Investigating Potential Claims – United Mortgage Trust

The White Law Group continues to investigate potential claims involving broker dealers who may have unsuitably recommended high risk REITs like United Mortgage Trust to investors.

United Mortgage Trust is a real estate investment trust (REIT). It invests primarily in lines of credit and secured loans for the acquisition and development of single-family home lots. Additional investments include lines of credit and loans secured by developed single-family lots and completed model homes. The company was founded in 1996 and is based in Grapevine, Texas.

As we told you last October, United Mortgage Trust (UMT) reported that the SEC had plans to revoke the REIT’s registration for reportedly failing to file periodic reports dating to September 2015.

Liquidity Problems with Non-traded REITs

The trouble with non-traded real estate investment trusts (REITs) like United Mortgage Trust, is that they are high risk investments that lack liquidity.

According to LPsales.com, a secondary marketplace for non-traded REITs, shares of United Mortgage Trust were priced at $3.95 per share in February 2016. In August 2016, shares were sold for $1.50 per share.  The price dropped again in August 2017 to just $.75/share. This is unfortunate for investors, as the original purchase price of United Mortgage Trust was $10.00 per share.

Brokers are required to perform adequate due diligence on any investment they recommend. They must ensure that all recommendations are suitable for the investor and are in line with the clients risk tolerance, age, net worth, and investment experience.

Brokers often earn extremely high sales commission selling non-traded REITs, sometimes as high as 15%. Unfortunately, some broker dealers may find enough incentive from the high commissions to overlook suitability requirements.

If a brokerage firm makes unsuitable investment recommendations or fails to adequately disclose the risks associated with an investment they may be liable for investment losses through FINRA arbitration.

Free Consultation

Did you lose money investing in United Mortgage Trust at the recommendation of your financial advisor? If so, the securities attorneys at The White Law Group may be able to help you recover investment losses. Please contact The White Law Group at (888) 637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. For more information on the firm, visit www.WhiteSecuritiesLaw.com.