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USE OF SPECIAL PURPOSE ENTITIES AND VARIABLE INTEREST ENTITIES (Tables)
 9 Months Ended
Sep. 30, 2020
Variable Interest Entity [Line Items]  
Summary of Loan and Borrowing Characteristics COMMERCIAL MORTGAGE LOANS HELD-FOR-INVESTMENT
The following tables summarize certain characteristics of the Company's investments in commercial mortgage loans as of September 30, 2020 and December 31, 2019:

Weighted Average
Loan TypeUnpaid Principal BalanceCarrying ValueLoan CountFloating Rate Loan %
Coupon(1)
Remaining
Term
 (Years)(2)
September 30, 2020
Loans held-for-investment
Senior secured loans(3)
$598,933,122 $598,933,122 44 100.0 %5.1 %3.2
598,933,122 598,933,122 44 100.0 %5.1 %3.2

Weighted Average
Loan TypeUnpaid Principal BalanceCarrying ValueLoan CountFloating Rate Loan %
Coupon(1)
Remaining
Term
 (Years)(2)
December 31, 2019
Loans held-for-investment
Senior secured loans(3)
$635,260,420 $635,260,420 51 100.0 %5.4 %3.8
635,260,420 635,260,420 51 100.0 %5.4 %3.8

(1)    Weighted average coupon assumes applicable one-month LIBOR of 0.16% and 1.70% as of September 30, 2020 and December 31, 2019, respectively, inclusive of weighted average floors of 1.61% and 1.56%, respectively.
(2)    Weighted average remaining term assumes all extension options are exercised by the borrower, provided, however, that our loans may be repaid prior to such date.
(3)    As of September 30, 2020, $582,771,880 of the outstanding senior secured loans were held in VIEs and $16,161,242 of the outstanding senior secured loans were held outside VIEs. As of December 31, 2019, $629,157,956 of the outstanding senior secured loans were held in VIEs and $6,102,464 of the outstanding senior secured loans were held outside VIEs.

Activity: For the nine months ended September 30, 2020, the loan portfolio activity was as follows:
Commercial Mortgage Loans Held-for-Investment
Balance at December 31, 2019$635,260,420 
Purchases and fundings52,580,443 
Proceeds from principal payments(88,907,741)
Balance at September 30, 2020$598,933,122 

Loan Risk Ratings: As further described in Note 2, the Company evaluates the commercial mortgage loan portfolio on a quarterly basis and assigns a risk rating based on a variety of factors. The following tables present the principal balance and net book value of the loan portfolio based on the Company's internal risk ratings utilized as of September 30, 2020 and December 31, 2019:


September 30, 2020December 31, 2019
Risk RatingNumber of LoansUnpaid Principal BalanceNet Carrying ValueNumber of LoansUnpaid Principal BalanceNet Carrying Value
1— $— — 1 9,000,000 9,000,000 
28 91,155,086 91,155,086 9 87,176,088 87,176,088 
327 393,803,374 393,803,374 37 487,513,256 487,513,256 
49 113,974,662 113,974,662 4 51,571,076 51,571,076 
5— — — — — — 
44 $598,933,122 598,933,122 51 635,260,420 635,260,420 

As of September 30, 2020, the average risk rating of the commercial mortgage loan portfolio was 3.1 (Moderate Risk), weighted by investment carrying value, with 81.0% of commercial loans held-for-investment rated 3 (Moderate Risk) or better by the Company's Manager.

As of December 31, 2019, the average risk rating of the commercial mortgage loan portfolio was 2.8 (Moderate Risk), weighted by investment carrying value, with 91.9% of commercial loans held-for-invested rated 3 (Moderate Risk) or better by the Company's Manager.
The increase in the average risk rating during 2020 is primarily the result of downgrade of several non multi-family loans to a risk rating of "4" to reflect higher risk in loans collateralized by retail and office properties that are particularly negatively impacted by the COVID-19 pandemic.

Concentration of Credit Risk: The following tables present the geographic and property types of collateral underlying the Company's commercial mortgage loans as a percentage of the loans' carrying value as of September 30, 2020 and December 31, 2019:

Loans Held-for-Investment
September 30, 2020December 31, 2019
Geography
Southwest37.0 %38.7 %
South35.5 27.5 
Midwest18.8 16.9 
Mid-Atlantic7.0 8.4 
West1.7 3.0 
Various— 5.5 
Total100.0 %100.0 %

September 30, 2020(1)
December 31, 2019
Collateral Property Type
Multi-Family90.4 %93.9 %
Retail5.9 2.7 
Office3.0 2.0 
Self-Storage0.7 0.7 
Mixed-Use— 0.7 
Total100.0 %100.0 %
(1)    During the period ended March 31, 2020, two multi-family loans were adjusted to retail and office, respectively, due to the primary nature of the underlying properties. The adjustment represents a reduction in multi-family of 3.6% and an increase to retail and office of 2.8% and 0.8%, respectively, to the percentages presented for December 31, 2019.

We did not have any impaired loans, nonaccrual loans, or loans in maturity default as of September 30, 2020 or December 31, 2019.
Condensed Consolidated Statements of Operations
The condensed consolidated statement of operations of the FREMF trusts for the three and nine months ended September 30, 2019 are as follows:

Statements of OperationsThree Months Ended September 30, 2019Nine Months Ended September 30, 2019
Interest income$— $78,361 
Net interest income$— $78,361 
Realized (loss) on multi-family loans held in securitization trusts— (709,439)
Unrealized gain on multi-family loans held in securitization trusts— 694,339 
Net income (loss)$— $63,261 
Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd.  
Variable Interest Entity [Line Items]  
Condensed Consolidated Balance Sheets
The carrying values of the Company's total assets and liabilities related to Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. at September 30, 2020 and December 31, 2019 included the following VIE assets and liabilities:

ASSETSSeptember 30, 2020December 31, 2019
Cash, cash equivalents and restricted cash$14,548,916 $5,069,715 
Accrued interest receivable(1)
2,203,444 2,313,818 
Investment related receivable(2)
9,166,516 — 
Loans held for investment582,771,880 629,157,956 
Total Assets$608,690,756 $636,541,489 
LIABILITIES
Accrued interest payable$338,656 $732,173 
Collateralized loan obligations(3)
479,704,710 505,930,065 
Total Liabilities$480,043,366 $506,662,238 
Equity128,647,390 129,879,251 
Total liabilities and equity$608,690,756 $636,541,489 
(1)    Accrued interest receivable includes $133,723 of interest and exit fees receivable, which were settled subsequent to September 30, 2020.
(2)    Investment related receivable includes one loan in Hunt CRE 2017-FL1 with a principal amount due of $9,166,516 which paid off after the September remittance and was received in October. This repayment will be used to pay down the Class A Notes of the CLO.
(3)     The stated maturity of the collateral loan obligations per the terms of the underlying collateralized loan obligation agreement is August 15, 2034 for Hunt CRE 2017-FL1, Ltd. and August 15, 2028 for Hunt CRE 2018-FL2, Ltd.
Summary of Loan and Borrowing Characteristics
The following tables present certain loan and borrowing characteristics of Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. as of September 30, 2020 and December 31, 2019:


As of September 30, 2020
Collateralized Loan ObligationsCountPrincipal Value
Carrying Value(1)
Wtd. Avg. Yield
Collateral (loan investments)44$582,771,880 $582,771,880 
L + 3.53%
Financings provided2482,440,642 479,704,710 
L + 1.43%

As of December 31, 2019
Collateralized Loan ObligationsCountPrincipal Value
Carrying Value(1)
Wtd. Avg. Yield
Collateral (loan investments)51$629,157,956 $629,157,956 
L + 3.60%
Financing provided2510,181,000 505,930,065 
L + 1.40%
(1)     The carrying value for Hunt CRE 2017-FL1, Ltd. is net of discount of $472,055 and $1,344,923 for September 30, 2020 and December 31, 2019, respectively and the carrying value for Hunt CRE 2018-FL2, Ltd. is net of debt issuance costs of $2,263,877 and $2,906,012 for September 30, 2020 and December 31, 2019, respectively.
Condensed Consolidated Statements of Operations The statement of operations related to Hunt CRE 2017-FL1, Ltd. and Hunt CRE 2018-FL2, Ltd. for the three and nine months ended September 30, 2020 and September 30, 2019 include the following income and expense items:
Statements of OperationsThree Months Ended September 30, 2020Three Months Ended September 30, 2019
Interest income$7,900,183 $9,717,060 
Interest expense(2,495,996)(5,244,001)
$5,404,187 $4,473,059 
General and administrative fees(201,459)(256,269)
Net income$5,202,728 $4,216,790 

Statements of OperationsNine Months Ended September 30, 2020Nine Months Ended September 30, 2019
Interest income$25,225,152 $29,695,218 
Interest expense(9,649,523)(16,147,178)
$15,575,629 $13,548,040 
General and administrative fees(497,088)(538,028)
Net income (loss)$15,078,541 $13,010,012