Most borrowers never look at the forms that come with commercial and CMBS funded loans. Vulture funds and distressed investors seek out properties that are performing poorly and try to buy them on the cheap.
Why? If the property has equity, Lone Star will devise a strategy to deplete as much equity as possible from the property in the forms of fees and charges.Often buried in those documents are provisions that let the noteholder accelerate a loan if a tenant leaves, if certain asset rations fall below a specified percentage or even if the noteholder feels uncomfortable.Having litigated several cases against individual funds or loan pools controlled by Lone Star Funds, we have a unique insight into the how the company behaves with commercial borrowers.Most of the consumer complaints against Caliber appear to center on aggressive foreclosure practices and their proprietary in-house loan modifications. Sign that and your case becomes extremely difficult to win.In 2016, the media announced that New York’s investigation of Lone Star Funds and Caliber Home Loans was expanding. That investigation still centered on residential borrowing and foreclosure practices, however.Only when all the reserves have been depleted and all the equity stripped will Lone Star try to take the property. MahanyLaw and Judge, Lang & Katers – We Sue Servicers!We certainly don’t begrudge successful businesses.
In October of 2015, the New York Attorney General announced it was investigating the company’s residential mortgage servicing company, Caliber Home Loans.Unsuspecting borrowers also run the risk of signing an innocuous titled document called a prenegotiation agreement or PNA. Sometimes their problems arise from unforeseen market events and at other times, it is just from being inexperienced or undercapitalized.
Even more impressive, the company’s 15 funds have shown average annual net returns of 20% and never had a down year.
Having litigated several cases against individual funds or loan pools controlled by Lone Star Funds, we have a unique insight into the how the company behaves with commercial borrowers.
The pooling and servicing agreement itself may be 600 or more pages.How do noteholders get away with this?
Try D&B Hoovers Free Some homeowners claimed they were surprised on the 6th year when they learned that the difference between the reduced payments and full payment and interest was simply deferred and all became due at once.Comments, reports and rants on outrageous lender conductWe have even seen another interesting dynamic. Servicers claim this is a necessary first step before that allows both sides to speak freely and not have their negotiations later used in court.
Lone Star Funds said that it was possible that BI-LO could emerge from bankruptcy in the first quarter of 2010. But cooperate too long with a company like Lone Star and suddenly you will find many months have elapsed with default interest and various fees compounding daily.Some call distressed investors “vultures,” while others call them grave robbers. Cheating borrowers and property owners is not.Lone Star, and its Grayken owned asset manager Hudson Advisors, typically make an early assessment as to the financials on both the distressed property and its owners. Lone Star is a leading private equity firm advising funds that invest globally in real estate, equity, credit and other financial assets. Owned by Lone Star Real Estate Fund IV; ServiHabitat Servicios Immobiliarios, S.L.
It’s the way a free market economy works.The other reasons that companies like Lone Star get away with so much is that courts typically allow commercial borrowers and lenders more leeway in what they can negotiate.
This is especially true when the actual noteholder is a CMBS trust.First companies like Lone Star Funds are not banks. Forbes says that Lone Star Funds has amassed $70 billion in assets since 1995.
Lone Star is teaming up with the Portuguese Resolution Fund to buy a controlling stake in struggling Novo Banco.
Many property owners don’t know they are dealing with Lone Star until they have lost many months and millions in equity. They acquired Sino Gas & Energy for $530M .
Another problem occurs when a company like Lone Star acquires loans from a third party.