3. MORTGAGE LOAN RECEIVABLES

December 31, 2014



	Outstanding Face Amount		Carrying Value			Weighted Average Yield (1)		Remaining Maturity (years)

Mortgage loan receivables held for investment, at amortized cost	$	1,536,922,814	$	1,524,153,375		7.33	%	1.96
Provision for loan losses	N/A		(3,100,000		)
Total mortgage loan receivables held for investment, at amortized cost	1,536,922,814		1,521,053,375
Mortgage loan receivables held for sale	417,954,757		417,954,757			4.31	%	9.72
Total	$	1,954,877,571	$	1,939,008,132

(1) December 31, 2014 yields are used to calculate weighted average yield for floating rate loans.

As of December 31, 2014, $231,938,111, or 15.2%, of the carrying value of our mortgage loan receivables held for investment, at amortized cost, were at fixed interest rates and $1,292,215,264, or 84.8%, of the carrying value of our mortgage loan receivables held for investment, at amortized cost, were at variable interest rates, linked to LIBOR, some of which include interest rate floors. As of December 31, 2014, $417,954,757, or 100.0%, of the carrying value of our mortgage loan receivables held for sale, were at fixed interest rates.

December 31, 2013



	Outstanding Face Amount		Carrying Value			Weighted Average Yield (1)		Remaining Maturity (years)

Mortgage loan receivables held for investment, at amortized cost	$	549,573,788	$	541,578,182		9.76	%	2.14
Provision for loan losses	N/A		(2,500,000		)
Total mortgage loan receivables held for investment, at amortized cost	549,573,788		539,078,182
Mortgage loan receivables held for sale	440,774,789		440,489,789			5.47	%	9.62
Total	$	990,348,577	$	979,567,971

(1) December 31, 2013 yields are used to calculate weighted average yield for floating rate loans.

As of December 31, 2013, $421,824,981, or 77.9%, of the carrying value of our mortgage loan receivables held for investment, at amortized cost, were at fixed interest rates and $119,753,201, or 22.1%, of the carrying value of our mortgage loan receivables held for investment, at amortized cost, were at variable interest rates, linked to LIBOR, some of which include interest rate floors. As of December 31, 2013, 440,489,789, or 100%, of the carrying value of our mortgage loan receivables held for sale, were at fixed interest rates.

The following table summarizes mortgage loan receivables by loan type:



	December 31, 2014					December 31, 2013
	Outstanding Face Amount		Carrying Value			Outstanding Face Amount		Carrying Value

Mortgage loan receivables held for sale
First mortgage loan	$	417,954,757	$	417,954,757		$	440,774,789	$	440,489,789
Total mortgage loan receivables held for sale	417,954,757		417,954,757			440,774,789		440,489,789
Mortgage loan receivables held for investment, at amortized cost
First mortgage loan	1,373,476,221		1,361,754,632			420,672,555		413,564,066
Mezzanine loan	163,446,593		162,398,743			128,901,233		128,014,116
Total mortgage loan receivables held for investment, at amortized cost	1,536,922,814		1,524,153,375			549,573,788		541,578,182

Provision for loan losses	N/A		(3,100,000		)	N/A		(2,500,000		)
Total	$	1,954,877,571	$	1,939,008,132		$	990,348,577	$	979,567,971

For the years ended December 31, 2014, 2013, and 2012 the activity in our loan portfolio was as follows:



	Mortgage loan receivables held for investment, at amortized cost			Mortgage loan receivables held for sale

Balance December 31, 2013	$	539,078,182		$	440,489,789
Origination of mortgage loan receivables	1,201,968,254			3,345,371,937
Repayment of mortgage loan receivables	(214,510,727		)	(1,293,262		)
Proceeds from sales of mortgage loan receivables	—			(3,523,688,310		)
Realized gain on sale of mortgage loan receivables	—			145,274,603
Transfer between held for investment and held for sale	(11,800,000		)	11,800,000
Accretion/amortization of discount, premium and other fees	6,917,666			—
Loan loss provision	(600,000		)	—
Balance December 31, 2014	$	1,521,053,375		$	417,954,757



	Mortgage loan receivables held for investment, at amortized cost			Mortgage loan receivables held for sale

Balance December 31, 2012	$	326,318,550		$	623,332,620
Origination of mortgage loan receivables	486,072,238			2,013,674,038
Repayment of mortgage loan receivables	(268,093,305		)	(5,840,419		)
Proceeds from sales of mortgage loan receivables	—			(2,345,704,987		)
Realized gain on sale of mortgage loan receivables	—			146,708,264
Transfer between held for investment and held for sale	(8,320,273		)	8,320,273
Accretion/amortization of discount, premium and other fees	3,700,972			—
Loan loss provision	(600,000		)	—
Balance December 31, 2013	$	539,078,182		$	440,489,789



	Mortgage loan receivables held for investment, at amortized cost			Mortgage loan receivables held for sale

Balance December 31, 2011	$	255,196,384		$	258,841,725
Origination of mortgage loan receivables	341,947,392			2,036,138,933
Repayment of mortgage loan receivables	(204,913,202		)	(75,654,634		)
Proceeds from sales of mortgage loan receivables	—			(1,815,995,772		)
Realized gain on sale of mortgage loan receivables	—			151,661,150
Transfer between held for investment and held for sale	(68,080,932		)	68,080,932
Accretion/amortization of discount, premium and other fees	2,617,741			260,286
Loan loss provision	(448,833		)	—
Balance December 31, 2012	$	326,318,550		$	623,332,620

During the years ended December 31, 2014 and 2012, the transfers of financial assets via sales of loans have been treated as sales by us under ASC 860. During the year ended December 31, 2013, transfers of financial assets via sales of loans have been treated as sales by us under ASC 860 with the exception of one asset with a book value of $996,650 in which the Company retains effective control that would preclude sales accounting. The transfer is considered to be a secured borrowing in which the asset remains on the Company’s combined consolidated balance sheets in mortgage loan receivables held for investment at amortized cost and the sale proceeds are recognized in other liabilities and held as secured borrowings.

The Company evaluates each of its loans for potential losses at least quarterly. Its loans are typically collateralized by real estate directly or indirectly. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, as well as the financial and operating capability of the borrower. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash flow from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan at maturity, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the Company considers the overall economic environment, real estate sector, and geographic sub-market in which the collateral property is located. Such impairment analyses are completed and reviewed by asset management personnel, who utilize various data sources, including (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrowers’ business plan, and capitalization and discount rates, (ii) site inspections, and (iii) current credit spreads and other market data. As a result of this analysis, the Company has concluded that none of its loans are individually impaired as of December 31, 2014 and December 31, 2013.

However, based on the inherent risks shared among the loans as a group, it is probable that the loans had incurred an impairment due to common characteristics and inherent risks in the portfolio. Therefore, the Company has recorded a reserve, based on a targeted percentage level which it seeks to maintain over the life of the portfolio, as disclosed in the tables below. Historically, the Company has not incurred losses on any originated loans. At December 31, 2014 and December 31, 2013, there was $4,195,927 and $4,273,890, respectively, of unamortized discounts included in our mortgage loan receivables held for investment, at amortized cost on our combined consolidated balance sheets.

At December 31, 2014 and December 31, 2013, there was one loan on non-accrual status with an amortized cost of $4,620,000 and an unamortized discount of $3,452,500 included in our mortgage loan receivables held for investment, at amortized cost on our combined consolidated balance sheets. This loan was not originated by the Company. Instead it was credit impaired at the time of acquisition, which was reflected in Ladder’s purchase price.

Provision for Loan Losses



	Year Ended December 31,
	2014		2013		2012

Provision for loan losses at beginning of period	$	2,500,000	$	1,900,000	$	1,451,167
Provision for loan losses	600,000		600,000		448,833
Charge-offs	—		—		—
Provision for loan losses at end of period	$	3,100,000	$	2,500,000	$	1,900,000