21. Commitments and Contingencies

Advisor Services

The Company is dependent on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, origination, acquisition and disposition of investments; management of the daily operations of the Company's investment portfolio including determination of fair value; and other general and administrative responsibilities. In the event that the Advisor is unable to provide the respective services, the Company will be required to obtain such services from an alternative source.

Litigation

From time to time, the Company may become involved in various claims and legal actions arising in the ordinary course of business. Management is not aware of any contingencies that would require accrual or disclosure in the consolidated financial statements at December 31, 2014 or December 31, 2013.

Commitments to Originate Loans

The Company enters into IRLCs with customers who have applied for residential mortgage loans and meet certain credit and underwriting criteria. These commitments expose the Company to market risk if interest rates change, and the loan is not economically hedged or committed to an investor. The Company is also exposed to credit loss if the loan is originated and not sold to an investor and the mortgagor does not perform. The collateral upon extension of credit typically consists of a first deed of trust in the mortgagor's residential property. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon. Total commitments to originate loans approximated $117.7 million for the year ended December 31, 2014.

Leases

The Company leases office space for use in its mortgage banking operations in connection under a non-cancelable operating lease. The lease provides that the Company pays taxes, maintenance, insurance, and other occupancy expenses applicable to the leased premises. The lease contains three five-year renewal options at the then existing market rates. The Company also leases equipment under various short-term rental agreements. The Company incurred rent expense for the year ended December 31, 2014 of $122,986. Such amount is included in operating expenses in the Company's consolidated statements of operations. The Company did not incur any rent expense for the years ended December 31, 2013 or December 31, 2012.

The Company sub-leases a portion of its office space and furniture and fixtures contained therein to two entities (one related and one unrelated). The Company received total sub-lease income for the year ended December 31, 2014 of $45,861. Such amount is included in other income in the Company's consolidated statements of operations. The Company did not have any sublease income for the years ended December 31, 2013 or December 31, 2012.

At December 31, 2014, the future minimum rental payments for the next five years and thereafter are as follows:

2015	$	639,523
2016		455,351
2017		385,075
2018		385,075
2019		410,515
Thereafter	$	2,275,539

Regulatory Net Worth Requirements

The Company is subject to various regulatory capital requirements administered by HUD, which governs non-supervised, direct endorsement mortgagees, and Ginnie Mae, which governs issuers of Ginnie Mae securities. Additionally, the Company is required to maintain minimum net worth requirements for many of the states in which it sells and services loans. Each state has its own minimum net worth requirements, up to $1 million, depending on the state.

Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary remedial actions by regulators that, if undertaken, could (i) remove the Company's ability to sell and service loans to or on behalf of the GSEs and (ii) have a direct material effect on the Company's consolidated financial statements. In accordance with the regulatory capital guidelines, the Company must meet specific quantitative measures of assets, liabilities and certain off-balance sheet items calculated under regulatory accounting practices. Further, changes in regulatory and accounting standards, as well as the impact of future events on the Company's results, may significantly affect the Company's net worth adequacy.

The Company met all minimum net worth requirements to which it was subject for the year ended December 31, 2014. The Company's required and actual net worth amounts at December 31, 2014 are presented in the following table:

	Net Worth	Net Worth Required
HUD	$ 52,545,673	$ 2,500,000
Ginnie Mae	52,545,673	5,007,700
Fannie Mae	52,548,259	6,577,547
Freddie Mac	52,548,259	3,143,262
Various States	52,548,259	0 - 1,000,000