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related topics |
{loan, real, estate} |
{investment, property, distribution} |
{tax, income, asset} |
{debt, indebtedness, cash} |
{control, financial, internal} |
{interest, director, officer} |
{stock, price, share} |
{loss, insurance, financial} |
{provision, law, control} |
{product, market, service} |
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As a result of reductions in revenues and substantial realized and unrealized losses in the carrying value of our municipal bonds and other investments due to severely adverse current market conditions, and to the high costs of preparing and auditing our financial statements, we are incurring significant operating losses.
Most of our lenders have the right to require us to repay what we have borrowed or could require us to post additional collateral.
If we were forced to sell all our pledged assets, the total sales price might not be sufficient to enable us to repay all our borrowings.
We are facing defaults and delinquencies with respect to many of the debt instruments we hold.
General Risks Related to Our Business
Economic conditions adversely affecting the real estate market have had a material adverse effect on us.
We might not be able to meet our funding commitments.
We are exposed to the normal risks that affect construction lenders which could adversely affect our or our funds return on investment.
We are exposed to risks specific to real estate.
We are sometimes subject to collateral calls and if we cannot meet the calls we may be deemed in default.
The market value, availability or cost of our investments and investment opportunities could be adversely affected by changes in prevailing interest rates.
We do not, and cannot, fully hedge against interest rate risks.
We can lose money on the transactions we undertake to hedge against losses due to interest rate movements.
Our ability to find investors or make tax-exempt investments could be adversely affected by changes in government tax incentive programs.
Substantial reduction or increased costs in the activities of GSEs that provide liquidity to the market for real estate related investments could adversely affect our business.
Most of our assets are pledged as collateral for borrowings that could go into default causing us to suffer significant losses.
We must be careful not to become subject to the Investment Company Act of 1940 because if we were subject to that Act, we could be required to sell substantial portions of our assets at a time when we might not otherwise want to do so, and we could incur significant losses as a result.
Risks Related to Our Financial Reporting
There have been material weaknesses in our internal controls over financial reporting that have required us on three occasions to restate our financial statements with the assistance of outside accounting consultants, and until we have sufficient internal resources we may need continued substantial assistance from outside accounting consultants at considerable cost.
The material weaknesses in our internal control over financial reporting substantially increase the cost of ensuring that there will not be misstatements in our financial statements.
We will continue to incur major costs in the preparation and audit of our financial statements, which could adversely affect our financial results.
Our 2007 and 2008 financial statements will not be filed with the SEC or provided to lenders when they are due, which means we will not meet a requirement of many of our loan agreements and unless we obtain waivers or forbearances, our lenders could terminate our lending agreements and require us to repay the sums we have borrowed, and if all of these loan amounts were currently declared due and payable, we would not have available resources sufficient to satisfy all of such loan amounts.
The SEC Staff has inquired into the reasons for our restatements and if they decide to take any substantial action against us it could adversely affect our business.
The book value of our assets is not necessarily the amount for which they could be sold at any point in time, and if we currently were forced to sell significant assets, we probably would not realize their full book value.
Risk Related to our Affordable Housing Division
Affordable housing partnerships may not be able to repay their borrowings from us and that could adversely affect the return on the investment to us or to the funds we manage.
As a sponsor of tax credit equity funds, we have exposure to risk of loss if we are unable to place partnership interests at sufficiently high prices.
Economic conditions have substantially reduced demand for investments that generate tax credits, and therefore we have curtailed our efforts to identify investments that generate tax credits or to form LIHTC Funds.
Substantially all of our investments are illiquid, which could prevent us from consummating sales on favorable terms and makes it difficult for us accurately to value our investment portfolio.
We have provided guarantees with respect to certain of the tax credit equity funds that we sponsored, and if we were to become obligated to perform on those guarantees our financial condition and results of operation could suffer.
Noncompliance with various legal requirements by the affordable housing partnerships could impair our investors right to low income housing tax credits and have a negative impact on our business.
A significant portion of our interests in tax-exempt bonds and our residual interests in securitized asset pools have been pledged as collateral to support securitization programs.
Risks Related to Our Real Estate Division
Substantially all of our investments are illiquid, which could prevent us from consummating sales on favorable terms and makes it difficult for us accurately to value our investment portfolio.
The assets in which we invest may not realize the value forecasted at acquisition.
A portion of our market rate investments are subordinated bonds or are junior in right of payment to other obligations and if the borrowers are unable to make all required payments, we may suffer losses.
As a delegated underwriter and servicer in the Fannie Mae DUS program and Freddie Mac Program Plus program, we have agreed to share losses (up to specified levels) on loans that we underwrite and sell to Fannie Mae and Freddie Mac.
Our agency loan origination business is particularly dependent on maintaining our relationships with the GSEs that participate in the multifamily housing market and adverse changes to those relationships could cause our business and results of operations to suffer.
Risks Relating to Ownership of Our Shares
Our Board can issue an unlimited number of common or preferred shares, which could reduce our book value per common share and earnings per common share and the cash or other assets available for distribution per common share upon liquidation or otherwise.
We have stopped paying dividends and it is unlikely we will resume paying them in the near future.
Our shareholders may be taxed on their respective shares of our taxable income, even if we do not make distributions to them.
We could have additional federal income tax obligations which would reduce the sums available for distribution to shareholders.
One of our shareholders has the right to designate one, and in some circumstances two, of our directors, which is a right that is not available to any other of our shareholders.
Provisions of our Operating Agreement may discourage attempts to acquire us.
Full 10-K form ▸
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