Registration statement for securities to be issued by real estate companies

Commitments and Contingencies

Commitments and Contingencies

3 Months Ended

12 Months Ended

Mar. 31, 2017

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

7.	Commitments and Contingencies

Loan Brokerage Commissions/Origination Fees Paid to JJV

Loan origination fees consist of points, generally 2%-5% of the original loan principal. Pursuant to the Company’s operating agreement and prior to the Exchange, JJV is entitled to 75% of loan origination fees. For the three months March 31, 2017 and 2016, loan origination fees paid to JJV were $79,341 and $117,221, respectively. These payments are amortized over the life of the loan for financial statement purposes and recognized as a reduction of origination fee income. After the Exchange, JJV is no longer entitled to origination fee payments.

Original maturities of deferred revenue are as follows as of:

December 31,
2017	$	276,061
2018		85,761
2019		40,944
Total	$	402,766

In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in full.

Loan Servicing Fees

JJV administered the servicing of the Company’s loan portfolio. At JJV’s discretion, the loan servicing fee ranged from one-twelfth (1/12 th) of one-half percent (0.5%) to one percent (1.0%) of the Company’s loan portfolio, payable monthly and calculated based on total loans as of the first of each month. The percentage charged by the Manager was 1.0% for the March 31, 2017 period up to the date of the Exchange and 1.0% for the March 2016 period. After the Exchange, JJV is no longer entitled to loan servicing fees.

For the three months ended March 31, 2017 and 2016, loan servicing fees paid to JJV were $32,778 and $55,456 respectively.

Unfunded Commitments

At March 31, 2017, the Company is committed to an additional $3,109,446 in construction loans that can be drawn by the borrower when certain conditions are met.

Other

In the normal course of its business, the Company is named as a party-defendant because it is a mortgagee having interests in real properties that are being foreclosed upon, primarily resulting from unpaid property taxes. The Company actively monitors these actions and in all cases, there remains sufficient value in the subject property to assure that no loan impairment exists.

Commitments and Contingencies

Compensation to Manager

The Company’s operating agreement provides for the Manager to receive fees for various services performed for or on behalf of the Company. Pursuant to the Company’s operating agreement, the Manager may choose to defer all or a portion of these fees.

Loan Brokerage Commissions/Origination Fees Paid to Manager

Loan origination fees consist of points, generally 2%-5% of the original loan principal. Pursuant to the Company’s operating agreement, the Manager is entitled to 75% of loan origination fees. For the years ended December 31, 2016 and 2015, loan origination fees paid to the Manager were $636,260 and $541,600, respectively. These payments are amortized over the life of the loan for financial statement purposes and recognized as a reduction of origination fee income.

Activity related to origination fees for the year ended December 31, 2016 is as follows:

	Deferred Revenue, Beginning		Gross Origination Fee Income		Amortization of Deferred Revenue		Deferred Revenue Ending
Manager’s Share			$	636,260
Company’s Share	$	190,017		187,748	$	162,264	$	215,501
Total	$	190,017	$	824,008	$	162,264	$	215,501

Activity related to origination fees for the year ended December 31, 2015 is as follows:

	Deferred Revenue, Beginning		Gross Origination Fee Income		Amortization of Deferred Revenue		Deferred Revenue Ending
Manager’s Share			$	541,600
Company’s Share	$	118,718		179,684	$	108,385	$	190,017
Total	$	118,718	$	721,284	$	108,385	$	190,017

Original maturities of deferred revenue are as follows as of:

December 31,
2017	$	124,800
2018		62,491
2019		28,210
Total	$	215,501

In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in full.

Management Fees

Pursuant to the Company’s operating agreement, the Manager is entitled to an annual management fee equal to one percent (1%) of the Company’s total assets. The management fee is payable monthly with each payment calculated as one-twelfth of one percent of the total assets of the Company as of the first of each month. For the years ended December 31, 2016 and 2015, the Manager agreed to forego the management fees. These fees will not be collected at a future date, and no expenses were incurred during those periods.

Loan Servicing Fees

The Manager administers the servicing of the Company’s loan portfolio. At the Manager’s discretion, the loan servicing fee ranges from one-twelfth (1/12 th) of one-half percent (0.5%) to one percent (1.0%) of the Company’s loan portfolio, payable monthly and calculated based on total loans as of the first of each month. The percentage charged by the Manager was 0.75% through August 2015 then 1.0% for the balance of 2015 and 1.0% for the year ended December 31, 2016.

For the years ended December 31, 2016 and 2015, loan servicing fees paid to the Manager were $295,035, and $164,853, respectively.

Other Manager Compensation

The Manager is also entitled to fees for other services performed such as inspection fees. For the years ended December 31, 2016 and 2015, fees remitted to the Manager for such services were $55,194 and $45,824, respectively.

Unfunded Commitments

At December 31, 2016, the Company is committed to an additional $1,616,735 in construction loans that can be drawn by the borrower when certain conditions are met.

Other

In the normal course of its business, the Company is named as a party-defendant because it is a mortgagee having interests in real properties that are being foreclosed upon, primarily resulting from unpaid property taxes. The Company actively monitors these actions and in all cases there remains sufficient value in the subject property to assure that no loan impairment exists.