Homebuilder loans at issue in seizure of mortgage firm

Phil Levine

Thursday, Nov. 4, 1999 | 11:27 a.m.

A state-appointed conservator and David Ferradino, president of Interstate Mortgage Group, may spend up to two months working to find a way to secure the collateral of Interstate investors whose money was lent to Champion Homes.

The state Financial Institutions Division Tuesday took possession of Interstate Mortgage, citing the "loss of collateral securing loans in the amount of $5.7 million." Deputy Commissioner Lyndon Evans said Ferradino has expressed "a willingness to work closely with the conservator" to resolve the matter.

Certified public accountant George C. Swarts was named IMG's conservator. IMG's Las Vegas office is at 1601 N. Rancho Drive. Evans said both Swarts and Ferradino will work together on-site, and progress resolving the matter will be reviewed daily.

Ferradino could not be reached for comment.

One of Swart's first duties as conservator will be issuing reports to IMG investors about the current status of their investment.

"Interstate Mortgage Group has approximately 1,000 investors, and the minimum investment was $10,000," said Evans. "However, the average investment was likely substantially higher than that. Now, about $1.4 million of the $5.7 million (of investor's money at issue) has been paid off. As for the balance, Mr. Ferradino is attempting to resolve that matter."

IMG has been licenced to do business in Las Vegas since 1984 and Evans said he was unaware of any similar problems involving the company.

Evans said the "collateral loss" arose when IMG released approximately seven property liens to Las Vegas-based developer Champion Homes without receiving compensation for loans.

The problem became evident as a result of regular examinations and complaints filed by IMG investors.

"Why IMG would choose to do that is really a question only Mr. Ferradino could answer," said Evans. Normally, IMG would first recoup compensation for the loans, disperse the funds to investors, and only then release the property liens, he said.

As legal counsel for the Financial Division, Senior Deputy Attorney General Doug Walther agreed with Evans it was unusual for IMG to release the liens before receiving repayment.

"We certainly think it's an odd thing to do," said Walther. "I've never heard of exactly this kind of thing occurring before."

"Champion Homes disagrees that we ever received property from Interstate Mortgage without consideration," Champion President Terry Manley said in a statement. He said Champion, a six-year-old Las Vegas company, has borrowed and repaid more than $100 million in loans and has done business with Interstate for more than five years.

"Champion Homes is looking forward to working with the state and its designated agent and is confident that financial issues involving any of its projects will be resolved during this period," Manley's statement said.

Champion's master-planned developments include the Hillside Champion Village and Clearwater Canyon projects near Lake Mead Drive and U.S. 95 in Henderson.

Evans said the 60-day period provided IMG with "an opportunity to reach some funding arrangement" to correct the outstanding problems.

"There are a couple of ways this could be resolved," he said. "For one, the borrower could just repay the (outstanding) loans. Also, Mr. Ferradino could use personal assets to satisfy the matter. Or there could be a combination of both methods."

If a resolution can't be reached within the 60-day time frame, the state would revoke IMG's mortgage licence, Evans said. The Financial Institutions commissioner would then request a receiver be appointed by the state district court.

Las Vegas' booming construction sector means there's no shortage of mortgage firms, said Evans. Still, the need for the state to assume possession of a mortgage company remains infrequent.

"This certainly isn't something that happens very often," Evans said.