Time for some proper due diligence/ independent auditing in our communities

[yuneeq]

Imagine if their investigation concludes with a real ban of the title companies - and they won't buy any mortgages that have been closed since 2022. This would screw over every single lender that did business with the title companies retroactively - and would probably open them up to a massive lawsuit: they had knowledge of a possible ban and yet they didn't warn the lenders. Makes sense for them to issue a warning while an investigation is undergoing.

(I definitely sympathize with both Riverside and Madison - there are many good people involved in both of them; I personally have a family member working for one of them.)

Your whole post is off - Fannie didn't issue a warning, they issued a ban

[yuneeq]

Not a good situation based on the way it’s presented here:
https://www.justice.gov/opa/pr/real-estate-investor-pleads-guilty-165m-mortgage-fraud-conspiracy

“On March 8, 2019, Madison Title Agency performed two closings, one for the true $70 million sales price and another for the fraudulent $95.85 million sales price presented to the lender.”
“On Sept. 25, 2020, Riverside Abstract performed two closings, one for the true $42.7 million sales price and another for the fraudulent $70 million sales price presented to the lender.”

As mentioned above, double closings are very commonly done on the same day.

What hasn't been mentioned yet is that the lenders are the ones that appraised the buildings at these outrageous values, it's not the title company's responsibility to decide if a transaction price makes sense or not. This is the fallout of the lenders looking for someone to blame for their own greed and stupidity.

[yelped]

Don't run a massive national company like it's a heimish business is the main lesson.

Madison is not run like a Heimishe company and they do not do any shtick. They refuse transactions all the time.

[shapsam]

Madison is not run like a Heimishe company and they do not do any shtick. They refuse transactions all the time.

By the way, they employ 800 people and around half of those jobs are in jeopardy if this is not cleared up within a few days.

[jye]

By the way, they employ 800 people and around half of those jobs are in jeopardy if this is not cleared up within a few days.

Meridian, Madison, and Riverside are a reminder that parnassa comes from Hashem and even a parnassa that seems virtually invincible can be turned upside down over night. That being said the owners of Madison have unparalleled zechusim in what they do for the tzibbur, and for individuals, both known and unknown. Most people reading this post have likely benefited from them in one form or another. Hopefully that will weigh in their favor and allow them to weather this intact.

[yitzgar]

Meridian, Madison, and Riverside are a reminder that parnassa comes from Hashem and even a parnassa that seems virtually invincible can be turned upside down over night. That being said the owners of Madison have unparalleled zechusim in what they do for the tzibbur, and for individuals -in a humble and unassuming way-, both known and unknown. Most people reading this post have likely benefited from them in one form or another. Hopefully that will weigh in their favor and allow them to weather this intact.

Atfm (added that for me)

[dealfinder11]

Meridian, Madison, and Riverside are a reminder that parnassa comes from Hashem and even a parnassa that seems virtually invincible can be turned upside down over night. That being said the owners of Madison have unparalleled zechusim in what they do for the tzibbur, and for individuals, both known and unknown. Most people reading this post have likely benefited from them in one form or another. Hopefully that will weigh in their favor and allow them to weather this intact.

The owner of Meridian as well. The amount of tzedekah Ralph gives on a monthly basis in unfathomable.

[AsherO]

Atfm (added that for me)

OTOH there’s מצוה לפרסם עושי מצוה specifically because it inspires others and encourages them to follow suit, and

The owner of Meridian as well. The amount of tzedekah Ralph gives on a monthly basis in unfathomable.

is a perfect example of that.

[shapsam]

Meridian, Madison, and Riverside are a reminder that parnassa comes from Hashem and even a parnassa that seems virtually invincible can be turned upside down over night. That being said the owners of Madison have unparalleled zechusim in what they do for the tzibbur, and for individuals, both known and unknown. Most people reading this post have likely benefited from them in one form or another. Hopefully that will weigh in their favor and allow them to weather this intact.

I've witnessed him first hand coming to shop in a store and paying off dozens of outstanding accounts.

[Shmobaum]

By the way, they employ 800 people and around half of those jobs are in jeopardy if this is not cleared up within a few days.

Fake news.

[Fish Tank]

Fake news.

-1

[jye]

Yet another dear investor letter:
…”Regrettably, we must inform you that based on our projections, the sales of the property are unlikely to generate sufficient capital to cover the losses incurred. As a result, we anticipate significant losses to invested capital. We understand that this news is disappointing and may raise concerns.
……thank you for your trust and understanding as we navigate through this period.”

Unfortunately trust without enough DD is likely what got these investors into trouble in the first place and will likely cost them most if not all of their equity. Unfortunately this scenario as well as capital calls and taking on pref equity are starting to play out more frequently as the portfolios with the pie in the sky projections begin to meet reality.

[Mordyk]

Yet another dear investor letter:
…”Regrettably, we must inform you that based on our projections, the sales of the property are unlikely to generate sufficient capital to cover the losses incurred. As a result, we anticipate significant losses to invested capital. We understand that this news is disappointing and may raise concerns.
……thank you for your trust and understanding as we navigate through this period.”

Unfortunately trust without enough DD is likely what got these investors into trouble in the first place and will likely cost them most if not all of their equity. Unfortunately this scenario as well as capital calls and taking on pref equity are starting to play out more frequently as the portfolios with the pie in the sky projections begin to meet reality.

Why can't  it simply be a change in interest rates to cause this? Why assume foul play?

[avromie7]

Why can't  it simply be a change in interest rates to cause this? Why assume foul play?

incompetence =/= foul play.

[Afrages6]

Yet another dear investor letter:
…”Regrettably, we must inform you that based on our projections, the sales of the property are unlikely to generate sufficient capital to cover the losses incurred. As a result, we anticipate significant losses to invested capital. We understand that this news is disappointing and may raise concerns.
……thank you for your trust and understanding as we navigate through this period.”

Unfortunately trust without enough DD is likely what got these investors into trouble in the first place and will likely cost them most if not all of their equity. Unfortunately this scenario as well as capital calls and taking on pref equity are starting to play out more frequently as the portfolios with the pie in the sky projections begin to meet reality.

If we are talking about the same syndication. The fact that they sunk in 5 million in Capex and lost 12 million last year should tell you all you need to know.

[knowitall]

Yet another dear investor letter:
…”Regrettably, we must inform you that based on our projections, the sales of the property are unlikely to generate sufficient capital to cover the losses incurred. As a result, we anticipate significant losses to invested capital. We understand that this news is disappointing and may raise concerns.
……thank you for your trust and understanding as we navigate through this period.”

Unfortunately trust without enough DD is likely what got these investors into trouble in the first place and will likely cost them most if not all of their equity. Unfortunately this scenario as well as capital calls and taking on pref equity are starting to play out more frequently as the portfolios with the pie in the sky projections begin to meet reality.

I didn’t see the OM, but this situation here is mind-boggling. This portfolio went from $4.7M of NOI to negative $5M NOI, in 2 years! That’s a $10M swing! To those unacquainted with CRE, NOI means “profit”, which is calculated before factoring in the mortgage(s), so interest rates aren’t a factor here.

[jye]

Along with the fact that they were already starting to bleed money in ‘22

[Sammy82]

Could somebody post which group this is? L'toeles harabbim

[Baglach]

Could somebody post which group this is? L'toeles harabbim

I'd rather see the Original OM and Projected IRR

[liosac]

By the way, they employ 800 people and around half of those jobs are in jeopardy if this is not cleared up within a few days.

The issues facing the above companies and the commercial real estate scene in general have the potential to negatively impact Lakewood in a significant way. Everthing from timely tuition receipts for schools, to the kollel check, to the middle to upper class spending that drives Lakewoods economy (and has a multiplier effect as money is spent within Lakewood by prosperous Lakewood business owners) has the potential to be impacted by the outsized role CRE has played in Lakewood over the last decade or so. Many who think they are far outside the sphere of CRE would be surprised to hear that their parnassa is in some way linked.