Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2017shares | |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2017 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | CK0001448038 |
Entity Registrant Name | Redwood Mortgage Investors IX |
Entity Central Index Key | 1,448,038 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 0 |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
ASSETS | ||
Cash and cash equivalents | $ 5,813,584 | $ 2,194,854 |
Loans | ||
Principal | 53,091,886 | 40,123,393 |
Advances | 14,668 | 24,550 |
Accrued interest | 382,817 | 287,767 |
Loan balances secured by deeds of trust | 53,489,371 | 40,435,710 |
Loan administrative fees, net | 13,252 | 30,282 |
Total loans | 53,502,623 | 40,465,992 |
Other assets | 5,000 | 5,000 |
Total assets | 59,321,207 | 42,665,846 |
Liabilities | ||
Accounts payable and accrued liabilities | 42,549 | 89 |
Investors in applicant status | 4,803,450 | 1,408,185 |
Members’ capital, net | 58,210,576 | 43,777,010 |
Receivable from manager (formation loan) | (3,735,368) | (2,519,438) |
Members’ capital, net, less formation loan | 54,475,208 | 41,257,572 |
Total liabilities, investors in applicant status and members’ capital | $ 59,321,207 | $ 42,665,846 |
Statements of Income (Unaudited
Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues, net | ||||
Interest income | $ 1,074,539 | $ 696,544 | $ 2,850,783 | $ 1,917,460 |
Late fees | 11,326 | 4,539 | 19,153 | 11,352 |
Total revenues | 1,085,865 | 701,083 | 2,869,936 | 1,928,812 |
Operations Expense | ||||
Mortgage servicing fees | 30,627 | 20,228 | 81,795 | 55,749 |
Professional services, net (Note 3) | 45,794 | 48,158 | 4,500 | |
Other | 1,771 | 1,663 | 5,896 | 5,849 |
Total operations expense | 78,192 | 21,891 | 135,849 | 66,098 |
Net income | 1,007,673 | 679,192 | 2,734,087 | 1,862,714 |
Members (99%) | 997,596 | 672,400 | 2,706,746 | 1,844,086 |
Managers (1%) | $ 10,077 | $ 6,792 | $ 27,341 | $ 18,628 |
Statements of Income (Unaudite4
Statements of Income (Unaudited) (Parenthetical) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Members investment | 99.00% | 99.00% | 99.00% | 99.00% |
Managers investment | 1.00% | 1.00% | 1.00% | 1.00% |
Statement of Changes in Members
Statement of Changes in Members' Capital (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 96 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | ||
Beginning balance | $ 41,257,572 | |||
Net income | $ 1,007,673 | 2,734,087 | ||
Early withdrawal penalties | [1] | 6,291 | $ 14,148 | |
Ending balance | 54,475,208 | 54,475,208 | 54,475,208 | |
Investors In Applicant Status [Member] | ||||
Beginning balance | 3,064,747 | 1,408,185 | ||
Early withdrawal penalties | 0 | 0 | ||
Ending balance | 4,803,450 | 4,803,450 | 4,803,450 | |
Investors In Applicant Status [Member] | Contributions On Application [Member] | ||||
Partners capital accounts | 7,332,050 | 17,507,324 | ||
Investors In Applicant Status [Member] | Contributions Admitted To Members Capital | ||||
Partners capital accounts | (5,655,983) | (14,190,109) | ||
Investors In Applicant Status [Member] | Premiums Paid On Application By RMC [Member] | ||||
Partners capital accounts | 86,450 | 112,014 | ||
Investors In Applicant Status [Member] | Premiums Admitted To Members Capital | ||||
Partners capital accounts | (23,814) | (33,964) | ||
Capital Members [Member] | ||||
Beginning balance | 54,391,904 | 45,405,776 | ||
Net income | 997,596 | 2,706,746 | ||
Organization and offering expenses allocated | (59,367) | (162,851) | ||
Early withdrawal penalties | 0 | 0 | ||
Ending balance | 60,238,270 | 60,238,270 | 60,238,270 | |
Capital Members [Member] | Contributions Admitted To Members Capital | ||||
Partners capital accounts | 5,655,983 | 14,190,109 | ||
Capital Members [Member] | Premiums Admitted To Members Capital | ||||
Partners capital accounts | 23,814 | 33,964 | ||
Capital Members [Member] | Earnings Distributed To Members [Member] | ||||
Partners capital accounts | (943,602) | (2,539,413) | ||
Capital Members [Member] | Earnings Distributed Used In DRIP [Member] | ||||
Partners capital accounts | 518,742 | 1,404,201 | ||
Capital Members [Member] | Member's Redemptions [Member] | ||||
Partners capital accounts | (346,800) | (800,262) | ||
Managers Capital Net [Member] | ||||
Beginning balance | 95,773 | 69,965 | ||
Net income | 10,077 | 27,341 | ||
Early withdrawal penalties | 0 | 0 | ||
Ending balance | 111,530 | 111,530 | 111,530 | |
Managers Capital Net [Member] | Contributions Admitted To Members Capital | ||||
Partners capital accounts | 5,680 | 14,224 | ||
Unallocated Syndication Costs Members [Member] | ||||
Beginning balance | (1,962,368) | (1,698,731) | ||
Organization and offering expenses | (254,887) | (639,280) | ||
Organization and offering expenses allocated | 59,367 | 162,851 | ||
Early withdrawal penalties | 5,564 | 6,291 | ||
Ending balance | (2,139,224) | (2,139,224) | (2,139,224) | |
Unallocated Syndication Costs Members [Member] | Manager Reimbursement For Unallocated Organization And Offering Cost On Redemptions [Member] | ||||
Partners capital accounts | 13,100 | 29,645 | ||
Members Capital, Net [Member] | ||||
Beginning balance | 52,525,309 | 43,777,010 | ||
Net income | 1,007,673 | 2,734,087 | ||
Organization and offering expenses | (254,887) | (639,280) | ||
Early withdrawal penalties | 5,564 | 6,291 | ||
Ending balance | 58,210,576 | 58,210,576 | $ 58,210,576 | |
Members Capital, Net [Member] | Contributions Admitted To Members Capital | ||||
Partners capital accounts | 5,661,663 | 14,204,333 | ||
Members Capital, Net [Member] | Premiums Admitted To Members Capital | ||||
Partners capital accounts | 23,814 | 33,964 | ||
Members Capital, Net [Member] | Earnings Distributed To Members [Member] | ||||
Partners capital accounts | (943,602) | (2,539,413) | ||
Members Capital, Net [Member] | Earnings Distributed Used In DRIP [Member] | ||||
Partners capital accounts | 518,742 | 1,404,201 | ||
Members Capital, Net [Member] | Member's Redemptions [Member] | ||||
Partners capital accounts | (346,800) | (800,262) | ||
Members Capital, Net [Member] | Manager Reimbursement For Unallocated Organization And Offering Cost On Redemptions [Member] | ||||
Partners capital accounts | $ 13,100 | $ 29,645 | ||
[1] | Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operations | ||||
Interest received | $ 1,038,252 | $ 690,103 | $ 2,755,734 | $ 1,887,752 |
Other loan income | 11,376 | 4,589 | 19,253 | 11,502 |
Loan administrative fee reimbursed (paid) | 3,569 | 17,030 | 21,044 | |
Operations expense | (25,635) | (17,775) | (77,748) | (68,148) |
Net cash provided by (used in) operations | 1,027,562 | 676,917 | 2,714,269 | 1,852,150 |
Investing – loan principal/advances | ||||
Principal collected on loans | 5,802,607 | 4,105,589 | 17,921,395 | 14,611,262 |
Loans originated | (12,403,750) | (7,620,750) | (31,889,883) | (21,788,250) |
Loans sold to Affiliates | 999,995 | |||
Advances on loans | 18,837 | 311 | 9,881 | 1,976 |
Total cash provided by (used in) investing | (6,582,306) | (3,514,850) | (12,958,612) | (7,175,012) |
Contributions by members, net | ||||
Organization and offering expenses paid, net | (241,787) | (121,616) | (609,637) | (358,351) |
Formation loan funding | (505,263) | (273,910) | (1,225,582) | (689,746) |
Total cash provided by members, net | 6,677,276 | 3,530,395 | 15,798,547 | 8,980,566 |
Distributions to members | ||||
Distributions to Member | (771,660) | (486,531) | (1,935,474) | (1,370,896) |
Total cash provided by (used in) financing | 5,905,616 | 3,043,864 | 13,863,073 | 7,609,670 |
Net increase (decrease) in cash | 350,872 | 205,931 | 3,618,730 | 2,286,808 |
Cash, beginning of period | 5,462,712 | 3,889,716 | 2,194,854 | 1,808,839 |
Cash, end of period | 5,813,584 | 4,095,647 | 5,813,584 | 4,095,647 |
Net income | 1,007,673 | 679,192 | 2,734,087 | 1,862,714 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities | ||||
Amortization of loan administrative fees | 9,799 | 28,139 | ||
Change in operating assets and liabilities | ||||
Accrued interest | (36,288) | (16,239) | (95,051) | (57,847) |
Receivable from affiliate | 3,541 | |||
Loan administrative fees reimbursed (paid) | 3,569 | 17,030 | 21,044 | |
Accounts payable | 38,483 | 42,257 | ||
Other | 14,125 | 624 | 15,946 | (1,900) |
Total adjustments | 19,889 | (2,275) | (19,818) | (10,564) |
Net cash provided by (used in) operations | 1,027,562 | 676,917 | 2,714,269 | 1,852,150 |
Members Equity Contributions [Member] | ||||
Contributions by members, net | ||||
Contributions by members/manager | 7,424,326 | 3,925,921 | 17,633,766 | 10,028,663 |
Earnings Distributed To Members [Member] | ||||
Distributions to members | ||||
Distributions to Member | (424,860) | (278,011) | (1,135,212) | (770,251) |
Member's Redemptions [Member] | ||||
Distributions to members | ||||
Distributions to Member | $ (346,800) | $ (208,520) | $ (800,262) | $ (600,645) |
Organization and General
Organization and General | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Organization and General | NOTE 1 – ORGANIZATION AND GENERAL In the opinion of the manager, the accompanying unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial information included therein. These financial statements should be read in conjunction with the audited financial statements included in the company’s Form 10-K for the fiscal year December 31, 2016 filed with the U.S. Securities and Exchange Commission (or SEC). The results of operations for the three and nine month periods ended September 30, 2017 are not necessarily indicative of the operations results to be expected for the full year. Redwood Mortgage Investors IX, LLC (or we, RMI IX or the company) is a Delaware limited liability company formed in October 2008 to engage in business as a mortgage lender and investor by making and holding-for-investment mortgage loans secured by California real estate, primarily through first and second deeds of trust. Our primary investment objectives are to • Yield a favorable rate of return from the company’s business of making and/or investing in loans, • Preserve and protect the company’s capital by making and/or investing in loans secured by California real estate, preferably income-producing properties geographically situated in the San Francisco Bay Area and the coastal metropolitan regions of Southern California, and • Generate and distribute cash flow from these mortgage lending and investing activities. The ongoing sources of funds for loans are the proceeds (net of redemption of members’ capital) from • sale of members’ units (net of reimbursement to RMC of organization and offering expenses), including units sold by reinvestment of distributions, • loan payoffs, • borrowers’ monthly principal and interest payments, and • to a lesser degree and, if obtained, a line of credit. Profits and losses are allocated among the members according to their respective capital accounts monthly after one percent (1%) of the profits and losses are allocated to the manager. The monthly results are subject to subsequent adjustment as a result of quarterly and year-end accounting and reporting. Investors should not expect the company to provide tax benefits of the type commonly associated with limited liability company tax shelter investments. Federal and state income taxes are the obligation of the members, if and when taxes apply, other than the annual California franchise tax and any California LLC cash receipts taxes paid by the company. The company is externally managed by Redwood Mortgage Corp. (or RMC or the manager). The manager is solely responsible for managing the business and affairs of the company, subject to the voting rights of the members on specified matters. The manager acting alone has the power and authority to act for and bind the company. RMC provides the personnel and services necessary for us to conduct our business as we have no employees of our own. The mortgage loans the company funds and/or invests in are arranged and generally are serviced by RMC. The manager is required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members. The rights, duties and powers of the members and manager of the company are governed by the company’s operating agreement, the Delaware Limited Liability Company Act and the California Revised Uniform Limited Liability Company Act. Members should refer to the company’s operating agreement for complete disclosure of its provisions. Members representing a majority of the outstanding units may, without the concurrence of the manager, vote to: (i) dissolve the company, (ii) amend the operating agreement, subject to certain limitations, (iii) approve or disapprove the sale of all or substantially all of the assets of the company or (iv) remove or replace one or all of the managers. Where there is only one manager, a majority in interest of the members is required to elect a new manager to continue the company business after a manager ceases to be a manager due to its withdrawal. Distribution policy Cash available for distribution at the end of each calendar month is allocated ninety-nine percent (99%) to the members and one percent (1%) to the manager. Cash available for distribution means cash flow from operations (excluding repayments for loan principal and other capital transaction proceeds) less amounts set aside for creation or restoration of reserves. The manager may withhold from cash available for distribution otherwise distributable to the members with respect to any period the respective amounts of organization and offering expenses allocated to the members for the applicable period pursuant to the company’s reimbursement and allocation of organization and offering expenses policy. Per the terms of the company’s operating agreement, cash available for distribution allocated to the members is allocated among the members in proportion to their percentage interests (except with respect to differences in the amounts of organization and offering expenses allocated to the respective members during the applicable period) and in proportion to the number of days during the applicable month that they owned such percentage interests. Cash available for distributions allocable to members other than those participating in the distribution reinvestment plan (DRIP) and the manager, is distributed at the end of each calendar month. Cash available for distribution allocable to members who participate in the DRIP is used to purchase additional units at the end of each calendar month. The manager’s allocable share of cash available for distribution is also distributed not more frequently than with cash distributions to members. To determine the amount of cash to be distributed in any specific month, the company relies in part on its annual forecast of profits, which takes into account the difference between the forecasted and actual results in the prior year and the requirement to maintain a cash reserve. Distribution reinvestment plan The DRIP provision of the operating agreement permits members to elect to have all or a portion of their monthly distributions reinvested in additional units. Members may withdraw from the DRIP with written notice. Liquidity and unit redemption program There is no established public trading and/or secondary market for the units and none is expected to develop. There are substantial restrictions on transferability of units. In order to provide liquidity to members, the company’s operating agreement includes a unit redemption program, whereby beginning one year from the date of purchase of the units, a member may redeem all or part of their units, subject to certain limitations. The price paid for redeemed units is based on the lesser of the purchase price paid by the redeeming member or the member’s capital account balance as of the date of each redemption payment. Redemption value is calculated based on the period from date of purchase as follows: • After one year, 92% of the purchase price or of the capital account balance, whichever is less; • After two years, 94% of the purchase price or of the capital account balance, whichever is less; • After three years, 96% of the purchase price or of the capital account balance, whichever is less; • After four years, 98% of the purchase price or of the capital account balance, whichever is less; • After five years, 100% of the purchase price or of the capital account balance, whichever is less. The company redeems units quarterly, subject to certain limitations as provided for in the operating agreement. The number of units that may be redeemed per quarter per individual member is subject to a maximum of the greater of 100,000 units or 25% of the member’s units outstanding. For redemption requests requiring more than one quarter to fully redeem, the percentage discount amount that, if any, applies when the redemption payments begin continues to apply throughout the redemption period and applies to all units covered by such redemption request regardless of when the final redemption payment is made. The company has not established a cash reserve from which to fund redemptions. The company’s capacity to redeem units upon request is limited by the availability of cash and the company’s cash flow. The company will not, in any calendar year, redeem more than five percent (5%) of the weighted average number of units outstanding during the twelve-month period immediately prior to the date of the redemption. Manager’s interest If a manager is removed, withdrawn or terminated, the company will pay to the manager all amounts then accrued and owing to the manager. Additionally, the company will terminate the manager’s interest in the company’s profits, losses, distributions and capital by payment of an amount in cash equal to the then-present fair value of such interest. Unit sales commissions paid to broker-dealers/formation loan Commissions for unit sales to be paid to broker-dealers (B/D sales commissions) are paid by RMC and are not paid directly by the company out of offering proceeds. Instead, the company advances to RMC, from offering proceeds, amounts sufficient to pay the B/D sales commissions and premiums to be paid to investors. Such advances in total may not exceed seven percent (7%) of offering proceeds. The receivable arising from the advances is unsecured, and non-interest bearing and is referred to as the “formation loan.” As of September 30, 2017 the company had made such advances of $4,375,935, of which $3,735,368 remain outstanding on the formation loan. Term of the company The term of the company will continue until 2028, unless sooner terminated as provided in the operating agreement. Ongoing public offering of units/ SEC Registrations Gross proceeds from sales of units from inception (October, 2009) through September 30, 2017 are summarized below. Proceeds From investors - admitted $ 57,898,707 From members under our DRIP 5,649,645 From premiums paid by RMC (1) 195,724 Gross proceeds from unit sales $ 63,744,076 (1) If a member acquired units through an unsolicited sale (i.e. without broker/dealer) the member’s capital account is credited with their capital contribution plus a premium paid by RMC equal to the amount of the sales commissions that otherwise would have been paid to a broker-dealer by RMC. This premium is reported in the year paid as taxable income to the member. As of September 30, 2017, we had sold approximately 63,744,000 units– 39,407,000 units under our previous registration statements and 24,337,000 units under our current registration statement which was effective on June 6, 2016, for gross proceeds from unit sales (including units issued under our distribution reinvestment plan) of approximately $63,744,000 - $39,407,000 and $24,337,000, respectively. Use of Proceeds from sale of units We will use the proceeds from the sale of the units to • make additional loans, • fund working capital reserves, • pay RMC up to 4.5% of proceeds from sale of units for organization and offering expenses, and • fund a formation loan to RMC at up to 7% of proceeds from sale of units. Total estimated expenses incurred with respect to the offering and sale of our units from program inception through September 30, 2017 were approximately $2,614,000, including brokers’ reimbursement to brokers for certain expenses. Broker commissions and premiums paid to certain investors upon the purchase of units will be paid by RMC from funds advanced by the company from offering proceeds, which we refer to as the “formation loan”. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Management estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Such estimates relate principally to the determination of the allowance for loan losses, including, when applicable, the valuation of impaired loans (which itself requires determining the fair value of the collateral), and the valuation of real estate held for sale and held as investment, at acquisition and subsequently. Actual results could differ significantly from these estimates. Fair value estimates GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact. Fair values of assets and liabilities are determined based on the fair-value hierarchy established in GAAP. The hierarchy is comprised of three levels of inputs to be used: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. • Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly in active markets and quoted prices for identical assets or liabilities that are not active, and inputs other than quoted prices that are observable or inputs derived from or corroborated by market data. • Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the company’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the company’s own data. The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values and publicly available information on in-market transactions. Appraisals of commercial real property generally present three approaches to estimating value: 1) market comparables or sales approach; 2) cost to replace and 3) capitalized cash flows or investment approach. These approaches may or may not result in a common, single value. The market-comparables approach may yield several different values depending on certain basic assumptions, such as, determining highest and best use (which may or may not be the current use); determining the condition (e.g. as-is, when-completed or for land when-entitled); and determining the unit of value (e.g. as a series of individual unit sales or as a bulk disposition). Management has the requisite familiarity with the real estate markets it lends in generally and of the properties lent on specifically to analyze sales-comparables and assess their suitability/applicability. Management is acquainted with market participants – investors, developers, brokers, lenders – that are useful, relevant secondary sources of data and information regarding valuation and valuation variability. These secondary sources may have familiarity with and perspectives on pending transactions, successful strategies to optimize value and the history and details of specific properties – on and off the market – that enhance the process and analysis that is particularly and principally germane to establishing value in distressed markets and/or property types. Cash and cash equivalents The company considers all highly liquid financial instruments with maturities of three months or less at the time of purchase to be cash equivalents. Periodically, company cash balances in banks exceed federally insured limits. Loans and interest income Loans generally are stated at the unpaid principal balance (principal). Management has discretion to pay amounts (advances) to third parties on behalf of borrowers to protect the company’s interest in the loan. Advances include, but are not limited to, the payment of interest and principal on a senior lien to prevent foreclosure by the senior lien holder, property taxes, insurance premiums and attorney fees. Advances generally are stated at the unpaid principal balance and accrue interest until repaid by the borrower. The company may fund a specific loan origination net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. As monthly interest payments become due, the company funds the payments into the affiliated trust account. In the event of an early loan payoff, any unapplied interest reserves would be first applied to any accrued but unpaid interest and then as a reduction to the principal. If events and or changes in circumstances cause management to have serious doubts about the collectability of the payments of interest and principal in accordance with the loan agreement, a loan may be designated as impaired. Impaired loans are included in management’s periodic analysis of recoverability. Any subsequent payments on impaired loans are applied to accrued interest, then to advances, then to late fees, and lastly to principal. From time to time, the company negotiates and enters into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. In the normal course of the company’s operations, loans that mature may be renewed at then current market rates and terms for new loans. Such renewals are not designated as impaired, unless the renewed loan was previously designated as impaired. Interest is accrued daily based on the principal of the loans. An impaired loan continues to accrue as long as the loan is in the process of collection and is considered to be well-secured. Loans are placed on non-accrual status at the earlier of management’s determination that the primary source of repayment will come from the foreclosure and subsequent sale of the collateral securing the loan (which usually occurs when a notice of sale is filed) or when the loan is no longer considered well-secured. When a loan is placed on non-accrual status, the accrual of interest is discontinued; however, previously recorded interest is not reversed. A loan may return to accrual status when all delinquent interest and principal payments become current in accordance with the terms of the loan agreement. Loan administrative fees paid to RMC for loans funded or invested in by the company are capitalized and amortized over the life of the loan on a straight-line method which approximates the effective interest method. Allowance for loan losses Loans and the related accrued interest and advances (i.e. the loan balance) are analyzed on a periodic basis for ultimate recoverability. Delinquencies are identified and followed as part of the loan system of record. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the arithmetic difference between the fair value of the collateral, net of any senior liens, and the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon. This computation is done for each loan (whether impaired or performing), and while loans secured by collateral of similar property type are grouped, there is enough distinction and variation in the collateral that a loan-by-loan, collateral-by-collateral analysis is appropriate. For loans designated impaired, a provision is made for loan losses to adjust the allowance for loan losses to an amount such that the net carrying amount (unpaid principal less the specific allowance) is reduced to the lower of the loan balance or the estimated fair value of the related collateral, net of any senior loans and net of any costs to sell in arriving at net realizable value. Loans determined not to be individually impaired are grouped by the property type of the underlying collateral, and for each loan and for the total by property type, the amount of protective equity or amount of exposure to loss ( i.e., the dollar amount of the deficiency of the fair value of the underlying collateral to the loan balance) is computed. The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible. At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value is charged against the allowance for loan losses. Real estate owned (REO) Real estate owned, or REO, is property acquired in full or partial settlement of loan obligations generally through foreclosure, and is recorded at acquisition at the lower of the amount owed on the loan (legal basis), plus any senior indebtedness, or at the property’s net realizable value, which is the fair value less estimated costs to sell, as applicable. The fair value estimates are derived from information available in the real estate markets including similar property, and often require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The estimates figure materially in calculating the value of the property at acquisition, the level of charge to the allowance for loan losses and any subsequent valuation reserves. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, REO is analyzed periodically for changes in fair values and any subsequent write down is charged to operations expenses. Any recovery in the fair value subsequent to such a write down is recorded and is not to exceed the value recorded at acquisition. Recognition of gains on the sale of real estate is dependent upon the transaction meeting certain criteria related to the nature of the property and the terms of the sale including potential seller financing. Recently issued accounting pronouncements -Accounting and Financial reporting for Expected Credit Losses The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that significantly changes how entities will account for credit losses for most financial assets that are not measured at fair value through net income. The new standard will supersede currently in effect guidance and applies to all entities. Entities will be required to use a current expected credit loss (CECL) model to estimate credit impairment. This estimate will be forward-looking, meaning management will be required to use forecasts about future economic conditions to determine the expected credit loss over the remaining life of an instrument. This will be a significant change from today’s incurred credit loss model, and generally may result in allowances being recognized in earlier periods than under the current credit loss model. RMI IX invests in real estate secured loans made with the expectation of zero credit losses as a result of substantial protective equity provided by the underlying collateral. For a loss to be recognized under the CECL or incurred loss model, if the lending/loan-to-value guidelines are followed effectively, an intervening, subsequent-to-loan-funding, event must negatively impact the value of the underlying collateral of the loan in an amount greater than the amount of protective equity provided by the collateral. Such an event would be either (or both) of: 1) An uninsured event(s) specifically impacting the collateral or 2) A non-temporary decline in values in the applicable real estate market. In both of these instances the treatment would be the same in the incurred loss and CECL models of approximately the same amount. Other than in these events, the probable of occurrence criteria of the incurred loss model is not triggered and a loss is not recognized. Further, if the zero-expected-loss lending guideline is preserved and the protective equity provided by the collateral is not expected to be impaired over the life of the loans, then a loss is not required to be recognized under the CECL model. This convergence between the CECL and incurred loss models as to loss recognition – as an event driven occurrence – in low LTV, real estate secured programs caused RMC to conclude that the CECL model will not materially impact the reported results of operations or financial position as compared to that which would be reported in the incurred loss model. The manager expects to adopt the ASU for interim and annual reporting in 2020. -Accounting and Financial Reporting for Revenue Recognition On May 28, 2014, FASB issued a final standard on revenue from contracts with customers. The standard issued as ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is effective January 2018. The goals of the revenue recognition project are to clarify and converge the revenue recognition principles under U.S. GAAP and to develop guidance that would streamline and enhance revenue recognition requirements. A core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Revenue is recognized when a performance obligation is satisfied by transferring goods or services to a customer. The FASB intentionally used the wording “be entitled” rather than “receive” or “collect” to distinguish collectability risk from other uncertainties that may exist under a contract. RMC management’s preliminary evaluation is that the new revenue standard will not have an impact on the company’s current revenue recognition policies. The scope of guidance is not applicable to financial instruments including loans and therefore will not have an impact on interest income. The company also does not expect that there will be changes to revenue recognition from the sale of REOs, however, there may be an impact to the gain on sale of real estate when the sale is financed by the company. |
Manager and Other Related Parti
Manager and Other Related Parties | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Manager and Other Related Parties | NOTE 3 – MANAGER AND OTHER RELATED PARTIES RMC’s allocated one percent (1%) of the profits and losses was $10,077 and $6,792 for the three months ended and $27,341 and $18,628 for the nine months ended September 30, 2017 and 2016, respectively. The manager, at its sole discretion, provided financial support that improved net income and the return to investors in both 2017 and 2016. Total support provided, as detailed below, was approximately $405,000 and $258,000 for the three months ended and, $1,254,000 and $951,000 for the nine months ended September 30, 2017 and 2016, respectively. At times, to enhance the company’s earnings, RMC has taken several actions, including: • charging less than the maximum allowable fees, • has not requested reimbursement of qualifying expenses, • paying company expenses, such as professional fees, that could have been obligations of the company, and/or • contributing cash to the company that was credited to members’ capital accounts. Such fee waivers and cost actions were not made for the purpose of providing the company with sufficient funds to satisfy withdrawal requests, nor to meet any required level of distributions, as the company has no such required level of distributions. RMC does not use any specific criteria in determining the exact amount of fees to be waived and/or costs to be absorbed. Any decision to waive fees and/or to absorb costs, and the amount (if any) to be waived or absorbed, is made by RMC in its sole discretion. Fees waived and costs reimbursements for the three and nine months ended September 30, 2017 are presented in the following tables. Operating Expenses Loan Admin Fees Mortgage Servicing Fees Asset Management Fee Cost Reimbursements Professional Services Other Total For the three months ended Chargeable/reimbursable $ 124,038 $ 30,627 $ 106,800 $ 146,558 $ 69,944 $ 5,340 $ 483,307 RMC Support Waived (124,038 ) — (106,800 ) (146,558 ) — — (377,396 ) Cost absorbed by RMC — — — — (24,150 ) (3,569 ) (27,719 ) Total RMC support (124,038 ) — (106,800 ) (146,558 ) (24,150 ) (3,569 ) (405,115 ) Net charged $ — $ 30,627 $ — $ — $ 45,794 $ 1,771 $ 78,192 Operating Expenses Loan Admin Fees Mortgage Servicing Fee Asset Management Fee Cost Reimbursements Professional Services Other Total For the nine months ended Chargeable/reimbursable $ 318,899 $ 81,795 $ 288,194 $ 364,904 $ 303,035 $ 32,875 $ 1,389,702 RMC Support Waived (318,899 ) — (288,194 ) (364,904 ) — — (971,997 ) Cost absorbed by RMC — — — — (254,877 ) (26,979 ) (281,856 ) Total RMC support (318,899 ) — (288,194 ) (364,904 ) (254,877 ) (26,979 ) (1,253,853 ) Net charged $ — $ 81,795 $ — $ — $ 48,158 $ 5,896 $ 135,849 Fees waived and costs reimbursements for the three and nine months ended September 30, 2016 are presented in the following tables. Operating Expenses Loan Admin Fees Mortgage Servicing Fee Asset Management Fee Cost Reimbursements Professional Services Other Total For the three months ended Chargeable/reimbursable $ 76,208 $ 20,228 $ 71,672 $ 67,676 $ 42,298 $ 1,663 $ 279,745 RMC Support Waived (76,208 ) — (71,672 ) (67,676 ) — — (215,556 ) Cost absorbed by RMC — — — — (42,298 ) — (42,298 ) Total RMC support (76,208 ) — (71,672 ) (67,676 ) (42,298 ) — (257,854 ) Net charged $ — $ 20,228 $ — $ — $ — $ 1,663 $ 21,891 Operating Expenses Loan Admin Fees Mortgage Servicing Fee Asset Management Fee Cost Reimbursements Professional Services Other Total For the nine months ended Chargeable/reimbursable $ 217,883 $ 55,749 $ 197,307 $ 189,425 $ 306,472 $ 50,635 $ 1,017,471 RMC Support Waived (196,839 ) — (197,307 ) (189,425 ) — — (583,571 ) Cost absorbed by RMC (21,044 ) — — — (301,972 ) (44,786 ) (367,802 ) Total RMC support (217,883 ) — (197,307 ) (189,425 ) (301,972 ) (44,786 ) (951,373 ) Net charged $ — $ 55,749 $ — $ — $ 4,500 $ 5,849 $ 66,098 • Loan administrative fees RMC is entitled to receive a loan administrative fee in an amount up to one percent (1%) of the principal amount of each new loan originated or acquired on the company’s behalf by RMC for services rendered in connection with the selection and underwriting of potential loans. Such fees are payable by the company upon the closing or acquisition of each loan. Beginning in August 2015, RMC, at its sole discretion, began waiving loan administrative fees. There is no assurance RMC will waive these fees in the future. • Mortgage servicing fees RMC earns mortgage servicing fees from the company of up to one-quarter of one percent (0.25%) annually of the unpaid principal balance of the loan portfolio or such lesser amount as is reasonable and customary in the geographic area where the property securing the mortgage is located. RMC is entitled to receive these fees regardless of whether specific mortgage payments are collected. The mortgage servicing fees are accrued monthly on all loans. Remittance to RMC is made monthly unless the loan has been assigned a specific loss reserve, at which point remittance is deferred until the specific loss reserve is no longer required, or the property has been acquired by the company. To enhance the earnings of the company, RMC, in its sole discretion, may elect to accept less than the maximum amount of the mortgage servicing fee. An increase or decrease in this fee within the limits set by the operating agreement directly impacts the yield to the members. • Asset management fees RMC is entitled to receive a monthly asset management fee for managing the company’s portfolio and operations in an amount up to three-quarters of one percent (0.75%) annually of the portion of the capital originally committed to investment in mortgages, not including leverage, and including up to two percent (2%) of working capital reserves. This amount will be recomputed annually after the second full year of operations by subtracting from the then fair value of the company’s loans plus working capital reserves, an amount equal to the outstanding debt. RMC, at its sole discretion, may elect to accept less than the maximum amount of the asset management fee. An increase or decrease in this fee within the limits set by the operating agreement directly impacts the yield to the members. There is no assurance RMC will decrease or waive these fees in the future. • Costs from RMC, net RMC, per the operating agreement, may request reimbursement by the company for operations expense incurred on behalf of the company, including without limitation, accounting and audit fees, legal fees and expenses, postage and preparation of reports to members and out-of-pocket general and administration expenses. Certain costs (e.g. postage) can be allocated specifically to the company. Other costs are allocated on a pro-rata basis (e.g. by the company’s percentage of total capital of all mortgage funds managed by RMC). Payroll and consulting fees are broken out first based on activity, and then allocated to the company on a pro-rata basis based on percentage of capital to the total capital of all mortgage funds. The decision to request reimbursement of any qualifying charges is made by RMC at its sole discretion. In addition, RMC, at its sole discretion, may elect to reimburse the company for professional services (primarily audit and tax expenses). An increase or decrease in reimbursements by RMC directly impacts the yield to the members. • Professional Services Professional services consist primarily of legal, audit and tax expenses, relating to tax compliance and SEC reporting. Commissions and fees are paid by the borrowers to RMC • Brokerage commissions, loan originations For fees in connection with the review, selection, evaluation, negotiation and extension of loans, RMC may collect a loan brokerage commission that is expected to range from approximately 1.5% to 5% of the principal amount of each loan made during the year. Total loan brokerage commissions are limited to an amount not to exceed 4% of the total company assets per year. The loan brokerage commissions are paid by the borrowers, and thus, are not an expense of the company. • Other fees RMC receives fees for processing, notary, document preparation, credit investigation, reconveyance and other mortgage related fees. The amounts received are customary for comparable services in the geographical area where the property securing the loan is located, payable solely by the borrower and not by the company. In the ordinary course of business, performing loans may be assigned, in-part or in-full, between the affiliated mortgage funds at par. Formation loan Formation loan transactions are presented in the following table for the nine months ended September 30, 2017, and since inception. For the nine months ended Since Inception Balance, beginning of period $ 2,519,438 $ — Formation loan advances to RMC 1,225,582 4,375,935 Payments received from RMC — (618,934 ) Early withdrawal penalties applied (9,652 ) (21,633 ) Balance, September 30, 2017 $ 3,735,368 $ 3,735,368 Subscription proceeds since inception $ 62,622,357 Formation loan advance rate 7 % The estimated future minimum payments on the formation loan as of September 30, 2017 are presented in the following table. 2017 $ 251,944 2018 251,944 2019 251,944 2020 251,944 2021 251,944 Thereafter 2,475,648 Total $ 3,735,368 RMC is required to make annual payments on the formation loan of one tenth of the principal balance outstanding at December 31 of the prior year. The formation loan is forgiven if the manager is removed and RMC is no longer receiving payments for services rendered. Reimbursement and allocation of organization and offering expenses The manager is reimbursed for, or the company may pay directly, organization and offering expenses (or O&O expenses) incurred in connection with the organization of the company or offering of the units including, without limitation, attorneys’ fees, accounting fees, printing costs and other selling expenses (other than sales commissions) in a total amount not exceeding 4.5% of the original purchase price of all units (other than DRIP units) sold in all offerings (hereafter, the “maximum O&O expenses”), and the manager pays any O&O expenses in excess of the maximum O&O expenses. For each calendar quarter or portion thereof after December 31, 2015, that a member holds units (other than DRIP units) and for a maximum of forty (40) such quarters, a portion of the O&O expenses borne by the company is allocated to and debited from that member’s capital account in an annual amount equal to 0.45% of the member’s original purchase price for those units, in equal quarterly installments of 0.1125% each commencing with the later of the first calendar quarter of 2016 or the first full calendar quarter after a member’s purchase of units, and continuing through the quarter in which such units are redeemed. If at any time the aggregate O&O expenses actually paid or reimbursed by the company since inception are less than the maximum O&O expenses, the company shall first reimburse the manager for any O&O expenses previously borne by it so long as it does not result in the company bearing more than the maximum O&O expenses, and any savings thereafter remaining shall be equitably allocated among (and serve to reduce any subsequent such cost allocations to) those members who have not yet received forty (40) quarterly allocations of O&O expenses, as determined in the good faith judgment of the manager. Any O&O expenses with respect to a member’s units that remain unallocated upon redemption of such units shall be reimbursed to the company by the manager. Organization and offering expenses (O & O expenses) are summarized in the following table for the nine months ended September 30, 2017 and since inception. For the nine months ended Since Inception Balance, beginning of period $ 1,698,731 $ — O&O expenses reimbursed to RMC 639,280 2,614,024 Early withdrawal penalties applied (1) (6,291 ) (14,148 ) O&O expenses allocated (162,851 ) (315,642 ) O&O expenses paid by the company — — O&O expenses reimbursed by RMC (2) (29,645 ) (145,010 ) Balance, end of period (3)(4) $ 2,139,224 $ 2,139,224 (1) Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. (2) RMC reimburses the company for any unallocated O&O expenses on units redeemed. (3) Proceeds from investors admitted to RMI IX were $57,898,707 through September 30, 2017. O&O expenses incurred by RMC and remaining to be reimbursed to RMC by RMI IX were $3,288,479. (4) Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters. |
Loans
Loans | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Loans | NOTE 4 – LOANS Loans generally are funded at a fixed interest rate with a loan term of up to five years. Loans acquired are generally done so within the first six months of origination, and purchased at the current par value, which approximates fair value. As of September 30, 2017, 88 of the company’s 93 loans (representing 99% of the aggregate principal of the company’s loan portfolio) have a loan term of five years or less from loan inception. The remaining loans have terms longer than five years. Substantially all loans are written without a prepayment penalty provision. As of September 30, 2017, 74 loans outstanding (representing 75% of the aggregate principal balance of the company’s loan portfolio) require monthly payments of principal and interest, typically calculated on a 30-year amortization, with the remaining principal balance due at maturity. The remaining loans provide for monthly payments of interest only, with the principal due in full at maturity. Secured loans unpaid principal balance (principal) Secured loan transactions are summarized in the following table for the three and nine months ended September 30, 2017. For the Three Months Ended For the Nine Months Ended Principal, beginning of period $ 46,490,743 $ 40,123,393 Loans funded 12,403,750 31,889,883 Loans acquired from affiliates — — Loans sold to affiliates — (999,995 ) Principal payments received (5,802,607 ) (17,921,395 ) Principal, end of period $ 53,091,886 $ 53,091,886 For the three months ended September 30, 2017, no renewals were made. For the nine months ended September 30, 2017 1 renewal with a principal balance of $190,000 was made. Loan characteristics Secured loans had the characteristics presented in the following table. September 30, December 31, 2017 2016 Number of secured loans 93 89 Secured loans – principal $ 53,091,886 $ 40,123,393 Secured loans – lowest interest rate (fixed) 7.1 % 7.0 % Secured loans – highest interest rate (fixed) 10.5 % 10.0 % Average secured loan – principal $ 570,880 $ 450,825 Average principal as percent of total principal 1.1 % 1.1 % Average principal as percent of members’ capital 1.0 % 1.0 % Average principal as percent of total assets 1.0 % 1.1 % Largest secured loan – principal $ 3,244,623 $ 1,350,000 Largest principal as percent of total principal 6.1 % 3.4 % Largest principal as percent of members’ capital 5.6 % 3.1 % Largest principal as percent of total assets 5.5 % 3.2 % Smallest secured loan – principal $ 54,008 $ 8,651 Smallest principal as percent of total principal 0.1 % 0.1 % Smallest principal as percent of members’ capital 0.1 % 0.1 % Smallest principal as percent of total assets 0.1 % 0.1 % Number of counties where security is located (all California) 18 16 Largest percentage of principal in one county 19.4 % 21.3 % Number of secured loans with filed notice of default — 2 Secured loans in foreclosure – principal $ — $ 890,470 Number of secured loans with an interest reserve — — Interest reserves $ — $ — As of September 30, 2017, the company’s largest loan with principal of $3,244,623 represents 6.1% of outstanding secured loans and 5.5% of company assets. The loan is secured by a 1 st As of September 30, 2017, the company had no outstanding construction or rehabilitation loans and no commitments to fund construction, rehabilitation or other loans. Lien position Secured loans had the lien positions presented in the following table. September 30, 2017 December 31, 2016 Loans Principal Percent Loans Principal Percent First trust deeds 58 $ 37,350,830 70 % 63 $ 30,350,642 76 % Second trust deeds 35 15,741,056 30 26 9,772,751 24 Total secured loans 93 53,091,886 100 % 89 40,123,393 100 % Liens due other lenders at loan closing 28,264,524 12,738,126 Total debt $ 81,356,410 $ 52,861,519 Appraised property value at loan closing $ 164,799,000 $ 123,709,057 Percent of total debt to appraised values (LTV) at loan closing (1) 54.2 % 51.5 % (1) Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders. Property type Secured loans summarized by property type are presented in the following table. September 30, 2017 December 31, 2016 Loans Principal Percent Loans Principal Percent Single family (2) 70 $ 38,217,246 72 % 63 $ 25,582,833 64 % Multi-family 5 2,017,903 4 5 3,211,380 8 Commercial 18 12,856,737 24 21 11,329,180 28 Total secured loan balance 93 $ 53,091,886 100 % 89 40,123,393 100 % (2) Single family property type as of September 30, 2017 consists of 11 loans with principal of $6,491,246 that are owner occupied and 59 loans with principal of $31,726,000 that are non-owner occupied. At December 31, 2016, single family property consisted of 9 loans with principal of $3,538,729 that are owner occupied and 54 loans with principal of $22,044,104 that are non-owner occupied. Distribution of loans within California The distribution of secured loans outstanding by California counties is presented in the following table. September 30, 2017 December 31, 2016 Principal Percent Principal Percent San Francisco Bay Area (3) Alameda $ 10,312,037 19.4 % $ 7,726,853 19.3 % San Francisco 10,193,096 19.1 6,913,534 17.2 San Mateo 7,615,488 14.3 4,644,731 11.6 Santa Clara 3,989,046 7.5 4,073,501 10.2 Contra Costa 1,514,220 2.9 989,994 2.5 Marin 374,258 0.7 377,241 0.9 Solano 109,633 0.2 1,820,336 4.5 Sonoma — — 8,652 0.1 34,107,778 64.1 26,554,842 66.3 Other Northern California Sacramento 850,000 1.6 — 0.0 Monterey 700,934 1.3 1,840,927 4.6 Placer 644,226 1.2 1,074,437 2.7 Yolo 179,506 0.3 156,810 0.4 San Joaquin 157,375 0.3 158,340 0.4 2,532,041 4.7 3,230,514 8.1 Northern California Total 36,639,819 68.8 29,785,356 74.4 Los Angeles & Coastal Los Angeles 8,587,898 16.2 8,547,567 21.3 Orange 2,096,511 4.0 494,334 1.2 San Diego 1,884,859 3.6 933,571 2.3 12,569,268 23.8 9,975,472 24.8 Other Southern California San Bernardino 2,110,000 4.0 — — Santa Barbara 1,412,660 2.7 — — Riverside 360,139 0.7 362,565 0.8 3,882,799 7.4 362,565 0.8 Southern California Total 16,452,067 31.2 10,338,037 25.6 Total Secured Loans $ 53,091,886 100.0 % $ 40,123,393 100.0 % (3) Delinquency Secured loans summarized by payment delinquency are presented in the following table. September 30, 2017 December 31, 2016 Loans Amount Loans Amount Past Due 30-89 days — $ — 1 $ 377,241 90-179 days 1 139,643 2 890,470 180 or more days — — — — Total past due 1 139,643 3 1,267,711 Current 92 52,952,243 86 38,855,682 Total secured loan balance 93 $ 53,091,886 89 $ 40,123,393 Interest in the amount of $4,497 was accrued for loans contractually 90 days or more delinquent as to principal or interest payments as of September 30, 2017. No interest was accrued for loans contractually 90 days or more delinquent as to principal or interest payments as of December 31, 2016. Modifications and troubled debt restructurings No loan payment modifications were made during three and nine months ended September 30, 2017, and no modifications were in effect at September 30, 2017 or December 31, 2016. Scheduled maturities Secured loans are scheduled to mature as presented in the following table. Loans Principal Percent 2017 (4) 6 $ 2,681,185 5 % 2018 15 8,522,197 16 2019 36 27,751,303 52 2020 16 7,095,731 13 2021 7 3,380,524 6 Thereafter 12 3,521,303 7 Total future maturities 92 52,952,243 99 Matured as of September 30, 2017 1 139,643 1 Total secured loan balance 93 $ 53,091,886 100 % (4) Loans maturing in 2017 from October 1 to December 31. One loan with a principal balance of $139,643 was past maturity as of September 30, 2017. The loan was 152 days delinquent and designated as impaired and in non-accrual status as of September 30, 2017. Loans may be repaid or refinanced before, at or after the contractual maturity date. On matured loans, the company may continue to accept payments while pursuing collection of amounts owed from borrowers. Therefore, the above tabulation for scheduled maturities is not a forecast of future cash receipts. Loans in non-accrual status At September 30, 2017, one loan with a principal balance of $139,643 was designated as non-accrual status. At December 31, 2016, no loans were designated as non-accrual status. At September 30, 2017 and December 31, 2016, no loans were contractually 90 or more days past due as to principal or interest and not in non-accrual status. Impaired loans/allowance for loan losses One loan with a principal balance of $139,643, was designated as impaired at September 30, 2017. No loans were designated as impaired at December 31, 2016. No allowance for loan losses has been recorded as all loans were deemed to have protective equity ( i.e Fair Value The company does not record its loans at fair value on a recurring basis. The recorded amount of the performing loans (i.e., the loan balance) is deemed to approximate the fair value, as is the loan balance of loans designated impaired for which a specific reserve has not been recorded (i.e., the loan is well collateralized such that the collection of the amount owed is assured, including foregone interest if any).Loans designated impaired (i.e., that are collateral dependent) are measured at fair value on a non-recurring basis. No assets or liabilities were measured at fair value on a non-recurring basis during the nine months ended September 30, 2017. • Secured loans, performing (i.e. not designated as impaired) (Level 2) – Each loan is reviewed quarterly for its delinquency, LTV adjusted for the most recent valuation of the underlying collateral, remaining term to maturity, borrower’s payment history and other factors. Also considered is the limited resale market for the loans. Most companies or individuals making similar loans as the company intend to hold the loans until maturity as the average contractual term of the loans (and the historical experience of the time the loan is outstanding due to pre-payments) is shorter than conventional mortgages. As there are no prepayment penalties to be collected, loan buyers may be hesitant to risk paying above par. Due to these factors, sales of the loans are infrequent, because an active market does not exist. The recorded amount of the performing loans (i.e. the loan balance) is deemed to approximate the fair value, although the intrinsic value of the loans would reflect a premium due to the interest to be received. • Secured loans, designated impaired (Level 2) – Secured loans designated impaired are deemed collateral dependent, and the fair value of the loan is the lesser of the fair value of the collateral or the enforceable amount owing under the note. The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values and publicly available information on in-market transactions (Level 2 inputs). The following methods and assumptions are used to determine the fair value of the collateral securing a loan. Single family – Management’s preferred method for determining the fair market value of its single-family residential assets is the sale comparison method. Management primarily obtains sale comps via its subscription to the RealQuest service, but also uses free online services such as Zillow.com and other available resources to supplement this data. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, number of bedrooms and bathrooms, square footage, sale date, condition and year built. If applicable sale comps are not available or deemed unreliable, management will seek additional information in the form of brokers’ opinions of value or appraisals. Multi-family residential – Management’s preferred method for determining the aggregate retail value of its multifamily units is the sale comparison method. Sale comps are reviewed for similarity to the subject property, examining features such as proximity to subject, rental income, number of units, composition of units by the number of bedrooms and bathrooms, square footage, condition, amenities and year built. Management’s secondary method for valuing its multifamily assets as income-producing rental operations is the direct capitalization method. In order to determine market cap rates for properties of the same class and location as the subject, management refers to published data from reliable third-party sources such as the CBRE Cap Rate Survey. Management applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals. Commercial buildings – Where commercial rental income information is available, management’s preferred method for determining the fair value of its commercial real estate assets is the direct capitalization method. In order to determine market cap rates for properties of the same class and location as the subject, management refers to reputable third-party sources such as the CBRE Cap Rate Survey. Management then applies the appropriate cap rate to the subject’s most recent available annual net operating income to determine the property’s value as an income-producing commercial rental project. When adequate sale comps are not available or reliable net operating income information is not available or the project is under development or is under-performing to market, management will seek additional information and analysis to determine the cost to improve and the intrinsic fair value and/or management will seek additional information in the form of brokers’ opinion of value or appraisals. Management supplements the direct capitalization method with additional information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal. Commercial land – Commercial land has many variations/uses, thus requiring management to employ a variety of methods depending upon the unique characteristics of the subject land. Management may rely on information in the form of a sale comparison analysis (where adequate sale comps are available), brokers’ opinion of value, or appraisal. |
Commitments and Contingencies,
Commitments and Contingencies, Other Than Loan Commitments | 9 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies, Other Than Loan Commitments | NOTE 5 – COMMITMENTS AND CONTINGENCIES, OTHER THAN LOAN COMMITMENTS Commitments The company had two contractual obligations as of September 30, 2017: 1) scheduled unit redemptions to members, and 2) reimbursement to RMC for O&O expenses (as of September 30, 2017, $3,288,479 was to be reimbursed to RMC) contingent upon future sales of units. Redemptions of members’ capital scheduled as of September 30, 2017 were $404,043, to be paid between 2017 and 2021. Scheduled redemptions as of September 30, 2017 are presented in the following table. 2017 $ 364,877 2018 12,000 2019 12,000 2020 12,000 2021 3,166 Total 404,043 Legal proceedings In the normal course of its business, the company may become involved in legal proceedings (such as assignment of rents, bankruptcy proceedings, appointment of receivers, unlawful detainers, judicial foreclosure, etc.) to collect the debt owed under the promissory notes, to enforce the provisions of the deeds of trust, to protect its interest in the real property subject to the deeds of trust and to resolve disputes with borrowers, lenders, lien holders and mechanics. None of these actions, in and of themselves, typically would be of any material financial impact to the net income or balance sheet of the company. As of the date hereof, the company is not involved in any legal proceedings other than those that would be considered part of the normal course of business. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 6 – SUBSEQUENT EVENTS None. |
Summary of Significant Accoun13
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of presentation The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). |
Management Estimates | Management estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Such estimates relate principally to the determination of the allowance for loan losses, including, when applicable, the valuation of impaired loans (which itself requires determining the fair value of the collateral), and the valuation of real estate held for sale and held as investment, at acquisition and subsequently. Actual results could differ significantly from these estimates. |
Fair Value Estimates | Fair value estimates GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact. Fair values of assets and liabilities are determined based on the fair-value hierarchy established in GAAP. The hierarchy is comprised of three levels of inputs to be used: • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access at the measurement date. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. • Level 2 inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly in active markets and quoted prices for identical assets or liabilities that are not active, and inputs other than quoted prices that are observable or inputs derived from or corroborated by market data. • Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs reflect the company’s own assumptions about the assumptions market participants would use in pricing the asset or liability (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the company’s own data. The fair value of the collateral is determined by exercise of judgment based on management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values and publicly available information on in-market transactions. Appraisals of commercial real property generally present three approaches to estimating value: 1) market comparables or sales approach; 2) cost to replace and 3) capitalized cash flows or investment approach. These approaches may or may not result in a common, single value. The market-comparables approach may yield several different values depending on certain basic assumptions, such as, determining highest and best use (which may or may not be the current use); determining the condition (e.g. as-is, when-completed or for land when-entitled); and determining the unit of value (e.g. as a series of individual unit sales or as a bulk disposition). Management has the requisite familiarity with the real estate markets it lends in generally and of the properties lent on specifically to analyze sales-comparables and assess their suitability/applicability. Management is acquainted with market participants – investors, developers, brokers, lenders – that are useful, relevant secondary sources of data and information regarding valuation and valuation variability. These secondary sources may have familiarity with and perspectives on pending transactions, successful strategies to optimize value and the history and details of specific properties – on and off the market – that enhance the process and analysis that is particularly and principally germane to establishing value in distressed markets and/or property types. |
Cash and Cash Equivalents | Cash and cash equivalents The company considers all highly liquid financial instruments with maturities of three months or less at the time of purchase to be cash equivalents. Periodically, company cash balances in banks exceed federally insured limits. |
Loans and Interest Income | Loans and interest income Loans generally are stated at the unpaid principal balance (principal). Management has discretion to pay amounts (advances) to third parties on behalf of borrowers to protect the company’s interest in the loan. Advances include, but are not limited to, the payment of interest and principal on a senior lien to prevent foreclosure by the senior lien holder, property taxes, insurance premiums and attorney fees. Advances generally are stated at the unpaid principal balance and accrue interest until repaid by the borrower. The company may fund a specific loan origination net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. As monthly interest payments become due, the company funds the payments into the affiliated trust account. In the event of an early loan payoff, any unapplied interest reserves would be first applied to any accrued but unpaid interest and then as a reduction to the principal. If events and or changes in circumstances cause management to have serious doubts about the collectability of the payments of interest and principal in accordance with the loan agreement, a loan may be designated as impaired. Impaired loans are included in management’s periodic analysis of recoverability. Any subsequent payments on impaired loans are applied to accrued interest, then to advances, then to late fees, and lastly to principal. From time to time, the company negotiates and enters into loan modifications with borrowers whose loans are delinquent. If the loan modification results in a significant reduction in the cash flow compared to the original note, the modification is deemed a troubled debt restructuring and a loss is recognized. In the normal course of the company’s operations, loans that mature may be renewed at then current market rates and terms for new loans. Such renewals are not designated as impaired, unless the renewed loan was previously designated as impaired. Interest is accrued daily based on the principal of the loans. An impaired loan continues to accrue as long as the loan is in the process of collection and is considered to be well-secured. Loans are placed on non-accrual status at the earlier of management’s determination that the primary source of repayment will come from the foreclosure and subsequent sale of the collateral securing the loan (which usually occurs when a notice of sale is filed) or when the loan is no longer considered well-secured. When a loan is placed on non-accrual status, the accrual of interest is discontinued; however, previously recorded interest is not reversed. A loan may return to accrual status when all delinquent interest and principal payments become current in accordance with the terms of the loan agreement. Loan administrative fees paid to RMC for loans funded or invested in by the company are capitalized and amortized over the life of the loan on a straight-line method which approximates the effective interest method. |
Allowance for Loan Losses | Allowance for loan losses Loans and the related accrued interest and advances (i.e. the loan balance) are analyzed on a periodic basis for ultimate recoverability. Delinquencies are identified and followed as part of the loan system of record. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the arithmetic difference between the fair value of the collateral, net of any senior liens, and the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon. This computation is done for each loan (whether impaired or performing), and while loans secured by collateral of similar property type are grouped, there is enough distinction and variation in the collateral that a loan-by-loan, collateral-by-collateral analysis is appropriate. For loans designated impaired, a provision is made for loan losses to adjust the allowance for loan losses to an amount such that the net carrying amount (unpaid principal less the specific allowance) is reduced to the lower of the loan balance or the estimated fair value of the related collateral, net of any senior loans and net of any costs to sell in arriving at net realizable value. Loans determined not to be individually impaired are grouped by the property type of the underlying collateral, and for each loan and for the total by property type, the amount of protective equity or amount of exposure to loss ( i.e., the dollar amount of the deficiency of the fair value of the underlying collateral to the loan balance) is computed. The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible. At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value is charged against the allowance for loan losses. |
Real Estate Owned (REO) | Real estate owned (REO) Real estate owned, or REO, is property acquired in full or partial settlement of loan obligations generally through foreclosure, and is recorded at acquisition at the lower of the amount owed on the loan (legal basis), plus any senior indebtedness, or at the property’s net realizable value, which is the fair value less estimated costs to sell, as applicable. The fair value estimates are derived from information available in the real estate markets including similar property, and often require the experience and judgment of third parties such as commercial real estate appraisers and brokers. The estimates figure materially in calculating the value of the property at acquisition, the level of charge to the allowance for loan losses and any subsequent valuation reserves. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, REO is analyzed periodically for changes in fair values and any subsequent write down is charged to operations expenses. Any recovery in the fair value subsequent to such a write down is recorded and is not to exceed the value recorded at acquisition. Recognition of gains on the sale of real estate is dependent upon the transaction meeting certain criteria related to the nature of the property and the terms of the sale including potential seller financing. |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements -Accounting and Financial reporting for Expected Credit Losses The Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that significantly changes how entities will account for credit losses for most financial assets that are not measured at fair value through net income. The new standard will supersede currently in effect guidance and applies to all entities. Entities will be required to use a current expected credit loss (CECL) model to estimate credit impairment. This estimate will be forward-looking, meaning management will be required to use forecasts about future economic conditions to determine the expected credit loss over the remaining life of an instrument. This will be a significant change from today’s incurred credit loss model, and generally may result in allowances being recognized in earlier periods than under the current credit loss model. RMI IX invests in real estate secured loans made with the expectation of zero credit losses as a result of substantial protective equity provided by the underlying collateral. For a loss to be recognized under the CECL or incurred loss model, if the lending/loan-to-value guidelines are followed effectively, an intervening, subsequent-to-loan-funding, event must negatively impact the value of the underlying collateral of the loan in an amount greater than the amount of protective equity provided by the collateral. Such an event would be either (or both) of: 1) An uninsured event(s) specifically impacting the collateral or 2) A non-temporary decline in values in the applicable real estate market. In both of these instances the treatment would be the same in the incurred loss and CECL models of approximately the same amount. Other than in these events, the probable of occurrence criteria of the incurred loss model is not triggered and a loss is not recognized. Further, if the zero-expected-loss lending guideline is preserved and the protective equity provided by the collateral is not expected to be impaired over the life of the loans, then a loss is not required to be recognized under the CECL model. This convergence between the CECL and incurred loss models as to loss recognition – as an event driven occurrence – in low LTV, real estate secured programs caused RMC to conclude that the CECL model will not materially impact the reported results of operations or financial position as compared to that which would be reported in the incurred loss model. The manager expects to adopt the ASU for interim and annual reporting in 2020. -Accounting and Financial Reporting for Revenue Recognition On May 28, 2014, FASB issued a final standard on revenue from contracts with customers. The standard issued as ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is effective January 2018. The goals of the revenue recognition project are to clarify and converge the revenue recognition principles under U.S. GAAP and to develop guidance that would streamline and enhance revenue recognition requirements. A core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Revenue is recognized when a performance obligation is satisfied by transferring goods or services to a customer. The FASB intentionally used the wording “be entitled” rather than “receive” or “collect” to distinguish collectability risk from other uncertainties that may exist under a contract. RMC management’s preliminary evaluation is that the new revenue standard will not have an impact on the company’s current revenue recognition policies. The scope of guidance is not applicable to financial instruments including loans and therefore will not have an impact on interest income. The company also does not expect that there will be changes to revenue recognition from the sale of REOs, however, there may be an impact to the gain on sale of real estate when the sale is financed by the company. |
Organization and General (Table
Organization and General (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Gross Proceeds from Sales of Units | Gross proceeds from sales of units from inception (October, 2009) through September 30, 2017 are summarized below. Proceeds From investors - admitted $ 57,898,707 From members under our DRIP 5,649,645 From premiums paid by RMC (1) 195,724 Gross proceeds from unit sales $ 63,744,076 (1) If a member acquired units through an unsolicited sale (i.e. without broker/dealer) the member’s capital account is credited with their capital contribution plus a premium paid by RMC equal to the amount of the sales commissions that otherwise would have been paid to a broker-dealer by RMC. This premium is reported in the year paid as taxable income to the member. As of September 30, 2017, we had sold approximately 63,744,000 units– 39,407,000 units under our previous registration statements and 24,337,000 units under our current registration statement which was effective on June 6, 2016, for gross proceeds from unit sales (including units issued under our distribution reinvestment plan) of approximately $63,744,000 - $39,407,000 and $24,337,000, respectively. |
Manager and Other Related Par15
Manager and Other Related Parties (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Summary of Fees Waived and Costs Reimbursements | Fees waived and costs reimbursements for the three and nine months ended September 30, 2017 are presented in the following tables. Operating Expenses Loan Admin Fees Mortgage Servicing Fees Asset Management Fee Cost Reimbursements Professional Services Other Total For the three months ended Chargeable/reimbursable $ 124,038 $ 30,627 $ 106,800 $ 146,558 $ 69,944 $ 5,340 $ 483,307 RMC Support Waived (124,038 ) — (106,800 ) (146,558 ) — — (377,396 ) Cost absorbed by RMC — — — — (24,150 ) (3,569 ) (27,719 ) Total RMC support (124,038 ) — (106,800 ) (146,558 ) (24,150 ) (3,569 ) (405,115 ) Net charged $ — $ 30,627 $ — $ — $ 45,794 $ 1,771 $ 78,192 Operating Expenses Loan Admin Fees Mortgage Servicing Fee Asset Management Fee Cost Reimbursements Professional Services Other Total For the nine months ended Chargeable/reimbursable $ 318,899 $ 81,795 $ 288,194 $ 364,904 $ 303,035 $ 32,875 $ 1,389,702 RMC Support Waived (318,899 ) — (288,194 ) (364,904 ) — — (971,997 ) Cost absorbed by RMC — — — — (254,877 ) (26,979 ) (281,856 ) Total RMC support (318,899 ) — (288,194 ) (364,904 ) (254,877 ) (26,979 ) (1,253,853 ) Net charged $ — $ 81,795 $ — $ — $ 48,158 $ 5,896 $ 135,849 Fees waived and costs reimbursements for the three and nine months ended September 30, 2016 are presented in the following tables. Operating Expenses Loan Admin Fees Mortgage Servicing Fee Asset Management Fee Cost Reimbursements Professional Services Other Total For the three months ended Chargeable/reimbursable $ 76,208 $ 20,228 $ 71,672 $ 67,676 $ 42,298 $ 1,663 $ 279,745 RMC Support Waived (76,208 ) — (71,672 ) (67,676 ) — — (215,556 ) Cost absorbed by RMC — — — — (42,298 ) — (42,298 ) Total RMC support (76,208 ) — (71,672 ) (67,676 ) (42,298 ) — (257,854 ) Net charged $ — $ 20,228 $ — $ — $ — $ 1,663 $ 21,891 Operating Expenses Loan Admin Fees Mortgage Servicing Fee Asset Management Fee Cost Reimbursements Professional Services Other Total For the nine months ended Chargeable/reimbursable $ 217,883 $ 55,749 $ 197,307 $ 189,425 $ 306,472 $ 50,635 $ 1,017,471 RMC Support Waived (196,839 ) — (197,307 ) (189,425 ) — — (583,571 ) Cost absorbed by RMC (21,044 ) — — — (301,972 ) (44,786 ) (367,802 ) Total RMC support (217,883 ) — (197,307 ) (189,425 ) (301,972 ) (44,786 ) (951,373 ) Net charged $ — $ 55,749 $ — $ — $ 4,500 $ 5,849 $ 66,098 |
Schedule of Accounts, Notes, Loans and Financing Receivable | Formation loan transactions are presented in the following table for the nine months ended September 30, 2017, and since inception. For the nine months ended Since Inception Balance, beginning of period $ 2,519,438 $ — Formation loan advances to RMC 1,225,582 4,375,935 Payments received from RMC — (618,934 ) Early withdrawal penalties applied (9,652 ) (21,633 ) Balance, September 30, 2017 $ 3,735,368 $ 3,735,368 Subscription proceeds since inception $ 62,622,357 Formation loan advance rate 7 % |
Formation Loan, Estimated Future Minimum Payments | The estimated future minimum payments on the formation loan as of September 30, 2017 are presented in the following table. 2017 $ 251,944 2018 251,944 2019 251,944 2020 251,944 2021 251,944 Thereafter 2,475,648 Total $ 3,735,368 |
Summary of Organization and Offering Expenses | Organization and offering expenses (O & O expenses) are summarized in the following table for the nine months ended September 30, 2017 and since inception. For the nine months ended Since Inception Balance, beginning of period $ 1,698,731 $ — O&O expenses reimbursed to RMC 639,280 2,614,024 Early withdrawal penalties applied (1) (6,291 ) (14,148 ) O&O expenses allocated (162,851 ) (315,642 ) O&O expenses paid by the company — — O&O expenses reimbursed by RMC (2) (29,645 ) (145,010 ) Balance, end of period (3)(4) $ 2,139,224 $ 2,139,224 (1) Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. (2) RMC reimburses the company for any unallocated O&O expenses on units redeemed. (3) Proceeds from investors admitted to RMI IX were $57,898,707 through September 30, 2017. O&O expenses incurred by RMC and remaining to be reimbursed to RMC by RMI IX were $3,288,479. (4) Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters. |
Loans (Tables)
Loans (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Secured Loan Principal Transactions | Secured loan transactions are summarized in the following table for the three and nine months ended September 30, 2017. For the Three Months Ended For the Nine Months Ended Principal, beginning of period $ 46,490,743 $ 40,123,393 Loans funded 12,403,750 31,889,883 Loans acquired from affiliates — — Loans sold to affiliates — (999,995 ) Principal payments received (5,802,607 ) (17,921,395 ) Principal, end of period $ 53,091,886 $ 53,091,886 |
Secured Loans Characteristics | Secured loans had the characteristics presented in the following table. September 30, December 31, 2017 2016 Number of secured loans 93 89 Secured loans – principal $ 53,091,886 $ 40,123,393 Secured loans – lowest interest rate (fixed) 7.1 % 7.0 % Secured loans – highest interest rate (fixed) 10.5 % 10.0 % Average secured loan – principal $ 570,880 $ 450,825 Average principal as percent of total principal 1.1 % 1.1 % Average principal as percent of members’ capital 1.0 % 1.0 % Average principal as percent of total assets 1.0 % 1.1 % Largest secured loan – principal $ 3,244,623 $ 1,350,000 Largest principal as percent of total principal 6.1 % 3.4 % Largest principal as percent of members’ capital 5.6 % 3.1 % Largest principal as percent of total assets 5.5 % 3.2 % Smallest secured loan – principal $ 54,008 $ 8,651 Smallest principal as percent of total principal 0.1 % 0.1 % Smallest principal as percent of members’ capital 0.1 % 0.1 % Smallest principal as percent of total assets 0.1 % 0.1 % Number of counties where security is located (all California) 18 16 Largest percentage of principal in one county 19.4 % 21.3 % Number of secured loans with filed notice of default — 2 Secured loans in foreclosure – principal $ — $ 890,470 Number of secured loans with an interest reserve — — Interest reserves $ — $ — |
Secured Loans by Lien Position in the Collateral | Secured loans had the lien positions presented in the following table. September 30, 2017 December 31, 2016 Loans Principal Percent Loans Principal Percent First trust deeds 58 $ 37,350,830 70 % 63 $ 30,350,642 76 % Second trust deeds 35 15,741,056 30 26 9,772,751 24 Total secured loans 93 53,091,886 100 % 89 40,123,393 100 % Liens due other lenders at loan closing 28,264,524 12,738,126 Total debt $ 81,356,410 $ 52,861,519 Appraised property value at loan closing $ 164,799,000 $ 123,709,057 Percent of total debt to appraised values (LTV) at loan closing (1) 54.2 % 51.5 % (1) Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders. |
Secured Loans by Property Type of the Collateral | Secured loans summarized by property type are presented in the following table. September 30, 2017 December 31, 2016 Loans Principal Percent Loans Principal Percent Single family (2) 70 $ 38,217,246 72 % 63 $ 25,582,833 64 % Multi-family 5 2,017,903 4 5 3,211,380 8 Commercial 18 12,856,737 24 21 11,329,180 28 Total secured loan balance 93 $ 53,091,886 100 % 89 40,123,393 100 % (2) Single family property type as of September 30, 2017 consists of 11 loans with principal of $6,491,246 that are owner occupied and 59 loans with principal of $31,726,000 that are non-owner occupied. At December 31, 2016, single family property consisted of 9 loans with principal of $3,538,729 that are owner occupied and 54 loans with principal of $22,044,104 that are non-owner occupied. |
Secured Loans Distributed Within California | The distribution of secured loans outstanding by California counties is presented in the following table. September 30, 2017 December 31, 2016 Principal Percent Principal Percent San Francisco Bay Area (3) Alameda $ 10,312,037 19.4 % $ 7,726,853 19.3 % San Francisco 10,193,096 19.1 6,913,534 17.2 San Mateo 7,615,488 14.3 4,644,731 11.6 Santa Clara 3,989,046 7.5 4,073,501 10.2 Contra Costa 1,514,220 2.9 989,994 2.5 Marin 374,258 0.7 377,241 0.9 Solano 109,633 0.2 1,820,336 4.5 Sonoma — — 8,652 0.1 34,107,778 64.1 26,554,842 66.3 Other Northern California Sacramento 850,000 1.6 — 0.0 Monterey 700,934 1.3 1,840,927 4.6 Placer 644,226 1.2 1,074,437 2.7 Yolo 179,506 0.3 156,810 0.4 San Joaquin 157,375 0.3 158,340 0.4 2,532,041 4.7 3,230,514 8.1 Northern California Total 36,639,819 68.8 29,785,356 74.4 Los Angeles & Coastal Los Angeles 8,587,898 16.2 8,547,567 21.3 Orange 2,096,511 4.0 494,334 1.2 San Diego 1,884,859 3.6 933,571 2.3 12,569,268 23.8 9,975,472 24.8 Other Southern California San Bernardino 2,110,000 4.0 — — Santa Barbara 1,412,660 2.7 — — Riverside 360,139 0.7 362,565 0.8 3,882,799 7.4 362,565 0.8 Southern California Total 16,452,067 31.2 10,338,037 25.6 Total Secured Loans $ 53,091,886 100.0 % $ 40,123,393 100.0 % (3) |
Past Due Financing Receivables | Secured loans summarized by payment delinquency are presented in the following table. September 30, 2017 December 31, 2016 Loans Amount Loans Amount Past Due 30-89 days — $ — 1 $ 377,241 90-179 days 1 139,643 2 890,470 180 or more days — — — — Total past due 1 139,643 3 1,267,711 Current 92 52,952,243 86 38,855,682 Total secured loan balance 93 $ 53,091,886 89 $ 40,123,393 |
Secured Loans Scheduled Maturities | Secured loans are scheduled to mature as presented in the following table. Loans Principal Percent 2017 (4) 6 $ 2,681,185 5 % 2018 15 8,522,197 16 2019 36 27,751,303 52 2020 16 7,095,731 13 2021 7 3,380,524 6 Thereafter 12 3,521,303 7 Total future maturities 92 52,952,243 99 Matured as of September 30, 2017 1 139,643 1 Total secured loan balance 93 $ 53,091,886 100 % (4) Loans maturing in 2017 from October 1 to December 31. |
Commitments and Contingencies17
Commitments and Contingencies, Other Than Loan Commitments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Scheduled Redemptions Of Members Capital [Abstract] | |
Scheduled Redemptions of Members' Capital | Scheduled redemptions as of September 30, 2017 are presented in the following table. 2017 $ 364,877 2018 12,000 2019 12,000 2020 12,000 2021 3,166 Total 404,043 |
Organization and General - Addi
Organization and General - Additional Information (Details) | 3 Months Ended | 9 Months Ended | 96 Months Ended | |||
Sep. 30, 2017USD ($)shares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)Unitshares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)shares | Dec. 31, 2016USD ($) | |
Organization and General (Details) [Line Items] | ||||||
Ownership interest held by the manager | 1.00% | 1.00% | 1.00% | 1.00% | ||
Members or partners capital, description | Cash available for distribution at the end of each calendar month is allocated ninety-nine percent (99%) to the members and one percent (1%) to the manager. | |||||
Percentage of distribution allocated to members | 99.00% | |||||
Unit Redemption Program, Years After Purchase | 1 year | |||||
Maximum Capital Units for Redemption Per Quarter Per Individual | Unit | 100,000 | |||||
Maximum Percentage of Members Outstanding Units for Redemption Per Quarter Per Individual | 25.00% | |||||
Maximum Percentage of Weighted Average Number of Members Outstanding Units During Twelve Months for Redemption | 5.00% | |||||
Formation loan, advances | $ 505,263 | $ 273,910 | $ 1,225,582 | $ 689,746 | ||
Receivable from affiliate (formation loan) | $ 3,735,368 | $ 3,735,368 | $ 3,735,368 | $ 2,519,438 | ||
Estimated expenses on offering and sale of units | $ 2,614,000 | |||||
Member Units [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Capital Unit Sold in Public Offering, Shares | shares | 24,337,000 | 24,337,000 | 24,337,000 | |||
Capital Unit Sold in Public Offering, Value | $ 24,337,000 | $ 24,337,000 | $ 24,337,000 | |||
Maximum [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Percentage of offering proceeds | 7.00% | |||||
Maximum [Member] | Member Units [Member] | Capital Units Issued Under Previous Registration Statements [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Capital Unit Sold in Public Offering, Shares | shares | 63,744,000 | 63,744,000 | 63,744,000 | |||
Capital Unit Sold in Public Offering, Value | $ 63,744,000 | $ 63,744,000 | $ 63,744,000 | |||
Minimum [Member] | Member Units [Member] | Capital Units Issued Under Previous Registration Statements [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Capital Unit Sold in Public Offering, Shares | shares | 39,407,000 | 39,407,000 | 39,407,000 | |||
Capital Unit Sold in Public Offering, Value | $ 39,407,000 | $ 39,407,000 | $ 39,407,000 | |||
Formation Loan [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Formation loan, advances | 4,375,935 | |||||
Receivable from affiliate (formation loan) | $ 3,735,368 | $ 3,735,368 | $ 3,735,368 | |||
Redemption Between One to Two Years [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Redemption Value Percentage of Purchase Price or Capital Account Balance | 92.00% | 92.00% | 92.00% | |||
Redemption Between Two to Three Years [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Redemption Value Percentage of Purchase Price or Capital Account Balance | 94.00% | 94.00% | 94.00% | |||
Redemption Between Three to Four Years [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Redemption Value Percentage of Purchase Price or Capital Account Balance | 96.00% | 96.00% | 96.00% | |||
Redemption Between Four to Five Years [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Redemption Value Percentage of Purchase Price or Capital Account Balance | 98.00% | 98.00% | 98.00% | |||
Redemption After Five Years [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Redemption Value Percentage of Purchase Price or Capital Account Balance | 100.00% | 100.00% | 100.00% | |||
RMC [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Percentage of profits and losses allocated to manager | 1.00% | |||||
Ownership interest held by the manager | 0.10% | |||||
RMC [Member] | Maximum [Member] | ||||||
Organization and General (Details) [Line Items] | ||||||
Percentage of proceeds from sale of units used to pay for organization and offering expenses | 4.50% | |||||
Percentage of proceeds from sale of units used for funding formation loan to related party | 7.00% |
Organization and General - Summ
Organization and General - Summary of Gross Proceeds from Sales of Units (Details) - USD ($) | 9 Months Ended | 96 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | ||
Limited Partners' Capital Account [Line Items] | |||
Gross proceeds from unit sales | $ 63,744,076 | ||
Contributions Admitted To Members Capital | |||
Limited Partners' Capital Account [Line Items] | |||
Gross proceeds from unit sales | $ 57,898,707 | 57,898,707 | |
DRIP | |||
Limited Partners' Capital Account [Line Items] | |||
Gross proceeds from unit sales | 5,649,645 | ||
Premiums Admitted To Members Capital | |||
Limited Partners' Capital Account [Line Items] | |||
Gross proceeds from unit sales | [1] | $ 195,724 | |
[1] | If a member acquired units through an unsolicited sale (i.e. without broker/dealer) the member’s capital account is credited with their capital contribution plus a premium paid by RMC equal to the amount of the sales commissions that otherwise would have been paid to a broker-dealer by RMC. This premium is reported in the year paid as taxable income to the member. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)Approach | |
Summary of Significant Accounting Policies [Line Items] | |
Estimating Real Property Value, Number of Approaches | Approach | 3 |
Cash and Cash Equivalents, Maximum Initial Maturity | 3 months |
Interest Reserve Minimum Length | 1 year |
Interest Reserve Maximum Length | 2 years |
Real Estate Secured Loans [Member] | |
Summary of Significant Accounting Policies [Line Items] | |
Expected credit losses from investment | $ | $ 0 |
Manager and Other Related Par21
Manager and Other Related Parties - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Managers and Other Related Parties (Details) [Line Items] | ||||
Managers Share of Profits or Losses | 1.00% | |||
Managers (1%), Net income | $ 10,077 | $ 6,792 | $ 27,341 | $ 18,628 |
Reimbursement as a percentage of member's original purchase price | 0.45% | |||
Percentage of original purchase price, quarterly installment percentage | 0.1125% | |||
Maximum [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Annual mortgage servicing fees, percentage | 0.25% | 0.25% | ||
Percentage of reimbursement of organization and offering expenses | 4.50% | |||
Reimbursement threshold | Maximum of forty (40) such quarters | |||
RMC [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Managers (1%), Net income | $ 10,077 | 6,792 | $ 27,341 | 18,628 |
Related Party Transaction, Amounts of Transaction | $ 405,000 | $ 258,000 | $ 1,254,000 | $ 951,000 |
Administrative Fees, Percentage | 1.00% | 1.00% | ||
Management Fee, Percentage | 0.75% | 0.75% | ||
Working Capital Reserve, Percentage | 2.00% | 2.00% | ||
Loan Brokerage Commission Percent Minimum | 1.50% | 1.50% | ||
Loan Brokerage Commission Percent Maximum | 5.00% | 5.00% | ||
Loan Brokerage Commissions, Maximum Percent of Assets | 4.00% | 4.00% |
Manager and Other Related Par22
Manager and Other Related Parties - Summary of Fees Waived and Costs Reimbursed (Details) - RMC [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | $ 483,307 | $ 279,745 | $ 1,389,702 | $ 1,017,471 |
Waived | (377,396) | (215,556) | (971,997) | (583,571) |
Cost absorbed by RMC | (27,719) | (42,298) | (281,856) | (367,802) |
Total RMC support | (405,115) | (257,854) | (1,253,853) | (951,373) |
Net charged | 78,192 | 21,891 | 135,849 | 66,098 |
Loan Admin Fees [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | 124,038 | 76,208 | 318,899 | 217,883 |
Waived | (124,038) | (76,208) | (318,899) | (196,839) |
Cost absorbed by RMC | (21,044) | |||
Total RMC support | (124,038) | (76,208) | (318,899) | (217,883) |
Mortgage Servicing Fees [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | 30,627 | 20,228 | 81,795 | 55,749 |
Net charged | 30,627 | 20,228 | 81,795 | 55,749 |
Asset Management Fee [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | 106,800 | 71,672 | 288,194 | 197,307 |
Waived | (106,800) | (71,672) | (288,194) | (197,307) |
Total RMC support | (106,800) | (71,672) | (288,194) | (197,307) |
Cost Reimbursements [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | 146,558 | 67,676 | 364,904 | 189,425 |
Waived | (146,558) | (67,676) | (364,904) | (189,425) |
Total RMC support | (146,558) | (67,676) | (364,904) | (189,425) |
Professional Services [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | 69,944 | 42,298 | 303,035 | 306,472 |
Cost absorbed by RMC | (24,150) | (42,298) | (254,877) | (301,972) |
Total RMC support | (24,150) | (42,298) | (254,877) | (301,972) |
Net charged | 45,794 | 48,158 | 4,500 | |
Other [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | 5,340 | 1,663 | 32,875 | 50,635 |
Cost absorbed by RMC | (3,569) | (26,979) | (44,786) | |
Total RMC support | (3,569) | (26,979) | (44,786) | |
Net charged | $ 1,771 | $ 1,663 | $ 5,896 | $ 5,849 |
Manager and Other Related Par23
Manager and Other Related Parties - Formation Loan Transactions (Details) - USD ($) | 9 Months Ended | 96 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Formation Loan Transactions [Abstract] | ||
Balance, beginning of period | $ 2,519,438 | |
Formation loan advances to RMC | 1,225,582 | $ 4,375,935 |
Payments received from RMC | (618,934) | |
Early withdrawal penalties applied | (9,652) | (21,633) |
Balance, September 30, 2017 | $ 3,735,368 | 3,735,368 |
Subscription proceeds since inception | $ 62,622,357 | |
Formation loan advance rate | 7.00% |
Manager and Other Related Par24
Manager and Other Related Parties - Formation Loan, Estimated Future Minimum Payments (Details) | Sep. 30, 2017USD ($) |
Formation Loan Estimated Future Minimum Payments [Abstract] | |
2,017 | $ 251,944 |
2,018 | 251,944 |
2,019 | 251,944 |
2,020 | 251,944 |
2,021 | 251,944 |
Thereafter | 2,475,648 |
Total | $ 3,735,368 |
Manager and Other Related Par25
Manager and Other Related Parties - Summary of Organization and Offering Expenses (Details) - USD ($) | 9 Months Ended | 96 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | ||
Related Party Transactions [Abstract] | |||
Balance, beginning of period | $ 1,698,731 | ||
O&O expenses reimbursed to RMC | 639,280 | $ 2,614,024 | |
Early withdrawal penalties applied | [1] | (6,291) | (14,148) |
O&O expenses allocated | (162,851) | (315,642) | |
O&O expenses reimbursed by RMC | [2] | (29,645) | (145,010) |
Balance, end of period | [3],[4] | $ 2,139,224 | $ 2,139,224 |
[1] | Early withdrawal penalties collected are applied to the next installment of principal due under the formation loan and to reduce the amount owed to RMC for O&O expenses. The amounts credited will be determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. | ||
[2] | RMC reimburses the company for any unallocated O&O expenses on units redeemed. | ||
[3] | Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters. | ||
[4] | Proceeds from investors admitted to RMI IX were $57,898,707 through September 30, 2017. O&O expenses incurred by RMC and remaining to be reimbursed to RMC by RMI IX were $3,288,479 |
Manager and Other Related Par26
Manager and Other Related Parties - Summary of Organization and Offering Expenses (Parenthetical) (Details) | 9 Months Ended | 96 Months Ended |
Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | |
Managers and Other Related Parties (Details) - Syndication Costs [Line Items] | ||
Proceeds from investors admitted | $ 63,744,076 | |
O&O expenses incurred by RMC and remaining to be reimbursed to RMC | $ 3,288,479 | 3,288,479 |
O&O expenses reimbursed period to RMC | 120 months | |
Contributions Admitted To Members Capital | ||
Managers and Other Related Parties (Details) - Syndication Costs [Line Items] | ||
Proceeds from investors admitted | $ 57,898,707 | $ 57,898,707 |
Loans - Additional Information
Loans - Additional Information (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017USD ($)MortgageLoanLoan | Sep. 30, 2017USD ($)MortgageLoanLoan | Dec. 31, 2016USD ($)MortgageLoan | Jun. 30, 2017USD ($) | |
Loans (Details) [Line Items] | ||||
Loans Receivable, Term | 5 years | |||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 93 | 89 | ||
Loans Receivable, Number of Interest Only Loans | Loan | 74 | 74 | ||
Loans Receivable, Amortization Term | 30 years | |||
Mortgage Loans on Real Estate Renewed, Number of Loans | MortgageLoan | 0 | 1 | ||
Loans - principal renewed (in Dollars) | $ 190,000 | |||
Loans Receivable Largest Loan (in Dollars) | $ 3,244,623 | $ 3,244,623 | $ 1,350,000 | |
Loans Receivable, Percent | 100.00% | 100.00% | 100.00% | |
Loans - principal (in Dollars) | $ 53,091,886 | $ 53,091,886 | $ 40,123,393 | $ 46,490,743 |
Financing Receivable, Modifications, Number of Contracts | Loan | 0 | 0 | ||
Financing Receivable, Recorded Investment, Nonaccrual Status (in Dollars) | $ 139,643 | $ 139,643 | 0 | |
Financing receivable, recorded investment, 90 days past due and still accruing | 0 | 0 | 0 | |
Impaired Financing Receivable, with No Related Allowance, Recorded Investment (in Dollars) | 139,643 | 139,643 | 0 | |
Assets measured at fair value on non-recurring basis | 0 | 0 | ||
Liabilities measured at fair value on non-recurring basis | 0 | 0 | ||
Past Due 90 Days Or More [Member] | ||||
Loans (Details) [Line Items] | ||||
Accrued interest | $ 4,497 | $ 0 | ||
Impaired Loans [Member] | ||||
Loans (Details) [Line Items] | ||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 1 | |||
Impaired Loans [Member] | Past Maturity 1 to 152 Days [Member] | ||||
Loans (Details) [Line Items] | ||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 1 | |||
Financing Receivable, Recorded Investment, Nonaccrual Status (in Dollars) | $ 139,643 | $ 139,643 | ||
Five Years Or Less Term Loans [Member] | ||||
Loans (Details) [Line Items] | ||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 88 | |||
Loans Receivable, Percent of Aggregate Principal | 99.00% | 99.00% | ||
Interest Only [Member] | ||||
Loans (Details) [Line Items] | ||||
Loans Receivable, Percent of Aggregate Principal | 75.00% | 75.00% | ||
Largest Loan [Member] | ||||
Loans (Details) [Line Items] | ||||
Loans Receivable, Percent | 6.10% | 6.10% | ||
Loans Receivable, Percent of Assets | 5.50% | 5.50% | ||
Loans Receivable, Yield of Loan Acquired | 8.99% | 8.99% | ||
Loans Receivable Maturity Date | Jun. 1, 2019 | |||
Construction or Rehabilitation Loans [Member] | ||||
Loans (Details) [Line Items] | ||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 0 | |||
Construction Rehabilitation or Other Loans [Member] | ||||
Loans (Details) [Line Items] | ||||
Loans - principal (in Dollars) | $ 0 | $ 0 | ||
Minimum [Member] | ||||
Loans (Details) [Line Items] | ||||
Loans Receivable, Remaining Term | 5 years |
Loans - Secured Loan Principal
Loans - Secured Loan Principal Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Receivables [Abstract] | ||
Principal, beginning of period | $ 46,490,743 | $ 40,123,393 |
Loans funded | 12,403,750 | 31,889,883 |
Loans sold to affiliates | (999,995) | |
Principal payments received | (5,802,607) | (17,921,395) |
Principal, end of period | $ 53,091,886 | $ 53,091,886 |
Loans - Secured Loans Character
Loans - Secured Loans Characteristics (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017USD ($)MortgageLoanCounty | Dec. 31, 2016USD ($)MortgageLoanCounty | Jun. 30, 2017USD ($) | |
Secured Loan Transactions [Line Items] | |||
Number of secured loans | MortgageLoan | 93 | 89 | |
Secured loans - principal (in Dollars) | $ 53,091,886 | $ 40,123,393 | $ 46,490,743 |
Average secured loan - principal (in Dollars) | $ 570,880 | $ 450,825 | |
Average principal as percent of total principal | 1.10% | 1.10% | |
Average principal as percent of members’ capital | 1.00% | 1.00% | |
Average principal as percent of total assets | 1.00% | 1.10% | |
Largest secured loan - principal (in Dollars) | $ 3,244,623 | $ 1,350,000 | |
Largest principal as percent of total principal | 6.10% | 3.40% | |
Largest principal as percent of members’ capital | 5.60% | 3.10% | |
Largest principal as percent of total assets | 5.50% | 3.20% | |
Smallest secured loan - principal (in Dollars) | $ 54,008 | $ 8,651 | |
Smallest principal as percent of total principal | 0.10% | 0.10% | |
Smallest principal as percent of members’ capital | 0.10% | 0.10% | |
Smallest principal as percent of total assets | 0.10% | 0.10% | |
Number of counties where security is located (all California) | County | 18 | 16 | |
Largest percentage of principal in one county | 19.40% | 21.30% | |
Secured loans in foreclosure - principal (in Dollars) | $ 890,470 | ||
Minimum [Member] | |||
Secured Loan Transactions [Line Items] | |||
Secured loans – interest rate (fixed) | 7.10% | 7.00% | |
Maximum [Member] | |||
Secured Loan Transactions [Line Items] | |||
Secured loans – interest rate (fixed) | 10.50% | 10.00% | |
Filed Notice of Default [Member] | |||
Secured Loan Transactions [Line Items] | |||
Number of secured loans | MortgageLoan | 2 |
Loans - Secured Loans by Lien P
Loans - Secured Loans by Lien Position in the Collateral (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($)MortgageLoan | Dec. 31, 2016USD ($)MortgageLoan | Jun. 30, 2017USD ($) | ||
Loans (Details) - Secured Loans by Lien Position in the Collateral [Line Items] | ||||
Loans | MortgageLoan | 93 | 89 | ||
Loans - principal (in Dollars) | $ 53,091,886 | $ 40,123,393 | $ 46,490,743 | |
Liens due other lenders at loan closing | 28,264,524 | 12,738,126 | ||
Total debt | 81,356,410 | 52,861,519 | ||
Appraised property value at loan closing | $ 164,799,000 | $ 123,709,057 | ||
Percent of total debt to appraised values (LTV) at loan closing | [1] | 54.20% | 51.50% | |
Loans - percent | 100.00% | 100.00% | ||
First Trust Deeds [Member] | ||||
Loans (Details) - Secured Loans by Lien Position in the Collateral [Line Items] | ||||
Loans | MortgageLoan | 58 | 63 | ||
Loans - principal (in Dollars) | $ 37,350,830 | $ 30,350,642 | ||
Loans - percent | 70.00% | 76.00% | ||
Second Trust Deeds [Member] | ||||
Loans (Details) - Secured Loans by Lien Position in the Collateral [Line Items] | ||||
Loans | MortgageLoan | 35 | 26 | ||
Loans - principal (in Dollars) | $ 15,741,056 | $ 9,772,751 | ||
Loans - percent | 30.00% | 24.00% | ||
[1] | Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing nor does it include decreases or increases of the amount owing on senior liens to other lenders. |
Loans - Secured Loans by Proper
Loans - Secured Loans by Property Type (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($)MortgageLoan | Dec. 31, 2016USD ($)MortgageLoan | Jun. 30, 2017USD ($) | ||
Loans (Details) - Secured Loans by Property Type [Line Items] | ||||
Loans | MortgageLoan | 93 | 89 | ||
Loans - principal (in Dollars) | $ | $ 53,091,886 | $ 40,123,393 | $ 46,490,743 | |
Loans - percent | 100.00% | 100.00% | ||
Single Family [Member] | ||||
Loans (Details) - Secured Loans by Property Type [Line Items] | ||||
Loans | MortgageLoan | [1] | 70 | 63 | |
Loans - principal (in Dollars) | $ | [1] | $ 38,217,246 | $ 25,582,833 | |
Loans - percent | [1] | 72.00% | 64.00% | |
Multifamily [Member] | ||||
Loans (Details) - Secured Loans by Property Type [Line Items] | ||||
Loans | MortgageLoan | 5 | 5 | ||
Loans - principal (in Dollars) | $ | $ 2,017,903 | $ 3,211,380 | ||
Loans - percent | 4.00% | 8.00% | ||
Commercial [Member] | ||||
Loans (Details) - Secured Loans by Property Type [Line Items] | ||||
Loans | MortgageLoan | 18 | 21 | ||
Loans - principal (in Dollars) | $ | $ 12,856,737 | $ 11,329,180 | ||
Loans - percent | 24.00% | 28.00% | ||
[1] | Single family property type as of September 30, 2017 consists of 11 loans with principal of $6,491,246 that are owner occupied and 59 loans with principal of $31,726,000 that are non-owner occupied. At December 31, 2016, single family property consisted of 9 loans with principal of $3,538,729 that are owner occupied and 54 loans with principal of $22,044,104 that are non-owner occupied. |
Loans - Secured Loans by Prop32
Loans - Secured Loans by Property Type (Parenthetical) (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017USD ($)MortgageLoan | Dec. 31, 2016USD ($)MortgageLoan | Jun. 30, 2017USD ($) | |
Loans (Details) - Secured Loans by Property Type [Line Items] | |||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 93 | 89 | |
Mortgage Loans on Real Estate, Commercial and Consumer, Net (in Dollars) | $ | $ 53,091,886 | $ 40,123,393 | $ 46,490,743 |
Single Family Property-Owner Occupied [Member] | |||
Loans (Details) - Secured Loans by Property Type [Line Items] | |||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 11 | 9 | |
Mortgage Loans on Real Estate, Commercial and Consumer, Net (in Dollars) | $ | $ 6,491,246 | $ 3,538,729 | |
Single Family Property-NonOwner Occupied [Member] | |||
Loans (Details) - Secured Loans by Property Type [Line Items] | |||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 59 | 54 | |
Mortgage Loans on Real Estate, Commercial and Consumer, Net (in Dollars) | $ | $ 31,726,000 | $ 22,044,104 |
Loans - Secured Loans Distribut
Loans - Secured Loans Distributed Within California (Details) - USD ($) | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 53,091,886 | $ 46,490,743 | $ 40,123,393 | |
Loans - percent | 100.00% | 100.00% | ||
Alameda [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 10,312,037 | $ 7,726,853 | |
Loans - percent | [1] | 19.40% | 19.30% | |
San Francisco [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 10,193,096 | $ 6,913,534 | |
Loans - percent | [1] | 19.10% | 17.20% | |
San Mateo [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 7,615,488 | $ 4,644,731 | |
Loans - percent | [1] | 14.30% | 11.60% | |
Santa Clara [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 3,989,046 | $ 4,073,501 | |
Loans - percent | [1] | 7.50% | 10.20% | |
Solano [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 109,633 | $ 1,820,336 | |
Loans - percent | [1] | 0.20% | 4.50% | |
Contra Costa [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 1,514,220 | $ 989,994 | |
Loans - percent | [1] | 2.90% | 2.50% | |
Marin [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 374,258 | $ 377,241 | |
Loans - percent | [1] | 0.70% | 0.90% | |
Sonoma [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 8,652 | ||
Loans - percent | [1] | 0.10% | ||
San Francisco Bay Area [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 34,107,778 | $ 26,554,842 | |
Loans - percent | [1] | 64.10% | 66.30% | |
Monterey [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 700,934 | $ 1,840,927 | ||
Loans - percent | 1.30% | 4.60% | ||
Placer [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 644,226 | $ 1,074,437 | ||
Loans - percent | 1.20% | 2.70% | ||
San Joaquin [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 157,375 | $ 158,340 | ||
Loans - percent | 0.30% | 0.40% | ||
Yolo [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 179,506 | $ 156,810 | ||
Loans - percent | 0.30% | 0.40% | ||
Sacramento [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 850,000 | |||
Loans - percent | 1.60% | 0.00% | ||
Other Northern California [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 2,532,041 | $ 3,230,514 | ||
Loans - percent | 4.70% | 8.10% | ||
Northern California [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 36,639,819 | $ 29,785,356 | ||
Loans - percent | 68.80% | 74.40% | ||
Los Angeles [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 8,587,898 | $ 8,547,567 | ||
Loans - percent | 16.20% | 21.30% | ||
San Diego [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 1,884,859 | $ 933,571 | ||
Loans - percent | 3.60% | 2.30% | ||
Orange [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 2,096,511 | $ 494,334 | ||
Loans - percent | 4.00% | 1.20% | ||
Los Angeles & Coastal [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 12,569,268 | $ 9,975,472 | ||
Loans - percent | 23.80% | 24.80% | ||
Santa Barbara [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 1,412,660 | |||
Loans - percent | 2.70% | |||
San Bernardino [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 2,110,000 | |||
Loans - percent | 4.00% | |||
Riverside [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 360,139 | $ 362,565 | ||
Loans - percent | 0.70% | 0.80% | ||
Other Southern California [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 3,882,799 | $ 362,565 | ||
Loans - percent | 7.40% | 0.80% | ||
Southern California [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 16,452,067 | $ 10,338,037 | ||
Loans - percent | 31.20% | 25.60% | ||
[1] | Includes Silicon Valley |
Loans - Past Due Financing Rece
Loans - Past Due Financing Receivables (Details) | Sep. 30, 2017USD ($)Loan | Dec. 31, 2016USD ($)Loan |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Number of loans | Loan | 93 | 89 |
Amount | $ | $ 53,091,886 | $ 40,123,393 |
Past Due 30-89 Days [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Number of loans | Loan | 1 | |
Amount | $ | $ 377,241 | |
Past Due 90-179 Days [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Number of loans | Loan | 1 | 2 |
Amount | $ | $ 139,643 | $ 890,470 |
Total Past Due [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Number of loans | Loan | 1 | 3 |
Amount | $ | $ 139,643 | $ 1,267,711 |
Current [Member] | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Number of loans | Loan | 92 | 86 |
Amount | $ | $ 52,952,243 | $ 38,855,682 |
Loans - Secured Loans Scheduled
Loans - Secured Loans Scheduled Maturities (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017USD ($)MortgageLoan | Dec. 31, 2016USD ($)MortgageLoan | Jun. 30, 2017USD ($) | ||
Secured Loans Scheduled Maturities [Abstract] | ||||
2017 | MortgageLoan | [1] | 6 | ||
2018 | MortgageLoan | 15 | |||
2019 | MortgageLoan | 36 | |||
2020 | MortgageLoan | 16 | |||
2021 | MortgageLoan | 7 | |||
Thereafter | MortgageLoan | 12 | |||
Total future maturities | MortgageLoan | 92 | |||
Matured as of September 30, 2017 | MortgageLoan | 1 | |||
Total secured loan balance | MortgageLoan | 93 | 89 | ||
2017 | $ | [1] | $ 2,681,185 | ||
2018 | $ | 8,522,197 | |||
2019 | $ | 27,751,303 | |||
2020 | $ | 7,095,731 | |||
2021 | $ | 3,380,524 | |||
Thereafter | $ | 3,521,303 | |||
Total future maturities | $ | 52,952,243 | |||
Matured as of September 30, 2017 | $ | 139,643 | |||
Total secured loan balance | $ | $ 53,091,886 | $ 40,123,393 | $ 46,490,743 | |
2,017 | [1] | 5.00% | ||
2,018 | 16.00% | |||
2,019 | 52.00% | |||
2,020 | 13.00% | |||
2,021 | 6.00% | |||
Thereafter | 7.00% | |||
Total future maturities | 99.00% | |||
Matured as of September 30, 2017 | 1.00% | |||
Total secured loan balance | 100.00% | 100.00% | ||
[1] | Loans maturing in 2017 from October 1 to December 31. |
Commitment and Contingencies, O
Commitment and Contingencies, Other Than Loan Commitments - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)ContractualObligation | |
Commitments And Contingencies Disclosure [Abstract] | |
Number of contractual obligations | ContractualObligation | 2 |
O&O expenses incurred by RMC and cash remaining to be reimbursed | $ 3,288,479 |
Redemptions of members' capital | $ 404,043 |
Commitments and Contingencies37
Commitments and Contingencies, Other Than Loan Commitments - Scheduled Redemptions of Members' Capital (Details) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Scheduled Redemptions Of Members Capital [Abstract] | |
2,017 | $ 364,877 |
2,018 | 12,000 |
2,019 | 12,000 |
2,020 | 12,000 |
2,021 | 3,166 |
Total | $ 404,043 |