BUSINESS, BASIS OF PRESENTATION AND LIQUIDITY	9 Months Ended
Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BUSINESS, BASIS OF PRESENTATION AND LIQUIDITY	BUSINESS, BASIS OF PRESENTATION AND LIQUIDITY Our Company IMH Financial Corporation (the “Company”) is a real estate investment and finance company based in the southwestern United States engaged in various and diverse facets of the real estate lending and investment process, including origination, acquisition, underwriting, servicing, enforcement, development, marketing, and disposition. The Company’s focus is to invest in, manage and dispose of commercial real estate mortgage investments or other real estate assets, and to perform all functions reasonably related thereto, including developing, managing and either holding for investment or disposing of real property acquired through acquisition, foreclosure or other means. In the last few years, we acquired certain operating properties through deed-in-lieu of foreclosure which have contributed significantly to our operating revenues and expenses. Our operating properties currently consist of two operating hotels and restaurants located in Sedona, Arizona, a golf course and restaurant operation located in Bullhead City, Arizona, and a multi-family housing campus in Apple Valley, Minnesota, which commenced leasing operations in the fourth quarter of 2015. A commercial office building located in Stafford, Texas, which also contributed to operating property revenues and expenses during 2015, was sold in the third quarter of 2015. Due to our limited lending and investment activities since 2008 and our declining loan portfolio, these operating properties currently contribute virtually all of our operating revenue. Basis of Presentation The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for a complete set of financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the results for the periods presented have been made. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016. These condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, 2015. The accompanying unaudited condensed consolidated financial statements include the accounts of IMH Financial Corporation and the following wholly-owned operating subsidiaries: 11333, Inc. (formerly known as Investors Mortgage Holdings, Inc.), an Arizona corporation, Investors Mortgage Holdings California, Inc., a California corporation, IMH Holdings, LLC, a Delaware limited liability company (“Holdings”), and numerous other wholly owned subsidiaries established in connection with the acquisition of real estate either through foreclosure or purchase and/or for borrowing purposes, as well as its majority owned or controlled real estate entities and its interests in variable interest entities (“VIEs”) in which the Company is determined to be the primary beneficiary. Holdings is a holding company for IMH Management Services, LLC, an Arizona limited liability company, which provides us and our affiliates with human resources and administrative services, including the supply of employees. Other entities in which we have invested and have the ability to exercise significant influence over operating and financial policies of the investee, but upon which we do not possess control, are accounted for by the equity method of accounting within the financial statements and they are therefore not consolidated. During the second quarter of 2015, the Company, through certain subsidiaries, obtained certain real estate assets and equity interests in a number of limited liability companies and limited partnerships with various real estate holdings and related assets as a result of certain loan and guarantor enforcement and collection efforts. Certain of these entities have been consolidated in the accompanying condensed consolidated financial statements while others have been accounted for under the equity method of accounting based on the extent of the Company’s controlling financial interest in each such entity. See Note 5 for a discussion of our equity investments and VIEs. All significant intercompany accounts and transactions have been eliminated in consolidation. Liquidity As of September 30, 2016, our accumulated deficit aggregated $685.3 million primarily as a result of previous impairment charges recorded relating to the decrease in the fair value of our mortgage assets and real estate owned (“REO”) assets, as well as on-going net operating losses resulting from the lack of income-producing assets, the cost of our debt financing and debt restructuring charges. Beginning in 2008, we experienced significant defaults and foreclosures in our mortgage loan portfolio due primarily to the erosion of the U.S. and global real estate and credit markets during those periods. As a result, since that time we have been focused on enforcing our rights under our loan documents, working to repossess the collateral properties underlying those loans for purposes of disposing of or developing such assets, and pursuing recovery from guarantors under such loans. Our liquidity plan has included obtaining additional financing, selling mortgage loans, and selling the majority of our legacy real estate assets. We secured various financings between 2011 and 2015 which, along with proceeds from asset sales, have been our primary sources of working capital. During the fourth quarter of 2015, a wholly-owned subsidiary of the Company borrowed $5.4 million pursuant to a non-revolving credit facility with the Banc of California, National Association (the “BOC Facility”), which was repaid in March 2016 upon collection of the mortgage receivable that served as collateral for that loan. During the nine months ended September 30, 2016, we also secured and drew down a revolving line of credit in the amount of $4.0 million (“SRE Revolver”). The SRE Revolver is secured by certain REO assets and has a maturity date in December 2016. At September 30, 2016, we had cash and cash equivalents of $6.5 million and restricted cash of $2.3 million. As of September 30, 2016, certain of our REO assets with a carrying value of $45.9 million and our entire mortgage loan portfolio with a carrying value of $0.4 million were held for sale. We continue to evaluate potential disposition strategies for our remaining real estate owned and operating properties. During the nine months ended September 30, 2016, we collected mortgage payments totaling $7.6 million and sold certain mortgage loans and REO assets that generated $6.5 million in cash. In October 2014, the Company and Titan Investments IX, LLC (“Titan”) entered into a joint venture known as Southwest Acquisitions, LLC (“Southwest JV”) for the purpose of holding and developing a multi-family project in Apple Valley, Minnesota to be known as Gabella (“Gabella”). Southwest JV simultaneously created a wholly-owned subsidiary, IMH Gabella LLC, (“IMH Gabella”) to hold the Gabella assets, and in October 2014, IMH Gabella secured a $24.0 million construction loan. The construction loan is subject to a completion and repayment carve-out guarantee by the Company and requires the Company to maintain a minimum liquidity balance of $7.5 million. On various occasions during 2016, we fell below the $7.5 million liquidity threshold resulting in a non-compliance event under the terms of the guarantor agreement, and which also constituted a non-compliance event under the terms of our Certificate of Designation of Series B-1 Cumulative Convertible Preferred Stock and Series B-2 Cumulative Convertible Preferred Stock (“Certificate of Designation”). While the lender has not taken any enforcement action regarding this non-compliance event, and we have obtained a waiver from our preferred shareholders for this non-compliance event under the Certificate of Designation, this non-compliance event could have a material adverse effect on our business, results of operations and financial position. We are also subject to a $5.0 million minimum liquidity balance for the calendar year 2016 in connection with a mortgage loan secured by our Sedona hospitality assets. In September 2016, we sought and obtained a temporary reduction of the minimum liquidity covenant to $3.0 million through December 31, 2016. In addition to this minimum liquidity requirement, the lender requires our hotel operations to meet certain debt service coverage ratio (“DSCR”) and minimum 12-month rolling net operating income (“NOI”) requirements measured on a quarterly basis. Due to the operational impact of the 2015-2016 capital improvement program at our Sedona hospitality assets, our hotel operations did not meet the mortgage loan’s DSCR and NOI requirements during the quarterly measurement period in the first quarter of 2016, for which the lender provided a one-time forbearance. While the hotel operations met the mortgage loan’s DSCR and NOI requirements during the second and third quarterly reporting periods in 2016, there is no assurance that our hotel operations will meet these liquidity, DSCR and/or NOI requirements in future quarterly reporting periods. In the event that they do not meet such requirements, we would likely seek a supplemental forbearance from the lender. There is no assurance that such a forbearance would be granted. While we have been successful in securing financing through September 30, 2016 to provide adequate funding for working capital purposes and have generated liquidity through asset sales and mortgage receivable collections, there is no assurance that we will be successful in selling our remaining loan and REO assets in a timely manner or in obtaining additional or replacement financing, if needed, to sufficiently fund future operations, repay existing debt, or to implement our investment strategy. Our failure to generate sustainable earning assets, and successfully liquidate a sufficient number of our loans and REO assets, may have a material adverse effect on our business, results of operations and financial position.

BUSINESS, BASIS OF PRESENTATION AND LIQUIDITY

Our Company

IMH Financial Corporation (the “Company”) is a real estate investment and finance company based in the southwestern United States engaged in various and diverse facets of the real estate lending and investment process, including origination, acquisition, underwriting, servicing, enforcement, development, marketing, and disposition. The Company’s focus is to invest in, manage and dispose of commercial real estate mortgage investments or other real estate assets, and to perform all functions reasonably related thereto, including developing, managing and either holding for investment or disposing of real property acquired through acquisition, foreclosure or other means.

In the last few years, we acquired certain operating properties through deed-in-lieu of foreclosure which have contributed significantly to our operating revenues and expenses. Our operating properties currently consist of two operating hotels and restaurants located in Sedona, Arizona, a golf course and restaurant operation located in Bullhead City, Arizona, and a multi-family housing campus in Apple Valley, Minnesota, which commenced leasing operations in the fourth quarter of 2015. A commercial office building located in Stafford, Texas, which also contributed to operating property revenues and expenses during 2015, was sold in the third quarter of 2015. Due to our limited lending and investment activities since 2008 and our declining loan portfolio, these operating properties currently contribute virtually all of our operating revenue.

Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for a complete set of financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the results for the periods presented have been made. Operating results for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016. These condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, 2015.

The accompanying unaudited condensed consolidated financial statements include the accounts of IMH Financial Corporation and the following wholly-owned operating subsidiaries: 11333, Inc. (formerly known as Investors Mortgage Holdings, Inc.), an Arizona corporation, Investors Mortgage Holdings California, Inc., a California corporation, IMH Holdings, LLC, a Delaware limited liability company (“Holdings”), and numerous other wholly owned subsidiaries established in connection with the acquisition of real estate either through foreclosure or purchase and/or for borrowing purposes, as well as its majority owned or controlled real estate entities and its interests in variable interest entities (“VIEs”) in which the Company is determined to be the primary beneficiary. Holdings is a holding company for IMH Management Services, LLC, an Arizona limited liability company, which provides us and our affiliates with human resources and administrative services, including the supply of employees. Other entities in which we have invested and have the ability to exercise significant influence over operating and financial policies of the investee, but upon which we do not possess control, are accounted for by the equity method of accounting within the financial statements and they are therefore not consolidated.

During the second quarter of 2015, the Company, through certain subsidiaries, obtained certain real estate assets and equity interests in a number of limited liability companies and limited partnerships with various real estate holdings and related assets as a result of certain loan and guarantor enforcement and collection efforts. Certain of these entities have been consolidated in the accompanying condensed consolidated financial statements while others have been accounted for under the equity method of accounting based on the extent of the Company’s controlling financial interest in each such entity. See Note 5 for a discussion of our equity investments and VIEs.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Liquidity

As of September 30, 2016, our accumulated deficit aggregated $685.3 million primarily as a result of previous impairment charges recorded relating to the decrease in the fair value of our mortgage assets and real estate owned (“REO”) assets, as well as on-going net operating losses resulting from the lack of income-producing assets, the cost of our debt financing and debt restructuring charges. Beginning in 2008, we experienced significant defaults and foreclosures in our mortgage loan portfolio due primarily to the erosion of the U.S. and global real estate and credit markets during those periods. As a result, since that time we have been focused on enforcing our rights under our loan documents, working to repossess the collateral properties underlying those loans for purposes of disposing of or developing such assets, and pursuing recovery from guarantors under such loans.

Our liquidity plan has included obtaining additional financing, selling mortgage loans, and selling the majority of our legacy real estate assets. We secured various financings between 2011 and 2015 which, along with proceeds from asset sales, have been our primary sources of working capital.

During the fourth quarter of 2015, a wholly-owned subsidiary of the Company borrowed $5.4 million pursuant to a non-revolving credit facility with the Banc of California, National Association (the “BOC Facility”), which was repaid in March 2016 upon collection of the mortgage receivable that served as collateral for that loan. During the nine months ended September 30, 2016, we also secured and drew down a revolving line of credit in the amount of $4.0 million (“SRE Revolver”). The SRE Revolver is secured by certain REO assets and has a maturity date in December 2016. At September 30, 2016, we had cash and cash equivalents of $6.5 million and restricted cash of $2.3 million.

As of September 30, 2016, certain of our REO assets with a carrying value of $45.9 million and our entire mortgage loan portfolio with a carrying value of $0.4 million were held for sale. We continue to evaluate potential disposition strategies for our remaining real estate owned and operating properties. During the nine months ended September 30, 2016, we collected mortgage payments totaling $7.6 million and sold certain mortgage loans and REO assets that generated $6.5 million in cash.

In October 2014, the Company and Titan Investments IX, LLC (“Titan”) entered into a joint venture known as Southwest Acquisitions, LLC (“Southwest JV”) for the purpose of holding and developing a multi-family project in Apple Valley, Minnesota to be known as Gabella (“Gabella”). Southwest JV simultaneously created a wholly-owned subsidiary, IMH Gabella LLC, (“IMH Gabella”) to hold the Gabella assets, and in October 2014, IMH Gabella secured a $24.0 million construction loan. The construction loan is subject to a completion and repayment carve-out guarantee by the Company and requires the Company to maintain a minimum liquidity balance of $7.5 million. On various occasions during 2016, we fell below the $7.5 million liquidity threshold resulting in a non-compliance event under the terms of the guarantor agreement, and which also constituted a non-compliance event under the terms of our Certificate of Designation of Series B-1 Cumulative Convertible Preferred Stock and Series B-2 Cumulative Convertible Preferred Stock (“Certificate of Designation”). While the lender has not taken any enforcement action regarding this non-compliance event, and we have obtained a waiver from our preferred shareholders for this non-compliance event under the Certificate of Designation, this non-compliance event could have a material adverse effect on our business, results of operations and financial position. We are also subject to a $5.0 million minimum liquidity balance for the calendar year 2016 in connection with a mortgage loan secured by our Sedona hospitality assets. In September 2016, we sought and obtained a temporary reduction of the minimum liquidity covenant to $3.0 million through December 31, 2016. In addition to this minimum liquidity requirement, the lender requires our hotel operations to meet certain debt service coverage ratio (“DSCR”) and minimum 12-month rolling net operating income (“NOI”) requirements measured on a quarterly basis. Due to the operational impact of the 2015-2016 capital improvement program at our Sedona hospitality assets, our hotel operations did not meet the mortgage loan’s DSCR and NOI requirements during the quarterly measurement period in the first quarter of 2016, for which the lender provided a one-time forbearance. While the hotel operations met the mortgage loan’s DSCR and NOI requirements during the second and third quarterly reporting periods in 2016, there is no assurance that our hotel operations will meet these liquidity, DSCR and/or NOI requirements in future quarterly reporting periods. In the event that they do not meet such requirements, we would likely seek a supplemental forbearance from the lender. There is no assurance that such a forbearance would be granted.

While we have been successful in securing financing through September 30, 2016 to provide adequate funding for working capital purposes and have generated liquidity through asset sales and mortgage receivable collections, there is no assurance that we will be successful in selling our remaining loan and REO assets in a timely manner or in obtaining additional or replacement financing, if needed, to sufficiently fund future operations, repay existing debt, or to implement our investment strategy. Our failure to generate sustainable earning assets, and successfully liquidate a sufficient number of our loans and REO assets, may have a material adverse effect on our business, results of operations and financial position.