Private Money Lending FAQ's

Direct Lending Group requires DLG borrowers to provide DLG a first position mortgage or deed of trust on the borrower’s real estate as security for the DLG loan. In general, these loans are made to borrowers who are, for various reasons, unable to qualify for conventional type bank loans. This may be due to poor credit history or other problems such as divorce or a prior bankruptcy. DLG’s loan evaluation includes asset value and the borrower’s present financial circumstances. Conventional lenders focus more on credit scores. As a rule of thumb, risk is commensurate with reward. Although there is more risk in lending money to a borrower with a bad credit history, the DLG investor is compensated with a higher rate of return. .

DLG’s experienced underwriters independently review the borrower’s present financial condition, cash flow, as well as the value of the real estate offered as security. DLG’s loans do not exceed seventy percent (70%) of the value of the real estate provided to secure the loan. This provides investors with some financial “cushion” in the event of borrower default.
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Not necessarily. Low credit scores reflect a history of the borrower’s credit and describe past financial problems experienced by the borrower. The best predictor of future performance is past performance. Although the loans made by DLG provide an investment that is considered riskier than CD’ s or annuities, the higher return is intended to compensate for the additional risk. DLG’ s business is to evaluate loans and try to minimize investor risk. .

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The timing of capital needs of the borrower can be driven by their financial obligations (tax surprises, estate issues, balloon payments to name a few).

Business opportunities sometimes arise when conventional lenders simply cannot react in as timely a manner as DLG. In these circumstances DLG provides a bridge for businesses to meet their business objectives.

The loans that DLG underwrite and sell to investors are generally to borrowers that do not qualify for traditional lower interest rate loans due to poor credit history or other problems.

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When DLG receives payment from a borrower, we provide each investor with their pro rata share of the payment. Currently investor payments are made on the 10th of each month, commencing the month following receipt of the investment check. If the borrower does not make their payment, investors will not receive payment. In this event, DLG can initiate proceedings to protect the investors’ investment including foreclosure proceedings.

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Investors' principal is tied to the loan contract and is not intended to be liquid until the borrower pays off the loan. DLG does its best to help Investors that have emergencies and will, if possible, buy out the portion of the contract for the Investor to assist them. However, our capital is not idle and is usually funding new loans, so there are no guarantees.

DLG can only make payments to investors if the borrower makes payments to DLG. In the event of non-payment by the borrower, DLG will pursue remedies on behalf of its investors. These remedies include increased penalty interest charged against the borrower, and foreclosure. If the borrower does not cure the default, investors may be required to wait until the conclusion of the foreclosure process, and the resale of the property to recover their investment. There is always some risk that an investor could lose money in the process. The foregoing risks effect the liquidity of the investment on loans offered by DLG.

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The minimum investment is $5,000 per contract.

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We are regulated by the Washington Department of Financial Institutions Securities Division. They require audited financials and periodically examine our files.

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Our primary source of income is the loan fees charged the borrowers (also called points). We also make a spread of 1 to 2% on the interest charged to borrowers and paid to our investors.

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When DLG receives investor funds, they are placed in a trust account at our bank until such time that DLG receives notice that our investors' interest in the participation agreement regarding the loan is recorded in the real property records in the jurisdiction where the real estate securing the loan is located. It is only after this notice is received that the investor funds are transferred to DLG's account.

When DLG receives funds from a borrower for payment, those borrower funds are placed in a trust account pending distribution to investors.

Note that the use of trust accounts helps provide that neither investor funds nor borrower funds will ever be commingled with DLG operating funds. Trust funds do not provide a guarantee of, or insurance for investments in DLG loans.

STANDARD DISCLOSURE: MORTGAGE PAPER SECURITIES ARE NOT RATED OR INSURED AGAINST LOSS AND MAY BE SUBJECT TO SIGNIFICANT RISKS THAT ARE FURTHER DESCRIBED IN THE GENERAL AND SPECIFIC OFFERING CIRCULARS. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. INVESTORS ARE URGED TO READ THE GENERAL AND SPECIFIC OFFERING CIRCULARS BEFORE INVESTING. WE INVITE AND WELCOME YOUR QUESTIONS.

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Direct Lending Group

General Offering Circular