Company: BLNE
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001641172-25-004793
Chunk: 207

Company: Beeline Holdings, Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 1A
Chunk 207
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 must satisfy a net tangible benefits test with respect to the related borrower. This test may be highly subjective
and open to interpretation. As a result, a court may determine that a residential loan, for example, does not meet the test even if the
related originator reasonably believed that the test was satisfied. Failure of residential loan originators or servicers to comply with
these laws, to the extent any of their residential loans are or become part of its mortgage-related assets, could subject Beeline, as
an originator, to monetary penalties and could result in the borrowers rescinding the affected loans. Lawsuits have been brought in various
states making claims against originators, servicers, assignees and purchasers of high-cost loans for violations of state law. Named defendants
in these cases have included numerous participants within the secondary mortgage market. Due to its size and financial condition, Beeline
faces greater challenges in defending litigation. If Beeline’s loans are found to have been produced in violation of predatory or
abusive lending laws, it could be subject to lawsuits or governmental actions or it could be fined or incur losses and incur reputational
damage.

33

Beeline’s failure to comply
with applicable U.S. federal and state lending, telecommunications, data protection, privacy and consumer protection laws could lead to:

    ●
    loss of its licenses and approvals to engage in its lending, servicing and brokering businesses;

    ●
    damage to its reputation in the industry;

    ●
    governmental investigations and enforcement actions, which also could involve allegations that such compliance failures demonstrate weaknesses in Beeline’s compliance systems;

    ●
    administrative fines and penalties and litigation;

    ●
    civil and criminal liability, including class action lawsuits and defenses to foreclosure;

    ●
    diminished ability to sell loans that it originates or brokers, requirements to sell such loans at a discount compared to other loans or repurchase or address indemnification claims from purchasers of such loans, including the GSEs; and

    ●
    inability to execute on its business strategy, including its growth plans.

Since the lending laws and regulations
to which Beeline is subject are constantly evolving, its compliance costs continue to increase.

As with any regulated business,
the smaller the business, the more difficult it is to comply with applicable laws and regulations. Similarly, smaller companies like Beeline
are more adversely affect by compliance costs. Large competitors have substantially greater financial resources and revenue to be able
pay for and absorb the compliance costs in contrast to