@Dion DePaoli You raise very good questions here and I'm going to answer each in turn:
So what exactly is your company here? You mention you are one the "new crowdfunding companies", so you have been approved as a Funding Portal or you are a licensed Broker/Dealer?
The "registered funding portal" specified in Title III of the jobs act doesn't actually exist yet. Since we aren't using unaccredited investors, and instead are operating under a Reg D rule 506(c) filing as the issuer, we are in full compliance with securities regulations. Once Title III is finalized and enacted, we will definitely be looking into working with unaccredited investors and therefore filing as a "registered" portal, however the SEC determines what that process will be. We expect it to be similar to registering as a B/D
Who is the Mortgagee listed on the Mortgage and Note and how are you pooling the investors into that note?
The mortgagee is Patch of Land and then we syndicate it with low minimums to our investor.
Subject Property is in New Jersey, you seem to be in California, are you a licensed lender with the state of New Jersey?
Based on the loans being to an LLC for a business purpose and the volume of business as a private lender, we aren't required to have a lending license yet in NJ. We are actively working on full licensing in several states so that we can move into more sophisticated offerings.
If the intent is to fund the additional 10%, which sounds like it is your portion of the funding being taken out, who would then be the Syndicated Trustee?
We prefund all of our deals and then syndicate the entire loan out but we also realize we might not be fully taken out. We are very happy to remain in every single loan we offer but that means we don't have as much funds to prefund more deals. We remain the Syndicated Trustee because we approve all of our deals before we prefund and would only be willing to prefund deals we are happy to hold. We have a duty to our investors to only bring the best possible deals to the platform because we are committing our own funds up front and to maintain high quality opportunities for our clients. We are also in talks with a hedge fund to provide us funding so that we keep 10-20% of each deal.
The structure of this is not clear, folks use the word syndication and crowdfunding way out of context, can you explain how the capital is stacked into the note?
Funny you say that because we actually say Crowdfunding is the 21st century term for syndication. Its very similar from my perspective. If you are referring to risk, everyone is in the note with the same level of risk, including us if we haven't filled it completely and therefore are maintaining a position.
Then what evidences their ownership/investment - Is this through legal assignment, equity assignment, or novation?
We currently operate through borrower dependent notes which are encumbered by the individual project however we will be moving to assigning interest through a specialty LLC.
The note rate is 13%, what are the servicing fees that are being deducted for the servicing and adminstration of this investment?
On this particular note we didn't charge a servicing fee or administration fee. We have built in systems that greatly reduce these costs and are passing them on to the investor. On some of the newer deals we started charging 1% to cover escrow and servicing costs.
I'm happy to discuss this further as is anyone on our team, if you'd like to follow up with a call, please PM me.
