FREQUENTLY ASKED QUESTIONS CONTINUED

Can I choose to reinvest the interest distributions that I receive?

Yes. You can choose to either receive regular interest distributions or alternatively you can reinvest the interest that you receive. Most people utilizing retirement plans (IRA’s, Keogh’s, etc.) tend to choose to reinvest.

What are the different ways that I can participate in private mortgage investments, and what are the advantages/disadvantages of each?

There are two different approaches to participating in a private mortgage investment:

1. You can either source a viable loan opportunity on your own and accept responsibility for all that it entails, including: a) conducting all the necessary due diligence, b) structuring the terms and conditions of the loan, c) hiring and directing an experienced real estate Lender’s attorney to draft the documents and to represent you, and then d) after the loan closing, you would need to actively service the loan yourself.

2. Alternatively, you may choose to participate in a fund that is already staffed to do all the above by experienced professionals, and for a nominal management fee, benefit from the diversification that results from being invested in a carefully chosen “pool” of mortgages…rather than in one or two individual mortgages.

How safe are private mortgage investments? What are the risks?

There are inherent protections unique to mortgage lending which can significantly limit any downside risk when carefully implemented in the deal’s structure and in the mortgage documents.

The biggest possible risk, of course, is that for one reason or another the Borrower stops paying the mortgage and at the same time the value of the collateral diminishes. Although we have not seen this occur in 15 years of originating, managing and servicing such mortgages, it is theoretically a risk. To offset this risk factor, in most cases there will also be one or more personal guarantees. In situations, for example, where a property is being rehabilitated, an interest reserve may be established to fund the interest payments during the time that the property is being renovated and not producing any cash flow. The key is choosing the loans and the Borrowers very carefully and then anticipating (and incorporating into the loan documents) ways to offset the risk of a non-performing loan. Keep in mind that the mortgage documents assess late fees and default rates of interest that serve as powerful disincentives for Borrowers to make any late payments or to default on their loan obligations. If, however, the deal has been structured properly, there will be plenty of equity in the property to protect the Lender.

As in any investment opportunity, the quality of the management is of key importance. You want seasoned professionals in charge who have many years of experience successfully originating and managing a portfolio of private mortgages. Next, you need to be sure that the Managers are also investing their own personal funds, side by side with the other investors, and that their compensation is directly linked to the achievement of stated Fund objectives. The Managers of W Financial have made a substantial investment of their personal funds on the same terms as the other investors.

What about diversification? Is it possible to achieve diversification in this type of investment?

Diversification is one of the primary advantages of investing within a Fund format. A Fund's goal is to have a widely diversified portfolio of private mortgage investments in order to reduce risk as well as to achieve continuity of cash flow (in other words, even if one mortgage is repaid, there are still many other mortgages paying the desired rate of return, resulting in continuous cash flow).

What is the minimum investment that I can make?

$100,000 is our minimum. This can be divided between regular and tax-deferred accounts.

Can I add to my investment later on if I so choose?

Yes, W Financial permits current investors to add to their investment.

How liquid is my investment? What time commitment do I have to make?

Since most of our bridge loans have terms of 1-2 years, ranging up to 5 years, only investors comfortable with a 5-year time horizon should consider investing in private mortgages within a Fund format.

Who can participate in private mortgage investments?

Only “accredited investors” may invest in a private investment fund after carefully reviewing the Offering Memorandum. Please visit the following link (www.privatemortgageinvestment.com/qualify) and complete the brief form. Accredited investors who so request will be contacted and then may review the Offering Memorandum and LLC Agreement.

How can I learn more about whether private mortgage investments are right for me?

You can reach Gregg Winter at 212-684-2283 ext. 111 or Marc Bailin at 212-935-0900. In addition you might wish to speak with other investors with experience in this type of investment, Fund Managers or others who source, originate and service these types of loans. To gain perspective from the Borrower's point of view, visit www.w-financial.com, W Financial’s Borrower portal.