GUIDE TO TRUST DEED INVESTMENTS. all california funding

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1 GUIDE TO TRUST DEED INVESTMENTS all california funding

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3 Today s investment experts are enthusiastically adopting a simple but highly effective strategy: diversify, diversify, diversify. Prudent investors focused on steadily building wealth have moved beyond stocks and bonds into investment opportunities that offer A trust deed is an investment vehicle securing a legal interest in a borrower s property. solid rates of return but are less susceptible to market fluctuations. Some of the most dynamic and lucrative alternatives are real estate trust deed investments. Trust deed investments enable investors to reap the benefits of real estate lending traditionally enjoyed only by banks and savings and loans. All California Funding (ACF) makes this opportunity accessible to investors like you. 1

4 Welcome Thank you for considering All California Funding (ACF) as part of your investment strategy. ACF has been in the real estate brokerage and lending business for many years, with over five decades of combined experience between the two principal stockholders. Having personally and professionally invested in numerous properties, projects, stocks, mutual funds and bonds, they have found trust deeds to be among the best and most consistent performers. As a result of personal experience and the success of thousands of investors, we firmly believe that trust deeds should be a component of every investor s portfolio. So much so that ACF was founded to provide trust deed investment opportunities to investors like you. The basics of trust deed investments are relatively easy to understand: 1. Establish the value of the property being provided as collateral 2. Look at the amount of the loan request 3. Include any loans senior to the loan you are being asked to make 4. Determine the loan-to-value 5. Determine the Net Equity 6. Carefully evaluate the borrower s track record and ability to repay the debt Some questions are sure to arise. Call us. We re always eager to talk about trust deeds and explore how they might fit your financial picture. In fact, our team prides itself on the creation of innovative solutions that best suit the individual needs of our clients. We also know from experience that everyone s needs are different, so we encourage you to confer with your legal and financial advisors when making any investment decisions. We invite you to contact us anytime, with no obligations or pressure we re confident that the many benefits of our investment opportunities speak for themselves. Our aim is to provide exceptional service with every opportunity and build trusting relationships with all of our clients. It s the way we do business. We look forward to sharing the experience with you. WELCOME Sincerely, All California Funding (ACF) 3

5 The Trust Deed Overview Trust Deed is the term commonly used for a legal document known as a deed of trust. Simply speaking, the deed of trust secures a borrower s obligation to repay a loan by granting the lender a security interest in the real estate owned by the borrower (trustor). It is actually quite similar to a mortgage, which is the familiar term used in many states. Factors for Success ACF founders Barry Judis and Bill Schumer have more than 50 years of experience in real estate lending, brokerage, ownership, development and improvement. The company s track record of success since its formation in 1999 substantiates the team s applied knowledge and professional experience in assessing and meeting those factors most critical to success in the lending process. THE TRUST DEED Institutional and individual lenders have been investing in various forms of trust deeds since the earliest days of the real estate industry. A trust deed names the lender (beneficiary) and is recorded in the public records of the county in which the property is located. Should the borrower default, the trust deed grants an independent third party (trustee) the right to cause the property to be sold in order to satisfy the obligations owed. This is essentially the same foreclosure right a borrower grants to a bank or savings institution to finance the purchase of a home or other real estate. ACF provides investors the opportunities to participate as a lender of record in a property through a whole or fractionalized investment, or indirectly through the All California Mortgage Fund, LLC (Fund). A whole or fractionalized interest is an investment usually secured by a single property. In contrast, the Fund allows the investor to participate in a pool of loans, similar to a mutual fund, whereby all the properties in the pool are the security for the investment. Notably, most conventional lending institutions (Banks, Savings and Loans, etc.) believe that the personal income and the credit rating of a borrower are the main factors in loan underwriting. These institutions also employ strict debt service and loan-to-value ratios determined by the type of real estate the individual is trying to fund. These underwriting guidelines prevent them from offering any financing at all on certain loan types. These same types of loans have proven to be very profitable to ACF Investors. At ACF, the borrower s credit rating and their ability to make the monthly payments are important considerations. However, most emphasis is placed on the net equity of the underlying real estate, the actual property that will secure the loan. This can apply to an improved property or to land in the entitlement, mapping or construction stages of development. After all, as a lender you certainly want to make a solid return on your investment, but you also want to secure that investment. Trust Deeds can provide that security. 5

6 The Market ACF vs. Market Instability Most ACF investors have experienced the benefit of trust deed investing for many years. New investors are realizing the same benefits that long time investors have learned. There is a familiar risk/reward ratio the greater the risk, the greater the reward. Although there are certain risks in trust deed investing, the long-term gains are generally well worth assuming those risks. Many investors have had their fill of the ups and downs of the stock market and are tired of relying on the expertise of their stockbrokers. Others want to diversify their portfolios with fixed-rate investments. In either case, a trust deed investment with ACF can provide a high annual return on your investment and satisfy your investment strategies, whether you are focused on income or growth. understanding necessary to make intelligent decisions about how to choose their investments. This is really no different than how each investor should approach any investment, whether it is stocks, bonds or commodities. In every instance, investors should seek advice and information from their attorneys, accountants or their other financial advisors. Ultimately, the decision to invest and the result of those decisions are borne by the investor. ACF vs. Conventional Lending Institutions There are two primary areas where ACF differs from conventional lending institutions (Banks and Savings and Loans). The first is entitlement and mapping loans. The second is providing investors the opportunity to lend at retail rates. THE MARKET We have all recently seen the vast fluctuations of investments in the stock market. One major company lost over $700,000,000 in value in one hour (23% of their total net worth). Motivated by a desire to increase the yield derived from their investments, investors know that trust deeds are simple to understand and easy to monitor. Unlike stocks and bonds, investors do not need to sift through financial statements and understand the complexities of the entire industry to intelligently evaluate an ACF trust deed. Investors in trust deeds understand and appreciate the value of real estate as well as certain fundamentals about real estate lending. They like the fact that real estate is a tangible asset. An investor can visually inspect the property securing the loan they can actually walk through it, examine it and touch it. There is simply no mystery. ACF embraces its role as a service provider and recognizes that this is the investor s personal capital. We believe that they should have sufficient knowledge and the ACF Entitlement and Mapping programs allow a borrower the opportunity to redefine a property s usage (i.e. raw to entitled, density change, change of use, etc.) with reasonable financing instead of immediate out-of-pocket expense. ACF has been a leader in this type of loan allowing us to provide our investors a high rate of return with strong security in the developing property. This program attracts high net worth, good credit rated developers who prefer our funding alternative. Banks and Savings and Loans tend to avoid this type of transaction. The second area of difference is that Banks and Savings and Loans make money by borrowing money at wholesale rates from the investing public in the form of deposits, and then lending those funds at retail rates to the borrowing public. The difference between these rates is known as the spread. 17

7 The Market To earn this spread, the financial institutions analyze or underwrite the loan by determining the creditworthiness of the borrowers and the values of the properties securing the loans. Usually they are making loans for the purchase or refinance of homes where down payments and owner s equity are relatively low. ACF is a mortgage banker that specializes in arranging loans directly for borrowers who, for the most part, are property owners, buyers or developers with substantial cash equity in the property and who often provide personal guarantees. We attract investors who want to make a significant return on their investment. We provide those investors with the opportunity to lend and we assist these lenders by servicing the loans on their behalf. The investor s money is lent at retail rates and the investors have directly secured interests in the real estate pledged by the borrowers to collateralize repayment of the loans. Lending Guidelines and Flexibility When large financial institutions underwrite loans, they place tremendous emphasis on the borrower s present and past employment and earnings history, as well as the overall historical ability and apparent willingness to repay (i.e. creditworthiness). This is important when the borrower s loan-to-value (LTV) ratio is high and the equity is low, as is the case with most home purchases. Although they also look at the value of the securing property, banks focus on the borrower s income in comparison to the borrower s debt obligations and living expenses (Debt Service Ratio). They calculate many ratios that must fall below certain rigid cut-offs. If the borrower s ratios do not meet an institution s standards, the borrower will not qualify. Often, even if a borrower owns real estate in which the equity is very high but the income or creditworthiness picture is not up to par, the financial institution will decline to make the loan. This rigidity in qualifying potential borrowers is maintained by financial institutions by virtue of their special role in our banking system. Since they accept deposits from the general public and the Federal Government insures those deposits up to limited amounts, the regulations strictly affect their lending guidelines. In turn, they are limited in their terms and flexibility, which place much greater emphasis on income and credit history rather than on the value of the security. We believe that ultimately their loans may actually be less secure than the loans originated by ACF. In fact, if conventional lending practices were ideal then conventional financial institutions would never have a foreclosure. We know from experience that they do. We believe that borrowers will always find a way to meet their obligations when the real estate they own holds cash equity that they do not want to lose. At ACF, the single most important factor in determining whether to make a loan is the borrower s equity in the property. Often we require the borrower to infuse cash into a project because we prefer that real money be at risk for the borrower. After all, the borrower s creditworthiness can change on a moment s notice, but the value of real estate is unlikely to diminish in any meaningful way, particularly when the loan-to-value ratio provides a substantial equity cushion. The value of real estate may fluctuate, but history has proven it continues to appreciate. 9

8 Opportunities and Properties Available Investment Opportunities Whole or Fractionalized Program ACF offers whole or fractionalized interests in individual notes and deeds of trust. In these investments you would own an undivided interest (either a partial or whole interest) in a specific property, with the note describing the terms of repayment by the borrower and the deed of trust providing the security. Rates of Return Your rate of return depends on which of the investment options you choose, particularly in the case of a whole or fractionalized investment where the terms vary according to the property-specific trust deed. The length of the loan term, the lien priority (see Lien Priority page 15), the timeliness of the borrower s payments and other factors may also affect your yield. All California Mortgage Fund, LLC (Fund) The All California Mortgage Fund provides diversification in a form similar to a mutual fund. Investors are secured by a pool of loans, earn an aggregate of the average yield and are protected by the entirety of the portfolio. As a benefit of our size and volume of business, ACF can offer you a wide variety of trust deed opportunities. In fact, we can determine and find the type that best fits your investment needs and goals. Your ACF Account Executive will be happy to discuss the variety of offerings currently available. OPPORTUNITIES AND PROPERTIES Investment Programs Interest Rate Return Risk Loans secured by fully improved real estate Construction loans pursuant to a Loan Agreement governing the construction of one or more new structures on a security property Loans where the loan amount exceeds 100% of borrowers acquisition cost, with a portion of loan proceeds used to make repairs or improvements Loans secured by raw land or land being entitled Loan to Value Ratio Whole or Fractionalized 10%-13%* Loan secured by single trust deed Up to 65% Mortgage Fund Approximately 9%* Loan secured by a pool of trust deeds Up to 65% * Rates of return may vary. Past results are not a guarantee of future performance. 11

9 Opportunities and Properties ACF Investment Highlights: Features and Options Whole or Fractionalized Mortgage Fund Types of Properties Same (see previous Table) Same (see previous Table) Interest Rate/Yield Fixed rate of return Blended rate of return Term/Length of Investment Fixed term Fund shares may remain in the fund (usually 1-2 years) for indefinite periods of time Return of Investment Subject to loan pay-off After 6 months, subject to provisions of the Operating Agreement Payment Schedule Friday following receipt of First of each month negotiable funds Investment Minimums $20,000 $5,000 initial investment (some exceptions considered) $1,000 increments after initial investment Compounding of Dividends None Investors can choose to receive their dividends (Income) or to have dividends reinvested into additional fund shares (Growth) Advertising Support Diversification of Risk Each investor owns a whole or Each investor owns shares in the fractionalized interest in a specific Fund with any risk spread over the note and deed of trust entire fund Construction Lending Company oversees construction Company oversees construction disbursements and inspections disbursements and inspections Out of State Collateral Being reviewed by counsel and not Can include a loan secured by an being offered at this time out-of-state property Number of Investors Unlimited Unlimited Lender Qualification $65,000/$65,000/$250,000 $65,000/$65,000/$250,000 (see offering circular) (see offering circular) Disclosures DOC Approved Offering Circular, DOC Approved Offering Circular, Subscription Agreement, Lender Subscription Agreement. Purchaser Disclosure Statement, Appraisal and Credit Report Whether you choose to invest in our Whole or Fractionalized Program or in the All California Mortgage Fund, be sure to read the appropriate ACF Offering Circular that is provided for each investment opportunity. Copies are available upon request. Regardless of the present economic conditions, you, the investor, can lend like banks at retail rates, not wholesale, and personally take advantage of the high rates of return provided by an ACF investment vehicle. In most cases, ACF trust deeds yield substantially more than the going rate on CD s and similar types of investments. The Decision is Yours As an investor-lender in an ACF brokered loan, you decide whether or not to make an investment. Our account executives will provide you with the information you need to make an informed decision, and are available to you at every step of the investment process. Ultimately, the decision to invest is yours. You are entitled to be compensated for that effort and risk, and your reward is reflected in the yield that you earn. Through the years our investors have indicated this level of return to be the key reason they lend through ACF. ACF Borrowers ACF arranges loans for many types of people with widely differing financial needs. Some need the money right away and cannot wait the 45, 60 or 90 days that a conventional financial institution may require. Others are opposed to providing intimate personal financial information, which banks often require. They might even be self-employed with income that either fluctuates or cannot be easily verified. Oftentimes a borrower has an opportunity to purchase a project if he or she acts quickly due to a seller s need to liquidate their property, thereby allowing the borrower an increased profit potential if they can act immediately. ACF can quickly provide financing to these individuals, allowing them to take advantage of the opportunity. Many ACF borrowers are unable to obtain loans at more traditional financial institutions. This is often because these institutions don t provide funding for the borrower s type of development property, or their debt-to-income ratios are higher than the banks standards. These borrowers may also have had problems with their credit, frequently due to temporary personal priorities (college fees, parent s nursing home, new car, home renovation, vacation, etc.). ACF s underwriting criteria are based primarily on the protective equity remaining in the property. However, criteria including credit, length of ownership, condition of property, debt and income ratios are all considered. ACF is a real estate investment company that is an active partner in the many communities in which we operate. Our borrowers are often contractors, real estate developers, large property owners and commercial entities, improving real property and lifestyles in our California communities. 13

10 Opportunities and Properties Interest Rates for Borrowers Loan-To-Value Ratio (LTV) It is no secret that ACF interest rates are often higher than While that delay is certainly part of the risk analysis, ACF The key factor for ACF is the loan-to-value (LTV) ratio, determined not by how many appraisals they do, but by at most financial institutions. The primary reason is believes that the biggest measure of risk is whether there is which is the percentage of debt secured by the property how accurate and conservative those appraisals prove to be rooted in one of the most elementary principles of a likelihood that the loan obligation will be repaid. In compared to the current or future market value of the over the long term. Further, each and every appraisal is business: reward is commensurate with risk, and thus reflects the effort that regard, ACF believes that the risk involved is no more property. For example, if the total amount of all debt carefully underwritten by the ACF Senior Loan put forth to achieve it. This is particularly true with trust deed than that assumed by conventional financial institutions, secured by the property is $600,000 and it could be Committee and in some instances also reviewed by other investments and demonstrated by the interest rates paid by and may be even less due to our lower loan-to-value sold for $1,000,000, the LTV is 60%. Another way of real estate professionals. borrowers and subsequently earned by investors. ratios and our emphasis on equity rather than credit. viewing this ratio is to say that the borrower s equity in the Our rates reflect the fact that some borrowers cannot obtain the type of loan they require from conventional lending sources to develop their property. Since ACF makes these entitlement and mapping loans available, investors can earn a higher rate of interest. Due to the historical emphasis on income and creditworthiness, the marketplace imposes higher interest rates on those Property Selections ACF considers a wide range of properties when providing loans. These include single-family homes, apartment buildings, vacant land, development projects, industrial buildings, housing tracts, construction and entitlement loans. When investing in our Whole or Fractionalized Program, detailed information on the borrowers and all property is 40% or $400,000. EXAMPLES OF PROPERTIES WITH $1,000,000 MARKET VALUE AND 60% LTV A B C 1st TD $600,000 1st TD $400,000 1st TD $400,000 2nd TD $200,000 2nd TD $100,000 3rd TD $100,000 TOTAL $600,000 $600,000 $600,000 Lien Priority Lien priority refers to the order in which loans have a claim on the equity in a property. It correlates to the order in which the loans were obtained by the borrower (chronologically by date of recordation at the county recorders office). For example, if an individual has a second or third trust deed investment, this means the lien priority of the deed of trust securing their loan is in persons who either do not meet an institution s credit tests aspects of the properties will be provided to you for second or third position and is recorded behind the first or who choose not to divulge highly personal financial review and consideration. trust deed. Liens that are not first in priority are information. In effect, our higher rates reflect that standard Typically, a financial institution will lend up to commonly referred to as being junior trust deeds. of the marketplace and our willingness and ability to help The protection of property equity serves as both an 80%, 90%, 100% or even more of the value of the real Most of ACF s trust deed investments currently enjoy our borrowers overcome those challenges. Additionally, our effective motivator for the borrower to repay the loan and estate securing the loan, leaving little or no equity first trust deed lien status. higher rates reflect the more favorable speed with which we as the lender s ultimate protective recourse with the protection. At ACF, our average LTV is substantially are able to provide funding, as well as the personal attention options of foreclosure and sale. lower (historically in the 55% to 65% range), resulting in The priority of the trust deed securing the loan and that, as a more nimble, agile and relationship-focused a higher average protective equity cushion for our the amount of debt senior in priority must also be company, we are able to provide every client. private lenders. considered in evaluating a trust deed investment. For instance, a junior lien holder may find it necessary to Furthermore, our rates reflect the fact that, occasionally, The realistic market value of the property is determined reinstate senior liens and cover payments in case of a our borrower(s) may have a less than A credit rating by an appraisal that compares the subject property to default resulting in foreclosure. However, an investor and might miss a monthly payment or two during the other similar properties in the same community. A should keep in mind that the particular order of lien course of the loan term. Payments are almost always qualified real estate appraiser will look at recent sale priority is secondary to the equity remaining in the received, otherwise appropriate measures are taken. We prices of comparable properties, and make adjustments property, since it is the equity that will be the determining do occasionally experience delays in receiving these to the value of the subject property based on factors such factor of the lender s ability to collect all sums owed by payments but, again, the upside with this infrequent risk as size, location and physical condition. the borrower. is that it justifies making loans with higher interest rates. Independent third-party fee appraisers perform all ACF appraisals. These appraisers are licensed career professionals whose performance and compensation are 15

11 Making Your Investment MAKING YOUR INVESTMENT Getting Started is Easy Once you have a comfortable understanding of the basic concepts of trust deed investment, you can apply your knowledge in making successful decisions. Just call our Investment Office toll free at , or us at acf@allcaliforniafunding.com. One of our experienced Senior Account Executives will answer any and all questions you may have. They will also ask questions of you so that we may gain a comprehensive understanding of your specific investment goals. The better we know your objectives, the easier it will be to present a selection of trust deed or mortgage fund investments that are right for your needs. The notion of making a trust deed investment is straightforward and simple but only if you have the right company managing and servicing your investment on a day-to-day basis. Professional Guidance with Each Step Another advantage of investing through ACF is the depth and experience of our administrative staff, the experts who keep track of your borrower s performance. They track your investment from its recording to its eventual pay-off, communicating with the borrower on a regular basis through statements, notices and phone calls to keep your investment secure and current. ACF s Loan Servicing Department receives the borrower s payments and forwards those monies to the respective investors, either weekly in the case of our Whole or Fractionalized Program or monthly in our Fund. Your ACF loan origination professionals stay current with the myriad of complex, often confusing, local, state and federal government regulations that apply to loan transactions. They protect you in making certain that all notes, deeds and other documents are not only in compliance, but are also correct, properly executed and accurately recorded. This is not a task for amateurs or newcomers to the industry, especially when the security of your money is at stake. Our vast experience, resources and hands-on approach ensure that we maximize your confidence and minimize your concerns by doing the job right. 17

12 Getting Started Borrower Application and Approval 1 Contact and Pre-Approval 3 Application Review 5 Offering for Sale 7 Completion and Documentation Our goal is to pre-approve as quickly as possible, subject A completed loan application and other pertinent Upon approval by the ACF Loan Committee, Senior When the escrow is complete and the loan closes, the to verification of the equity and title in the property. The documents such as credit reports, appraisals, construction Account Executives will contact their investment clients to deed of trust is filed with the County Recorder and the process usually begins when a prospective borrower is budgets, city and/or county approvals, etc. are reviewed discuss the availability of a whole or fractionalized loan loan funds are distributed. Once recorded, and upon either contacted by one of ACF s Loan Origination staff by our Loan Committee, which is comprised of ACF investment opportunity. They will also call from time to your request, copies of the deed of trust and the note are or contacts us directly. Our name and reputation are well principals and senior loan consultants. The committee time to discuss the opportunity to invest in sent to you, the investor, along with a copy of the title known throughout the mortgage lending community, so may approve the loan, decline to make the loan or approve shares of the All California Mortgage Fund. Offering insurance policy, proof of fire and casualty insurance we receive a number of quality referrals every day. it subject to the receipt of additional information, Circulars explaining the details of the whole or coverage, and other appropriate documents securing ACF maintains several convenient toll-free numbers, which may require a modification of the terms, often fractionalized investment opportunities and the Fund are your investment position. provides fax access, and can be reached via at including a personal guaranty. available upon request. acf@allcaliforniafunding.com and through our website at 4 Escrow and Title Detailed information about the terms of the loan, the 2 Appraisal If the loan is approved, an escrow is opened and a preliminary title policy is ordered. Clear title and title property securing the loan and the borrower is provided to each potential investor. Full disclosure is the rule at If a loan appears viable, ACF will order an appraisal by an insurance, insuring lien priority, is required before the ACF. All pertinent information gathered in the loan independent certified fee appraiser. This appraiser is selected loan is recorded. approval process is provided directly to the investors to by his or her knowledge of the community in which the assist them in making an informed and intelligent potential loan will be made. The appraiser must be approved investment decision. by ACF and must provide a copy of his or her license and E&O (errors and omissions) insurance. If the equity in 6 Initiating Deposit the project is sufficient, the ACF Loan Consultant will Once the investor makes the investment decision, his or advance the loan process by having the borrower her Senior Account Executive will advise the ACF Escrow complete the required documentation. Department as to the extent of the investment and the proper vesting necessary for recording the investor's ownership interest. Lender Purchaser Disclosure Statements (LPDS) will be generated and, along with other disclosures, sent to the investor for signing. The lender will return those documents along with their investment funds to ACF s Escrow Trust Account where the investment will be deposited in accordance with the regulations of the California Department of Real Estate. Interest begins accruing from the date all of the funds are deposited into escrow (see the appropriate ACF Offering Circular). 19

13 Managing Your Investment MANAGING YOUR INVESTMENT Questions & Answers How and when do I receive payments? The borrower s due dates and schedule of repayment are specified in the loan documents. Most ACF borrowers make monthly payments of interest on their loans. When the payments are received and cleared by ACF, a distribution check is issued to the lenders. In the Fund, investors receive checks issued on the first of each month without fail. The amount of the checks will vary depending on the performance of the fund and the timely receipt of borrower payments. How do I keep track? Each month you will receive an easy-to-read statement detailing the status of all your investments with ACF. In addition, summary statements for tax purposes are sent to you promptly following years-end. The ACF loan servicing staff is always a toll-free call away to answer any questions you may have concerning your statement. What happens if a payment is late? Our experienced loan servicing team monitors each loan and takes a series of steps to encourage the borrower to bring the loan current. These include monthly payment coupons, written late notices, notices of intent to foreclose and follow-up phone calls as necessary. If all of the above fail, the foreclosure process begins. Can I invest with retirement funds?. In fact, a wide variety of corporations, trusts, pension and profit sharing plans, IRAs and Keoghs currently invest at ACF. Does trust deed investment require much patience?. Though borrowers pay their loans on schedule the vast majority of the time, sometimes they are late. Some even miss one or more payments. Also, the funds you choose to invest in trust deeds are not liquid. Once invested, your collateral is the note and deed of trust. Your funds are committed until such time that the borrower pays off the note. The All California Mortgage Fund does provide greater liquidity than the Whole or Fractionalized Program. (See Offering Circular) If this notion is prohibitively unappealing, you should perhaps consider investing in more conventional and potentially less lucrative investment options. However, an investor in trust deeds does enjoy a higher rate of interest as a function of this associated risk and must be comfortable with the fact that the value of the property securing the loan as well as the borrower s personal guarantees (when applicable) are the ultimate recourses the investor has to protect his or her investments. Will ACF help me with any difficulties that might arise? Absolutely. Should the borrower become delinquent or if other problems arise, your ACF loan servicing team will continue to work on your behalf to remedy the situation. Even in the event that foreclosure becomes necessary, we will be there handling all of the details, advising you and protecting your best interests. 21

14 What if I need my money before the end of the term? We recommend that you invest only those funds that you do not anticipate needing for the period of the note. Although we can make no guarantees, in the case of an emergency we are usually successful in assisting our clients with selling their trust deed to another investor. This is, however, very rare and may not be possible to achieve quickly or with notes already in foreclosure. It is important to remember that the market value of your investment can change along with market interest rates and other factors. The All California Mortgage Fund does provide greater liquidity than the Whole or Fractionalized Program. (See Offering Circular) Mind if I visit your offices? You are always welcome to drop in with any questions or needs, or even just to say hello or inquire about additional opportunities. Also, when it comes to your money, it pays to compare options. We will gladly compare our investment opportunities to those offered by anyone in the business. So yes, come in, talk to us and get the feel of our offices and our family. We look forward to the opportunity to serve you in the years ahead. We invite you to visit or call us today to begin earning a higher return on your investment capital. What if the borrower wants to pay it back early? The terms and conditions of each loan contract specify what happens if the borrower wants to repay more than a certain percentage of the principal balance ahead of schedule. Occasionally, there is a prepayment penalty paid by the borrower if the loan is partially or fully repaid before the date of maturity. Quite often an investor earns as many as three months of payments immediately upon the close of escrow. Should this be part of the loan agreement and the borrower wishes to pay off the loan during that time, the lender will benefit by earning a higher yield on their investment due to the early pay off and the retention of the prepaid interest. Who do I contact with more questions along the way? Your Senior Account Executive is dedicated to serving your needs in the most responsive and professional manner, each and every step of the way. The answers to your questions are as close as your phone. In fact, you can call today for immediate attention so you can see for yourself how simple and profitable trust deed investing can be.

15 Corporate Offices Ventura Blvd., 2nd Floor, Sherman Oaks, CA (818) (818) fax (866) toll-free Regional Sales Office 505 Montgomery Street, Suite 1149 San Francisco, CA (415) fax (415) All California Funding, Inc. All California Funding (ACF) is a wholly owned subsidiary of B Squared, Inc. and is licensed as a real estate broker by the California Department of Real Estate. (# )