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COMMERCIAL LOANS

9 Months Ended

Sep. 30, 2023

3. COMMERCIAL LOANS

Loans Receivable

The Company offers short-term secured non–banking loans to real estate investors (also known as hard money) to fund their acquisition and construction of properties located in the New York metropolitan area, including New Jersey and Connecticut, and in Florida. The loans are principally secured by collateral consisting of real estate and accompanied by personal guarantees from the principals of the borrowers. The loans are generally for a term of one year. The short term loans are initially recorded, and carried thereafter, in the financial statements at cost. Most of the loans provide for receipt of interest only during the term of the loan and a balloon payment at the end of the term.

At September 30, 2023, the Company was committed to $9,663,901 in construction loans that can be drawn by the borrowers when certain conditions are met.

At September 30, 2023, no entity had loans outstanding representing more than 10% of the total balance of the loans outstanding.

The Company generally grants loans for a term of one year. When a performing loan reaches its maturity and the borrower requests an extension, the Company may extend the term of the loan beyond one year. Prior to granting an extension of any loan, the Company reevaluates the underlying collateral.

Credit Risk

Credit risk profile based on loan activity as of September 30, 2023 and December 31, 2022:

SCHEDULE OF CREDIT RISK

Performing loans	Developers- Residential		Developers- Commercial		Developers- Mixed Use		Total outstanding loans
September 30, 2023	$	60,397,039	$	8,915,000	$	1,469,000	$	70,781,039
December 31, 2022	$	62,264,463	$	9,300,000	$	2,919,000	$	74,483,463

At September 30, 2023, the Company’s loans receivable consisted of loans in the amount of $36,790, $760,433, $2,660,250, $2,204,000 and $10,965,000, originally due or committed to lend to borrowers in 2016, 2019, 2020, 2021 and 2022, respectively. The loans receivable also includes loans in the amount of $15,803,000 originally due in the first nine months of 2023.

Generally, borrowers are paying their interest, and the Company receives a fee in connection with the extension of the loans. In all instances, except as described below, the borrower has either signed an extension agreement or are in the process of signing the extension. Accordingly, at September 30, 2023, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof.

During February 2023, the Company determined to, and sold, one of its loans receivable to a third-party investor at its face value of $485,000. Assaf Ran, the Company’s President and Chief Executive Officer, participated in such acquisition in the amount of $152,000. In addition, in June 2023, the Company filed a foreclosure lawsuit relating to one property, as a result of a deed transfer from the borrower to a buyer without the Company’s consent. In that instance, the buyer of a property on which the Company had a valid mortgage suffered a data breach which resulted in the failure of the buyer to remit the funds needed for the loan payoff. As a result, the Company filed the foreclosure lawsuit to assist the buyer in making a claim with its title insurer. On October 18, 2023, the Company received the payoff amount for the property, originally owed as of March 24, 2023. The Company is working to recover additional amounts incurred subsequent to the original payoff date, which includes additional interest, costs and legal fees.

Subsequent to the balance sheet date, $2,560,000 of the loans receivable at September 30, 2023 were paid off, including $2,150,000 originally due in or before 2022.