Mortgage Lending Funds
How does a mortgage lending fund work?
An investor purchases shares of the mortgage fund. The mortgage fund then lends the money out to borrowers. Borrowers make interest payments to the fund each month, and the fund pays out dividends to investors. The mortgage fund contains a large number of highly diverse trust deed loans as security for the investment, similar to a “mutual fund” of loans.
Where are the properties on which the fund loans money?
The vast majority of the portfolio is secured by California real estate.
What’s the risk?
Generally, we finance residential and commercial properties at a maximum loan-to-value ratio of 65%. We underwrite all loans with as much rigor as required to determine collateral value, insurance, credit and title history. Typically, the process is the same as that of institutional lenders.
Is there a minimum investment?
Mortgage lending funds carry minimum investment requirements, which vary, depending on the fund. Please check the individual fund pages for details.
Why do borrowers seek private money for real estate transactions?
In today’s market, sound loans are being passed over because of the capital crunch. In addition, many of our borrowers don’t want to be constrained by long timelines and rigid conditions with traditional lenders since speed is often the key in making a profitable transaction. And finally, a borrower and/or a property may fall outside the normal underwriting guidelines of conventional sources.
What are the advantages of investing in mortgage funds over individual trust deeds?
- Diversification: The portfolio holds loans secured by various types of properties.
- No churning: You don’t experience a payoff of your investments as with individual trust deeds.
- No idle cash: Your money won’t sit idle while you search for new investments.
- More consistent income: Your income stream is protected against an individual, non-performing loan.
- No reserve capital: By pooling loans, the fund eliminates the need for extra available capital for payment of advances, etc.
Real Estate Owned (REO) & Non-performing Mortgage Loan (NPML) funds
How does a real estate acquisition fund work?
For REO and NPML funds, investors purchase preferred interests in the fund, and the proceeds are used in turn to buy and sell properties. We invest in REO properties and NPML’s located in low-to medium-income communities throughout the United States. Our aim is to secure low purchase pricing and then provide financing or resell each property quickly for cash. The fund assets are liquidated at the end of the fund term whereupon cash is distributed to the investors.
What types of properties does the Fund purchase?
Stonecrest has built a niche within the Non-Performing Mortgage Loan (NPML) and Real Estate Owned (REO) markets. We invest in low to moderate income residential assets throughout the United States.
Is there a minimum investment?
REO funds carry a minimum investment requirement of $100,000.
Can I invest my IRA in Stonecrest funds?
Yes, self-directed IRA’s can invest in our funds. Please call (800) 557-7720 for more details.
Are there investor suitability standards?
Shares are offered exclusively to qualified investors who meet certain minimum standards of income and/or net worth. Click here for more information.
What information is provided for tax reporting?
Income information for tax reporting is provided by Stonecrest via a Schedule K tax form.