Summerlin Asset Management, LLC g , Investment:

Purchasing Bank Owned Real Estate Portfolios

http://www.mortgagesforsale.net

1.THE BUSINESS: 1 1 Business Summary 1.1 Summerlin Asset Management, LLC (SAM), (SAM) is a diversified real estate investment and management company. SAM s SAM's expertise is the purchase, service, and resale, of both performing and nonperforming real estate notes secured by the Deed of Trust or Mortgage.

SAM has been operating for over three years acquiring various residential mortgage assets. We provide secure Trust Deed or Mortgage investments that are recorded by a licensed title company with your y p y y name documented on the public record in the county recorders office as the beneficiary. b fi i

 1.2 Investing in Bank Owned Real Estate Notes - Example Our entity will purchase a pool of subperforming and/or non-performing real non performing estate notes secured by the 1st Deed of Trust or Mortgage. The p g g purchase p price will be negotiated between SAM and the financial institution that is holding the note. t

The main objective is to acquire the 1st lien position note at a price that is significantly lower than the current market value of the subject p p y j property. Another objective is to make the Trust Deed or Mortgage a performing note that can be sold for close to 1.5 times the purchase price.

The relationships we have established with banks throughout the United States gives our investors the opportunity to invest in distressed or charged off g real estate notes that are secured to properties across the country. We are able to purchase these mortgages at a large discount, creating an i investment th t is very secure and t t that i d offers an excellent rate of return.

 1.3 Business Opportunity Banks make their money when customers deposit money into their bank. The bank will then invest a significant amount of that money into real estate notes aka; mortgages for sale. g g Now SAM investors have an opportunity to make the same investment at a significant discount because real estate prices have dropped significantly and financial institutions are willing to sell at discounted prices.

2.THEORY: 2 1 Money in Reference to Time 2.1 Since the beginning of time, the theory remains; money equals power Banks money power. have always had the money and subsequently have always had the power, until now. g y y, Though they still have the money, their power is diminishing. To defend that statement, take a moment and contemplate the housing market that we live in today.

Financial Institutions across the world have come into hard times for the success of GROWING their portfolios. Economic hardships and the course of world conditions, whether it is political or social, have placed a tremendous strain p on the Markets that we do business in today.

These factors make the markets in which we conduct our daily business both lucrative and indefinite. However, However many reassuring opportunities still present themselves.

 2.2 Current Situations Seen by Banks These Institutions may have had portfolios valued at 500 million to several billion. However, billion However these harsh times have caused these billions of dollars in notes to be worth a fraction of face value. That being the case, we positioned ourselves to create an opportunity for the betterment of all parties involved in these said Real Estate Portfolios.

The banks sell off their portfolios and are once again liquid we acquire notes at liquid, significant discounts, and the end user/borrower is p / provided a solution that helps their financial position. At this point, questions may be surfacing.

 2.3 In Preparation to Exploit This may be the junction where you question why the banks would ever want to sell off their assets so cheap. The cheap answer is simple; a sub performing and nonperforming asset is a liability for the p g y banks.

The banks are setting aside funds that the Federal Government requires to guarantee a scratch and dent loan. Thus, recovery of capital on the note and release of guaranteed funds that were set aside is essential for the bank to get money working for them again.

Why dont banks simply do what we are doing for themselves? The long term costs necessary to set up the infrastructure to service these portfolios is one that is entirely unknown. The problem created by attempting to recover the notes themselves is the uncertainty of the cost.

For instance, the time needed to create an efficient recovery system will be more costly than the spread to sell these notes and to recover the guaranteed funds that g were set aside. We now have the advantage. Our company possesses the infrastructure necessary to work on recovering the balances on the first position deeds. This is our absolute advantage over the banks.

 2.4 Current Marketplace Analysis The RMBS market has been, in our view, the most disrupted and systematically cheap corner of the fixed income universe for the past few years.

The buyer base transformation (from ratings based ratings-based holders to credit specialists) taking place in the massive ( $ (>$1 trillion) Non-Agency market has ) g y resulted in securities priced to quite adverse outcomes that appear to be at odds with observable housing market trends over the longer term. Hi h returns (to long average lives) are High t (t l li ) achievable without improvement in housing. housing

Since the spring of 2011, the distressed Non Agency Non-Agency RMBS landscape has become an increasingly broken market where (dramatically lower) p ( y ) prices have become more and more detached from (steady to improving) fundamentals. We are regularly buying securities at 2535 percent discounts to trading levels from earlier this year.

The state of disruption in the distressed RMBS market is relatively stark stark.

It isnt very often that the market presents us with a chance to buy senior debt securities with 20 percent or better return potential that offer: p

 Very low principal risk (IRRs to maturity are slightly positive even in the event of catastrophic housing deterioration from current depressed levels). We believe p ) these securities are priced to withstand more in the way of economic/housing deterioration than just about any other asset category in which we invest.

 Very high (1,000-1,500+) loss-adjusted credit spreads to long average lives (spreads would be even higher if we used less conservative assumptions with p regard to defaults, loss severities, prepayments, etc.) Relative value (loss-adjusted yields in distressed RMBS are substantially higher than nominal yields i other asset th i l i ld in th t classes)

 Exposure to an asset class that is naturally (and significantly) improving in credit quality as the worst borrowers continue to default; as these pools become less distressed in credit quality, it is l k l that they will also d l likely h h ll l become less distressed in price as they begin to appeal to a broader base of investors and become priced to less severe scenarios and/or lower yields; another way of thinking about this is that credit improvement can occur without housing market improvement)

 Exposure to an asset class that has never endured a distressed cycle, and where y , traditional investors lack the credit background necessary to underwrite this risk. Much of the highest return profile collateral is found within the SubPrime and Pay Option ARM sectors. These are among the most complicated areas of the market, where credit expertise and security h k h di i d i selection are critical, emerging variables such as p put-back settlements and modifications take on amplified importance, and collateral is often only available in small size. Due in part to these factors, factors PPIP managers and mutual fund complexes have been less active in these areas.

 Positive leverage to US dollar debasement/inflation (which would tend to boost homeowner equity, slowing default rates and increasing recoveries) g ) Rapid return of cash (many securities, by virtue of seniority, amortize in excess of y 20-30 percent per year; recouping our investment quickly allows us to reduce our dependence on a friendly back-end d d f i dl b k d housing/economic environment)

 Free options on voter-friendly policy initiatives (principal modifications designed to keep people in their homes are increasing in frequency and g q y effectiveness; we are buying securities that should benefit from the lower default, higher recovery, higher f prepayment environment that could be expected to result from a scenario in which borrowers have higher home equity)

 2.5 Background In spring 2011, distressed Non Agency 2011 Non-Agency RMBS prices began to fall precipitously. Importantly, Importantly the selloff occurred in the absence of unforeseen deterioration in housing fundamentals. g

Rather, the initial downdraft arose from supply fatigue attributable to the Federal Reserves disorderly liquidation of its $31 billion Maiden Lane II portfolio ( p (which consists mostly of SubPrime, Alt-A and Pay Option ARMs) and well-telegraphed additional supply f from other players (such as Dexias >$7 billion portfolio).

Many market participants have relatively short term investment horizons, and horizons were disinclined to buy or hold assets with short term mark-to-market risk when they knew additional supply of those assets was due to hit the market in the near f future.

Subsequent to this flood of supply, the severe risk-off climate in risk off August/September weighed further on p prices ( p (especially as general de-risking y g g and uncertainty around capital requirements resulted in reduced participation f from Wall Street investment banks).

Like most markets, certain parts of the mortgage arena are overbought while others are either underappreciated or thinly sponsored. y p However, on the whole we believe certain portions of this asset class are poised over the next couple of years to generate higher returns with less risk than virtually any other sector in which we operate. operate

The asymmetry embedded in these assets at current prices (positive yields to maturity even in a severe left tail scenario, with quite high total return , q g potential in the event of reflation or even a perpetuation of the status quo) stands out starkly versus the rest of the RMBS f market as well as other asset classes.

 In this uncertain macro environment, we believe that assets with these kinds of return profiles (where left tails can be cut off but right tail options are substantial) will be increasingly coveted. Scarcity value should l d l h ld also not be ignored long-dated (5-10+ years), years) high loss adjusted spread (>1 000 loss-adjusted (>1,000 bps) debt with positive leverage to inflation is hard to find at the moment outside of distressed Non-Agencies (over time, pension funds and insurance companies struggling to meet liabilities should find this asset class difficult to ignore).

 2.6 Credit-Intensive Approach We deliberately are targeting some of the most distressed mortgage pools that were originated at the peak of the housing market (2005-2007) and the trough of lending standards. The reason g g we are focused on these poor credit quality pools is they require a great deal of credit expertise and most of the f dit ti d t f th mortgage investor base do not employ a credit-intensive approach approach.

Before 2008, the mortgage space was dominated by ratings-based buyers ratings based (insurance companies, banks, pensions etc. that needed to buy AAA assets). y ) Credit rating, not credit quality, was the p primary criteria for investment. y

The process of ratings downgrades a few years ago is one of the primary reasons this opportunity exists the major holders of this debt became forced sellers in droves once it was downgraded. y g y Moreover, they were largely sellers into a vacuum because there was not a wellestablished distressed mortgage investor base (thi i th fi t nationwide b (this is the first ti id distressed cycle in the mortgage market). market)

A credit-intensive approach to the space leads us to believe that current prices do not reflect the substantial returns likely to be reaped from these distressed p mortgage pools.

This is largely a function of the fact that the Non-Agency asset class is huge (over Non Agency $1 trillion), and the marginal movers/determiners of p / price tend to be the largest participants (Pimco, Blackrock, TCW, etc.), members of the long-only community that, due to the vast sums of capital they have to deploy, are compelled to take a somewhat macro, less credit-intensive approach to mortgage security analysis.

If these large asset managers tore apart every $5M security for sale and stressstress tested it for several hundred default, recovery, prepay and modification y, p p y scenarios (as we do), they would find it difficult to put their money to work. To some degree they need to buy and sell in bulk and apply more blunt methods of security valuation. th d f it l ti

These dominant methods of mortgage security valuation tend to set prices and prices, (in our view) fail to appreciate various forms of optionality (on fundamentals, p y( , interest rates, and policies) embedded in the assets as well as evolving dynamics with regard to default and recovery f trajectories.

This phenomenon, in conjunction with the more recent supply/demand dislocation in the space resulting from wide scale deleveraging, has resulted in g g, a situation in which these assets are priced to adverse outcomes that seem to be inconsistent with observable housing market trends.

Our ability to perform in-depth analyses into the underlying mortgages helps us discern portfolio attributes (particularly credit quality dispersion) and trends that q y p ) are generally missed by the bulk of investors. We have exploited numerous of these opportunities in the mortgage market (on both the l b th th long and short side) over the d h t id ) th last 4 years which have arisen from the market s markets tendency to extrapolate current trends into the future.

Much of our success in the mortgage space, space which has taken place across very different market environments, has rested upon our ability to identify p y y inflection points where those trends break down, creating opportunities for high returns.

3. OUR POSITION: 3 1 What We Do 3.1 Our goal, through these transactions, is solely based on the ability to acquire these large portfolios of notes, service each asset in-house, and then dispose of in house, the asset to attain the highest possible ROI. Summerlin Asset Management has direct relationships to purchase said portfolios via Financial Institutions such as Deutsche Bank JP Morgan Chase, Bank, Chase HSBC, Bank of America, and Citi Group.

These large scale and accredited firms have chosen to liquidate their Real Estate asset portfolios. Recently the banks have decided that it is essential to start liquidating the pools of mortgage backed securities and strip out the notes that have trending delinquencies. Ideally, they are holding mass portfolios of liabilities; these said liabilities can be f li biliti th id li biliti b acquired at significant discounts, conversely turning them into assets for our firm.

 3.2 Securitizing Your Investment Your funds will be used for the acquisition of these portfolios and will be secured by first lien positions on residential properties. Our LLC, which y you, the investor, will be a member of, will be the recorded mortgagee on title in the public domain. Quickly referencing back, b k SAM i now th bank; we have the is the b k h th money, and possess the power.

In addition, all operations will take place under an LLC that you the investor, is a you, investor general partner. Direct access to all financials will be available at your y discretion per the articles of organization and the operating agreement. At SAM, we service each transaction for our investors and are dedicated to complete operational transparency.

 3.3 Choosing The Notes There is a very tedious and important timeline involved with these large unpaid balances of notes Most importantly is notes. the scrubbing process. This is a period where we will assess each individual file within the pool of notes. While looking through these larger pools, we inevitably find fi d certain files with scenarios that will t i fil ith i th t ill take longer to exit and in that case we can categorize whether the yield is high enough to move towards acquisition.

After identifying these files, we, in some cases, cases remove them from the pool as pool, these types of notes do not fit our business model. This will typically bring down the unpaid balance by 20 percent from an uny p scrubbed pool to a scrubbed pool, ultimately saving investor dollars and increasing th rate of return on capital i i the t f t it l injected.

This is an important step in our due diligence process to make our investors investor s money secured. We also account for 3 percent attrition rate on the scrubbed pool for these same instances, bankruptcies, and deaths as time goes on to collect or exit on the notes.

 3.4 Workouts Balance Reduction In this scenario, the balance of the borrower s borrowers loan is 175 percent or greater than the value of the home. In this case, borrower wants to keep their home. However, the borrower realizes they will never recoup the negative equity that they are paying down.

SAM will structure a 12 month program to write down the balance of the borrower loan in exchange for 12 months of un-interrupted, on-time payments. p , p y Here is an example below:

Unpaid Balance $300,000.00 $300 000 00 Home Value $200,000.00 $200 000 00 Purchase Price of Note $120,000.00 Monthly Principal and Interest Payment $ , $1,896.20

We will give the borrower a $5000 per month balance reduction at the end of the 12th month assuming borrower has made 12 on time payments. p y The end result is our portfolio enjoys a cash-on-cash return of 18.96 percent on our $120,000 investment while the borrower has the benefit of reducing the balance of their loan by $60,000 by month 12 12.

This gives the borrower hope that their house will become an asset in the near future. In addition, SAM now has the ability to sell a 12 month, seasoned, y , , performing loan, upwards of 70 percent of the home value. In conclusion, our return on investment f 12 months is for 35.62 percent.

Loan Modification/Forbearance Agreement In this case, the borrower fell behind for a variety of reasons; loss of income income, health issues, career change, etc. The borrower has expressed the desire to p stay in the home and demonstrated the financial ability to sustain the current mortgage payment. We create a t t W t forbearance agreement that will take the total amount of payments owing and divide the sum by 12.

We add the 1/12 to the regular monthly payment. payment This will immediately help borrower to get back on track, increase our cash-on cash return, and reestablish , the borrower as a seasoned performer. In the event that the borrower lapses on their forbearance payment, we reserve the right to initiate foreclosure.

Cash for Keys/Deed in Lieu of Foreclosure This is an instance where borrower is emotionally disconnected with the home and is living in the home. We create an opportunity where the borrower is pp y released from all personal liability on the obligation and walk away with enough cash t relocate and establish a new lif h to l t d t bli h life.

We offer them an aggressive cash incentive to sign over the deed to the home. This scenario exists if the home only has a first position lien (that we y p ( purchased) and the balance of the loan is higher than the value of the home. After we come to a formal agreement in writing, we perform a thorough inspection of th h i ti f the home t identify to id tif potential problems.

Our contract states that within our discovery process we identify problematic situations, i.e. roof leak, we have the right to reduce our cash offer to the g current owner. Our team encourages the home owner to treat this as a business decision.

Short Payoff One of the most equitable options we have for a borrower is a short payoff. In this instance, we provide a 6 month instance option where borrower can pay off their mortgage at a p g g price below the market value of the property. This happens by way of a family member putting up the cash, private money financing, or using h i t fi i i 401k proceeds (if available) to pay off the home home. Here is an example:

Unpaid Balance $300,000.00 $300 000 00 Home Value $200,000.00 $200 000 00 Purchase Price of Note $120,000.00

In this case, we would offer the borrower a payoff at $180 000 00 In addition, we $180,000.00. addition will write off the remaining debt and relieve the borrower from the difference. Since SAM is still profitable, we do not 1099 the borrower for the difference, thus creating no tax liability for the borrower.

Short Sale The most common of all workouts we workouts, work with the borrower to list their home. home During the short sale period we period, allow the borrower to live in the home with no mortgage p y g g payments.

Foreclosure Foreclosure is the last resort for SAM. If our asset managers are not able to complete either of the above, we deploy our legal team to recoup the asset via Foreclosure. This process can take from 120 days to 360 days.

Our philosophy is to price the asset to sell at the foreclosure court steps In steps. doing so, we immediately recoup funds and do not ensure the sale process. p In the event the asset reverts back to SAM, our team of realtors will list and dispose of the asset as an REO. Sam will perform an asset search of any borrower. If other assets exist, we will explore our deficiency rights against the borrower. borrower This is an unlikely scenario, scenario but one that still exists.

4.PARTNERS: 4 1 James Stepanian 4.1

Jim Stepanian spent 17 years in the Telecommunications industry In 1992 Mr industry. 1992, Mr. Stepanian started Step Overseas Telecommunications, Inc., a telecommunication agency th t quickly t l i ti that i kl became the 2nd largest agency out of over 100 agents that marketed Telecommunication 00 ag a a d o u a o service for Execuline of Sacramento, Inc. In 1998, Mr. Stepanian founded and served as Chief Executive Officer of Wholesale Telecom Incorporated, a California Public Utility.

Jim Stepanian was one of the first Telecommunication executives to introduce marketing wholesale bandwidth solutions into multiple resale channels p within the communications industry. p In 2007, Mr. Stepanian started Nutri88 Inc., DBA: MyNutritionStore.com a Nutraceutical Company marketing natural products t h lth and fitness t l d t to health d fit professionals throughout North America.

In 2007, Mr. Stepanian earned the Best New Concept award at the annual SCIA Concept (Southern California Business Association) for the ) MyNutritionStore.com business model. p y g y Mr. Stepanian was recently recognized by several media and news organizations for his 2003 written letter to the NASD (National Association of S (N ti lA i ti f Securities iti Dealers) Los Angeles chapter that predicted systemic problems at Merrill Lynch.

The issues Mr. Stepanian wrote about in his 2003 letter then surfaced during the 2008 global financial crisis. Currently Mr. Stepanian is founder and Chief Executive p Officer of Summerlin Asset Management, LLC., a diversified real estate investment and management company.

Jim Stepanian has over 17 years of experience in corporate management including sales and marketing, new p product development/distribution, p / , regulatory compliance, and mergers & acquisitions. In 2002, Mr. Stepanian earned his Bachelors Degree in Health and Human Services from the University of Phoenix Phoenix.

 4.2 Peter G. Pakes Mr. Mr Pete Pakes is currently the companys Chief Financial Officer and Senior Vice President of Investor Relations. In 1994, Mr. Pakes was hired by SBC Global Services and served for 15 y years as Senior Executive AM covering the financial sector in the Midwestern United States. U it d St t

Mr. Pakes left SBC in 2005 and partnered with Adam Pakes to create a lending and development company that engaged in commercial land development. p Today, Mr. Pete Pakes works with SAM investors and the companys partners to p y p maximize and grow SAM assets.

Mr. Pakes is noted for his attention to detail and his ability to come up with innovative ideas to insure that financial g goals are met. He is a graduate of Ball State University with a degree in International Finance and minor in Criminal Justice and Criminology.

 4.3 Adam C. Pakes Adam C Pakes is Vice President and C. Pakes, Chief Operating Officer of Summerlin Asset Management, LLC. Mr. Pakes has Management LLC Mr over 6 years of experience in the mortgage industry. Since 2004, Mr. g g y Pakes has held a Brokers license in California, Arizona, Florida, and Washington. M P k i a graduate W hi t Mr. Pakes is d t from California State University of Long Beach with a Bachelor of Science degree in Human Resource Management.

As Chief Operating Officer, Mr. Pakes oversees the acquisition and disposition of all non-performing and performing Mortgages and/or Deeds of Trust. g g / Through his experience, Mr. Pakes has grown SAM assets under management to over $50,000,000.

As a mortgage broker and active member in the real estate community over the last nine years, Mr. Adam Pakes has been consistently realizing his investors a y g 12-26 percent per annum. He has been working with private investors to issue private money loans for the last three years.

His track record includes over 80 private transactions. transactions This demonstrates his ability to scrub through opportunity and secure his investors in a manner that the rewards outweigh the risks.

 4.4 Shannon DeRosby Shannon DeRosbys is a Senior Asset Manager for Summerlin Asset Management, Management with a core competency in transactional real estate including Escrow, Title, and Processing g Management. In 1992 Mrs. DeRosby was hired at First American Title, where she worked her way up to a Certified Escrow k dh t C tifi d E Officer position.

Eventually, Shannon switched title companies, companies and was promoted up the ranks to Assistant County Manager / Sales Manager for Mohave County, g y, Arizona. p p In this position, Shannon helped hundreds of Realtors develop marketing programs and techniques to help increase th i b tt i their bottom li line. I October of In O t b f 2007, Shannon decided to venture near her parents in Flagstaff Arizona. Flagstaff, Arizona

In 2009, Shannon was hired to open the Keller Williams office as the Team Leader for Keller Williams Realty in Flagstaff, Arizona.

STRATEGY: Risks and Advantages Risks There are necessary steps that SAM will take in order to insure that your capital is secured. This includes our responsibility to conduct due diligence to establish collateral value, insurance, title history, and terms of the note.

This is traditionally conducted in the same manner as conventional lenders lenders. We provide a level field of controlled risk and hold tightly to consistent risk management practices.

In addition to the significant amount of due diligence we have created a 16 diligence, point algorithm to establish the degree of risk under each individual file. To furthermore establish a true value of the assets on hand, we base all values off of a conservative 30-day fire sale basis. This ensures that the most accurate values of these properties is t l f th ti i taken into account and held as closely as possible to true market 30-day value value.

SAM will purchase assets within a strict value protocol equal to 50-64 percent of 50 64 our appraised 30-day property value. At the high range of 64 percent we would pay $128,000 for a first mortgage, whereas property value is appraised at $200,000. Therefore, risk to capital is mitigated by the steep discount SAM purchases its assets for.

 5.2 Advantages In every transaction there exist certain factors that must be in line to set itself above other investment opportunities opportunities. Our product being offered possesses many of these attractive qualities. y q Diversification is primarily the most attractive quality that makes this opportunity f t it feasible. ibl

There also is the opportunity to purchase a pool of notes that have performing performing, sub-performing and non-performing notes to further diversify the pool. y p The trend of diversification is becoming vitally important given the turbulence in world markets. In addition, there is no churning that takes place with this investment.

What this means is that you dont experience a payoff on your investment as you would with individual trust deeds. That being the case, your money never sits idle while you look for the next investment opportunity.

6. OPPORTUNITY: 6 1 Direct Purchase of Performing and 6.1 Non-Performing Notes Our greatest advantage to this product is the direct purchase of performing and non performing non-performing 1st position notes. As previously stated, an asset that does not produce predictable income is essentially a troubled asset.

We are able to negotiate directly with the lien holders on these assets This allows assets. us to name our own price and acquire these notes without having y g your investment being eaten up by heavy commissions, fees, and transfer costs. Performing deeds allows us to mitigate risk alongside the non-performing deeds and allows for a balance of cash flow to d ll f b l f h fl t offset the non-performing assets.

 6.2 Servicing and Underwriting Through the relationship we possess with our servicing and underwriting partners, our objective is to increase a nonnon performing note by 30 to 40 percent of its purchase value. We will achieve this p through restructuring the note ourselves via our servicing partner.

Once we own the notes and have restructured the debts the collection of debts, the notes is done through the same entity. y Currently, our servicing partner has their corporate office in Southern California and is licensed in all 50 states.

 6.3 Conservative Estimations Our LLC projects it will return 100 percent of capital money invested within 18 months. Communication with the months borrowers is the key to a successful outcome and usually produces an yp expedited exit or disposition of the note. Total liquidation of the portfolio is estimated to be 12 to 18 months. ti t dt b t th

This will allow us to maximize the dollars collected and provide a great solution to the borrower and their position on the p p y property they own. y Net ROI to the LLC upon complete disposition of the portfolio is estimated to be 40 to 55 percent.

7. INVESTOR POTENTIAL: 7 1 Making Your Money Work for You 7.1 Option 1: As Sam disposes of each asset investor monies will be paid first until 100 percent of your capital is returned. After your capital is returned you will see a preferred return of eight percent (8 percent) per annum on that investment. In addition to this preferred return, you will also accrue thirty three percent (33 percent) of the net profits recovered by our LLC.

Your preferred return will be distributed quarterly with statements produced by our accounting department. Upon a complete p y p payback of the capital, thirty p , y three percent (33 percent) of all funds will be disburse to the investor.

8.PROFORMA

Contact us at: Call Toll Free: 855-726-6683 http://www.investinsam.com