Loans generally are funded at a fixed interest rate with a loan term of up to five years. Loans acquired are generally done so within the first six months of origination and purchased at the current par value, which approximates fair value. See Note 3 (General Partners and Other Related Parties) for a description of loans transferred by executed assignments between the related mortgage funds.

As of December 31, 2021, 23 of the partnership’s 31 loans (representing 84% of the aggregate principal of the partnership’s loan portfolio) have a term of five years or less. The remaining loans have terms longer than five years. Substantially all loans are written without a prepayment penalty provision.

As of December 31, 2021, 13 of the loans outstanding (representing 68% of the aggregate principal balance of the partnership’s loan portfolio) provide for monthly payments of interest only, with the principal due in full at maturity. The remaining loans require monthly payments of principal and interest, typically calculated on a 30-year amortization, with the remaining principal balance due at maturity.

Secured loan transactions are summarized in the following table ($ in thousands).


	2021			2020
Principal, beginning of period	$	74,080		$	86,203
Loans funded		25,248			7,718
Principal collected(1)		(39,404	)		(10,798	)
Loan transferred from related mortgage fund		1,371			—
Loans transferred to related mortgage fund		(5,711	)		(3,374	)
Loans sold to non-affiliate		(485	)		(2,730	)
Foreclosures(2)		—			(2,939	)
Principal, December 31, 2021	$	55,099		$	74,080

(1)

Includes principal collected and held in trust at December 31, 2021 of approximately $464,000.

(2)

In 2020 the partnership foreclosed on one loan, with a recorded investment of approximately $3,163,000. The net investment in the loan was adjusted to the estimated fair value of the related collateral, net of any costs to sell in arriving at net realizable value and net of any senior loans, which resulted in the recognition of foregone interest of approximately $140,000.

During 2021 and 2020, the partnership renewed 8 and 18 loans with aggregate principal of approximately $36,572,000 and $53,340,000, respectively, which are not included in the activity shown in the above table. The loans were current and deemed well collateralized (i.e., the LTV for the collateral was within lending guidelines) at the time they were extended.

The partnership funds loans with the intent to hold the loans until maturity, although from time to time the partnership may sell certain loans when the manager determines it to be in the best interest of the partnership.

In 2021, a loan with principal of approximately $485,000, was sold to an unaffiliated third party, for an amount that approximated the loan balance at the time of sale. In 2020, two loans with a principal of approximately $2,730,000 and accrued interest of approximately $13,500 were sold to an unaffiliated third party. After commissions to third parties the partnership recognized a gain of approximately $26,000.

Pursuant to California regulatory requirements borrower payments are deposited into a trust account established by RMC with an independent bank and are presented on the balance sheet as “Loan payments in trust”. Funds are disbursed to the partnership as collected which can range from same day for wire transfers and up to two weeks after deposit for checks. Loan payments in trust at December 31, 2021 were disbursed to the partnership’s account by January 14, 2022. Loan payments in trust at December 31, 2020 were distributed to the partnership’s account by January 15, 2021.

Secured loans had the characteristics presented in the following table ($ in thousands).


	December 31,			December 31,
	2021			2020
Number of secured loans		31			33
Secured loans – principal	$	55,099		$	74,080
Secured loans – lowest interest rate (fixed)		7.3	%		5.0	%
Secured loans – highest interest rate (fixed)		10.8	%		10.8	%

Average secured loan – principal	$	1,777		$	2,245
Average principal as percent of total principal		3.2	%		3.0	%
Average principal as percent of partners’ capital, net of formation loan		2.7	%		2.9	%
Average principal as percent of total assets		2.6	%		2.7	%

Largest secured loan – principal	$	7,994		$	10,200
Largest principal as percent of total principal		14.5	%		13.8	%
Largest principal as percent of partners’ capital, net of formation loan		12.2	%		13.0	%
Largest principal as percent of total assets		11.7	%		12.1	%

Smallest secured loan – principal	$	56		$	46
Smallest principal as percent of total principal		0.1	%		0.1	%
Smallest principal as percent of partners’ capital, net of formation loan		0.1	%		0.1	%
Smallest principal as percent of total assets		0.1	%		0.1	%

Number of California counties where security is located		12			14
Largest percentage of principal in one California county		32.1	%		40.0	%

As of December 31, 2021, the partnership’s largest loan, with an unpaid principal balance of $7,994,068 is secured by an commercial building in the City and County of San Francisco, bears an interest rate of 8.375%, and matures on March 1, 2022.

As of December 31, 2021, the partnership had no commitments to lend outstanding and had no construction or rehabilitation loans outstanding.

At funding, secured loans had the lien positions in the following table ($ in thousands).


	December 31, 2021								December 31, 2020
	Loans		Principal			Percent			Loans		Principal			Percent
First trust deeds		25	$	45,992			83	%		24	$	64,286			87	%
Second trust deeds		6		9,107			17			9		9,794			13
Total principal, secured loans		31		55,099			100	%		33		74,080			100	%
Liens due other lenders at loan closing				14,988								15,759
Total debt			$	70,087							$	89,839
Appraised property value at loan closing			$	117,570							$	180,041
Percent of total debt to appraised values (LTV) at loan closing(3)				62.3	%							53.8	%

(3)

Based on appraised values and liens due other lenders at loan closing. The weighted-average loan-to-value (LTV) computation above does not take into account subsequent increases or decreases in property values following the loan closing, nor does it include decreases or increases of the amount of senior liens to other lenders.

Secured loans summarized by property type are presented in the following table ($ in thousands).


	December 31, 2021							December 31, 2020
	Loans		Principal		Percent			Loans		Principal		Percent
Single family(4)		16	$	14,597		26	%		19	$	16,598		22	%
Multi-family		2		7,550		14			1		6,300		9
Commercial		13		32,952		60			12		49,682		67
Land		—		—		—			1		1,500		2
Total principal, secured loans		31	$	55,099		100	%		33	$	74,080		100	%

(4)

Single family property type as of December 31, 2021 consists of 4 loans with aggregate principal of approximately $2,306,000 that are owner occupied and 12 loans with aggregate principal of approximately $12,291,000 that are non-owner occupied. At December 31, 2020, single family property consisted of 8 loans with aggregate principal of approximately $3,344,000 that were owner occupied and 11 loans with aggregate principal of approximately $13,254,000 that were non-owner occupied.

The distribution of secured loans by counties is presented in the following table ($ in thousands).


	December 31, 2021					December 31, 2020
	Principal		Percent			Principal		Percent
San Francisco Bay Area(5)
San Francisco	$	17,694		32.1	%	$	29,659		40.0	%
San Mateo		7,696		14.0			16,756		22.6
Alameda		6,239		11.3			823		1.1
Santa Clara		4,600		8.4			4,600		6.2
Marin		1,653		3.0			917		1.2
Sonoma		576		1.0			—		0.0
Contra Costa		—		0.0			302		0.4
		38,458		69.8			53,057		71.5

Other Northern California
Mariposa		56		0.1			46		0.1
Placer		—		0.0			1,500		2.0
Santa Cruz		—		0.0			485		0.7
Amador		—		0.0			701		0.9
		56		0.1			2,732		3.7
Northern California Total		38,514		69.9			55,789		75.2

Los Angeles & Coastal
Los Angeles		10,783		19.6			10,199		13.8
Orange		2,192		4.0			642		0.9
Santa Barbara		2,062		3.7			2,070		2.8
San Diego		1,088		2.0			—		0.0
		16,125		29.3			12,911		17.5

Other Southern California
San Bernardino		—		0.0			5,380		7.3
Riverside		460		0.8			—		0.0
		460		0.8			5,380		7.3
Southern California Total		16,585		30.1			18,291		24.8
Total principal, secured loans	$	55,099		100.0	%	$	74,080		100.0	%

(5)

Includes Silicon Valley

Secured loans scheduled to mature as of December 31, 2021 are presented in the following table ($ in thousands).


	Loans		Principal		Percent
2022		17	$	45,108		82	%
2023		6		6,049		11
2024		1		588		1
2025		1		1,000		2
2026		—		—		—
Thereafter		2		1,310		2
Total scheduled maturities		27		54,055		98
Matured at December 31, 2021		4		1,044		2
Total principal, secured loans		31	$	55,099		100	%

In February 2022, two loans, with aggregate principal of approximately $585,000, included as matured at December 31, 2021 in the table above were paid in full, and one loan, with principal of approximately $402,000, included as matured at December 31, 2021 in the table above was brought current and extended with an updated maturity date of June 1, 2022.

Scheduled maturities are presented based on the most recent in-effect agreement with the borrower, including forbearance agreements. As a result, matured loans at December 31, 2021, for the scheduled maturities table may differ from the same captions in the tables of delinquencies and payments in arrears that are based on the loan terms and do not consider forbearance agreements. For matured loans, the partnership may continue to accept payments while pursuing collection of principal or while negotiating an extension of the loan’s maturity date.

It is the partnership’s experience that the timing of future cash receipts from secured loans will differ from scheduled maturities. Loans may be repaid or renewed before, at or after the contractual maturity date.

Secured loans summarized by payment-delinquency status are presented in the following table ($ in thousands).


	December 31, 2021				December 31, 2020
	Loans		Principal		Loans		Principal
Current		25	$	48,274		30	$	58,941
Past Due
30-89 days		2		5,782		—		—
90-179 days		1		56		—		—
180 or more days		3		987		3		15,139
Total past due		6		6,825		3		15,139
Total principal, secured loans		31	$	55,099		33	$	74,080

In February 2022, two loans, with aggregate principal of approximately $585,000, included as 180 or more days delinquent in the table above were paid in full and one loan, with principal of approximately $402,000, included as 180 or more days delinquent in the table above was brought current and extended.

At December 31, 2021 were no forbearance agreements in effect. At December 31, 2020 there were two forbearance agreements in effect with aggregate principal of $10,735,000, both of which are included in the table above as 180 or more days past due.

No loan forbearance agreements or other loan payment modifications were made during 2021 or 2020 that would be deemed troubled debt restructurings.

Non-performing secured loans at December 31, 2021, and December 31, 2020, had principal payments in arrears totaling approximately $1,047,000 (6 loans) and $15,139,000 (3 loans), respectively and interest payments in arrears totaling approximately $71,000 and $849,000, respectively. Payments in arrears for non-performing secured loans (i.e., monthly interest and principal payments past due 30 or more days) at December 31, 2021 and December 31, 2020, are presented in the following tables ($ in thousands).


	Loans				Principal				Interest(6)
At December 31, 2021	Past maturity		Monthly payments		Past maturity		Monthly payments		Past maturity		Monthly payments		Total payments in arrears
Past due
30-89 days (1-3 payments)		—		2	$	—	$	3	$	—	$	65	$	68
90-179 days (4-6 payments)		—		—		—		—		—		—		—
180 or more days (more than 6 payments)(7)		4		—		1,044		—		6		—		1,050
Total past due		4		2	$	1,044	$	3	$	6	$	65	$	1,118

(6)

Interest includes foregone interest of approximately $700 on non-accrual loans past maturity. Interest for December 2021 is due January 1, 2022 and is not included in the payments in arrears at December 31, 2021.

(7)

In February 2022, two loans, with aggregate principal of approximately $585,000, included in past maturity payments (principal and interest) 180 or more days paid in full and one loan, with principal of approximately $402,000, included in past maturity payments (principal and interest) 180 or more days was brought current and extended.


	Loans				Principal				Interest(8)
At December 31, 2020	Past maturity		Monthly payments		Past maturity		Monthly payments		Past maturity		Monthly payments		Total payments in arrears
Past due
30-89 days (1-3 payments)		—		—	$	—	$	—	$	—	$	—	$	—
90-179 days (4-6 payments)		—		—		—		—		—		—		—
180 or more days (more than 6 payments)(9)		3		—		15,139		—		849		—		15,988
Total past due		3		—	$	15,139	$	—	$	849	$	—	$	15,988

(8)

Interest includes foregone interest of approximately $512,000 on non-accrual loans past maturity. Interest for December 2020 was due on January 1, 2021 and is not included in the payments in arrears at December 31, 2020.

(9)

Two loans, with an aggregate principal of approximately $10,735,000, included in past maturity payments (principal and interest) 180 or more days, had forbearance agreements in place at December 31, 2020.

Non-performing loans are placed on non-accrual status the first of the following month after it is 180 days delinquent or earlier if management determines that the primary source of repayment will come from the foreclosure and subsequent sale of the collateral securing the loan (which usually occurs when a notice of sale is filed) or when the loan is no longer considered well-secured. When a loan is placed on non-accrual status, the accrual of interest is discontinued for accounting purposes only (i.e., foregone interest in the table above), however, previously recorded interest is not reversed.

At December 31, 2021 and December 31, 2020, there were no loans 90 or more days past due and not in non-accrual status.

Generally, the partnership has not recorded an allowance for loan losses as all loans have protective equity such that collection is deemed probable for all recorded amounts due on the loan. From time to time, the manager may deem it in the best interest of the partnership to agree to concessions to borrowers to facilitate a sale of collateral or a borrower’s refinance transaction primarily for secured loans in second lien position.