4.    Mortgages Receivable

The Company offers secured, non-bank loans to real estate owners and investors (also known as “hard money” loans) to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut, New York and Florida. The loans are secured by first mortgage liens on one or more properties owned by the borrower or related parties. The loans are generally for a term of one to three years. The loans are initially recorded and carried thereafter, in the financial statements, at cost. Most of the loans provide for monthly payments of interest only (in arrears) during the term of the loan and a “balloon” payment of the principal on the maturity date.

For the nine months ended September 30, 2022 and 2021, the aggregate amounts of loans funded by the Company were $252,370,675 and $154,810,007, respectively, offset by principal repayments of $95,173,969 and $90,463,016, respectively.

As of September 30, 2022, the Company’s mortgage loan portfolio includes loans ranging in size up to $26,117,118 with stated interest rates ranging from 5.0% to 14.2%. The default interest rate is generally 18%.

As of September 30, 2022 and 2021, the Company’s mortgage loan portfolio had an impairment loss of $105,000 and $0, respectively.

At September 30, 2022, no single borrower or group of related borrowers had loans outstanding representing more than 10% of the total balance of the loans outstanding. At September 30, 2021, we had one borrower whose outstanding loans represented 10.2% of the total balance of loans outstanding.

The Company may agree to extend the term of a loan if, at the time of the extension, the loan and the borrower meet all the Company’s then underwriting requirements. The Company treats a loan extension as a new loan.

Credit Risk

Credit risk profile based on loan activity as of September 30, 2022 and December 31, 2021:

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The following is the maturities of mortgages receivable as of September 30:

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At September 30, 2022 there were 92 loans having an aggregate unpaid principal balance of approximately $45.0 million that were past maturity and either in foreclosure or in the process of being extended. Of the 477 mortgage loans in the Company’s portfolio, 44 were the subject of foreclosure proceedings. The aggregate outstanding principal balance of these loans and the accrued but unpaid interest and borrower charges as of September 30, 2022 was approximately $21.4 million. In the case of each of these loans, the Company believes the value of the collateral exceeds the outstanding balance on the loan plus accrued interest and borrower charges.
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