Company: BLNE
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004793
Chunk: 40

Company: Beeline Holdings, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1
Chunk 40
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 any or all of which could cause
the U.S. economy to experience a significant decline including a reduction in consumer sentiment and spending. Future economic downturns
and recessions may negatively impact the real estate market and the demand for our services, which in turn would have a material adverse
effect on its business and operating results. Because of the high purchase prices for homes relative to other items that may be purchased
in the market, the real estate market tends to be particularly hard hit during economic downturns or recessions, and we cannot predict
the impact such an event could have 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