Mortgage investors die before payout
An increasing number of Canterbury Mortgage Trust’s 5000 investors may never see full repayment from the $250 million fund which was frozen in 2009.
Some have died, and managers BDO and Trustees Executors have encouraged others to transfer their interest to beneficiaries as the most pragmatic way of keeping track of them in the absence of a register of estates or trusts in New Zealand.
As a result, the number of people who must be contacted by the manager increased by about 100 each year.
CMT recently confirmed another repayment to investors, bringing the total to 85.5 cents in the dollar of funds held at February 2009 – excluding interest and the effects of inflation.
Investing in mortgage trusts gives people a chance to invest in properties without the hassle of managing them, but there is a risk that borrowers from the trusts may be unable to repay their loans.
CMT’s final recovery of all money involves two court cases scheduled for hearings later this year – one is an insurance claim over a building in central Christchurch, and another is against the former manager of the fund.
A High Court hearing in the insurance case is set down for June.
In 2017, trustee, manager, legal, audit and accounting fees came to $801,125. Similar amounts have been charged in previous years, reducing the amount available to investors.
CMT was one of six funds set up in the 2000s by law firms around the country, all independently managed, but with a common software-owning shareholder, Fund Managers Holdings.
Despite their marketing emphasis on conservative lending, some loaned to high-profile developers including Terry Serepisos and Dave Henderson and were caught out after the 2008 financial crash.
Following the global financial crisis about 25 mortgage lending finance companies, including South Canterbury Finance, either collapsed or sustained heavy losses.