Common use of GENERAL STATEMENT OF POLICY Clause in Contracts

GENERAL STATEMENT OF POLICY. The Trust intends to invest in Originated Mortgages and Acquired Mortgages which will be secured directly by first mortgage liens on residential real estate. The Trust shall have the right to acquire or originate Mortgages without first obtaining a real property appraisal, unless a majority of the Independent Trustees determine that such an appraisal is necessary; if obtained, any real property appraisals will be maintained in the Trust's books and records for at least five years. The foregoing investments are intended to be structured to comply with the Real Estate Investment Trust Provisions of the Code. In addition to the investments referred to above, the Trust may, in the discretion of the Board of Trustees or the Advisor, make the investments described in Section 2 below or such other investments that the Board of Trustees or the Advisor deem in good faith to be consistent with the Investment objectives and policies of the Trust as set forth in the Prospectus. The Trust may make commitments to make investments consistent with the foregoing policies. The Trust may also participate in investments with other unaffiliated investors, including unaffiliated investors having investment policies similar to those of the Trust, on the same or different terms. The Advisor may act as advisor to other investors, including investors who have the same investment policies as the Trust. The Independent Trustees shall review the investment policies of the Trust with sufficient frequency and at least annually to determine that the policies being followed by the Trust are in the best interests of its Shareholders. Such determination by the Independent Trustees and the basis therefor shall be recorded in the minutes of the meeting of Trustees. The Trust may not enter into transactions with a Sponsor, the Advisor, a Trustee or an Affiliate thereof, except as otherwise permitted by Sections 7 and 8 of this Article VIII. The general purpose of the Trust is to acquire assets and to seek income which qualifies under the Real Estate Investment Trust ("REIT") Provisions of the Code. The Board of Trustees shall endeavor to make Mortgage Investments (including investments yielding "qualified temporary investment income" within the meaning of Section 856(c)(6)(D) of the Code) in such a manner as to comply with the requirements of the REIT Provisions of the Code with respect to the composition of the Trust's investments and the derivation of its income; provided, however, that for a period of time during which the portfolio of investments is being developed, the Trust's assets may be invested in investments which income which does not qualify under the REIT Provisions of the Code. The investment objectives of the Trust are to invest in first lien Originated Mortgages and existing Acquired Mortgages secured by single family residential real estate, which investments are expected to: (1) produce net interest income on its mortgage portfolio; and (2) provide monthly Distributions from, among other things, interest on Mortgage Investments. (3) permit the reinvestment of payments of principal on Mortgage Investments, payments of penalties and premiums on Mortgages and the proceeds of Mortgage Prepayments, Sales and Insurance net of expenses received by the Trust.

GENERAL STATEMENT OF POLICY. The Trust intends to invest in Originated Mortgages and Acquired Mortgages which will be secured directly by first mortgage liens on residential real estate. The Trust shall have the right to acquire or originate Mortgages without first obtaining a real property appraisal, unless a majority of the Independent Trustees determine that such an appraisal is necessary; if obtained, any real property appraisals will be maintained in the Trust's books and records for at least five years. The foregoing investments are intended to be structured to comply with the Real Estate Investment Trust Provisions of the Code. In addition to the investments referred to above, the Trust may, in the discretion of the Board of Trustees or the Advisor, make the investments described in Section 2 below or such other investments that the Board of Trustees or the Advisor deem in good faith to be consistent with the Investment objectives and policies of the Trust as set forth in the Prospectus. The Trust may make commitments to make investments consistent with the foregoing policies. The Trust may also participate in investments with other unaffiliated investors, including unaffiliated investors having investment policies similar to those of the Trust, on the same or different terms. The Advisor may act as advisor to other investors, including investors who have the same investment policies as the Trust. The Independent Trustees shall review the investment policies of the Trust with sufficient frequency and at least annually to determine that the policies being followed by the Trust are in the best interests of its Shareholders. Such determination by the Independent Trustees and the basis therefor shall be recorded in the minutes of the meeting of Trustees. The Trust may not enter into transactions with a Sponsor, the Advisor, a Trustee or an Affiliate thereof, except as otherwise permitted by Sections 7 and 8 of this Article VIIIVII. The general purpose of the Trust is to acquire assets and to seek income which qualifies under the Real Estate Investment Trust ("REIT") Provisions of the Code. The Board of Trustees shall endeavor to make Mortgage Investments (including investments yielding "qualified temporary investment income" within the meaning of Section 856(c)(6)(D) of the Code) in such a manner as to comply with the requirements of the REIT Provisions of the Code with respect to the composition of the Trust's investments and the derivation of its income; provided, however, that for a period of time during which the portfolio of investments is being developed, the Trust's assets may be invested in investments which income which does not qualify under the REIT Provisions of the Code. The investment objectives of the Trust are to invest in first lien Originated Mortgages and existing Acquired Mortgages secured by single family residential real estate, which investments are expected to: (1) produce net interest income on its mortgage portfolio; and (2) provide monthly Distributions from, among other things, interest on Mortgage Investments. (3) permit the reinvestment of payments of principal on Mortgage Investments, payments of penalties and premiums on Mortgages and the proceeds of Mortgage Prepayments, Sales and Insurance net of expenses received by the Trustrust.

GENERAL STATEMENT OF POLICY. The Trust intends to invest in Mortgage Investments including: (i) Original Mortgage Investments and (ii) Additional Mortgage Investments. Additional Mortgage Investments (other than uninsured Mortgage Loans originated with the intent of later securitizing such Mortgage Loans) may not comprise, in the aggregate, more than 60% of the Mortgage Investments made by the Trust after the date the Proposals are adopted. The Trust will seek to obtain Originated Mortgages and with Participating Interest Payments and, to a lesser extent, Acquired Mortgages which will be secured directly by first mortgage liens on residential real estatewith Participating Interest Payments. The Trust shall have the right to acquire or originate Mortgages without first obtaining a real property appraisal, unless a majority of the Independent Trustees determine that such an appraisal is necessary; if obtained, any real property appraisals will be maintained in the Trust's books and records for at least five years. The foregoing investments are intended to be structured to comply with the Real Estate Investment Trust Provisions of the Code. In addition to the investments referred to above, the Trust may, in the discretion of the Board of Trustees or the Advisor, make the investments described in Section 2 7.2 below or such other investments that the Board of Trustees or the Advisor deem in good faith to be consistent with the Investment investment objectives and policies of the Trust as set forth in the ProspectusConsent Statement. The Trust may make commitments to make investments consistent with the foregoing policies. The Trust may also participate in joint ventures in Mortgages with Affiliated Programs (subject to the terms of this Section 7.1) and in investments with other unaffiliated investors, including unaffiliated investors having investment policies similar to those of the Trust, on the same or different terms. The Advisor may act as advisor to other investors, including investors who have the same investment policies as the Trust. The Independent Trustees shall review the investment policies of the Trust with sufficient frequency and at least annually to determine that the policies being followed by the Trust are in the best interests of its Shareholders. Such determination by the Independent Trustees and the basis therefor shall be recorded in the minutes of the meeting of Trustees. The Trust may not enter into transactions with a Sponsor, the Advisor, a Trustee or an Affiliate thereof, except as (i) specified below or (ii) otherwise permitted by Sections 7 7.7 and 8 7.8 of this Article VIIIVII. The Trust may invest in a joint venture with an Affiliated Program provided (i) the Affiliated Program has similar investment objectives to those of the Trust, (ii) such joint venture is approved by a majority of the Trustees, including a majority of the Independent Trustees, not otherwise interested in such transaction, as being fair and reasonable to the Trust and (iii) the Trust's participation in such joint venture is on substantially the same terms and conditions as those received by the other joint venturers. In the case of participation with Affiliated Programs, the cost of generating such investments will be shared ratably by the participating Affiliated Program and the Trust. The Advisor or an Affiliate may purchase Mortgages or interests therein in its own name or in the name of a nominee, a trust or a corporate "nominee" or otherwise and hold title thereto for the purpose of facilitating the acquisition of such Mortgages by the Trust or any other purpose related to the business of the Trust; provided that in the event of the acquisition of such a Mortgage by the Trust from the Advisor or its Affiliates, (i) the purchase price paid by the Trust may not exceed the purchase price paid by the Advisor or its Affiliates, including expenses of acquisition, appropriately reduced (a) to reflect the results of any interest rate xxxxxx placed by the Advisor or its Affiliates on such Mortgages up to the date of acquisition by the Trust, (b) by any mortgage payments received or accrued to the date of acquisition by the Trust to the extent not paid over to the Trust and (c) by all closing costs and Acquisition Fees paid by the Trust and (ii) no compensation or other benefit may accrue to the Advisor or its Affiliates except as otherwise permitted herein and except that they may be reimbursed for the costs incurred to carry the Mortgage (which could include the transactional costs associated with interest rate xxxxxx on such Mortgages including, but not limited to, commodity brokerage commissions, exchange fees, etc.). If the Advisor or an Affiliate has borrowed the funds to make or acquire such Mortgage, the carrying costs payable by the Trust shall include the lesser of interest at the rate charged or the rate which would have been charged for a comparable loan by Xxxxx Xxxx, X.X., Xxx Xxxx, Xxx Xxxx; if the Advisor or such Affiliate has used its own funds to finance the Mortgage, the carrying costs payable by the Trust shall include interest at a rate not in excess of that which would have been charged by unrelated lending institutions or by Xxxxx Xxxx, X.X., Xxx Xxxx, Xxx Xxxx to the Advisor or such Affiliate for short-term borrowings. The Advisor or an Affiliate may purchase other Mortgage Investments upon similar terms and conditions. The general purpose of the Trust is to acquire assets and to seek income which qualifies under the Real Estate Investment Trust ("REIT") Provisions of the Code. The Board of Trustees shall endeavor to make Mortgage Investments (including investments yielding "qualified temporary investment income" within the meaning of Section 856(c)(6)(D) of the Code) in such a manner as to comply with the requirements of the REIT Provisions of the Code with respect to the composition of the Trust's investments and the derivation of its income; provided, however, that for a period of time during which the portfolio of investments is being developed, the Trust's assets may be invested in investments which with income which does not qualify under the REIT Provisions of the Code; and provided further, however, that up to seven percent of the Trust's assets may be invested in Additional Loans, which are unsecured loans and which therefore do not qualify as real estate assets under the REIT provisions of the Code. The investment objectives of the Trust are to invest to: (i) preserve and protect the Trust's invested capital, by investing principally in first lien Mortgage Investments (ii) provide quarterly distributions which may be increased over time as a result of Participating Interest Payments, when obtainable, on Originated Mortgages, based on the cash flow or revenues of the underlying Development; and (iii) provide appreciation by investing in Acquired Mortgages which present the possibility of early disposition or prepayment and investing in Originated Mortgages and existing and, to a lesser extent, Acquired Mortgages secured by single family residential real estatewhich may generate Participating Interest Payments, which investments are expected to: (1) produce net interest income when obtainable, based on the increased value of the underlying Development upon its mortgage portfolio; and (2) provide monthly Distributions fromrefinancing, among sale or other things, interest on Mortgage Investmentsdisposition. (3) permit the reinvestment of payments of principal on Mortgage Investments, payments of penalties and premiums on Mortgages and the proceeds of Mortgage Prepayments, Sales and Insurance net of expenses received by the Trust.