SPFC Faces Suit, Warehouse Lending Problems

Southern Pacific Funding Corp., Lake Oswego, Ore., has obtained a temporary restraining order in a lawsuit filed Wednesday against Wilshire Real Estate Partnership, SPFC has announced.SPFC also said it is engaged in discussions with its warehouse lenders with regard to notices of default involving certain loan covenants. The warehouse lines of credit, which total $1.3 billion, are used by SPFC to fund loan originations and purchases. The litigation results from claims that SPFC is in default with respect to a $40 million loan recently made by Wilshire that is secured by assets with a market value substantially in excess of the loan amount, SPFC said. The temporary restraining order enjoins Wilshire from selling the loan collateral without complying with requirements of the Uniform Commercial Code.