First Position Commercial Mortgage Notes – What Investors Need to Know

Since the days of the financial crisis of 2007-2008, most of the world has been locked in a low-interest rate environment. In this type of economic climate, it can be very difficult for investors to find safe but consistent growth. There are many financial advisors and investment companies that have responded by trying to create financial products that draw in investors looking for these types of opportunities.

Unfortunately, some of these investment opportunities are misrepresented, with investors receiving far less than they are promised. One of the most notable examples is the First Position Commercial Mortgage (FPCM) Notes being offered to investors by the Woodbridge Group. FPCM Note investors have been promised a safe and consistent return, yet, in far too many cases, this financial product has failed to deliver.

At Sonn Law Group, our legal team is currently investigating First Position Commercial Mortgage Notes and the Woodbridge Group. If you have invested in this product and you sustained losses, we are interested in speaking to you. You may have a valid legal claim. Here, we highlight the basic things that you need to know about the First Position Commercial Mortgage Notes offered by the Woodbridge Group.

First Position Commercial Mortgage (FPCM) Notes: Explained

The Promises Made to FPCM Investors

In its marketing material to investors, the Woodbridge Group promotes First Position Commercial Mortgage Notes as a safe and secure way for investors to achieve impressive returns. The company has promised anywhere from a five percent annual yield to a seven percent annual yield.

Both of these marks are significantly above the current rate available for safe bonds and other relatively secure loan-based investment products. Specifically, the Woodbridge Group touts FPCM notes as being flexible, secure, simple and reliable.

The Reality Facing FPCM Investors

Unfortunately, the reality of the Woodbridge Group’s First Position Commercial Mortgage Notes has failed to live up to the hype. When an investor purchases an FPCM note, they are essentially making a short-term loan to a commercial property owner or to a commercial developer.

Though, notably, this is being done by obtaining a promissory note through the Woodbridge Group. Of course, with this, First Position Commercial Mortgage Note investors are taking on all of the financial risks that come with making a commercial mortgage loan.

As a general rule, the return on a mortgage loan is adjusted for the risk. In the current mortgage market conditions, even a five percent return is well above the standard rate for a loan that is made to a reliable commercial investor. So, this raises a very important question: Why would a commercial property owner or developer take out this type of loan in the first place?

The answer is almost always because the commercial borrower in question did not have the ability to obtain a mortgage from a bank at a lower rate. Why not? Because these are not the most stable borrowers. Put another way, First Position Commercial Mortgage Notes are extremely risky. Yet they are not marketed that way to innocent investors.

The SEC is Currently Investigating the Woodbridge Group

Currently, the United States Securities and Exchange Commission (SEC) is conducting a comprehensive investigation into the Woodbridge Group and its offering of First Position Commercial Mortgage Notes. In the U.S. District Court for the Southern District of Florida, the SEC has obtained a subpoena for the Woodbridge Group, several representatives of the company, and at least 235 LLCs that are believed to be connected to the company.

The SEC is currently investigating the Woodbridge Group for several possible violations of securities law, including violations of:

• The Securities Act;
• The Securities Exchange Act; and
• SEC Rule 10b-5.

Regulators believe that the Woodbridge Group and other associated persons and entities have been engaging in the sale of unregistered securities and possibly committing investment fraud.

Court filings indicate that the Woodbridge Group has raised in excess of one billion dollars by selling First Position Commercial Mortgage Notes to several thousand different investors who are located all across the country. These products were sold to these investors in many different forms, using a wide array of different entities and structures.

Alarmingly, in our investigation of the Woodbridge Group, the legal team at Sonn Law Group has discovered that certain company officials have exercised their Fifth Amendment rights in response to the SEC’s investigation.

As our founding attorney Jeffrey Sonn has explained, this is a major red flag. While all people are innocent until they are proven guilty, the unwillingness to cooperate with an investigation should make investors extremely nervous.

You May Be Entitled to Significant Compensation

In many cases, FPCM Notes were sold through to investors as private placements. If you lost money investing in the First Position Commercial Mortgage Notes offered by the Woodbridge Group, you may be entitled to full financial compensation for your losses. Some of the specific products include:

• WMF Management;
• Woodbridge Group of Companies;
• Woodbridge Mortgage Investment Fund 1;
• Woodbridge Mortgage Investment Fund 2;
• Woodbridge Mortgage Investment Fund 3;
• Woodbridge Mortgage Investment Fund PA; and
• Woodbridge Wealth.

If you worked with a financial advisor who sold you any Woodbridge Group products, you may be able to hold them legally liable for your losses. More specifically, if the First Position Commercial Mortgage Notes that you were sold were unsuitable investments for your individual risk profile or investment needs, or if any misrepresentations were made to you when you were presented with the product, you may be able to recover financial compensation.

Contact Our Top Rated Investment Fraud Lawyers Today

At Sonn Law Group, our aggressive securities fraud attorneys have helped many wronged investors recover money for their damages. If you sustained losses in the First Position Commercial Mortgage Notes or with any other Woodbridge Group product, our team is standing by, ready to help. Please call us today to set up a free, fully confidential review of your claim. From our main office in South Florida, we represent investors nationwide.