##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 FORM 10-Q
  þ
    
    Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarter ended September 30, 2008
 or
 o
    
    Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File number 000-52611
 IMH SECURED LOAN FUND, LLC
  Delaware
    
    81-0624254(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification Number)organization)
 4900 N. Scottsdale Rd #5000
Scottsdale, Arizona, 85251
 (480) 840-8400
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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2




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##### 



IMH SECURED LOAN FUND, LLC
QUARTERLY REPORT ON FORM 10-Q
INDEX
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements.Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007
    
    
    4Consolidated Statements of Net Earnings for the Nine and Three Months
Ended September 30, 2008 and 2007
    
    
    5Consolidated Statement of Members Equity for the Nine Months Ended
September 30, 2008
    
    
    6Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 2008 and 2007
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results
of Operations.
    
    
    23Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
    
    
    58Item 4T.
    
    Controls and Procedures.
    
    
    59PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings.
    
    
    60Item 1A.
    
    Risk Factors.
    
    
    60Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    63Item 6.
    
    Exhibits.
    
    
    65Signatures
    
    
    66Index to Exhibits
    
    
    67EX-31.1EX-31.2EX-32.1
  3




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PART I
 FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 IMH SECURED LOAN FUND, LLC
 
 Consolidated Balance Sheets
 (In thousands, except unit data)
 September 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCash and Cash Equivalents
    
    $
    57,766
    
    
    $
    73,604Mortgage Loans:Mortgage Loan Note Obligations
    
    
    587,524
    
    
    
    578,925Less Undisbursed Portion of Loans-in-process and Interest Reserves
    
    
    (79,154
    )
    
    
    (68,128
    )Principal Outstanding Held for Investment
    
    
    508,370
    
    
    
    510,797Less Allowance for Credit Loss
    
    
    (45,440
    )
    
    
    (1,900
    )Mortgage Loans Held for Sale, Net
    
    
    88,385
    
    
    
    Mortgage Loans, Net
    
    
    551,315
    
    
    
    508,897Accrued Interest and Other Receivables
    
    
    9,555
    
    
    
    8,058Real Estate Held for Development:Acquired through Foreclosure
    
    
    80,736
    
    
    
    Purchased for Investment
    
    
    7,442
    
    
    
    Deposits and Other Assets
    
    
    46
    
    
    
    Due from Fund Manager
    
    
    2,260
    
    
    
    Total Assets
    
    $
    709,120
    
    
    $
    590,559LIABILITIESPayables to Fund Manager
    
    $
    1,157
    
    
    $
    316Member Investments Pending Activation
    
    
    
    
    
    
    4,491Deposits Pending Return
    
    
    1,100
    
    
    
    Redemptions Payable to Members
    
    
    13,485
    
    
    
    6,114Distributions Payable to Members
    
    
    4,830
    
    
    
    2,183Unearned Income and Other Funds Held
    
    
    148
    
    
    
    622Total Liabilities
    
    
    20,870
    
    
    
    13,726MEMBERS EQUITYRetained Earnings (Accumulated Deficit)
    
    
    (41,984
    )
    
    
    49Members Equity  $10,000 per unit stated value,
authorized units set at discretion of the Manager -
73,038 and 57,678 units issued and outstanding at
September 30, 2008 and December 31, 2007, respectively
    
    
    730,384
    
    
    
    576,784Total Members Equity
    
    
    688,400
    
    
    
    576,833Commitments and Contingent LiabilitiesTotal Liabilities and Members Equity
    
    $
    709,120
    
    
    $
    590,559
 The accompanying notes are an integral part of these statements
 4




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IMH SECURED LOAN FUND, LLC
 
 Consolidated Statements of Net Earnings
 (Unaudited)
 (In thousands, except unit and per unit data)
 Nine Months Ended September 30,
    
    
    Three Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007INTEREST AND FEE INCOMEMortgage Loans
    
    $
    49,420
    
    
    $
    33,688
    
    
    $
    17,069
    
    
    $
    12,968Investments and MoneyMarket Accounts
    
    
    1,788
    
    
    
    1,177
    
    
    
    467
    
    
    
    710Total Interest and Fee Income
    
    
    51,208
    
    
    
    34,865
    
    
    
    17,536
    
    
    
    13,678EXPENSESManagement Fees
    
    
    819
    
    
    
    682
    
    
    
    300
    
    
    
    257Default Related Expenses
    
    
    707
    
    
    
    
    
    
    
    555
    
    
    
    Interest Expense:Borrowings from Fund Manager
    
    
    
    
    
    
    390
    
    
    
    
    
    
    
    44Participations in Mortgage Loans
    
    
    
    
    
    
    827
    
    
    
    
    
    
    
    127Borrowings on Note Payable
    
    
    78
    
    
    
    
    
    
    
    
    
    
    
    Interest Expense
    
    
    78
    
    
    
    1,217
    
    
    
    
    
    
    
    171Provision
for Credit Loss
    
    
    42,430
    
    
    
    
    
    
    
    42,430
    
    
    
    Total Expenses
    
    
    44,034
    
    
    
    1,899
    
    
    
    43,285
    
    
    
    428Net
Earnings (Loss)
    
    $
    7,174
    
    
    $
    32,966
    
    
    $
    (25,749
    )
    
    $
    13,250Net Earnings
(Loss) Allocated to Members
per Weighted Average Membership
Units Outstanding
    
    $
    109.99
    
    
    $
    857.52
    
    
    $
    (368.96
    )
    
    $
    275.89Distribututions to Members per
Weighted Average Membership Units
Outstanding
    
    $
    753.76
    
    
    $
    840.48
    
    
    $
    238.26
    
    
    $
    275.89Weighted Average Membership Units
Outstanding
    
    
    65,225
    
    
    
    38,444
    
    
    
    69,788
    
    
    
    48,028
 The accompanying notes are an integral part of these statements
 5




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IMH SECURED LOAN FUND, LLC
 
 Consolidated Statement of Members Equity
 Nine months ended September 30, 2008
 (Unaudited)
 (In thousands, except unit data)
 RetainedEarnings
    

    TotalMembers
    
    
    Members
    
    (Accumulated
    
    MembersUnits
    
    
    Capital
    
    
Deficit)
    
    
    EquityBalances at December 31, 2007
    
    
    57,678
    
    
    $
    576,784
    
    
    $
    49
    
    
    $
    576,833Net Earnings  Nine Months Ended September 30, 2008
    
    
    
    
    
    
    
    
    
    
    7,174
    
    
    
    7,174Earnings Distributed
    
    
    
    
    
    
    
    
    
    
    (25,971
    )
    
    
    (25,971
    )Reinvestment of Earnings
    
    
    2,319
    
    
    
    23,192
    
    
    
    (23,192
    )
    
    
    Capital Investment  New Members
    
    
    19,906
    
    
    
    199,056
    
    
    
    
    
    
    
    199,056Capital Investment  Existing Members
    
    
    5,188
    
    
    
    51,885
    
    
    
    
    
    
    
    51,885Full Redemptions
    
    
    (7,504
    )
    
    
    (75,041
    )
    
    
    
    
    
    
    (75,041
    )Partial Redemptions
    
    
    (4,549
    )
    
    
    (45,492
    )
    
    
    
    
    
    
    (45,492
    )Retained Earnings Paid on Full Redemptions
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    (44
    )Net Activity for Period
    
    
    15,360
    
    
    
    153,600
    
    
    
    (42,033
    )
    
    
    111,567Balances at September 30, 2008
    
    
    73,038
    
    
    $
    730,384
    
    
    $
    (41,984
    )
    
    $
    688,400
 The accompanying notes are an integral part of these statements
 6




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IMH SECURED LOAN FUND, LLC
 
 Consolidated Statements of Cash Flows
 Nine months ended September 30, 2008 and 2007
 (Unaudited)
 (In thousands)
 Nine months ended September 30,2008
    
    
    2007CASH FLOWS  Operating Activities:Net Earnings
    
    $
    7,174
    
    
    $
    32,966Adjustments to Reconcile Net Earnings to Net Cash
Provided by Operating Activities:Provision
for Credit Loss
    
    
    42,430

    
    
    
    Accretion of Note Discount
    
    
    (9,639
    )
    
    
    Increase in Accrued Interest Receivable
    
    
    (3,933
    )
    
    
    (2,982
    )Increase in Deposits and Other Assets
    
    
    (255
    )
    
    
    Increase in Due From/To Fund Manager
    
    
    991
    
    
    
    251Increase (Decrease) in Deposit Refund Payable
    
    
    
    
    
    
    (62
    )Increase (Decrease) in Unearned Income
    
    
    (474
    )
    
    
    1,615Net Cash Provided by Operating Activities
    
    
    36,294
    
    
    
    31,788CASH FLOWS  Investing Activities:Mortgage Loans Fundings
    
    
    (220,905
    )
    
    
    (265,832
    )Mortgage Loan Repayments
    
    
    34,544
    
    
    
    73,106Mortgage Loan Repayment from Sale of Whole Loan
    
    
    31,325
    
    
    
    Investment in Real Estate Held for Development
    
    
    (8,116
    )
    
    
    Net Cash Used in Investing Activities
    
    
    (163,152
    )
    
    
    (192,726
    )CASH FLOWS  Financing Activities:Proceeds from Note Payable to Bank
    
    
    8,000
    
    
    
    Repayment of Note Payable to Bank
    
    
    (8,000
    )
    
    
    Proceeds from Sale of Whole Loans
    
    
    
    
    
    
    5,400Repurchase of Whole Loans Sold
    
    
    
    
    
    
    (5,238
    )Proceeds from Borrowings from Manager
    
    
    
    
    
    
    10,165Repayments of Borrowings from Manager
    
    
    
    
    
    
    (14,616
    )Proceeds from Loan Participations Issued
    
    
    
    
    
    
    37,498Loan Participations Reacquired
    
    
    
    
    
    
    (42,279
    )Increase (Decrease) in Member InvestmentsPending Activation/ Deposits Pending Return
    
    
    (3,391
    )
    
    
    1,915Members Capital Investments
    
    
    250,941
    
    
    
    273,086Members Redemptions
    
    
    (113,206
    )
    
    
    (25,835
    )Members Distributions
    
    
    (23,324
    )
    
    
    (12,886
    )Net Cash Provided by Financing Activities
    
    
    111,020
    
    
    
    227,210Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (15,838
    )
    
    
    66,272Cash and Cash Equivalents:Beginning of Period
    
    
    73,604
    
    
    
    12,159End of Period
    
    $
    57,766
    
    
    $
    78,431Suppleme ntal Cash Flow Information:Interest Paid
    
    $
    78
    
    
    $
    1,248Suppleme ntal Disclosure of Non-Cash Financing and Investing Activities:Real Estate Acquired through Foreclosure
    
    $
    81,362
    
    
    $
    Loans Satisfied with Next-Phase Financing
    
    $
    41,886
    
    
    $
    
 The accompanying notes are an integral part of these statements
 7




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IMH SECURED LOAN FUND, LLC
 
     NOTE 1- FUND DESCRIPTION AND BASIS OF PRESENTATION
        
    
    Implemented a comprehensive cost reduction program, including a reduction in staff.
The reduction in staff affected nearly 40% of the Managers employees while preserving
core functionality in all operational areas. The Manager projects that monthly operating
costs should stabilize during the fourth quarter of 2008 at approximately $700,000 per
month.
    
    Engaged the services of an investment banking firm to explore financing alternatives
available to IMH.
    
    Commenced exploring mechanisms through which IMH can continue to participate in the
capital markets, including, without limitation, the use of additional funding
vehicles to capitalize on what IMH believes are a multitude of opportunities arising from
the disruptions in the capital and credit markets.
    
    Commenced evaluation of a request for a change in the management fee structure payable
to IMH to the level necessary to reimburse IMH for the cost of management services
provided.
    
    Considered other initiatives, as they arise, to insure the continued viability of the
Manager as an operating entity.
  NOTE 2  SIGNIFICANT ACCOUNTING POLICIES
 Basis of Accounting
  Statement of Cash Flows
  8




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IMH SECURED LOAN FUND, LLC
 NOTE 2  SIGNIFICANT ACCOUNTING POLICIES  CONTINUED
 Loans Held for Sale
   Real Estate Held for Development
 Accounting for the Impairment or Disposal of
Long-Lived Assets
 Discounts on Acquired Loans
 Accounting for Certain Loans or Debt Securities Acquired in a Transfer
 9




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IMH SECURED LOAN FUND, LLC
 NOTE 2  SIGNIFICANT ACCOUNTING POLICIES  CONTINUED
 Direct Default Related Expenses
  Use of Estimates
  Reclassifications
  NOTE 3  CASH AND CASH EQUIVALENTS
  September 30,
    
    
    December 31,2008
    
    
    2007Working Capital Reserve
    
    $
    21,912
    
    
    $
    17,304Retained Earnings
    
    
    
    
    
    
    49Available for Operating Obligations and Lending
    
    
    35,854
    
    
    
    56,251$
    57,766
    
    
    $
    73,604
  10




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IMH SECURED LOAN FUND, LLC
 NOTE 4  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES
   September 30, 2008Fixed Rate
    
    
    Variable Rate
    
    
    Total#
    
    
    Amount
    
    
    #
    
    
    Amount
    
    
    #
    
    
    Amount
    
    
    %Current Rate:8.00%
    
    
    1
    
    
    $
    3,500
    
    
    
    
    
    
    $
    
    
    
    
    1
    
    
    $
    3,500
    
    
    
    0.6
    %9.00%
    
    
    1
    
    
    
    5,635
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    5,635
    
    
    
    1.0
    %10.00%
    
    
    1
    
    
    
    26,262
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    26,262
    
    
    
    4.8
    %11.00%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,981
    
    
    
    1
    
    
    
    1,981
    
    
    
    0.4
    %11.25%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    45,239
    
    
    
    1
    
    
    
    45,239
    
    
    
    8.2
    %11.50%
    
    
    2
    
    
    
    2,651
    
    
    
    6
    
    
    
    93,120
    
    
    
    8
    
    
    
    95,771
    
    
    
    17.4
    %11.75%
    
    
    1
    
    
    
    4,694
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    4,694
    
    
    
    0.9
    %12.00%
    
    
    10
    
    
    
    68,569
    
    
    
    9
    
    
    
    65,346
    
    
    
    19
    
    
    
    133,915
    
    
    
    24.2
    %12.25%
    
    
    1
    
    
    
    630
    
    
    
    4
    
    
    
    35,034
    
    
    
    5
    
    
    
    35,664
    
    
    
    6.5
    %12.50%
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    18,231
    
    
    
    6
    
    
    
    18,231
    
    
    
    3.3
    %12.75%
    
    
    1
    
    
    
    37,857
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    37,857
    
    
    
    6.9
    %13.00%
    
    
    5
    
    
    
    18,624
    
    
    
    9
    
    
    
    53,693
    
    
    
    14
    
    
    
    72,317
    
    
    
    13.1
    %13.25%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,371
    
    
    
    1
    
    
    
    1,371
    
    
    
    0.2
    %13.75%
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    6,555
    
    
    
    2
    
    
    
    6,555
    
    
    
    1.2
    %14.25%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    62,323
    
    
    
    1
    
    
    
    62,323
    
    
    
    11.3
    %Total
    
    
    23
    
    
    $
    168,422
    
    
    
    40
    
    
    $
    382,893
    
    
    
    63
    
    
    $
    551,315
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    30.5
    %
    
    
    
    
    
    
    69.5
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    11.03
    %
    
    
    
    
    
    
    12.37
    %
    
    
    
    
    
    
    11.96
    %Number of Loans
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    63Average Loan Carrying Value
    
    
    
    
    
    $
    7,323
    
    
    
    
    
    
    $
    9,572
    
    
    
    
    
    
    $
    8,751
 11




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IMH SECURED LOAN FUND, LLC
 NOTE 4  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
 December 31, 2007Fixed Rate
    
    
    Variable Rate
    
    
    Total#
    
    
    Amount
    
    
    #
    
    
    Amount
    
    
    #
    
    
    Amount
    
    
    %Current Rate:11.50%
    
    
    2
    
    
    $
    26,964
    
    
    
    4
    
    
    $
    15,022
    
    
    
    6
    
    
    $
    41,986
    
    
    
    8.3
    %11.75%
    
    
    1
    
    
    
    3,112
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    3,112
    
    
    
    0.6
    %12.00%
    
    
    7
    
    
    
    52,150
    
    
    
    13
    
    
    
    88,709
    
    
    
    20
    
    
    
    140,859
    
    
    
    27.7
    %12.25%
    
    
    1
    
    
    
    631
    
    
    
    6
    
    
    
    68,948
    
    
    
    7
    
    
    
    69,579
    
    
    
    13.7
    %12.50%
    
    
    3
    
    
    
    40,274
    
    
    
    8
    
    
    
    46,793
    
    
    
    11
    
    
    
    87,067
    
    
    
    17.0
    %12.75%
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    63,371
    
    
    
    3
    
    
    
    63,371
    
    
    
    12.5
    %13.00%
    
    
    7
    
    
    
    26,094
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    26,094
    
    
    
    5.1
    %13.25%
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    45,764
    
    
    
    2
    
    
    
    45,764
    
    
    
    9.0
    %13.50%
    
    
    1
    
    
    
    5,680
    
    
    
    1
    
    
    
    4,840
    
    
    
    2
    
    
    
    10,520
    
    
    
    2.1
    %13.75%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    5,065
    
    
    
    1
    
    
    
    5,065
    
    
    
    1.0
    %14.00%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    15,480
    
    
    
    1
    
    
    
    15,480
    
    
    
    3.0
    %Total
    
    
    22
    
    
    $
    154,905
    
    
    
    39
    
    
    $
    353,992
    
    
    
    61
    
    
    $
    508,897
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    30.4
    %
    
    
    
    
    
    
    69.6
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    12.26
    %
    
    
    
    
    
    
    12.52
    %
    
    
    
    
    
    
    12.44
    %Number of Loans
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    61Average Loan Carrying Value
    
    
    
    
    
    $
    7,041
    
    
    
    
    
    
    $
    9,077
    
    
    
    
    
    
    $
    8,343
   September 30, 2008Quarter
    
    
    
    Amount
    
    
    Percent
    
    
    #Matured
    
    
    
    $
    94,530
    
    
    
    17.1
    %
    
    
    15Q4 2008
    
    
    
    
    92,189
    
    
    
    16.7
    %
    
    
    14Q1 2009
    
    
    
    
    112,390
    
    
    
    20.5
    %
    
    
    9Q2 2009
    
    
    
    
    124,141
    
    
    
    22.6
    %
    
    
    6Q3 2009
    
    
    
    
    61,321
    
    
    
    11.1
    %
    
    
    7Q4 2009
    
    
    
    
    3,916
    
    
    
    0.7
    %
    
    
    1Q1 2010
    
    
    
    
    5,635
    
    
    
    1.0
    %
    
    
    1Q3 2010
    
    
    
    
    53,693
    
    
    
    9.7
    %
    
    
    9Q1 2011
    
    
    
    
    3,500
    
    
    
    0.6
    %
    
    
    1$
    551,315
    
    
    
    100.0
    %
    
    
    63
 12




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IMH SECURED LOAN FUND, LLC
 NOTE 4  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
    Percent
    
    
    
    
    
    
    Carrying
    
    
    Accrued
    
    
    Non-Accrued
    
    
    
    
    
    
    Wtd. Averageof Principal
    
    
    #
    
    

Amount
    
    
    Interest
    
    
    Note Interest
    
    
    Total
    
    
    Loan-to-ValueArizona
    
    
    40.1
    %
    
    
    11
    
    
    $
    40,931
    
    
    $
    1,003
    
    
    $
    1,693
    
    
    $
    43,627
    
    
    
    74.5
    %California
    
    
    9.1
    %
    
    
    2
    
    
    
    9,325
    
    
    
    97
    
    
    
    
    
    
    
    9,422
    
    
    
    94.0
    %Idaho
    
    
    46.7
    %
    
    
    3
    
    
    
    47,717
    
    
    
    2,173
    
    
    
    3,649
    
    
    
    53,539
    
    
    
    95.4
    %New Mexico
    
    
    4.1
    %
    
    
    1
    
    
    
    4,171
    
    
    
    164
    
    
    
    83
    
    
    
    4,418
    
    
    
    85.7
    %100.0
    %
    
    
    17
    
    
    $
    102,144
    
    
    $
    3,437
    
    
    $
    5,425
    
    
    $
    111,006
    
    
    
    84.2
    %
  13




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IMH SECURED LOAN FUND, LLC
 NOTE 4  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
 Accounting
by Creditors for Impairment of a Loan Fair Value Measurements ,
  
    
    For collateral to be developed, the initial unit sales price utilized was based on
local market, comparable prices from the fourth quarter of 2007, discounted by 20%.
Management assumed a 50 basis point increase per quarter from the initial sales price over the
sell-out period (i.e., not compounded), an amount generally less than half of the actual
historical trend for the states in which the subject markets exist. Management 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 were based on actual costs reported during the fourth quarter of 2007
obtained from an independent third party.
    
    For collateral whose development is complete or nearly complete which are expected to be leased initially to allow
for stabilization of market prices before being sold, management utilized operating revenue
and costs for comparable projects using current operating data obtained by management. Upon
assumed stabilization of real estate markets, management utilized unit sales prices
comparable to fourth quarter 2007 pricing.
    
    Based on the resulting net cash flows derived from the utilization of the above
assumptions, management applied risk-adjusted annual discount rates ranging
from 15% to 40% to the net
cash flows, depending on the projected build-out term, the project type, the location and assumed project risk.
    
    For raw or improved land assumed to be sold on a bulk sale basis, management utilized
previously obtained appraised values,  discounting such values by 25%
to 60%, depending on the location and assumed project risk.
 14




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IMH SECURED LOAN FUND, LLC
 NOTE 4  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
    15




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IMH SECURED LOAN FUND, LLC
 NOTE 4  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
 September 30, 2008
    
    
    December 31, 2007Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Held for Investment
    
    $
    7,104
    
    
    
    1.3
    %
    
    
    2
    
    
    $
    
    
    
    
    
    
    
    
    Processing Entitlements
    
    
    185,092
    
    
    
    33.6
    %
    
    
    13
    
    
    
    201,266
    
    
    
    39.6
    %
    
    
    19192,196
    
    
    
    34.9
    %
    
    
    15
    
    
    
    201,266
    
    
    
    39.6
    %
    
    
    19Entitled Land:Held for Investment
    
    
    115,341
    
    
    
    20.9
    %
    
    
    17
    
    
    
    135,060
    
    
    
    26.5
    %
    
    
    11Infrastructure under Construction
    
    
    57,175
    
    
    
    10.4
    %
    
    
    4
    
    
    
    60,037
    
    
    
    11.8
    %
    
    
    5Improved and Held for Vertical Construction
    
    
    18,416
    
    
    
    3.3
    %
    
    
    4
    
    
    
    14,800
    
    
    
    2.9
    %
    
    
    3190,932
    
    
    
    34.6
    %
    
    
    25
    
    
    
    209,897
    
    
    
    41.2
    %
    
    
    19Construction & Existing Structures:New Structure  Construction in-process
    
    
    36,433
    
    
    
    6.6
    %
    
    
    15
    
    
    
    70,864
    
    
    
    13.9
    %
    
    
    17Existing Structure Held for Investment
    
    
    36,832
    
    
    
    6.7
    %
    
    
    5
    
    
    
    26,870
    
    
    
    5.3
    %
    
    
    6Existing Structure  Improvements
    
    
    94,922
    
    
    
    17.2
    %
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    168,187
    
    
    
    30.5
    %
    
    
    23
    
    
    
    97,734
    
    
    
    19.2
    %
    
    
    23$
    551,315
    
    
    
    100.0
    %
    
    
    63
    
    
    $
    508,897
    
    
    
    100.0
    %
    
    
    61
  September 30, 2008
    
    
    December 31, 2007Amount
    
    
    Percent
    
    
    #
    
    
    Amount
    
    
    Percent
    
    
    #Arizona
    
    $
    266,086
    
    
    
    48.4
    %
    
    
    32
    
    
    $
    228,363
    
    
    
    44.8
    %
    
    
    34California
    
    
    152,894
    
    
    
    27.7
    %
    
    
    20
    
    
    
    171,560
    
    
    
    33.7
    %
    
    
    15New Mexico
    
    
    5,240
    
    
    
    1.0
    %
    
    
    2
    
    
    
    4,469
    
    
    
    0.9
    %
    
    
    2Texas
    
    
    54,249
    
    
    
    9.8
    %
    
    
    4
    
    
    
    32,114
    
    
    
    6.3
    %
    
    
    5Idaho
    
    
    42,082
    
    
    
    7.6
    %
    
    
    2
    
    
    
    48,635
    
    
    
    9.6
    %
    
    
    2Minnesota
    
    
    16,258
    
    
    
    2.9
    %
    
    
    1
    
    
    
    14,781
    
    
    
    2.9
    %
    
    
    1Nevada
    
    
    7,969
    
    
    
    1.4
    %
    
    
    1
    
    
    
    8,975
    
    
    
    1.8
    %
    
    
    2Utah
    
    
    6,537
    
    
    
    1.2
    %
    
    
    1$
    551,315
    
    
    
    100.0
    %
    
    
    63
    
    
    $
    508,897
    
    
    
    100.0
    %
    
    
    61Average Loan Principal Balance
    
    $
    8,751
    
    
    
    
    
    
    
    
    
    
    $
    8,343
  16




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IMH SECURED LOAN FUND, LLC
 NOTE 4  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
    Mortgage Loans Held for Sale
  Accretable Discounts on Acquired Loans
  17




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IMH SECURED LOAN FUND, LLC
 NOTE 5  REAL ESTATE HELD FOR DEVELOPMENT
   NOTE 6  NET EARNINGS, DISTRIBUTIONS REINVESTED AND DISTRIBUTIONS PAYABLE TO MEMBERS AND REDEMPTIONS
  18




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IMH SECURED LOAN FUND, LLC
 NOTE 6  NET EARNINGS, DISTRIBUTIONS REINVESTED AND DISTRIBUTIONS PAYABLE TO MEMBERS AND REDEMPTIONS  CONTINUED
  NOTE 7  NOTE PAYABLE TO BANK
  NOTE 8  MANAGEMENT FEES AND RELATED PARTY ACTIVITY
 Management Fees and Other Amounts Due to Manager
    19




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IMH SECURED LOAN FUND, LLC
 NOTE 8  MANAGEMENT FEES AND RELATED PARTY ACTIVITY  CONTINUED
   Related Party Investments and Borrowings
  20




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##### Table of Contents



IMH SECURED LOAN FUND, LLC
 NOTE 9  COMMITMENTS AND CONTINGENCIES
    21




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22




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Forward-Looking Statements
   
    
    As allowed in the Funds Operating Agreement, the Manager has elected to suspend certain
activities of the Fund, including the acceptance of any additional Member investments in
the Fund, the payment of outstanding redemptions requests that would otherwise have been
payable after October 1, 2008, and the identification and funding of any new loans. This
election to suspend certain of the Funds activities was made in order to prevent
impairment of the Funds capital and operating activities and to stabilize the Funds
liquid assets in order to meet future obligations under the current loan commitments.
Several of the risks described below are described under the assumption that the Fund will
resume its historical activities in the same manner. However, there can be no assurance that
the activities of the Fund will resume in the foreseeable future, if ever.
    
    As a result of the suspension of the Funds activities, the Manager believes that its
ability to continue as a going concern for the next 12 months is predicated on the
successful completion of various initiatives being undertaken. If IMH is unable to
continue in its capacity as Manager of the Fund, a replacement manager will need to be
identified which could result in a significantly different management fee structure and
which may require to the Fund to bear certain overhead costs that are presently paid by IMH.
 23




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##### Table of Contents




    
    If the Funds liquidity continues to dissipate and the Fund is unable to meet its
current obligations, the Fund may be forced to sell certain assets of the Fund for a price
at or below their current book value which could result in a loss.
    
    We are subject to the risk that, despite recent actions and proposals by the U.S.
government and governments around the world, banks and other financial institutions may not
be willing to lend and/or interest rates and the yield curve may change, which could
adversely affect 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.
    
    Our business may be adversely affected by the general economic slowdown or recession in
the U.S. or abroad.
    
    Our units lack liquidity and marketability and our Members have a limited ability to
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.
    
    As a mortgage lender, we are subject to a variety of external forces that could have a
material adverse effect our operations and results, including, without limitation,
fluctuations in interest rates, fluctuations in economic conditions (which are exacerbated
by our limited geographic diversity), competition and amount of available capital and the
effect that regulators or bankruptcy courts could have on our operations and rights as a
secured lender.
    
    In recent periods, the homebuilding and capital markets have experienced a severe
downturn. Although we are not a direct participant in these markets, we face secondary
exposure to downturns in these markets because the markets we serve are directly impacted
by events that occur in the homebuilding and capital markets. As a result, we have
experienced an increase in delinquencies on our loans and foreclosure activity relating to
the collateral securing our loans, which has and may continue to adversely affect our
liquidity.
    
    Real estate assets acquired in foreclosure or through other means are generally
non-earning assets that reduce the distributable yield to investors. Moreover, the
ultimate disposition and liquidation of such assets may not occur for an extended period of
time, which would adversely affect our liquidity.
    
    Our borrowers are exposed to various risks associated with owning real estate, and
unexpected costs or liabilities 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.
    
    We are subject to risks generally associated with the ownership of real estate and real
estate-related assets, including changing economic conditions, environmental risks, the
cost of and ability to obtain insurance and risks related to developing and leasing of
properties.
    
    Our loans, which are not guaranteed by any government agency, are risky and are not sold
on any secondary market, and our underwriting standards may not protect Members from loan
defaults or ensure that sufficient collateral, including collateral pledged by guarantors,
will exist to protect Members from any such defaults.
    
    We rely exclusively on our Manager to select and manage the mortgage loans in which we
invest, and our Manager has limited experience with such activities or sponsoring mortgage
funds, although certain employees of the Manager do have such experience. Our Members have
no right to participate in decisions relating to the activities of our Manager, including,
without limitation, the right to participate in selecting and managing mortgage
investments.
    
    If the Manager elects to resume historical Fund activities, the Manager may not be able
to identify and close suitable loans for funding in a timely manner or in a time frame that
corresponds with the raising of investor capital, thereby resulting in lower or varying
Member yields.
 24




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##### Table of Contents




    
    Prior to the Managers election to suspend certain of the Funds activities, we were
transitioning our lending strategies to increase the percentage of our assets allocated to
loans on commercial and income-producing properties. We were also beginning to emphasize
smaller loans, in the $2 million to $10 million range, although we also intended to
consider making larger loans  over $50 million  on a select basis. In the event that the
Fund resumes historical activities and continues the foregoing lending strategy, there can
be no assurance that we will be able to implement these strategies or that, if implemented,
they will be successful. Making loans above $50 million would result in higher loan
concentrations, and greater dependence on single borrowers, which may increase the risk of
loss to investors.
    
    We have experienced higher levels of redemptions from Members, and have suspended the
acceptance of new Member investments in the Fund, and the payment of redemption requests.
If the Manager does not resume historical Fund activities and we are unable to replace
these funds with new investor contributions or other funding sources, we may be unable to
satisfy our liquidity needs.
    
    We are obligated to pay certain fees to our Manager, which may materially and adversely
impact our operating results and reduce cash available for investment and distributions.
    
    Our Manager will face conflicts of interest, including, without limitation, competing
demands upon its time, its involvement with other activities and entities and its desire to
generate origination proceeds at the risk of extending or participating in loans not
suitable for the Fund, all of which could have a material adverse effect on us.
    
    As a publicly reporting company, we are required to divert considerable resources to new
compliance initiatives, including refining 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 activities may persist for an extended period of time, and
the Fund may not resume historical activities at all. Unless the Fund activities resume,
the Fund will be unable to capitalize on potential current lending opportunities that the
Manager believes exist in the marketplace.
    
    There are material income tax and retirement plan risks associated with ownership of our
units.
  25




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##### Table of Contents



Overview of the Business
     Industry Conditions and Fund Strategy
   26




---



##### Table of Contents



Management Policies
 
    
    Maintain capital to honor all Fund commitments and obligations.
    
    Manage and protect the existing portfolio effectively.
    
    Remain steadfast against fire-sale liquidation of Fund assets.
    
    Continue to make meaningful pro-rata cash distributions on a monthly basis to Fund
Members.
  
    
    Suspension of Fund Investor Activities: Short-term bridge loans to facilitate real
estate entitlement, development and interim financing constitute the heart of our
Funds business model. This model relies on market capital availability. However,
current market conditions have virtually eliminated these traditional sources of
take-out financing. We believe it will take 12-24 months for markets and capital
sources to begin to normalize, although there can be no assurance that the markets
will stabilize in this timeframe.Based on the events of recent weeks, we expect that there will be a lack of take-out
financing for many of the loans in our portfolio. As a result, we have determined
that the Funds short-term financing platform will need to be modified  both in
policy and action  in order to deal with the current credit freeze. Accordingly, the
Fund has taken the following actions effective September 30, 2008:
 
    
    The Fund suspended accepting any additional Member investments in the Fund.
    
    The Fund suspended reinvesting monthly distributions.
    
    The Fund plans to pay all future monthly distributions in cash, eliminating the
re-invest option.
    
    The Fund cancelled all pending redemption requests.
 27




---



##### Table of Contents




    
    The Fund suspended accepting any new redemption requests.
    
    The Fund plans to continue to work toward meaningful distributions to its
Members.
    
    The Fund suspended accepting any new loan requests.
    
    The modification of certain loans in the Funds portfolio have resulted in, and
are expected to continue to result in, an extended term of maturity of two years or
longer.
    
    
    Continued economic, legislative and regulatory pressure on housing values and
mortgage origination volumes, which has adversely affected, and we believe will
continue to adversely affect, the demand for the residential and commercial projects
our borrowers participate in and develop;
    
    The erosion of the credit markets has virtually eliminated all take-out financing
options available to our borrowers, resulting in increased delinquencies of our loans
and foreclosure activity relating to the collateral securing our loans, which reduces
the earning asset base of our asset portfolio; and
    
    Continued disruptions in the secondary mortgage and debt capital markets, which
adversely affects the ability of some of our borrowers to find alternative or follow-on
financing and repay our loans.
  
    
    Asset Class Avoidance: Prior to the suspension of certain of the Funds activities,
IMH minimized the Funds investment in a number of asset classes because IMH believed
such investments would have resulted in an unnecessary risk to investor capital. These
asset classes included condominium conversions, high-rise condominiums, public
homebuilder projects, large land parcels not in proximity to existing development, and
office condominiums.
    
    Portfolio Diversification: Although the Funds portfolio is concentrated in Arizona
and California, over the past several years the Fund had diversified into several
markets that IMH believes reflect long-term affordability and economic growth. In the
event that the Fund resumes its historical activities, IMH anticipates increased
geographic diversification in the portfolio. IMH would also anticipate increasing the
percentage of its assets allocated to loans on commercial properties. The Fund would
also explore increasing its emphasis on smaller
 28




---



##### Table of Contents



loans, in the $2 million to $10 million range (although it also intends to consider
making larger loans  over $50 million  on a select basis).
    
    Underwriting: IMH has utilized, and if the Fund resumes its historical activities,
it anticipates it would continue to utilize, residual analysis methodology in its
underwriting process. This methodology results in an assessment of whether there is
there sufficient equity in the loan that, in the event of a default and foreclosure,
we could complete development of the project in a manner such that the fair value of
the project in the marketplace would exceed our aggregate investment, ideally
generating a return of 18%-20% or more. We believe this type of analysis mitigates the
likelihood of loaning too much money in relation to a projects value and has allowed
the Fund to remain well-positioned in a volatile market.
   29




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##### Table of Contents



Selected Financial Data
  (Unaudited)
    
    (Unaudited)As of and for the Nine
    
    As of and for the Three
    
    As of and for theMonths Ended September 30,
    
    Months Ended September 30,
    
    Year Ended2008
    
    2007
    
    2008
    
    2007
    
    December 31, 2007Cash and cash equivalents
    
    $
    57,766
    
    
    $
    78,431
    
    
    $
    57,766
    
    
    $
    78,431
    
    
    $
    73,604Total assets
    
    $
    709,120
    
    
    $
    535,191
    
    
    $
    709,120
    
    
    $
    535,191
    
    
    $
    590,559Interest income and fees
    
    $
    51,208
    
    
    $
    34,865
    
    
    $
    17,536
    
    
    $
    13,678
    
    
    $
    49,763Management fees
    
    $
    819
    
    
    $
    682
    
    
    $
    300
    
    
    $
    257
    
    
    $
    968Interest expense
    
    $
    78
    
    
    $
    1,217
    
    
    $
    
    
    
    $
    171
    
    
    $
    1,220Net earnings (loss)
    
    $
    7,174
    
    
    $
    32,966
    
    
    $
    (25,749)
    
    
    $
    13,250
    
    
    $
    45,675Net distributions to Members
    
    $
    49,163
    
    
    $
    32,311
    
    
    $
    16,627
    
    
    $
    13,250
    
    
    $
    46,920Net Member distribution as a % of net earnings
    
    
    685.3
    %
    
    
    98.0
    %
    
    
    (64.6
    %)
    
    
    100.0
    %
    
    
    102.7
    %Net earnings
(loss) allocated to Members per weighted average
membership units outstanding
    
    $
    109.99
    
    
    $
    857.52
    
    
    $
    (368.96
    )
    
    $
    275.89
    
    
    $
    1,073.47Net distributions to Members per weighted average
membership units
    
    $
    753.76
    
    
    $
    840.48
    
    
    $
    238.26
    
    
    $
    275.89
    
    
    $
    1,102.72Average annualized yield to Members
    
    
    9.93
    %
    
    
    11.32
    %
    
    
    9.23
    %
    
    
    10.94
    %
    
    
    11.09
    %Member Equity Related:Retained
earnings (Accumulated deficit)
    
    $
    (41,984
    )
    
    $
    2,028
    
    
    $
    (41,984
    )
    
    $
    2,028
    
    
    $
    49Total Members equity
    
    $
    688,400
    
    
    $
    526,487
    
    
    $
    688,400
    
    
    $
    526,487
    
    
    $
    576,833Number of Member accounts
    
    
    4,732
    
    
    
    3,039
    
    
    
    4,732
    
    
    
    3,039
    
    
    
    3,472Average Member account balance
    
    $
    145
    
    
    $
    173
    
    
    $
    145
    
    
    $
    173
    
    
    $
    166States in which the Fund has Members
    
    
    49
    
    
    
    48
    
    
    
    49
    
    
    
    48
    
    
    
    49Member investments (excluding reinvestments)
    
    $
    250,941
    
    
    $
    273,086
    
    
    $
    84,070
    
    
    $
    99,693
    
    
    $
    349,523Member earnings distributed
    
    $
    25,971
    
    
    $
    14,066
    
    
    $
    10,500
    
    
    $
    6,111
    
    
    $
    20,755Member earnings reinvested
    
    $
    23,192
    
    
    $
    18,246
    
    
    $
    6,128
    
    
    $
    7,139
    
    
    $
    26,165Retained earnings additions (distributed)
    
    $
    (41,989
    )
    
    $
    655
    
    
    $
    (42,377
    )
    
    $
    
    
    
    $
    (1,245
    )% of total distributions reinvested
    
    
    47.17
    %
    
    
    56.47
    %
    
    
    36.9
    %
    
    
    53.88
    %
    
    
    57.28
    %Redemptions
    
    $
    120,533
    
    
    $
    25,626
    
    
    $
    36,640
    
    
    $
    4,979
    
    
    $
    57,790Redemptions as % of new investment (incl. reinvestments)
    
    
    43.97
    %
    
    
    8.80
    %
    
    
    40.62
    %
    
    
    4.66
    %
    
    
    15.38
    %Loan Related:Loan deployment ratio
    
    
    77.0
    %
    
    
    93.0
    %
    
    
    73.5
    %
    
    
    88.2
    %
    
    
    89.0
    %Note balances originated
    
    $
    327,662
    
    
    $
    363,151
    
    
    $
    92,394
    
    
    $
    47,040
    
    
    $
    428,777Number of notes originated
    
    
    22
    
    
    
    30
    
    
    
    11
    
    
    
    8
    
    
    
    38Average note balance originated
    
    $
    14,894
    
    
    $
    12,105
    
    
    $
    8,399
    
    
    $
    5,880
    
    
    $
    11,284Net loan
carrying values
    
    $
    551,315
    
    
    $
    451,179
    
    
    $
    551,315
    
    
    $
    451,179
    
    
    $
    508,897Number of loans outstanding
    
    
    63
    
    
    
    55
    
    
    
    63
    
    
    
    55
    
    
    
    61Average loan
carrying value
    
    $
    8,751
    
    
    $
    8,203
    
    
    $
    8,751
    
    
    $
    8,203
    
    
    $
    8,343% of Portfolio Principal  Fixed interest rate
    
    
    30.5
    %
    
    
    45.8
    %
    
    
    30.5
    %
    
    
    45.8
    %
    
    
    30.4
    %Number of fixed rate loans
    
    
    23
    
    
    
    27
    
    
    
    23
    
    
    
    27
    
    
    
    22Weighted average interest rate  Fixed
    
    
    11.03
    %
    
    
    12.17
    %
    
    
    11.03
    %
    
    
    12.17
    %
    
    
    12.26
    %% of portfolio  Variable interest rate
    
    
    69.5
    %
    
    
    54.2
    %
    
    
    69.5
    %
    
    
    54.2
    %
    
    
    69.6
    %Number of variable rate loans
    
    
    40
    
    
    
    28
    
    
    
    40
    
    
    
    28
    
    
    
    39Weighted average interest rate  Variable
    
    
    12.37
    %
    
    
    12.58
    %
    
    
    12.37
    %
    
    
    12.58
    %
    
    
    12.52
    %Principal balance % by state:Arizona
    
    
    48.4
    %
    
    
    45.2
    %
    
    
    48.4
    %
    
    
    45.2
    %
    
    
    44.8
    %California
    
    
    27.7
    %
    
    
    29.7
    %
    
    
    27.7
    %
    
    
    29.7
    %
    
    
    33.7
    %New Mexico
    
    
    1.0
    %
    
    
    0.8
    %
    
    
    1.0
    %
    
    
    0.8
    %
    
    
    0.9
    %Texas
    
    
    9.8
    %
    
    
    6.1
    %
    
    
    9.8
    %
    
    
    6.1
    %
    
    
    6.3
    %Idaho
    
    
    7.6
    %
    
    
    10.3
    %
    
    
    7.6
    %
    
    
    10.3
    %
    
    
    9.6
    %North Carolina
    
    
    0.0
    %
    
    
    4.5
    %
    
    
    0.0
    %
    
    
    4.5
    %
    
    
    0.0
    %Minnesota
    
    
    2.9
    %
    
    
    3.2
    %
    
    
    2.9
    %
    
    
    3.2
    %
    
    
    2.9
    %Nevada
    
    
    1.4
    %
    
    
    0.2
    %
    
    
    1.4
    %
    
    
    0.2
    %
    
    
    1.8
    %Utah
    
    
    1.2
    %
    
    
    0.0
    %
    
    
    1.2
    %
    
    
    0.0
    %
    
    
    0.0
    %Interest payments over 30 days delinquent
    
    $
    41
    
    
    $
    1,048
    
    
    $
    41
    
    
    $
    1,048
    
    
    $
    2,741Loans past scheduled maturity
    
    
    15
    
    
    
    9
    
    
    
    15
    
    
    
    9
    
    
    
    15Carrying
value of loans past scheduled maturity
    
    $
    94,529
    
    
    $
    42,793
    
    
    $
    94,529
    
    
    $
    42,793
    
    
    $
    133,532Number of loans in non accrual status
    
    
    7
    
    
    
    5
    
    
    
    7
    
    
    
    5
    
    
    
    10Carrying
value of loans in non accrual status
    
    $
    64,631
    
    
    $
    17,858
    
    
    $
    64,631
    
    
    $
    17,858
    
    
    $
    73,346Allowance for credit losses
    
    $
    45,440
    
    
    $
    
    
    
    $
    45,440
    
    
    $
    
    
    
    $
    1,900Allowance for credit losses as % of loan principal
    
    
    8.2
    %
    
    
    0.0
    %
    
    
    8.2
    %
    
    
    0.0
    %
    
    
    0.4
    %
 
 *
    
    Where applicable, quarterly results are annualized to allow for compatability with annual
results. 30




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##### Table of Contents



Results of Operations for the Nine and Three Months Ended September 30, 2008 and 2007
    Revenues
 Nine Months Ended September 30,
    
    
    
    Three Months Ended September 30,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % ChangeInterest and Fee Income:Mortgage Loans
    
    $
    49,420
    
    
    $
    33,688
    
    
    $
    15,732
    
    
    
    46.7
    %
    
    
    $
    17,069
    
    
    $
    12,968
    
    
    $
    4,101
    
    
    
    31.6
    %Investments and MoneyMarket Accounts
    
    
    1,788
    
    
    
    1,177
    
    
    
    611
    
    
    
    51.9
    %
    
    
    
    467
    
    
    
    710
    
    
    
    (243
    )
    
    
    -34.2
    %Total Interest and Fee Income
    
    $
    51,208
    
    
    $
    34,865
    
    
    $
    16,343
    
    
    
    46.9
    %
    
    
    $
    17,536
    
    
    $
    13,678
    
    
    $
    3,858
    
    
    
    28.2
    %
   31




---



##### Table of Contents



Expenses
 Nine Months Ended September 30,
    
    
    
    Three Months Ended September 30,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % ChangeExpenses:Management Fees
    
    $
    819
    
    
    $
    682
    
    
    $
    137
    
    
    
    20.1
    %
    
    
    $
    300
    
    
    $
    257
    
    
    $
    43
    
    
    
    16.7
    %Default Related Expenses
    
    
    707
    
    
    
    
    
    
    
    707
    
    
    
    N/A
    
    
    
    
    555
    
    
    
    
    
    
    
    555
    
    
    
    N/AInterest Expense:Borrowings from Fund Manager
    
    
    
    
    
    
    390
    
    
    
    (390
    )
    
    
    (100.0
    %)
    
    
    
    
    
    
    
    44
    
    
    
    (44
    )
    
    
    (100.0
    %)Participations in Mortgage Loans
    
    
    
    
    
    
    827
    
    
    
    (827
    )
    
    
    (100.0
    %)
    
    
    
    
    
    
    
    127
    
    
    
    (127
    )
    
    
    (100.0
    %)Borrowings on Note Payable
    
    
    78
    
    
    
    
    
    
    
    78
    
    
    
    N/A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    N/AInterest Expense
    
    
    78
    
    
    
    1,217
    
    
    
    (1,139
    )
    
    
    (93.6
    %)
    
    
    
    
    
    
    
    171
    
    
    
    (171
    )
    
    
    (100.0
    %)Provision
for Credit Loss
    
    
    42,430

    
    
    
    

    
    
    
    42,430

    
    

    
    N/A


    
    
    
    
    42,430

    
    
    
    

    
    
    
    42,430

    
    
    
    N/ATotal Expenses
    
    $
    44,034
    
    
    $
    1,899
    
    
    $
    42,135
    
    
    
    2,218.8
    %
    
    
    $
    43,285
    
    
    $
    428
    
    
    $
    42,857
    
    
    
    10,013.3
    %
  32




---



##### Table of Contents



Net Earnings
 Nine Months Ended September 30,
    
    
    
    Three Months Ended September 30,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % ChangeNet Earnings
    
    $
    7,174
    
    
    $
    32,966
    
    
    $
    (25,792
    )
    
    
    (78.2
    %)
    
    
    $
    (25,749
    )
    
    $
    13,250
    
    
    $
    (38,999
    )
    
    
    (294.3
    %)
  Fund Manager Fund-Related Income and Expense
  33




---



##### Table of Contents



Nine months ended Sept 30,
    
    
    Three months ended Sept 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Fund-related Expenses Paid by Manager:Operations-related expenses
    
    $
    10,895
    
    
    $
    10,480
    
    
    $
    3,487
    
    
    $
    2,993Origination-related expenses
    
    
    6,182
    
    
    
    5,946
    
    
    
    1,978
    
    
    
    1,698Total
    
    $
    17,077
    
    
    $
    16,426
    
    
    $
    5,465
    
    
    $
    4,691
   
    
    Implemented a comprehensive cost reduction program, including a reduction in staff. The
reduction in staff affected nearly 40% of the Managers employees while preserving core
functionality in all operational areas. The Manager projects that monthly operating costs
should stabilize during the fourth quarter of 2008 at approximately $700,000 per month.
    
    Engaged the services of an investment banking firm explore financing alternatives
available to IMH.
    
    Commenced exploring mechanisms through which IMH can continue to participate in the
capital markets, including, without limitation, through the use of additional funding
vehicles to capitalize on what the Manager believes are a multitude of opportunities
arising from the disruptions in the capital and credit markets.
    
    Commenced evaluation of a request for a change in the management fee structure payable
to IMH to the level necessary to reimburse IMH for the cost of management services
provided.
    
    Considered other initiatives, as they arise, to insure the continued viability of the
Manager as an operating entity.
  34




---



##### Table of Contents



Changes in the Loan Portfolio Profile
   Average Loan Size
  Geographic Diversification
  35




---



##### Table of Contents



September 30, 2008
    
    
    December 31, 2007Amount
    
    
    Percent
    
    
    #
    
    
    Amount
    
    
    Percent
    
    
    #Arizona
    
    $
    266,086
    
    
    
    48.4
    %
    
    
    32
    
    
    $
    228,363
    
    
    
    44.8
    %
    
    
    34California
    
    
    152,894
    
    
    
    27.7
    %
    
    
    20
    
    
    
    171,560
    
    
    
    33.7
    %
    
    
    15New Mexico
    
    
    5,240
    
    
    
    1.0
    %
    
    
    2
    
    
    
    4,469
    
    
    
    0.9
    %
    
    
    2Texas
    
    
    54,249
    
    
    
    9.8
    %
    
    
    4
    
    
    
    32,114
    
    
    
    6.3
    %
    
    
    5Idaho
    
    
    42,082
    
    
    
    7.6
    %
    
    
    2
    
    
    
    48,635
    
    
    
    9.6
    %
    
    
    2Minnesota
    
    
    16,258
    
    
    
    2.9
    %
    
    
    1
    
    
    
    14,781
    
    
    
    2.9
    %
    
    
    1Nevada
    
    
    7,969
    
    
    
    1.4
    %
    
    
    1
    
    
    
    8,975
    
    
    
    1.8
    %
    
    
    2Utah
    
    
    6,537
    
    
    
    1.2
    %
    
    
    1$
    551,315
    
    
    
    100.0
    %
    
    
    63
    
    
    $
    508,897
    
    
    
    100.0
    %
    
    
    61
  Interest Rate Information
     36




---



##### Table of Contents



September 30, 2008Fixed Rate
    
    
    Variable Rate
    
    
    Total#
    
    
    Amount
    
    
    #
    
    
    Amount
    
    
    #
    
    
    Amount
    
    
    %Current Rate:8.00%
    
    
    1
    
    
    $
    3,500
    
    
    
    
    
    
    $
    
    
    
    
    1
    
    
    $
    3,500
    
    
    
    0.6
    %9.00%
    
    
    1
    
    
    
    5,635
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    5,635
    
    
    
    1.0
    %10.00%
    
    
    1
    
    
    
    26,262
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    26,262
    
    
    
    4.8
    %11.00%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,981
    
    
    
    1
    
    
    
    1,981
    
    
    
    0.4
    %11.25%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    45,239
    
    
    
    1
    
    
    
    45,239
    
    
    
    8.2
    %11.50%
    
    
    2
    
    
    
    2,651
    
    
    
    6
    
    
    
    93,120
    
    
    
    8
    
    
    
    95,771
    
    
    
    17.4
    %11.75%
    
    
    1
    
    
    
    4,694
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    4,694
    
    
    
    0.9
    %12.00%
    
    
    10
    
    
    
    68,569
    
    
    
    9
    
    
    
    65,346
    
    
    
    19
    
    
    
    133,915
    
    
    
    24.2
    %12.25%
    
    
    1
    
    
    
    630
    
    
    
    4
    
    
    
    35,034
    
    
    
    5
    
    
    
    35,664
    
    
    
    6.5
    %12.50%
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    18,231
    
    
    
    6
    
    
    
    18,231
    
    
    
    3.3
    %12.75%
    
    
    1
    
    
    
    37,857
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    37,857
    
    
    
    6.9
    %13.00%
    
    
    5
    
    
    
    18,624
    
    
    
    9
    
    
    
    53,693
    
    
    
    14
    
    
    
    72,317
    
    
    
    13.1
    %13.25%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1,371
    
    
    
    1
    
    
    
    1,371
    
    
    
    0.2
    %13.75%
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    6,555
    
    
    
    2
    
    
    
    6,555
    
    
    
    1.2
    %14.25%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    62,323
    
    
    
    1
    
    
    
    62,323
    
    
    
    11.3
    %Total
    
    
    23
    
    
    $
    168,422
    
    
    
    40
    
    
    $
    382,893
    
    
    
    63
    
    
    $
    551,315
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    30.5
    %
    
    
    
    
    
    
    69.5
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    11.03
    %
    
    
    
    
    
    
    12.37
    %
    
    
    
    
    
    
    11.96
    %Number of Loans
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    40
    
    
    
    
    
    
    
    63Average Loan
Carrying Value
    
    
    
    
    
    $
    7,323
    
    
    
    
    
    
    $
    9,572
    
    
    
    
    
    
    $
    8,751
 December 31, 2007Fixed Rate
    
    
    Variable Rate
    
    
    Total#
    
    
    Amount
    
    
    #
    
    
    Amount
    
    
    #
    
    
    Amount
    
    
    %Current Rate:11.50%
    
    
    2
    
    
    $
    26,964
    
    
    
    4
    
    
    $
    15,022
    
    
    
    6
    
    
    $
    41,986
    
    
    
    8.3
    %11.75%
    
    
    1
    
    
    
    3,112
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    3,112
    
    
    
    0.6
    %12.00%
    
    
    7
    
    
    
    52,150
    
    
    
    13
    
    
    
    88,709
    
    
    
    20
    
    
    
    140,859
    
    
    
    27.7
    %12.25%
    
    
    1
    
    
    
    631
    
    
    
    6
    
    
    
    68,948
    
    
    
    7
    
    
    
    69,579
    
    
    
    13.7
    %12.50%
    
    
    3
    
    
    
    40,274
    
    
    
    8
    
    
    
    46,793
    
    
    
    11
    
    
    
    87,067
    
    
    
    17.0
    %12.75%
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    63,371
    
    
    
    3
    
    
    
    63,371
    
    
    
    12.5
    %13.00%
    
    
    7
    
    
    
    26,094
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    26,094
    
    
    
    5.1
    %13.25%
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    45,764
    
    
    
    2
    
    
    
    45,764
    
    
    
    9.0
    %13.50%
    
    
    1
    
    
    
    5,680
    
    
    
    1
    
    
    
    4,840
    
    
    
    2
    
    
    
    10,520
    
    
    
    2.1
    %13.75%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    5,065
    
    
    
    1
    
    
    
    5,065
    
    
    
    1.0
    %14.00%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    15,480
    
    
    
    1
    
    
    
    15,480
    
    
    
    3.0
    %Total
    
    
    22
    
    
    $
    154,905
    
    
    
    39
    
    
    $
    353,992
    
    
    
    61
    
    
    $
    508,897
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    30.4
    %
    
    
    
    
    
    
    69.6
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    12.26
    %
    
    
    
    
    
    
    12.52
    %
    
    
    
    
    
    
    12.44
    %Number of Loans
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    61Average Loan
Carrying Value
    
    
    
    
    
    $
    7,041
    
    
    
    
    
    
    $
    9,077
    
    
    
    
    
    
    $
    8,343
 37




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##### Table of Contents



Concentration by Category based on Collaterals Development Status
  September 30, 2008
    
    
    December 31, 2007Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Held for Investment
    
    $
    7,104
    
    
    
    1.3
    %
    
    
    2
    
    
    $
    
    
    
    
    
    
    
    
    Processing Entitlements
    
    
    185,092
    
    
    
    33.6
    %
    
    
    13
    
    
    
    201,266
    
    
    
    39.6
    %
    
    
    19192,196
    
    
    
    34.9
    %
    
    
    15
    
    
    
    201,266
    
    
    
    39.6
    %
    
    
    19Entitled Land:Held for Investment
    
    
    115,341
    
    
    
    20.9
    %
    
    
    17
    
    
    
    135,060
    
    
    
    26.5
    %
    
    
    11Infrastructure under Construction
    
    
    57,175
    
    
    
    10.4
    %
    
    
    4
    
    
    
    60,037
    
    
    
    11.8
    %
    
    
    5Improved and Held for Vertical Construction
    
    
    18,416
    
    
    
    3.3
    %
    
    
    4
    
    
    
    14,800
    
    
    
    2.9
    %
    
    
    3190,932
    
    
    
    34.6
    %
    
    
    25
    
    
    
    209,897
    
    
    
    41.2
    %
    
    
    19Construction & Existing Structures:New Structure  Construction in-process
    
    
    36,433
    
    
    
    6.6
    %
    
    
    15
    
    
    
    70,864
    
    
    
    13.9
    %
    
    
    17Existing Structure Held for Investment
    
    
    36,832
    
    
    
    6.7
    %
    
    
    5
    
    
    
    26,870
    
    
    
    5.3
    %
    
    
    6Existing Structure  Improvements
    
    
    94,922
    
    
    
    17.2
    %
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    168,187
    
    
    
    30.5
    %
    
    
    23
    
    
    
    97,734
    
    
    
    19.2
    %
    
    
    23$
    551,315
    
    
    
    100.0
    %
    
    
    63
    
    
    $
    508,897
    
    
    
    100.0
    %
    
    
    61
  September 30, 2008
    
    
    December 31, 2007Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Residential
    
    $
    251,390
    
    
    
    45.6
    %
    
    
    38
    
    
    $
    229,260
    
    
    
    45.0
    %
    
    
    34Mixed Use
    
    
    173,778
    
    
    
    31.5
    %
    
    
    11
    
    
    
    219,753
    
    
    
    43.2
    %
    
    
    16Commercial
    
    
    125,077
    
    
    
    22.7
    %
    
    
    13
    
    
    
    59,884
    
    
    
    11.8
    %
    
    
    11Industrial
    
    
    1,070
    
    
    
    0.2
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    $
    551,315
    
    
    
    100.0
    %
    
    
    63
    
    
    $
    508,897
    
    
    
    100.0
    %
    
    
    61
  38




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##### Table of Contents



Borrower and Borrower Groups
  Changes in the Portfolio Profile  Scheduled Maturities
  September 30, 2008Quarter
    
    
    
    Amount
    
    
    Percent
    
    
    #Matured
    
    
    
    $
    94,530
    
    
    
    17.1
    %
    
    
    15Q4 2008
    
    
    
    
    92,189
    
    
    
    16.7
    %
    
    
    14Q1 2009
    
    
    
    
    112,390
    
    
    
    20.5
    %
    
    
    9Q2 2009
    
    
    
    
    124,141
    
    
    
    22.6
    %
    
    
    6Q3 2009
    
    
    
    
    61,321
    
    
    
    11.1
    %
    
    
    7Q4 2009
    
    
    
    
    3,916
    
    
    
    0.7
    %
    
    
    1Q1 2010
    
    
    
    
    5,635
    
    
    
    1.0
    %
    
    
    1Q3 2010
    
    
    
    
    53,693
    
    
    
    9.7
    %
    
    
    9Q1 2011
    
    
    
    
    3,500
    
    
    
    0.6
    %
    
    
    1$
    551,315
    
    
    
    100.0
    %
    
    
    63
  Real Estate Held for Development
  39




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##### Table of Contents



# of
    
    Aggregate
    
    Estimated Net
    
    Book Value as %State
    
    Projects
    
    Book Value
    
    Realizable Value (NRV)
    
    of Est. NRVCalifornia
    
    
    3
    
    
    $
    19,706
    
    
    $
    22,464
    
    
    
    88
    %Texas
    
    
    2
    
    
    
    21,450
    
    
    
    21,927
    
    
    
    98
    %Arizona
    
    
    5
    
    
    
    47,022
    
    
    
    59,403
    
    
    
    79
    %Total
    
    
    10
    
    
    $
    88,178
    
    
    $

    103,794
    
    
    
    85
    %
   Important Relationships Between Capital Resources and Results of Operations
 Loan Loss Reserve
    40




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Mortgage Loans, Participations and Loan Sales
     41




---



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Distributions to Members
  Annualized Rate of Return to Members on Distributions
  42




---



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Redemptions
   Trends and Uncertainties
 Prospective Trends
 Loan Demand, Selection and Quality
   43




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Summary
of Existing Loans in Default
    Percent
    
    
    
    
    
    
    Carrying
    
    
    Accrued
    
    
    Non-Accrued
    
    
    
    
    
    
    Wtd. Averageof Principal
    
    
    #
    
    
    Amount
    
    
    Interest
    
    
    Note Interest
    
    
    Total
    
    
    Loan-to-ValueArizona
    
    
    40.1
    %
    
    
    11
    
    
    $
    40,931
    
    
    $
    1,003
    
    
    $
    1,693
    
    
    $
    43,627
    
    
    
    74.5
    %California
    
    
    9.1
    %
    
    
    2
    
    
    
    9,325
    
    
    
    97
    
    
    
    
    
    
    
    9,422
    
    
    
    94.0
    %Idaho
    
    
    46.7
    %
    
    
    3
    
    
    
    47,717
    
    
    
    2,173
    
    
    
    3,649
    
    
    
    53,539
    
    
    
    95.4
    %New Mexico
    
    
    4.1
    %
    
    
    1
    
    
    
    4,171
    
    
    
    164
    
    
    
    83
    
    
    
    4,418
    
    
    
    85.7
    %100.0
    %
    
    
    17
    
    
    $
    102,144
    
    
    $
    3,437
    
    
    $
    5,425
    
    
    $
    111,006
    
    
    
    84.2
    %
   Loan Portfolio Valuation Analysis Summary
  44




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##### Table of Contents




    
    Estimated net realizable value of any underlying collateral in relation to the
outstanding mortgage balance, including accrued interest and related costs;
    
    Recency and reliability of valuation;
    
    The financial condition of the borrower and any adverse factors that may affect its
ability to pay;
    
    Prevailing economic conditions, including all known relevant internal and external
factors that may affect loan collectibility (and modified for new factors);
    
    Historical experience by market and in general; and
    
    Evaluation of industry trends;
   Comprehensive Analysis of the Funds Loan Portfolio
  45




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46




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##### Table of Contents



47




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Accounting
by Creditors for Impairment of a Loan Fair Value Measurements ,
  
    
    For collateral to be developed, the initial unit sales price utilized was based on
local market, comparable prices from the fourth quarter of 2007, discounted by 20%.
Management assumed a 50 basis point increase per quarter from the
initial sales price over the
sell-out period (i.e., not compounded), an amount generally less than half of the actual
historical trend for the states in which the subject markets exist. Management 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 were based on actual costs reported during the fourth quarter of 2007
obtained from an independent third party.
    
    For collateral whose development is complete or nearly complete  which are expected to be leased initially to allow
for stabilization of market prices before being sold, management utilized operating revenue
and costs for comparable projects using current operating data obtained by management. Upon
assumed stabilization of real estate markets, management utilized unit sales prices
comparable to fourth quarter 2007 pricing.
    
    Based on the resulting net cash flows derived from the utilization of the above
assumptions, management applied risk-adjusted annual discount rates ranging
from 15% to 40% to the net cash flows, depending on the projected build-out term, the project type, the  location and assumed project risk.
 48




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##### Table of Contents




    
    For raw or improved land assumed to be sold on a bulk sale basis, management utilized
previously obtained appraised values, discounting  such values by 25% to 60%, depending on the location and assumed project risk.
   Trends in Interest Income and Effective Portfolio Yield
  49




---



##### Table of Contents



Interest Earning Assets Deployment Ratio
   
    
    pending fundings of loans that have completed the underwriting process;
    
    anticipated loan fundings;
    
    average size of loans in the underwriting process;
    
    expected loan reductions or payoffs;
    
    pending Member redemptions;
    
    direct expenses, and
    
    other anticipated liquidity needs.
  50




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##### Table of Contents



Leverage to Enhance Portfolio Yields
  Off-Balance Sheet Arrangements
  Contractual Obligations
  Liquidity and Capital Resources
  Requirements:
    
    Sources of Liquidity:   Loan Fundings
    
       New Member Investments   Management Fees and Loan Enforcement Costs
    
       Participations and Whole Loans Sold   Interest Expense
    
       Interest Income   Distributions to Members
    
       Loan Payments   Member Redemptions
    
       Supplemental Liquidity
  Requirements
 Loan Fundings
  51




---



##### Table of Contents



Member Redemptions
   Distributions to Members
  Sources of Liquidity
  52




---



##### Table of Contents



New Member Investments
  Cash Flows
    53




---



##### Table of Contents



Critical Accounting Policies
 Revenue Recognition
   Mortgage Loans
 Origination
and Acquisition
   Allowance
for Credit Losses
  54




---



##### Table of Contents



Accounting by Creditors for Impairment of a
Loan Fair Value Measurements
   Classification of Loans
 Accounting for Certain Mortgage Banking Activities
 Loans-In-Process
  55




---



##### Table of Contents



Loans Held for Sale
   Participations Issued and Whole Loans Sold
   56




---



##### Table of Contents



Unearned Income
  Controlled Disbursement Accounts
  Real Estate Held for Development
 Accounting for the Impairment or Disposal of
Long-Lived Assets
 Use of Estimates
  Fund Expenses
  57




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##### Table of Contents



Recent Accounting Pronouncements
 The Hierarchy of Generally Accepted Accounting Principles The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles
 
 Determining the Fair Value
of a Financial Asset When the Market for That Asset is Not Active
 Item 3. Quantitative and Qualitative Disclosures about Market Risk.
     Matured
    
    
    Q4 2008
    
    
    Q1 2009
    
    
    Q2 2009
    
    
    Q3 2009
    
    
    Q4 2009
    
    
    Q1 2010
    
    
    Q3 2010
    
    
    Q1 2011
    
    
    TotalLoan Rates:Variable
    
    $
    43,246
    
    
    $
    76,509
    
    
    $
    69,736
    
    
    $
    89,790
    
    
    $
    46,003
    
    
    $
    3,916
    
    
    $
    
    
    
    $
    53,693
    
    
    $
    
    
    
    $
    382,893Fixed
    
    
    51,283
    
    
    
    15,681
    
    
    
    42,654
    
    
    
    34,351
    
    
    
    15,318
    
    
    
    
    
    
    
    5,635
    
    
    
    
    
    
    
    3,500
    
    
    
    168,422$
    94,529
    
    
    $
    92,190
    
    
    $
    112,390
    
    
    $
    124,141
    
    
    $
    61,321
    
    
    $
    3,916
    
    
    $
    5,635
    
    
    $
    53,693
    
    
    $
    3,500
    
    
    $
    551,315
  58




---



##### Table of Contents



Item 4T. Controls and Procedures
 Disclosure Controls and Procedures
    Changes to Internal Control over Financial Reporting
   59




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##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings.
    
 Item 1A. Risk Factors.
  Defaults on our mortgage loans will decrease our revenue and distributions.
   60




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##### Table of Contents



We have suspended our lending activities and will unable to capitalize on perceived lending
opportunities.
  The suspension of the Fund activities has created doubt about the Managers ability to continue as
a going concern for a reasonable period of time .
  We are subject to the risk that, despite recent actions by the U.S. government and governments
around the world, banks and other financial institutions may not be willing to lend and/or interest
rates and the yield curve may change, which could adversely affect the ability of our borrowers to
repay loans or obtain take-out financing in a timely manner, on reasonable terms, or at all, which
would adversely affect our liquidity and our operating results.
   61




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##### Table of Contents



Our business may be adversely affected by a general economic slowdown or recession in the U.S. or
abroad.
  We have recently experienced higher levels of redemptions from Members, and have suspended the
acceptance of new investor contributions and the payment of redemption requests. If the Manager
does not resume historical Fund activities and we are unable to replace these funds with new
investor contributions or other funding sources, we may be unable to satisfy our liquidity needs.
  Members have a limited ability to have their units redeemed and may not receive a return of their
capital contribution, in whole or in part, in a timely manner, or at all.
  
    
    Requests to redeem units may only be submitted after the units have been held for at
least 60 days.
    
    Redemptions are made only to the extent we have cash available and, in the judgment of
the Manager, the redemption would not impair the liquidity or operation of the Fund.
    
    All requests for withdrawal are on a first-come, first-served basis. If the amount
needed to fund withdrawals in any particular month exceeds the amount of cash available for
withdrawals, funds will be distributed to the Members in the order in which their requests
were received.
    
    If a Members capital account is reduced below $10,000 due to any withdrawal payment, we
may distribute all remaining amounts in the capital account to the Member in cancellation
of the units, and the Member will then cease to be a Member.
    
    Unless the Manager determines otherwise, the total amount withdrawn by all Members
during any fiscal year may not exceed 10% of the amount of capital accounts of all the
Members.
    
    We are not required to sell any portion of our assets to fund a withdrawal.
    
    We historically have only made redemption payments once a month.
    
    If units are redeemed, the redemption has historically been paid within 60 to 90 days
following the end of the month in which the request was received by IMH.
 62




---



##### Table of Contents



Retirement Plan Risks
 If we fail to satisfy an ERISA exemption by limiting the investments of certain employee benefit
plans to less than 25% of the Fund, we could become subject to personal liability, civil penalties,
and to non-deductible excise taxes, all of which could have a negative impact on the Fund and
certain Members who have purchased our units.
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  63




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##### Table of Contents



Member InvestmentsAdditional FirstInitial
    
    
    Year
    
    
    Additional
    
    
    Reinvestment
    
    
    RedemptionsInvestment
    
    
    Contributions
    
    
    Contributions
    
    
    Contributions
    
    
    Full
    
    
    Partial
    
    
    NetJuly 1 - September 30, 2008DirectDollars
    
    $
    8,170
    
    
    $
    9,818
    
    
    $
    3,995
    
    
    $
    1,846
    
    
    $
    (6,324
    )
    
    $
    (7,151
    )
    
    $
    10,354# Members
    
    
    37
    
    
    
    11
    
    
    
    38
    
    
    
    1,008
    
    
    
    (45
    )
    
    
    (50
    )
    
    
    (8
    )# Units
    
    
    817
    
    
    
    982
    
    
    
    400
    
    
    
    185
    
    
    
    (632
    )
    
    
    (715
    )
    
    
    1,035Broker/DealerDollars
    
    $
    49,117
    
    
    $
    5,243
    
    
    $
    7,727
    
    
    $
    4,282
    
    
    $
    (15,423
    )
    
    $
    (7,742
    )
    
    $
    43,204# Members
    
    
    516
    
    
    
    71
    
    
    
    119
    
    
    
    3,939
    
    
    
    (112
    )
    
    
    (74
    )
    
    
    404# Units
    
    
    4,912
    
    
    
    524
    
    
    
    773
    
    
    
    428
    
    
    
    (1,542
    )
    
    
    (774
    )
    
    
    4,320Third Quarter TotalsDollars
    
    $
    57,287
    
    
    $
    15,061
    
    
    $
    11,722
    
    
    $
    6,128
    
    
    $
    (21,747
    )
    
    $
    (14,893
    )
    
    $
    53,558# Members
    
    
    553
    
    
    
    82
    
    
    
    157
    
    
    
    4,947
    
    
    
    (157
    )
    
    
    (124
    )
    
    
    396# Units
    
    
    5,729
    
    
    
    1,506
    
    
    
    1,172
    
    
    
    613
    
    
    
    (2,175
    )
    
    
    (1,489
    )
    
    
    5,356Fiscal 2008 TotalsDollars
    
    $
    177,724
    
    
    $
    21,332
    
    
    $
    51,885
    
    
    $
    23,192
    
    
    $
    (75,041
    )
    
    $
    (45,491
    )
    
    $
    153,600# Members
    
    
    1,679
    
    
    
    147
    
    
    
    515
    
    
    
    17,699
    
    
    
    (419
    )
    
    
    (303
    )
    
    
    1,260# Units
    
    
    17,772
    
    
    
    2,133
    
    
    
    5,188
    
    
    
    2,319
    
    
    
    (7,504
    )
    
    
    (4,549
    )
    
    
    15,360Inception to September 30, 2008Dollars
    
    $
    631,274
    
    
    $
    89,628
    
    
    $
    154,286
    
    
    $
    66,897
    
    
    $
    (117,154
    )
    
    $
    (94,546
    )
    
    $
    730,384# Members
    
    
    5,433
    
    
    
    936
    
    
    
    1,639
    
    
    
    34,463
    
    
    
    (701
    )
    
    
    (658
    )
    
    
    4,732# Units
    
    
    63,125
    
    
    
    8,963
    
    
    
    15,429
    
    
    
    6,690
    
    
    
    (11,715
    )
    
    
    (9,455
    )
    
    
    73,038
 64




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##### Table of Contents



Item 6. Exhibits
 ExhibitNo.
    
    Description3.1
    
    IMH Secured Loan Fund, LLC Certificate of Formation (incorporated
by reference to Exhibit 3.1 of the Annual Report on Form 10-K,
filed by IMH Secured Loan Fund, LLC 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 200231.2*
    
    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 200232.1*
    
    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. 65




---



##### Table of Contents



SIGNATURES
  Date: November 19, 2008
    
    IMH SECURED LOAN FUND, LLCBy:
    
    Investors Mortgage Holdings, Inc.Its:
    
    ManagerBy:
    
    /s/ Steven DarakSteven DarakChief Financial Officer(Principal Financial and Accounting Officer andDuly Authorized Officer)
 66




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNo.
    
    Description3.1
    
    IMH Secured Loan Fund, LLC Certificate of Formation (incorporated
by reference to Exhibit 3.1 of the Annual Report on Form 10-K,
filed by IMH Secured Loan Fund, LLC 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 200231.2*
    
    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 200232.1*
    
    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. 67