Sherman Oaks Mortgage Firm In Chapter 11
Property Mortgage Co., a major California mortgage broker, filed for reorganization under Chapter 11 of the federal bankruptcy laws Thursday, the firm’s lawyer announced.
The lawyer, Bernard Shapiro, told about 300 Property Mortgage investors and others packed into a Sherman Oaks hotel that the filing was required because of a “sudden and dramatic liquidity crisis.”
He said that some of the company’s borrowers defaulted and that there also was an “unusual requirement for funds” by Property Mortgage’s investors, which left the company starved for cash.
Under Chapter 11, Property Mortgage will be shielded from investors’ lawsuits while it works out a plan to pay its bills.
Shapiro said Property Mortgage’s loan portfolio totaled about $90 million.
Property Mortgage, based in Sherman Oaks, arranges loans for houses and other property with cash that is primarily provided by investors in a Property Mortgage affiliate called SLGH Investments Inc., which also filed for Chapter 11 protection Thursday, Shapiro said.
The state Department of Real Estate said Monday that it was auditing both companies’ books amid reports from investors that Property Mortgage was no longer brokering new loans or making interest payments to investors.
