East Coast eases out
EAST Coast Mortgage Trust has announced it will wind down its operation and close its doors after a bruising few years for the North Coast financial institution.
Mortgage Trust chief executive Scott Collis yesterday stressed the closure would be a gradual process designed to return as much money as possible to investors and allow mortgagors time to refinance.
Investors could expect to get at least 90% of their funds back. However, depending on how any property sales went, Mr Collis said that figure could be higher. Funds would be returned through a series of capital distributions starting from March this year.
The announcement comes after a rocky few years for the 51-year-old financial institution, starting in 2008 with the federal banking guarantee, which guaranteed lines of credit for banks and credit unions but not for mortgage trusts. The introduction of the guarantee and the global financial crisis meant many mortgage trusts around the country started freezing accounts, preventing investors from withdrawing their money.
Little had improved since, with Mr Collis noting the poor economic climate and the flat property market. As recently as August, the trust was still being rocked by difficulties, ranging from reduced interest payments and withdrawal freezes to concerns about a $4 million loan given to property developer Mario Girardo after he was committed to trial for extortion (he was convicted in August).
Looking back at the events since 2008, Mr Collis said there was nothing he could see the trust could have done differently.
"This (the global financial crisis) is essentially the worst economic shock in a generation," he said.
Mr Collis praised East Coast Mortgage Trust's board for making the best decisions for investors - even when that meant signalling its own demise.
Mr Collis was unable to say how long the "wind-down" would take, but said the board would remain actively looking after the business until the process was complete.