----

----

|   | x | ANNUAL REPORT PURSUANT TO      SECTION 13 OR 15(d) OF THE |
|--------|---|-----------------------------------------------------------|

|   | SECURITIES EXCHANGE ACT OF    1934 |
|--------|------------------------------------|

|   | o | TRANSITION REPORT PURSUANT TO      SECTION 13 OR 15(d) OF THE |
|--------|---|---------------------------------------------------------------|

|   | SECURITIES EXCHANGE ACT OF    1934 |
|--------|------------------------------------|

| Delaware                                                            |   | 20-3269195                                |
|---------------------------------------------------------------------|--------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |   | (I.R.S.      Employer Identification No.) |

----

|                   |                                                                                                     | Page   |
|------------------------|----------------------------------------------------------------------------------------------------------|--------|
| Item      1.           | Financial      Statements.                                                                               |   |
|                   |                                                                                                     |   |
|                   | Balance      Sheets as of June 30, 2008 (Unaudited) and December 31, 2007      (Audited)                 | 3      |
|                   |                                                                                                     |   |
|                   | Statements      of Operations for the three and six months ended June 30, 2008 and 2007      (Unaudited) | 4      |
|                   |                                                                                                     |   |
|                   | Statements      of Cash Flows for the six months ended June 30, 2008 and 2007      (Unaudited) | 5      |
|                   |                                                                                                     |   |
|                   | Notes      to Financial Statements (Unaudited)                                                           | 6      |
|                   |                                                                                                     |   |
| Item      2.           | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations.   | 10     |
|                   |                                                                                                     |   |
| Item      3.           | Quantitative      and Qualitative Disclosures About Market Risk.                                         | 19     |
|                   |                                                                                                     |   |
| Item      4T.          | Controls      and Procedures.                                                                            | 19     |
|                   |                                                                                                     |   |
| PART      II           |                                                                                                     |   |
| OTHER      INFORMATION |                                                                                                     |   |
|                   |                                                                                                     |   |
| Item      1.           | Legal      Proceedings.                                                                                  | 20     |
|                   |                                                                                                     |   |
| Item      1A.          | Risk      Factors.                                                                                       | 20     |
|                   |                                                                                                     |   |
| Item      2.           | Unregistered      Sales of Equity Securities and Use of Proceeds.                                        | 20     |
|                   |                                                                                                     |   |
| Item      5.           | Other      Information.                                                                                  | 21     |
|                   |                                                                                                     |   |
| Item      6.           | Exhibits.                                                                                                | 21     |
|                   |                                                                                                     |   |
| Signatures.            |                                                                                                     | 22     |

----

Item 1. FinancialStatements.

BALANCE SHEETS

|                                               |                                                                          |   | June      30, 2008 (Unaudited) |        |   | December      31, 2007 (Audited) |        |
|----------------------------------------------------|-------------------------------------------------------------------------------|--------|--------------------------------|-------------|--------|----------------------------------|-------------|
| Assets:                                            |                                                                          |   |                           |        |   |                             |        |
|                                               | Cash      and cash equivalents                                                |   | $                              | 18,410,821  |   |                             | $           | 586,642 |   |
|                                               | Restricted      cash                                                          |   |                           | 3,033,905   |   |                             |        | 665,174 |   |
|                                               | Accrued      interest receivable                                              |   |                           | 1,766,246   |   |                             |        | 437,324 |   |
|                                               | Accrued      interest receivable – related party                        |   |                           | 231,571     |   |                             |        | 676,716 |   |
|                                               | Mortgage      notes receivable, net                                           |   |                           | 112,185,884 |   |                             |        | 76,858,885 |   |
|                                               | Mortgage      notes receivable – related party, net                     |   |                           | 44,144,778  |   |                             |        | 23,190,872 |   |
|                                               | Partnership      interest subscriptions receivable                            |   |                           | 100         |   |                             |        | 100 |   |
|                                               | Deferred      offering costs                                                  |   |                           | 1,071,716   |   |                             |        | 2,605,788 |   |
|                                               | Other      assets                                                             |   |                           | 32,510      |   |                             |        | 70,932 |   |
|                                               |                                                                          |   |                           |        |   |                             |        |   |   |
| Total      assets                                  |                                                                          | $      | 180,877,531                    |        |   | $                                | 105,092,433 |   |
|                                               |                                                                          |   |                           |        |   |                             |        |   |   |
| Liabilities      and Partners’ Capital       |                                                                          |   |                           |        |   |                             |        |   |
| Liabilities:                                       |                                                                          |   |                           |        |   |                             |        |   |
|                                               | Accounts      payable                                                         |   | $                              | 172,099     |   |                             | $           | 37,253 |   |
|                                               | Accrued      liabilities                                                      |   |                           | 105,619     |   |                             |        | 86,668 |   |
|                                               | Accrued      liabilities – related party                                |   |                           | 1,773,876   |   |                             |        | 2,892,774 |   |
|                                               | Escrow      payable                                                           |   |                           | 1,411,990   |   |                             |        | 665,174 |   |
|                                               | Line      of credit                                                           |   |                           | -           |   |                             |        | 2,325,028 |   |
|                                               |                                                                          |   |                           |        |   |                             |        |   |   |
| Total      liabilities                             |                                                                          |   | 3,463,584                      |        |   |                             | 6,006,897   |   |
|                                               |                                                                          |   |                           |        |   |                             |        |   |   |
| Commitments      and contingencies                 |                                                                          |   | -                              |        |   |                             | -           |   |
|                                               |                                                                          |   |                           |        |   |                             |        |   |   |
| Partners’      Capital:                      |                                                                          |   |                           |        |   |                             |        |   |
|                                               | Limited      partners’ capital:  17,500,000 units authorized; |   |                           |        |   |                             |        |   |   |
|                                               | 9,916,821      units issued and outstanding at                                |   |                           |        |   |                             |        |   |   |
|                                               | June      30, 2008 and 5,509,316 units issued and                             |   |                           |        |   |                             |        |   |   |
|                                               | outstanding      at December 31, 2007                                         |   |                           | 177,257,148 |   |                             |        | 98,978,590 |   |
|                                               | General      partner’s capital                                          |   |                           | 156,799     |   |                             |        | 106,946 |   |
|                                               |                                                                          |   |                           |        |   |                             |        |   |   |
| Total      partners’ capital                 |                                                                          |   | 177,413,947                    |        |   |                             | 99,085,536  |   |
|                                               |                                                                          |   |                           |        |   |                             |        |   |   |
| Total      liabilities and partners’ capital |                                                                          | $      | 180,877,531                    |        |   | $                                | 105,092,433 |   |

----

STATEMENTS OFOPERATIONS

|                                                                          |   | Three      Months Ended |      |   | Six      Months Ended |   |
|-------------------------------------------------------------------------------|--------|-------------------------|-----------|--------|-----------------------|--------|
|                                                                          |   | June      30,           |      |   | June      30,         |   |
|                                                                          |   | 2008                    |      |   | 2007                  |   |   | 2008 |   |   | 2007 |   |
| Revenues:                                                                     |   |                    |      |   |                  |   |   |   |   |   |   |   |
| Interest      income                                                          |   | $                       | 5,102,717 |   |                  | $      | 1,513,382 |   |   | $ | 9,025,632 |   |   | $ | 2,326,601 |   |
| Credit      enhancement fees – related party                            |   |                    | -         |   |                  |   | 154,207 |   |   |   | - |   |   |   | 296,394 |   |
| Mortgage      and transaction service revenues                                |   |                    | 500,859   |   |                  |   | 160,324 |   |   |   | 782,690 |   |   |   | 247,107 |   |
| Total      revenues                                                           |   |                    | 5,603,576 |   |                  |   | 1,827,913 |   |   |   | 9,808,322 |   |   |   | 2,870,102 |   |
|                                                                          |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                                                                     |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                         |   |                    | -         |   |                  |   | 91,523 |   |   |   | 1,500 |   |   |   | 192,269 |   |
| General      and administrative                                               |   |                    | 1,068,819 |   |                  |   | 336,211 |   |   |   | 1,751,671 |   |   |   | 505,063 |   |
| Total      expenses                                                           |   |                    | 1,068,819 |   |                  |   | 427,734 |   |   |   | 1,753,171 |   |   |   | 697,332 |   |
|                                                                          |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                               |   | $                       | 4,534,757 |   |                  | $      | 1,400,179 |   |   | $ | 8,055,151 |   |   | $ | 2,172,770 |   |
|                                                                          |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      allocated to limited partners                                   |   | $                       | 4,062,688 |   |                  | $      | 1,254,829 |   |   | $ | 7,218,996 |   |   | $ | 1,947,223 |   |
|                                                                          |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      per limited partnership unit, basic and diluted                 |   | $                       | 0.48      |   |                  | $      | 0.58 |   |   | $ | 0.98 |   |   | $ | 1.23 |   |
|                                                                          |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average limited partnership units outstanding                   |   |                    | 8,518,469 |   |                  |   | 2,157,755 |   |   |   | 7,356,036 |   |   |   | 1,582,866 |   |
|                                                                          |   |                    |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Distributions      per weighted average limited partnership units outstanding |   | $                       | 0.46      |   |                  | $      | 0.29 |   |   | $ | 0.91 |   |   | $ | 0.57 |   |

----

STATEMENTS OF CASHFLOWS

|                                                                      |   | Six Months      Ended |             |
|---------------------------------------------------------------------------|--------|----------------------------|------------------|
|                                                                      |   | June      30,              |             |
|                                                                      |   | 2008                       |             |   | 2007 |   |
| Operating      Activities                                                 |   |                       |             |   |   |   |
|                                                                      |   |                       |             |   |   |   |
|  Net      income                                                     |   | $                          | 8,055,151        |   |   | $ | 2,172,770 |   |
| Adjustment      to reconcile net income to net cash provided              |   |                       |             |   |   |   |   |   |
| by      operating activities:                                             |   |                       |             |   |   |   |   |   |
| Provision      for loan losses                                            |   |                       | 90,256           |   |   |   | 22,972 |   |
| Amortization                                                              |   |                       | 29,688           |   |   |   | 29,383 |   |
| Changes      in operating assets and liabilities:                         |   |                       |             |   |   |   |   |   |
| Accrued      interest receivable                                          |   |                       | (1,328,922       | ) |   |   | (23,902 | ) |
| Accrued      interest receivable – related party                    |   |                       | 445,145          |   |   |   | (293,481 | ) |
| Other      assets                                                         |   |                       | 8,734            |   |   |   | 49,800 |   |
| Accounts      payable                                                     |   |                       | 134,846          |   |   |   | (1,913 | ) |
| Accrued      liabilities                                                  |   |                       | 18,951           |   |   |   | (48,443 | ) |
| Net      cash provided by operating activities                            |   |                       | 7,453,849        |   |   |   | 1,907,186 |   |
|                                                                      |   |                       |             |   |   |   |   |   |
|  Investing      Activities                                           |   |                       |             |   |   |   |   |   |
|  Investments      in mortgage notes receivable                       |   |                       | (66,972,948      | ) |   |   | (25,865,282 | ) |
|  Investments      in mortgage notes receivable – related party |   |                       | (36,669,059      | ) |   |   | (5,775,015 | ) |
|  Receipts      from mortgage notes receivable                        |   |                       | 31,555,692       |   |   |   | 116,850 |   |
|  Receipts      from mortgage notes receivable – related party  |   |                       | 15,715,153       |   |   |   | 85,786 |   |
| Net      cash used in investing activities                                |   |                       | (56,371,162      | ) |   |   | (31,437,661 | ) |
|                                                                      |   |                       |             |   |   |   |   |   |
| Financing      Activities                                                 |   |                       |             |   |   |   |   |   |
|  Net      proceeds from (payments on) line of credit                 |   |                       | (2,325,028       | ) |   |   | (2,421,544 | ) |
|  Limited      partner contributions                                  |   |                       | 86,552,893       |   |   |   | 37,459,147 |   |
|  Limited      partner distributions                                  |   |                       | (6,696,013       | ) |   |   | (908,110 | ) |
|  Limited      partner distribution reinvestment                      |   |                       | 2,370,590        |   |   |   | 267,288 |   |
|  Limited      partner redemption                                     |   |                       | (1,057,677       | ) |   |   | - |   |
|  General      partner distributions                                  |   |                       | (786,302         | ) |   |   | (190,420 | ) |
|  Escrow      payable                                                 |   |                       | 746,816          |   |   |   | 1,554,805 |   |
|  Restricted      cash                                                |   |                       | (2,368,731       | ) |   |   | (1,554,805 | ) |
|  Payments      of offering costs                                     |   |                       | (10,110,230      | ) |   |   | (433,574 | ) |
|  Payments      of deferred offering costs                            |   |                       | 1,534,072        |   |   |   | - |   |
|  Accrued      liabilities – related party                      |   |                       | (1,118,898       | ) |   |   | 302,501 |   |
| Net      cash provided by financing activities                            |   |                       | 66,741,492       |   |   |   | 34,075,288 |   |
|                                                                      |   |                       |             |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                 |   |                       | 17,824,179       |   |   |   | 4,544,813 |   |
| Cash      and cash equivalents at beginning of period                     |   |                       | 586,642          |   |   |   | 672,107 |   |
|                                                                      |   |                       |             |   |   |   |   |   |
| Cash      and cash equivalents at end of period                           |   | $                          | 18,410,      821 |   |   | $ | 5,216,920 |   |
| Supplemental      Disclosure of Cash Flow Information                     |   |
| Cash      paid during the period for interest                             |   | $                          | -                |   |   | $ | 196,694 |   |

----

NOTES TO FINANCIALSTATEMENTS

----

----

----

|                  |                                           |   | For      the Six Months Ended |      |
|-----------------------|------------------------------------------------|--------|-------------------------------|-----------|
| Payee                 | Purpose                                        |   | June      30, 2008            |      |   | June      30, 2007 |   |
| Land      Development |                                           |   |                          |      |   |   |   |
|                  | Organization      &                        |   |                          |      |   |   |   |
|                  |     Offering      Expenses |   | $                             | 1,302,000 |   |   | $ | 637,000 |   |
|                  | Due      Diligence Fees                        |   |                          | 434,000   |   |   |   | 212,000 |   |
|                  | Wholesaler      Reimbursement                  |   |                          | 78,000    |   |   |   | 127,000 |   |
|                  | Acquisition      & Origination             |   |                          |      |   |   |   |   |   |
|                  |     Expenses      and Fees |   |                          | 2,293,000 |   |   |   | 1,157,000 |   |
|                  | Promotional      Interest                      |   |                          | 822,000   |   |   |   | 166,000 |   |
|                  | Carried      Interest                          |   |                          | 121,000   |   |   |   | 24,000 |   |
|                  | Mortgage      Servicing Fee                    |   |                          | 157,000   |   |   |   | 44,000 |   |
| Funding      Services |                                           |   |                          |      |   |   |   |   |   |
|                  | Marketing      Support Fees                    |   |                          | 1,124,000 |   |   |   | 499,000 |   |
|                  | Operating      Expense                         |   |                          |      |   |   |   |   |   |
|                  |     Reimbursement          |   |                          | 178,000   |   |   |   | 40,000 |   |

----

----

----

----

----

----

----

----

----

Off-Balance Sheet Arrangements

----

Item 4T. Controls andProcedures.

----

PART II

Item 1. LegalProceedings.

Item 1A. RiskFactors.

Item 2. UnregisteredSales of Equity Securities and Use of Proceeds.

----

| 2008   |   |  Total      number of units of limited partnership interestrepurchased                                                         |   | Average      price paid per unit of limited partnership interest               |   | Total      number of units of limited partnership interest repurchased as part of      publicly announced plan                                              |   | Maximum      number of units of limited partnership interest that may yet be purchased      under the plan |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|
| April  |   |                    38,125            |   |  $           19.97 |   |                        38,125            |   | (1)                                                                                                        |
| May    |   |                      2,922 |   |  $           19.19 |   |                          2,922 |   | (1)                                                                                                        |
| June   |   |                      4,574 |   |  $           18.46 |   |                          4,574 |   | (1)                                                                                                        |
|   |   |                    45,621            |   |  $           19.77 |   |                        45,621            |   | (1)                                                                                                        |

| (1) | A      description of the maximum number of units of limited partnership interest      that may be purchased under our redemption program is included in the      narrative preceding this table. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 3.1 | Second Amended and Restated Agreement of Limited      Partnership of Registrant (previously filed in and incorporated by      reference to Exhibit B to prospectus dated May 15, 2006, filed pursuant to      Rule 424(b)(3) on May 18,2006) |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Certificate of Limited Partnership of Registrant      (previously filed in and incorporated by reference to Registrant’s      Registration Statement on Form S-11, Commission File No. 333-127891, filed      on August 26, 2005) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | First      Amendment to Second Amended and Restated Agreement of Limited Partnership      of Registrant (previously filed in and      incorporated by reference to Exhibit B to Supplement No. 6 to prospectus      dated May 15, 2006, contained within Post-Effective Amendment No. 3 to      Registrant’s Registration Statement on Form S-11, Commission File      No. 333-127891, filed on April 29,  2008) |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | Subscription      Agreement (previously filed in and      incorporated by reference to Exhibit C to Supplement No. 6 to prospectus      dated May 15, 2006, contained within Post-Effective Amendment No. 3 to      Registrant’s Registration Statement on Form S-11, Commission File      No. 333-127891, filed on April 29,  2008) |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1 | Rule 13a-14(a)/15d-14(a) Certification of      Principal Executive Officer (filed  herewith) |
|------|----------------------------------------------------------------------------------------------|

| 31.2 | Rule 13a-14(a)/15d-14(a) Certification of      Principal Financial Officer (filed  herewith) |
|------|----------------------------------------------------------------------------------------------|

| 32.1* | Section 1350 Certifications (furnished      herewith) |
|-------|-------------------------------------------------------|

| * | In accordance with Item 601(b)(32) of Regulation      S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the      Exchange Act or otherwise subject to the liabilities of that      section.  Such certifications will not be deemed incorporated by      reference into any filing under the Securities Act of 1933, as amended, or      the Exchange Act, except to the extent that the registrant specifically      incorporates it byreference. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|