Company: BLNE
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004793
Chunk: 36

Company: Beeline Holdings, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 36
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 in attracting and retaining experienced
talent.

If we encounter material fraud,
it could result in significant financial losses and harm to our reputation.

In deciding whether to approve
loans or to enter into other transactions with its customers or counterparties, we rely on information furnished to it by or on behalf
of customers and such counterparties, including credit applications, property appraisals, title information and valuation, employment
and income documentation, and other financial information. We also rely on representations of customers and such counterparties as to
the accuracy and completeness of that information. If any of this information is intentionally or negligently misrepresented and such
misrepresentation is not detected prior to loan funding, the fair value of the loan may be significantly lower than expected or it may
not be possible for us to sell the loan. Additionally, there is a risk that, following the date of the credit report that we obtain and
its review of a person’s credit worthiness, a borrower may have become delinquent in the payment of an outstanding obligation, defaulted
on a pre-existing debt obligation, taken on additional debt, lost his or her job or other sources of income, or sustained other adverse
financial events. This risk is exacerbated since we originate Non-QM loans, primarily debt service coverage ratio (“DSCR”)
loans which relies on the rental income associated with a property and not the borrower’s income from traditional employment. However,
we ameliorate this risk through credit monitoring through each closing date.

24

We use automated underwriting engines
from the GSEs to assist us in determining if a loan applicant is creditworthy, as well as other proprietary and third-party tools and
safeguards to detect and prevent fraud. We are unable, however, to prevent every instance of fraud that may be engaged in by our customers
or staff, and any seller, real estate broker, notary, settlement agent, appraiser, title agent or third-party originator that misrepresents
facts about a loan, including the information contained in the loan application, property valuation, title information and employment
and income stated on the loan application. If any of this information was misrepresented and such misrepresentation was not detected prior
to the acquisition or closing of the loan, the value of the loan could be significantly lower than expected, resulting in a loan being
approved in circumstances where it would not have been, had Beeline been provided with accurate data. These loans can materially and adversely
affect our operations by reducing