----

| Delaware                                                           | 81-0624254                                   |
|--------------------------------------------------------------------|----------------------------------------------|
| (State      or other jurisdiction of incorporation ororganization) | (I.R.S.      Employer Identification Number) |

| Large      accelerated filer                       |  ̈ | Accelerated      filer         |  ̈ |
|----------------------------------------------------|--------|--------------------------------|--------|
| Non-accelerated      filer                         | þ | Smaller      reporting company |  ̈ |
| (Do      not check if a smaller reporting company) |   |

----

|          | PART      I - FINANCIAL INFORMATION                                                                    |   |
|---------------|--------------------------------------------------------------------------------------------------------|--------|
|          |                                                                                                   |   |
| Item      1.  | Financial      Statements.                                                                             |   |
|          |                                                                                                   |   |
|          | Consolidated      Balance Sheets as of December 31, 2009 and March 31, 2010                            | 3      |
|          |                                                                                                   |   |
|          | Consolidated      Statements of Operations for the Three months Ended March 31, 2009 and      2010     | 4      |
|          |                                                                                                   |   |
|          | Consolidated      Statement of Members’ Equity for the Three Months Ended March 31,      2010    | 5      |
|          |                                                                                                   |   |
|          | Consolidated      Statements of Cash Flows for the Three Months Ended March 31, 2009 and      2010     | 6      |
|          |                                                                                                   |   |
|          | Notes      to Consolidated Financial Statements                                                        | 7      |
|          |                                                                                                   |   |
| Item      2.  | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations. | 39     |
|          |                                                                                                   |   |
| Item      3.  | Quantitative      and Qualitative Disclosures About Market Risk.                                       | 88     |
|          |                                                                                                   |   |
| Item      4T. | Controls      and Procedures.                                                                          | 93     |
|          |                                                                                                   |   |
|          | PART      II – OTHER INFORMATION                                                                 |   |
|          |                                                                                                   |   |
| Item      1.  | Legal      Proceedings.                                                                                | 93     |
|          |                                                                                                   |   |
| Item      1A. | Risk      Factors.                                                                                     | 94     |
|          |                                                                                                   |   |
| Item      2.  | Unregistered      Sales of Equity Securities and Use of Proceeds.                                      | 95     |
|          |                                                                                                   |   |
| Item      6.  | Exhibits.                                                                                              | 96     |
|          |                                                                                                   |   |
|          | Signatures                                                                                             | 97     |
|          |                                                                                                   |   |
|          | Index      to Exhibits                                                                                 | 98     |

----

| Item      1. | Financial      Statements. |
|--------------|----------------------------|

|                                                                                                                                                                                                           |   | December      31, |     |   | March      31, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|----------|--------|----------------|--------|
|                                                                                                                                                                                                           |   | 2009              |     |   | 2010           |   |
|                                                                                                                                                                                                           |   | (Unaudited)       |     |
| ASSETS                                                                                                                                                                                                         |   |              |     |   |           |   |
| Cash      and Cash Equivalents                                                                                                                                                                                 |   | $                 | 963      |   |           | $      | 3,852 |   |
| Mortgage      Loans:                                                                                                                                                                                           |   |              |     |   |           |   |   |   |
| Mortgage      Loan Note Obligations                                                                                                                                                                            |   |              | 554,848  |   |           |   | 526,974 |   |
| Less      Undisbursed Portion of Loans-in-process and Interest    Reserves                                                                                                                                     |   |              | (15,975  | )      |           |   | (13,769 | ) |
| Principal      Outstanding Held for Investment                                                                                                                                                                 |   |              | 538,873  |   |           |   | 513,205 |   |
| Less      Allowance for Credit Loss                                                                                                                                                                            |   |              | (328,060 | )      |           |   | (320,045 | ) |
| Mortgage      Loans Held for Investment, Net                                                                                                                                                                   |   |              | 210,813  |   |           |   | 193,160 |   |
| Mortgage      Loans Held for Sale, Net                                                                                                                                                                         |   |              | 3,207    |   |           |   | 4,411 |   |
| Mortgage      Loans, Net                                                                                                                                                                                       |   |              | 214,020  |   |           |   | 197,571 |   |
| Accrued      Interest and Other Receivables                                                                                                                                                                    |   |              | 15,751   |   |           |   | 14,889 |   |
| Real      Estate Acquired through Foreclosure Held for Sale, net                                                                                                                                               |   |              | 12,082   |   |           |   | 12,157 |   |
| Real      Estate Held for Development, net:                                                                                                                                                                    |   |              |     |   |           |   |   |   |
| Acquired      through Foreclosure                                                                                                                                                                              |   |              | 84,804   |   |           |   | 100,806 |   |
| Purchased      for Investment                                                                                                                                                                                  |   |              | 7,345    |   |           |   | 7,367 |   |
| Real      Estate Held for Development, net                                                                                                                                                                     |   |              | 92,149   |   |           |   | 108,173 |   |
| Deposits      and Other Assets                                                                                                                                                                                 |   |              | 1,464    |   |           |   | 3,748 |   |
| Advances      to Fund Manager                                                                                                                                                                                  |   |              | 1,367    |   |           |   | 1,396 |   |
|                                                                                                                                                                                                           |   |              |     |   |           |   |   |   |
| Total      Assets                                                                                                                                                                                              |   | $                 | 337,796  |   |           | $      | 341,786 |   |
|                                                                                                                                                                                                           |   |              |     |   |           |   |   |   |
| LIABILITIES                                                                                                                                                                                                    |   |              |     |   |           |   |   |   |
| Payables      to Fund Manager                                                                                                                                                                                  |   | $                 | 3,342    |   |           | $      | 1,529 |   |
| Other      Payables and Accrued Liabilities                                                                                                                                                                    |   |              | 6,582    |   |           |   | 6,682 |   |
| Borrowings      From Fund Manager                                                                                                                                                                              |   |              | 1,608    |   |           |   | 827 |   |
| Notes      Payable                                                                                                                                                                                             |   |              | 4,182    |   |           |   | 13,429 |   |
| Unearned      Income and Other Funds Held                                                                                                                                                                      |   |              | 214      |   |           |   | 303 |   |
| Total      Liabilities                                                                                                                                                                                         |   |              | 15,928   |   |           |   | 22,770 |   |
| MEMBERS'      EQUITY                                                                                                                                                                                           |   |              |     |   |           |   |   |   |
| Accumulated      Deficit                                                                                                                                                                                       |   |              | (408,515 | )      |           |   | (411,367 | ) |
| Members'      Capital - $10,000 per unit stated value, authorized units set at      discretion of the Manager - 73,038 units issued and outstanding at      December 31, 2009 and March 31, 2010, respectively |   |              | 730,383  |   |           |   | 730,383 |   |
| Total      Members' Equity                                                                                                                                                                                     |   |              | 321,868  |   |           |   | 319,016 |   |
| Commitments      and Contingent Liabilities                                                                                                                                                                    |   |              |     |   |           |   |   |   |
| Total      Liabilities and Members' Equity                                                                                                                                                                     |   | $                 | 337,796  |   |           | $      | 341,786 |   |

----

|                                                                                                 |   | Three      Months Ended March 31, |   |
|------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                                 |   | 2009                              |   |   | 2010 |   |
|                                                                                                 |   | (Unaudited)                       |   |
| REVENUES                                                                                             |   |                              |   |   |   |   |   |   |
| Mortgage      Loan Interest Income                                                                   |   | $                                 | 11,938 |   |   | $ | 522 |   |
| Investment      and Other Interest Income                                                            |   |                              | 36     |   |   |   | 76 |   |
| Rents      and Other Income                                                                          |   |                              | -      |   |   |   | 410 |   |
| Total      Revenues                                                                                  |   |                              | 11,974 |   |   |   | 1,008 |   |
| EXPENSES                                                                                             |   |                              |   |   |   |   |   |   |
| Management      Fees                                                                                 |   |                              | 249    |   |   |   | 64 |   |
| Default      Related and Other Fund Expenses                                                         |   |                              | 126    |   |   |   | 206 |   |
| Operating      Expenses for Real Estate Owned                                                        |   |                              | 214    |   |   |   | 1,947 |   |
| Professional      Fees                                                                               |   |                              | 309    |   |   |   | 1,399 |   |
| Interest      Expense:                                                                               |   |                              |   |   |   |   |   |   |
| Borrowings      from Fund Manager                                                                    |   |                              | -      |   |   |   | 27 |   |
| Borrowings      on Note Payable                                                                      |   |                              | -      |   |   |   | 217 |   |
| Interest      Expense                                                                                |   |                              | -      |   |   |   | 244 |   |
|                                                                                                 |   |                              |   |   |   |   |   |   |
| Total      Expenses                                                                                  |   |                              | 899    |   |   |   | 3,860 |   |
|                                                                                                 |   |                              |   |   |   |   |   |   |
| Net      Earnings (Loss)                                                                             |   | $                                 | 11,076 |   |   | $ | (2,852 | ) |
|                                                                                                 |   |                              |   |   |   |   |   |   |
| Net      Earnings (Loss) Allocated to Members per Weighted Average Membership Units      Outstanding |   | $                                 | 151.64 |   |   | $ | (39.04 | ) |
|                                                                                                 |   |                              |   |   |   |   |   |   |
| Distributions      to Members per Weighted Average Membership Units    Outstanding                   |   | $                                 | 132.67 |   |   | $ | - |   |
|                                                                                                 |   |                              |   |   |   |   |   |   |
| Weighted      Average Membership Units Outstanding                                                   |   |                              |   |   |   |   |   |   |
|                                                                                                 |   |                              | 73,038 |   |   |   | 73,038 |   |

----

|                                          |   |     |   |   |     |   |    |        |   |   | Total    |   |
|-----------------------------------------------|--------|----------|--------|--------|----------|--------|---------|-------------|--------|--------|----------|--------|
|                                          |   | Members' |   |   | Members' |   |    | Accumulated |   |   | Members' |   |
|                                          |   | Units    |   |   | Capital  |   |    | Deficit     |   |   | Equity   |   |
|                                          |   |     |   |   |     |   |    |        |   |   |     |   |
| Balances      at December 31, 2009            |   |     | 73,038 |   |     | $      | 730,383 |        |   | $      | (408,515 | )      |   | $ | 321,868 |   |
| Net      Loss - 3 months ended March 31, 2010 |   |     | -      |   |     |   | -       |        |   | $      | (2,852   | )      |   | $ | (2,852 | ) |
| Balances      at March 31, 2010               |   |     | 73,038 |   |     |   | 730,383 |        |   |   | (411,367 | )      |   |   | 319,016 |   |

----

|                                                                                                 |   | Three      Months Ended March 31, |    |
|------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                                 |   | 2009                              |    |   | 2010 |   |
|                                                                                                 |   | (Unaudited)                       |    |
| CASH      FLOWS - Operating Activities:                                                         |   |                              |    |   |   |   |   |   |
| Net      Earnings (Loss)                                                                             |   | $                                 | 11,076  |   |   | $ | (2,852 | ) |
| Adjustments      to Reconcile Net Earnings (Loss) to Net Cash Provided by Operating      Activities: |   |                              |    |   |   |   |   |   |
| Provision      for Credit Losses                                                                     |   |                              | -       |   |   |   | - |   |
| Impairment      Charges for Assets Acquired Through                                                  |   |                              |    |   |   |   |   |   |
| Foreclosure                                                                                          |   |                              | -       |   |   |   | - |   |
| Depreciation      and Amortization                                                                   |   |                              | -       |   |   |   | 419 |   |
| Increase      in Accrued Interest Receivable                                                         |   |                              | (1,627  | ) |   |   | (45 | ) |
| Increase      in Deposits and Other Assets                                                           |   |                              | (362    | ) |   |   | (2,961 | ) |
| Increase      (Decrease) in Due From/To Fund Manager                                                 |   |                              | 623     |   |   |   | (1,842 | ) |
| Increase      (Decrease) in Other Payables and Accrued Liabilities                                   |   |                              | -       |   |   |   | 100 |   |
| Increase      (Decrease) in Unearned Income and Other Funds Held                                     |   |                              | 169     |   |   |   | 89 |   |
| Net      Cash Provided by (Used in) Operating Activities                                             |   |                              | 9,879   |   |   |   | (7,092 | ) |
| CASH      FLOWS - Investing Activities:                                                              |   |                              |    |   |   |   |   |   |
| Mortgage      Loans Fundings                                                                         |   |                              | (13,600 | ) |   |   | (1,314 | ) |
| Mortgage      Loan Repayments                                                                        |   |                              | 1,149   |   |   |   | 3,500 |   |
| Investment      in Real Estate Held for Development                                                  |   |                              | (733    | ) |   |   | (799 | ) |
| Net      Cash Provided by (Used in) Investing Activities                                             |   |                              | (13,184 | ) |   |   | 1,387 |   |
| CASH      FLOWS - Financing Activities:                                                              |   |                              |    |   |   |   |   |   |
| Proceeds      from Notes Payable                                                                     |   |                              | -       |   |   |   | 9,374 |   |
| Repayments      of Borrowings from Fund Manager                                                      |   |                              | -       |   |   |   | (780 | ) |
| Members'      Distributions                                                                          |   |                              | (12,637 | ) |   |   | - |   |
| Net      Cash Provided by (used in) Financing Activities                                             |   |                              | (12,637 | ) |   |   | 8,594 |   |
| Net      Increase (Decrease) in Cash and Cash Equivalents                                            |   |                              | (15,942 | ) |   |   | 2,889 |   |
| Cash      and Cash Equivalents:                                                                      |   |                              |    |   |   |   |   |   |
| Beginning      of Period                                                                             |   |                              | 23,815  |   |   |   | 963 |   |
| End      of Period                                                                                   |   | $                                 | 7,873   |   |   | $ | 3,852 |   |
| Supplemental      Cash Flow Information:                                                             |   |                              |    |   |   |   |   |   |
| Interest      Paid                                                                                   |   | $                                 | -       |   |   | $ | 106 |   |
| Supplemental      Disclosure of Non-Cash Financing and Investing Activities:                         |   |                              |    |   |   |   |   |   |
| Real      Estate Acquired through Foreclosure                                                        |   | $                                 | 5,953   |   |   | $ | 14,263 |   |

----

----

|   | · | position      the Fund to become a publicly traded corporation listed on the New York      Stock Exchange, or NYSE; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | create      the opportunity for liquidity formembers; |
|--------|--------|-------------------------------------------------------|

|   | · | cause      the Fund to be internally managed, which would eliminate possible      conflicts and more fully align the interests of the Fund, the Manager and      IMH Holdings, LLC, or Holdings, which is a holding company for other      affiliates of the Manager; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | create      the opportunity to raise additional capital in the public markets, thereby      enabling  the successor to the Fund to better acquire and originate      commercial mortgage loans and other real estate related investment      opportunities; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | create      the opportunity to achieve long term value through dividends and capital      appreciation; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

|   | · | create      a board of directors comprised of a majority of independent directors,      which will enhance our corporategovernance. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Implemented      a cost reduction program, including a reduction in staff. The reduction in      staff affected nearly 60% of the Manager’s employees while preserving more      modest core functionality in the material operational areas. To date, the      Manager has stabilized monthly operating costs at approximately $500 per      month. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Continued      our discussions with investment banking firms to seek and to close      financing and capital raisingalternatives. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | · | Continued      to explore mechanisms through which the Manager can expand participation      in the capital markets, including, without limitation, to expand existing      or add additional funding vehicles to seek to capitalize on what the      Manager believes are numerous business opportunities arising from the      disruptions in the capital and creditmarkets. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Engaged      in on-going negotiations with creditors to defer or otherwise restructure      existing liabilities. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------|

|   | · | Other      initiatives seeking to mitigate the risk of the continued viability of the      Manager as an operating entity. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | Filed      a registration statement on behalf of the Fund regarding the proposed      Conversion Transactions. |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

----

----

|   | · | The Fund is a variable interest entity because the      holders of the equity      investment at risk (i.e., the members) lack the power through voting or      similar rights to direct the Fund’s activities that most      significantly impact its economic performance under this accounting      guidance. Specifically, the Manager has the power to direct the      activities that most significantly impact the Fund’s    performance; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Manager’s fees are considered to represent      a variable interest in the Fund because (i) the fees earned by the Manager for      the daily management of loans, in accordance with the Operating      agreement, and fees      that the Manager      receives separately for loan originations, modifications, and certain      events of default      that are more than insignificant to the Fund,  and (ii) the      majority owners of      the Manager hold an equity interest in the Fund equal to      0.06% of the Fund’s total equity      interests. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Transfers      in and out of Levels 1 and 2.  An entity should disclose separately      the amounts of significant transfers between Levels 1 and 2 f and describe      the reasons for the transfers. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Activity      in Level 3 fair value measurements.  In the reconciliation of fair      value measurements using significant unobservable inputs (Level 3), an      entity should present separately information about purchases, sales,      issuances, and settlements (that is, on a gross basis rather than as one      net number). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | An      entity that either (a) is an SEC filer, as defined, or (b) is a conduit      bond obligor for conduit debt securities that are traded in a public      market (a domestic or foreign stock exchange or an over-the-counter      market, including local or regional markets) is required to evaluate      subsequent events through the date that the financial statements are      issued. If an entity meets neither of those criteria, then it should      evaluate subsequent events through the date the financial statements are      available to be issued. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | While      an SEC filer is still required by GAAP to evaluate subsequent events      through the date its financial statements are issued, it is no longer      required to disclose in the financial statements that it has done so or      the date through which subsequent events have been    evaluated. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Entities      that are neither SEC filers nor conduit bond obligors are now only      required to evaluate subsequent events through the date the financial      statements are available to be issued. Previously, if such an entity      expected to distribute its financial statements widely, it was required to      evaluate subsequent events through the issuance date. The Board decided to      eliminate the concept of “wide distribution” for determining the      appropriate date through which an entity should evaluate subsequent      events. Entities that are not SEC filers continue to be required to      disclose the date through which subsequent events were evaluated.      Therefore, entities other than SEC filers whose financial statements are      included in SEC filings continue to be required to disclose the evaluation      date. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      FASB also defined a new category of reissuances, termed “revised financial      statements.” Revised financial statements are financial statements that      have been revised for either (a) the correction of an error or (b)      retrospective application of GAAP. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | A      reporting entity’s interest in an entity if the reporting entity and its      related parties have an explicit or implicit obligation to fund losses of      the entity that could potentially be significant to the entity. This      condition should be evaluated considering the legal structure of the      reporting entity’s interest, the purpose and design of the entity, and any      guarantees provided by the reporting entity’s related    parties. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Interests      in securitization entities, asset-backed financing entities, or entities      formerly considered QSPEs. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|

----

----

|                       |   | December      31, 2009 |   |
|----------------------------|--------|------------------------|--------|
|                       |   | Fixed      Rate        |   |   | Variable      Rate |   |   | Total |   |
|                       |   |                   |   |   | Outstanding |   |   |   |   |   | Outstanding |   |   |   |   |   | Outstanding |   |   | Allowance      for |   |   | Net      Carrying |   |   |   |   |
| Current Rate:         |   | #                      |   |   | Principal |   |   | # |   |   | Principal |   |   | # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | % |   |
| 6.00%                      |   |                   | 1      |   |   | $ | 5,890 |   |   |   | - |   |   | $ | - |   |   |   | 1 |   |   | $ | 5,890 |   |   | $ | (1,568 | ) |   | $ | 4,322 |   |   |   | 2.0 | % |
| 7.53%                      |   |                   | 1      |   |   |   | 41,886 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 41,886 |   |   |   | (23,942 | ) |   |   | 17,944 |   |   |   | 8.4 | % |
| 8.00%                      |   |                   | 4      |   |   |   | 31,077 |   |   |   | - |   |   |   | - |   |   |   | 4 |   |   |   | 31,077 |   |   |   | (24,999 | ) |   |   | 6,078 |   |   |   | 2.8 | % |
| 8.25%                      |   |                   | 1      |   |   |   | 56,033 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 56,033 |   |   |   | - |   |   |   | 56,033 |   |   |   | 26.2 | % |
| 9.00%                      |   |                   | 1      |   |   |   | 1,589 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 1,589 |   |   |   | (9 | ) |   |   | 1,580 |   |   |   | 0.7 | % |
| 10.00%                     |   |                   | 4      |   |   |   | 29,555 |   |   |   | - |   |   |   | - |   |   |   | 4 |   |   |   | 29,555 |   |   |   | (22,316 | ) |   |   | 7,239 |   |   |   | 3.4 | % |
| 11.00%                     |   |                   | 1      |   |   |   | 1,463 |   |   |   | 1 |   |   |   | 1,618 |   |   |   | 2 |   |   |   | 3,081 |   |   |   | - |   |   |   | 3,081 |   |   |   | 1.4 | % |
| 11.50%                     |   |                   | -      |   |   |   | - |   |   |   | 4 |   |   |   | 11,328 |   |   |   | 4 |   |   |   | 11,328 |   |   |   | (4,489 | ) |   |   | 6,839 |   |   |   | 3.2 | % |
| 11.75%                     |   |                   | 1      |   |   |   | 5,759 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 5,759 |   |   |   | - |   |   |   | 5,759 |   |   |   | 2.7 | % |
| 12.00%                     |   |                   | 7      |   |   |   | 61,403 |   |   |   | 8 |   |   |   | 53,947 |   |   |   | 15 |   |   |   | 115,350 |   |   |   | (59,545 | ) |   |   | 55,805 |   |   |   | 26.1 | % |
| 12.25%                     |   |                   | -      |   |   |   | - |   |   |   | 2 |   |   |   | 56,562 |   |   |   | 2 |   |   |   | 56,562 |   |   |   | (51,372 | ) |   |   | 5,190 |   |   |   | 2.4 | % |
| 12.50%                     |   |                   | -      |   |   |   | - |   |   |   | 5 |   |   |   | 16,128 |   |   |   | 5 |   |   |   | 16,128 |   |   |   | (11,705 | ) |   |   | 4,423 |   |   |   | 2.1 | % |
| 12.75%                     |   |                   | 1      |   |   |   | 37,958 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 37,958 |   |   |   | (22,664 | ) |   |   | 15,294 |   |   |   | 7.1 | % |
| 13.00%                     |   |                   | 1      |   |   |   | 1,650 |   |   |   | 9 |   |   |   | 54,947 |   |   |   | 10 |   |   |   | 56,597 |   |   |   | (45,462 | ) |   |   | 11,135 |   |   |   | 5.2 | % |
| 13.75%                     |   |                   | -      |   |   |   | - |   |   |   | 2 |   |   |   | 6,528 |   |   |   | 2 |   |   |   | 6,528 |   |   |   | (5,987 | ) |   |   | 541 |   |   |   | 0.3 | % |
| 14.25%                     |   |                   | -      |   |   |   | - |   |   |   | 1 |   |   |   | 69,127 |   |   |   | 1 |   |   |   | 69,127 |   |   |   | (56,370 | ) |   |   | 12,757 |   |   |   | 6.0 | % |
| Total                      |   |                   | 23     |   |   | $ | 274,263 |   |   |   | 32 |   |   | $ | 270,185 |   |   |   | 55 |   |   | $ | 544,448 |   |   | $ | (330,428 | ) |   | $  | 214,020 |   |   |   | 100.0 | % |
|                       |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| % of      Portfolio        |   |                   |   |   |   |   | 50.4 | % |   |   |   |   |   |   | 49.6 | % |   |   |   |   |   |   | 100.0 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Rate |   |                   |   |   |   |   | 9.84 | %  |   |   |   |   |   |   | 12.88 | % |   |   |   |   |   |   | 11.34 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Number      of Loans       |   |                   |   |   |   |   | 23 |   |   |   |   |   |   |   | 32 |   |   |   |   |   |   |   | 55 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      Principal     |   |                   |   |   |   | $ | 11,924 |   |   |   |   |   |   | $ | 8,443 |   |   |   |   |   |   | $  | 9,899 |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                       |   | March      31, 2010 |   |
|----------------------------|--------|---------------------|--------|
|                       |   | Fixed      Rate     |   |   | Variable      Rate |   |   | Total |   |
|                       |   |                |   |   | Outstanding |   |   |   |   |   | Outstanding |   |   |   |   |   | Outstanding |   |   | Allowance      for Net Carrying |   |   |   |   |
| Current      Rate:         |   | #                   |   |   | Principal |   |   | # |   |   | Principal |   |   | # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | % |   |
| 6.00%                      |   |                | 1      |   |   | $ | 5,890 |   |   |   | - |   |   | $ | - |   |   |   | 1 |   |   | $ | 5,890 |   |   | $ | (1,582 | ) |   | $ | 4,308 |   |   |   | 2.2 | % |
| 7.53%                      |   |                | 1      |   |   |   | 41,920 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 41,920 |   |   |   | (24,070 | ) |   |   | 17,850 |   |   |   | 9.0 | % |
| 8.00%                      |   |                | 3      |   |   |   | 31,758 |   |   |   | - |   |   |   | - |   |   |   | 3 |   |   |   | 31,758 |   |   |   | (25,607 | ) |   |   | 6,151 |   |   |   | 3.1 | % |
| 8.25%                      |   |                | 1      |   |   |   | 56,033 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 56,033 |   |   |   | - |   |   |   | 56,033 |   |   |   | 28.4 | % |
| 9.00%                      |   |                | 1      |   |   |   | 1,589 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 1,589 |   |   |   | (9 | ) |   |   | 1,580 |   |   |   | 0.8 | % |
| 10.00%                     |   |                | 4      |   |   |   | 29,555 |   |   |   | - |   |   |   | - |   |   |   | 4 |   |   |   | 29,555 |   |   |   | (22,350 | ) |   |   | 7,205 |   |   |   | 3.6 | % |
| 11.00%                     |   |                | 1      |   |   |   | 1,463 |   |   |   | 1 |   |   |   | 1,618 |   |   |   | 2 |   |   |   | 3,081 |   |   |   | - |   |   |   | 3,081 |   |   |   | 1.6 | % |
| 11.50%                     |   |                | -      |   |   |   | - |   |   |   | 1 |   |   |   | 225 |   |   |   | 1 |   |   |   | 225 |   |   |   | (219 | ) |   |   | 6 |   |   |   | 0.0 | % |
| 11.75%                     |   |                | 1      |   |   |   | 5,775 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 5,775 |   |   |   | - |   |   |   | 5,775 |   |   |   | 2.9 | % |
| 12.00%                     |   |                | 7      |   |   |   | 61,403 |   |   |   | 6 |   |   |   | 42,399 |   |   |   | 13 |   |   |   | 103,802 |   |   |   | (58,840 | ) |   |   | 44,962 |   |   |   | 22.9 | % |
| 12.25%                     |   |                | -      |   |   |   | - |   |   |   | 2 |   |   |   | 56,562 |   |   |   | 2 |   |   |   | 56,562 |   |   |   | (51,133 | ) |   |   | 5,429 |   |   |   | 2.7 | % |
| 12.50%                     |   |                | -      |   |   |   | - |   |   |   | 3 |   |   |   | 13,139 |   |   |   | 3 |   |   |   | 13,139 |   |   |   | (10,680 | ) |   |   | 2,459 |   |   |   | 1.2 | % |
| 12.75%                     |   |                | 1      |   |   |   | 37,958 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 37,958 |   |   |   | (22,983 | ) |   |   | 14,975 |   |   |   | 7.6 | % |
| 13.00%                     |   |                | 1      |   |   |   | 1,650 |   |   |   | 9 |   |   |   | 54,947 |   |   |   | 10 |   |   |   | 56,597 |   |   |   | (42,137 | ) |   |   | 14,460 |   |   |   | 7.3 | % |
| 13.75%                     |   |                | -      |   |   |   | - |   |   |   | 2 |   |   |   | 6,528 |   |   |   | 2 |   |   |   | 6,528 |   |   |   | (6,036 | ) |   |   | 492 |   |   |   | 0.2 | % |
| 14.25%                     |   |                | -      |   |   |   | - |   |   |   | 1 |   |   |   | 69,127 |   |   |   | 1 |   |   |   | 69,127 |   |   |   | (56,322 | ) |   |   | 12,805 |   |   |   | 6.5 | % |
| Total                      |   |                | 22     |   |   | $ | 274,994 |   |   |   | 25 |   |   | $ | 244,545 |   |   |   | 47 |   |   | $ | 519,539 |   |   | $ | (321,968 | ) |   | $  | 197,571 |   |   |   | 100.0 | % |
|                       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| % of      Portfolio        |   |                |   |   |   |   | 52.9 | % |   |   |   |   |   |   | 47.1 | % |   |   |   |   |   |   | 100.0 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Rate |   |                |   |   |   |   | 9.83 | % |   |   |   |   |   |   | 12.98 | %  |   |   |   |   |   |   | 11.32 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Number      of Loans       |   |                |   |   |   |   | 22 |   |   |   |   |   |   |   | 25 |   |   |   |   |   |   |   | 47 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      Principal     |   |                |   |   |   | $ | 12,500 |   |   |   |   |   |   | $ | 9,782 |   |   |   |   |   |   | $ | 11,054 |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| March 31, 2010                       |   |
|--------------------------------------|--------|
| Quarter                              |   | Amount |   |   | Percent |   |   |   | # |   |
| Matured                              |   | $ | 323,933 |   |   |   | 62.3 | % |   |   | 30 |   |
| Q3      2010                         |   |   | 56,059 |   |   |   | 10.8 | % |   |   | 10 |   |
| Q4      2010                         |   |   | 7,248 |   |   |   | 1.4 | % |   |   | 1 |   |
| Q1      2011                         |   |   | 3,080 |   |   |   | 0.6 | % |   |   | 2 |   |
| Q4      2011                         |   |   | 31,266 |   |   |   | 6.0 | % |   |   | 2 |   |
| Q3      2012                         |   |   | 97,953 |   |   |   | 18.9 | % |   |   | 2 |   |
| Total                                |   |   | 519,539 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowance for Credit Loss |   |   | (321,968 | ) |   |   |   |   |   |   |   |   |
|                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Carrying Value              |   | $ | 197,571 |   |   |   |   |   |   |   |   |   |

----

----

|            |   | December      31, 2009 |   |
|-----------------|--------|------------------------|--------|
|            |   | Percent      of        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Non-Accrued |   |   |   |   |
|            |   | Outstanding            |   |   |   |   |   | Outstanding |   |   | Allowance      for |   |   | Net      Carrying |   |   | Accrued |   |   | Note |   |   |   |   |
|            |   | Principal              |   |   | # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | Interest |   |   | Interest |   |   | Total |   |
| Arizona         |   |                   | 52.3   | % |   |   | 23 |   |   | $ | 278,306 |   |   | $ | (162,282 | ) |   | $ | 116,024 |   |   | $ | 5,362 |   |   | $ | 13,723 |   |   | $ | 135,109 |   |
| Idaho           |   |                   | 9.3    | % |   |   | 2 |   |   | $ | 49,594 |   |   | $ | (38,981 | ) |   |   | 10,613 |   |   | $ | 1,948 |   |   | $ | 5,993 |   |   |   | 18,554 |   |
| California      |   |                   | 33.8   | % |   |   | 19 |   |   | $ | 179,773 |   |   | $ | (120,829 | ) |   |   | 58,944 |   |   | $ | 3,959 |   |   | $ | 18,349 |   |   |   | 81,252 |   |
| Texas           |   |                   | 2.1    | % |   |   | 3 |   |   | $ | 11,102 |   |   | $ | (4,272 | ) |   |   | 6,830 |   |   | $ | 427 |   |   | $ | 1,170 |   |   |   | 8,427 |   |
| Nevada          |   |                   | 1.5    | % |   |   | 1 |   |   | $ | 7,984 |   |   | $ | (2,613 | ) |   |   | 5,371 |   |   | $ | 319 |   |   | $ | 957 |   |   |   | 6,647 |   |
| New      Mexico |   |                   | 1.0    | % |   |   | 2 |   |   | $ | 5,240 |   |   | $ | (1,094 | ) |   |   | 4,146 |   |   | $ | - |   |   | $ | 586 |   |   |   | 4,732 |   |
|            |   |                   | 100.0  | % |   |   | 50 |   |   | $ | 531,999 |   |   | $ | (330,071 | ) |   | $ | 201,928 |   |   | $ | 12,015 |   |   | $ | 40,778 |   |   | $ | 254,721 |   |

|            |   | March      31, 2010 |   |
|-----------------|--------|---------------------|--------|
|            |   | Percent      of     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Non-Accrued |   |   |   |   |
|            |   | Outstanding         |   |   |   |   |   | Outstanding |   |   | Allowance      for |   |   | Net      Carrying |   |   | Accrued |   |   | Note |   |   |   |   |
|            |   | Principal           |   |   | # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | Interest |   |   | Interest |   |   | Total |   |
| Arizona         |   |                | 53.2   | % |   |   | 22 |   |   | $ | 275,582 |   |   | $ | (159,971 | ) |   | $ | 115,611 |   |   | $ | 4,601 |   |   | $ | 6,252 |   |   | $ | 126,464 |   |
| Idaho           |   |                | 9.6    | % |   |   | 2 |   |   |   | 49,595 |   |   |   | (42,852 | ) |   |   | 6,743 |   |   |   | 1,948 |   |   |   | 1,491 |   |   |   | 10,182 |   |
| California      |   |                | 34.7   | % |   |   | 19 |   |   |   | 179,860 |   |   |   | (118,070 | ) |   |   | 61,790 |   |   |   | 4,109 |   |   |   | 5,906 |   |   |   | 71,805 |   |
| New      Mexico |   |                | 1.0    | % |   |   | 2 |   |   |   | 5,240 |   |   |   | (1,075 | ) |   |   | 4,165 |   |   |   | (7 | ) |   |   | 147 |   |   |   | 4,305 |   |
| Utah            |   |                | 1.5    | % |   |   | 1 |   |   |   | 7,645 |   |   |   | - |   |   |   | 7,645 |   |   |   | 336 |   |   |   | - |   |   |   | 7,981 |   |
|            |   |                | 100.0  | % |   |   | 46 |   |   | $ | 517,922 |   |   | $ | (321,968 | ) |   | $ | 195,954 |   |   | $ | 10,987 |   |   | $ | 13,796 |   |   | $ | 220,737 |   |

|                   |   |            |   |   |   |   |   |        |   |   |            |   |   |              |     |   |     |   |    | Non-     |   |   |   |   |
|------------------------|--------|-----------------|--------|--------|--------|--------|--------|-------------|--------|--------|-----------------|--------|--------|-------------------|----------|--------|----------|--------|---------|----------|--------|--------|--------|--------|
|                   |   | Percent      of |   |   |   |   |   |        |   |   | Allowance       |   |   |              |     |   |     |   |    | Accrued  |   |   |   |   |
|                   |   | Outstanding     |   |   |   |   |   | Outstanding |   |   | for      Credit |   |   | Net      Carrying |     |   | Accrued  |   |    | Note     |   |   |   |   |
|                   |   | Principal       |   |   | #      |   |   | Principal   |   |   | Loss            |   |   | Amount            |     |   | Interest |   |    | Interest |   |   | Total  |   |
| Pre-entitled      Land |   |            | 38.3   | %      |   |   | 10     |        |   | $      | 198,483         |   |   | $                 | (147,923 | )      |     | $      | 50,560  |     |   | $      | 6,341  |   |   | $ | 6,275 |   |   | $ | 63,176 |   |
| Entitled      Land     |   |            | 40.4   | %      |   |   | 21     |        |   |   | 209,106         |   |   |              | (141,894 | )      |     |   | 67,212  |     |   |   | 4,249  |   |   |   | 5,237 |   |   |   | 76,698 |   |
| Construction           |   |            | 21.3   | %      |   |   | 15     |        |   |   | 110,333         |   |   |              | (32,151  | )      |     |   | 78,182  |     |   |   | 397    |   |   |   | 2,284 |   |   |   | 80,863 |   |
|                   |   |            | 100.0  | %      |   |   | 46     |        |   | $      | 517,922         |   |   | $                 | (321,968 | )      |     | $      | 195,954 |     |   | $      | 10,987 |   |   | $ | 13,796 |   |   | $ | 220,737 |   |

----

|                                                                                                                        |   | As      of and Year     |     |   | As      of and 3 Mos. |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------|--------|-----------------------|--------|
|                                                                                                                        |   | Ended      December 31, |     |   | Ended      March 31,  |   |
|                                                                                                                        |   | 2009                    |     |   | 2010                  |   |
|                                                                                                                        |   |                    |     |   |                  |   |
| Loans      in Default - Impairment Status:                                                                                  |   |                    |     |   |                  |   |
| Impaired      loans in default                                                                                              |   | $                       | 458,464  |   |                  | $      | 443,870 |   |
| Non-impaired      loans in default                                                                                          |   |                    | 73,534   |   |                  |   | 74,052 |   |
| Total      loans in default                                                                                                 |   | $                       | 531,998  |   |                  | $      | 517,922 |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Allowance      for Credit Loss on Impaired Loans                                                                            |   |                    |     |   |                  |   |   |   |
| Impaired      loans in default                                                                                              |   | $                       | 458,464  |   |                  | $      | 443,870 |   |
| Less:      Allowance for Credit Loss                                                                                        |   |                    | (330,071 | )      |                  |   | (321,968 | ) |
| Net      carrying value of impaired loans                                                                                   |   | $                       | 128,393  |   |                  | $      | 121,902 |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Note:      none of the impaired loans have an allowance for credit    loss                                                  |   |                    |     |   |                  |   |   |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Average      investment for impaired loans during period held                                                               |   | $                       | 456,993  |   |                  | $      | 443,224 |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Interest      income recognized during the period that loans were    impaired                                               |   | $                       | 1,898    |   |                  | $      | - |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Interest      income recognized using a cash-basis method of accounting during the      period that the loans were impaired |   | $                       | 404      |   |                  | $      | - |   |

----

|   | · | the      type of property; |
|--------|--------|----------------------------|

|   | · | the      current status of entitlement and level of development (horizontal or      vertical improvements) of the respective  project; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      likelihood of a bulk sale as opposed to individual unit    sales; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | whether      the property is currently or near ready to produce  income; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | the      current sales price of property in relation to cost of      development; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | the      availability and reliability of market participant data;    and |
|--------|--------|--------------------------------------------------------------------------|

|   | · | the      date of an offer received in relation to the reporting    period. |
|--------|--------|----------------------------------------------------------------------------|

----

----

|   | 1. | Reviewed      the status of each loan in our portfolio to ascertain the likelihood that      we will collect all amounts due under the terms of the loans at maturity      based on current real estate and credit market  conditions. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | With      respect to loans in our portfolio whose collection was deemed to be      unlikely, we reviewed the portfolio to ascertain when the latest valuation      of the underlying collateral wasperformed. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Subjected      our entire loan portfolio to independent third party valuation as of      September 30, 2009, with a review and update of such valuations provided      through December 31, 2009 and through March 31, 2010, to determine whether      any material changes in industry or economic conditions warranted a change      in the valuation conclusions formed at September 30,  2009. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 4.  | For      the year ended December 31, 2009, we utilized the services of Cushman      & Wakefield, a nationally recognized valuation firm, and other      valuation firms to perform a valuation analysis for the selected projects.      Cushman & Wakefield valued approximately 89% of the outstanding      principal balance of our loan portfolio while other valuation firms valued      the remaining 11%. For those valuations performed by valuation firms other      than Cushman & Wakefield, we engaged Cushman & Wakefield to      perform a review of the valuations andreports. |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | For      loan collateral not subject to third-party valuation during the year ended      December 31, 2008, we performed an analysis on selected assets utilizing a      development approach, using observable and unobservable inputs available,      to determine the fair value for the loan collateral. This analysis      included estimating project development costs, projected carrying costs,      such as property taxes, and estimated disposal costs. The cash flow      streams were then discounted to present value to derive fair      value. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.  | For      projects in which we have received a bona fide written third party offer      to buy our loan, or the borrower has received a bona fide written third      party offer to buy the related project, we utilized the offer amount in      cases in which the offer exceeded the valuation conclusion reached by the      independent valuation firms. Such offers are only considered if the      Manager deems the offer to be valid, reasonable and      negotiable. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | Very      few of the precedent transactions that were analyzed satisfied the market      value and fair value requirement that the price reflect the price of an      orderly transaction, rather than that of a sale under duress or in markets      in turmoil. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | Inputs      for use in the development valuation models were reported by the valuation      firms to be inconsistent and reflective of a distressed market that had      not yet stabilized for inputs into discounted cash flow or other financial      models, such as absorption rates and timing, unit pricing and trends,      discount rate, risk adjustment processes, or the  like. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | A      distinction was made between owners under duress and properties under      duress. Market values are determined based on the highest and best use of      the real property being valued. When owners are under duress, as defined      by applicable accounting guidance, prices of transactions in which they      are involved must be viewed as at least potentially subject to duress as      well. The valuation firms took this distinction into account in arriving      at highest and best use conclusions and selecting appropriate valuation      methodologies. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | For      2009, the highest and best use for the majority of real estate collateral      subject to third-party valuation was deemed to be held for investment      and/or future development, rather than being subject to immediate      development and/or sale. In determining fair value, the Manager utilized      the “as is” sales comparable valuation methodology for 31 assets, the      development approach for six assets, the income capitalization approach      for four assets, and the cost approach for two assets, and we utilized      offers received from third parties to estimate fair value for the      remaining 14 assets. The Manager selected a fair value within a      determinable range as provided by the valuation  firm. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | •  | For      the projects which included either un-entitled or entitled land lacking      any vertical or horizontal improvements, given the current distressed      state of the real estate and credit markets, the development approach was      deemed to be unsupportable because market participant data was      insufficient or other assumptions were not reliably available from the      valuation firm’s market research; the “highest and best use” standard in      these instances required such property to be classified as “held for      investment” purposes until market conditions provide observable      development activity to support a valuation model for the development of      the planned site. As a result, the valuation firms used a sales comparison      approach using available data to determine fair  value. |
|--|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | For      the projects containing partially or fully developed lots, the development      approach was generally utilized, with assumptions made for pricing trends,      absorption projections, holding costs, and the relative risk given these      assumptions. The assumptions were based on currently observable available      market data. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | For      operating properties, the income approach, using the direct capitalization      and discounted cash flow methods was used by the valuation firms. The      anticipated future cash flows and a reversionary value were discounted to      the net present value at a chosen yield rate. The assumptions were based      on currently observable available marketdata. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | For      collateral to be developed, the initial unit sales price utilized was      based on local market, comparable prices from non-distressed pricing from      prior periods utilizing observable and unobservable data points, generally      discounted by 20% or more. In general, the Manager assumed a price      escalation utilizing the low end of a historical 3-year average look back      for the last 10 years. We considered this a fair exchange price in an      orderly transaction between market participants to sell the asset,      assuming its highest and best use as determined by management, in the      principal or most advantageous market for the  asset. |
|--|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | For      collateral to be developed, the additional development costs, operating      and selling cost assumptions the Manager made were based on observable and      unobservable cost estimates obtained from a cross section of industry      experts and marketparticipants. |
|--|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | For      collateral consisting of partially complete or finished lots, development      costs, operating and selling cost assumptions the Manager made were based      on observable and unobservable cost estimates obtained from a      cross-section of industry experts and market  participants. |
|--|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | • | For      collateral whose development is complete or nearly complete and which are      expected to be leased initially to allow for stabilization of market      prices before being sold, we utilized operating revenue and costs for      comparable projects using current operating data obtained by the Manager.      Based upon an assumed stabilization of applicable real estate markets, the      Manager utilized unit sales prices comparable to historical      pricing. |
|--|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | •  | Based      on the resulting net cash flows derived from the utilization of the above      assumptions, we applied risk-adjusted annual discount rates ranging from      10.5% to 30% for December 31, 2009 and March 31, 2010 to the net cash      flows, depending on the projected build-out term, the project type, the      location and assumed projectrisk. |
|--|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 1) | In      conducting the 2009 and 2010 valuations, the third party valuation      specialist’s data and the research performed in connection with valuations      were influenced by market duress, economic uncertainty, and a relative      shortage of tangible market data. Numerous of the relevant transactions      consummated around the time of preparation of the valuation reports were      believed to be based on either a property or a seller in distress and,      thus, the applicable transaction was executed under a condition of      duress.  The Manager noted that the pricing of many actual      transactions in what was observed to be a less than normal volume of      purchases and sales frequently appeared to be lower than the expectations      of many, if not most, owners of competitive properties.  As a result,      in the Manager’s judgment, for each of the Fund’s loans not supported by      recent bona fide independent third-party purchase offers, the Manager      concluded  that the values at the high end of the range were more      representative of fair values than any other point in the      range; |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 2) | The      Manager concluded that the third party valuation specialist’s reported      value ranges, and the underlying concepts of the ranges themselves, did      not reflect the improving market conditions as of December 31, 2009, but      because of the lag in the time frame for their gathering and processing      information, were more representative of early fourth-quarter 2009, if not      before. The Manager obtained observable and unobservable evidence (such as      published residential pricing indices and other real estate market      publications, discussions with real estate brokers with applicable market      expertise in local markets, discussions with third-party consultants and      direct market participants with relevant real estate experience) as of      December 31, 2009 that indicated that fair values have “bottomed out”, and      there is an indication that the home pricing trends are moving upward.      Based on the Manager’s experience, it is the Manager’s judgment that      buyers will select parcels that offer the most competitive advantage and      the highest and best use of their capital in order to complete their      project and maximize their returns. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3) | Individual      valuation reports were prepared assuming non-leveraged sales transactions      of the underlying collateral in accordance with professional appraisal      standards. Because the Fund’s core business is that of a first lien real      estate mortgage lender, the Manager believes that the Fund’s capacity to      provide financing, particularly in the absence of available financing in      existing credit markets, provides the Fund a market advantage that would      significantly increase the likelihood that qualified buyers would be      willing to pay a price at the top of the applicable valuation range.       The Manager believes that this market advantage further supports the      Manager’s selection of the high end of the range when determining the      single best estimate of value from within the range of values      provided. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                |   | March      31, |    |   | March      31, |   |
|-------------------------------------|--------|----------------|---------|--------|----------------|--------|
|                                |   | 2009           |    |   | 2010           |   |
| Balance      at beginning of period |   | $              | 300,310 |   |           | $      | 330,428 |   |
|                                |   |           |    |   |           |   |   |   |
| Provision      for credit losses    |   |           |    |   |           |   | - |   |
| Net      charge offs                |   |           | (17,400 | )      |           |   | (8,460 | ) |
|                                |   |           |    |   |           |   |   |   |
| Balance      at end of period       |   | $              | 282,910 |   |           | $      | 321,968 |   |

|                                             |   | December      31, 2009 |   |   | March      31, 2010 |   |
|--------------------------------------------------|--------|------------------------|--------|--------|---------------------|--------|
|                                             |   | Significant            |   |   |                |   |   |   |   |   | Significant |   |   |   |   |   |   |   |
|                                             |   | Other                  |   |   | Significant         |   |   |   |   |   | Other |   |   | Significant |   |   |   |   |
|                                             |   | Observable             |   |   | Unobservable        |   |   |   |   |   | Observable |   |   | Unobservable |   |   |   |   |
|                                             |   | Inputs                 |   |   | Inputs              |   |   |   |   |   | Inputs |   |   | Inputs |   |   |   |   |
|                                             |   | (Level      2)         |   |   | (Level      3)      |   |   | Total |   |   | (Level      2) |   |   | (Level      3) |   |   | Total |   |
| Description:                                     |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Mortgage Loans:                         |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                      | -      |   |                | $      | 4,211 |   |   | $ | 4,211 |   |   | $ | - |   |   | $ | 3,076 |   |   | $ | 3,076 |   |
| Processing      Entitlements                     |   |                   | 1,028  |   |                |   | 49,838 |   |   |   | 50,866 |   |   | $ | 1,503 |   |   |   | 45,983 |   |   |   | 47,485 |   |
|                                             |   |                   | 1,028  |   |                |   | 54,049 |   |   |   | 55,077 |   |   |   | 1,503 |   |   |   | 49,059 |   |   |   | 50,561 |   |
| Entitled      Land:                              |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |                   | 7,693  |   |                |   | 13,499 |   |   |   | 21,192 |   |   |   | 7,642 |   |   |   | 8,264 |   |   |   | 15,906 |   |
| Infrastructure      under Construction           |   |                   | 459    |   |                |   | 29,939 |   |   |   | 30,398 |   |   |   | 364 |   |   |   | 29,740 |   |   |   | 30,105 |   |
| Improved      and Held for Vertical Construction |   |                   | 2,519  |   |                |   | 16,012 |   |   |   | 18,531 |   |   |   | 5,261 |   |   |   | 15,940 |   |   |   | 21,200 |   |
|                                             |   |                   | 10,671 |   |                |   | 59,450 |   |   |   | 70,121 |   |   |   | 13,267 |   |   |   | 53,944 |   |   |   | 67,211 |   |
| Construction      & Existing Structures:     |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process     |   |                   | 3,860  |   |                |   | 12,359 |   |   |   | 16,219 |   |   |   | 2,909 |   |   |   | 11,553 |   |   |   | 14,462 |   |
| Existing      Structure Held for Investment      |   |                   | -      |   |                |   | 16,570 |   |   |   | 16,570 |   |   |   | - |   |   |   | 9,304 |   |   |   | 9,304 |   |
| Existing      Structure - Improvements           |   |                   | -      |   |                |   | 56,033 |   |   |   | 56,033 |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
|                                             |   |                   | 3,860  |   |                |   | 84,963 |   |   |   | 88,822 |   |   |   | 2,909 |   |   |   | 76,890 |   |   |   | 79,799 |   |
| Total                                            |   | $                      | 15,559 |   |                | $      | 198,461 |   |   | $ | 214,020 |   |   | $ | 17,678 |   |   | $ | 179,893 |   |   | $ | 197,571 |   |

----

|                                       |   | Mortgage   |    |
|--------------------------------------------|--------|------------|---------|
|                                       |   | Loans, net |    |
| Balances,      December 31, 2009           |   | $          | 198,461 |   |
|                                       |   |       |    |   |
| Mortgage      Loan Fundings                |   |       | 1,314   |   |
| Mortgage      Loan Repayments              |   |       | (3,500  | ) |
| Transfers      to REO                      |   |       | 6,339   |   |
| Mortgage      Repayment on whole loan sold |   |       | (22,721 | ) |
| Transfers      into (out of) level 3       |   |       | -       |   |
| Included      in earnings:                 |   |       |    |   |
| Provision      for credit losses           |   |       | -       |   |
|                                       |   |       |    |   |
| Balances,      March 31, 2010              |   | $          | 179,893 |   |

|                                             |   | December      31, 2009 |     |   | March      31, 2010 |   |
|--------------------------------------------------|--------|------------------------|----------|--------|---------------------|--------|
|                                             |   | Amount                 |     |   | %                   |   |   | # |   |   | Amount |   |   | % |   |   | # |   |
| Pre-entitled      Land:                          |   |                   |     |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                      | 13,834   |   |                |   | 2.5 | % |   |   | 3 |   |   | $ | 12,815 |   |   |   | 2.5 | % |   |   | 2 |   |
| Processing      Entitlements                     |   |                   | 185,608  |   |                |   | 34.1 | % |   |   | 8 |   |   |   | 185,668 |   |   |   | 35.8 | % |   |   | 8 |   |
|                                             |   |                   | 199,442  |   |                |   | 36.6 | % |   |   | 11 |   |   |   | 198,483 |   |   |   | 38.3 | % |   |   | 10 |   |
| Entitled      Land:                              |   |                   |     |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |                   | 101,942  |   |                |   | 18.8 | % |   |   | 14 |   |   |   | 91,918 |   |   |   | 17.7 | % |   |   | 12 |   |
| Infrastructure      under Construction           |   |                   | 69,839   |   |                |   | 12.8 | % |   |   | 5 |   |   |   | 69,874 |   |   |   | 13.4 | % |   |   | 5 |   |
| Improved      and Held for Vertical Construction |   |                   | 47,227   |   |                |   | 8.7 | % |   |   | 4 |   |   |   | 47,314 |   |   |   | 9.1 | % |   |   | 4 |   |
|                                             |   |                   | 219,008  |   |                |   | 40.3 | % |   |   | 23 |   |   |   | 209,106 |   |   |   | 40.2 | % |   |   | 21 |   |
| Construction      & Existing Structures:     |   |                   |     |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process     |   |                   | 46,325   |   |                |   | 8.5 | % |   |   | 16 |   |   |   | 43,897 |   |   |   | 8.4 | % |   |   | 13 |   |
| Existing      Structure Held for Investment      |   |                   | 23,640   |   |                |   | 4.3 | % |   |   | 4 |   |   |   | 12,020 |   |   |   | 2.3 | % |   |   | 2 |   |
| Existing      Structure - Improvements           |   |                   | 56,033   |   |                |   | 10.3 | % |   |   | 1 |   |   |   | 56,033 |   |   |   | 10.8 | % |   |   | 1 |   |
|                                             |   |                   | 125,998  |   |                |   | 23.1 | % |   |   | 21 |   |   |   | 111,950 |   |   |   | 21.5 | % |   |   | 16 |   |
| Total                                            |   |                   | 544,448  |   |                |   | 100.0 | % |   |   | 55 |   |   |   | 519,539 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowance for Credit Loss             |   |                   | (330,428 | )      |                |   |   |   |   |   |   |   |   |   | (321,968 | ) |   |   |   |   |   |   |   |   |
| Net      Carrying Value                          |   | $                      | 214,020  |   |                |   |   |   |   |   |   |   |   | $ | 197,571 |   |   |   |   |   |   |   |   |   |

----

|                                 |   | December 31, 2009 |     |   | March 31, 2010 |   |
|--------------------------------------|--------|-------------------|----------|--------|----------------|--------|
|                                 |   | Amount            |     |   | %              |   |   | # |   |   | Amount |   |   | % |   |   | # |   |
|                                 |   |              |     |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                          |   | $                 | 273,666  |   |           |   | 50.2 | % |   |   | 35 |   |   | $ | 270,396 |   |   |   | 52.0 | % |   |   | 31 |   |
| Mixed      Use                       |   |              | 177,308  |   |           |   | 32.6 | % |   |   | 7 |   |   |   | 170,731 |   |   |   | 32.9 | % |   |   | 6 |   |
| Commercial                           |   |              | 92,404   |   |           |   | 17.0 | % |   |   | 12 |   |   |   | 77,342 |   |   |   | 14.9 | % |   |   | 9 |   |
| Industrial                           |   |              | 1,070    |   |           |   | 0.2 | % |   |   | 1 |   |   |   | 1,070 |   |   |   | 0.2 | % |   |   | 1 |   |
| Total                                |   |              | 544,448  |   |           |   | 100.0 | % |   |   | 55 |   |   |   | 519,539 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowance for Credit Loss |   |              | (330,428 | )      |           |   |   |   |   |   |   |   |   |   | (321,968 | ) |   |   |   |   |   |   |   |   |
| Net      Carrying Value              |   | $                 | 214,020  |   |           |   |   |   |   |   |   |   |   | $ | 197,571 |   |   |   |   |   |   |   |   |   |

|            |   | December      31, 2009 |    |   | March      31, 2010 |   |
|-----------------|--------|------------------------|---------|--------|---------------------|--------|
|            |   | Oustanding             |    |   | Allowance      for  |   |   | Net      Carrying |   |   |   |   |   |   |   |   | Oustanding |   |   | Allowance      for |   |   | Net      Carrying |   |   |   |   |   |   |   |
|            |   | Principal              |    |   | Credit      Loss    |   |   | Amount |   |   | Percent |   |   | # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | Percent |   |   | # |   |
| Arizona         |   | $                      | 281,492 |   |                | $      | (162,639 | ) |   | $ | 118,853 |   |   |   | 55.5 | % |   |   | 26 |   |   | $ | 275,582 |   |   | $ | (159,971 | ) |   | $ | 115,610 |   |   |   | 58.5 | % |   |   | 22 |   |
| California      |   |                   | 181,390 |   |                |   | (120,829 | ) |   |   | 60,561 |   |   |   | 28.3 | % |   |   | 20 |   |   |   | 181,478 |   |   |   | (118,070 | ) |   |   | 63,408 |   |   |   | 32.1 | % |   |   | 20 |   |
| New      Mexico |   |                   | 5,241   |   |                |   | (1,094 | ) |   |   | 4,147 |   |   |   | 1.9 | % |   |   | 2 |   |   |   | 5,240 |   |   |   | (1,075 | ) |   |   | 4,165 |   |   |   | 2.1 | % |   |   | 2 |   |
| Texas           |   |                   | 11,102  |   |                |   | (4,272 | ) |   |   | 6,830 |   |   |   | 3.2 | % |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   |   | 0 |   |
| Idaho           |   |                   | 49,594  |   |                |   | (38,981 | ) |   |   | 10,613 |   |   |   | 5.0 | % |   |   | 2 |   |   |   | 49,594 |   |   |   | (42,852 | ) |   |   | 6,743 |   |   |   | 3.4 | % |   |   | 2 |   |
| Nevada          |   |                   | 7,984   |   |                |   | (2,613 | ) |   |   | 5,371 |   |   |   | 2.5 | % |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   |   | 0 |   |
| Utah            |   |                   | 7,645   |   |                |   | - |   |   |   | 7,645 |   |   |   | 3.6 | % |   |   | 1 |   |   |   | 7,645 |   |   | $ | - |   |   |   | 7,645 |   |   |   | 3.9 | % |   |   | 1 |   |
| Total           |   | $                      | 544,448 |   |                | $      | (330,428 | ) |   | $ | 214,020 |   |   |   | 100.0 | % |   |   | 55 |   |   | $ | 519,539 |   |   | $ | (321,968 | ) |   | $ | 197,571 |   |   |   | 100.0 | % |   |   | 47 |   |

----

----

----

----

----

|                                                       |   | December      31, 2009 |    |   | March      31, 2010 |   |
|------------------------------------------------------------|--------|------------------------|---------|--------|---------------------|--------|
|                                                       |   | Loans      Held        |    |   | Loans      Held     |   |   |   |   |   | Loans      Held |   |   | Loans      Held |   |   |   |   |
|                                                       |   | to Maturity            |    |   | for Sale            |   |   | Total |   |   | to Maturity |   |   | for Sale |   |   | Total |   |
| Undispersed      Loans-in-process per Note Agreement       |   | $                      | 63,001  |   |                | $      | - |   |   | $ | 63,001 |   |   | $ | 59,947 |   |   | $ | - |   |   | $ | 59,947 |   |
| Less:      amounts not to be funded                        |   |                   | (47,026 | )      |                |   | - |   |   |   | (47,026 | ) |   |   | (46,178 | ) |   |   | - |   |   |   | (46,178 | ) |
| Undispersed      Loans-in-process per Financial Statements |   | $                      | 15,975  |   |                | $      | - |   |   | $ | 15,975 |   |   | $ | 13,769 |   |   | $ | - |   |   | $ | 13,769 |   |

----

|                                     |   | December      31, |   |   | March      31, |   |
|------------------------------------------|--------|-------------------|--------|--------|----------------|--------|
| Loans-in-ProcessAllocation:              |   | 2009              |   |   | 2010           |   |
| Construction/Operations      Commitments |   | $                 | 3,731  |   |           | $      | 3,764 |   |
| Unfunded      Interest Reserves          |   |              | 7,524  |   |           |   | 6,993 |   |
| Deferred      Loan Fees due to Manager   |   |              | 2,360  |   |           |   | 660 |   |
| Reserve      for Protective Advances     |   |              | 654    |   |           |   | 646 |   |
| Taxes      and Other                     |   |              | 1,706  |   |           |   | 1,706 |   |
| Total      Loan-in-Process               |   | $                 | 15,975 |   |           | $      | 13,769 |   |

----

----

| Item      2. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations. |
|--------------|--------------------------------------------------------------------------------------------------------|

|   | · | The      Fund has been and will continue to be adversely affected by the general      economic slowdown and recession in the U.S. and  abroad. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      are subject to the risk that, despite recent actions and proposals by the      U.S. government and governments around the world, the economy and real      estate and other markets will not improve, which could continue to      adversely affect our ability to sell or dispose of properties we own and      the ability of our borrowers to repay our loans or obtain take-out      financing in a timely manner, on reasonable terms, or at all, which would      adversely affect our liquidity and operating  results. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As      allowed by the Operating Agreement, effective October 1, 2008, the Manager      elected to suspend certain of our activities, including the acceptance of      any additional investments in the Fund, the payment of redemption      requests, the acceptance of new redemption requests, and the      identification and funding of new loans (excluding financing new loans in      connection with the sale of collateral under existing loans or the sale of      real estate owned).  This election was made in order to preserve the      Fund’s capital and to stabilize the Fund’s operating activities and liquid      assets in order to assist us in our ability to meet future obligations,      including those pursuant to the Fund’s current loan commitments.       There can be no assurance that our activities will resume in the      foreseeable future, if ever. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | If      our liquidity continues to dissipate and we are unable to meet our      obligations, we may continue to sell certain assets for a price at or      below their current book value, which could result in an additional loss      (impairment charge). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our      units lack liquidity and marketability and our Members cannot sell their      units or have their units redeemed.  As a result, our Members may      lose their entire investment or may not be able to sell their units or      have them redeemed in a timely manner, or at all, or at the price they      paid. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      are subject to risks generally associated with the ownership of real      estate-related assets, including changing economic conditions,      environmental risks, unforeseen statutory and regulatory changes, the cost      of and ability to obtain insurance and risks related to developing,      maintaining and leasing ofproperties. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As      a mortgage lender, we are subject to a variety of external forces that      could have a material adverse effect on our operations and results,      including, without limitation, fluctuations in interest rates,      fluctuations in economic conditions (which are exacerbated by our limited      geographic diversity), and the effect that regulators or bankruptcy courts      could have on our operations and rights as a secured    lender. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our      loans, which are not guaranteed by any government agency, are risky and      are not sold on any secondary market, and the underwriting standards that      we have utilized may not have been sufficient to protect Members from loan      defaults or ensure that sufficient collateral, including collateral      pledged by guarantors, will exist to protect Members from any such      defaults. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our      borrowers are exposed to various risks associated with owning real estate,      and expected and unexpected costs or liabilities, including costs of      holding such real estate, could reduce the likelihood that our borrowers      will be able to develop or sell the real estate, which could increase the      likelihood that our borrowers will default on the loans or may require us      to advance additional amounts to preserve and protect our interest in the      related assets. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Real      estate assets acquired in foreclosure or through other means are generally      non-earning assets that reduce the distributable yield to investors, if      any.  Moreover, the ultimate disposition and liquidation of such      assets may not occur for an extended period of time, which would adversely      affect our liquidity. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      rely exclusively on our Manager to manage our investments and conduct our      operations.  Our Members have no right to participate in decisions      relating to the activities of our Manager or, in general, the      Fund. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      are obligated to pay certain fees to our Manager, which may materially and      adversely impact our operating results and reduce cash available for other      purposes. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      Manager faces conflicts of interest, including, without limitation,      competing demands upon its time and its involvement with other activities,      all of which could have an adverse effect on the  Fund. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As      a publicly reporting company, we are required to divert considerable      resources to new compliance initiatives, including refining, maintaining,      testing and reporting on our disclosure controls and procedures and      internal control over financial reporting, as well as compliance with      accounting and reporting initiatives relating to valuation of our      assets. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | The      suspension of the Fund’s activities may persist for an extended period of      time, and we may not resume historical activities at  all. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | There      are material income tax and retirement plan risks associated with      ownership of our units. |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | There      is a risk that we may modify and refinance existing portfolio loans which      currently have interest rate floors to loans with lower rates, or for      extended periods, which could reduce mortgage  income. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|  | · | position      the Fund to become a publicly traded corporation listed on the New York      Stock Exchange; |
|--|--------|------------------------------------------------------------------------------------------------------------|

|  | · | create      the opportunity for liquidity formembers; |
|--|--------|-------------------------------------------------------|

|  | · | cause      the Fund to be internally managed, which would eliminate conflicts and      more fully align the interests of the Fund, the Manager and      Holdings; |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | create      the opportunity for us to raise additional capital in the public markets,      thereby enabling the successor to the Fund to better acquire and originate      commercial mortgage loans and other real estate related investment      opportunities; |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | create      the opportunity to achieve long term value for stockholders of IMH      Financial Corporation through dividends and capital appreciation;      and |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | create      a board of directors comprised of a majority of independent directors,      which will enhance our corporategovernance. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                  |   | As      of and for  |      |   |                         |   |
|---------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|------------------------------|--------|
|                                                                                  |   | the      Year Ended |      |   | As      of and for the Three |   |
|                                                                                  |   | December 31,        |      |   | Months Ended March 31,       |   |
|                                                                                  |   | 2009                |      |   | 2009                         |   |   | 2010 |   |
| Summary      balance sheet items                                                      |   |                |      |   |                         |   |   |   |   |
| Cash      and cash equivalents                                                        |   | $                   | 963       |   |                         | $      | 7,873 |   |   | $ | 3,852 |   |
| Mortgage      loan principal outstanding                                              |   | $                   | 544,448   |   |                         | $      | 603,628 |   |   | $ | 519,539 |   |
| Allowance      for credit losses                                                      |   | $                   | (330,428  | )      |                         | $      | (282,910 | ) |   | $ | (321,968 | ) |
| Mortgage      loans, net                                                              |   | $                   | 214,020   |   |                         | $      | 320,718 |   |   | $ | 197,571 |   |
| Real      estate owned                                                                |   | $                   | 104,231   |   |                         | $      | 69,466 |   |   | $ | 120,330 |   |
| Total      assets                                                                     |   | $                   | 337,796   |   |                         | $      | 412,844 |   |   | $ | 341,786 |   |
| Total      liabilities                                                                |   | $                   | 15,928    |   |                         | $      | 3,407 |   |   | $ | 22,770 |   |
| Retained      earnings (accumulated deficit)                                          |   | $                   | (408,515  | )      |                         | $      | (320,946 | ) |   | $ | (411,367 | ) |
| Members'      capital, net of redemptions                                             |   | $                   | 730,383   |   |                         | $      | 730,383 |   |   | $ | 730,383 |   |
| Total      owners' equity                                                             |   | $                   | 321,868   |   |                         | $      | 409,437 |   |   | $ | 319,016 |   |
|                                                                                  |   |                |      |   |                         |   |   |   |   |   |   |   |
| Summary      income statement                                                         |   |                |      |   |                         |   |   |   |   |   |   |   |
| Mortgage      loan interest                                                           |   | $                   | 21,339    |   |                         | $      | 11,938 |   |   | $ | 522 |   |
| Total      revenue                                                                    |   | $                   | 22,522    |   |                         | $      | 11,974 |   |   | $ | 1,008 |   |
| Operating      expenses                                                               |   | $                   | 9,433     |   |                         | $      | 898 |   |   | $ | 3,859 |   |
| Provision      for credit losses                                                      |   | $                   | 79,299    |   |                         | $      | - |   |   | $ | - |   |
| Impairment      charge for assets acquired through foreclosure                        |   | $                   | 8,000     |   |                         | $      | - |   |   | $ | - |   |
| Total      expenses                                                                   |   | $                   | 96,999    |   |                         | $      | 898 |   |   | $ | 3,860 |   |
| Net      earnings (loss)                                                              |   | $                   | (74,477   | )      |                         | $      | 11,076 |   |   | $ | (2,852 | ) |
|                                                                                  |   |                |      |   |                         |   |   |   |   |   |   |   |
| Member      Related items                                                             |   |                |      |   |                         |   |   |   |   |   |   |   |
| Number      of member accounts                                                        |   |                | 4,772     |   |                         |   | 4,735 |   |   |   | 4,761 |   |
| Average      Member account balance                                                   |   | $                   | 67        |   |                         | $      | 86 |   |   | $ | 67 |   |
| Distributions      to members (including distributions reinvested)                    |   | $                   | 11,706    |   |                         | $      | 9,690 |   |   | $ | - |   |
| Book      value per member unit                                                       |   | $                   | 4,406.86  |   |                         | $      | 5,605.80 |   |   | $ | 4,367.82 |   |
| Net      distributions to Members per weighted average membership    units            |   | $                   | 160.27    |   |                         | $      | 132.67 |   |   | $ | - |   |
| Net      earnings (loss) per weighted average member unit                             |   | $                   | (1,019.70 | )      |                         | $      | 151.64 |   |   | $ | (39.04 | ) |
| Earnings      (loss) from continuing operations per weighted average member      unit |   | $                   | 175.55    |   |                         | $      | 151.64 |   |   | $ | (39.04 | ) |
|                                                                                  |   |                |      |   |                         |   |   |   |   |   |   |   |
| Loan      related items                                                               |   |                |      |   |                         |   |   |   |   |   |   |   |
| Note      balances originated                                                         |   | $                   | 47,557    |   |                         | $      | 392 |   |   | $ | - |   |
| Number      of notes originated                                                       |   |                | 3         |   |                         |   | 1 |   |   |   | - |   |
| Average      note balance originated                                                  |   | $                   | 15,852    |   |                         | $      | 392 |   |   |   | N/A |   |
| Number      of loans outstanding                                                      |   |                | 55        |   |                         |   | 60 |   |   |   | 47 |   |
| Average      loan carrying value                                                      |   | $                   | 3,891     |   |                         | $      | 5,345 |   |   | $ | 4,204 |   |
| %      of portfolio principal – fixed interest rate                             |   |                | 50.4      | %      |                         |   | 37.7 | % |   |   | 50.4 | % |
| Weighted      average interest rate – fixed                                     |   |                | 9.8       | %      |                         |   | 9.61 | % |   |   | 9.84 | % |
| %      of portfolio principal – variable interest rate                          |   |                | 49.6      | %      |                         |   | 62.3 | % |   |   | 49.6 | % |
| Weighted      average interest rate – variable                                  |   |                | 12.9      | %      |                         |   | 12.53 | % |   |   | 12.88 | % |
| Principal      balance % by state:                                                    |   |                |      |   |                         |   |   |   |   |   |   |   |
| Arizona                                                                               |   |                | 55.5      | %      |                         |   | 53.5 | % |   |   | 53.1 | % |
| California                                                                            |   |                | 28.3      | %      |                         |   | 17.1 | % |   |   | 34.9 | % |
| Texas                                                                                 |   |                | 3.2       | %      |                         |   | 15.7 | % |   |   | - |   |
| Idaho                                                                                 |   |                | 5.0       | %      |                         |   | 3.2 | % |   |   | 9.5 | % |
| Other                                                                                 |   |                | 8.0       | %      |                         |   | 10.5 | % |   |   | 2.5 | % |
| Total                                                                                 |   |                | 100.0     | %      |                         |   | 100.0 | % |   |   | 100.0 | % |

----

|                                                                |   | As      of and for  |     |   |                         |   |
|---------------------------------------------------------------------|--------|---------------------|----------|--------|------------------------------|--------|
|                                                                |   | the      Year Ended |     |   | As      of and for the Three |   |
|                                                                |   | December 31,        |     |   | Months Ended March 31,       |   |
|                                                                |   | 2009                |     |   | 2009                         |   |   | 2010 |   |
| Credit      Quality                                                 |   |                |     |   |                         |   |   |   |   |
| Extension      fees included in mortgage loan principal             |   | $                   | 18,765   |   |                         | $      | 12,749 |   |   | $ | 18,225 |   |
| Interest      payments over 30 days delinquent                      |   | $                   | 7,530    |   |                         | $      | 6,903 |   |   | $ | 7,559 |   |
| Loans      past scheduled maturity                                  |   |                | 34       |   |                         |   | 29 |   |   |   | 30 |   |
| Principal      balance of loans past scheduled maturity             |   | $                   | 347,135  |   |                         | $      | 326,949 |   |   | $ | 323,933 |   |
| Number      of loans in non accrual status                          |   |                | 46       |   |                         |   | 32 |   |   |   | 44 |   |
| Carrying      Value of loans in non accrual status                  |   | $                   | 192,334  |   |                         | $      | 250,000 |   |   | $ | 187,794 |   |
| Allowance      for credit losses                                    |   | $                   | (330,428 | )      |                         | $      | (282,910 | ) |   | $ | (321,371 | ) |
| Allowance      for credit losses as % of loan principal outstanding |   |                | 60.7     | %      |                         |   | 46.9 | % |   |   | 61.9 | % |

|                                      |   | December 31,        |    |   | March 31, |   |
|-------------------------------------------|--------|---------------------|---------|--------|-----------|--------|
|                                      |   | 2008                |    |   | 2009      |   |   | 2010 |   |
| Average      Balance Sheets*              |   | (in      thousands) |    |
| Cash      and cash equivalents            |   | $                   | 78,379  |   |      | $      | 7,719 |   |   | $ | 2,408 |   |
| Mortgage      loan principal outstanding  |   |                | 551,174 |   |      |   | 584,551 |   |   |   | 531,994 |   |
| Allowance      for credit losses          |   |                | (70,290 | )      |      |   | (306,712 | ) |   |   | (326,198 | ) |
| Mortgage      loans, net                  |   |                | 480,884 |   |      |   | 277,840 |   |   |   | 205,796 |   |
| Real      estate owned, net               |   |                | 45,055  |   |      |   | 79,292 |   |   |   | 111,407 |   |
| Other      assets                         |   |                | 10,808  |   |      |   | 18,884 |   |   |   | 19,308 |   |
| Total      assets                         |   | $                   | 615,126 |   |      | $      | 383,735 |   |   | $ | 339,217 |   |
|                                      |   |                |    |   |      |   |   |   |   |   |   |   |
| Total      liabilities                    |   |                | 21,184  |   |      |   | 9,517 |   |   |   | 19,349 |   |
| Total      owners'equity                  |   |                | 593,942 |   |      |   | 374,218 |   |   |   | 319,868 |   |
| Total      liabilities and owners' equity |   | $                   | 615,126 |   |      | $      | 383,735 |   |   | $ | 339,216 |   |

----

|                                                           |   |                     |   |   | Three      Months |   |
|----------------------------------------------------------------|--------|--------------------------|--------|--------|-------------------|--------|
|                                                           |   | Years Ended December 31, |   |   | Ended March 31,   |   |
|                                                           |   | 2008                     |   |   | 2009              |   |   | 2010 |   |
| Analysis      of Mortgage Loan Interest by Loan Classification |   |                     |   |   |              |   |   |   |   |
|                                                           |   |                     |   |   |              |   |   |   |   |
| Pre-entitled      Land:                                        |   |                     |   |   |              |   |   |   |   |
| Held      for Investment                                       |   | $                        | 780    |   |              | $      | 60 |   |   | $ | - |   |
| Processing      Entitlements                                   |   |                     | 20,145 |   |              |   | 6,977 |   |   |   | - |   |
| Entitled      Land:                                            |   |                     |   |   |              |   |   |   |   |   |   |   |
| Held      for Investment                                       |   |                     | 14,262 |   |              |   | 2,385 |   |   |   | - |   |
| Infrastructure      under Construction                         |   |                     | 5,586  |   |              |   | 2,163 |   |   |   | 226 |   |
| Improved      and Held for vertical Construction               |   |                     | 5,656  |   |              |   | 1,384 |   |   |   | 139 |   |
| Construction      and Existing Structures:                     |   |                     |   |   |              |   |   |   |   |   |   |   |
| New      Structure - Construction in process                   |   |                     | 10,976 |   |              |   | 1,058 |   |   |   | 157 |   |
| Existing      Structure Held for Investment                    |   |                     | 2,825  |   |              |   | 1,201 |   |   |   | - |   |
| Existing      Structure- Improvements                          |   |                     | 5,267  |   |              |   | 6,111 |   |   |   | - |   |
| Total      Mortgage Interest Income                            |   | $                        | 65,497 |   |              | $      | 21,339 |   |   | $ | 522 |   |

|                                                        |   | December 31, |    |   | March 31, |   |
|-------------------------------------------------------------|--------|--------------|---------|--------|-----------|--------|
|                                                        |   | 2008         |    |   | 2009      |   |   | 2010 |   |
|                                                        |   |         |    |   |      |   |   |   |   |
| Average      Mortgage Loan Balances by Loan Classification* |   |         |    |   |      |   |   |   |   |
| Pre-entitled      Land:                                     |   |         |    |   |      |   |   |   |   |
| Held      for Investment                                    |   | $            | 5,673   |   |      | $      | 12,478 |   |   | $ | 13,325 |   |
| Processing      Entitlements                                |   |         | 198,886 |   |      |   | 193,261 |   |   |   | 185,638 |   |
| Entitled      Land:                                         |   |         |    |   |      |   |   |   |   |   |   |   |
| Held      for Investment                                    |   |         | 117,468 |   |      |   | 116,521 |   |   |   | 96,930 |   |
| Infrastructure      under Construction                      |   |         | 59,192  |   |      |   | 66,399 |   |   |   | 69,857 |   |
| Improved      and Held for vertical Construction            |   |         | 43,208  |   |      |   | 47,909 |   |   |   | 47,271 |   |
| Construction      and Existing Structures:                  |   |         |    |   |      |   |   |   |   |   |   |   |
| New      Structure - Construction in process                |   |         | 52,480  |   |      |   | 40,329 |   |   |   | 45,111 |   |
| Existing      Structure Held for Investment                 |   |         | 26,839  |   |      |   | 26,394 |   |   |   | 17,831 |   |
| Existing      Structure- Improvements                       |   |         | 47,428  |   |      |   | 81,260 |   |   |   | 56,033 |   |
| Total      Average Mortgage Loan Balances                   |   | $            | 551,174 |   |      | $      | 584,551 |   |   | $ | 531,994 |   |

|                                                |   | December 31, |   |   | March 31, |   |
|-----------------------------------------------------|--------|--------------|--------|--------|-----------|--------|
|                                                |   | 2008         |   |   | 2009      |   |   | 2010 |   |
| Average      Interest Rate by Loan Classification** |   |         |   |   |      |   |   |   |   |
|                                                |   |         |   |   |      |   |   |   |   |
| Pre-entitled      Land:                             |   |         |   |   |      |   |   |   |   |
| Held      for Investment                            |   |         | 12.0   | %      |      |   | 10.8 | % |   |   | 10.4 | % |
| Processing      Entitlements                        |   |         | 11.5   | %      |      |   | 9.6 | % |   |   | 9.2 | % |
| Entitled      Land:                                 |   |         |   |   |      |   |   |   |   |   |   |   |
| Held      for Investment                            |   |         | 12.2   | %      |      |   | 12.4 | % |   |   | 12.7 | % |
| Infrastructure      under Construction              |   |         | 12.2   | %      |      |   | 11.0 | % |   |   | 10.4 | % |
| Improved      and Held for vertical Construction    |   |         | 11.8   | %      |      |   | 12.1 | % |   |   | 12.2 | % |
| Construction      and Existing Structures:          |   |         |   |   |      |   |   |   |   |   |   |   |
| New      Structure - Construction in process        |   |         | 12.3   | %      |      |   | 11.5 | % |   |   | 10.5 | % |
| Existing      Structure Held for Investment         |   |         | 13.8   | %      |      |   | 12.0 | % |   |   | 12.0 | % |
| Existing      Structure- Improvements               |   |         | 12.5   | %      |      |   | 12.4 | % |   |   | 12.4 | % |
| Total      Overall Average Interest Rate            |   |         | 12.3   | %      |      |   | 11.5 | % |   |   | 11.2 | % |

----

|                                             |   |                     |   |   | Three      Months |   |
|--------------------------------------------------|--------|--------------------------|--------|--------|-------------------|--------|
|                                             |   | Years Ended December 31, |   |   | Ended March 31,   |   |
| Average      Yield***                            |   | 2008                     |   |   | 2009              |   |   | 2010 |   |
|                                             |   |                     |   |   |              |   |   |   |   |
| Pre-entitled      Land:                          |   |                     |   |   |              |   |   |   |   |
| Held      for Investment                         |   |                     | 13.7   | %      |              |   | 0.5 | % |   |   | 0.0 | % |
| Processing      Entitlements                     |   |                     | 10.1   | %      |              |   | 3.6 | % |   |   | 0.0 | % |
| Entitled      Land:                              |   |                     |   |   |              |   |   |   |   |   |   |   |
| Held      for Investment                         |   |                     | 12.1   | %      |              |   | 2.0 | % |   |   | 0.0 | % |
| Infrastructure      under Construction           |   |                     | 9.4    | %      |              |   | 3.3 | % |   |   | 0.3 | % |
| Improved      and Held for vertical Construction |   |                     | 13.1   | %      |              |   | 2.9 | % |   |   | 0.3 | % |
| Construction      and Existing Structures:       |   |                     |   |   |              |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |                     | 20.9   | %      |              |   | 2.6 | % |   |   | 0.4 | % |
| Existing      Structure Held for Investment      |   |                     | 10.5   | %      |              |   | 4.6 | % |   |   | 0.0 | % |
| Existing      Structure- Improvements            |   |                     | 11.1   | %      |              |   | 7.5 | % |   |   | 0.0 | % |
| Total      Weighted Average Yield                |   |                     | 12.1   | %      |              |   | 3.7 | % |   |   | 0.1 | % |

| Return      on Average Equity and Assets Ratio |   |   |   |   |   |   |   |   |   |
|------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Return      on average assets                  |   |   | -42.0  | %      |   |   | -19.4  | %      |   |   | -1.1 | % |
| Return      on average equity                  |   |   | -43.5  | %      |   |   | -19.9  | %      |   |   | -1.1 | % |
| Dividend      payout ratio                     |   |   | -24.8  | %      |   |   | -15.7  | %      |   |   | 0.0 | % |
| Equity      to assets ratio                    |   |   | 96.6   | %      |   |   | 97.5   | %      |   |   | 96.6 | % |

----

| (in      Thousands)                                                                                 |   | As of and for the Year ended December      31, |    |   | March 31, |   |
|-----------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|--------|-----------|--------|
|                                                                                                |   | 2006                                           |    |   | 2007      |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
| Principal      Balanaces Outstanding by Loan Classifications                                        |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                                                             |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   | $                                              | -       |   |      | $      | - |   |   | $ | 7,178 |   |   | $ | 13,834 |   |   | $ | 12,815 |   |
| Processing      Entitlements                                                                        |   |                                           | 145,219 |   |      |   | 203,166 |   |   |   | 200,902 |   |   |   | 185,608 |   |   |   | 185,668 |   |
| Entitled      Land:                                                                                 |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   |                                           | 41,894  |   |      |   | 135,060 |   |   |   | 114,307 |   |   |   | 101,942 |   |   |   | 91,918 |   |
| Infrastructure      under Construction                                                              |   |                                           | 17,621  |   |      |   | 60,037 |   |   |   | 57,908 |   |   |   | 69,839 |   |   |   | 69,874 |   |
| Improved      and Held for vertical Construction                                                    |   |                                           | 29,388  |   |      |   | 14,800 |   |   |   | 54,486 |   |   |   | 47,227 |   |   |   | 47,314 |   |
| Construction      and Existing Structures:                                                          |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process                                                        |   |                                           | 16,316  |   |      |   | 70,864 |   |   |   | 43,814 |   |   |   | 46,325 |   |   |   | 43,897 |   |
| Existing      Structure Held for Investment                                                         |   |                                           | 8,177   |   |      |   | 26,870 |   |   |   | 37,482 |   |   |   | 23,640 |   |   |   | 12,020 |   |
| Existing      Structure- Improvements                                                               |   |                                           | -       |   |      |   | - |   |   |   | 97,777 |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Principal Balanaces Outstanding by Loan Classifications                                  |   | $                                              | 258,615 |   |      | $      | 510,797 |   |   | $ | 613,854 |   |   | $ | 544,448 |   |   | $ | 519,539 |   |
|                                                                                                |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allocation      of Allowance for Credit Losses by                                                   |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loan      Classification                                                                            |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                                                             |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   | $                                              | -       |   |      | $      | - |   |   | $ | (3,242 | ) |   | $ | (9,623 | ) |   | $ | (9,739 | ) |
| Processing      Entitlements                                                                        |   |                                           | -       |   |      |   | (1,900 | ) |   |   | (122,266 | ) |   |   | (134,742 | ) |   |   | (138,182 | ) |
| Entitled      Land:                                                                                 |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   |                                           | -       |   |      |   | - |   |   |   | (79,279 | ) |   |   | (80,750 | ) |   |   | (76,011 | ) |
| Infrastructure      under Construction                                                              |   |                                           | -       |   |      |   | - |   |   |   | (24,863 | ) |   |   | (39,441 | ) |   |   | (39,897 | ) |
| Improved      and Held for Vertical Construction                                                    |   |                                           | -       |   |      |   | - |   |   |   | (38,522 | ) |   |   | (28,696 | ) |   |   | (25,986 | ) |
| Construction      & Existing Structures:                                                        |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process                                                        |   |                                           | -       |   |      |   | - |   |   |   | (28,547 | ) |   |   | (30,106 | ) |   |   | (29,435 | ) |
| Existing      Structure Held for Investment                                                         |   |                                           | -       |   |      |   | - |   |   |   | (2,954 | ) |   |   | (7,070 | ) |   |   | (2,716 | ) |
| Existing      Structure - Improvements                                                              |   |                                           | -       |   |      |   | - |   |   |   | (637 | ) |   |   | - |   |   |   | - |   |
| Allowance      for Loan Loss                                                                        |   | $                                              | -       |   |      | $      | (1,900 | ) |   | $ | (300,310 | ) |   | $ | (330,428 | ) |   | $ | (321,968 | ) |
|                                                                                                |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rollforward      of Allowance for Credit Losses by Loan Classifications                             |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at the beginning of period                                                             |   | $                                              | -       |   |      | $      | - |   |   | $ | (1,900 | ) |   | $ | (300,310 | ) |   | $ | (330,428 | ) |
|                                                                                                |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Additions      to Allowance for Credit Loss                                                         |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                                                             |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   | $                                              | -       |   |      | $      | - |   |   | $ | - |   |   | $ | (6,381 | ) |   | $ | (116 | ) |
| Processing      Entitlements                                                                        |   |                                           | -       |   |      |   | (1,900 | ) |   |   | (117,567 | ) |   |   | (24,851 | ) |   |   | (3,440 | ) |
| Entitled      Land:                                                                                 |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   |                                           | -       |   |      |   | - |   |   |   | (91,735 | ) |   |   | (9,851 | ) |   |   | 466 |   |
| Infrastructure      under Construction                                                              |   |                                           | -       |   |      |   | - |   |   |   | (30,338 | ) |   |   | (11,990 | ) |   |   | (456 | ) |
| Improved      and Held for Vertical Construction                                                    |   |                                           | -       |   |      |   | - |   |   |   | (13,249 | ) |   |   | 801 |   |   |   | 2,710 |   |
| Construction      & Existing Structures:                                                        |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process                                                        |   |                                           | -       |   |      |   | - |   |   |   | (38,157 | ) |   |   | (3,218 | ) |   |   | (412 | ) |
| Existing      Structure Held for Investment                                                         |   |                                           | -       |   |      |   | - |   |   |   | (4,361 | ) |   |   | (4,116 | ) |   |   | 1,248 |   |
| Existing      Structure - Improvements                                                              |   |                                           | -       |   |      |   | - |   |   |   | (593 | ) |   |   | (19,693 | ) |   |   | - |   |
| Total      provision for credit losses                                                              |   | $                                              | -       |   |      | $      | (1,900 | ) |   |   | (296,000 | ) |   | $ | (79,299 | ) |   | $ | - |   |
|                                                                                                |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Charge-Offs:                                                                                        |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                                                             |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                                                            |   | $                                              | -       |   |      | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Processing      Entitlements                                                                        |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | 12,375 |   |   |   | - |   |
| Entitled      Land:                                                                                 |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Held      for Investment                                                                            |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | 8,380 |   |   |   | 4,272 |   |
| Infrastructure      under Construction                                                              |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | (2,588 | ) |   |   | - |   |
| Improved      and Held for Vertical Construction                                                    |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | 9,025 |   |   |   | - |   |
| Construction      & Existing Structures:                                                        |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   |   |   |
| New      Structure - Construction in-process                                                        |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | 1,659 |   |   |   | 1,081 |   |
| Existing      Structure Held for Investment                                                         |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,107 |   |
| Existing      Structure - Improvements                                                              |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | 20,330 |   |   |   | - |   |
| Total      charge-offs                                                                              |   | $                                              | -       |   |      | $      | - |   |   | $ | - |   |   | $ | 49,181 |   |   | $ | 8,460 |   |
| Recoveries      - None                                                                              |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      recoveries                                                                               |   | $                                              | -       |   |      | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                                                                |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      charge-offs                                                                                |   | $                                              | -       |   |      | $      | - |   |   | $ | - |   |   | $ | 49,181 |   |   | $ | 8,460 |   |
|                                                                                                |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Change in Allowance for Credit Loss                                                        |   | $                                              | -       |   |      | $      | (1,900 | ) |   | $ | (296,000 | ) |   | $ | (30,118 | ) |   | $ | 8,460 |   |
| Other      changes to allowance for credit losses                                                   |   |                                           | -       |   |      |   | - |   |   |   | (2,410 | ) |   |   | - |   |   |   | - |   |
| Balance      at end of period                                                                       |   | $                                              | -       |   |      | $      | (1,900 | ) |   | $ | (300,310 | ) |   | $ | (330,428 | ) |   | $ | (321,968 | ) |
|                                                                                                |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of net charge-offs during the period to average loans outstanding during      the period |   |                                           | 0.0     | %      |      |   | 0.4 | % |   |   | 48.2 | % |   |   | 5.5 | % |   |   | -1.6 | % |

----

|                                                       |   | As of and for the Year ended December      31, |    |   | March 31, |   |
|------------------------------------------------------------|--------|------------------------------------------------|---------|--------|-----------|--------|
|                                                       |   | 2006                                           |    |   | 2007      |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
| Principal      Balances Outstanding by Loan Classification |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                    |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   | $                                              | -       |   |      | $      | - |   |   | $ | 7,178 |   |   | $ | 13,834 |   |   | $ | 12,815 |   |
| Processing      Entitlements                               |   |                                           | 145,219 |   |      |   | 203,166 |   |   |   | 200,902 |   |   |   | 185,608 |   |   |   | 185,668 |   |
| Entitled      Land:                                        |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   |                                           | 41,894  |   |      |   | 135,060 |   |   |   | 114,307 |   |   |   | 101,942 |   |   |   | 91,918 |   |
| Infrastructure      under Construction                     |   |                                           | 17,621  |   |      |   | 60,037 |   |   |   | 57,908 |   |   |   | 69,839 |   |   |   | 69,874 |   |
| Improved      and Held for vertical Construction           |   |                                           | 29,388  |   |      |   | 14,800 |   |   |   | 54,486 |   |   |   | 47,227 |   |   |   | 47,314 |   |
| Construction      and Existing Structures:                 |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process               |   |                                           | 16,316  |   |      |   | 70,864 |   |   |   | 43,814 |   |   |   | 46,325 |   |   |   | 43,897 |   |
| Existing      Structure Held for Investment                |   |                                           | 8,177   |   |      |   | 26,870 |   |   |   | 37,482 |   |   |   | 23,640 |   |   |   | 12,020 |   |
| Existing      Structure- Improvements                      |   |                                           | -       |   |      |   | - |   |   |   | 97,777 |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Loan Portfolio                                  |   | $                                              | 258,615 |   |      | $      | 510,797 |   |   | $ | 613,854 |   |   | $ | 544,448 |   |   | $ | 519,539 |   |
|                                                       |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Scheduled      Maturities                                  |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Scheduled      Maturities - One year or less               |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                    |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   | $                                              | -       |   |      | $      | - |   |   | $ | 7,178 |   |   | $ | 13,834 |   |   | $ | 12,815 |   |
| Processing      Entitlements                               |   |                                           | 145,219 |   |      |   | 203,166 |   |   |   | 195,168 |   |   |   | 185,608 |   |   |   | 185,668 |   |
| Entitled      Land:                                        |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   |                                           | 41,894  |   |      |   | 135,060 |   |   |   | 89,786 |   |   |   | 101,942 |   |   |   | 91,918 |   |
| Infrastructure      under Construction                     |   |                                           | 17,621  |   |      |   | 60,037 |   |   |   | 57,908 |   |   |   | 27,953 |   |   |   | 27,953 |   |
| Improved      and Held for vertical Construction           |   |                                           | 29,388  |   |      |   | 14,800 |   |   |   | 13,904 |   |   |   | 47,227 |   |   |   | 47,314 |   |
| Construction      and Existing Structures:                 |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process               |   |                                           | 16,316  |   |      |   | 70,864 |   |   |   | 43,814 |   |   |   | 12,653 |   |   |   | 12,632 |   |
| Existing      Structure Held for Investment                |   |                                           | 8,177   |   |      |   | 26,870 |   |   |   | 37,482 |   |   |   | 23,641 |   |   |   | 12,020 |   |
| Existing      Structure- Improvements                      |   |                                           | -       |   |      |   | - |   |   |   | 97,777 |   |   |   | - |   |   |   | - |   |
| Total      Scheduled Maturities - One year or less         |   | $                                              | 258,615 |   |      | $      | 510,797 |   |   | $ | 543,017 |   |   | $ | 412,858 |   |   | $ | 390,320 |   |
|                                                       |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Scheduled      Maturities - One to five years              |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                    |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   | $                                              | -       |   |      | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Processing      Entitlements                               |   |                                           | -       |   |      |   | - |   |   |   | 5,735 |   |   |   | - |   |   |   | - |   |
| Entitled      Land:                                        |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                   |   |                                           | -       |   |      |   | - |   |   |   | 24,520 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction                     |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | 41,886 |   |   |   | 41,920 |   |
| Improved      and Held for vertical Construction           |   |                                           | -       |   |      |   | - |   |   |   | 40,582 |   |   |   | - |   |   |   | - |   |
| Construction      and Existing Structures:                 |   |                                           |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process               |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | 33,671 |   |   |   | 31,266 |   |
| Existing      Structure Held for Investment                |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Existing      Structure- Improvements                      |   |                                           | -       |   |      |   | - |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Scheduled Maturities - One to five years        |   | $                                              | -       |   |      | $      | - |   |   | $ | 70,837 |   |   | $ | 131,590 |   |   | $ | 129,219 |   |
| Total      Scheduled Maturities                            |   | $                                              | 258,615 |   |      | $      | 510,797 |   |   | $ | 613,854 |   |   | $ | 544,448 |   |   | $ | 519,539 |   |

| Scheduled      Maturities - One to Five Years by Interest Type |   | As of and for the Year ended December      31, |   |   | March 31, |   |
|----------------------------------------------------------------|--------|------------------------------------------------|--------|--------|-----------|--------|
| Fixed      Interest Rates                                      |   | 2006                                           |   |   | 2007      |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
| Pre-entitled      Land:                                        |   |                                           |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   | $                                              | -      |   |      | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Processing      Entitlements                                   |   |                                           | -      |   |      |   | - |   |   |   | 1,929 |   |   |   | - |   |   |   | - |   |
| Entitled      Land:                                            |   |                                           |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   |                                           | -      |   |      |   | - |   |   |   | 3,500 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction                         |   |                                           | -      |   |      |   | - |   |   |   | - |   |   |   | 41,886 |   |   |   | - |   |
| Improved      and Held for vertical Construction               |   |                                           | -      |   |      |   | - |   |   |   | 10,461 |   |   |   | - |   |   |   | - |   |
| Construction      and Existing Structures:                     |   |                                           |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process                   |   |                                           | -      |   |      |   | - |   |   |   | - |   |   |   | 32,053 |   |   |   | 31,266 |   |
| Existing      Structure Held for Investment                    |   |                                           | -      |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Existing      Structure- Improvements                          |   |                                           | -      |   |      |   | - |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Scheduled Maturities - Fixed interest rate          |   | $                                              | -      |   |      | $      | - |   |   | $ | 15,890 |   |   | $ | 129,972 |   |   | $ | 87,299 |   |
| Variable      Interest Rates                                   |   |                                           |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                                        |   |                                           |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                                       |   | $                                              | -      |   |      | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Processing      Entitlements                                   |   |                                           | -      |   |      |   | - |   |   |   | 3,807 |   |   |   | - |   |   |   | - |   |
| Entitled      Land:                                            |   |                                           |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Held      for Investment                                       |   |                                           | -      |   |      |   | - |   |   |   | 21,020 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction                         |   |                                           | -      |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   | 41,920 |   |
| Improved      and Held for vertical Construction               |   |                                           | -      |   |      |   | - |   |   |   | 30,120 |   |   |   | - |   |   |   | - |   |
| Construction      and Existing Structures:                     |   |                                           |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| New      Structure - Construction in process                   |   |                                           | -      |   |      |   | - |   |   |   | - |   |   |   | 1,618 |   |   |   | - |   |
| Existing      Structure Held for Investment                    |   |                                           | -      |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Existing      Structure- Improvements                          |   |                                           | -      |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      Scheduled Maturities - Variable interest rate       |   | $                                              | -      |   |      | $      | - |   |   | $ | 54,947 |   |   | $ | 1,618 |   |   | $ | 41,920 |   |
| Total      Scheduled Maturities by Interest rate type          |   | $                                              | -      |   |      | $      | - |   |   | $ | 70,837 |   |   | $ | 131,590 |   |   | $ | 129,219 |   |

----

|                                             |   | December 31, |    |   | March 31, |   |
|--------------------------------------------------|--------|--------------|---------|--------|-----------|--------|
|                                             |   | 2006         |    |   | 2007      |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |
|                                             |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |
| Performing Loans                                 |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $            | -       |   |      | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Processing      Entitlements                     |   |         | 131,318 |   |      |   | 119,175 |   |   |   | 146,460 |   |   |   | - |   |   |   | - |   |
| Entitled      Land:                              |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |         | 41,893  |   |      |   | 135,060 |   |   |   | 37,146 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction           |   |         | 17,621  |   |      |   | 44,557 |   |   |   | 40,653 |   |   |   | 7,645 |   |   |   | - |   |
| Improved      and Held for vertical Construction |   |         | 29,388  |   |      |   | 14,800 |   |   |   | 35,102 |   |   |   | - |   |   |   | - |   |
| Construction      and Existing Structures:       |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |         | 16,317  |   |      |   | 45,087 |   |   |   | 6,694 |   |   |   | 4,805 |   |   |   | 1,618 |   |
| Existing      Structure Held for Investment      |   |         | 8,177   |   |      |   | 18,620 |   |   |   | 23,393 |   |   |   | - |   |   |   | - |   |
| Existing      Structure- Improvements            |   |         | -       |   |      |   | - |   |   |   | 97,777 |   |   |   | - |   |   |   | - |   |
| Total      Performing Loans                      |   | $            | 244,714 |   |      | $      | 377,299 |   |   | $ | 387,225 |   |   | $ | 12,450 |   |   | $ | 1,618 |   |
|                                             |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans in Defualt -    Non-Accrual                |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $            | -       |   |      | $      | - |   |   | $ | - |   |   | $ | 13,834 |   |   | $ | 12,815 |   |
| Processing      Entitlements                     |   |         | -       |   |      |   | 64,743 |   |   |   | 46,636 |   |   |   | 185,608 |   |   |   | 185,668 |   |
| Entitled      Land:                              |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |         | -       |   |      |   | - |   |   |   | 3,300 |   |   |   | 101,942 |   |   |   | 91,918 |   |
| Infrastructure      under Construction           |   |         | -       |   |      |   | - |   |   |   | 17,255 |   |   |   | 62,194 |   |   |   | 62,229 |   |
| Improved      and Held for vertical Construction |   |         | -       |   |      |   | - |   |   |   | 14,632 |   |   |   | 40,051 |   |   |   | 47,314 |   |
| Construction      and Existing Structures:       |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |         | -       |   |      |   | 2,253 |   |   |   | 13,800 |   |   |   | 39,102 |   |   |   | 41,168 |   |
| Existing      Structure Held for Investment      |   |         | -       |   |      |   | 8,250 |   |   |   | - |   |   |   | 23,640 |   |   |   | 12,020 |   |
| Existing      Structure- Improvements            |   |         | -       |   |      |   | - |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      Loans in Default - Non-Accrual        |   | $            | -       |   |      | $      | 75,246 |   |   | $ | 95,623 |   |   | $ | 522,404 |   |   | $ | 509,165 |   |
|                                             |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans in Defualt - Other                         |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $            | -       |   |      | $      | - |   |   | $ | 7,178 |   |   | $ | - |   |   | $ | - |   |
| Processing      Entitlements                     |   |         | 13,901  |   |      |   | 19,247 |   |   |   | 7,806 |   |   |   | - |   |   |   | - |   |
| Entitled      Land:                              |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |         | -       |   |      |   | - |   |   |   | 73,861 |   |   |   | - |   |   |   | - |   |
| Infrastructure      under Construction           |   |         | -       |   |      |   | 15,480 |   |   |   | - |   |   |   | - |   |   |   | 7,645 |   |
| Improved      and Held for vertical Construction |   |         | -       |   |      |   | - |   |   |   | 4,752 |   |   |   | 7,176 |   |   |   | - |   |
| Construction      and Existing Structures:       |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |         | -       |   |      |   | 23,525 |   |   |   | 23,320 |   |   |   | 2,418 |   |   |   | 1,111 |   |
| Existing      Structure Held for Investment      |   |         | -       |   |      |   | - |   |   |   | 14,089 |   |   |   | - |   |   |   | - |   |
| Existing      Structure- Improvements            |   |         | -       |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      Loans in Default - Other              |   | $            | 13,901  |   |      | $      | 58,252 |   |   | $ | 131,006 |   |   | $ | 9,594 |   |   | $ | 8,756 |   |
| Total      Loans in Default                      |   | $            | 13,901  |   |      | $      | 133,498 |   |   | $ | 226,629 |   |   | $ | 531,998 |   |   | $ | 517,921 |   |
|                                             |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Loan Portfolio                             |   | $            | 258,615 |   |      | $      | 510,797 |   |   | $ | 613,854 |   |   | $ | 544,448 |   |   | $ | 519,539 |   |
|                                             |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans in Default by Basis for      Default       |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans past maturity date                         |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $            | -       |   |      | $      | - |   |   | $ | 7,178 |   |   | $ | 13,834 |   |   | $ | 12,815 |   |
| Processing      Entitlements                     |   |         | 13,901  |   |      |   | 83,990 |   |   |   | 52,791 |   |   |   | 181,801 |   |   |   | 181,861 |   |
| Entitled      Land:                              |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |         | -       |   |      |   | - |   |   |   | 73,714 |   |   |   | 80,922 |   |   |   | 70,898 |   |
| Infrastructure      under Construction           |   |         | -       |   |      |   | 15,480 |   |   |   | 17,255 |   |   |   | 20,308 |   |   |   | 27,953 |   |
| Improved      and Held for vertical Construction |   |         | -       |   |      |   | - |   |   |   | 8,923 |   |   |   | 17,106 |   |   |   | 9,946 |   |
| Construction      and Existing Structures:       |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |         | -       |   |      |   | 25,778 |   |   |   | 36,246 |   |   |   | 9,522 |   |   |   | 8,440 |   |
| Existing      Structure Held for Investment      |   |         | -       |   |      |   | 8,250 |   |   |   | 14,089 |   |   |   | 23,641 |   |   |   | 12,020 |   |
| Existing      Structure- Improvements            |   |         | -       |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total      past maturity date                    |   | $            | 13,901  |   |      | $      | 133,498 |   |   | $ | 210,196 |   |   | $ | 347,134 |   |   | $ | 323,933 |   |
| Loans past due on interest                       |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $            | -       |   |      | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Processing      Entitlements                     |   |         | -       |   |      |   | - |   |   |   | 1,650 |   |   |   | 3,807 |   |   |   | 3,807 |   |
| Entitled      Land:                              |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |         | -       |   |      |   | - |   |   |   | 3,447 |   |   |   | 21,020 |   |   |   | 21,020 |   |
| Infrastructure      under Construction           |   |         | -       |   |      |   | - |   |   |   | - |   |   |   | 41,886 |   |   |   | 41,920 |   |
| Improved      and Held for vertical Construction |   |         | -       |   |      |   | - |   |   |   | 10,461 |   |   |   | 30,120 |   |   |   | 37,368 |   |
| Construction      and Existing Structures:       |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |         | -       |   |      |   | - |   |   |   | 875 |   |   |   | 31,998 |   |   |   | 33,840 |   |
| Existing      Structure Held for Investment      |   |         | -       |   |      |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Existing      Structure- Improvements            |   |         | -       |   |      |   | - |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
| Total      past due on interest                  |   | $            | -       |   |      | $      | - |   |   | $ | 16,433 |   |   | $ | 184,864 |   |   | $ | 193,988 |   |
|                                             |   |         |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total loans in dafault by basis of      default  |   | $            | 13,901  |   |      | $      | 133,498 |   |   | $ | 226,629 |   |   | $ | 531,998 |   |   | $ | 517,921 |   |

----

|                                             |   | December 31,               |   |   | March 31,                  |   |
|--------------------------------------------------|--------|----------------------------|--------|--------|----------------------------|--------|
|                                             |   | 2009      Compared to 2008 |   |   | 2010      Compared to 2009 |   |
|                                             |   | Increase (Decrease) due to |   |   | Increase (Decrease) due to |   |
|                                             |   | Volume                     |   |   | Rate                       |   |   | Net |   |   | Volume |   |   | Rate |   |   | Net |   |
| Pre-entitled      Land:                          |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                          | 817    |   |                       | $      | (1,537 | ) |   | $ | (720 | ) |   | $ | 337 |   |   | $ | (397 | ) |   | $ | (60 | ) |
| Processing      Entitlements                     |   |                       | (647   | )      |                       |   | (12,521 | ) |   |   | (13,168 | ) |   |   | (1,275 | ) |   |   | (3,357 | ) |   | $ | (4,632 | ) |
|                                             |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Entitled      Land:                              |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |                       | (115   | )      |                       |   | (11,762 | ) |   |   | (11,877 | ) |   |   | (2,978 | ) |   |   | 1,105 |   |   | $ | (1,873 | ) |
| Infrastructure      under Construction           |   |                       | 879    |   |                       |   | (4,302 | ) |   |   | (3,423 | ) |   |   | 917 |   |   |   | (2,071 | ) |   | $ | (1,154 | ) |
| Improved      and Held for vertical Construction |   |                       | 555    |   |                       |   | (4,827 | ) |   |   | (4,272 | ) |   |   | (285 | ) |   |   | (210 | ) |   | $ | (495 | ) |
|                                             |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction      and Existing Structures:       |   |                       |   |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in process     |   |                       | (1,495 | )      |                       |   | (8,423 | ) |   |   | (9,918 | ) |   |   | 572 |   |   |   | (778 | ) |   | $ | (206 | ) |
| Existing      Structure Held for Investment      |   |                       | (61    | )      |                       |   | (1,563 | ) |   |   | (1,624 | ) |   |   | (1,703 | ) |   |   | 1,266 |   |   | $ | (437 | ) |
| Existing      Structure- Improvements            |   |                       | 4,229  |   |                       |   | (3,385 | ) |   |   | 844 |   |   |   | (5,126 | ) |   |   | 2,567 |   |   | $ | (2,559 | ) |
|                                             |   | $                          | 4,162  |   |                       | $      | (48,320 | ) |   | $ | (44,158 | ) |   | $ | (9,540 | ) |   | $ | (1,875 | ) |   | $ | (11,416 | ) |

----

----

----

----

|                                      |   |  Three      Months Ended March 31, |   |
|-------------------------------------------|--------|-----------------------------------------|--------|
| Revenues                                  |   | 2009                                    |   |   | 2010 |   |   | $      Change |   |   | %      Change |   |
| Mortgage      Loan Interest Income        |   | $                                       | 11,938 |   |   | $ | 522 |   |   | $ | (11,416 | ) |   |   | (95.6 | )% |
| Investment      and Other Interest Income |   |                                    | 36     |   |   |   | 76 |   |   |   | 40 |   |   |   | 111.1 | % |
| Rents      and Other Income               |   |                                    | 0      |   |   |   | 410 |   |   |   | 410 |   |   |   | N/A |   |
| Total      Interest and Fee Income        |   | $                                       | 11,974 |   |   | $ | 1,008 |   |   | $ | (10,966 | ) |   |   | (91.6 | )% |

----

| Expenses                                      |   |                                    |   |   |   |   |   |          |   |   |          |   |
|-----------------------------------------------|--------|-----------------------------------------|--------|--------|--------|--------|--------|---------------|--------|--------|---------------|--------|
|                                          |   |  Three      Months Ended March 31, |   |
| Expenses:                                     |   | 2009                                    |   |   | 2010   |   |   | $      Change |   |   | %      Change |   |
| Management      Fees                          |   | $                                       | 249    |   |   | $      | 64     |          |   | $      | (185          | )      |   |   | (74.3 | )% |
| Default      Related and Other Fund Expenses  |   |                                    | 126    |   |   |   | 206    |          |   |   | 80            |   |   |   | 63.5 | % |
| Operating      Expenses for Real Estate Owned |   |                                    | 214    |   |   |   | 1,947  |          |   |   | 1,733         |   |   |   | 809.8 | % |
| Professional      Fees                        |   |                                    | 309    |   |   |   | 1,399  |          |   |   | 1,090         |   |   |   | 352.8 | % |
| Interest      Expense:                        |   |                                    |   |   |   |   |   |          |   |   |          |   |   |   |   |   |
| Borrowings      from Fund Manager             |   |                                    | -      |   |   |   | 27     |          |   |   | 27            |   |   |   | N/A |   |
| Participations      in Mortgage Loans         |   |                                    | -      |   |   |   | -      |          |   |   | -             |   |   |   | N/A |   |
| Borrowings      on Note Payable               |   |                                    | -      |   |   |   | 217    |          |   |   | 217           |   |   |   | N/A |   |
| Total      Interest Expense                   |   |                                    | -      |   |   |   | 244    |          |   |   | 244           |   |   |   | N/A |   |
|                                          |   |                                    |   |   |   |   |   |          |   |   |          |   |   |   |   |   |
| Total      Expenses                           |   | $                                       | 899    |   |   | $      | 3,860  |          |   | $      | 2,962         |   |   |   | 329.5 | % |

----

|                     |   | Three      Months Ended March 31, |   |
|--------------------------|--------|-----------------------------------|--------|
|                     |   | 2009                              |   |   | 2010 |   | $      Change |   |   | %      Change |   |
| Net      Earnings (Loss) |   | $                                 | 11,076 |   |   | $ | (2,852 | ) |   | $ | (13,928 | ) |   |   | (125.7 | )% |

----

|                                        |   | Three      months ended |   |
|---------------------------------------------|--------|-------------------------|--------|
|                                        |   | March      31,          |   |
| Fund-related      Expenses Paid by Manager: |   | 2009                    |   |   | 2010 |   |
| Operations-related      expenses            |   | $                       | 1,572  |   |   | $ | 367 |   |
| Origination-related      expenses           |   | $                       | 892    |   |   | $ | 208 |   |
| Total                                       |   | $                       | 2,464  |   |   | $ | 575 |   |

----

|            |   | December      31, 2009 |    |   | March      31, 2010 |   |
|-----------------|--------|------------------------|---------|--------|---------------------|--------|
|            |   | Oustanding             |    |   | Allowance      for  |   |   | Net      Carrying |   |   |   |   |   |   |   |   | Oustanding |   |   | Allowance      for |   |   | Net      Carrying |   |   |   |   |   |   |   |
|            |   | Principal              |    |   | Credit      Loss    |   |   | Amount |   |   | Percent |   |   | # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | Percent |   |   | # |   |
| Arizona         |   | $                      | 281,492 |   |                | $      | (162,639 | ) |   | $ | 118,853 |   |   |   | 55.5 | % |   |   | 26 |   |   | $ | 275,582 |   |   | $ | (159,971 | ) |   | $ | 115,610 |   |   |   | 58.5 | % |   |   | 22 |   |
| California      |   |                   | 181,390 |   |                |   | (120,829 | ) |   |   | 60,561 |   |   |   | 28.3 | % |   |   | 20 |   |   |   | 181,478 |   |   |   | (118,070 | ) |   |   | 63,408 |   |   |   | 32.1 | % |   |   | 20 |   |
| New      Mexico |   |                   | 5,241   |   |                |   | (1,094 | ) |   |   | 4,147 |   |   |   | 1.9 | % |   |   | 2 |   |   |   | 5,240 |   |   |   | (1,075 | ) |   |   | 4,165 |   |   |   | 2.1 | % |   |   | 2 |   |
| Texas           |   |                   | 11,102  |   |                |   | (4,272 | ) |   |   | 6,830 |   |   |   | 3.2 | % |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   |   | 0 |   |
| Idaho           |   |                   | 49,594  |   |                |   | (38,981 | ) |   |   | 10,613 |   |   |   | 5.0 | % |   |   | 2 |   |   |   | 49,594 |   |   |   | (42,852 | ) |   |   | 6,743 |   |   |   | 3.4 | % |   |   | 2 |   |
| Nevada          |   |                   | 7,984   |   |                |   | (2,613 | ) |   |   | 5,371 |   |   |   | 2.5 | % |   |   | 1 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 0.0 | % |   |   | 0 |   |
| Utah            |   |                   | 7,645   |   |                |   | - |   |   |   | 7,645 |   |   |   | 3.6 | % |   |   | 1 |   |   |   | 7,645 |   |   |   | - |   |   |   | 7,645 |   |   |   | 3.9 | % |   |   | 1 |   |
| Total           |   | $                      | 544,448 |   |                | $      | (330,428 | ) |   | $ | 214,020 |   |   |   | 100.0 | % |   |   | 55 |   |   | $ | 519,539 |   |   | $ | (321,968 | ) |   | $ | 197,571 |   |   |   | 100.0 | % |   |   | 47 |   |

----

----

|                       |   | December      31, 2009 |   |
|----------------------------|--------|------------------------|--------|
|                       |   | Fixed      Rate        |   |   | Variable      Rate |   |   | Total |   |
|                       |   |                   |   |   | Outstanding |   |   |   |   |   | Outstanding |   |   |   |   |   | Outstanding |   |   | Allowance      for |  |   | Net      Carrying |   |   |   |   |
| Current      Rate:         |   |  #                |   |   | Principal |   |   |  # |   |   | Principal |   |   |  # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | % |   |
| 6.00%                      |   |                   | 1      |   |   | $ | 5,890 |   |   |   | - |   |   | $ | - |   |   |   | 1 |   |   | $ | 5,890 |   |   | $ | (1,568 | ) |   | $ | 4,322 |   |   |   | 2.0 | % |
| 7.53%                      |   |                   | 1      |   |   |   | 41,886 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 41,886 |   |   |   | (23,942 | ) |   |   | 17,944 |   |   |   | 8.4 | % |
| 8.00%                      |   |                   | 4      |   |   |   | 31,077 |   |   |   | - |   |   |   | - |   |   |   | 4 |   |   |   | 31,077 |   |   |   | (24,999 | ) |   |   | 6,078 |   |   |   | 2.8 | % |
| 8.25%                      |   |                   | 1      |   |   |   | 56,033 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 56,033 |   |   |   | - |   |   |   | 56,033 |   |   |   | 26.2 | % |
| 9.00%                      |   |                   | 1      |   |   |   | 1,589 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 1,589 |   |   |   | (9 | ) |   |   | 1,580 |   |   |   | 0.7 | % |
| 10.00%                     |   |                   | 4      |   |   |   | 29,555 |   |   |   | - |   |   |   | - |   |   |   | 4 |   |   |   | 29,555 |   |   |   | (22,316 | ) |   |   | 7,239 |   |   |   | 3.4 | % |
| 11.00%                     |   |                   | 1      |   |   |   | 1,463 |   |   |   | 1 |   |   |   | 1,618 |   |   |   | 2 |   |   |   | 3,081 |   |   |   | - |   |   |   | 3,081 |   |   |   | 1.4 | % |
| 11.75%                     |   |                   | 1      |   |   |   | 5,759 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 5,759 |   |   |   | - |   |   |   | 5,759 |   |   |   | 2.7 | % |
| 12.00%                     |   |                   | 7      |   |   |   | 61,403 |   |   |   | 8 |   |   |   | 53,947 |   |   |   | 15 |   |   |   | 115,350 |   |   |   | (59,545 | ) |   |   | 55,805 |   |   |   | 26.1 | % |
| 12.25%                     |   |                   | -      |   |   |   | - |   |   |   | 2 |   |   |   | 56,562 |   |   |   | 2 |   |   |   | 56,562 |   |   |   | (51,372 | ) |   |   | 5,190 |   |   |   | 2.4 | % |
| 12.50%                     |   |                   | -      |   |   |   | - |   |   |   | 5 |   |   |   | 16,128 |   |   |   | 5 |   |   |   | 16,128 |   |   |   | (11,705 | ) |   |   | 4,423 |   |   |   | 2.1 | % |
| 12.75%                     |   |                   | 1      |   |   |   | 37,958 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 37,958 |   |   |   | (22,664 | ) |   |   | 15,294 |   |   |   | 7.1 | % |
| 13.00%                     |   |                   | 1      |   |   |   | 1,650 |   |   |   | 9 |   |   |   | 54,947 |   |   |   | 10 |   |   |   | 56,597 |   |   |   | (45,462 | ) |   |   | 11,135 |   |   |   | 5.2 | % |
| 13.75%                     |   |                   | -      |   |   |   | - |   |   |   | 2 |   |   |   | 6,528 |   |   |   | 2 |   |   |   | 6,528 |   |   |   | (5,987 | ) |   |   | 541 |   |   |   | 0.3 | % |
| 14.25%                     |   |                   | -      |   |   |   | - |   |   |   | 1 |   |   |   | 69,127 |   |   |   | 1 |   |   |   | 69,127 |   |   |   | (56,370 | ) |   |   | 12,757 |   |   |   | 6.0 | % |
| Total                      |   |                   | 23     |   |   | $ | 274,263 |   |   |   | 32 |   |   | $ | 270,185 |   |   |   | 55 |   |   | $ | 544,448 |   |   | $ | (330,428 | ) |   | $ | 214,020 |   |   |   | 100.0 | % |
|                       |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| % of      Portfolio        |   |                   |   | 50.4 | % |   |   |   |   |   |   | 49.6 | % |   |   |   |   |   |   | 100.0 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Rate |   |                   |   | 9.84 | % |   |   |   |   |   |   | 12.88 | % |   |   |   |   |   |   | 11.34 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Number      of Loans       |   |                   |   | 23 |   |   |   |   |   |   |   | 32 |   |   |   |   |   |   |   | 55 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      Principal     |   |                   | $      | 11,924 |   |   |   |   |   |   | $ | 8,443 |   |   |   |   |   |   | $ | 9,899 |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                       |   | March      31, 2010 |   |
|----------------------------|--------|---------------------|--------|
|                       |   | Fixed      Rate     |   |   | Variable      Rate |   |   | Total |   |
|                       |   |                |   |   | Outstanding |   |   |   |   |   | Outstanding |   |   |   |   |   | Outstanding |   |   | Allowance      for |   |   |  Net      Carrying |   |   |   |   |
| Current      Rate:         |   |  #             |   |   | Principal |   |   |  # |   |   | Principal |   |   |  # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | % |   |
| 6.00%                      |   |                | 1      |   |   | $ | 5,890 |   |   |   | - |   |   | $ | - |   |   |   | 1 |   |   | $ | 5,890 |   |   | $ | (1,582 | ) |   | $ | 4,308 |   |   |   | 2.2 | % |
| 7.53%                      |   |                | 1      |   |   |   | 41,920 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 41,920 |   |   |   | (24,070 | ) |   |   | 17,850 |   |   |   | 9.0 | % |
| 8.00%                      |   |                | 3      |   |   |   | 31,758 |   |   |   | - |   |   |   | - |   |   |   | 3 |   |   |   | 31,758 |   |   |   | (25,607 | ) |   |   | 6,151 |   |   |   | 3.1 | % |
| 8.25%                      |   |                | 1      |   |   |   | 56,033 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 56,033 |   |   |   | - |   |   |   | 56,033 |   |   |   | 28.4 | % |
| 9.00%                      |   |                | 1      |   |   |   | 1,589 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 1,589 |   |   |   | (9 | ) |   |   | 1,580 |   |   |   | 0.8 | % |
| 10.00%                     |   |                | 4      |   |   |   | 29,555 |   |   |   | - |   |   |   | - |   |   |   | 4 |   |   |   | 29,555 |   |   |   | (22,350 | ) |   |   | 7,205 |   |   |   | 3.6 | % |
| 11.00%                     |   |                | 1      |   |   |   | 1,463 |   |   |   | 1 |   |   |   | 1,618 |   |   |   | 2 |   |   |   | 3,081 |   |   |   | - |   |   |   | 3,081 |   |   |   | 1.6 | % |
| 11.50%                     |   |                | -      |   |   |   | - |   |   |   | 1 |   |   |   | 225 |   |   |   | 1 |   |   |   | 225 |   |   |   | (219 | ) |   |   | 6 |   |   |   | 0.0 | % |
| 11.75%                     |   |                | 1      |   |   |   | 5,775 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 5,775 |   |   |   | - |   |   |   | 5,775 |   |   |   | 2.9 | % |
| 12.00%                     |   |                | 7      |   |   |   | 61,403 |   |   |   | 6 |   |   |   | 42,399 |   |   |   | 13 |   |   |   | 103,802 |   |   |   | (58,840 | ) |   |   | 44,962 |   |   |   | 22.9 | % |
| 12.25%                     |   |                | -      |   |   |   | - |   |   |   | 2 |   |   |   | 56,562 |   |   |   | 2 |   |   |   | 56,562 |   |   |   | (51,133 | ) |   |   | 5,429 |   |   |   | 2.7 | % |
| 12.50%                     |   |                | -      |   |   |   | - |   |   |   | 3 |   |   |   | 13,139 |   |   |   | 3 |   |   |   | 13,139 |   |   |   | (10,680 | ) |   |   | 2,459 |   |   |   | 1.2 | % |
| 12.75%                     |   |                | 1      |   |   |   | 37,958 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 37,958 |   |   |   | (22,983 | ) |   |   | 14,975 |   |   |   | 7.6 | % |
| 13.00%                     |   |                | 1      |   |   |   | 1,650 |   |   |   | 9 |   |   |   | 54,947 |   |   |   | 10 |   |   |   | 56,597 |   |   |   | (42,137 | ) |   |   | 14,460 |   |   |   | 7.3 | % |
| 13.75%                     |   |                | -      |   |   |   | - |   |   |   | 2 |   |   |   | 6,528 |   |   |   | 2 |   |   |   | 6,528 |   |   |   | (6,036 | ) |   |   | 492 |   |   |   | 0.2 | % |
| 14.25%                     |   |                | -      |   |   |   | - |   |   |   | 1 |   |   |   | 69,127 |   |   |   | 1 |   |   |   | 69,127 |   |   |   | (56,322 | ) |   |   | 12,805 |   |   |   | 6.5 | % |
| Total                      |   |                | 22     |   |   | $ | 274,994 |   |   |   | 25 |   |   | $ | 244,545 |   |   |   | 47 |   |   | $ | 519,539 |   |   | $ | (321,968 | ) |   | $ | 197,571 |   |   |   | 100.0 | % |
|                       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| % of      Portfolio        |   |                |   | 52.9 | % |   |   |   |   |   |   | 47.1 | % |   |   |   |   |   |   | 100.0 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Rate |   |                |   | 9.83 | % |   |   |   |   |   |   | 12.98 | % |   |   |   |   |   |   | 11.32 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Number      of Loans       |   |                |   | 22 |   |   |   |   |   |   |   | 25 |   |   |   |   |   |   |   | 47 |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      Principal     |   |                | $      | 12,500 |   |   |   |   |   |   | $ | 9,782 |   |   |   |   |   |   | $ | 11,054 |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                             |   | December      31, 2009 |     |   | March      31, 2010 |   |
|--------------------------------------------------|--------|------------------------|----------|--------|---------------------|--------|
|                                             |   | Amount                 |     |   | %                   |   |   |  # |   |   | Amount |   |   | % |   |   |  # |   |
| Pre-entitled      Land:                          |   |                   |     |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                      | 13,834   |   |                |   | 2.5 | % |   |   | 3 |   |   | $ | 12,815 |   |   |   | 2.5 | % |   |   | 2 |   |
| Processing      Entitlements                     |   |                   | 185,608  |   |                |   | 34.1 | % |   |   | 8 |   |   |   | 185,668 |   |   |   | 35.8 | % |   |   | 8 |   |
|                                             |   |                   | 199,442  |   |                |   | 36.6 | % |   |   | 11 |   |   |   | 198,483 |   |   |   | 38.3 | % |   |   | 10 |   |
| Entitled      Land:                              |   |                   |     |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |                   | 101,942  |   |                |   | 18.8 | % |   |   | 14 |   |   |   | 91,918 |   |   |   | 17.7 | % |   |   | 12 |   |
| Infrastructure      under Construction           |   |                   | 69,839   |   |                |   | 12.8 | % |   |   | 5 |   |   |   | 69,874 |   |   |   | 13.4 | % |   |   | 5 |   |
| Improved      and Held for Vertical Construction |   |                   | 47,227   |   |                |   | 8.7 | % |   |   | 4 |   |   |   | 47,314 |   |   |   | 9.1 | % |   |   | 4 |   |
|                                             |   |                   | 219,008  |   |                |   | 40.3 | % |   |   | 23 |   |   |   | 209,106 |   |   |   | 40.2 | % |   |   | 21 |   |
| Construction      & Existing Structures:     |   |                   |     |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process     |   |                   | 46,325   |   |                |   | 8.5 | % |   |   | 16 |   |   |   | 43,897 |   |   |   | 8.4 | % |   |   | 13 |   |
| Existing      Structure Held for Investment      |   |                   | 23,640   |   |                |   | 4.3 | % |   |   | 4 |   |   |   | 12,020 |   |   |   | 2.3 | % |   |   | 2 |   |
| Existing      Structure - Improvements           |   |                   | 56,033   |   |                |   | 10.3 | % |   |   | 1 |   |   |   | 56,033 |   |   |   | 10.8 | % |   |   | 1 |   |
|                                             |   |                   | 125,998  |   |                |   | 23.1 | % |   |   | 21 |   |   |   | 111,950 |   |   |   | 21.5 | % |   |   | 16 |   |
| Total                                            |   |                   | 544,448  |   |                |   | 100.0 | % |   |   | 55 |   |   |   | 519,539 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowance for Credit Loss             |   |                   | (330,428 | )      |                |   |   |   |   |   |   |   |   |   | (321,968 | ) |   |   |   |   |   |   |   |   |
| Net      Carrying Value                          |   | $                      | 214,020  |   |                |   |   |   |   |   |   |   |   | $ | 197,571 |   |   |   |   |   |   |   |   |   |

|   | (1) | The      subject collateral consists of land that does not have final governmental      approvals, or entitlements, to begin developing the applicable project      site. Moreover, the borrower does not intend to process the entitlements      during the term of the applicable portfolio  loan. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | The      subject collateral consists of land that does not have final governmental      approvals, or entitlements, to begin developing the applicable project      site. However, the applicable portfolio loan was made with the      understanding that the borrower intends to process the entitlements during      the term of the applicable portfolio loan. The loan may include proceeds      allocated specifically for entitlementcosts. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                 |   | December      31, 2009 |     |   | March      31, 2010 |   |
|--------------------------------------|--------|------------------------|----------|--------|---------------------|--------|
|                                 |   | Amount                 |     |   | %                   |   |   |  # |   |   | Amount |   |   | % |   |   |  # |   |
|                                 |   |                   |     |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential                          |   | $                      | 273,666  |   |                |   | 50.2 | % |   |   | 35 |   |   | $ | 270,396 |   |   |   | 52.0 | % |   |   | 31 |   |
| Mixed      Use                       |   |                   | 177,308  |   |                |   | 32.6 | % |   |   | 7 |   |   |   | 170,731 |   |   |   | 32.9 | % |   |   | 6 |   |
| Commercial                           |   |                   | 92,404   |   |                |   | 17.0 | % |   |   | 12 |   |   |   | 77,342 |   |   |   | 14.9 | % |   |   | 9 |   |
| Industrial                           |   |                   | 1,070    |   |                |   | 0.2 | % |   |   | 1 |   |   |   | 1,070 |   |   |   | 0.2 | % |   |   | 1 |   |
| Total                                |   |                   | 544,448  |   |                |   | 100.0 | % |   |   | 55 |   |   |   | 519,539 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowance for Credit Loss |   |                   | (330,428 | )      |                |   |   |   |   |   |   |   |   |   | (321,968 | ) |   |   |   |   |   |   |   |   |
| Net      Carrying Value              |   | $                      | 214,020  |   |                |   |   |   |   |   |   |   |   | $ | 197,571 |   |   |   |   |   |   |   |   |   |

----

----

| March 31, 2010                           |   |
|------------------------------------------|--------|
| Quarter                                  |   | Amount |   |   | Percent |   |   | # |   |
| Matured                                  |   | $ | 323,933 |   |   |   | 62.3 | % |   |   | 30 |   |
| Q3      2010                             |   |   | 56,059 |   |   |   | 10.8 | % |   |   | 10 |   |
| Q4      2010                             |   |   | 7,248 |   |   |   | 1.4 | % |   |   | 1 |   |
| Q1      2011                             |   |   | 3,080 |   |   |   | 0.6 | % |   |   | 2 |   |
| Q4      2011                             |   |   | 31,266 |   |   |   | 6.0 | % |   |   | 2 |   |
| Q3      2012                             |   |   | 97,953 |   |   |   | 18.9 | % |   |   | 2 |   |
| Total                                    |   |   | 519,539 |   |   |   | 100.0 | % |   |   | 47 |   |
| Less:      Allowancefor      Credit Loss |   |   | (321,968 | ) |   |   |   |   |   |   |   |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Carrying Value                  |   | $ | 197,571 |   |   |   |   |   |   |   |   |   |

----

|   | · | the      creditor (Fund) deems that the debtor, for economic or legal reasons, has      financial difficulties; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

|   | · | the      creditor (Fund) grants a concession to the debtor that it would not      otherwise consider. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

----

|           |   |                               |   |   |                       |   |    |                                |   |   |                       |   |   |              |   |   |                  |   |   |         |   |   | Average      Loan Term |   |   |         |   |   |         |   |
|----------------|--------|------------------------------------|--------|--------|----------------------------|--------|---------|-------------------------------------|--------|--------|----------------------------|--------|--------|-------------------|--------|--------|-----------------------|--------|--------|--------------|--------|--------|------------------------|--------|--------|--------------|--------|--------|--------------|--------|
|           |   |                               |   |   | Outstanding      Principal |   |    | Outstanding      Funding Commitment |   |   | Average      Interest Rate |   |   | (Months)          |   |   | Weighted      Avg Int |   |
| Period      of |   | #      of                          |   |   |                       |   |    |                                |   |   |                       |   |   |              |   |   | Pre-                  |   |   | Post-        |   |   | Pre-                   |   |   | Post-        |   |   | Pre-         |   |   | Post- |   |
| Modification   |   | Loans                              |   |   | Pre-Modification           |   |    | Post-Modification                   |   |   | Pre-Modification           |   |   | Post-Modification |   |   | Modification          |   |   | Modification |   |   | Modification           |   |   | Modification |   |   | Modification |   |   | Modification |   |
|           |   | (dollar      amounts in thousands) |   |   |                       |   |    |                                |   |   |                       |   |   |              |   |   |                  |   |   |         |   |
| Q4      2008   |   |                               | 4      |   |                       | $      | 81,802  |                                |   | $      | 89,045                     |   |   | $                 | 5,296  |   |                  | $      | 5,296  |         |   |   | 12.88                  | %      |   |         | 12.06  | %      |         |   | 11.25 |   |   |   | 17.00 |   |   |   | 13.78 | % |   |   | 13.71 | % |
| Q1      2009   |   |                               | 5      |   |                       |   | 59,228  |                                |   |   | 64,785                     |   |   |              | 14,328 |   |                  |   | 14,328 |         |   |   | 12.15                  | %      |   |         | 10.35  | %      |         |   | 9.20 |   |   |   | 19.00 |   |   |   | 11.52 | % |   |   | 8.57 | % |
| Q2      2009   |   |                               | 3      |   |                       |   | 51,103  |                                |   |   | 52,412                     |   |   |              | 2,093  |   |                  |   | 1,241  |         |   |   | 12.08                  | %      |   |         | 12.25  | %      |         |   | 10.00 |   |   |   | 19.00 |   |   |   | 11.72 | % |   |   | 12.10 | % |
| Q3      2009   |   |                               | 7      |   |                       |   | 114,421 |                                |   |   | 117,244                    |   |   |              | 7,134  |   |                  |   | 4,908  |         |   |   | 11.39                  | %      |   |         | 10.11  | %      |         |   | 13.29 |   |   |   | 29.29 |   |   |   | 10.23 | % |   |   | 8.63 | % |
| Q4      2009   |   |                               | 4      |   |                       |   | 44,211  |                                |   |   | 44,437                     |   |   |              | 916    |   |                  |   | 14,025 |         |   |   | 12.30                  | %      |   |         | 10.00  | %      |         |   | 15.80 |   |   |   | 18.50 |   |   |   | 12.64 | % |   |   | 5.51 | % |
| Q1      2010   |   |                               | 2      |   |                       |   | 8,282   |                                |   |   | 8,359                      |   |   |              | 74     |   |                  |   | 662    |         |   |   | 10.00                  | %      |   |         | 10.00  | %      |         |   | 4.50 |   |   |   | 13.50 |   |   |   | 11.47 | % |   |   | 11.47 | % |
| Totals         |   |                               | 25     |   |                       | $      | 359,047 |                                |   | $      | 376,282                    |   |   | $                 | 29,841 |   |                  | $      | 40,460 |         |   |   |                   |   |   |         |   |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|       |   | December      31, 2009    |   |   | March      31, 2010 |   |
|------------|--------|---------------------------|--------|--------|---------------------|--------|
|       |   | Held      For Development |   |   | Held      for Sale  |   |   | Held      For Development |   |   | Held      for Sale |   |
|       |   | #      of                 |   |   | Aggregate      Net  |   |   | #      of |   |   | Aggregate      Net |   |   | #      of |   |   | Aggregate      Net |   |   | #      of |   |   | Aggregate      Net |   |
| State      |   | Projects                  |   |   | Carrying      Value |   |   | Projects |   |   | Carrying      Value |   |   | Projects |   |   | Carrying      Value |   |   | Projects |   |   | Carrying      Value |   |
| California |   |                      | 3      |   |                | $      | 9,644 |   |   |   | - |   |   | $ | - |   |   |   | 3 |   |   | $ | 9,645 |   |   |   | - |   |   | $ | - |   |
| Texas      |   |                      | 3      |   |                |   | 39,326 |   |   |   | - |   |   |   | - |   |   |   | 6 |   |   |   | 46,201 |   |   |   | - |   |   |   | - |   |
| Arizona    |   |                      | 6      |   |                |   | 31,485 |   |   |   | 4 |   |   |   | 12,082 |   |   |   | 9 |   |   |   | 34,126 |   |   |   | 4 |   |   |   | 12,157 |   |
| Minnesota  |   |                      | 1      |   |                |   | 11,694 |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 11,694 |   |   |   | - |   |   |   | - |   |
| Nevada     |   |                      | -      |   |                |   | - |   |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | 6,508 |   |   |   | - |   |   |   | - |   |
| Total      |   |                      | 13     |   |                | $      | 92,149 |   |   |   | 4 |   |   | $ | 12,082 |   |   |   | 20 |   |   | $ | 108,174 |   |   |   | 4 |   |   | $ | 12,157 |   |

----

----

----

|            |   | December      31, 2009 |   |
|-----------------|--------|------------------------|--------|
|            |   | Percent      of        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Non-Accrued |   |   |   |   |
|            |   | Outstanding            |   |   |   |   |   | Outstanding |   |   | Allowance      for |   |   | Net      Carrying |   |   | Accrued |   |   | Note |   |   |   |   |
|            |   | Principal              |   |   | # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | Interest |   |   | Interest |   |   | Total |   |
| Arizona         |   |                   | 52.3   | % |   |   | 23 |   |   | $ | 278,306 |   |   | $ | (162,282 | ) |   | $ | 116,024 |   |   | $ | 5,362 |   |   | $ | 13,723 |   |   | $ | 135,109 |   |
| Idaho           |   |                   | 9.3    | % |   |   | 2 |   |   | $ | 49,594 |   |   | $ | (38,981 | ) |   |   | 10,613 |   |   | $ | 1,948 |   |   | $ | 5,993 |   |   |   | 18,554 |   |
| California      |   |                   | 33.8   | % |   |   | 19 |   |   | $ | 179,773 |   |   | $ | (120,829 | ) |   |   | 58,944 |   |   | $ | 3,959 |   |   | $ | 18,349 |   |   |   | 81,252 |   |
| Texas           |   |                   | 2.1    | % |   |   | 3 |   |   | $ | 11,102 |   |   | $ | (4,272 | ) |   |   | 6,830 |   |   | $ | 427 |   |   | $ | 1,170 |   |   |   | 8,427 |   |
| Nevada          |   |                   | 1.5    | % |   |   | 1 |   |   | $ | 7,984 |   |   | $ | (2,613 | ) |   |   | 5,371 |   |   | $ | 319 |   |   | $ | 957 |   |   |   | 6,647 |   |
| New      Mexico |   |                   | 1.0    | % |   |   | 2 |   |   | $ | 5,240 |   |   | $ | (1,094 | ) |   |   | 4,146 |   |   | $ | - |   |   | $ | 586 |   |   |   | 4,732 |   |
|            |   |                   | 100.0  | % |   |   | 50 |   |   | $ | 531,999 |   |   | $ | (330,071 | ) |   | $ | 201,928 |   |   | $ | 12,015 |   |   | $ | 40,778 |   |   | $ | 254,721 |   |

|            |   | March      31, 2010 |   |
|-----------------|--------|---------------------|--------|
|            |   | Percent      of     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Non-Accrued |   |   |   |   |
|            |   | Outstanding         |   |   |   |   |   | Outstanding |   |   | Allowance      for |   |   | Net      Carrying |   |   | Accrued |   |   | Note |   |   |   |   |
|            |   | Principal           |   |   | # |   |   | Principal |   |   | Credit      Loss |   |   | Amount |   |   | Interest |   |   | Interest |   |   | Total |   |
| Arizona         |   |                | 53.2   | % |   |   | 22 |   |   | $ | 275,582 |   |   | $ | (159,971 | ) |   | $ | 115,611 |   |   | $ | 4,601 |   |   | $ | 6,252 |   |   | $ | 126,464 |   |
| Idaho           |   |                | 9.6    | % |   |   | 2 |   |   |   | 49,595 |   |   |   | (42,852 | ) |   |   | 6,743 |   |   |   | 1,948 |   |   |   | 1,491 |   |   |   | 10,182 |   |
| California      |   |                | 34.7   | % |   |   | 19 |   |   |   | 179,860 |   |   |   | (118,070 | ) |   |   | 61,790 |   |   |   | 4,109 |   |   |   | 5,906 |   |   |   | 71,805 |   |
| New      Mexico |   |                | 1.0    | % |   |   | 2 |   |   |   | 5,240 |   |   |   | (1,075 | ) |   |   | 4,165 |   |   |   | (7 | ) |   |   | 147 |   |   |   | 4,305 |   |
| Utah            |   |                | 1.5    | % |   |   | 1 |   |   |   | 7,645 |   |   |   | - |   |   |   | 7,645 |   |   |   | 336 |   |   |   | - |   |   |   | 7,981 |   |
|            |   |                | 100.0  | % |   |   | 46 |   |   | $ | 517,922 |   |   | $ | (321,968 | ) |   | $ | 195,954 |   |   | $ | 10,987 |   |   | $ | 13,796 |   |   | $ | 220,737 |   |

|                   |   |            |   |   |   |   |   |        |   |   |            |   |   |              |     |   |     |   |    | Non-     |   |   |   |   |
|------------------------|--------|-----------------|--------|--------|--------|--------|--------|-------------|--------|--------|-----------------|--------|--------|-------------------|----------|--------|----------|--------|---------|----------|--------|--------|--------|--------|
|                   |   | Percent      of |   |   |   |   |   |        |   |   | Allowance       |   |   |              |     |   |     |   |    | Accrued  |   |   |   |   |
|                   |   | Outstanding     |   |   |   |   |   | Outstanding |   |   | for      Credit |   |   | Net      Carrying |     |   | Accrued  |   |    | Note     |   |   |   |   |
|                   |   | Principal       |   |   | #      |   |   | Principal   |   |   | Loss            |   |   | Amount            |     |   | Interest |   |    | Interest |   |   | Total  |   |
| Pre-entitled      Land |   |            | 38.3   | %      |   |   | 10     |        |   | $      | 198,483         |   |   | $                 | (147,923 | )      |     | $      | 50,560  |     |   | $      | 6,341  |   |   | $ | 6,275 |   |   | $ | 63,176 |   |
| Entitled      Land     |   |            | 40.4   | %      |   |   | 21     |        |   |   | 209,106         |   |   |              | (141,894 | )      |     |   | 67,212  |     |   |   | 4,249  |   |   |   | 5,237 |   |   |   | 76,698 |   |
| Construction           |   |            | 21.3   | %      |   |   | 15     |        |   |   | 110,333         |   |   |              | (32,151  | )      |     |   | 78,182  |     |   |   | 397    |   |   |   | 2,284 |   |   |   | 80,863 |   |
|                   |   |            | 100.0  | %      |   |   | 46     |        |   | $      | 517,922         |   |   | $                 | (321,968 | )      |     | $      | 195,954 |     |   | $      | 10,987 |   |   | $ | 13,796 |   |   | $ | 220,737 |   |

----

|                                                                                                                        |   | As      of and Year     |     |   | As      of and 3 Mos. |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|----------|--------|-----------------------|--------|
|                                                                                                                        |   | Ended      December 31, |     |   | Ended      March 31,  |   |
|                                                                                                                        |   | 2010                    |     |   | 2010                  |   |
|                                                                                                                        |   |                    |     |   |                  |   |
| Loans      in Default - Impairment Status:                                                                                  |   |                    |     |   |                  |   |
| Impaired      loans in default                                                                                              |   | $                       | 458,464  |   |                  | $      | 443,870 |   |
| Non-impaired      loans in default                                                                                          |   |                    | 73,534   |   |                  |   | 74,052 |   |
| Total      loans in default                                                                                                 |   | $                       | 531,998  |   |                  | $      | 517,922 |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Allowance      for Credit Loss on Impaired Loans                                                                            |   |                    |     |   |                  |   |   |   |
| Impaired      loans in default                                                                                              |   | $                       | 458,464  |   |                  | $      | 443,870 |   |
| Less:      Allowance for Credit Loss                                                                                        |   |                    | (330,071 | )      |                  |   | (321,968 | ) |
| Net      carrying value of impaired loans                                                                                   |   | $                       | 128,393  |   |                  | $      | 121,902 |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Note:      none of the impaired loans have an allowance for credit    loss                                                  |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Average      investment for impaired loans during period held                                                               |   | $                       | 456,993  |   |                  | $      | 443,224 |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Interest      income recognized during the period that loans were    impaired                                               |   | $                       | 1,898    |   |                  | $      | - |   |
|                                                                                                                        |   |                    |     |   |                  |   |   |   |
| Interest      income recognized using a cash-basis method of accounting during the      period that the loans were impaired |   | $                       | 404      |   |                  | $      | - |   |

----

|   | · | the      type of property; |
|--------|--------|----------------------------|

|   | · | the      current status of entitlement and level of development (horizontal or      vertical improvements) of the respective  project; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the      likelihood of a bulk sale as opposed to individual unit    sales; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | whether      the property is currently or near ready to produce  income; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | the      current sales price of property in relation to cost of      development; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | the      availability and reliability of market participant data;    and |
|--------|--------|--------------------------------------------------------------------------|

|   | · | the      date of an offer received in relation to the reporting    period. |
|--------|--------|----------------------------------------------------------------------------|

----

----

|   | 1. | Reviewed      the status of each loan in our portfolio to ascertain the likelihood that      we will collect all amounts due under the terms of the loans at maturity      based on current real estate and credit market  conditions. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | With      respect to loans in our portfolio whose collection was deemed to be      unlikely, we reviewed the portfolio to ascertain when the latest valuation      of the underlying collateral wasperformed. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | Subjected      our entire loan portfolio to independent third party valuation as of      September 30, 2009, with a review and update of such valuations provided      through December 31, 2009 and through March 31, 2010, to determine whether      any material changes in industry or economic conditions warranted a change      in the valuation conclusions formed at September 30,  2009. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.  | For      the year ended December 31, 2009, we utilized the services of Cushman      & Wakefield, a nationally recognized valuation firm, and other      valuation firms to perform a valuation analysis for the selected projects.      Cushman & Wakefield valued approximately 89% of the outstanding      principal balance of our loan portfolio while other valuation firms valued      the remaining 11%. For those valuations performed by valuation firms other      than Cushman & Wakefield, we engaged Cushman & Wakefield to      perform a review of the valuations andreports. |
|--------|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 5. | For      loan collateral not subject to third-party valuation during the year ended      December 31, 2008, we performed an analysis on selected assets utilizing a      development approach, using observable and unobservable inputs available,      to determine the fair value for the loan collateral. This analysis      included estimating project development costs, projected carrying costs,      such as property taxes, and estimated disposal costs. The cash flow      streams were then discounted to present value to derive fair      value. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.  | For      projects in which we have received a bona fide written third party offer      to buy our loan, or the borrower has received a bona fide written third      party offer to buy the related project, we utilized the offer amount in      cases in which the offer exceeded the valuation conclusion reached by the      independent valuation firms. Such offers are only considered if the      Manager deems the offer to be valid, reasonable and      negotiable. |
|--------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | Very      few of the precedent transactions that were analyzed satisfied the market      value and fair value requirement that the price reflect the price of an      orderly transaction, rather than that of a sale under duress or in markets      in turmoil. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Inputs      for use in the development valuation models were reported by the valuation      firms to be inconsistent and reflective of a distressed market that had      not yet stabilized for inputs into discounted cash flow or other financial      models, such as absorption rates and timing, unit pricing and trends,      discount rate, risk adjustment processes, or the  like. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A      distinction was made between owners under duress and properties under      duress. Market values are determined based on the highest and best use of      the real property being valued. When owners are under duress, as defined      by applicable accounting guidance, prices of transactions in which they      are involved must be viewed as at least potentially subject to duress as      well. The valuation firms took this distinction into account in arriving      at highest and best use conclusions and selecting appropriate valuation      methodologies. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | For      2009, the highest and best use for the majority of real estate collateral      subject to third-party valuation was deemed to be held for investment      and/or future development, rather than being subject to immediate      development and/or sale. In determining fair value, the Manager utilized      the “as is” sales comparable valuation methodology for 31 assets, the      development approach for six assets, the income capitalization approach      for four assets, and the cost approach for two assets, and we utilized      offers received from third parties to estimate fair value for the      remaining 14 assets. The Manager selected a fair value within a      determinable range as provided by the valuation  firm. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | •  | For      the projects which included either un-entitled or entitled land lacking      any vertical or horizontal improvements, given the current distressed      state of the real estate and credit markets, the development approach was      deemed to be unsupportable because market participant data was      insufficient or other assumptions were not reliably available from the      valuation firm’s market research; the “highest and best use” standard in      these instances required such property to be classified as “held for      investment” purposes until market conditions provide observable      development activity to support a valuation model for the development of      the planned site. As a result, the valuation firms used a sales comparison      approach using available data to determine fair  value. |
|--------|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | For      the projects containing partially or fully developed lots, the development      approach was generally utilized, with assumptions made for pricing trends,      absorption projections, holding costs, and the relative risk given these      assumptions. The assumptions were based on currently observable available      market data. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | For      operating properties, the income approach, using the direct capitalization      and discounted cash flow methods was used by the valuation firms. The      anticipated future cash flows and a reversionary value were discounted to      the net present value at a chosen yield rate. The assumptions were based      on currently observable available marketdata. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | For      collateral to be developed, the initial unit sales price utilized was      based on local market, comparable prices from non-distressed pricing from      prior periods utilizing observable and unobservable data points, generally      discounted by 20% or more. In general, the Manager assumed a price      escalation utilizing the low end of a historical 3-year average look back      for the last 10 years. We considered this a fair exchange price in an      orderly transaction between market participants to sell the asset,      assuming its highest and best use as determined by management, in the      principal or most advantageous market for the  asset. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | For      collateral to be developed, the additional development costs, operating      and selling cost assumptions the Manager made were based on observable and      unobservable cost estimates obtained from a cross section of industry      experts and market participants. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | For      collateral consisting of partially complete or finished lots, development      costs, operating and selling cost assumptions the Manager made were based      on observable and unobservable cost estimates obtained from a      cross-section of industry experts and market  participants. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | For      collateral whose development is complete or nearly complete and which are      expected to be leased initially to allow for stabilization of market      prices before being sold, we utilized operating revenue and costs for      comparable projects using current operating data obtained by the Manager.      Based upon an assumed stabilization of applicable real estate markets, the      Manager utilized unit sales prices comparable to historical      pricing. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | •  | Based      on the resulting net cash flows derived from the utilization of the above      assumptions, we applied risk-adjusted annual discount rates ranging from      10.5% to 30% for December 31, 2009 and March 31, 2010 to the net cash      flows, depending on the projected build-out term, the project type, the      location and assumed project risk. |
|--------|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4) | In      conducting the 2009 and 2010 valuations, the third party valuation      specialist’s data and the research performed in connection with valuations      were influenced by market duress, economic uncertainty, and a relative      shortage of tangible market data. Numerous of the relevant transactions      consummated around the time of preparation of the valuation reports were      believed to be based on either a property or a seller in distress and,      thus, the applicable transaction was executed under a condition of      duress.  The Manager noted that the pricing of many actual      transactions in what was observed to be a less than normal volume of      purchases and sales frequently appeared to be lower than the expectations      of many, if not most, owners of competitive properties.  As a result,      in the Manager’s judgment, for each of the Fund’s loans not supported by      recent bona fide independent third-party purchase offers, the Manager      concluded  that the values at the high end of the range were more      representative of fair values than any other point in the      range; |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5) | The      Manager concluded that the third party valuation specialist’s reported      value ranges, and the underlying concepts of the ranges themselves, did      not reflect the improving market conditions as of December 31, 2009, but      because of the lag in the time frame for their gathering and processing      information, were more representative of early fourth-quarter 2009, if not      before. The Manager obtained observable and unobservable evidence (such as      published residential pricing indices and other real estate market      publications, discussions with real estate brokers with applicable market      expertise in local markets, discussions with third-party consultants and      direct market participants with relevant real estate experience) as of      December 31, 2009 that indicated that fair values have “bottomed out”, and      there is an indication that the home pricing trends are moving upward.      Based on the Manager’s experience, it is the Manager’s judgment that      buyers will select parcels that offer the most competitive advantage and      the highest and best use of their capital in order to complete their      project and maximize their returns. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6) | Individual      valuation reports were prepared assuming non-leveraged sales transactions      of the underlying collateral in accordance with professional appraisal      standards. Because the Fund’s core business is that of a first lien real      estate mortgage lender, the Manager believes that the Fund’s capacity to      provide financing, particularly in the absence of available financing in      existing credit markets, provides the Fund a market advantage that would      significantly increase the likelihood that qualified buyers would be      willing to pay a price at the top of the applicable valuation range.       The Manager believes that this market advantage further supports the      Manager’s selection of the high end of the range when determining the      single best estimate of value from within the range of values      provided. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                |   | March      31, |    |   | March      31, |   |
|-------------------------------------|--------|----------------|---------|--------|----------------|--------|
|                                |   | 2009           |    |   | 2010           |   |
| Balance      at beginning of period |   | $              | 300,310 |   |           | $      | 330,428 |   |
|                                |   |           |    |   |           |   |   |   |
| Provision      for credit losses    |   |           |    |   |           |   | - |   |
| Net      charge offs                |   |           | (17,400 | )      |           |   | (8,460 | ) |
|                                |   |           |    |   |           |   |   |   |
| Balance      at end of period       |   | $              | 282,910 |   |           | $      | 321,968 |   |

----

|                                             |   | December      31, 2009 |   |   | March      31, 2010 |   |
|--------------------------------------------------|--------|------------------------|--------|--------|---------------------|--------|
|                                             |   | Significant            |   |   |                |   |   |   |   |   | Significant |   |   |   |   |   |   |   |
|                                             |   | Other                  |   |   | Significant         |   |   |   |   |   | Other |   |   | Significant |   |   |   |   |
|                                             |   | Observable             |   |   | Unobservable        |   |   |   |   |   | Observable |   |   | Unobservable |   |   |   |   |
|                                             |   | Inputs                 |   |   | Inputs              |   |   |   |   |   | Inputs |   |   | Inputs |   |   |   |   |
|                                             |   | (Level      2)         |   |   | (Level      3)      |   |   | Total |   |   | (Level      2) |   |   | (Level      3) |   |   | Total |   |
| Description:                                     |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Mortgage Loans:                         |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pre-entitled      Land:                          |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   | $                      | -      |   |                | $      | 4,211 |   |   | $ | 4,211 |   |   | $ | - |   |   | $ | 3,076 |   |   | $ | 3,076 |   |
| Processing      Entitlements                     |   |                   | 1,028  |   |                |   | 49,838 |   |   |   | 50,866 |   |   | $ | 1,503 |   |   |   | 45,983 |   |   |   | 47,485 |   |
|                                             |   |                   | 1,028  |   |                |   | 54,049 |   |   |   | 55,077 |   |   |   | 1,503 |   |   |   | 49,059 |   |   |   | 50,561 |   |
| Entitled      Land:                              |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held      for Investment                         |   |                   | 7,693  |   |                |   | 13,499 |   |   |   | 21,192 |   |   |   | 7,642 |   |   |   | 8,264 |   |   |   | 15,906 |   |
| Infrastructure      under Construction           |   |                   | 459    |   |                |   | 29,939 |   |   |   | 30,398 |   |   |   | 364 |   |   |   | 29,740 |   |   |   | 30,105 |   |
| Improved      and Held for Vertical Construction |   |                   | 2,519  |   |                |   | 16,012 |   |   |   | 18,531 |   |   |   | 5,261 |   |   |   | 15,940 |   |   |   | 21,200 |   |
|                                             |   |                   | 10,671 |   |                |   | 59,450 |   |   |   | 70,121 |   |   |   | 13,267 |   |   |   | 53,944 |   |   |   | 67,211 |   |
| Construction      & Existing Structures:     |   |                   |   |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| New      Structure - Construction in-process     |   |                   | 3,860  |   |                |   | 12,359 |   |   |   | 16,219 |   |   |   | 2,909 |   |   |   | 11,553 |   |   |   | 14,462 |   |
| Existing      Structure Held for Investment      |   |                   | -      |   |                |   | 16,570 |   |   |   | 16,570 |   |   |   | - |   |   |   | 9,304 |   |   |   | 9,304 |   |
| Existing      Structure - Improvements           |   |                   | -      |   |                |   | 56,033 |   |   |   | 56,033 |   |   |   | - |   |   |   | 56,033 |   |   |   | 56,033 |   |
|                                             |   |                   | 3,860  |   |                |   | 84,963 |   |   |   | 88,822 |   |   |   | 2,909 |   |   |   | 76,890 |   |   |   | 79,799 |   |
| Total                                            |   | $                      | 15,559 |   |                | $      | 198,461 |   |   | $ | 214,020 |   |   | $ | 17,678 |   |   | $ | 179,893 |   |   | $ | 197,571 |   |

----

|                                       |   | Mortgage   |    |
|--------------------------------------------|--------|------------|---------|
|                                       |   | Loans, net |    |
|                                       |   |       |    |
| Balances,      December 31, 2009           |   | $          | 198,461 |   |
|                                       |   |       |    |   |
| Mortgage      Loan Fundings                |   |       | 1,314   |   |
| Mortgage      Loan Repayments              |   |       | (3,500  | ) |
| Transfers      to REO                      |   |       | 6,339   |   |
| Mortgage      Repayment on whole loan sold |   |       | (22,721 | ) |
| Transfers      into (out of) level 3       |   |       | -       |   |
| Included      in earnings:                 |   |       |    |   |
| Provision      for credit losses           |   |       | -       |   |
|                                       |   |       |    |   |
| Balances,      March 31, 2010              |   | $          | 179,893 |   |

----

----

----

|                                  |   | December      31, 2009 |    |   | March      31, 2010 |   |
|---------------------------------------|--------|------------------------|---------|--------|---------------------|--------|
|                                  |   | Loans      Held        |    |   | Loans      Held     |   |   |   |   |   | Loans      Held |   |   | Loans      Held |   |   |   |   |
|                                  |   | to      Maturity       |    |   | for      Sale       |   |   | Total |   |   | to      Maturity |   |   | for      Sale |   |   | Total |   |
| Undispersed      Loans-in-process per |   |                   |    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Note      Agreement                   |   | $                      | 63,001  |   |                | $      | - |   |   | $ | 63,001 |   |   | $ | 59,947 |   |   | $ | - |   |   | $ | 59,947 |   |
| Less:      amounts not to be funded   |   |                   | (47,026 | )      |                |   | - |   |   |   | (47,026 | ) |   |   | (46,178 | ) |   |   | - |   |   |   | (46,178 | ) |
| Undispersed      Loans-in-process per |   |                   |    |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      Statements             |   | $                      | 15,975  |   |                | $      | - |   |   | $ | 15,975 |   |   | $ | 13,769 |   |   | $ | - |   |   | $ | 13,769 |   |

----

|                                     |   | December      31, |   |   | March      31, |   |
|------------------------------------------|--------|-------------------|--------|--------|----------------|--------|
|                                     |   | 2009              |   |   | 2010           |   |
| Loans-in-Process      Allocation:        |   |              |   |   |           |   |
| Construction/Operations      Commitments |   | $                 | 3,731  |   |           | $      | 3,764 |   |
| Unfunded      Interest Reserves          |   |              | 7,524  |   |           |   | 6,993 |   |
| Deferred      Loan Fees due to Manager   |   |              | 2,360  |   |           |   | 660 |   |
| Reserve      for Protective Advances     |   |              | 654    |   |           |   | 646 |   |
| Taxes      and Other                     |   |              | 1,706  |   |           |   | 1,706 |   |
| Total      Loan-in-Process               |   | $                 | 15,975 |   |           | $      | 13,769 |   |

----

----

----

----

----

----

----

----

|                                |   | March 31, 2010 Portfolio      Information |    |
|-------------------------------------|--------|-------------------------------------------|---------|
|                                |   | Fixed Rate                                |    |   | Variable Rate |   |   | Total |   |
| Outstanding      Balance            |   | $                                         | 274,994 |   |   | $ | 244,545 |   |   | $ | 519,539 |   |
| Current      Weighted Average Yield |   |                                      | 9.83    | % |   |   | 12.98 | % |   |   | 11.32 | % |
| Annualized      Interest Income     |   | $                                         | 27,034  |   |   | $ | 31,754 |   |   | $ | 58,788 |   |

|                          |   |                                  |   |   |          |   |   |     |   |   | Pro-forma |   |   | Change |   |
|-------------------------------|--------|---------------------------------------|--------|--------|---------------|--------|--------|----------|--------|--------|-----------|--------|--------|--------|--------|
|                          |   | Change in Annual Interest      Income |   |   | Yield         |   |   | In Yield |   |
|                          |   | Fixed Rate                            |   |   | Variable Rate |   |   | Total    |   |   |      |   |   |   |   |
| Increase      in Prime Rate:  |   |                                  |   |   |          |   |   |     |   |   |      |   |   |   |   |
| 0.5%      or 50 basis points  |   | $                                     | -      |   |          | $      | -      |     |   | $      | -         |   |   |   | 11.32  | % |   |   | 0.00 | % |
| 1.0%      or 100 basis points |   | $                                     | -      |   |          | $      | -      |     |   | $      | -         |   |   |   | 11.32  | % |   |   | 0.00 | % |
| 2.0%      or 200 basis points |   | $                                     | -      |   |          | $      | 41     |     |   | $      | 41        |   |   |   | 11.32  | % |   |   | 0.01 | % |
|                          |   |                                  |   |   |          |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |
| Decrease      in Prime Rate:  |   |                                  |   |   |          |   |   |     |   |   |      |   |   |   |   |   |   |   |   |   |
| 0.5%      or 50 basis points  |   | $                                     | -      |   |          | $      | -      |     |   | $      | -         |   |   |   | 11.32  | % |   |   | 0.00 | % |
| 1.0%      or 100 basis points |   | $                                     | -      |   |          | $      | -      |     |   | $      | -         |   |   |   | 11.32  | % |   |   | 0.00 | % |
| 2.0%      or 200 basis points |   | $                                     | -      |   |          | $      | -      |     |   | $      | -         |   |   |   | 11.32  | % |   |   | 0.00 | % |

|                                 |   | (in      thousands) |    |
|--------------------------------------|--------|---------------------|---------|
|                                 |   | Matured             |    |   |   | Q3      2010 |   |   |   | Q4      2010 |   |   |   | Q1      2011 |   |   |   | Q4      2011 |   |   |   | Q3      2012 |   |   | Total |   |
| Loan      Rates:                     |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable                             |   | $                   | 180,732 |   |   | $ | 54,947 |   |   | $ | 7,248 |   |   | $ | 1,618 |   |   | $ | - |   |   | $ | - |   |   | $ | 244,545 |   |
| Fixed                                |   |                | 143,201 |   |   |   | 1,111 |   |   |   | - |   |   |   | 1,463 |   |   |   | 31,266 |   |   |   | 97,953 |   |   |   | 274,994 |   |
|                                 |   | $                   | 323,933 |   |   | $ | 56,058 |   |   | $ | 7,248 |   |   | $ | 3,081 |   |   | $ | 31,266 |   |   | $ | 97,953 |   |   | $ | 519,539 |   |
| Less:      Allowance for Credit Loss |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (321,968 | ) |
| Net      Carrying Value              |   |                |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | 197,571 |   |

----

----

----

----

| Exhibit      No. |   | Description                                                                                                                                                                                                                                                          |
|------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1*             |   | Agreement      and Plan of Conversion and Contribution by and among IMH Secured Loan      Fund, LLC, Investors Mortgage Holdings, Inc. and its stockholders and IMH      Holdings, LLC and its members.                                                              |
|             |   |                                                                                                                                                                                                                                                                 |
| 3.1              |   | IMH      Secured Loan Fund, LLC Certificate of Formation (incorporated by reference      to Exhibit 3.1 of the Annual Report on Form 10-K, File No. 000-52611,      filed on March 31, 2008)                                                                         |
|             |   |                                                                                                                                                                                                                                                                 |
| 4.1              |   | IMH      Secured Loan Fund, LLC Restated Limited Liability Company Operating      Agreement (incorporated by reference to Exhibit 4.1 of the Registration      Statement on Form 10, File No. 000-52611, filed by IMH Secured Loan Fund,      LLC on April 30, 2007) |
|             |   |                                                                                                                                                                                                                                                                 |
| 4.2              |   | Form      Subscription Agreement (incorporated by reference to Exhibit 4.2 of the      Registration Statement on Form 10, File No. 000-52611, filed by IMH      Secured Loan Fund, LLC on April 30, 2007)                                                            |
|             |   |                                                                                                                                                                                                                                                                 |
| 31.1*            |   | Certification      of Chief Executive Officer of Investors Mortgage Holdings, Inc., manager      of IMH Secured Loan Fund, LLC pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002                                                                        |
|             |   |                                                                                                                                                                                                                                                                 |
| 31.2*            |   | Certification      of Chief Financial Officer of Investors Mortgage Holdings, Inc., manager      of IMH Secured Loan Fund, LLC pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002                                                                        |
|             |   |                                                                                                                                                                                                                                                                 |
| 32.1*†     |   | Certification      of Chief Executive Officer and the Chief Financial Officer of Investors      Mortgage Holdings, Inc., manager of IMH Secured Loan Fund, LLC pursuant to      Section  906 of the Sarbanes-Oxley Act of  2002                                 |

| * | Filed      herewith. |
|---|----------------------|

| † | This      certification is being furnished solely to accompany this report pursuant      to 18 U.S.C. Section 1350, and is not being filed for purposes of Section      18 of the Exchange Act, and is not to be incorporated by reference into      any filings of the Fund, whether made before or after the date hereof,      regardless of any general incorporation language in such      filing. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Date:      May 17, 2010 | IMH      SECURED LOAN FUND, LLC |
|-------------------------|---------------------------------|
|                    |                            |   |
|                    | By:                             | Investors      Mortgage Holdings, Inc. |
|                    | Its:                       | Manager |
|                    |                            |   |
|                    | By:                        | /s/      Steven Darak |
|                    |                            | Steven      Darak |
|                    |                            | Chief      Financial Officer |
|                    |                            | (Principal      Financial and Accounting Officer and Duly      Authorized Officer) |

----

| ExhibitNo.   |   | Description                                                                                                                                                                                                                                                          |
|--------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1*         |   | Agreement      and Plan of Conversion and Contribution by and among IMH Secured Loan      Fund, LLC, Investors Mortgage Holdings, Inc. and its stockholders and IMH      Holdings, LLC and its members.                                                              |
|         |   |                                                                                                                                                                                                                                                                 |
| 3.1          |   | IMH      Secured Loan Fund, LLC Certificate of Formation (incorporated by reference      to Exhibit 3.1 of the Annual Report on Form 10-K, File No. 000-52611,      filed on March 31, 2008)                                                                         |
|         |   |                                                                                                                                                                                                                                                                 |
| 4.1          |   | IMH      Secured Loan Fund, LLC Restated Limited Liability Company Operating      Agreement (incorporated by reference to Exhibit 4.1 of the Registration      Statement on Form 10, File No. 000-52611, filed by IMH Secured Loan Fund,      LLC on April 30, 2007) |
|         |   |                                                                                                                                                                                                                                                                 |
| 4.2          |   | Form      Subscription Agreement (incorporated by reference to Exhibit 4.2 of the      Registration Statement on Form 10, File No. 000-52611, filed by IMH      Secured Loan Fund, LLC on April 30, 2007)                                                            |
|         |   |                                                                                                                                                                                                                                                                 |
| 31.1*        |   | Certification      of Chief Executive Officer of Investors Mortgage Holdings, Inc., manager      of IMH Secured Loan Fund, LLC pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002                                                                        |
|         |   |                                                                                                                                                                                                                                                                 |
| 31.2*        |   | Certification      of Chief Financial Officer of Investors Mortgage Holdings, Inc., manager      of IMH Secured Loan Fund, LLC pursuant to Section 302 of the      Sarbanes-Oxley Act of 2002                                                                        |
|         |   |                                                                                                                                                                                                                                                                 |
| 32.1*† |   | Certification      of Chief Executive Officer and the Chief Financial Officer of Investors      Mortgage Holdings, Inc., manager of IMH Secured Loan Fund, LLC pursuant to      Section  906 of the Sarbanes-Oxley Act of  2002                                 |

| * | Filed      herewith. |
|---|----------------------|

| † | This      certification is being furnished solely to accompany this report pursuant      to 18 U.S.C. Section 1350, and is not being filed for purposes of Section      18 of the Exchange Act, and is not to be incorporated by reference into      any filings of the Fund, whether made before or after the date hereof,      regardless of any general incorporation language in such      filing. |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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