Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2020shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2020 |
Document Fiscal Year Focus | 2020 |
Document Fiscal Period Focus | Q3 |
No Trading Symbol Flag | true |
Entity Registrant Name | Redwood Mortgage Investors IX |
Entity Central Index Key | 0001448038 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Common Stock, Shares Outstanding | 0 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Shell Company | false |
Document Quarterly Report | true |
Document Transition Report | false |
Entity File Number | 000-55601 |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 26-3541068 |
Entity Address, Address Line One | 177 Bovet Road |
Entity Address, Address Line Two | Suite 520 |
Entity Address, City or Town | San Mateo |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 94402 |
City Area Code | 650 |
Local Phone Number | 365-5341 |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
ASSETS | ||
Cash, in banks | $ 601,742 | $ 4,450,529 |
Loans held for sale | 7,534,512 | |
Loans | ||
Principal | 75,949,063 | 70,660,284 |
Advances | 17,674 | 14,040 |
Accrued interest | 820,482 | 680,146 |
Prepaid interest | (14,308) | |
Loan balances secured by deeds of trust | 76,772,911 | 71,354,470 |
Allowance for loan losses | (55,000) | (87,000) |
Loan balances secured by deeds of trust, net | 76,717,911 | 71,267,470 |
Debt issuance costs, net | 82,207 | |
Promissory note from related party (Note 3) | 850,000 | |
Other receivables | 19,200 | |
Total assets | 85,805,572 | 75,717,999 |
LIABILITIES AND MEMBERS’ CAPITAL | ||
Accounts payable and accrued liabilities | 82,385 | 36,933 |
Payable to related party (Note 3) | 78,539 | |
Line of credit | 10,000,000 | |
Total liabilities | 10,160,924 | 36,933 |
Commitments and contingencies (Note 6) | ||
Members’ capital, net | 79,577,649 | 79,629,130 |
Receivable from manager (formation loan) | (3,933,001) | (3,948,064) |
Members’ capital, net of formation loan | 75,644,648 | 75,681,066 |
Total liabilities and members’ capital | $ 85,805,572 | $ 75,717,999 |
Statements of Income (Unaudited
Statements of Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | ||||
Interest income | $ 1,857,029 | $ 1,526,142 | $ 4,796,705 | $ 4,405,007 |
Interest expense | (122,618) | (169,362) | ||
Net interest income | 1,734,411 | 1,526,142 | 4,627,343 | 4,405,007 |
Late fees | 7,040 | 18,162 | 20,042 | 44,789 |
Gain on sale, loans | 20,833 | 0 | 20,833 | |
Total revenue, net | 1,741,451 | 1,565,137 | 4,647,385 | 4,470,629 |
Recovery of loan losses | (75) | |||
Operations expense | ||||
Mortgage servicing fees | 48,500 | 40,450 | 134,831 | 122,010 |
Asset management fees, net (Note 3) | 135,321 | 119,187 | 405,963 | 158,916 |
Costs from Redwood Mortgage Corp., net (Note 3) | 72,181 | 72,181 | ||
Professional services | 156,005 | 178,752 | 452,090 | 404,927 |
Other | 3,331 | 19 | 10,678 | 24,757 |
Total operations expense | 415,338 | 338,408 | 1,075,743 | 710,610 |
Net income | 1,326,113 | 1,226,729 | 3,571,717 | 3,760,019 |
Members (99%) | 1,312,852 | 1,214,462 | 3,535,999 | 3,722,419 |
Manager (1%) | $ 13,261 | $ 12,267 | $ 35,718 | $ 37,600 |
Statements of Income (Parenthet
Statements of Income (Parenthetical) (Unaudited) - Redwood Mortgage Investors IX [Member] | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Members investment | 99.00% | 99.00% | 99.00% | 99.00% |
Manager 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 | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Beginning balance | $ 75,681,066 | ||||
Net income | $ 1,326,113 | $ 1,226,729 | 3,571,717 | $ 3,760,019 | |
Early withdrawal penalties | [1] | 12,468 | |||
Ending balance | 75,644,648 | 75,644,648 | |||
RMC [Member] | |||||
Early withdrawal penalties | 5,598 | 6,611 | 27,531 | 67,695 | |
Investors In Applicant Status [Member] | |||||
Beginning balance | 651,500 | ||||
Partners capital accounts | 12,355 | ||||
Investors In Applicant Status [Member] | Premiums Admitted To Members Capital [Member] | |||||
Partners capital accounts | (12,355) | ||||
Investors In Applicant Status [Member] | Contributions On Application | |||||
Partners capital accounts | 2,666,508 | ||||
Investors In Applicant Status [Member] | Contributions Admitted To Members Capital [Member] | |||||
Partners capital accounts | (3,318,008) | ||||
Capital Members [Member] | |||||
Beginning balance | 81,547,630 | 81,934,546 | 81,755,930 | 79,198,453 | |
Net income | 1,312,852 | 1,214,462 | 3,535,999 | 3,722,419 | |
Organization and offering expenses allocated | (79,580) | (85,485) | (240,489) | (247,975) | |
Early withdrawal penalties | 0 | 0 | |||
Ending balance | 81,373,590 | 81,759,674 | 81,373,590 | 81,759,674 | |
Capital Members [Member] | Premiums Admitted To Members Capital [Member] | |||||
Partners capital accounts | 12,355 | ||||
Capital Members [Member] | Earnings Distributed To Members [Member] | |||||
Partners capital accounts | (1,108,339) | (1,147,807) | (3,354,984) | (3,375,675) | |
Capital Members [Member] | Earnings Distributed Used In DRIP [Member] | |||||
Partners capital accounts | 567,813 | 604,814 | 1,730,609 | 1,808,995 | |
Capital Members [Member] | Member's Redemptions [Member] | |||||
Partners capital accounts | (866,786) | (760,856) | (2,053,475) | (2,676,906) | |
Capital Members [Member] | Contributions Admitted To Members Capital [Member] | |||||
Partners capital accounts | 3,318,008 | ||||
Managers Capital Net [Member] | |||||
Beginning balance | 155,725 | 153,864 | 133,268 | 125,200 | |
Net income | 13,261 | 12,267 | 35,718 | 37,600 | |
Early withdrawal penalties | 0 | 0 | |||
Ending balance | 168,986 | 166,131 | 168,986 | 166,131 | |
Managers Capital Net [Member] | Contributions Admitted To Members Capital [Member] | |||||
Partners capital accounts | 3,331 | ||||
Unallocated Organization and Offering Expenses [Member] | |||||
Beginning balance | (2,068,360) | (2,460,386) | (2,260,068) | (2,519,458) | |
Organization and offering expenses | (185,332) | ||||
Organization and offering expenses allocated | 79,580 | 85,485 | 240,489 | 247,975 | |
Early withdrawal penalties | 2,530 | 12,468 | 19,415 | ||
Ending balance | (1,964,927) | (2,357,478) | (1,964,927) | (2,357,478) | |
Unallocated Organization and Offering Expenses [Member] | RMC [Member] | |||||
Organization and offering expenses repaid by RMC | 21,323 | 17,423 | 42,184 | 79,922 | |
Members Capital, Net [Member] | |||||
Beginning balance | 79,634,995 | 79,628,024 | 79,629,130 | 76,804,195 | |
Net income | 1,326,113 | 1,226,729 | 3,571,717 | 3,760,019 | |
Organization and offering expenses | (185,332) | ||||
Early withdrawal penalties | 2,530 | 12,468 | 19,415 | ||
Ending balance | 79,577,649 | 79,568,327 | 79,577,649 | 79,568,327 | |
Members Capital, Net [Member] | RMC [Member] | |||||
Organization and offering expenses repaid by RMC | 21,323 | 17,423 | 42,184 | 79,922 | |
Members Capital, Net [Member] | Premiums Admitted To Members Capital [Member] | |||||
Partners capital accounts | 12,355 | ||||
Members Capital, Net [Member] | Earnings Distributed To Members [Member] | |||||
Partners capital accounts | (1,108,339) | (1,147,807) | (3,354,984) | (3,375,675) | |
Members Capital, Net [Member] | Earnings Distributed Used In DRIP [Member] | |||||
Partners capital accounts | 567,813 | 604,814 | 1,730,609 | 1,808,995 | |
Members Capital, Net [Member] | Member's Redemptions [Member] | |||||
Partners capital accounts | $ (866,786) | $ (760,856) | $ (2,053,475) | (2,676,906) | |
Members Capital, Net [Member] | Contributions Admitted To Members Capital [Member] | |||||
Partners capital accounts | $ 3,321,339 | ||||
[1] | (1)Beginning July 1, 2019, the O&O expense component of early withdrawal penalties are applied as a reduction to O&O expenses to be repaid by RMC to members’ capital on scheduled redemptions. The amounts credited are determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. Prior to June 30, 2019, early withdrawal penalties collected were applied to the next installment due under the formation loan and to reduce the amount owed to RMC for O&O expenses. |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operations | ||
Interest income received | $ 4,658,819 | $ 4,307,297 |
Interest expense paid | (101,445) | |
Late fees | 20,042 | 45,289 |
Operations expense | (1,011,549) | (635,059) |
Total cash provided by operations | 3,565,867 | 3,717,527 |
Investing – loans | ||
Loans funded | (36,327,850) | (53,073,200) |
Loans sold to non-affiliate, net | 480,000 | 4,994,818 |
Loan transferred from related mortgage fund | (2,296,677) | |
Principal collected - secured | 25,301,168 | 36,646,053 |
Advances (made on) received from loans | (3,634) | 618 |
Promissory note funded to related party | (850,000) | |
Total cash used in investing | (13,696,993) | (11,431,711) |
Distributions to members | ||
Distributions to members | (3,650,319) | (4,175,891) |
Contributions by members, net | ||
Organization and offering expenses received (paid), net | 42,184 | (105,410) |
Formation loan funding | (186,656) | |
Total contributions by members, net | 42,184 | 2,390,088 |
Cash distributed to members, net | (3,608,135) | (1,785,803) |
Advances | 19,250,000 | |
Repayments | (9,250,000) | |
Debt issuance costs | (109,526) | |
Cash from line of credit | 9,890,474 | |
Total cash provided by (used in) financing | 6,282,339 | (1,785,803) |
Net decrease in cash | (3,848,787) | (9,499,987) |
Cash, beginning of period | 4,450,529 | 10,674,953 |
Cash, end of period | 601,742 | 1,174,966 |
Net income | 3,571,717 | 3,760,019 |
Adjustments to reconcile net income to net cash provided by operating activities | ||
(Gain) on sale, loans | (20,833) | |
Charge off of accrued interest | (11,858) | |
Amortization of debt issuance costs | 27,320 | |
Recovery of loan losses | (75) | |
Change in operating assets and liabilities | ||
Prepaid interest | 14,308 | 21,000 |
Accrued interest | (140,336) | (118,710) |
Other receivable | (19,200) | |
Accounts payable and accrued liabilities | 45,452 | 76,285 |
Payable to related parties | 78,539 | |
Other | (234) | |
Total adjustments | (5,850) | (42,492) |
Total cash provided by operations | 3,565,867 | 3,717,527 |
Members Equity Contributions [Member] | ||
Contributions by members, net | ||
Contributions by new members | 2,682,154 | |
Earnings Distributed To Members [Member] | ||
Distributions to members | ||
Distributions to members | (1,624,375) | (1,566,680) |
Member's Redemptions [Member] | ||
Distributions to members | ||
Distributions to members | $ (2,025,944) | $ (2,609,211) |
Statements of Cash Flows (Paren
Statements of Cash Flows (Parenthetical) (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Non cash financing activity in early withdrawal penalties | $ 27,531 | $ 67,695 |
Non cash investing activity principal charges | 20,068 | 0 |
Loans transferred to held for sale | 7,534,512 | 0 |
Earnings Distributed To Members [Member] | ||
Earnings distributed used in DRIP | 1,730,609 | 1,808,995 |
Formation Loan [Member] | ||
Non cash financing activity in early withdrawal penalties | 15,063 | 48,281 |
Unallocated Organization and Offering Expenses [Member] | ||
Non cash financing activity in early withdrawal penalties | $ 12,468 | $ 19,415 |
Organization and General
Organization and General | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Organization and General | NOTE 1 – ORGANIZATION AND GENERAL In the opinion of management of Redwood Mortgage Corp. (RMC or 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 unaudited financial statements should be read in conjunction with the audited financial statements included in the company’s Form 10-K for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission (SEC). The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the operating results to be expected for the full year. Redwood Mortgage Investors IX, LLC (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. The ongoing sources of funds for loans are the proceeds (net of redemption of members’ capital and operating expenses) from: • loan payoffs; • borrowers’ monthly principal payments; • sale of units to members participating in the dividend reinvestment plan and – prior to May 2019 – sale of units to new members, net of reimbursement to RMC of organization and offering expenses (O&O expenses) and net of amounts advanced to RMC for the formation loan; • line of credit advances; • loan sales to unaffiliated third parties and loan transfers by executed assignment to affiliated mortgage funds; and, • payments from RMC on the outstanding balance of the formation loan. The mortgage loans the company funds and/or invests in are arranged and generally are serviced by RMC. The ongoing ability of the company to source funds for loans from one or more of the ongoing sources above may be adversely affected by the COVID-19 pandemic and by the social and governmental responses and severe economic disruptions caused by the pandemic (see COVID-19, below). 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 funding, and purchased at the current par value, which approximates fair value. The company intends to hold until maturity the loans in which it invests and does not presently intend to invest in mortgage loans primarily for the purpose of reselling such loans in the ordinary course of business; however, the company may sell mortgage loans (or fractional interests therein) when the manager determines that it appears to be advantageous for the company to do so, based upon then current interest rates, the length of time that the loan has been held by the company, the company’s credit risk and concentration risk and the overall investment objectives of the company. Loans sold to third parties may be sold for par, at a premium or, in the case of non-performing or under performing loans, at a discount. Company loans may be sold to third parties or to the manager or its related mortgage funds; however, any loan sold to the manager or a related mortgage fund thereof will be sold for a purchase price equal to the greater of (i) the par value of the loan or (ii) the fair market value of the loan. The manager will not receive commissions or broker fees with respect to loan sales conducted for the company; however, selling loans will increase members’ capital available for investing in new loans for which the manager will earn brokerage fees and other forms of compensation. The rights, duties and powers of the members and manager of the company are governed by the Ninth Amended and Restated Limited Liability Company Operating Agreement of RMI IX (the Operating Agreement), the Delaware Limited Liability Company Act and the California Revised Uniform Limited Liability Company Act. The following is a summary of certain provisions of the Operating Agreement and is qualified in its entirety by the terms of the Operating Agreement. Members should refer to the company’s Operating Agreement for complete disclosure of its provisions. The company is externally managed by RMC. The manager is solely responsible for managing the business and affairs of RMI IX, 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 is entitled to one percent (1%) of the profits and losses of the company and to fees and reimbursements of qualifying costs as specified in the Operating Agreement. Prior to May 2019, the manager was required to contribute to capital one tenth of one percent (0.1%) of the aggregate capital accounts of the members. The company’s 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. Members representing a majority of the outstanding units may, without the concurrence of the managers, vote to: • dissolve the company; • amend the Operating Agreement, subject to certain limitations; • approve or disapprove the sale of all or substantially all of the assets of the company; and • 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. Net income (losses) are allocated among the members according to their respective capital accounts after one percent (1%) of the net income (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 partnership tax shelter investments. Federal and state income taxes are the obligation of the members, other than the annual California franchise tax and the California LLC cash receipts taxes paid by the company. The company’s net income, cash available for distribution, and net-distribution rate fluctuates depending on: • loan origination volume and the balance of capital available to lend; • the current and future interest rates negotiated with borrowers; • line of credit advances, net and the interest rate therein; • the timing and amount of gains received from loan sales, if any; • payment of fees and cost reimbursements to RMC; • the amount and timing of other operating expenses, including expenses for professional services; • payments from RMC on the outstanding balance of the formation loan; and, • financial support, if any, from RMC (Note 3). COVID-19 In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. Since that time, COVID-19 has spread throughout the United States, including in the California regions and markets in which the company lends. In response, national, state, and local governments have taken, and are expected to continue to take, various actions, including the passage of laws and regulations, on a wide array of topics, in an attempt to slow the spread of COVID-19. On March 4, 2020, the Governor of California declared a State of Emergency related to the COVID-19 outbreak, followed by, among other administrative or executive orders for the purpose of ensuring that COVID-19 remains controlled and that the residents and visitors in California remain safe and secure. These emergency restrictions have substantially limited the operation of non-essential businesses and the activities of individuals. The COVID-19 pandemic and these restrictions and operating protocols have had a significant adverse effect on the global, US, and California economies and have caused significant disruption to the financial and real estate markets. The restrictions and economic conditions caused by COVID-19 have also caused record unemployment nationwide as well as a significant number of layoffs and furloughs in the regions and communities in which the company lends. Despite the improvement in the economy in recent months economic activity remains far below its pre-pandemic level and unemployment remains elevated. The ultimate effect of COVID-19 on the California real estate markets and broader economy is not known nor is the ultimate length of time California and other regions will be subject to the restrictions described and their accompanying effects. Some states and regions have begun to ease prior restrictions which may improve economic and market conditions; however, the easing of certain of these restrictions has resulted in recent increases in COVID-19 cases and deaths, requiring reinstatement of prior restrictions and the prolonging of the COVID-19 crisis. On August 28, 2020 California issued a "Blueprint for a Safer Economy" which describes a tiered approach to relaxing and tightening restrictions on activities based on specified criteria and as permitted by the order based on county health conditions and circumstances. As of September 30, 2020, the company has not experienced a significant increase or decrease in the number of borrowers delaying payments compared to June 30, 2020 or December 31, 2019. The requests for delay in payments or payment relief may not be indicative of requests in any future period. A worsening of future cash flows from borrower missed or delayed payments could result in the company experiencing an increase in loans being designated non-accrual and an increase in payments in arrears and possibly foreclosures. However, as the company generally lends at loan to value ratios below 70%, the delays in payments has not increased the credit risk on the loans, and therefore based on the company’s assessment of the value of real estate collateralizing its loans, there has not been an increase in the allowance for loan losses during the three and nine months ended September 30, 2020. The continued spread of COVID-19 or any other similar outbreaks in the future and the continued impact on social interaction, economies and financial markets may have significant adverse effects on (i) California real estate markets and thereby the company’s business, financial condition and result of operations due to the possibility of some borrowers having a reduced capacity and/or commitment to make principal and interest payments (ii) a decrease in the volume of loans funded and (iii) a decline in the values of the California real properties that serve as collateral for the loans. Declines in the value of real estate may lead to increases in the allowance for loan losses. Moreover, the Federal Reserve has taken action to lower the Federal Funds rate, which may lower the interest rate charged by banks and other competitors of the manager for real estate secured loans and which may reduce loan originations and increase loan payoffs. Such outcomes would negatively affect interest income and, therefore, earnings, financial condition and results of operations of the company. Potential other issues and risks resulting from the COVID-19 pandemic include: • Should key personnel of the manager become incapacitated by the COVID-19 virus, or be required (voluntarily or involuntarily) to terminate active involvement with the manager due to the effects of the virus, the business of the manager and related impact on the company could be adversely impacted. • The ability to enforce loan terms through foreclosure may be delayed and adversely effected by current or future limitations or moratoriums on foreclosures enacted by state or local authorities to address the impacts of COVID-19. • Loans secured by rental properties may be adversely impacted by restrictions or moratoriums on evictions enacted by federal, state or local authorities to address the impacts of COVID-19. • Partial or complete closures of county recording offices may affect the ability of the company to record deeds of trust and other documents and may affect the cost or ability of the company to obtain adequate title insurance for its loans. • The uncertainty of the effects of COVID-19 on borrowers, properties, and the economy generally may result in inaccuracy or delays in the recognition of loan losses or impairments by the company. • The company may incur additional costs to remedy damages caused by such disruptions and restrictions. Given the ongoing and dynamic nature of the circumstances, it is not possible to predict or estimate the ultimate impact of the COVID-19 outbreak on the financial condition or results of operations and liquidity of the company for the remainder of 2020. While the company has not incurred material disruptions this far, the rapid developments and fluidity of COVID-19 may cause the manager to adjust its lending parameters and investment strategy. The manager is continuing to monitor this situation and will adjust its response in concert with federal, state and local health officials and governmental authorities to protect the health and safety of its employees and to respond to changes in the real estate markets that it serves. On March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” was signed into law. The manager continues to examine the impact that the CARES Act may have on the company’s business. Although the manager does not expect the CARES Act to have a direct impact on the company, it may have an indirect impact on the company’s borrowers and its manager. At the time of issuance of the company’s financial statements, the manager is unable to estimate the impact that the CARES Act will have on the company’s financial condition, results of operations, or liquidity for the remainder of 2020. Natural Disasters-Wildfires Wildfires have occurred in recent years in different regions of California, and related flooding and mudslides have also occurred, including in the counties where the company holds real estate collateral as security for its loans. The most destructive of the recent wildfires, which have burned thousands of acres and destroyed thousands of homes and structures, have originated in wildlands adjacent to urban areas. Although the recent natural disasters, including the Woodward, Glass, Complex and other fires did not directly affect the company, wildfires such as these could pose a threat to the real estate collateral that the company holds as security for its loans and adversely affect the demand for loans. 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 otherwise distributable to the members with respect to any period the respective amounts of O&O expenses allocated to the members’ accounts for the applicable period pursuant to the company’s reimbursement to RMC and allocation to members’ accounts of O&O expenses. The amount otherwise distributable, less the respective amounts of O&O expenses allocated to members, is the net distribution. Per the terms of the company’s Operating Agreement, cash available for distribution to the members is allocated among the members in proportion to their percentage interests (except with respect to differences in the amounts of O&O 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. See Note 3 (Manager and Other Related Parties) to the financial statements for a detailed discussion on the allocation of O&O expenses to members’ accounts. The distribution reinvestment plan (DRIP) provision of the Operating Agreement permits members to elect to have all or a portion of their monthly distributions reinvested in the purchase of additional units. Cash available for distributions allocable to members, other than those participating in the 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 month, the company relies in part on its forecast of full-year net income, which takes into account the difference between the forecasted net income for the remainder of the year and actual results in the year to date and the requirement to maintain a cash reserve. As of September 30, 2020, the difference between earnings allocated to members’ capital accounts and net income available to members was approximately $59,000, and is expected to be offset by future earnings in excess of net distributions in 2020 as the cash available at September 30, 2020 and advances on the line of credit are deployed to make new loans. Liquidity and unit redemption program There are substantial restrictions on transferability of units, and there is no established public trading and/or secondary market for the units and none is expected to develop. 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 maximum number of units which may be redeemed per quarter per individual member shall not exceed the greater of (i) 100,000 units, or (ii) 25% of the member’s total outstanding units. For redemption requests requiring more than one quarter to fully redeem, the percentage discount amount if any, that 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. As provided in the Operating Agreement, 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. In the event unit withdrawal requests exceed 5% in any calendar year, units will be redeemed in the order of priority provided in the Operating Agreement. Manager’s interest If a manager is removed, withdrawn or terminated, the company will pay to the manager all amounts then accrued and due 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. The formation loan is forgiven if the manager is removed and RMC is no longer receiving payments for services rendered. Distribution reinvestment plan (DRIP)/Unit sales On May 9, 2019, the company filed a Registration Statement on Form S-3 with the SEC (SEC File No. 333-231333) to offer up to 15,000,000 units ($15,000,000) to members of record as of April 30, 2019 that had previously elected to participate in the DRIP or that elect to participate in the DRIP in those states in which approval has been obtained. The Registration Statement on Form S-3 became effective on May 9, 2019. As of September 30, 2020, the gross proceeds from sales of units to our members under our DRIP pursuant to the May 9, 2019 Form S-3 Registration Statement (after May 9, 2019) was approximately $3,345,000. On June 11, 2019, the company filed a Post-Effective Amendment No. 5 with the SEC (SEC File No. 333-208315) to deregister all of the units which were registered under its Form S-11 Registration Statement that remained unsold as of April 30, 2019. The company uses the gross proceeds from the sale of the units (for periods beginning May 1, 2019, DRIP units only) to: • make additional loans; • fund working capital reserves; • prior to May 2019, pay RMC up to 4.5% of proceeds from sale of units for O&O expenses, excluding units sold in the DRIP; and • prior to May 2019, fund a formation loan to RMC of up to 7% of proceeds from sale of units, excluding units sold in the DRIP. Commissions paid to broker-dealers/ Formation loan for periods prior to May 2019 Commissions for unit sales (other than DRIP units) were previously paid to broker-dealers (B/D sales commissions) by RMC and were not paid directly by the company out of offering proceeds. Instead, the company advanced to RMC, from offering proceeds, amounts sufficient to pay the B/D sales commissions and premiums paid to investors up to 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.” Term of the company The term of the company will continue until 2028, unless sooner terminated as provided in the Operating Agreement, or extended by majority vote of the members. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
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 owned, at acquisition and subsequently. Actual results could differ materially from these estimates. Fair value estimates GAAP defines fair value as the 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 real property 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 income 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 in banks At September 30, 2020, certain of the company’s cash balances in banks exceed federally insured limits of $250,000. The bank or banks in which funds are deposited are reviewed periodically for their general credit-worthiness/investment grade credit rating. See Note 5 (Line of Credit) for compensating balance arrangements. Loans and interest income Performing loans are carried at amortized cost which is generally equal to 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 amounts paid out on the borrower’s behalf and any accrued interest on amounts paid out, until repaid by the borrower. For performing loans, interest is accrued daily on the principal plus advances, if any. Non-performing loans (i.e., loans with a payment in arears) less than 180 days delinquent continue to recognize interest income as long as the loan is in the process of collection and is considered to be well-secured. Non-performing loans are placed on non-accrual status if 180 days delinquent (or 90 days past maturity without making monthly interest payments) or earlier if management determines 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 for accounting purposes only; 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. Late fees are recognized in the period received. The company may fund a specific loan net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. Any interest reserve is amortized over the period that the amount is prepaid. 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. In the normal course of the company’s operating activities, performing loans that are maturing or have matured may be renewed at then current market rates of interest and terms for new loans. Such renewals are not designated as impaired. From time to time, the manager negotiates and enters into loan modifications with borrowers whose loans are delinquent (non-performing). If a loan modification were to result in an economic concession to the borrower (i.e., a significant delay or reduction in cash flows compared to the original note), the modification is deemed a troubled debt restructuring (TDR). In March 2020, various federal regulatory agencies issued an interagency statement on loan modifications and reporting for financial institutions working with borrowers affected by COVID-19. The interagency statement was effective immediately and impacted accounting for loan modifications. The agencies confirmed with the staff of the Financial Accounting Standards Board (FASB) that short-term modifications made on a good faith basis in response to COVID- 19 to borrowers who were current prior to any relief, are not to be considered TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. The company funds loans with the intent to hold the loans until maturity. From time to time the company may sell certain loans when the manager determines it to be in the best interest of the company. Loans are classified as held-for-sale once a decision has been made to sell loans and the loans held-for-sale have been identified. Loans classified as held for sale are carried at the lower of cost or fair value. No loss has been recorded upon reclassification to held for sale as the fair value is in excess of the cost. The loans held for sale at September 30, 2020 are expected to be sold in November 2020. 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. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the dollar amount by which the net realizable value (i.e., fair value less the cost to sell) of the collateral, net of any senior liens exceeds the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon. If based upon current information and events, it is probable the company will be unable to collect all amounts due according to the contractual terms of the loan agreement, then a loan may be designated as impaired. Impaired loans are included in management’s periodic analysis of recoverability. Payments on impaired loans are applied to late fees, then to the accrued interest, then to advances, and lastly to principal. For loans that are deemed collateral dependent a provision for loan losses is recorded to adjust the allowance for loan losses (principal and/or recorded interest) in 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 costs to sell in arriving at net realizable value and net of any senior loans. The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible. Any amounts collected after a charge off is deemed a recovery of loan losses. At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value of the collateral 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 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 or losses 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. Debt issuance costs Debt issuance costs are the fees and commissions incurred in the course of obtaining a line of credit for services from banks, law firms and other professionals and are amortized on a straight-line basis as interest expense over the term of the line of credit. Recently issued accounting pronouncements - Accounting and Financial reporting for Expected Credit Losses The 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 not only historical trends and current conditions, but must also consider 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 the current incurred credit loss model, and generally may result in allowances being recognized in earlier periods than under the current credit loss model. The ASU is effective for smaller reporting companies for interim and annual reporting periods in 2023. RMI IX invests in real estate secured loans made with the expectation that the possibility of credit losses is remote as a result of substantial protective equity provided by the underlying collateral. The real estate secured programs and low loan-to-value ratios have caused RMC to expect that the adoption of the CECL model from the incurred loss models presently in use as to credit loss recognition will likely not materially impact the reported results of operations or financial position. However, the impact, if any, upon adoption will be dependent upon the facts and circumstances relating to our loans at that date. - Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, provides temporary optional expedients for various agreements and contracts that utilize the London Interbank Offered Rate (LIBOR) as the benchmark reference rate. The relief generally applies to eligible modifications of contractual terms that change (or have the potential to change) the amount or timing of contractual cash flows related to replacement of a reference rate. The relief allows such modifications to be accounted for as continuations of existing contracts without additional analysis. As the guidance in ASU 2020-04 is intended to assist entities during the global market-wide reference rate transition period, it is in effect from March 12, 2020 through December 31, 2022. RMC is currently evaluating the impact of the potential discontinuance of LIBOR in relation to the company’s line of credit and has not yet adopted the optional relief. |
Manager and Other Related Parti
Manager and Other Related Parties | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Manager and Other Related Parties | NOTE 3 – MANAGER AND OTHER RELATED PARTIES The Operating Agreement provides for fees as compensation to the manager and for reimbursement of qualifying costs, as detailed below. Since commencement of operations in 2009, and continuing until April 2018, RMC, at its sole discretion, has provided significant financial support to the company which increased the net income, cash available for distribution, and the net-distribution rate, by: • charging less than the maximum allowable fees; • not requesting reimbursement of qualifying costs attributable to the company (Costs from RMC on the Statements of Income); and/or, • absorbing some (and in certain periods all) of the company’s operations expense, such as professional fees. Such fee and cost-reimbursement waivers and the absorption of the company’s expenses by RMC were not made for the purpose of providing the company with sufficient funds to satisfy any required level of distributions, as the Operating Agreement has no such required level of distributions, nor to meet withdrawal requests. For periods prior to March 2018, this support increased RMI IX’s financial performance and resulted in an annual 6.5% net distribution rate (6.95% before O&O expenses allocation of 0.45% when applicable). Any decision to waive fees or cost-reimbursements and/or to absorb direct expenses, and the amount (if any) to be waived or absorbed, is made by RMC in its sole discretion. In April 2018, RMC ceased absorbing, and RMI IX began recording and paying, the operations expense for professional-service fees (primarily legal and audit/tax compliance) and costs invoiced to RMC but identifiable as RMI IX expenses (postage, printing etc.). In June 2019, RMC began collecting from RMI IX the asset management fee of three quarters of one percent annually (0.75%). Also in 2019, RMC arranged for RMI IX to be invoiced directly for the fees from an independent service bureau for information technology relating to the recordkeeping and reporting for the accounts of individual investors and their corresponding member accounts. In prior years these fees were invoiced to RMC and then billed to RMI IX through the cost-reimbursement, all of which had been waived. In the third quarter of 2020, RMC began collecting, in part, the reimbursement of costs attributable to RMI IX. Loan administrative fees, asset management fees, and costs from RMC, and the amounts waived by RMC for the three and nine months ended September 30, 2020 are presented in the following tables. Three months ended Loan Admin Fees Asset Management Fees Costs from RMC Total September 30, 2020 Chargeable/reimbursable $ 143,520 $ 135,321 $ 145,054 $ 423,895 RMC support (143,520 ) — (72,873 ) (216,393 ) Net charged $ — $ 135,321 $ 72,181 $ 207,502 Nine months ended Loan Admin Fees Asset Management Fee Costs from RMC Total September 30, 2020 Chargeable/reimbursable $ 363,279 $ 405,963 $ 435,868 $ 1,205,110 RMC support (363,279 ) — (363,687 ) (726,966 ) Net charged $ — $ 405,963 $ 72,181 $ 478,144 Loan administrative fees, asset management fees, and costs from RMC, and the amounts waived by RMC for the three and nine months ended September 30, 2019 are presented in the following tables. Three months ended Loan Admin Fees Asset Management Fees Costs from RMC Total September 30, 2019 Chargeable/reimbursable $ 221,512 $ 119,187 $ 151,061 $ 491,760 RMC support (221,512 ) — (151,061 ) (372,573 ) Net charged $ — $ 119,187 $ — $ 119,187 Nine months ended Loan Admin Fees Asset Management Fee Costs from RMC Total September 30, 2019 Chargeable/reimbursable $ 530,732 $ 357,561 $ 517,163 $ 1,405,456 RMC support (530,732 ) (198,645 ) (517,163 ) (1,246,540 ) Net charged $ — $ 158,916 $ — $ 158,916 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 funded or acquired on the company’s behalf by RMC for services rendered in connection with the selection and underwriting of potential loans. Such fees would be payable by the company upon the closing or acquisition of each loan. Since August 2015, RMC, at its sole discretion, has waived and continues to waive, the loan administrative fees. Mortgage servicing fees The manager acting as servicing agent with respect to all loans is entitled to receive a servicing fee 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. Asset management fees The manager 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. The company has been paying RMC the asset management fees for periods commencing June 1, 2019. Costs from RMC The manager is entitled to request reimbursement by the company for operations expense incurred on behalf of the company, including without limitation, accounting, tax and data processing, postage and out-of-pocket general and administration expenses. Certain of these qualifying costs (e.g., postage) can be tracked by RMC as specifically attributable to the company. Other costs (e.g., RMC’s accounting and audit fees, legal fees and expenses, qualifying payroll expenses, occupancy, and insurance premium) 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 allocated first based on activity, and then to the company on a pro-rata basis based on percentage of capital to the total capital of all related mortgage funds managed by RMC. In the third quarter of 2020, RMC began collecting, in part, the reimbursement of costs attributable to RMI IX. RMC, at its sole discretion, had elected to waive reimbursement for operating expenses during the three and nine months ended September 30, 2019. Commissions and fees paid by the borrowers to RMC - Brokerage commissions, loan originations – For fees in connection with the review, selection, evaluation and negotiation of loans (including extensions), 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 paid by the borrowers to RMC are not recorded by the company and approximated $438,000 and $498,000 for the three months ended September 30, 2020 and 2019, respectively, and $867,000 and $1,168,000 for the nine months ended September 30, 2020 and 2019, respectively. - Other fees – In the ordinary course of business, performing loans may be transferred by executed assignment, in-part or in-full, between the related mortgage funds at par. During the nine months ended September 30, 2020, Redwood Mortgage Investors VIII, LP (RMI VIII), a related mortgage fund, transferred to the company one performing loan in-full at par value, which approximates fair value, of approximately $2,297,000. The company paid cash for the loan and the related mortgage fund has no continuing obligation or involvement with the loan. No loans were transferred during the nine months ended September 30, 2019. Formation loan Formation loan transactions for the nine months ended September 30, 2020 are presented in the following table. 2020 Balance, January 1, 2020 $ 3,948,064 Early withdrawal penalties applied (15,063 ) Balance, September 30, 2020 $ 3,933,001 RMC is repaying the formation loan in annual installments of principal, without interest, of $493,508, less early withdrawal penalties such that the formation loan is paid in full on December 31, 2027, and prior to the end of the term of the company in 2028. The formation loan is forgiven if the manager is removed and RMC is no longer receiving payments for services rendered. The primary source of repayment of the formation loan are loan brokerage commissions earned by RMC. Redemptions of members’ capital Redemptions of members’ capital for the three and nine months ended September 30, 2020 and 2019 are presented in the following table. Three months ended Nine months ended Redemptions 2020 2019 2020 2019 Without penalty $ 747,009 $ 445,485 $ 1,509,603 $ 1,187,961 With penalty 119,777 315,371 543,872 1,488,945 Total $ 866,786 $ 760,856 $ 2,053,475 $ 2,676,906 Early withdrawal penalties $ 5,598 $ 6,611 $ 27,531 $ 67,695 At September 30, 2020, scheduled redemptions of members' capital were $1,156,763, of which $1,003,686 is scheduled for payment in 2020 and $153,077 is scheduled for payment in 2021. Scheduled redemptions of $30,766 are subject to early withdrawal penalties as the members elected the accelerated payout options as permitted by the Operating Agreement. Reimbursement and allocation of organization and offering expenses As provided by the Operating Agreement, the manager is reimbursed for, or the company may pay directly, 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 such subsequent 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. Unallocated O&O expenses for the nine months ended September 30, 2020 are summarized in the following table. 2020 Balance, January 1, 2020 $ 2,260,068 Early withdrawal penalties applied (1) (12,468 ) O&O expenses allocated (2) (240,489 ) O&O expenses repaid to Members' Capital by RMC (3) (42,184 ) Balance, September 30, 2020 $ 1,964,927 (1) Beginning July 1, 2019, the O&O expense component of early withdrawal penalties are applied as a reduction to O&O expenses to be repaid by RMC to members’ capital on scheduled redemptions. The amounts credited are determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. Prior to June 30, 2019, early withdrawal penalties collected were applied to the next installment due under the formation loan and to reduce the amount owed to RMC for O&O expenses. (2) Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters. (3) RMC is obligated under the Operating Agreement to repay RMI IX for the amount of unallocated O&O expenses attributed to members’ capital accounts if the member redeems prior to the 40 quarterly allocations. RMC estimated its future obligation to repay unallocated O&O expenses on scheduled redemptions as of September 30, 2020, to be approximately $21,747, which may be offset in part by early withdrawal penalties collected in future periods. Promissory note receivable from related party (RMI VIII) On September 30, 2020, RMI IX lent $850,000 to RMI VIII secured by the net cash flow payable on two mortgage loans totaling approximately $2,331,000 each of which were designated by RMI VIII as held for sale and expected to be sold to a third party purchaser prior to November 30, 2020. Interest on the loan accrued at a rate equal to RMI IX’s pro rata share of the weighted average interest payable on the held for sale loans through a term ending on the earlier of: (i) the closing of the purchase of the held for sale loans; and (ii) November 30, 2020. The promissory note receivable from RMI VIII was secured by all proceeds payable to RMI VIII upon the sale or repayment of the loans net of any amounts outstanding by RMI VIII on its line of credit secured by the loans. On October 14, 2020, RMI VIII repaid in full the promissory note amount of $850,000 and $2,700 in interest to RMI IX. Under the terms of the note, RMI IX is also entitled to a pro rata share of premium realized (i.e., gain on sale net of costs) upon the sale of the held for sale loans if the sale transaction closes following repayment of the promissory note receivable from RMI VIII. Payable to/receivable from related parties From time to time, in the normal course of business operations, the company may have payables to and/or receivables from related parties. At September 30, 2020 the payable to related parties balance consisted of accounts payable and cost reimbursements to the manager of approximately $78,901, which was partially offset by approximately $362 due from the manager. The receivable was received from the manager and the payable was paid to the manager in October 2020. |
Loans
Loans | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Loans | NOTE 4 – LOANS As of September 30, 2020, 75 of the company’s 79 loans (representing 98% of the aggregate principal of the company’s loan portfolio) have a loan term of five years or less. The remaining loans have terms longer than five years. Substantially all loans are written without a prepayment penalty provision. As of September 30, 2020, 52 loans outstanding (representing 43% of the aggregate principal of the company’s loan portfolio) provide for monthly payments of principal and interest, typically calculated on a 30-year amortization, with the remaining principal due at maturity. The remaining loans provide for monthly payments of interest only, with the principal due at maturity. Secured loans unpaid principal balance (principal) Secured loan transactions for the three and nine months ended September 30, 2020 are summarized in the following table. Three months ended Nine months ended Principal, beginning of period $ 72,577,049 $ 70,660,284 Loans funded 14,352,000 36,327,850 Loan transferred from related mortgage fund — 2,296,677 Collected - secured (2,965,474 ) (25,301,168 ) Loans sold to non-affiliate (480,000 ) (480,000 ) Loans transferred to held for sale (1) (7,534,512 ) (7,534,512 ) Charged off — (20,068 ) Principal, September 30, 2020 $ 75,949,063 $ 75,949,063 (1) At September 30, 2020, five loans with principal of approximately $7,535,000 were designated ‘held for sale’ for financial reporting purposes and are separately classified as such on the balance sheet and accompanying notes to the financial statements. All loans held for sale were performing and in first lien position. At September 30, 2020 the five loans held for sale had a combined accrued interest balance of approximately $47,700, all of which was received by the company in October 2020. During the three and nine months ended September 30, 2020, the company renewed 8 and 14 maturing (or matured) loans with aggregated principal of approximately $7,255,000 and $11,378,000, respectively, which are not included in the activity shown in the table above. The loans were current and deemed well collateralized at the time they were extended. See Note 3 (Manager and Other Related Parties) for a description of loans transferred by executed assignments from a related mortgage fund. Pursuant to California regulatory requirements, borrower payments are deposited into a trust account established by RMC with an independent bank. Funds are disbursed to the company as collected, which can range from same day for wire transfers and up to two weeks after deposit for checks. Borrower payments held in the trust account that are yet to be disbursed to the company are not included in the financial statements. At September 30, 2020, $215,085 of borrower payments made by check, was on deposit in the bank trust account, which was disbursed to the company’s account by October 14, 2020 when they were recorded by the company. At December 31, 2019, $71,416 of borrower payments made by check, was on deposit in the trust account. Loan characteristics Secured loans had the characteristics presented in the following table. September 30, December 31, 2020 2019 Number of secured loans 79 77 Secured loans – principal $ 75,949,063 $ 70,660,284 Secured loans – lowest interest rate (fixed) 6.8 % 7.8 % Secured loans – highest interest rate (fixed) 10.5 % 10.5 % Average secured loan – principal $ 961,381 $ 917,666 Average principal as percent of total principal 1.3 % 1.3 % Average principal as percent of members’ capital, net 1.2 % 1.2 % Average principal as percent of total assets 1.1 % 1.2 % Largest secured loan – principal $ 6,735,000 $ 6,735,000 Largest principal as percent of total principal 8.9 % 9.5 % Largest principal as percent of members’ capital, net 8.5 % 8.5 % Largest principal as percent of total assets 7.8 % 8.9 % Smallest secured loan – principal $ 12,138 $ 125,656 Smallest principal as percent of total principal 0.0 % 0.2 % Smallest principal as percent of members’ capital, net 0.0 % 0.2 % Smallest principal as percent of total assets 0.0 % 0.2 % Number of California counties where security is located 16 17 Largest percentage of principal in one California county 22.8 % 27.0 % Number of secured loans with filed notice of default 1 — Secured loans in foreclosure – principal $ 136,799 $ — Number of secured loans with prepaid interest 2 — Prepaid interest $ 14,308 $ — As of September 30, 2020, the company’s largest loan with principal of $6,735,000 is secured by an office building located in Santa Clara County, bears an interest rate of 8.25% and matures on October 1, 2021. As of September 30, 2020, the company had no construction loans outstanding, no rehabilitation loans outstanding, and no commitments to fund construction, rehabilitation or other loans. Lien position At funding, secured loans had the lien positions presented in the following table. September 30, 2020 December 31, 2019 Loans Principal Percent Loans Principal Percent First trust deeds 49 $ 49,042,131 65 % 42 $ 42,712,037 60 % Second trust deeds 30 26,906,932 35 35 27,948,247 40 Total principal, secured loans 79 75,949,063 100 % 77 70,660,284 100 % Liens due other lenders at loan closing 54,469,432 54,062,023 Total debt $ 130,418,495 $ 124,722,307 Appraised property value at loan closing $ 246,468,000 $ 237,453,000 Percent of total debt to appraised values (LTV) at loan closing (2) 55.3 % 55.3 % (2) 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 on senior liens to other lenders. Property type Secured loans summarized by property type are presented in the following table. September 30, 2020 December 31, 2019 Loans Principal Percent Loans Principal Percent Single family (3) 47 $ 31,553,693 42 % 53 $ 32,361,343 46 % Multi-family 8 8,287,389 11 9 9,219,497 13 Commercial 24 36,107,981 47 15 29,079,444 41 Total principal, secured loans 79 $ 75,949,063 100 % 77 $ 70,660,284 100 % (3) Single family property type as of September 30, 2020 consists of 9 loans with principal of $7,000,987 that are owner occupied and 38 loans with principal of $24,552,706 that are non-owner occupied. At December 31, 2019, single family property type consisted of 11 loans with principal of $6,236,571 that are owner occupied and 42 loans with principal of $26,124,772 that are non-owner occupied. Distribution of loans within California The distribution of secured loans within California by counties is presented in the following table. September 30, 2020 December 31, 2019 Principal Percent Principal Percent San Francisco Bay Area (4) Santa Clara $ 17,311,753 22.8 % $ 19,064,638 27.0 % San Francisco 7,588,142 10.0 7,735,173 10.9 San Mateo 7,778,922 10.2 10,837,195 15.3 Alameda 5,920,420 7.8 2,930,219 4.2 Contra Costa 1,096,271 1.5 400,000 0.6 Marin 1,247,001 1.6 249,628 0.4 Santa Cruz — — 264,515 0.4 40,942,509 53.9 41,481,368 58.8 Other Northern California Monterey 1,110,000 1.5 1,110,000 1.6 Tehama 405,000 0.5 405,000 0.6 Sacramento 127,498 0.2 492,216 0.6 Sutter — 0.0 3,815,000 5.4 1,642,498 2.2 5,822,216 8.2 Northern California Total 42,585,007 56.1 47,303,584 67.0 Los Angeles & Coastal Los Angeles 15,874,054 20.9 12,531,312 17.7 San Diego 9,806,485 12.9 4,983,331 7.1 Orange 4,463,683 5.9 3,067,396 4.3 Santa Barbara 395,335 0.5 497,977 0.7 San Luis Obispo 428,463 0.6 — — 30,968,020 40.8 21,080,016 29.8 Other Southern California San Bernardino 2,151,000 2.8 1,200,000 1.7 Riverside 245,036 0.3 1,076,684 1.5 2,396,036 3.1 2,276,684 3.2 Southern California Total 33,364,056 43.9 23,356,700 33.0 Total principal, secured loans $ 75,949,063 100.0 % $ 70,660,284 100.0 % (4) Includes Silicon Valley Scheduled maturities Secured loans scheduled to mature as of September 30, 2020 are presented in the following table. Loans Principal Percent 2020 (5) 7 $ 6,318,188 8 % 2021 43 53,377,031 69 2022 15 9,189,027 12 2023 4 1,317,172 2 2024 1 245,035 1 Thereafter 6 3,996,486 6 Total scheduled maturities 76 74,442,939 98 Matured as of September 30, 2020 3 1,506,124 2 Total principal, secured loans 79 $ 75,949,063 100 % (5) Loans scheduled to mature in 2020 after September 30. Includes two loans for which the company entered into forbearance agreements with the borrowers in September 2020 which deferred the maturity dates until December 1, 2020. One loan with principal of approximately $1,200,000 which matured July 1, 2020, and one loan with a principal of approximately $137,000 which matured December 1, 2019. Scheduled maturities are presented based on the most recent in-effect agreement with the borrower, including forbearance agreements. As a result, matured loans for the scheduled maturities table may differ from the same captions in the tables of delinquencies and payment in arears that are based on the notes and do not consider forbearance agreements. It is the company’s experience that the timing of future cash receipts from secured loans will differ from scheduled maturities. Loans may be repaid or renewed before, at or after the contractual maturity date. For matured loans, the company may continue to accept payments while pursuing collection of principal or while negotiating an extension of the loan’s maturity date. Delinquency/Non-performing loans Secured loans summarized by payment-delinquency status are presented in the following table. September 30, 2020 December 31, 2019 Loans Principal Loans Principal Current 68 $ 66,584,777 65 $ 62,174,140 Past Due 30-89 days 4 1,928,042 8 3,952,306 90-179 days 3 3,739,684 2 3,520,112 180 or more days 4 3,696,560 2 1,013,726 Total past due (non-performing) 11 9,364,286 12 8,486,144 Total principal, secured loans 79 $ 75,949,063 77 $ 70,660,284 The company entered into two forbearance agreements during the nine months ended September 30, 2020. The first, in September 2020 for a loan with principal of approximately $137,000, which is collateralized by a single family residence in Alameda County and matured on December 1, 2019. The company entered into a forbearance agreement with the borrower in September 2020 whereby the borrower agreed to pay all past due interest, resume monthly payments of interest and the company agreed to forgo collection of default interest and defer the maturity date until December 31, 2020. The loan was designated impaired and in non-accrual status at September 30, 2020. The second, in September 2020, for a loan with principal of $1,200,000, which is collateralized by a commercial property in San Bernardino County and matured on July 1, 2020. The company entered into a forbearance agreement with the borrower which defers the maturity date until December 1, 2020. The loan was designated impaired and in non-accrual status at September 30, 2020. At September 30, 2020, the company had one workout agreement with a borrower. The loan, with principal of $190,198 matured on June 1, 2016, and the company entered into a workout agreement in September 2016, whereby the borrower agreed to resume monthly payments to the company. This agreement extended the maturity date through October 1, 2021. At December 31, 2019, there were two loan modifications/forbearance agreements in effect. Updates as of September 30, 2020 are as follows: - One loan with principal of approximately $760,000, was 549 days past maturity and was designated impaired and in non-accrual status at September 30, 2020. The company entered into a forbearance agreement with the borrower in August 2019 whereby the borrower agreed to resume monthly payments and the company agreed to forbear collection activity until April 1, 2020. The agreement lapsed in April 2020 and the company is engaged in ongoing negotiations with the borrower who is pursuing a refinance with another lender. - One loan with principal of approximately $3,306,000 was designated impaired at December 31, 2019, with a forbearance agreement in place. In July 2020, the borrower made two payments totaling approximately $283,000 which brought the loan current. In consideration of the payments made, the company and the borrower entered into an agreement on July 30, 2020 which extended the maturity date to November 1, 2020. On October 30, 2020, the borrower paid the loan off in full. Payments in arrears for non-performing secured loans (i.e., monthly interest and principal payments past due 30 or more days) as of September 30, 2020 and December 31, 2019, are presented in the following tables. Loans Principal Interest (6) At September 30, 2020 Past maturity Monthly payments Past maturity Monthly payments Past maturity Monthly payments Total payments in arrears Payments in arrears 30-89 days (1-3 payments) 2 2 $ 746,363 $ 369 $ — $ 15,130 $ 761,862 90-179 days (4-6 payments) — 3 — 869 — 115,985 116,854 180 or more days (more than 6 payments) 3 1 2,096,560 — 99,617 67,392 2,263,569 Total past due (7) 5 6 $ 2,842,923 $ 1,238 $ 99,617 $ 198,507 $ 3,142,285 (6) Interest includes foregone interest of approximately $38,000 on non-accrual loans past maturity and approximately $5,000 for monthly payments in arrears. September 2020 interest is due October 1, 2020 and is not included in the payments in arrears at September 30, 2020. (7) Included in the table above is one loan past maturity with principal of approximately $369,000 and an original maturity date of September 1, 2020. In October 2020, the borrower paid all amounts in arrears, other than principal, and the maturity date was extended by one year to September 1, 2021. Loans Principal Interest ( 8 ) At December 31, 2019 Past maturity Monthly payments Past maturity Monthly payments Past maturity Monthly payments Total payments in arrears Payments in arrears 30-89 days (1-2 payments) 2 6 $ 311,294 $ 1,671 $ 1,198 $ 29,396 $ 343,559 90-179 days (3-5 payments) — 2 — 8,175 — 109,125 117,300 180 or more days (6 or more payments) 1 1 764,097 903 15,760 13,834 794,594 Total payments in arrears 3 9 $ 1,075,391 $ 10,749 $ 16,958 $ 152,355 $ 1,255,453 (8) Interest includes foregone interest of $1,976 on non-accrual loans for monthly payments in arrears 180 or more days (6 or more payments). December 2019 interest is due January 1, 2020 and is not included in the payments in arrears at December 31, 2019. Delinquency/Loans in non-accrual status Secured loans in non-accrual status are summarized in the following table. September 30, 2020 December 31, 2019 Number of loans 4 3 Principal $ 2,286,758 $ 1,204,495 Advances 14,271 10,677 Accrued interest 121,571 37,799 Total recorded investment $ 2,422,600 $ 1,252,971 Foregone interest $ 46,806 $ 3,952 Non-performing loans are placed on non-accrual status if 180 days delinquent (or 90 days past maturity without making monthly interest payments) or earlier if management determines 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 for accounting purposes only (i.e., foregone interest in the table above); however, previously recorded interest is not reversed. At September 30, 2020, three loans with aggregate principal of approximately $5,149,000 and aggregate accrued interest of approximately $207,000 were 90 or more days delinquent and not in non-accrual status. At December 31, 2019 one loan with principal of approximately $3,329,000 and accrued interest of approximately $132,000 was 90 or more days delinquent as to principal or interest and was not in non-accrual status. One loan with principal of approximately $137,000, matured on December 1, 2019, was 305 days delinquent at September 30, 2020. The loan was designated impaired in December 2019, and non-accrual in January 2020. A notice of default was filed in May 2020. Provision/allowance for loan losses and impaired loans Generally, the company has not recorded an allowance for loan losses as all loans have protective equity such that collection is deemed probable for all recorded amounts due on the loan. From time to time, the manager may deem it in the best interest of the company to agree to concessions to borrowers to facilitate a sale of collateral or refinance transactions primarily for secured loans in second lien position. For the nine months ended September 30, 2020, RMI IX recorded an insignificant recovery for loan losses. There were no provision or allowance for loan losses recorded during the nine months ended September 30, 2019. Activity in the allowance for loan losses for the nine months ended September 30, 2020 is presented in the following table. 2020 Balance, January 1 $ 87,000 Recovery for loan losses (75 ) Charge-offs (31,925 ) Balance September 30 $ 55,000 Loans designated impaired and any associated allowance for loan losses is presented in the following table. September 30, 2020 December 31, 2019 Number of loans 6 4 Principal $ 5,836,245 $ 4,533,838 Recorded investment (9) 6,081,615 4,719,705 Impaired loans without allowance 6,081,615 4,451,368 Impaired loans with allowance — 268,337 Allowance for loan losses, impaired loans — 37,000 Weighted average LTV at origination 59.6 % 66.0 % (9) Recorded investment is the sum of the principal, advances, and accrued interest receivable for financial reporting purposes. Loans designated impaired had an average recorded investment, interest income recognized and interest income received in cash for the nine months ended September 30, 2020 and the year ended December 31, 2019 as presented in the following table. September 30, 2020 December 31, 2019 Average recorded investment $ 5,208,273 $ 4,334,931 Interest income recognized 393,443 169,585 Interest income received in cash 219,355 67,990 Fair Value The following methods and assumptions are used when estimating fair value: Secured loans, performing and non-performing not designated as impaired (Level 3) - 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. Due to the nature of the company’s loans and borrowers, the fair value of loan balances secured by deeds of trust approximates the recorded amount (per the financial statements) due to the following: • are of shorter terms at origination than commercial real estate loans by institutional lenders and conventional single-family home mortgage lenders; • are written without a prepayment penalty causing uncertainty/a lack of predictability as to the expected duration of the loan; and • have limited marketability and are not yet sellable into an established secondary market. Secured loans, non-performing and designated impaired (Level 3) - The fair value of secured loans, non-performing and designated impaired is the lesser of the fair value of the collateral or the enforceable amount of the note. Secured loans designated impaired are collateral dependent because it is expected that the primary source of repayment will not be from the borrower but rather from the collateral. The fair value of the collateral is determined on a nonrecurring basis 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 3 inputs). When the fair value of the collateral exceeds the enforceable amount of the note, the borrower is likely to redeem the note. Accordingly, third party market participants would generally pay the fair value of the collateral, but no more than the enforceable amount of the note. 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 and adjusted 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. 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. 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 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, including a determination of its highest and best use. 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. |
Line of Credit
Line of Credit | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Line of Credit | NOTE 5 – LINE OF CREDIT Activity involving the line of credit during the three months ended September 30, 2020 and since inception in April 2020 is presented in the following table. Three months ended Since Inception Balance, beginning of period $ 8,200,000 $ — Draws 6,050,000 19,250,000 Repayments (4,250,000 ) (9,250,000 ) Balance, September 30, 2020 $ 10,000,000 $ 10,000,000 Line of credit - average daily balance $ 8,524,000 $ 6,236,000 Debt issuance costs of $109,526 are being amortized over the two-year term of the loan agreement. Amortized debt issuance costs totaled $13,702 for the three months ended and $27,320 for the nine months ended September 30, 2020 and are recorded as interest expense. RMI IX can borrow up to a maximum principal of $10 million subject to a borrowing base calculation pursuant to a credit and term loan agreement (the loan agreement) with a bank. Amounts under the loan agreement are secured by a first priority security interest in the notes and deeds of trust of the pledged loans in the borrowing base. The loan agreement matures March 13, 2022 when all amounts outstanding are then due. The company has the option at the maturity date to convert the then outstanding principal balance on the line of credit to a one-year term loan - for a fee of one-quarter of one percent (0.25%) – thereby extending the maturity date to March 13, 2023. Interest on the outstanding principal is payable monthly and accrues at the per annum rate of the greater of (i) five percent (5%) or (ii) the sum of the one-month LIBOR rate plus three and one-quarter percent (3.25%). If the company does not maintain the required compensating balance with a minimum daily average of $1.0 million for any day during the calendar quarter, the interest rate automatically increases by one-quarter of one percent (0.25%) above that rate which would otherwise be applicable for the next calendar quarter retroactive to the beginning of the calendar quarter in which the compensating balance is not maintained. Commencing with the quarter ended September 30, 2020, for each calendar quarter during which the aggregate average daily principal is less than fifty percent (50%) of the maximum principal of $10 million, there is a quarterly unused line fee equal to one-half of one percent (0.50%) per annum of the average daily difference between the principal outstanding and fifty percent (50%) of the maximum principal of $10 million ($5,000,000). The loan proceeds are to be used exclusively to fund secured loans. The loan agreement provides for customary financial and borrowing base reporting by RMI IX to the lending bank and specifies that RMI IX shall maintain (i) minimum tangible net worth of $50 million, net of amounts due from related companies; (ii) debt service coverage ratio at all times of not less than 2.00 to 1.00; and (iii) loan payment delinquency of less than ten percent (10.0%) on a quarterly basis as of the calendar quarter-end, calculated as the principal of loans with payments over 61-days past due, less loan loss allowances, divided by total principal of RMI IX loans. The loan agreement provides that in the event the loan payment delinquency rate exceeds 10.0% as of the end of any quarter, the bank will cease to make any further advances but agrees to not accelerate repayment of the loan. Principal of pledged loans was approximately $17,017,000 at September 30, 2020 with a maximum allowed advance thereon of approximately $10,000,000, subject to the borrowing base calculation. |
Commitments and Contingencies,
Commitments and Contingencies, Other Than Loan Commitments | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies, Other Than Loan Commitments | NOTE 6 – COMMITMENTS AND CONTINGENCIES, OTHER THAN LOAN COMMITMENTS Commitments At September 30, 2020, scheduled future redemptions of members' capital was $1,156,763, of which $1,003,686 is scheduled for payment in 2020 and $153,077 is scheduled for payment in 2021. The company has contractual obligations to RMC per the Operating Agreement. See Note 3 (Manager and Other Related Parties) for a more detailed discussion on the company’s contractual obligations to RMC. 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 September 30, 2020, 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, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 7 – SUBSEQUENT EVENTS Promissory note payable to related party (RMI VIII) On October 19, 2020, RMI IX borrowed from RMI VIII $800,000 secured by the net cash flow payable on five mortgage loans totaling approximately $7,535,000,000 each of which were designated by RMI IX as held for sale and expected to be sold to a third party purchaser prior to November 30, 2020. Interest on the loan accrued at a rate equal to RMI VIII’s pro rata share of the weighted average interest payable on the held for sale loans through a term ending on the earlier of: (i) the closing of the purchase of the held for sale loans; and (ii) November 30, 2020. The promissory note payable to RMI VIII was secured by all proceeds payable to RMI IX upon the sale or repayment of the loans net of any amounts outstanding by RMI IX on its line of credit secured by the loans. On October 30, 2020, RMI IX repaid in full the promissory note amount of $800,000 and $1,831 in interest to RMI VIII. Under the terms of the note, RMI IX is also obligated to pay RMI VIII a pro rata share of premium realized (i.e., gain on sale net of costs) upon the sale of the held for sale loans if the sale transaction closes following repayment of the promissory note to RMI VIII. The manager evaluated subsequent events that have occurred after September 30, 2020 and determined that there were no other events or transactions occurring during this reporting period that require recognition or disclosure in the unaudited financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
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 owned, at acquisition and subsequently. Actual results could differ materially from these estimates. |
Fair Value Estimates | Fair value estimates GAAP defines fair value as the 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 real property 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 income 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 in Banks | Cash in banks At September 30, 2020, certain of the company’s cash balances in banks exceed federally insured limits of $250,000. The bank or banks in which funds are deposited are reviewed periodically for their general credit-worthiness/investment grade credit rating. See Note 5 (Line of Credit) for compensating balance arrangements. |
Loans and Interest Income | Loans and interest income Performing loans are carried at amortized cost which is generally equal to 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 amounts paid out on the borrower’s behalf and any accrued interest on amounts paid out, until repaid by the borrower. For performing loans, interest is accrued daily on the principal plus advances, if any. Non-performing loans (i.e., loans with a payment in arears) less than 180 days delinquent continue to recognize interest income as long as the loan is in the process of collection and is considered to be well-secured. Non-performing loans are placed on non-accrual status if 180 days delinquent (or 90 days past maturity without making monthly interest payments) or earlier if management determines 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 for accounting purposes only; 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. Late fees are recognized in the period received. The company may fund a specific loan net of an interest reserve (one to two years) to insure timely interest payments at the inception of the loan. Any interest reserve is amortized over the period that the amount is prepaid. 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. In the normal course of the company’s operating activities, performing loans that are maturing or have matured may be renewed at then current market rates of interest and terms for new loans. Such renewals are not designated as impaired. From time to time, the manager negotiates and enters into loan modifications with borrowers whose loans are delinquent (non-performing). If a loan modification were to result in an economic concession to the borrower (i.e., a significant delay or reduction in cash flows compared to the original note), the modification is deemed a troubled debt restructuring (TDR). In March 2020, various federal regulatory agencies issued an interagency statement on loan modifications and reporting for financial institutions working with borrowers affected by COVID-19. The interagency statement was effective immediately and impacted accounting for loan modifications. The agencies confirmed with the staff of the Financial Accounting Standards Board (FASB) that short-term modifications made on a good faith basis in response to COVID- 19 to borrowers who were current prior to any relief, are not to be considered TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. The company funds loans with the intent to hold the loans until maturity. From time to time the company may sell certain loans when the manager determines it to be in the best interest of the company. Loans are classified as held-for-sale once a decision has been made to sell loans and the loans held-for-sale have been identified. Loans classified as held for sale are carried at the lower of cost or fair value. No loss has been recorded upon reclassification to held for sale as the fair value is in excess of the cost. The loans held for sale at September 30, 2020 are expected to be sold in November 2020. |
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. Collateral fair values are reviewed quarterly and the protective equity for each loan is computed. As used herein, “protective equity” is the dollar amount by which the net realizable value (i.e., fair value less the cost to sell) of the collateral, net of any senior liens exceeds the loan balance, where “loan balance” is the sum of the unpaid principal, advances and the recorded interest thereon. If based upon current information and events, it is probable the company will be unable to collect all amounts due according to the contractual terms of the loan agreement, then a loan may be designated as impaired. Impaired loans are included in management’s periodic analysis of recoverability. Payments on impaired loans are applied to late fees, then to the accrued interest, then to advances, and lastly to principal. For loans that are deemed collateral dependent a provision for loan losses is recorded to adjust the allowance for loan losses (principal and/or recorded interest) in 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 costs to sell in arriving at net realizable value and net of any senior loans. The company charges off uncollectible loans and related receivables directly to the allowance account once it is determined the full amount is not collectible. Any amounts collected after a charge off is deemed a recovery of loan losses. At foreclosure, any excess of the recorded investment in the loan (accounting basis) over the net realizable value of the collateral 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 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 or losses 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. |
Debt Issuance Costs | Debt issuance costs Debt issuance costs are the fees and commissions incurred in the course of obtaining a line of credit for services from banks, law firms and other professionals and are amortized on a straight-line basis as interest expense over the term of the line of credit. |
Recently Issued Accounting Pronouncements | Recently issued accounting pronouncements - Accounting and Financial reporting for Expected Credit Losses The 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 not only historical trends and current conditions, but must also consider 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 the current incurred credit loss model, and generally may result in allowances being recognized in earlier periods than under the current credit loss model. The ASU is effective for smaller reporting companies for interim and annual reporting periods in 2023. RMI IX invests in real estate secured loans made with the expectation that the possibility of credit losses is remote as a result of substantial protective equity provided by the underlying collateral. The real estate secured programs and low loan-to-value ratios have caused RMC to expect that the adoption of the CECL model from the incurred loss models presently in use as to credit loss recognition will likely not materially impact the reported results of operations or financial position. However, the impact, if any, upon adoption will be dependent upon the facts and circumstances relating to our loans at that date. - Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, provides temporary optional expedients for various agreements and contracts that utilize the London Interbank Offered Rate (LIBOR) as the benchmark reference rate. The relief generally applies to eligible modifications of contractual terms that change (or have the potential to change) the amount or timing of contractual cash flows related to replacement of a reference rate. The relief allows such modifications to be accounted for as continuations of existing contracts without additional analysis. As the guidance in ASU 2020-04 is intended to assist entities during the global market-wide reference rate transition period, it is in effect from March 12, 2020 through December 31, 2022. RMC is currently evaluating the impact of the potential discontinuance of LIBOR in relation to the company’s line of credit and has not yet adopted the optional relief. |
Manager and Other Related Par_2
Manager and Other Related Parties (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Summary of Loan Administrative Fees, Administration Fees and Operations Expenses, for Reimbursements and amounts Waived | Loan administrative fees, asset management fees, and costs from RMC, and the amounts waived by RMC for the three and nine months ended September 30, 2020 are presented in the following tables. Three months ended Loan Admin Fees Asset Management Fees Costs from RMC Total September 30, 2020 Chargeable/reimbursable $ 143,520 $ 135,321 $ 145,054 $ 423,895 RMC support (143,520 ) — (72,873 ) (216,393 ) Net charged $ — $ 135,321 $ 72,181 $ 207,502 Nine months ended Loan Admin Fees Asset Management Fee Costs from RMC Total September 30, 2020 Chargeable/reimbursable $ 363,279 $ 405,963 $ 435,868 $ 1,205,110 RMC support (363,279 ) — (363,687 ) (726,966 ) Net charged $ — $ 405,963 $ 72,181 $ 478,144 Loan administrative fees, asset management fees, and costs from RMC, and the amounts waived by RMC for the three and nine months ended September 30, 2019 are presented in the following tables. Three months ended Loan Admin Fees Asset Management Fees Costs from RMC Total September 30, 2019 Chargeable/reimbursable $ 221,512 $ 119,187 $ 151,061 $ 491,760 RMC support (221,512 ) — (151,061 ) (372,573 ) Net charged $ — $ 119,187 $ — $ 119,187 Nine months ended Loan Admin Fees Asset Management Fee Costs from RMC Total September 30, 2019 Chargeable/reimbursable $ 530,732 $ 357,561 $ 517,163 $ 1,405,456 RMC support (530,732 ) (198,645 ) (517,163 ) (1,246,540 ) Net charged $ — $ 158,916 $ — $ 158,916 |
Schedule of Accounts, Notes, Loans and Financing Receivable | Formation loan transactions for the nine months ended September 30, 2020 are presented in the following table. 2020 Balance, January 1, 2020 $ 3,948,064 Early withdrawal penalties applied (15,063 ) Balance, September 30, 2020 $ 3,933,001 |
Schedule of Unit Redemptions | Redemptions of members’ capital for the three and nine months ended September 30, 2020 and 2019 are presented in the following table. Three months ended Nine months ended Redemptions 2020 2019 2020 2019 Without penalty $ 747,009 $ 445,485 $ 1,509,603 $ 1,187,961 With penalty 119,777 315,371 543,872 1,488,945 Total $ 866,786 $ 760,856 $ 2,053,475 $ 2,676,906 Early withdrawal penalties $ 5,598 $ 6,611 $ 27,531 $ 67,695 |
Summary of Organization and Offering Expenses | Unallocated O&O expenses for the nine months ended September 30, 2020 are summarized in the following table. 2020 Balance, January 1, 2020 $ 2,260,068 Early withdrawal penalties applied (1) (12,468 ) O&O expenses allocated (2) (240,489 ) O&O expenses repaid to Members' Capital by RMC (3) (42,184 ) Balance, September 30, 2020 $ 1,964,927 (1) Beginning July 1, 2019, the O&O expense component of early withdrawal penalties are applied as a reduction to O&O expenses to be repaid by RMC to members’ capital on scheduled redemptions. The amounts credited are determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. Prior to June 30, 2019, early withdrawal penalties collected were applied to the next installment due under the formation loan and to reduce the amount owed to RMC for O&O expenses. (2) Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters. (3) RMC is obligated under the Operating Agreement to repay RMI IX for the amount of unallocated O&O expenses attributed to members’ capital accounts if the member redeems prior to the 40 quarterly allocations. RMC estimated its future obligation to repay unallocated O&O expenses on scheduled redemptions as of September 30, 2020, to be approximately $21,747, which may be offset in part by early withdrawal penalties collected in future periods. |
Loans (Tables)
Loans (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Secured Loan Principal Transactions | Secured loan transactions for the three and nine months ended September 30, 2020 are summarized in the following table. Three months ended Nine months ended Principal, beginning of period $ 72,577,049 $ 70,660,284 Loans funded 14,352,000 36,327,850 Loan transferred from related mortgage fund — 2,296,677 Collected - secured (2,965,474 ) (25,301,168 ) Loans sold to non-affiliate (480,000 ) (480,000 ) Loans transferred to held for sale (1) (7,534,512 ) (7,534,512 ) Charged off — (20,068 ) Principal, September 30, 2020 $ 75,949,063 $ 75,949,063 (1) At September 30, 2020, five loans with principal of approximately $7,535,000 were designated ‘held for sale’ for financial reporting purposes and are separately classified as such on the balance sheet and accompanying notes to the financial statements. All loans held for sale were performing and in first lien position. At September 30, 2020 the five loans held for sale had a combined accrued interest balance of approximately $47,700, all of which was received by the company in October 2020. |
Secured Loans Characteristics | Secured loans had the characteristics presented in the following table. September 30, December 31, 2020 2019 Number of secured loans 79 77 Secured loans – principal $ 75,949,063 $ 70,660,284 Secured loans – lowest interest rate (fixed) 6.8 % 7.8 % Secured loans – highest interest rate (fixed) 10.5 % 10.5 % Average secured loan – principal $ 961,381 $ 917,666 Average principal as percent of total principal 1.3 % 1.3 % Average principal as percent of members’ capital, net 1.2 % 1.2 % Average principal as percent of total assets 1.1 % 1.2 % Largest secured loan – principal $ 6,735,000 $ 6,735,000 Largest principal as percent of total principal 8.9 % 9.5 % Largest principal as percent of members’ capital, net 8.5 % 8.5 % Largest principal as percent of total assets 7.8 % 8.9 % Smallest secured loan – principal $ 12,138 $ 125,656 Smallest principal as percent of total principal 0.0 % 0.2 % Smallest principal as percent of members’ capital, net 0.0 % 0.2 % Smallest principal as percent of total assets 0.0 % 0.2 % Number of California counties where security is located 16 17 Largest percentage of principal in one California county 22.8 % 27.0 % Number of secured loans with filed notice of default 1 — Secured loans in foreclosure – principal $ 136,799 $ — Number of secured loans with prepaid interest 2 — Prepaid interest $ 14,308 $ — |
Secured Loans by Lien Position in the Collateral | At funding, secured loans had the lien positions presented in the following table. September 30, 2020 December 31, 2019 Loans Principal Percent Loans Principal Percent First trust deeds 49 $ 49,042,131 65 % 42 $ 42,712,037 60 % Second trust deeds 30 26,906,932 35 35 27,948,247 40 Total principal, secured loans 79 75,949,063 100 % 77 70,660,284 100 % Liens due other lenders at loan closing 54,469,432 54,062,023 Total debt $ 130,418,495 $ 124,722,307 Appraised property value at loan closing $ 246,468,000 $ 237,453,000 Percent of total debt to appraised values (LTV) at loan closing (2) 55.3 % 55.3 % (2) 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 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, 2020 December 31, 2019 Loans Principal Percent Loans Principal Percent Single family (3) 47 $ 31,553,693 42 % 53 $ 32,361,343 46 % Multi-family 8 8,287,389 11 9 9,219,497 13 Commercial 24 36,107,981 47 15 29,079,444 41 Total principal, secured loans 79 $ 75,949,063 100 % 77 $ 70,660,284 100 % (3) Single family property type as of September 30, 2020 consists of 9 loans with principal of $7,000,987 that are owner occupied and 38 loans with principal of $24,552,706 that are non-owner occupied. At December 31, 2019, single family property type consisted of 11 loans with principal of $6,236,571 that are owner occupied and 42 loans with principal of $26,124,772 that are non-owner occupied. |
Secured Loans Distributed within California | The distribution of secured loans within California by counties is presented in the following table. September 30, 2020 December 31, 2019 Principal Percent Principal Percent San Francisco Bay Area (4) Santa Clara $ 17,311,753 22.8 % $ 19,064,638 27.0 % San Francisco 7,588,142 10.0 7,735,173 10.9 San Mateo 7,778,922 10.2 10,837,195 15.3 Alameda 5,920,420 7.8 2,930,219 4.2 Contra Costa 1,096,271 1.5 400,000 0.6 Marin 1,247,001 1.6 249,628 0.4 Santa Cruz — — 264,515 0.4 40,942,509 53.9 41,481,368 58.8 Other Northern California Monterey 1,110,000 1.5 1,110,000 1.6 Tehama 405,000 0.5 405,000 0.6 Sacramento 127,498 0.2 492,216 0.6 Sutter — 0.0 3,815,000 5.4 1,642,498 2.2 5,822,216 8.2 Northern California Total 42,585,007 56.1 47,303,584 67.0 Los Angeles & Coastal Los Angeles 15,874,054 20.9 12,531,312 17.7 San Diego 9,806,485 12.9 4,983,331 7.1 Orange 4,463,683 5.9 3,067,396 4.3 Santa Barbara 395,335 0.5 497,977 0.7 San Luis Obispo 428,463 0.6 — — 30,968,020 40.8 21,080,016 29.8 Other Southern California San Bernardino 2,151,000 2.8 1,200,000 1.7 Riverside 245,036 0.3 1,076,684 1.5 2,396,036 3.1 2,276,684 3.2 Southern California Total 33,364,056 43.9 23,356,700 33.0 Total principal, secured loans $ 75,949,063 100.0 % $ 70,660,284 100.0 % (4) Includes Silicon Valley |
Secured Loans Scheduled Maturities | Secured loans scheduled to mature as of September 30, 2020 are presented in the following table. Loans Principal Percent 2020 (5) 7 $ 6,318,188 8 % 2021 43 53,377,031 69 2022 15 9,189,027 12 2023 4 1,317,172 2 2024 1 245,035 1 Thereafter 6 3,996,486 6 Total scheduled maturities 76 74,442,939 98 Matured as of September 30, 2020 3 1,506,124 2 Total principal, secured loans 79 $ 75,949,063 100 % (5) Loans scheduled to mature in 2020 after September 30. Includes two loans for which the company entered into forbearance agreements with the borrowers in September 2020 which deferred the maturity dates until December 1, 2020. One loan with principal of approximately $1,200,000 which matured July 1, 2020, and one loan with a principal of approximately $137,000 which matured December 1, 2019. |
Past Due Financing Receivables | Secured loans summarized by payment-delinquency status are presented in the following table. September 30, 2020 December 31, 2019 Loans Principal Loans Principal Current 68 $ 66,584,777 65 $ 62,174,140 Past Due 30-89 days 4 1,928,042 8 3,952,306 90-179 days 3 3,739,684 2 3,520,112 180 or more days 4 3,696,560 2 1,013,726 Total past due (non-performing) 11 9,364,286 12 8,486,144 Total principal, secured loans 79 $ 75,949,063 77 $ 70,660,284 |
Payments in Arrears Past Due Financing Receivables | Payments in arrears for non-performing secured loans (i.e., monthly interest and principal payments past due 30 or more days) as of September 30, 2020 and December 31, 2019, are presented in the following tables. Loans Principal Interest (6) At September 30, 2020 Past maturity Monthly payments Past maturity Monthly payments Past maturity Monthly payments Total payments in arrears Payments in arrears 30-89 days (1-3 payments) 2 2 $ 746,363 $ 369 $ — $ 15,130 $ 761,862 90-179 days (4-6 payments) — 3 — 869 — 115,985 116,854 180 or more days (more than 6 payments) 3 1 2,096,560 — 99,617 67,392 2,263,569 Total past due (7) 5 6 $ 2,842,923 $ 1,238 $ 99,617 $ 198,507 $ 3,142,285 (6) Interest includes foregone interest of approximately $38,000 on non-accrual loans past maturity and approximately $5,000 for monthly payments in arrears. September 2020 interest is due October 1, 2020 and is not included in the payments in arrears at September 30, 2020. (7) Included in the table above is one loan past maturity with principal of approximately $369,000 and an original maturity date of September 1, 2020. In October 2020, the borrower paid all amounts in arrears, other than principal, and the maturity date was extended by one year to September 1, 2021. Loans Principal Interest ( 8 ) At December 31, 2019 Past maturity Monthly payments Past maturity Monthly payments Past maturity Monthly payments Total payments in arrears Payments in arrears 30-89 days (1-2 payments) 2 6 $ 311,294 $ 1,671 $ 1,198 $ 29,396 $ 343,559 90-179 days (3-5 payments) — 2 — 8,175 — 109,125 117,300 180 or more days (6 or more payments) 1 1 764,097 903 15,760 13,834 794,594 Total payments in arrears 3 9 $ 1,075,391 $ 10,749 $ 16,958 $ 152,355 $ 1,255,453 (8) Interest includes foregone interest of $1,976 on non-accrual loans for monthly payments in arrears 180 or more days (6 or more payments). December 2019 interest is due January 1, 2020 and is not included in the payments in arrears at December 31, 2019. |
Secured Loans in Non-Accrual Status | Secured loans in non-accrual status are summarized in the following table. September 30, 2020 December 31, 2019 Number of loans 4 3 Principal $ 2,286,758 $ 1,204,495 Advances 14,271 10,677 Accrued interest 121,571 37,799 Total recorded investment $ 2,422,600 $ 1,252,971 Foregone interest $ 46,806 $ 3,952 |
Activity in Allowance for Loan Losses | Activity in the allowance for loan losses for the nine months ended September 30, 2020 is presented in the following table. 2020 Balance, January 1 $ 87,000 Recovery for loan losses (75 ) Charge-offs (31,925 ) Balance September 30 $ 55,000 |
Impaired Loans [Member] | |
Impaired Financing Receivables | Loans designated impaired and any associated allowance for loan losses is presented in the following table. September 30, 2020 December 31, 2019 Number of loans 6 4 Principal $ 5,836,245 $ 4,533,838 Recorded investment (9) 6,081,615 4,719,705 Impaired loans without allowance 6,081,615 4,451,368 Impaired loans with allowance — 268,337 Allowance for loan losses, impaired loans — 37,000 Weighted average LTV at origination 59.6 % 66.0 % (9) Recorded investment is the sum of the principal, advances, and accrued interest receivable for financial reporting purposes. |
Average Balances and Interest Income [Member] | |
Impaired Financing Receivables | Loans designated impaired had an average recorded investment, interest income recognized and interest income received in cash for the nine months ended September 30, 2020 and the year ended December 31, 2019 as presented in the following table. September 30, 2020 December 31, 2019 Average recorded investment $ 5,208,273 $ 4,334,931 Interest income recognized 393,443 169,585 Interest income received in cash 219,355 67,990 |
Line Of Credit (Tables)
Line Of Credit (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Line Of Credit Facility [Abstract] | |
Schedule of Line of Credit Facilities Activity | Activity involving the line of credit during the three months ended September 30, 2020 and since inception in April 2020 is presented in the following table. Three months ended Since Inception Balance, beginning of period $ 8,200,000 $ — Draws 6,050,000 19,250,000 Repayments (4,250,000 ) (9,250,000 ) Balance, September 30, 2020 $ 10,000,000 $ 10,000,000 Line of credit - average daily balance $ 8,524,000 $ 6,236,000 |
Organization and General - Addi
Organization and General - Additional Information (Details) | 9 Months Ended | 117 Months Ended | 132 Months Ended | ||
Sep. 30, 2020USD ($)Unit | May 31, 2019 | Sep. 30, 2020USD ($) | Dec. 31, 2019 | May 09, 2019USD ($)shares | |
Organization And General Details [Line Items] | |||||
Loans Receivable Term | 5 years | ||||
Loan to value ratios | 59.60% | 59.60% | 66.00% | ||
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% | ||||
Cumulative difference between earnings allocated to members' account and net income available to members | $ 59,000 | ||||
Unit Redemption Program, Years After Purchase | 1 year | ||||
Maximum capital units for redemption per quarter per individual | Unit | 100,000 | ||||
Maximum percentage of members total 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% | ||||
DRIP [Member] | |||||
Organization And General Details [Line Items] | |||||
Gross proceeds from unit sales | $ 3,345,000 | ||||
Member Units [Member] | |||||
Organization And General Details [Line Items] | |||||
Capital unit sold in public offering, shares | shares | 15,000,000 | ||||
Capital unit sold in public offering, value | $ 15,000,000 | ||||
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% | |||
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% | |||
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% | |||
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% | |||
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% | |||
Maximum [Member] | |||||
Organization And General Details [Line Items] | |||||
Percentage of offering proceeds | 7.00% | ||||
Debt-to-Value Ratio, Less than 80 Percent [Member] | Maximum [Member] | |||||
Organization And General Details [Line Items] | |||||
Loan to value ratios | 70.00% | 70.00% | |||
RMC [Member] | |||||
Organization And General Details [Line Items] | |||||
Percentage of profits and losses allocated to manager | 1.00% | ||||
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,excluding units sold in the DRIP | 4.50% | ||||
Percentage of proceeds from sale of units used for funding formation loan to related party,excluding units sold in the DRIP | 7.00% | ||||
RMC [Member] | |||||
Organization And General Details [Line Items] | |||||
Ownership interest held by the manager | 0.10% | ||||
Managers share of net income or loss | 1.00% |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)Approach | Sep. 30, 2019USD ($) | |
Summary of Significant Accounting Policies [Line Items] | |||
Estimating Real Property Value, Number of Approaches | Approach | 3 | ||
Impaired loans maximum days of delinquent | 180 days | ||
Interest Reserve Minimum Length | 1 year | ||
Interest Reserve Maximum Length | 2 years | ||
Gain on sale, loans | $ 20,833 | $ 0 | $ 20,833 |
Loans held for sale expected to be sold date | 2020-11 | ||
Maximum [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Federal Insurance Limit | $ 250,000 |
Manager and Other Related Par_3
Manager and Other Related Parties - Additional Information (Details) | Oct. 19, 2020MortgageLoan | Oct. 14, 2020USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)MortgageLoan | Sep. 30, 2019USD ($)MortgageLoan | Dec. 31, 2019USD ($)MortgageLoan | Mar. 31, 2018 | Dec. 31, 2020 | Jun. 30, 2020USD ($) | |
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Annualized net distribution rate | 6.50% | ||||||||||
Net distribution rate before organization and offering expense percentage | 6.95% | ||||||||||
Organization and offering expense percentage | 0.45% | ||||||||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 79 | 77 | |||||||||
Principal | $ 75,949,063 | $ 75,949,063 | $ 70,660,284 | $ 72,577,049 | |||||||
Future redemptions of member's capital | 1,156,763 | ||||||||||
Early withdrawal penalties | [1] | $ 12,468 | |||||||||
Reimbursement as a percentage of member's original purchase price | 0.45% | ||||||||||
Percentage of original purchase price, quarterly installment percentage | 0.1125% | ||||||||||
Payable to related party (Note 3) | 78,539 | $ 78,539 | |||||||||
Receivables from manager | 362 | ||||||||||
Accounts Payable and Cost Reimbursements [Member] | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Payable to related party (Note 3) | 78,901 | 78,901 | |||||||||
Subsequent Event | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Repayment Of Interest | $ 2,700 | ||||||||||
Scheduled for Payment 2020 [Member] | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Future redemptions of member's capital | 1,003,686 | ||||||||||
Scheduled for Payment 2021 [Member] | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Future redemptions of member's capital | 153,077 | ||||||||||
Scheduled for Payment Penalty [Member] | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Early withdrawal penalties | $ 30,766 | ||||||||||
Performing Loans [Member] | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 1 | 0 | |||||||||
Principal | $ 2,297,000 | $ 2,297,000 | |||||||||
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] | |||||||||||
Management Fee, Percentage | 0.75% | 0.75% | |||||||||
Administrative Fees, Percentage | 1.00% | 1.00% | |||||||||
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% | |||||||||
Loan Brokerage Commission | $ 438,000 | $ 498,000 | $ 867,000 | $ 1,168,000 | |||||||
Repayment of formation loan in annual installments | 493,508 | $ 493,508 | |||||||||
Formation loan payment date | Dec. 31, 2027 | ||||||||||
Future redemptions of member's capital | 866,786 | 760,856 | $ 2,053,475 | 2,676,906 | |||||||
Early withdrawal penalties | 5,598 | $ 6,611 | 27,531 | $ 67,695 | |||||||
RMC [Member] | Scenario, Forecast [Member] | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Management Fee, Percentage | 1.00% | ||||||||||
Redwood Mortgage Investors VIII [Member] | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Promissory note receivable | 850,000 | $ 850,000 | |||||||||
Number of mortgage loans securing notes receivable | MortgageLoan | 2 | ||||||||||
Mortgages offered-for-sale | $ 2,331,000 | $ 2,331,000 | |||||||||
Redwood Mortgage Investors VIII [Member] | Subsequent Event | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 5 | ||||||||||
Repayment of promissory notes receivable from related parties | $ 850,000 | ||||||||||
Redwood Mortgage Investors VIII [Member] | Mortgage Loans [Member] | |||||||||||
Managers and Other Related Parties (Details) [Line Items] | |||||||||||
Debt instrument, interest rate terms | Interest on the loan accrued at a rate equal to RMI IX’s pro rata share of the weighted average interest payable on the held for sale loans through a term ending on the earlier of: (i) the closing of the purchase of the held for sale loans; and (ii) November 30, 2020. | ||||||||||
[1] | (1)Beginning July 1, 2019, the O&O expense component of early withdrawal penalties are applied as a reduction to O&O expenses to be repaid by RMC to members’ capital on scheduled redemptions. The amounts credited are determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. Prior to June 30, 2019, early withdrawal penalties collected were applied to the next installment due under the formation loan and to reduce the amount owed to RMC for O&O expenses. |
Manager and Other Related Par_4
Manager and Other Related Parties - Summary of Loan Administrative Fees, Administration Fees and Operations Expenses, for Reimbursements and amounts Waived (Details) - RMC [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | $ 423,895 | $ 491,760 | $ 1,205,110 | $ 1,405,456 |
RMC support | (216,393) | (372,573) | (726,966) | (1,246,540) |
Net charged | 207,502 | 119,187 | 478,144 | 158,916 |
Loan Admin Fees [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | 143,520 | 221,512 | 363,279 | 530,732 |
RMC support | (143,520) | (221,512) | (363,279) | (530,732) |
Asset Management Fee [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | 135,321 | 119,187 | 405,963 | 357,561 |
RMC support | (198,645) | |||
Net charged | 135,321 | 119,187 | 405,963 | 158,916 |
Costs from RMC [Member] | ||||
Managers and Other Related Parties (Details) [Line Items] | ||||
Chargeable/reimbursable | 145,054 | 151,061 | 435,868 | 517,163 |
RMC support | (72,873) | $ (151,061) | (363,687) | $ (517,163) |
Net charged | $ 72,181 | $ 72,181 |
Manager and Other Related Par_5
Manager and Other Related Parties - Formation Loan Transactions (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Formation Loan Transactions [Abstract] | |
Balance, January 1, 2020 | $ 3,948,064 |
Early withdrawal penalties applied | (15,063) |
Balance, September 30, 2020 | $ 3,933,001 |
Manager and Other Related Par_6
Manager and Other Related Parties - Schedule of Unit Redemptions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | ||
Managers and Other Related Parties (Details) [Line Items] | |||||
Total, Capital redemptions | $ 1,156,763 | ||||
Early withdrawal penalties | [1] | 12,468 | |||
RMC [Member] | |||||
Managers and Other Related Parties (Details) [Line Items] | |||||
Total, Capital redemptions | $ 866,786 | $ 760,856 | 2,053,475 | $ 2,676,906 | |
Early withdrawal penalties | 5,598 | 6,611 | 27,531 | 67,695 | |
RMC [Member] | Without Penalty [Member] | |||||
Managers and Other Related Parties (Details) [Line Items] | |||||
Total, Capital redemptions | 747,009 | 445,485 | 1,509,603 | 1,187,961 | |
RMC [Member] | Capital Redemptions With Penalty | |||||
Managers and Other Related Parties (Details) [Line Items] | |||||
Total, Capital redemptions | $ 119,777 | $ 315,371 | $ 543,872 | $ 1,488,945 | |
[1] | (1)Beginning July 1, 2019, the O&O expense component of early withdrawal penalties are applied as a reduction to O&O expenses to be repaid by RMC to members’ capital on scheduled redemptions. The amounts credited are determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. Prior to June 30, 2019, early withdrawal penalties collected were applied to the next installment due under the formation loan and to reduce the amount owed to RMC for O&O expenses. |
Manager and Other Related Par_7
Manager and Other Related Parties - Summary of Organization and Offering Expenses (Details) | 9 Months Ended | |
Sep. 30, 2020USD ($) | ||
Related Party Transactions [Abstract] | ||
Balance, January 1, 2020 | $ 2,260,068 | |
Early withdrawal penalties applied | (12,468) | [1] |
O&O expenses allocated | (240,489) | [2] |
O&O expenses repaid to Members' Capital by RMC | (42,184) | [3] |
Balance, September 30, 2020 | $ 1,964,927 | |
[1] | (1)Beginning July 1, 2019, the O&O expense component of early withdrawal penalties are applied as a reduction to O&O expenses to be repaid by RMC to members’ capital on scheduled redemptions. The amounts credited are determined by the ratio between the amount of the formation loan and the amount of offering costs incurred by the company. Prior to June 30, 2019, early withdrawal penalties collected were applied to the next installment due under the formation loan and to reduce the amount owed to RMC for O&O expenses. | |
[2] | (2)Beginning in 2016, O&O expenses reimbursed to RMC by RMI IX are allocated to members’ capital accounts over 40 quarters. | |
[3] | (3)RMC is obligated under the Operating Agreement to repay RMI IX for the amount of unallocated O&O expenses attributed to members’ capital accounts if the member redeems prior to the 40 quarterly allocations. RMC estimated its future obligation to repay unallocated O&O expenses on scheduled redemptions as of September 30, 2020, to be approximately $21,747, which may be offset in part by early withdrawal penalties collected in future periods. |
Manager and Other Related Par_8
Manager and Other Related Parties - Summary of Organization and Offering Expenses (Parenthetical) (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Related Party Transactions [Abstract] | |
O&O expenses reimbursed period to RMC | 120 months |
Unallocated O&O expenses on units rebates period | 120 months |
Estimated future rebates on scheduled redemptions | $ 21,747 |
Loans - Additional Information
Loans - Additional Information (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Oct. 31, 2020Loan | Sep. 30, 2020USD ($)MortgageLoan | Sep. 30, 2020USD ($)MortgageLoan | Dec. 31, 2019USD ($)MortgageLoan | Sep. 30, 2020 | Sep. 30, 2020MortgageLoan | Sep. 30, 2020Loan | Jun. 30, 2020USD ($) | Dec. 31, 2019MortgageLoan | Dec. 31, 2019Loan | Dec. 31, 2019Payment | |||||
Loans (Details) [Line Items] | |||||||||||||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 79 | 77 | |||||||||||||
Loans Receivable, Number of Principal and Interest Loans | Loan | 52 | ||||||||||||||
Loans Receivable, Amortization Term | 30 years | ||||||||||||||
Mortgage Loans On Real Estate Renewed Number Of Loans | MortgageLoan | 8 | 14 | |||||||||||||
Mortgage Loans On Real Estate Principal Renewed | $ 7,255,000 | $ 11,378,000 | |||||||||||||
Balance relating to loan portfolio deposit in bank trust account | 215,085 | 215,085 | $ 71,416 | ||||||||||||
Loans Receivable Largest Loan (in Dollars) | 6,735,000 | 6,735,000 | 6,735,000 | ||||||||||||
Loans - principal (in Dollars) | 75,949,063 | 75,949,063 | 70,660,284 | $ 72,577,049 | |||||||||||
Number of loans | 2 | 79 | 2 | 77 | |||||||||||
Principal | 75,949,063 | 75,949,063 | 70,660,284 | ||||||||||||
Number of payment | Payment | 2 | ||||||||||||||
Payment received from borrower | $ 283,000 | ||||||||||||||
Loan, maturity date | Nov. 1, 2020 | ||||||||||||||
Monthly payments, interest | 38,000 | 38,000 | |||||||||||||
Forgone interest | $ 1,976 | ||||||||||||||
Interest, Due Date | Jan. 1, 2020 | ||||||||||||||
Accrued interest | 820,482 | 820,482 | $ 680,146 | ||||||||||||
Allowance for loans losses reserve | 0 | 0 | 37,000 | ||||||||||||
Past Due 366 Days [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Principal | 190,198 | $ 190,198 | |||||||||||||
Loans receivables maturity date | Jun. 1, 2016 | ||||||||||||||
Loans receivable extended maturity date | Oct. 1, 2021 | ||||||||||||||
Past Due 457 Days [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Number of loans | MortgageLoan | 1 | ||||||||||||||
Principal | $ 760,000 | ||||||||||||||
Loans receivable extended maturity date | Apr. 1, 2020 | ||||||||||||||
Past Due 274 Days [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Number of loans | MortgageLoan | 1 | ||||||||||||||
Principal | $ 3,306,000 | ||||||||||||||
180 or more days [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Number of loans | Loan | 4 | 2 | |||||||||||||
Principal | 3,696,560 | $ 3,696,560 | 1,013,726 | ||||||||||||
Monthly payments, interest | 67,392 | [1] | 67,392 | [1] | 13,834 | [2] | |||||||||
Forgone interest | 5,000 | $ 5,000 | |||||||||||||
Interest, Due Date | Oct. 1, 2020 | ||||||||||||||
Monthly payments, principal | 903 | ||||||||||||||
30-89 days [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Monthly payments, interest | 15,130 | [1] | $ 15,130 | [1] | 29,396 | [2] | |||||||||
Monthly payments, principal | 369 | $ 369 | 1,671 | ||||||||||||
30-89 days [Member] | Extension Agreement [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans receivables maturity date | Sep. 1, 2020 | ||||||||||||||
Number of loans (principal and interest) | Loan | 1 | ||||||||||||||
Monthly payments, principal | 369,000 | $ 369,000 | |||||||||||||
Total past due [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Monthly payments, interest | 198,507 | [1],[3] | 198,507 | [1],[3] | 152,355 | [2] | |||||||||
Monthly payments, principal | 1,238 | [3] | 1,238 | [3] | 10,749 | [2] | |||||||||
Total past due [Member] | Extension Agreement [Member] | Subsequent Event [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans receivable extended maturity date | Sep. 1, 2021 | ||||||||||||||
Number of loans (principal and interest) | Loan | 1 | ||||||||||||||
Past Due 90 Or More Days [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Number of loans | MortgageLoan | 3 | 1 | |||||||||||||
Financing receivable, recorded investment, 90 days past due and still accruing | 5,149,000 | 5,149,000 | 3,329,000 | ||||||||||||
Accrued interest | 207,000 | $ 207,000 | 132,000 | ||||||||||||
Past Due 122 Days [Member] | Impaired Loans [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Principal | $ 137,000 | ||||||||||||||
Single Family Residence [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | [4] | 47 | 53 | ||||||||||||
Loans - principal (in Dollars) | [4] | 31,553,693 | $ 31,553,693 | $ 32,361,343 | |||||||||||
Alameda [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans - principal (in Dollars) | [5] | 5,920,420 | 5,920,420 | 2,930,219 | |||||||||||
San Bernardino [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans - principal (in Dollars) | 2,151,000 | $ 2,151,000 | $ 1,200,000 | ||||||||||||
Commercial Building [Member] | Alameda [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans receivable extended maturity date | Dec. 31, 2020 | ||||||||||||||
Commercial Building [Member] | Alameda [Member] | Single Family Residence [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Principal | 137,000 | $ 137,000 | |||||||||||||
Loans receivables maturity date | Dec. 1, 2019 | ||||||||||||||
Commercial Building [Member] | San Bernardino [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Principal | 1,200,000 | $ 1,200,000 | |||||||||||||
Loans receivables maturity date | Jul. 1, 2020 | ||||||||||||||
Five Years Or Less Term Loans [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Mortgage Loans on Real Estate, Number of Loans | MortgageLoan | 75 | ||||||||||||||
Loans Receivable, Percent of Aggregate Principal | 98.00% | ||||||||||||||
Interest Only [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans Receivable, Percent of Aggregate Principal | 43.00% | ||||||||||||||
Largest Loan [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans Receivable, Yield of Loan Acquired | 8.25% | ||||||||||||||
Loans Receivable Maturity Date | Oct. 1, 2021 | ||||||||||||||
Construction Loans [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans outstanding | 0 | $ 0 | |||||||||||||
Rehabilitation Or Other Loans [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans outstanding | 0 | 0 | |||||||||||||
Construction Or Rehabilitation Loans [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans - principal (in Dollars) | $ 0 | $ 0 | |||||||||||||
Minimum [Member] | |||||||||||||||
Loans (Details) [Line Items] | |||||||||||||||
Loans Receivable, Remaining Term | 5 years | ||||||||||||||
[1] | Interest includes foregone interest of approximately $38,000 on non-accrual loans past maturity and approximately $5,000 for monthly payments in arrears. September 2020 interest is due October 1, 2020 and is not included in the payments in arrears at September 30, 2020. | ||||||||||||||
[2] | Interest includes foregone interest of $1,976 on non-accrual loans for monthly payments in arrears 180 or more days (6 or more payments). December 2019 interest is due January 1, 2020 and is not included in the payments in arrears at December 31, 2019. | ||||||||||||||
[3] | Included in the table above is one loan past maturity with principal of approximately $369,000 and an original maturity date of September 1, 2020. In October 2020, the borrower paid all amounts in arrears, other than principal, and the maturity date was extended by one year to September 1, 2021. | ||||||||||||||
[4] | Single family property type as of September 30, 2020 consists of 9 loans with principal of $7,000,987 that are owner occupied and 38 loans with principal of $24,552,706 that are non-owner occupied. At December 31, 2019, single family property type consisted of 11 loans with principal of $6,236,571 that are owner occupied and 42 loans with principal of $26,124,772 that are non-owner occupied. | ||||||||||||||
[5] | Includes Silicon Valley |
Loans - Secured Loan Principal
Loans - Secured Loan Principal Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | ||
Receivables [Abstract] | |||
Principal, beginning of period | $ 72,577,049 | $ 70,660,284 | |
Loans funded | 14,352,000 | 36,327,850 | |
Loan transferred from related mortgage fund | 2,296,677 | ||
Collected - secured | (2,965,474) | (25,301,168) | |
Loans sold to non-affiliate | (480,000) | (480,000) | |
Loans transferred to held for sale(1) | [1] | (7,534,512) | (7,534,512) |
Charged off | (20,068) | ||
Principal, September 30, 2020 | $ 75,949,063 | $ 75,949,063 | |
[1] | At September 30, 2020, five loans with principal of approximately $7,535,000 were designated ‘held for sale’ for financial reporting purposes and are separately classified as such on the balance sheet and accompanying notes to the financial statements. All loans held for sale were performing and in first lien position. At September 30, 2020 the five loans held for sale had a combined accrued interest balance of approximately $47,700, all of which was received by the company in October 2020. |
Loans - Secured Loan Principa_2
Loans - Secured Loan Principal Transactions (Parenthitical) (Details) | 9 Months Ended | |
Sep. 30, 2020USD ($)MortgageLoan | Dec. 31, 2019USD ($) | |
Loans (Details) [Line Items] | ||
Principal | $ 75,949,063 | $ 70,660,284 |
Secured Loan [Member] | ||
Loans (Details) [Line Items] | ||
Number mortgage loans held-for-sale | MortgageLoan | 5 | |
Principal | $ 7,535,000 | |
Accrued Interest On Mortgage Loans Net | $ 47,700 |
Loans - Secured Loans Character
Loans - Secured Loans Characteristics (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020USD ($)MortgageLoanCountry | Dec. 31, 2019USD ($)MortgageLoanCountry | Jun. 30, 2020USD ($) | |
Secured Loan Transactions [Line Items] | |||
Number of secured loans | MortgageLoan | 79 | 77 | |
Secured loans - principal (in Dollars) | $ 75,949,063 | $ 70,660,284 | $ 72,577,049 |
Average secured loan - principal (in Dollars) | $ 961,381 | $ 917,666 | |
Average principal as percent of total principal | 1.30% | 1.30% | |
Average principal as percent of members’ capital, net | 1.20% | 1.20% | |
Average principal as percent of total assets | 1.10% | 1.20% | |
Largest secured loan - principal (in Dollars) | $ 6,735,000 | $ 6,735,000 | |
Largest principal as percent of total principal | 8.90% | 9.50% | |
Largest principal as percent of members’ capital, net | 8.50% | 8.50% | |
Largest principal as percent of total assets | 7.80% | 8.90% | |
Smallest secured loan - principal (in Dollars) | $ 12,138 | $ 125,656 | |
Smallest principal as percent of total principal | 0.00% | 0.20% | |
Smallest principal as percent of members’ capital, net | 0.00% | 0.20% | |
Smallest principal as percent of total assets | 0.00% | 0.20% | |
Number of California counties where security is located | Country | 16 | 17 | |
Largest percentage of principal in one California county | 22.80% | 27.00% | |
Secured loans in foreclosure - principal (in Dollars) | $ 136,799 | ||
Prepaid interest | $ 14,308 | ||
Minimum [Member] | |||
Secured Loan Transactions [Line Items] | |||
Secured loans - interest rate (fixed) | 6.80% | 7.80% | |
Maximum [Member] | |||
Secured Loan Transactions [Line Items] | |||
Secured loans - interest rate (fixed) | 10.50% | 10.50% | |
Filed Notice of Default [Member] | |||
Secured Loan Transactions [Line Items] | |||
Number of secured loans | MortgageLoan | 1 | ||
Prepaid Interest [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, 2020USD ($)MortgageLoan | Dec. 31, 2019USD ($)MortgageLoan | Jun. 30, 2020USD ($) | ||
Loans (Details) - Secured Loans by Lien Position in the Collateral [Line Items] | ||||
Loans | MortgageLoan | 79 | 77 | ||
Loans - principal (in Dollars) | $ 75,949,063 | $ 70,660,284 | $ 72,577,049 | |
Liens due other lenders at loan closing | 54,469,432 | 54,062,023 | ||
Total debt | 130,418,495 | 124,722,307 | ||
Appraised property value at loan closing | $ 246,468,000 | $ 237,453,000 | ||
Percent of total debt to appraised values (LTV) at loan closing | [1] | 55.30% | 55.30% | |
Loans - percent | 100.00% | 100.00% | ||
First Trust Deeds [Member] | ||||
Loans (Details) - Secured Loans by Lien Position in the Collateral [Line Items] | ||||
Loans | MortgageLoan | 49 | 42 | ||
Loans - principal (in Dollars) | $ 49,042,131 | $ 42,712,037 | ||
Loans - percent | 65.00% | 60.00% | ||
Second Trust Deeds [Member] | ||||
Loans (Details) - Secured Loans by Lien Position in the Collateral [Line Items] | ||||
Loans | MortgageLoan | 30 | 35 | ||
Loans - principal (in Dollars) | $ 26,906,932 | $ 27,948,247 | ||
Loans - percent | 35.00% | 40.00% | ||
[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 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, 2020USD ($)MortgageLoan | Dec. 31, 2019USD ($)MortgageLoan | Jun. 30, 2020USD ($) | ||
Loans (Details) - Secured Loans by Property Type [Line Items] | ||||
Loans | MortgageLoan | 79 | 77 | ||
Loans - principal (in Dollars) | $ | $ 75,949,063 | $ 70,660,284 | $ 72,577,049 | |
Loans - percent | 100.00% | 100.00% | ||
Single Family Residence [Member] | ||||
Loans (Details) - Secured Loans by Property Type [Line Items] | ||||
Loans | MortgageLoan | [1] | 47 | 53 | |
Loans - principal (in Dollars) | $ | [1] | $ 31,553,693 | $ 32,361,343 | |
Loans - percent | [1] | 42.00% | 46.00% | |
Multifamily [Member] | ||||
Loans (Details) - Secured Loans by Property Type [Line Items] | ||||
Loans | MortgageLoan | 8 | 9 | ||
Loans - principal (in Dollars) | $ | $ 8,287,389 | $ 9,219,497 | ||
Loans - percent | 11.00% | 13.00% | ||
Commercial [Member] | ||||
Loans (Details) - Secured Loans by Property Type [Line Items] | ||||
Loans | MortgageLoan | 24 | 15 | ||
Loans - principal (in Dollars) | $ | $ 36,107,981 | $ 29,079,444 | ||
Loans - percent | 47.00% | 41.00% | ||
[1] | Single family property type as of September 30, 2020 consists of 9 loans with principal of $7,000,987 that are owner occupied and 38 loans with principal of $24,552,706 that are non-owner occupied. At December 31, 2019, single family property type consisted of 11 loans with principal of $6,236,571 that are owner occupied and 42 loans with principal of $26,124,772 that are non-owner occupied. |
Loans - Secured Loans by Prop_2
Loans - Secured Loans by Property Type (Parenthetical) (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020USD ($)MortgageLoan | Dec. 31, 2019USD ($)MortgageLoan | Jun. 30, 2020USD ($) | |
Loans (Details) - Secured Loans by Property Type [Line Items] | |||
Loans | MortgageLoan | 79 | 77 | |
Principal | $ | $ 75,949,063 | $ 70,660,284 | $ 72,577,049 |
Single Family Property-Owner Occupied [Member] | |||
Loans (Details) - Secured Loans by Property Type [Line Items] | |||
Loans | MortgageLoan | 9 | 11 | |
Principal | $ | $ 7,000,987 | $ 6,236,571 | |
Single Family Property-NonOwner Occupied [Member] | |||
Loans (Details) - Secured Loans by Property Type [Line Items] | |||
Loans | MortgageLoan | 38 | 42 | |
Principal | $ | $ 24,552,706 | $ 26,124,772 |
Loans - Secured Loans Distribut
Loans - Secured Loans Distributed Within California (Details) - USD ($) | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 75,949,063 | $ 72,577,049 | $ 70,660,284 | |
Loans - percent | 100.00% | 100.00% | ||
San Francisco Bay Area [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 40,942,509 | $ 41,481,368 | |
Loans - percent | [1] | 53.90% | 58.80% | |
Santa Clara [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 17,311,753 | $ 19,064,638 | |
Loans - percent | [1] | 22.80% | 27.00% | |
San Mateo [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 7,778,922 | $ 10,837,195 | |
Loans - percent | [1] | 10.20% | 15.30% | |
San Francisco [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 7,588,142 | $ 7,735,173 | |
Loans - percent | [1] | 10.00% | 10.90% | |
Alameda [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 5,920,420 | $ 2,930,219 | |
Loans - percent | [1] | 7.80% | 4.20% | |
Contra Costa [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | [1] | $ 1,096,271 | $ 400,000 | |
Loans - percent | [1] | 1.50% | 0.60% | |
Marin [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 1,247,001 | $ 249,628 | ||
Loans - percent | 1.60% | 0.40% | ||
Santa Cruz [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 264,515 | |||
Loans - percent | 0.40% | |||
Other Northern California [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 1,642,498 | $ 5,822,216 | ||
Loans - percent | 2.20% | 8.20% | ||
Sutter [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 3,815,000 | |||
Loans - percent | 0.00% | 5.40% | ||
Monterey [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 1,110,000 | $ 1,110,000 | ||
Loans - percent | 1.50% | 1.60% | ||
Tehama [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 405,000 | $ 405,000 | ||
Loans - percent | 0.50% | 0.60% | ||
Sacramento [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 127,498 | $ 492,216 | ||
Loans - percent | 0.20% | 0.60% | ||
Northern California [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 42,585,007 | $ 47,303,584 | ||
Loans - percent | 56.10% | 67.00% | ||
Los Angeles & Coastal [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 30,968,020 | $ 21,080,016 | ||
Loans - percent | 40.80% | 29.80% | ||
Los Angeles [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 15,874,054 | $ 12,531,312 | ||
Loans - percent | 20.90% | 17.70% | ||
San Diego [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 9,806,485 | $ 4,983,331 | ||
Loans - percent | 12.90% | 7.10% | ||
Orange [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 4,463,683 | $ 3,067,396 | ||
Loans - percent | 5.90% | 4.30% | ||
Santa Barbara [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 395,335 | $ 497,977 | ||
Loans - percent | 0.50% | 0.70% | ||
San Luis Obispo [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 428,463 | |||
Loans - percent | 0.60% | |||
Other Southern California [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 2,396,036 | $ 2,276,684 | ||
Loans - percent | 3.10% | 3.20% | ||
San Bernardino [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 2,151,000 | $ 1,200,000 | ||
Loans - percent | 2.80% | 1.70% | ||
Riverside [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 245,036 | $ 1,076,684 | ||
Loans - percent | 0.30% | 1.50% | ||
Southern California [Member] | ||||
Loans (Details) - Secured Loans Distributed Within California [Line Items] | ||||
Loans - principal (in Dollars) | $ 33,364,056 | $ 23,356,700 | ||
Loans - percent | 43.90% | 33.00% | ||
[1] | Includes Silicon Valley |
Loans - Secured Loans Scheduled
Loans - Secured Loans Scheduled Maturities (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020USD ($)MortgageLoan | Dec. 31, 2019USD ($)MortgageLoan | Jun. 30, 2020USD ($) | ||
Secured Loans Scheduled Maturities [Abstract] | ||||
2020, Loans | MortgageLoan | [1] | 7 | ||
2021, Loans | MortgageLoan | 43 | |||
2022, Loans | MortgageLoan | 15 | |||
2023, Loans | MortgageLoan | 4 | |||
2024, Loans | MortgageLoan | 1 | |||
Thereafter, Loans | MortgageLoan | 6 | |||
Total scheduled maturities, Loans | MortgageLoan | 76 | |||
Matured as of September 30, 2020, Loans | MortgageLoan | 3 | |||
Loans | MortgageLoan | 79 | 77 | ||
2020, Principal | $ | [1] | $ 6,318,188 | ||
2021, Principal | $ | 53,377,031 | |||
2022, Principal | $ | 9,189,027 | |||
2023, Principal | $ | 1,317,172 | |||
2024, Principal | $ | 245,035 | |||
Thereafter, Principal | $ | 3,996,486 | |||
Total scheduled maturities, Principal | $ | 74,442,939 | |||
Matured as of September 31, 2020, Principal | $ | 1,506,124 | |||
Total principal, secured loans | $ | $ 75,949,063 | $ 70,660,284 | $ 72,577,049 | |
2020, Percent | [1] | 8.00% | ||
2021, Percent | 69.00% | |||
2022, Percent | 12.00% | |||
2023, Percent | 2.00% | |||
2024, Percent | 1.00% | |||
Thereafter, Percent | 6.00% | |||
Total scheduled maturities, Percent | 98.00% | |||
Matured as of September 30, 2020, Percent | 2.00% | |||
Total principal, secured loans, Percent | 100.00% | 100.00% | ||
[1] | Loans scheduled to mature in 2020 after September 30. Includes two loans for which the company entered into forbearance agreements with the borrowers in September 2020 which deferred the maturity dates until December 1, 2020. One loan with principal of approximately $1,200,000 which matured July 1, 2020, and one loan with a principal of approximately $137,000 which matured December 1, 2019. |
Loans - Secured Loans Schedul_2
Loans - Secured Loans Scheduled Maturities (Parenthetical) (Details) | 9 Months Ended | |||
Sep. 30, 2020USD ($)Loan | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | ||
Loans (Details) [Line Items] | ||||
Principal | $ 75,949,063 | $ 72,577,049 | $ 70,660,284 | |
San Bernardino [Member] | ||||
Loans (Details) [Line Items] | ||||
Principal | 2,151,000 | 1,200,000 | ||
Alameda [Member] | ||||
Loans (Details) [Line Items] | ||||
Principal | [1] | $ 5,920,420 | $ 2,930,219 | |
Forbearance Agreement [Member] | ||||
Loans (Details) [Line Items] | ||||
Number of loans | Loan | 2 | |||
Forbearance Agreement [Member] | San Bernardino [Member] | ||||
Loans (Details) [Line Items] | ||||
Principal | $ 1,200,000 | |||
Loans receivables maturity date | Jul. 1, 2020 | |||
Forbearance Agreement [Member] | Alameda [Member] | ||||
Loans (Details) [Line Items] | ||||
Principal | $ 137,000 | |||
Loans receivables maturity date | Dec. 1, 2019 | |||
[1] | Includes Silicon Valley |
Loans - Past Due Financing Rece
Loans - Past Due Financing Receivables (Details) | Sep. 30, 2020USD ($) | Sep. 30, 2020MortgageLoan | Sep. 30, 2020Loan | Dec. 31, 2019USD ($) | Dec. 31, 2019MortgageLoan | Dec. 31, 2019Loan |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Number of loans | 2 | 79 | 2 | 77 | ||
Principal | $ 75,949,063 | $ 70,660,284 | ||||
Past Due 30-89 Days [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Number of loans | Loan | 4 | 8 | ||||
Principal | 1,928,042 | 3,952,306 | ||||
Past Due 90-179 Days [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Number of loans | Loan | 3 | 2 | ||||
Principal | 3,739,684 | 3,520,112 | ||||
180 or more days [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Number of loans | Loan | 4 | 2 | ||||
Principal | 3,696,560 | 1,013,726 | ||||
Current [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Number of loans | Loan | 68 | 65 | ||||
Principal | 66,584,777 | 62,174,140 | ||||
Total past due (non-performing) [Member] | ||||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||||||
Number of loans | Loan | 11 | 12 | ||||
Principal | $ 9,364,286 | $ 8,486,144 |
Loans - Schedule of Payments in
Loans - Schedule of Payments in Arrears Past Due Financing Receivables (Details) | Sep. 30, 2020USD ($)Loan | Dec. 31, 2019USD ($)Loan | |||
Loans Details Secured Loans By Property Type Of Collateral [Line Items] | |||||
Monthly payments, interest | $ 38,000 | ||||
30-89 days [Member] | |||||
Loans Details Secured Loans By Property Type Of Collateral [Line Items] | |||||
Number of loans | Loan | 2 | 2 | |||
Number of loans | Loan | 2 | 6 | |||
Past maturity, principal | $ 746,363 | $ 311,294 | |||
Monthly payments, principal | 369 | 1,671 | |||
Past maturity, interest | [1] | 1,198 | |||
Monthly payments, interest | 15,130 | [2] | 29,396 | [1] | |
Total payments | $ 761,862 | $ 343,559 | |||
90-179 days [Member] | |||||
Loans Details Secured Loans By Property Type Of Collateral [Line Items] | |||||
Number of loans | Loan | 3 | 2 | |||
Monthly payments, principal | $ 869 | $ 8,175 | |||
Monthly payments, interest | 115,985 | [2] | 109,125 | [1] | |
Total payments | $ 116,854 | $ 117,300 | |||
180 or more days [Member] | |||||
Loans Details Secured Loans By Property Type Of Collateral [Line Items] | |||||
Number of loans | Loan | 3 | 1 | |||
Number of loans | Loan | 1 | 1 | |||
Past maturity, principal | $ 2,096,560 | $ 764,097 | |||
Monthly payments, principal | 903 | ||||
Past maturity, interest | 99,617 | [2] | 15,760 | [1] | |
Monthly payments, interest | 67,392 | [2] | 13,834 | [1] | |
Total payments | $ 2,263,569 | $ 794,594 | |||
Total past due [Member] | |||||
Loans Details Secured Loans By Property Type Of Collateral [Line Items] | |||||
Number of loans | Loan | 5 | [3] | 3 | [1] | |
Number of loans | Loan | 6 | [3] | 9 | [1] | |
Past maturity, principal | $ 2,842,923 | [3] | $ 1,075,391 | [1] | |
Monthly payments, principal | 1,238 | [3] | 10,749 | [1] | |
Past maturity, interest | 99,617 | [2],[3] | 16,958 | [1] | |
Monthly payments, interest | 198,507 | [2],[3] | 152,355 | [1] | |
Total payments | $ 3,142,285 | [3] | $ 1,255,453 | [1] | |
[1] | Interest includes foregone interest of $1,976 on non-accrual loans for monthly payments in arrears 180 or more days (6 or more payments). December 2019 interest is due January 1, 2020 and is not included in the payments in arrears at December 31, 2019. | ||||
[2] | Interest includes foregone interest of approximately $38,000 on non-accrual loans past maturity and approximately $5,000 for monthly payments in arrears. September 2020 interest is due October 1, 2020 and is not included in the payments in arrears at September 30, 2020. | ||||
[3] | Included in the table above is one loan past maturity with principal of approximately $369,000 and an original maturity date of September 1, 2020. In October 2020, the borrower paid all amounts in arrears, other than principal, and the maturity date was extended by one year to September 1, 2021. |
Loans - Secured Loans in Non-Ac
Loans - Secured Loans in Non-Accrual Status (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020USD ($)MortgageLoan | Dec. 31, 2019USD ($)MortgageLoan | Jun. 30, 2020USD ($) | |
Loans Details Secured Loans In Nonaccrual Status [Line Items] | |||
Loans | MortgageLoan | 79 | 77 | |
Loans - principal (in Dollars) | $ 75,949,063 | $ 70,660,284 | $ 72,577,049 |
Accrued interest | $ 820,482 | 680,146 | |
Forgone interest | $ 1,976 | ||
Non-Accrual Status [Member] | |||
Loans Details Secured Loans In Nonaccrual Status [Line Items] | |||
Loans | MortgageLoan | 4 | 3 | |
Loans - principal (in Dollars) | $ 2,422,600 | $ 1,252,971 | |
Accrued interest | 121,571 | 37,799 | |
Forgone interest | 46,806 | 3,952 | |
Principal [Member] | Non-Accrual Status [Member] | |||
Loans Details Secured Loans In Nonaccrual Status [Line Items] | |||
Loans - principal (in Dollars) | 2,286,758 | 1,204,495 | |
Advances [Member] | Non-Accrual Status [Member] | |||
Loans Details Secured Loans In Nonaccrual Status [Line Items] | |||
Loans - principal (in Dollars) | $ 14,271 | $ 10,677 |
Loans - Activity in the Allowan
Loans - Activity in the Allowance for Loan Losses (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Receivables [Abstract] | |
Balance, beginning of period | $ 87,000 |
Recovery for loan losses | (75) |
Charge-offs | (31,925) |
Balance, end of period | $ 55,000 |
Loans - Schedule of Impaired Lo
Loans - Schedule of Impaired Loans/Allowance for Loan Losses (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020USD ($)Loan | Dec. 31, 2019USD ($)Loan | ||
Secured Loans Designated as Impaired Loans [Abstract] | |||
Number of loans | Loan | 6 | 4 | |
Principal | $ 5,836,245 | $ 4,533,838 | |
Recorded investment | [1] | 6,081,615 | 4,719,705 |
Impaired loans without allowance | 6,081,615 | 4,451,368 | |
Impaired loans with allowance | 268,337 | ||
Allowance for loan losses, impaired loans | $ 0 | $ 37,000 | |
Weighted average LTV at origination | 59.60% | 66.00% | |
[1] | Recorded investment is the sum of the principal, advances, and accrued interest receivable for financial reporting purposes. |
Loans - Impaired Loans - Averag
Loans - Impaired Loans - Average Balances and Interest Income (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Impaired Loans - Average Balances and Interest Income [Abstract] | ||
Average recorded investment | $ 5,208,273 | $ 4,334,931 |
Interest income recognized | 393,443 | 169,585 |
Interest income received in cash | $ 219,355 | $ 67,990 |
Line of Credit - Schedule of Li
Line of Credit - Schedule of Line of Credit Facilities Activity (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |||
Balance, beginning of period | $ 8,200,000 | ||
Draws | 6,050,000 | $ 19,250,000 | |
Repayments | (4,250,000) | (9,250,000) | $ 9,250,000 |
Balance, September 30, 2020 | 10,000,000 | 10,000,000 | $ 10,000,000 |
Line of credit - average daily balance | $ 8,524,000 | $ 6,236,000 |
Line of Credit - Additional Inf
Line of Credit - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Mar. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | |
Short Term Debt [Line Items] | |||
Amortization of debt issuance costs | $ 27,320 | ||
Pledged loans, principal amount | $ 17,017,000 | 17,017,000 | |
Maximum [Member] | |||
Short Term Debt [Line Items] | |||
Pledged loans, advance amount | 10,000,000 | 10,000,000 | |
Revolving Credit Facility [Member] | |||
Short Term Debt [Line Items] | |||
Debt issuance costs | 109,526 | 109,526 | |
Amortization of debt issuance costs | $ 13,702 | $ 27,320 | |
Term loan, duration | 1 year | 2 years | |
Line of credit facility, maximum amount outstanding during period | $ 10,000,000 | ||
Maturity date | Mar. 13, 2022 | ||
Line of credit facility, conversion of outstanding principal balance to term loan of fee | 0.25% | ||
Line of credit extended maturity date | Mar. 13, 2023 | ||
Line of credit facility, description | The company has the option at the maturity date to convert the then outstanding principal balance on the line of credit to a one-year term loan - for a fee of one-quarter of one percent (0.25%) – thereby extending the maturity date to March 13, 2023 | ||
Line of credit facility, description | Interest on the outstanding principal is payable monthly and accrues at the per annum rate of the greater of (i) five percent (5%) or (ii) the sum of the one-month LIBOR rate plus three and one-quarter percent (3.25%). | ||
Line of credit facility, interest rate | 5.00% | 5.00% | |
Compensating balance, minimum | $ 1,000,000 | $ 1,000,000 | |
Interest on non maintenance of compensating balance | 0.25% | ||
Line of credit facility, average rate | 50.00% | ||
Line of credit facility, unused line of fee | 0.50% | ||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||
Short Term Debt [Line Items] | |||
Line of credit facility, interest rate | 3.25% | 3.25% | |
Line Of Credit [Member] | Minimum [Member] | |||
Short Term Debt [Line Items] | |||
Minimum tangible net worth | $ 50,000,000 | $ 50,000,000 | |
Debt service coverage ratio | 1 | ||
Line Of Credit [Member] | Maximum [Member] | |||
Short Term Debt [Line Items] | |||
Debt service coverage ratio | 2 | ||
Line Of Credit [Member] | Maximum [Member] | Financial Asset, 61 Days Past Due [Member] | |||
Short Term Debt [Line Items] | |||
Loan payment, quartely | 10.00% |
Commitment and Contingencies, O
Commitment and Contingencies, Other Than Loan Commitments - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Commitments And Contingencies Disclosure [Abstract] | |
Future redemptions of members' capital | $ 1,156,763 |
Future redemptions of members' capital, scheduled for payment in 2020 | 1,003,686 |
Future redemptions of members' capital, scheduled for payment in 2021 | $ 153,077 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) | Oct. 19, 2020USD ($)MortgageLoan | Oct. 31, 2020USD ($) | Sep. 30, 2020USD ($)MortgageLoan | Dec. 31, 2019USD ($)MortgageLoan |
Subsequent Event [Line Items] | ||||
Number of secured loans | MortgageLoan | 79 | 77 | ||
Total Cash Flow Payable on Mortgage Loans | $ 75,949,063 | $ 70,660,284 | ||
Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Subsequent event, description | Promissory note payable to related party (RMI VIII) On October 19, 2020, RMI IX borrowed from RMI VIII $800,000 secured by the net cash flow payable on five mortgage loans totaling approximately $7,535,000,000 each of which were designated by RMI IX as held for sale and expected to be sold to a third party purchaser prior to November 30, 2020. Interest on the loan accrued at a rate equal to RMI VIII’s pro rata share of the weighted average interest payable on the held for sale loans through a term ending on the earlier of: (i) the closing of the purchase of the held for sale loans; and (ii) November 30, 2020. The promissory note payable to RMI VIII was secured by all proceeds payable to RMI IX upon the sale or repayment of the loans net of any amounts outstanding by RMI IX on its line of credit secured by the loans. On October 30, 2020, RMI IX repaid in full the promissory note amount of $800,000 and $1,831 in interest to RMI VIII. Under the terms of the note, RMI IX is also obligated to pay RMI VIII a pro rata share of premium realized (i.e., gain on sale net of costs) upon the sale of the held for sale loans if the sale transaction closes following repayment of the promissory note to RMI VIII. The manager evaluated subsequent events that have occurred after September 30, 2020 and determined that there were no other events or transactions occurring during this reporting period that require recognition or disclosure in the unaudited financial statements. | |||
Redwood Mortgage Investors VIII [Member] | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Net Amount Secured On Mortgage Loans | $ 800,000 | |||
Number of secured loans | MortgageLoan | 5 | |||
Total Cash Flow Payable on Mortgage Loans | $ 7,535,000,000 | |||
Proceeds from (Repayments of) Notes Payable | $ 800,000 | |||
Repayment of interest. | $ 1,831 |