INVESTING IN TRUST DEEDS

A Guide to Investing in Trust Deeds

Before you commit to a trust deed (TD) investment, please ask yourself: “What are my safety goals”?

• “Does this TD investment have the right level of yield, borrower credit, borrower income and/or remaining equity protection to meet my goals?”
• Are deficiencies, if any, in the borrower’s credit history or income offset by an adequately reduced loan to value ratio in order to provide additional protective equity?
• Do I have confidence in the appraised value?
• What can I do to verify the approximate value?
• What’s the “risk reward ratio?” Does the yield offset the apparent risks?  If not, don’t make the investment.
• Are my investments clustered too close together? In other words, do I have too many investments on the same earthquake fault line, etc.?
• Do I want the entire loan or do I wish to have greater diversification by investing in smaller portions of many different loans?
• What is the exit strategy if I/we foreclose on and acquire the underlying property?

Next, think about the obvious, uncontrollable risks:

• Natural disasters or terrorist attacks.
• Property value fluctuations with the market cycles and other influences.
• The effects of Federal, State or local legislation or court decisions affecting TD investments.
• What about deflation?
• What about inflation?
• How many of these risks can I accept when weighed against the balance of my portfolio?

 

Then please consider:

• Is this a loan being brokered into your name or has the loan been prefunded prior to offering to you?
• Has the original lender enough confidence in the loan to fund it with its own money?
• What degree of diligence and compliance has been applied in underwriting and processing this loan? Can I view the loan file to determine diligence level if I wish?
• What is the capability and experience of the company designated to service my loan?
• Are they up to date complying with the Dodd-Frank loan servicing change requirements effective January 2014?

 

Last:

• Do I want the convenience and diversification of the RCTC Diversified Mortgage Fund, LLC as opposed to individual TD investments?

 

Why R. C. Temme Corporation, Real Estate Broker – CA Dept. of Real Estate #00531243 NMLS #295637?

For a number of reasons, most TD investors feel safer investing in loans secured by owner-occupied single family homes.  R. C. Temme Corporation is currently one of the very few companies in California who routinely offers TD investments secured by owner-occupied homes.  R.C. Temme Corporation also offers TD investments secured by many other property types. Here are more reasons to think about doing business with R.C. Temme Corporation:

• We’ve served investors from the same location since 1976.
• We have 16 carefully screened and highly trained employees in addition to input from employees of our separate but affiliated company.
• Included among R.C. Temme Corp. employees are an in- house attorney, two doctorates, at least four masters degrees, including two MBAs and other degreed and/or highly capable professionals.
• For your TD investments, a critical appraisal review process takes place.
• We participate with our originating affiliate in a five to seven person loan committee that “picks apart” every loan considered for approval.
• Each loan is subjected to various tests and numerous checklists – all with an eye towards regulatory compliance and a critical analysis of the risk and safety factors.
• We have independent quarterly CPA reviews of our loan service trust accounts, filed with the state and available to you, our clients.

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