Mortgage Loans Receivable ; Due from Borrowers
|9 Months Ended|
Sep. 30, 2019
|Mortgage Loans Receivable ; Due from Borrowers|
|Mortgage Loans Receivable ; Due from Borrowers||
3. Mortgage Loans Receivable; Due from Borrowers
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 mortgage loan is personally guaranteed by the borrower or its principals, which guarantees may be collaterally secured as well. The mortgage loans are generally for a term of one to three years. The mortgage loans are initially recorded and carried thereafter, in our financial statements, at cost. Most of the mortgage 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-month periods ended September 30, 2019 and 2018, the aggregate amounts of loans funded by the Company were $42,163,704 and $37,278,346, respectively, offset by principal repayments of $27,917,331 and $20,958,280, respectively.
At September 30, 2019, the Company’s mortgage loan portfolio included loans ranging in size from approximately $8,000 to $2,900,000, with an average loan size of $206,000, and with stated interest rates ranging from 5.0% to 13.0% and a default interest rate for non-payment of 18%.
At September 30, 2019, no single borrower, or affiliated group of borrowers, accounted for more than 10% of the total outstanding balance of the Company’s mortgage loan portfolio.
At the request of the borrower, the Company may extend the term of a mortgage loan provided the loan satisfies the Company’s underwriting requirements at the time of the extension. A mortgage loan that is extended is treated as a new loan and the borrower is required to pay all fees associated with the funding of a new loan, including origination fees.
Credit risk profile of the Company’s mortgage loan portfolio as of September 30, 2019 and December 31, 2018 is as follows:
The following are the maturities of mortgage loans receivable as of September 30:
At September 30, 2019, of the 432 mortgage loans in the Company’s mortgage loan portfolio, sixteen (16) have been referred to counsel for collection and are currently the subject of foreclosure proceedings, of which eight (8) had already been subject to foreclosure proceeding on July 1, 2019. The aggregate outstanding principal balance and the accrued but unpaid interest as of September 30, 2019 on these sixteen loans was approximately $7.9 million. At September 30, 2018, of the 395 mortgage loans in the Company’s portfolio, ten (10) had been referred to counsel for collection and were the subject of foreclosure proceedings. The aggregate outstanding principal balance and the accrued but unpaid interest as of September 30, 2018 on these ten loans was approximately $5.2 million. In the case of each of these loans, at September 30, 2019 and 2018, the Company believes that the value of the collateral exceeds the outstanding balance on such loan.
The entire disclosure for investment in mortgage loan on real estate by entity with substantial portion of business acquiring and holding investment real estate or interest in real estate. Includes, but is not limited to, information for each mortgage loan receivable equaling or exceeding three percent of carrying amount of mortgage.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef