A private mortgage fund is an exclusive pool of money, gathered from many investors and professionally managed by a managing entity, that invests in mortgage loans, offering private investors access to a broad spectrum of real estate investment opportunities and providing diversification that individual investors may not be able to achieve on their own.

The fund's returns are primarily derived from interest on mortgage loans and fees related to those loans. After operational costs are deducted, the remaining earnings are distributed to investors.

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Mortgage pool investments are viewed as secure for two main reasons: diversification and protective equity. By aggregating capital from numerous investors to fund a variety of properties, risk is dispersed across a broader base of both individuals and real estate. This diversification reduces the impact of any single property's performance on the overall investment.

The concept of protective equity introduces a robust safety net for the principal amount invested. Protective equity, or the equity cushion, signifies that the property's value could decline by a certain percentage before impacting investors' principal. Our target equity cushion ranges from 25% to 50%, meaning the properties we invest in can lose up to 25% to 50% of its value before our investors would face any loss. This substantial buffer drastically alters the risk profile of the investment, enhancing its security.

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The involvement of its principals directly in the fund is a crucial mark of a private fund's authenticity. The Vorfin Investment Income Fund, for example, was established with the founder's personal capital. The managing principals not only invest their own money but also routinely reinvest their profits back into the fund. This approach ensures that their interests are closely aligned with those of their investors, fostering a deeper level of trust and demonstrating a shared commitment to the fund's success.

Investing in a mortgage fund, like any investment, carries certain risks. These can include market risk, where changes in the real estate market affect the value of the properties securing the loans, and credit risk, associated with the possibility of borrower default. Liquidity risk is another concern, as it may not always be possible to quickly withdraw funds without impacting the investment's value.

To mitigate these risks, the managing entity of the fund conducts thorough due diligence for every transaction, extending to the involvement of dedicated legal counsel. This ensures that all investments are carefully vetted and comply with relevant regulations, aiming to protect the fund and its investors. Despite these precautions, it's important for investors to be aware that risk cannot be entirely eliminated.

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The fund aims for an annualized return of 8%-12%. These returns can fluctuate based on factors such as changes in interest rates, real estate market conditions, and borrower repayment behaviors. Returns are distributed monthly, following a waterfall structure that prioritizes the allocation of profits in a specified order to investors.

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Returns are distributed monthly to our investors, either in the form of cash or checks.

Investments in private offerings, such as the Vorfin Investment Income Fund, are typically illiquid. Investors are advised against using funds that may be needed for immediate or short-term responsibilities. The investment horizon for the Vorfin Investment Income Fund is set at 1 year, which is comparatively shorter than many other private offerings where capital is locked in for 3 to 7 years. Therefore, investors should be prepared to commit their capital for at least this duration.

However, if investors find themselves in need of their capital before the end of the investment period, the managing entity will endeavor, in good faith, to return the capital to the investor to the best of their abilities, provided it does not negatively impact other investors.

After the 1-year term, investors have the flexibility to either reinvest their capital for another term or terminate their investment, allowing them to adjust their investment strategy in alignment with their financial goals and market conditions.