How is the fund liquidated at the end of the 36 month term?
Mainstay’s records show that many of the existing mortgages in the fund will be paid off within a 36 month period. For those that are not, they will be purchased, which will provide the liquidity to close and fully return investor principal or allow investors to roll over principal into new funds.
What happens to non-performing mortgages in the fund?
Mainstay has stated it will substitute a non-performing mortgage in the fund with an in-kind, seasoned and performing mortgage from Mainstay’s portfolio.
What are typical terms for a mortgage?
Each mortgage is designed to meet the mortgagee’s needs. Mainstay requires a minimum of ten percent down, taxes and insurance to be escrowed, and the loan to be amortized over a specific length of time that will give the borrower a favorable payment. Mortgages normally have a five-year balloon. Our history shows that most of our mortgages are paid off or restructured within a five-year period.
Why doesn’t the homeowner get a more favorable mortgage rate from a bank or other financial institutions?
Conventional financing is very difficult as banks and financial institutions have covenances or concentration limits on these types of loans, down payments, and credit underwriting.
How does Mainstay conduct its due diligence on each mortgage it underwrites?
Mainstay credit underwriting mirrors FNA standards so that when the proper time comes, the mortgagee may go to an FHA loan or the mortgage may be sold into an FHA portfolio.
What is Mainstay’s track record in mortgage defaults?
Over the last five years, Mainstay’s default rate has been in the three percent range.
What is Mainstay’s track record with protecting investor’s principal?
In its 17-year history, Mainstay has never lost an investor’s principal.
Who is the typical Mainstay mortgage client?
This varies from young couples to retirees who may not be able to finance a home through conventional sources due to down payment requirements, covenances, or credit requirements. Mainstay Financial Services also works with select FINRA member broker-dealers, registered investment advisors, and family offices seeking income and capital appreciation through non-correlated real estate investments.
How does Mainstay mitigate mortgage default risk for the investor in the Fund?
The fund is required by prospectus to remove a non-performing mortgage and replace with a performing mortgage.
Why do you have to be an accredited investor to put money in the fund?
Mainstay Mortgage Fund II is a private placement investment that is required by law to be offered only to accredited investors.
Can you roll over your investment at the end of the 36-month fund closing into another Mainstay Mortgage Fund?
Yes, there will be an in-kind investment that will follow.
Can a dividend fall below 9%?
By prospectus, Mainstay is required to pay a 9% dividend throughout the life of the fund.
Can I allocate a portion of my 401(k) or IRA into the fund?
Yes, assuming that the custodian of your 401(k) or IRA will hold this type of investment in their portfolio. If they will not, Mainstay has developed several custodians that will hold this type of self-directed investment. Additional custodian costs may apply.
How will money raised in fund be used?
To purchase additional mortgages for the fund.
What are the fees associated with the fund?
There are no fees for the investors in the fund. Mainstay only earns a performance fee on the spread it is able to achieve on the aggregated interest rates of the performing mortgages in the fund above the distribution percentage it is obligated to pay the investors.
Is Mainstay willing to answer any and all questions relating to the Mortgage Fund?
Absolutely, Mainstay has nothing to hide.
Why has Mainstay originated a Fund instead of selling individual mortgages?
Mainstay was created by originating and selling individual mortgages to investors. In 2010, the decision was made to put a pool of mortgages in a fund in order to mitigate investor risk and allow for a lower initial investment made by the investor.
What is the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, also known as The SAFE ACT?
The SAFE ACT is designed to enhance consumer protection and reduce fraud by requiring states to establish standards for licensing and registration of Mortgage Loan Officers.