The Company offers secured, non-banking 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. The loans are secured by first mortgage liens on one or more properties owned by the borrower or related parties. In addition, each loan is personally guaranteed by the borrower or its principals, which guarantees may be collaterally secured as well. 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 quarters ended March 31, 2019 and 2018, the aggregate amounts of loans funded by the Company were $12,827,043 and $10,345,784, respectively, offset by principal repayments of $9,663,620 and $6,034,243, respectively.

 

At March 31, 2019, the Company’s portfolio included closed loans ranging in size from approximately $8,000 to $2,100,000 with stated interest rates ranging from 5.0% to 13.0% and a default interest rate for non-payment of 18%.

 

At March 31, 2019, no single borrower had loans outstanding representing more than 10% of the total balance of the loans outstanding.

 

The Company generally grants loans for a term of one to three years. In some cases, the Company has agreed to extend the term of the loans. A loan that is extended is treated as a new loan. However, prior to granting an extension, the loan underwriting process is repeated.

 

 

Credit risk profile based on loan activity as of March 31, 2019 and December 31, 2018:

 

 

The following are the maturities of mortgages receivable as of March 31:

 

 

At March 31, 2019, of the 413 mortgage loans in the Company’s portfolio, 11 were treated by the Company as “non-performing”, typically because the borrower is more than 90 days in arrears on its interest payment obligations or because the borrower has failed to make timely payments of real estate taxes or insurance premiums. The aggregate outstanding principal balance of these non-performing loans and the accrued but unpaid interest as of March 31, 2019 was approximately $ 4.1 

$3.5 million. At each of March 31, 2019 and 2018, all non-performing loans were referred to counsel to commence foreclosure proceedings or to negotiate settlement terms. In the case of each non-performing loan, the Company believes the value of the collateral exceeds the outstanding balance on the loan.