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Bankrupt hard-money lender looks to sell properties

Integrated Financial Associates, a hard-money lender that filed for bankruptcy protection in March, hopes to sell properties it owns to generate income and get back to originating short-term loans secured by real estate, attorney Alan Smith said.

The debtor’s attorney disclosed the company’s proposed reorganization plan in a bankruptcy proceeding last week.

Hard-money lenders solicited investments from individuals and used the money typically for one-year loans secured by real estate. Borrowers often were developers or homebuilders; investors often were retirees.

The industry began collapsing in 2008 after the real estate bubble burst, development slowed and property values fell.

Over the last few years, the number of hard-money lenders in Southern Nevada has dwindled to 13 from 30 in 2006, according to the Mortgage Lending Division. The hard-money lending business pumped out $1.9 billion in loans in 2007, but just $58 million last year.

Integrated Financial started in 1996, relying on friends and family members for cash to lend, unlike competitors who frequently accepted investments from anyone with cash.

The directors included developer Ken Templeton, who was chairman of Sun West Bank when regulators closed it last year. Other directors are Jerome Snyder, Mark Stout, Tom Lea, Steve Kalb and Chief Executive Officer William Dyer.

Integrated Financial made real estate-secured loans to Templeton and Snyder.

When Integrated Financial filed for Chapter 11 bankruptcy in March, three individuals owned 33 percent each: Templeton, Stout and Kalb. Dyer owned 1 percent because he needed an ownership stake to be licensed with the state as a mortgage broker.

Integrated Financial operated a subsidiary known as IFA Capital, which borrowed money from investors and paid 8 percent or 10 percent interest on the unsecured loans.

IFA Capital often made loans to Integrated Financial so it could fund its loans without additional investors, Dyer said.

A few months ago, Integrated Financial merged with its subsidiary and issued promissory notes to the subsidiary’s financial backers, Dyer said.

Investors who hold the promissory notes have not received payments since 2008, Dyer said.

Separately, Integrated Financial solicited money from investors for loans secured by real estate and is managing many foreclosed properties. It has moved to smaller offices and cut expenses, including pay for three employees.

The company, now in bankruptcy, reported $44.9 million in liabilities, including $40 million unsecured, and
$7.5 million in assets.

Bank of Nevada has a secured claim of $6.5 million backed by collateral worth $4.8 million. Vestin Realty Mortgage, another hard-money lender, is owed $5.2 million on an unsecured claim.

Integrated Financial owns 97 acres in Phoenix valued at $3 million and a debt of $6.5 million, according to its bankruptcy filing. It also owns 159 subdivision lots in Riverside County, Calif.

Contact reporter John G. Edwards at
jedwards@reviewjournal.com or 702-383-0420.

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