4.    Mortgages Receivable

Mortgages Receivable

The Company offers short-term 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. 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 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 six-month periods ended June 30, 2021 and 2020, the aggregate amounts of loans funded by the Company were $75,190,172 and $42,303,747, respectively, offset by principal repayments of $58,012,498 and $25,417,062, respectively.

At June 30, 2021, the Company’s portfolio included loans with outstanding principal balances up to approximately $9.8 million, with stated interest rates ranging from 5.0% to 13.0% and a default interest rate for non-payment of 18%.

At June 30, 2021, no single borrower had loans outstanding representing more than 10% of the total balance of the loans outstanding.

The Company will extend the term of a loan if, at the time of the extension, the loan and the borrower satisfy the Company’s underwriting requirements at the time of the extension. The Company treats a loan extension as a new loan.

Credit Risk

Credit risk profile based on loan activity as of June 30, 2021 and December 31, 2020:

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The following are the maturities of mortgages receivable as of June 30:

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At June 30, 2021, of the 477 mortgage loans in the Company’s portfolio, 12 were the subject of foreclosure proceedings. The aggregate outstanding balances due on these loans as of June 30, 2021, including unpaid principal, accrued but unpaid interest and borrower fees, was approximately $2.63 million. In the case of each of these loans, the Company believes the value of the collateral exceeds the total amount due.