|It is a classic "good news, bad news" scenario for investors of failed Florida mortgage lender Brasota Mortgage Co.
Bankruptcy trustee Gerald McHale has confirmed in an e-mail to MortgageDaily.com that he has received a $4.2 million payoff from Florida developer William Manfull and his company, Manatee River Community Development.
That brings Brasota's cash to $34 million, up from $21 million when the bankruptcy was filed in February.
Manfull has told McHale he would payoff another $2 million in loans during the next three weeks.
But on the Brasota Web site, McHale writes that losses, which were originally believed to be about $20 million, may now be as high as $60 million.
McHale pulls no punches in a posting on the Brasota Web site, www.Brasota.com.
"There are slightly in excess of $100 million in assets and slightly less than $140 million in liabilities," he writes. "Be aware that the $100 million assets are 'soft' and do not take into account the probability that the assets recorded by the company might be questionable.
"Even those assets that are not questionable could be potentially uncollectible," he said. "The company had done no collection efforts on its portfolio of approximately three years. Suffice it to say...that losses 'exceed $38 million'. Total extent of the losses may well go into the $50 or $60 million range."
Brasota, which has been described as a Ponzi scheme, owes nearly 1,800 investors $138.5 million.
Brasota, based in the Gulf Coast Florida city of Bradenton, was a residential and commercial mortgage broker and lender that offered investments backed by mortgage loan real estate collateral.
"We are unable to conclude that any assets have been misappropriated, but it appears that new note holders have been paying the agreed upon return for existing note holders," accountant Rene Zarate wrote in an affidavit that was included in a lawsuit that placed the company in a court-ordered receivership.
"In other words, it appears new note holders have been funding the operating deficits on a monthly basis for an indeterminate amount of time," Zarate said.
On the Web site, McHale said he has turned about 40 loans totaling $5.8 million over to attorneys for collection.
"I think it's conceivable that we will continue to turn files over to them for collection at the rate of about 10 files per week," he said.
McHale said he is not seeking to bring the loans "current" but instead wants them paid off immediately or foreclosed on.
"We have already brought a number of foreclosure suits and these actions will rise dramatically as we progress in the 'clean-up" process," he said.
Record keeping was shoddy and has delayed the collection process, McHale said.
"The company records of payments, tracking mortgage balances and past due items was totally inadequate and in man cases, non-existent," he said. "How much more of this we'll find, I can't be sure. All I can say is that it is a time consuming and tedious process and we're moving through the process one file at a time."