Korth Direct Mortgage

KDM originates and funds CM Loans made to borrowers; the loans are held by KDM as lender. KDM also services its loans, though it may use a sub-servicer for some loans. KDM funds its loans directly in the capital markets through issuance of Mortgage Secured Notes (“MSNs” or “Notes”). The MSNs are special obligations of KDM, payable to the extent that the underlying mortgage is paid by the borrower. MSNs are secured by KDM’s interest in the underlying Corresponding Mortgage Loan (“CM Loan”). CM Loans are secured obligations of the borrowers that are generally a single-purpose entity formed or existing that owns the underlying property that is financed.