1. Investing in Bank Owned Real Estate Notes

2. Bank Owned Real Estate Notes Marketplace Analysis Recently the headlines have indicated that banking institutions are overleveraged with real estate notes. This means that high level executive management over allocated bank revenues into real estate backed securities. In some cases, banks invested over 80% of their liquidity into these notes. Therefore, the current market base for acquiring performing and non-performing mortgages is expanding at an alarming rate. Financial institutions and mortgage banks, who originate these notes, have begun to realize that selling both performing and non-performing assets is preferable to maintaining them. Moreover, due to recent market conditions some of these financial institutions have been forced to liquidate their entire portfolios. This has created a huge disconnect between the market value of a real estate note and the amount in which a bank is willing to sell the note for. This creates a huge opportunity for our company to move in with cash liquidity and buy these notes for a huge discount. Lending companies have exhausted their credit lines due to the “Sub-prime meltdown”. Major sectors of the mortgage industry, especially the stated loan and sub-prime lenders, have realized the need to dispose of these loans at greatly discounted prices.

3. Opportunity Our entity will purchase a pool of sub performing and non performing 1 st and 2 nd trusts deeds The purchase price will be negotiated between us and directly with the financial institution that is holding the note. We will partner with a servicing and underwriting company to collect on all slow paid and unpaid balances in the pool of trust deeds. The objective is to make the trust deed a performing note that can be sold for 5-10 times the purchase price. Collecting the debt service will also take place on notes that are decided to be modified by our entity. 15%-20% recovery of the total Unpaid Balances will be recovered with in the first 12 months.

4. Investing in Bank Owned Real Estate Notes -- Example The relationships we have established with banks throughout the United States, investors have the opportunity invest in “distressed” or “charged off” mortgages that are secured to properties across the country. We are able to purchase these mortgages at a large discount, creating an investment that is very secure and offers an excellent rate of return. We are buying performing and non-performing notes. IE: We recently purchased a performing note on a condo in Miami. The current BPO (broker price opinion) is $450,000 and the 1st trust deed is $364,000 with a fixed 7.5% interest rate. We purchased the 1st for $250,000 and will receive $27,400 in annual interest income and this transaction also created an $86,000 equity increase for our portfolio. We can choose to enjoy monthly income or help the owner refinance and cash out. We usually hold the loan for 5-6 months then sell it for a premium or refinance the borrower. In another example, we purchased a non-performing 2nd trust deed. The 30 day “Fire Sale” is $200,000 the first trust deed is $160,000 and the 2nd is $75,000. We purchased the non-performing 2nd $75k note for $3,750. We then called the borrower and re-wrote the note for $30,000 thus giving the struggling homeowner $45,000 (forgive a portion of the note). He agreed and signed a new loan for $30,000 and made 4 monthly payments. We then sold the loan as a performing note for $22,000 in the open market. Our profit was 580% in 6 months !! Bought for $3,750 and sold for $22,000.

5. Bank Owned Real Estate Notes What’s the Risk? Our due diligence and rigor is required to determine collateral value, insurance, credit and title history. Typically, the process is the same as that of leading institutional lenders. We control risk through consistent management risk practices. We conduct a significant amount of due diligence to offset the risk which includes a 16 point algorithm that must meet our criteria. For example, we base our real estate value on a 30 day fire sale. This conservative approach allows our firm to always be secured by true market value. What are the Advantages of investing in the Fund over Individual Trust Deeds? Diversification - the portfolio holds loans secured by various types of properties (commercial, residential, investment, owner occupied, single family, and multi-unit). No Churning - you don't experience a payoff of your investment as with individual trust deeds and the subsequent necessity to find another trust deed to buy. No Idle Cash - Your money won't sit idle while you search for new investments.

6. Bank Owned Real Estate Notes Large Financial institutions are cashing out on there non performing trust deeds in order to strengthen their liquid position in the market. Sub-performing loans Often called a ?high maintenance? account--that is an account that requires a tremendous amount collection effort in order to reason, cajole, harangue, and beseech the tardy borrowers to make their payments month in and month out. In some cases there may be rolling late payments, back payments already added to the outstanding principal, or an existing forbearance agreement between the lender and the borrowers to stave off a foreclosure. Non-performing loans These are accounts where attempts to collect have been unsuccessful and the account is simply not paying at all. It is in arrears with back payments and other expenses due. Often, lenders in need of cash liquidity are willing to steeply discount the amount they will accept for the sale of their sub-performing or non-performing loan accounts (the promissory notes). These problematic accounts are a drain for the lender both monetarily and from a human resources standpoint. For astute real estate investors, opportunities can be created by acquiring these secured loans, which can then be ?scrubbed? up and become performing again or simply foreclose and repossess the collateral securing the loan. Lenders sell these notes to create liquidity and get these loans off their books.

7. Loss Mitigation & Niche Servicing Co. Pakes Step, LLC Our LLC Investor Note Company Structure Entity formed by our company and the note mitigation service provider

8. Note Company Structure Why are the Funds Structured as Limited Liability Companies? As an LLC, the Funds are somewhat of a hybrid between a corporation, a REIT and a partnership. An LLC is a distinct type of business that combines the limited liability advantages of a corporation with the pass- through taxation advantages of a partnership while engaging in the sector benefit of a REIT.