Mortgage-backed Securities & investments:

What is a mortgage-backed security?
Our mortgage-backed security is much like a corporate bond. It has a maturity date and a fixed rate of return. It’s called mortgage-backed security because your investment is backed by mortgages, each secured by a Deed of Trust. Our MBS Accounts have varying maturity dates and returns between 6.25% and 10.50%.

How my deposit is backed?
Your deposit is backed by Trust Deeds held by our business partners or us and they are used to secure your investment. The Department of Corporations requires a company to have Deeds of Trust equal to the offering plus a 1-for-8 cash reserve. Our initial offering is for $12 million, which means we must have $12 million in Trust Deeds plus $1.5 million in additional assets set aside.

How does the value of the Trust Deeds secure my deposit?
Trust Deeds on real property are used to secure the loans. The Trust Deeds segregated for the MBS Accounts are primarily tied to LOW loan-to-value home loans, generally at 60% LTV or less. By way of example: Let’s say someone holds a Trust Deed to secure a loan in the amount of $200,000 on a home worth $400,000. If for some reason the borrower on that loan defaults, the holder of that deed would be able to foreclose on the property and sell the home for its fair market value.

Is my account FDIC-Insured, like a savings account?
No. FDIC insurance is a federal concern and we operate with a securities permit which is issued by the California Department of Corporations*.

Is it smarter to open an MBS account rather than a Savings, Money Market, or a CD account?
That’s an easy one. ABSOLUTELY! The average savings account is paying around 1%, if even that. CD’s are paying an average of between 2% and 2.5% right now; sometimes as much as 4.1%, but you have to keep the funds in the CD for five years or longer. Your MBS account pays a minimum of 6.25% and you only have to commit the funds for one year. Or you can choose a longer term and get a higher rate.

When can I withdraw my funds?
Anytime you want. However you will have to pay an early-withdrawal penalty if your funds are withdrawn before the maturity date on your account.

Can I take the interest monthly?
We pay your interest to you monthly OR you can choose to let the interest accrue. We call that the Rollover Option. The benefit to you with the Rollover Option is that you earn interest on your interest. So, for example, at the end of three years, an MBS Account which pays 6.5% will actually have earned 7.15%.

Are there returns possible beyond 6.25%?
Yes. We offer MBS Accounts with one-year, three-year, and four year terms with returns as high as 10.5%.