9. Commitments and Contingencies

 

Origination Fees

 

Loan origination fees consist of points, generally 2%–5% of the original loan principal. Pursuant to SCP’s operating agreement, the Manager was entitled to 75% of loan origination fees. For the years ended December 31, 2017 and 2016, loan origination fees paid to the Manager were $52,902 and $636,260, 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, the Manager is no longer entitled to origination fee payments.

 

Original maturities of deferred revenue are as follows as of:

 

 

In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is generally recognized in full at the time of repayment. If the borrower is entitled to a partial refund of the origination fee collected in connection with a prepaid loan, the Company credits the refundable portion against the balance due on the loan. During the year ended December 31, 2017, approximately $74,000 of origination fees were refunded in connection with prepaid loans.

 

Loan Servicing Fees

 

Prior to the Exchange, the Manager was responsible for servicing SCP’s mortgage loan portfolio and for administration of the affairs of SCP for which it received compensation. At the Manager’s discretion, the loan servicing fee ranges from one-twelfth (1/12th) of one-half percent (0.5%) to one percent (1.0%) of the 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 year ended December 31, 2016.

 

For the years ended December 31, 2017 and 2016, loan servicing fees paid to the Manager were $32,778, and $295,035, respectively.

 

Other Manager Compensation

 

The Manager was also entitled to fees for other services performed such as inspection fees. For the years ended December 31, 2017 and 2016, fees remitted to the Manager for such services were $3,069 and $55,194, respectively.

 

Unfunded Commitments

 

At December 31, 2017, the Company is committed to an additional $3,356,143 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. At December 31, 2017, there were approximately eight of such properties, representing approximately $1.06 million of mortgages receivable.