Hamstreet asks to lower American Equities property prices

Some hints of results are beginning to trickle in from a November real estate auction that included several properties owned by a group of 15 insolvent mortgage funds formerly operated by Vancouver-based company American Equities.

The funds were declared insolvent in June and placed into receivership under the direction of Portland-based financial consulting firm Hamstreet & Co. The firm was tasked with auditing the funds’ finances and selling off their assets in order to recapture as much value as possible for investors.

American Equities operated the 15 insolvent funds — all of which are named some variation of “American Eagle Mortgage,” e.g. American Eagle Mortgage 100, American Eagle Mortgage 200, etc. — as vehicles for investors, many of whom were local to Clark County.

At the time the insolvency became known, the funds held an estimated $34 million in assets against about $77 million in liabilities.

Hamstreet hired Realty Marketing/Northwest to auction off the properties, and 35 of them were listed in the company’s fall auction catalog. Of those 35 properties, 24 were in Oregon or Southwest Washington, with four in Clark County and two just outside of it — one in Woodland and one on the south bank of the Columbia River.

Several of those properties appear to have received offers, although court filings from Hamstreet suggest that the bids came in lower than expected. During the past few weeks, Hamstreet has filed several notices seeking permission to sell properties for less than their published “reserve price” in the auction catalog.

As the court-appointed receiver for the mortgage funds, Hamstreet is allowed to accept any auction offer for a listed property as long as the offer meets or exceeds the reserve price, according to Hamstreet consultant Maren Cohn.

If all the bids for a property come in below the reserve price, Hamstreet has to file a notice with the court requesting permission to lower the reserve price and notify investors about the request. Several of the listed properties within or near Clark County appear to have fallen into this category.

Most notably, a 4-acre property in Woodland was listed with a reserve of $495,000, but Hamstreet requested a reduction to $295,000. The initial $495,000 listing was the highest published reserve price of all the American Eagle properties in the catalog, and Reality Marketing/Northwest President John Rosenthal had described it as “the prime development property” due to its location in a commercial area near Interstate 5.

The only developed property from Clark County was a parcel off of state Highway 503 north of Battle Ground, featuring a 2,176-square-foot commercial building built in 1903. That property was published with a reserve price of $125,000, but Hamstreet requested a reduction to $80,000.

Two other properties within or near Clark County — a floating home in a marina on the south bank of the Columbia River and a 5-acre piece of undeveloped land in Washougal — were listed with reserve prices of $35,000 and $50,000, respectively, but Hamstreet filed requests for each of them to no longer have any minimum bid.

If any of the properties don’t sell, Cohn said, Hamstreet will begin to look into possible ways to improve them to make them more attractive to buyers, such as wiring power out to a property that didn’t previously have it.

“We’d look at what it would cost us to do it, versus the value we’d get,” she said.