Company: BLNE
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004793
Chunk: 194

Company: Beeline Holdings, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1A
Chunk 194
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 on us or the industry in the future.

The Company’s business
is subject to underwriting limitations and the potential of mortgage defaults.

A majority of the Company’s
loan originations have been Non-QM loans. Non-QM loans are not underwritten in accordance with guidelines defined by the GSEs, as well
as additional requirements in some cases, designed to predict a borrower’s ability and willingness to repay. Non-QM loans typically
involve persons who do not derive their income from traditional employment. The Company’s Non-QM loans are primarily DSCR loans,
where the income calculation is derived from the rental income on the subject property. Accordingly, there may be more risk of non-payment,
especially if the real estate rental market collapses and rents decrease or rental vacancies increase. The QM loans Beeline originates
are subject to underwriting requirements set by the GSEs and aggregators who purchase QM loans. There could be default risk on these loans,
which for example would increase if there are macroeconomic or geopolitical conditions that cause unemployment to increase or home values
to decrease.

26

Failure to comply with underwriting
guidelines of aggregators or GSEs could materially and adversely impact our business.

We must comply with the underwriting
guidelines of aggregators and the GSEs to successfully originate conforming GSE loans. We also must comply with the underwriting guidelines
of federal agency insurers/guarantors, such as the FHA and VA for those loan types. If we fail to do so, we may be required to repurchase
these loans, indemnify the insurers/guarantors, or be subject to other penalties or remedial measures. If we are found to have violated
GSE underwriting guidelines, it could face regulatory penalties and damages in litigation, and suffer reputational damage, any of which
could materially and adversely impact its business, financial condition, and results of operations. If we fail to meet the underwriting
guidelines of the GSEs, federal agency insurers/guarantors, or of non-GSE loan purchasers it could lose its ability to underwrite and/or
receive insurance/guaranty on loans for such loan purchasers and insurers/guarantors, which could have a material adverse effect on its
business, financial condition, results of operations, and prospects. We try to mitigate its repurchase risk with repurchase insurance,
however, this insurance may not cover the reason for the repurchase and it may not be able to sell a