RISK

Trust deeds may not be suitable for all investors . There is a possibility of a loss of income and/or a loss of principal in the event that the borrower defaults on the promissory note.

DEFAULT: Under the terms of the promissory note and deed of trust, a default is declared in the event the borrower ceases to make any payment of principal or interest or fails to pay the loan in full on or before the maturity date without a previously negotiated extension.

The defaulted loan may be referred to Investors Trustee Services, Inc. an affiliate of Cattlemen's Mortgage and Investment Corporation for initiation of a trustee sale. A trustee sale is the legal process for repossessing a property in the State of Arizona . The property is advertised for sale at a public auction to the highest bidder. A credit bid, which is the amount of the principal balance, late fees, account servicing fees, default interest and foreclosure fees will be entered on behalf of the beneficiary of the note, the investor. The trustee sale can be held no sooner than the 90th day after a public notice is recorded with the Maricopa County Recorder. Bids made by third parties must be paid in cash before 24 hours after the sale.

In the event no bid is made by a third party, the property will revert to the investor. The investor may endeavor to sell the property to sell the property or hold it for rental or other purposes.

OTHER RISKS

RISKS: Holding and owning promissory notes secured by real estate is a business of calculated risk. You could loose income if the borrower fails to make monthly payments or principal if the property cannot be sold for your investment amount. In transactions of the type you are considering here, the risks include but are not limited to:

Bankruptcy : In most transactions, non-recourse promissory notes are being sold. As such the only recourse a beneficiary has is to the property. The personal guarantee of the principals of the note may not have been given. In the event of insolvency, the makers may reorganize their income and debt under Chapter 13 of the United States Bankruptcy Code. Should the makers seek reorganization, council must be retained by the investor to object and file a lift of stay under Section 362.

The estimated cost of lifting the property from bankruptcy may be as much as fifteen thousand ($15,000.00). In the event of bankruptcy, you will be required to pay legal costs and fees.

Fire : Fire and hazard insurance is required on every transaction, excluding raw land, in the amount of the replacement cost of the improvements and structures located on the property. In the event of fire loss, a proof of claim will be filed with the insurance company.

The insurance company may elect to pay the claim to the beneficiary, or the insurance company may elect to have the improvements and structures damaged by fire or other hazards rebuilt. If the insurance company elects to pay the loan in full, all proceeds will be distributed to investor.

Title: To ensure that the note being offered has priority over other potential liens, encumbrances or other clouds on title, except real estate property taxes, lenders title insurance is required and purchased from the borrower's proceeds. Title insurance may pay for claims or litigation expenses on behalf of the assured policy holder for matters and/or claims regarding title to the property asserted by third parties and/or to correct liens as a result of past misdeeds of the borrower. Lenders title insurance is obtained in the principal amount of the note and deed of trust.

A preliminary title report will be available for your review prior to close of escrow. You are encouraged to read and ask questions about the preliminary title report before you invest money. The preliminary title report discloses any and all liens that may appear in public record, claims on title by third parties or interested parties, the status of real estate taxes or judgments against the borrower. Any matters having a priority greater than the proposed loan may be cleared before close of escrow. Claims of title not recorded in the Maricopa County Recorders Office may also be defended by the title company. This transaction shall not close escrow until such time as Lenders Title Insurance is acquired.

Do not invest or send money until you have read the complete information package. Trust Deed investments may be restricted to qualified investors. Please contact our office to complete a disclosure application.