The American Eagle Mortgage receivership process has quietly marched forward during the COVID-19 pandemic, with receiver Hamstreet and Associates selling more property from the defunct mortgage pools and settling two lawsuits brought against parties that had received loans from the pools.
One settlement includes three parties based in Clark County that Hamstreet had targeted in two lawsuits. The other involves two parties that had allegedly taken out loans secured by property in Mexico — property that the receiver intends to help develop and sell as part of the settlement.
The American Eagle Mortgage case involves 15 mortgage pools formerly operated by the Vancouver-based financial firm American Equities. The pools functioned as investment vehicles, using investor dollars to buy real estate and mortgage contract assets. The pools were all declared insolvent in May 2019 and placed into receivership.
As the court-appointed receiver, Portland-based financial consulting firm Hamstreet and Associates was tasked with recapturing as much value as possible for the roughly 250 investors, most of whom live in the Portland metro area or Southwest Washington. An initial assessment found that the pools collectively held about $34 million in assets against roughly $77 million in liabilities.
The first several months of the receivership process focused on assessing the pools’ finances and auctioning their real estate assets. Hamstreet signaled a new approach in February when the firm filed a lawsuit against American Equities and its president, Ross Miles, alleging a yearslong pattern of mismanagement and self-dealing that contributed to the pools’ insolvency.
The lawsuit also alleged that American Equities executives improperly lent $10.7 million to at least 16 “related parties,” defined as either family members of the executives or business entities connected to them, and that most of those loans were never fully repaid.
Hamstreet filed an initial round of five lawsuits against some of those outside parties in late February, seeking to collect on the unpaid debts. More lawsuits followed in March.
Most of the lawsuits — including the lawsuit against American Equities itself — are still ongoing, but in late April Hamstreet reached a proposed settlement with three parties that had been targeted in two lawsuits: Hanes-Zoller Joint Venture, the Zoller Family Limited Partnership and R.C. Hanes Limited Partnership. The receiver would receive $120,829.04 under the terms of the proposed settlement.
Hamstreet also announced a proposed settlement in a lawsuit brought against Valerio Gonzalez Schcolnik and an affiliated party, Inmobiliario Montanas del Cabo, SA de CV. The lawsuit alleged that the parties had taken loans from some of the pools, secured in part by real estate in Mexico that was planned for development.
The proposed settlement calls for the receiver to form a joint venture with the parties to finish developing the property to maximize its value. The amount of money the receiver estate will get from the settlement would depend on the sale value of the property, but the proposed settlement document estimates that it would be between $2 million and $3 million over the next three to five years.
In addition, real estate sales have continued. In its most recent update to investors in late February, Hamstreet stated that it had put 35 pool-owned properties in Oregon and Washington up for sale in a fall 2019 real estate auction, most of which sold or had sales pending.
The pools owned an additional 28 properties in other states, Hamstreet wrote, most of which have been put up for auction and four of which have sold. Hamstreet announced proposed sales on another nine properties in the subsequent months — three in Oregon and six in other states.