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I've had a few requests for updates on one of our other investment opportunities, Texas Residential Lending and inquiries into whether or not it is accepting new investors (yes it is). For those members that have been around for over three years, they may remember us launching Texas Residential Lending, with the goal of providing a high yield, very low risk, investment product for our clients. Over the last three years, Texas Residential Lending ("TRL") has grown from a few hundred thousand dollars being invested in two mortgages to a company that owns almost 200 mortgages totaling $25m in value, yielding 10.5% annually. TRL makes its money by buying mortgages from mortgage originators and outside investment firms. It then places the mortgages with a servicer (the firm that sends out the monthly statements and collects the bills) and collects the revenue from the loans. All mortgages are first in line mortgages, secured by a deed of trust, and are single family, owner-occupied. Currently all mortgages are located in Texas, which has extremely favorable lender foreclosure laws, but we the ability to expand into other states with similarly lender favorable laws. Currently the portfolio loan to value is under 65% (meaning the homeowners have 35% equity in their homes) and we have debt coverage ratios north of 2.5. In other words, we can have 25% of the mortgages go into default and still make all investor payments (TRL pays investors a quarterly distribution). In order for investors to lose money, TRL would have to see a default rate of 100% AND have home values decline by over 35% -- two things which TRL just does not see occurring. And if such a situation did arise, the company would just covert the foreclosed homes to rental homes until the market stabilized, then sell them. In the last three years, TRL has only had to foreclose on two homes, and both foreclosures resulted in profits above of what had been expected from the loan. (If there is 35% equity in the home, at a foreclosure auction TRL is either outbid, in which case it recovers 100% of what is owed, or it wins the home, markets it, and sells it at fair market value, ideally recognizing a larger profit). I personally market TRL as a bond replacement investment. It returns interest income, quarterly, at the portfolio rate, which has increased by over a full percentage point in the last three years as mortgage rates have gone up. Investors receive quarterly payments of interest back to their accounts. Investors can elect to re-invest their interest or receive it. Really the only reason I don't push clients to put over 10% of their accounts into TRL is the lock up period. Because the company buys 30 year mortgages and finances them on 5 year windows, TRL does have a four year lock up period it can exercise. So far TRL has had no issues with investors who want early redemptions, as plenty of investors have been willing to take their place. But if an investor wanted their money back six months in, TRL would try to return it, but if there is not an investor to replace them, won't be able to do so. That said, returning north of 10% for four plus years is still a good looking investment. If anyone has any questions on TRL, wants the investment summary writeup, or the investment presentation, just email me at cwelsh@lorintinecapital.com and I will send over. If you have questions about TRL, how it works, returns, or other topics, feel free to post them here, and I will answer them.