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 years ended December 31, 2018 and 2017, the aggregate amounts of loans funded by the Company were $42,078,191 and $53,468,949, respectively, offset by principal repayments of $24,641,469 and $23,948,601, respectively.

 

As of December 31, 2018, the Company’s mortgage loan portfolio included closed loans ranging in size from $8,113 to $2,038,586 with stated interest rates ranging from 5.0% to 12.5% and a default interest rate for non-payment of 18%.

 

At December 31, 2018 and 2017, 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. The Company will agree to extend the term of a loan if, at the time of the extension, the loan and the borrower meets all of the Company’s underwriting requirements. The Company treats a loan extension as a new loan.

 

Credit risk profile based on loan activity as of December 31, 2018 and 2017 :

 

 

As of December 31, 2018, the following is the maturities of mortgages receivable for the years ending December 31:

 

 

At December 31, 2018, of the 403 mortgage loans in the Company’s portfolio, 13 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 December 31, 2018 was approximately $5.1 million. The non-performing loans have all been 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.

 

At December 31, 2017, of the 337 mortgage loans in the Company’s portfolio, 12 were treated by the Company as non-performing. The aggregate outstanding principal balance of these non-performing loans and the accrued but unpaid interest as of December 31, 2017 was approximately $2.2 million. By the end of 2018, the Company sold five properties, two were refinanced by third party lenders at no loss to the Company and two are still in foreclosure. The Company recorded a net aggregate gain on the sale of those five properties of approximately $. Of the three remaining properties all three are held for sale.