Mortgage Loans Receivable and Bond Portfolio

6 Months Ended

Jun. 30, 2018

Notes to Financial Statements

Mortgage Loans Receivable and Bond Portfolio

3. MORTGAGE LOANS RECEIVABLE AND BOND PORTFOLIO

At June 30, 2018, the Company had mortgage loans receivable totaling $22,735,396. The loans bear interest ranging from 0% to 10.25% with a weighted average of approximately 8.22% at June 30, 2018. The Company had mortgage loans receivable totaling $24,158,787 that bore interest ranging from 0% to 10.25% with a weighted average of approximately 8.19% at December 31, 2017.

The Company has a portfolio of secured church bonds at June 30, 2018 and December 31, 2017, which are carried at fair value. The bonds pay quarterly interest ranging from 3.25% to 9.75%. The aggregate value of secured church bonds equaled approximately $15,295,000 at June 30, 2018 with a weighted average interest rate of 6.83% and approximately $14,688,000 at December 31, 2017 with a weighted average interest rate of 6.82%. These bonds are due at various maturity dates through May 2046.

The contractual maturity schedule for mortgage loans receivable and the bond portfolio as of June 30, 2018, is as follows:

	Mortgage Loans	Bond Portfolio
July 1, 2018 through June 30, 2019	$     1,042,488	$  147,000
July 1, 2019 through December 31, 2019	121,936	81,000
2020	843,619	228,000
2021	721,220	254,000
2022	1,516,082	176,000
Thereafter	18,490,051	14,408,755
	22,735,396	15,294,755
Less loan loss and bond other than temporary impairment	(1,584,889)	(458,000)
Less deferred origination income	(285,533)	______-__
Totals	$20,864,974	$ 14,836,755

 The Company currently owns $529,000 First Mortgage Bonds and $497,000 Second Mortgage Bonds issued by Agape Assembly Baptist Church located in Orlando, Florida. The total principal amount of First Mortgage Bonds issued by Agape is $7,200,000, and the total principal amount of Second Mortgage Bonds issued is $715,000. Agape defaulted on its payment obligations to bondholders in September 2010. The church subsequently commenced a Chapter 11 bankruptcy reorganization proceeding regarding the property that secures the First Mortgage Bonds in December 2010. In October 2014, a minimum of 80% of the bondholders of Agape agreed to a modification in the terms of their bonds which resulted in the temporary resumption of both principal and interest payments to both the first and second mortgage bond holders. Both the First Mortgage Bonds and Second Mortgage Bonds were modified to a fully amortized fixed rate, quarterly interest payment of 6.25% with a new maturity date of September 2037 for all the issued and outstanding bonds. The Company, along with all other bondholders, has a superior lien over all other creditors. The Company has an aggregate other than temporary impairment of $458,000 for the First and Second Mortgage Bonds at March 31, 2018 and December 31, 2017, which effectively reduces the bonds to the fair value amount management believes will be recovered. The Church subsequently defaulted on their modification agreement in 2016 and no interest payments were made to bondholders during the period ended June 30, 2018. However, the trustee made a distribution to bondholders during 2017 of $18.75 per $1,000 bond as a repayment of principal only, effectively reducing the outstanding balance of each $1,000 bond to approximately $826.