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The value of private mortgage investments and the potential income derived from them may fluctuate. A private mortgage investor will be subject to the risks inherent in making mortgage loans including, without limitation, (a) the borrower may default, requiring that the mortgage fund foreclose on the underlying property to protect the value of its mortgage loan, (b) the borrower may not be able to make a lump sum principal payment due under a mortgage loan at the end of the loan term, unless it can refinance the mortgage loan or (c) if interest rates are volatile during the loan period, a private mortgage fund’s variable-rate mortgage loans could have lower yields. Since private mortgage loans are sometimes non-recourse, a private mortgage fund must rely solely on the value of a property for its security. In addition, mezzanine loans will be subject to the prior rights of mortgage holders and creditors of the corporate entity owning the applicable property. Second and/or Wraparound mortgages will be subject to the prior rights of first mortgage holders. Generally, the larger the mortgage loan compared to the value of the property securing it, the greater the loan’s risk. Upon default and following foreclosure, a private mortgage fund may not be able to sell the property for its estimated or appraised value. Also, certain liens on the property, such as first mortgages, taxes and contractor or mechanic’s or tax liens, may have priority over a private mortgage fund’s security interest. In such cases the Lender may be required to pay the holders of such liens to protect its security interest and investment.

Address: 149 Madison Avenue , New York, NY 10016
Telephone: 212-684-2283
Fax: 212-532-1222
Website: http://www.privatemortgageinvestment.com/