##### 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, 2007
 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
(State or other jurisdiction of incorporation or 
organization)
    
    81-0624254
(I.R.S. Employer Identification Number)
 11333 N. Scottsdale Rd #160
Scottsdale, Arizona, 85254
 (602) 889-3410
  þ o
  o o 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 StatementsBalance Sheets as of September 30, 2007 and December 31, 2006
    
    4Statements of Net Earnings for the Three and Nine Months Ended September 30, 2007 and 2006
    
    5Statement of Members Equity for the Nine Months Ended September 30, 2007
    
    6Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006
    
    7Notes to Financial Statements
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    14Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    38Item 4T.
    
    Controls and Procedures
    
    40PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    42Item 1A.
    
    Risk Factors
    
    42Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    43Item 6.
    
    Exhibits
    
    45Signatures
    
    46Index to Exhibits
    
    47Exhibit 31.1Exhibit 31.2Exhibit 32.1
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PART I
 FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 IMH SECURED LOAN FUND, LLC
Balance Sheets
 As of September 30,
    
    
    As of December 31,2007
    
    
    2006(Unaudited)ASSETSCash and Cash Equivalents
    
    $
    78,536,343
    
    
    $
    12,159,495Mortgage Loans:Mortgage Loan Note Obligations
    
    
    535,039,225
    
    
    
    309,461,625Less Undisbursed Portion of
Loans-in-process and Interest Reserves
    
    
    (83,860,486
    )
    
    
    (50,846,851
    )Principal Outstanding
    
    
    451,178,739
    
    
    
    258,614,774Accrued Interest Receivable
    
    
    5,338,830
    
    
    
    2,599,485Total Assets
    
    $
    535,053,912
    
    
    
    273,373,754LIABILITIESFees Payable to Fund Manager
    
    $
    78,759
    
    
    $
    52,954Member Investments Pending Activation
    
    
    2,301,290
    
    
    
    386,263Deposit Refund Payable
    
    
    
    
    
    
    62,075Redemptions Payable to Members
    
    
    2,042,143
    
    
    
    2,249,482Distributions Payable to Members
    
    
    2,154,581
    
    
    
    920,999Borrowings From Fund Manager
    
    
    
    
    
    
    4,449,501Participations in Mortgage Loans Issued
    
    
    156,450
    
    
    
    4,937,771Unearned Income and Other Funds Held
    
    
    1,833,781
    
    
    
    133,971Total Liabilities
    
    
    8,567,004
    
    
    
    13,193,016MEMBERS EQUITYRetained Earnings
    
    
    2,027,588
    
    
    
    1,426,453Members Equity  $10,000 per unit stated value,
authorized units set at discretion of the Manager  52,446
and 25,875 units issued and outstanding at
September 30, 2007 and December 31, 2006, respectively
    
    
    524,459,320
    
    
    
    258,754,285Total Members Equity
    
    
    526,486,908
    
    
    
    260,180,738Commitments and Contingent LiabilitiesTotal Liabilities and Members Equity
    
    $
    535,053,912
    
    
    $
    273,373,754
 The accompanying notes are an integral part of these statements
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IMH SECURED LOAN FUND, LLC
Statements of Net Earnings
(Unaudited)
 For the Nine Months Ended
    
    
    For the Three Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006INTEREST AND FEE INCOMEMortgage Loans
    
    $
    33,770,712
    
    
    $
    13,413,950
    
    
    $
    12,968,254
    
    
    $
    5,690,509Investments and Money
Market Accounts
    
    
    1,176,821
    
    
    
    364,682
    
    
    
    710,290
    
    
    
    150,605Total Interest and Fee Income
    
    
    34,947,533
    
    
    
    13,778,632
    
    
    
    13,678,544
    
    
    
    5,841,114EXPENSESManagement Fees
    
    
    682,039
    
    
    
    286,179
    
    
    
    257,099
    
    
    
    116,548Interest Expense:Borrowings from Fund Manager
    
    
    389,682
    
    
    
    
    
    
    
    44,422
    
    
    
    Participations in Mortgage Loans
    
    
    909,225
    
    
    
    377,147
    
    
    
    126,731
    
    
    
    140,240Interest Expense
    
    
    1,298,907
    
    
    
    377,147
    
    
    
    171,153
    
    
    
    140,240Total Expenses
    
    
    1,980,946
    
    
    
    663,326
    
    
    
    428,252
    
    
    
    256,788Net Earnings
    
    $
    32,966,587
    
    
    $
    13,115,306
    
    
    $
    13,250,292
    
    
    $
    5,584,326Net Earnings Allocated to Members
per Weighted Average Membership
Units Outstanding
    
    $
    857.50
    
    
    $
    890.38
    
    
    $
    275.89
    
    
    $
    298.07Distribututions to Members per
Weighted Average Membership Units
Outstanding
    
    $
    840.45
    
    
    $
    851.48
    
    
    $
    275.89
    
    
    $
    288.30Weighted Average Membership Units
Outstanding
    
    
    38,445
    
    
    
    14,730
    
    
    
    48,028
    
    
    
    18,735
 The accompanying notes are an integral part of these statements
 5




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IMH SECURED LOAN FUND, LLC
Statement of Members Equity
Nine Months ended September 30, 2007
(Unaudited)
 TotalMembers
    
    
    Members
    
    
    Retained
    
    
    MembersUnits
    
    
    Capital
    
    
    Earnings
    
    
    EquityBalances at December 31, 2006
    
    
    25,875
    
    
    $
    258,754,285
    
    
    $
    1,426,453
    
    
    $
    260,180,738Net Earnings  nine months ended September 30, 2007
    
    
    
    
    
    
    
    
    
    
    32,966,587
    
    
    
    32,966,587Earnings Distributed
    
    
    
    
    
    
    
    
    
    
    (14,065,595
    )
    
    
    (14,065,595
    )Reinvestment of Earnings
    
    
    1,825
    
    
    
    18,245,656
    
    
    
    (18,245,656
    )
    
    
    Capital Investment  New Members
    
    
    22,133
    
    
    
    221,330,498
    
    
    
    
    
    
    
    221,330,498Capital investment  Existing Members
    
    
    5,176
    
    
    
    51,755,282
    
    
    
    
    
    
    
    51,755,282Full Redemptions
    
    
    (736
    )
    
    
    (7,358,268
    )
    
    
    
    
    
    
    (7,358,268
    )Partial Redemptions
    
    
    (1,827
    )
    
    
    (18,268,133
    )
    
    
    
    
    
    
    (18,268,133
    )Retained Earnings paid on Full Redemptions
    
    
    
    
    
    
    
    
    
    
    (54,201
    )
    
    
    (54,201
    )Net Activity for Period
    
    
    26,571
    
    
    
    265,705,035
    
    
    
    601,135
    
    
    
    266,306,170Balances at September 30, 2007
    
    
    52,446
    
    
    $
    524,459,320
    
    
    $
    2,027,588
    
    
    $
    526,486,908
 The accompanying notes are an integral part of these statements
 6




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IMH SECURED LOAN FUND, LLC
Statements of Cash Flows
(Unaudited)
 For the Nine Months EndedSeptember 30,2007
    
    
    2006CASH FLOWS  Operating Activities:Net Earnings
    
    $
    32,966,587
    
    
    $
    13,115,306Adjustments to Reconcile Net Earnings to Net Cash
Provided (Used) by Operating Activities:Increase in Accrued Interest Receivable
    
    
    (2,739,345
    )
    
    
    (1,123,018
    )Increase (decrease) in Fees Payable to Fund Manager
    
    
    25,805
    
    
    
    (20,341
    )Increase (decrease) in Deposit Refund Payable
    
    
    (62,075
    )
    
    
    Increase (decrease) in Unearned Income
    
    
    1,699,810
    
    
    
    (2,231,645
    )Net Cash Provided by Operating Activities
    
    
    31,890,782
    
    
    
    9,740,302CASH FLOWS  Investing Activities:Mortgage Loans Fundings
    
    
    (265,831,916
    )
    
    
    (175,348,951
    )Mortgage Loan Repayments
    
    
    73,105,931
    
    
    
    58,471,664Increase in Loan Principal Balances
    
    
    (192,725,985
    )
    
    
    (116,877,287
    )Net Cash Used in Investing Activities
    
    
    (192,725,985
    )
    
    
    (116,877,287
    )CASH FLOWS  Financing Activities:Proceeds from Sale of Whole Loans
    
    
    5,400,000
    
    
    
    14,392,492Repurchase of Whole Loans Sold
    
    
    (5,237,980
    )
    
    
    (4,676,290
    )Proceeds from Borrowings from Manager
    
    
    10,165,202
    
    
    
    8,430,000Repayments of Borrowings from Manager
    
    
    (14,614,703
    )
    
    
    (8,430,000
    )Proceeds from Loan Participations Issued
    
    
    37,498,052
    
    
    
    5,750,000Loan Participations Reacquired
    
    
    (42,279,373
    )
    
    
    (5,211,309
    )Increase in Member Investments
Pending Activation
    
    
    1,915,027
    
    
    
    1,121,500Members Capital Investments
    
    
    273,085,780
    
    
    
    119,146,154Members Redemptions
    
    
    (25,833,740
    )
    
    
    (9,063,830
    )Members Distributions
    
    
    (12,886,214
    )
    
    
    (4,124,758
    )Net Cash Provided by Financing Activities
    
    
    227,212,051
    
    
    
    117,333,959Net Increase in Cash
    
    
    66,376,848
    
    
    
    10,196,974Cash and Cash Equivalents:Beginning of Period
    
    
    12,159,495
    
    
    
    12,089,302End of Period
    
    $
    78,536,343
    
    
    $
    22,286,276Supplemental Cash Flow Information:Interest paid
    
    $
    1,330,228
    
    
    $
    339,376
 The accompanying notes are an integral part of these statements
 7




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IMH SECURED LOAN FUND, LLC
 NOTE 1
 FUND DESCRIPTION
  NOTE 2  CASH AND CASH EQUIVALENTS
  September 30,
    
    
    December 31,Cash and Cash Equivalents:
    
    2007
    
    
    2006Working Capital Reserve
    
    $
    15,733,780
    
    
    $
    7,758,443Retained Earnings
    
    
    979,900
    
    
    
    1,426,453Available for Operating Obligations and Lending
    
    
    61,822,663
    
    
    
    2,974,599$
    78,536,343
    
    
    $
    12,159,495
 NOTE 3  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES
   8




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IMH SECURED LOAN FUND, LLC
 NOTE 3  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
 September 30, 2007Fixed Rate
    
    
    Variable Rate
    
    
    TotalCurrent Rate:
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    %11.50%
    
    
    2
    
    
    $
    25,850,978
    
    
    
    6
    
    
    $
    22,928,650
    
    
    
    8
    
    
    $
    48,779,628
    
    
    
    10.8
    %11.75%
    
    
    1
    
    
    
    2,836,241
    
    
    
    1
    
    
    
    5,340,000
    
    
    
    2
    
    
    
    8,176,241
    
    
    
    1.8
    %12.00%
    
    
    13
    
    
    
    96,483,465
    
    
    
    5
    
    
    
    27,326,784
    
    
    
    18
    
    
    
    123,810,249
    
    
    
    27.5
    %12.25%
    
    
    2
    
    
    
    20,717,946
    
    
    
    6
    
    
    
    63,799,127
    
    
    
    8
    
    
    
    84,517,073
    
    
    
    18.7
    %12.50%
    
    
    3
    
    
    
    38,983,139
    
    
    
    2
    
    
    
    21,279,568
    
    
    
    5
    
    
    
    60,262,707
    
    
    
    13.4
    %12.75%
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    34,502,302
    
    
    
    3
    
    
    
    34,502,302
    
    
    
    7.6
    %13.00%
    
    
    5
    
    
    
    16,303,670
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    16,303,670
    
    
    
    3.6
    %13.25%
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    43,994,184
    
    
    
    2
    
    
    
    43,994,184
    
    
    
    9.8
    %13.50%
    
    
    1
    
    
    
    5,680,000
    
    
    
    1
    
    
    
    4,840,167
    
    
    
    2
    
    
    
    10,520,167
    
    
    
    2.3
    %13.75%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    5,016,873
    
    
    
    1
    
    
    
    5,016,873
    
    
    
    1.1
    %14.00%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    15,295,645
    
    
    
    1
    
    
    
    15,295,645
    
    
    
    3.4
    %Total
    
    
    27
    
    
    $
    206,855,439
    
    
    
    28
    
    
    $
    244,323,300
    
    
    
    55
    
    
    $
    451,178,739
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    45.8
    %
    
    
    
    
    
    
    54.2
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    12.17
    %
    
    
    
    
    
    
    12.58
    %
    
    
    
    
    
    
    12.39
    %Number of Loans
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    55Average Principal
    
    
    
    
    
    $
    7,661,313
    
    
    
    
    
    
    $
    8,725,832
    
    
    
    
    
    
    $
    8,203,250
 December 31, 2006Fixed Rate
    
    
    Variable Rate
    
    
    TotalCurrent Rate:
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    %11.25%
    
    
    
    
    
    $
    
    
    
    
    1
    
    
    $
    3,359,700
    
    
    
    1
    
    
    $
    3,359,700
    
    
    
    1.3
    %11.50%
    
    
    2
    
    
    
    21,020,500
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    21,020,500
    
    
    
    8.1
    %11.75%
    
    
    1
    
    
    
    3,286,400
    
    
    
    2
    
    
    
    4,609,962
    
    
    
    3
    
    
    
    7,896,362
    
    
    
    3.1
    %12.00%
    
    
    13
    
    
    
    72,698,645
    
    
    
    2
    
    
    
    12,220,020
    
    
    
    15
    
    
    
    84,918,665
    
    
    
    32.8
    %12.25%
    
    
    4
    
    
    
    32,061,511
    
    
    
    3
    
    
    
    30,882,905
    
    
    
    7
    
    
    
    62,944,416
    
    
    
    24.3
    %12.50%
    
    
    2
    
    
    
    8,219,573
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    8,219,573
    
    
    
    3.2
    %12.75%
    
    
    0
    
    
    
    
    
    
    
    1
    
    
    
    4,278,676
    
    
    
    1
    
    
    
    4,278,676
    
    
    
    1.7
    %13.00%
    
    
    6
    
    
    
    31,542,816
    
    
    
    3
    
    
    
    7,180,225
    
    
    
    9
    
    
    
    38,723,041
    
    
    
    15.0
    %13.25%
    
    
    1
    
    
    
    4,437,002
    
    
    
    1
    
    
    
    6,287,512
    
    
    
    2
    
    
    
    10,724,514
    
    
    
    4.1
    %13.50%
    
    
    1
    
    
    
    5,248,925
    
    
    
    1
    
    
    
    11,280,402
    
    
    
    2
    
    
    
    16,529,327
    
    
    
    6.4
    %Total
    
    
    30
    
    
    $
    178,515,372
    
    
    
    14
    
    
    $
    80,099,402
    
    
    
    44
    
    
    $
    258,614,774
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    69.0
    %
    
    
    
    
    
    
    31.0
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    12.26
    %
    
    
    
    
    
    
    12.49
    %
    
    
    
    
    
    
    12.33
    %Number of Loans
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    44Average Principal
    
    
    
    
    
    $
    5,950,512
    
    
    
    
    
    
    $
    5,721,386
    
    
    
    
    
    
    $
    5,877,609
  9




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IMH SECURED LOAN FUND, LLC
 NOTE 3  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
  September 30, 2007Quarter
    
    Amount
    
    
    Percent
    
    
    #Matured
    
    $
    42,793,340
    
    
    
    9.5
    %
    
    
    9Q4 2007
    
    
    120,975,755
    
    
    
    26.8
    %
    
    
    12Q1 2008
    
    
    78,223,319
    
    
    
    17.3
    %
    
    
    14Q2 2008
    
    
    112,859,373
    
    
    
    25.0
    %
    
    
    9Q3 2008
    
    
    66,205,339
    
    
    
    14.7
    %
    
    
    10Q4 2008
    
    
    30,121,613
    
    
    
    6.7
    %
    
    
    1$
    451,178,739
    
    
    
    100.0
    %
    
    
    55
      10




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IMH SECURED LOAN FUND, LLC
 NOTE 3  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
 September 30, 2007
    
    
    December 31, 2006Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Pre-entitled Land:Held for Investment
    
    $
    1,398,500
    
    
    
    0.3
    %
    
    
    1
    
    
    $
    
    
    
    
    
    
    
    
    Processing Entitlements
    
    
    229,242,555
    
    
    
    50.8
    %
    
    
    20
    
    
    
    145,219,454
    
    
    
    56.1
    %
    
    
    20230,641,055
    
    
    
    51.1
    %
    
    
    21
    
    
    
    145,219,454
    
    
    
    56.1
    %
    
    
    20Entitled Land:Held for Investment
    
    
    59,654,380
    
    
    
    13.2
    %
    
    
    7
    
    
    
    41,893,482
    
    
    
    16.2
    %
    
    
    8Infrastructure under Construction
    
    
    59,660,566
    
    
    
    13.2
    %
    
    
    6
    
    
    
    17,621,490
    
    
    
    6.8
    %
    
    
    4Improved and Held for Vertical Construction
    
    
    13,319,926
    
    
    
    3.0
    %
    
    
    3
    
    
    
    29,387,627
    
    
    
    11.4
    %
    
    
    4132,634,872
    
    
    
    29.4
    %
    
    
    16
    
    
    
    88,902,599
    
    
    
    34.4
    %
    
    
    16Construction & Existing Structures:New Structure  Construction in-process
    
    
    69,459,268
    
    
    
    15.4
    %
    
    
    12
    
    
    
    16,315,986
    
    
    
    6.3
    %
    
    
    5Existing Structure Held for Investment
    
    
    18,018,875
    
    
    
    4.0
    %
    
    
    5
    
    
    
    8,176,735
    
    
    
    3.2
    %
    
    
    3Existing Structure  Improvements
    
    
    424,669
    
    
    
    0.1
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    87,902,812
    
    
    
    19.5
    %
    
    
    18
    
    
    
    24,492,721
    
    
    
    9.5
    %
    
    
    8$
    451,178,739
    
    
    
    100.0
    %
    
    
    55
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
 September 30, 2007
    
    
    December 31, 2006Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Residential
    
    $
    193,512,294
    
    
    
    48.0
    %
    
    
    27
    
    
    $
    154,279,204
    
    
    
    59.7
    %
    
    
    29Mixed Use
    
    
    203,188,811
    
    
    
    39.2
    %
    
    
    17
    
    
    
    95,258,284
    
    
    
    36.8
    %
    
    
    11Commercial
    
    
    54,477,634
    
    
    
    12.8
    %
    
    
    11
    
    
    
    9,077,286
    
    
    
    3.5
    %
    
    
    4$
    451,178,739
    
    
    
    100.0
    %
    
    
    55
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
  September 30, 2007
    
    
    December 31, 2006Amount
    
    
    Percent
    
    
    #
    
    
    Amount
    
    
    Percent
    
    
    #Arizona
    
    $
    203,850,695
    
    
    
    45.2
    %
    
    
    29
    
    
    $
    149,796,267
    
    
    
    57.9
    %
    
    
    29California
    
    
    133,893,042
    
    
    
    29.7
    %
    
    
    14
    
    
    
    96,726,078
    
    
    
    37.4
    %
    
    
    13New Mexico
    
    
    3,792,227
    
    
    
    0.8
    %
    
    
    2
    
    
    
    812,027
    
    
    
    0.3
    %
    
    
    1Texas
    
    
    27,498,737
    
    
    
    6.1
    %
    
    
    5
    
    
    
    11,280,402
    
    
    
    4.4
    %
    
    
    1Idaho
    
    
    46,596,015
    
    
    
    10.3
    %
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    North Carolina
    
    
    20,087,396
    
    
    
    4.5
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Minnesota
    
    
    14,349,577
    
    
    
    3.2
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Nevada
    
    
    1,111,050
    
    
    
    0.2
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    $
    451,178,739
    
    
    
    100.0
    %
    
    
    55
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
 11




---



##### Table of Contents



IMH SECURED LOAN FUND, LLC
 NOTE 3  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
     NOTE 4  NET EARNINGS, DISTRIBUTIONS REINVESTED AND DISTRIBUTIONS PAYABLE TO MEMBERS AND
REDEMPTIONS
   NOTE 5  MANAGEMENT FEES AND RELATED PARTY ACTIVITY
 Management Fees
  12




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##### Table of Contents



IMH SECURED LOAN FUND, LLC
 NOTE 5  MANAGEMENT FEES AND RELATED PARTY ACTIVITY  CONTINUED
  Related Party Investments and Borrowings
     NOTE 6  COMMITMENTS AND CONTINGENCIES
   *******************************************************************************
 13




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
  Forward Looking Statements
   
    
    Our units lack liquidity and marketability and our Members have a limited ability to
have their units redeemed. As a result, our Members may lose their entire investment or
may not be able to sell their units in a timely manner, or at all, or at a price they paid.
    
    We are subject to risks generally associated with the ownership of real estate-related
assets, including changing economic conditions, environmental risks, the cost of and
ability to obtain insurance and risks related to leasing of properties.
    
    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 lack of geographic diversity), the large number of competitors and amount of
available capital and the effect that regulators or bankruptcy courts could have on our
operations and rights as a secured lender.
 14




---



##### Table of Contents




    
    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 our
guarantors, will exist to protect Members from any such defaults.
    
    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.
    
    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. 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.
    
    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 the Fund.
    
    We are a newly publicly reporting company and we will be required to divert considerable
resources to new compliance initiatives, including refining our disclosure controls and
procedures and internal control over financial reporting.
    
    There are material income tax and retirement plan risks associated with ownership of our
units.
  Overview of the Business
   15




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##### Table of Contents



16




---



##### Table of Contents



Selected Financial Data
  (Unaudited)
    
    (Unaudited)
    
    As of and for theAs of and for the
    
    As of and for the
    
    Year Ended9 Months Ended September 30,
    
    3 Months Ended September 30,
    
    December 31,2007
    
    2006
    
    2007
    
    2006
    
    2006Total assets
    
    $
    535,053,912
    
    
    $
    224,461,711
    
    
    $
    535,053,912
    
    
    $
    224,461,711
    
    
    $
    273,373,754Interest income and fees
    
    $
    34,947,533
    
    
    $
    13,778,632
    
    
    $
    13,678,544
    
    
    $
    5,841,114
    
    
    $
    21,145,474Management fees
    
    $
    682,039
    
    
    $
    286,179
    
    
    $
    257,099
    
    
    $
    116,548
    
    
    $
    430,362Interest expense
    
    $
    1,298,907
    
    
    $
    377,147
    
    
    $
    171,153
    
    
    $
    140,240
    
    
    $
    612,999Net earnings
    
    $
    32,966,587
    
    
    $
    13,115,306
    
    
    $
    13,250,292
    
    
    $
    5,584,326
    
    
    $
    20,102,113Net distributions to Members
    
    $
    32,311,251
    
    
    $
    12,542,302
    
    
    $
    13,250,292
    
    
    $
    5,401,238
    
    
    $
    19,379,611Net Member distribution as a % of net earnings
    
    
    98.0
    %
    
    
    95.6
    %
    
    
    100.0
    %
    
    
    96.7
    %
    
    
    96.4
    %Distribututions to Members per weighted average
membership units outstanding
    
    $
    840.45
    
    
    $
    851.48
    
    
    $
    275.89
    
    
    $
    288.30
    
    
    $
    1,189.12Net distributions to Members per weighted
average membership units (annualized) (1)
    
    $
    1,121
    
    
    $
    1,135
    
    
    $
    1,104
    
    
    $
    1,153
    
    
    $
    1,146Average annualized yield to Members (1)
    
    
    11.2
    %
    
    
    11.4
    %
    
    
    10.8
    %
    
    
    11.1
    %
    
    
    11.9
    %Member Equity Related:Retained earnings (Loan Loss Reserve)
    
    $
    2,027,588
    
    
    $
    1,425,001
    
    
    $
    2,027,588
    
    
    $
    1,425,001
    
    
    $
    1,426,453Total Members equity
    
    $
    526,486,908
    
    
    $
    215,472,705
    
    
    $
    526,486,908
    
    
    $
    215,472,705
    
    
    $
    260,180,738Number of Member accounts
    
    
    3,039
    
    
    
    1,093
    
    
    
    3,039
    
    
    
    1,093
    
    
    
    1,376Average Member account balance
    
    $
    173,243
    
    
    $
    197,139
    
    
    $
    173,243
    
    
    $
    197,139
    
    
    $
    189,085States in which the Fund has Members
    
    
    48
    
    
    
    38
    
    
    
    48
    
    
    
    38
    
    
    
    40New Member investments
    
    $
    273,085,780
    
    
    $
    119,146,154
    
    
    $
    99,692,522
    
    
    $
    48,590,457
    
    
    $
    176,100,685Member earnings distributed
    
    $
    14,065,595
    
    
    $
    4,481,378
    
    
    $
    6,111,187
    
    
    $
    1,909,628
    
    
    $
    7,072,247Member earnings reinvested
    
    $
    18,245,656
    
    
    $
    8,060,924
    
    
    $
    7,139,105
    
    
    $
    3,491,610
    
    
    $
    12,307,364Member earnings retained
    
    $
    655,336
    
    
    $
    573,004
    
    
    $
    
    
    
    $
    183,088
    
    
    $
    722,502% of total earnings reinvested
    
    
    55.35
    %
    
    
    61.46
    %
    
    
    53.88
    %
    
    
    62.53
    %
    
    
    61.20
    %Redemptions
    
    $
    25,626,401
    
    
    $
    10,142,798
    
    
    $
    4,979,327
    
    
    $
    3,669,633
    
    
    $
    26,637,188Redemptions as % of new investment
    
    
    9.38
    %
    
    
    8.51
    %
    
    
    4.99
    %
    
    
    7.55
    %
    
    
    14.14
    %Loan Related:Note balances originated
    
    $
    363,150,500
    
    
    $
    111,920,055
    
    
    $
    47,040,000
    
    
    $
    64,075,855
    
    
    $
    266,101,400Number of notes originated
    
    
    30
    
    
    
    13
    
    
    
    8
    
    
    
    10
    
    
    
    37Average note balance originated
    
    $
    12,105,017
    
    
    $
    8,609,235
    
    
    $
    5,880,000
    
    
    $
    6,407,586
    
    
    $
    7,191,930Principal balances outstanding
    
    $
    451,178,739
    
    
    $
    200,106,478
    
    
    $
    451,178,739
    
    
    $
    200,106,478
    
    
    $
    258,614,774Number of loans outstanding
    
    
    55
    
    
    
    42
    
    
    
    55
    
    
    
    42
    
    
    
    44Average principal balance
    
    $
    8,203,250
    
    
    $
    4,764,440
    
    
    $
    8,203,250
    
    
    $
    4,764,440
    
    
    $
    5,877,609% of Portfolio Principal  Fixed interest rate
    
    
    45.8
    %
    
    
    67.9
    %
    
    
    45.8
    %
    
    
    67.9
    %
    
    
    69.0
    %Number of fixed rate loans
    
    
    27
    
    
    
    30
    
    
    
    27
    
    
    
    30
    
    
    
    30Weighted average interest rate  Fixed
    
    
    12.17
    %
    
    
    12.40
    %
    
    
    12.17
    %
    
    
    12.40
    %
    
    
    12.26
    %% of portfolio  Variable interest rate
    
    
    54.2
    %
    
    
    32.1
    %
    
    
    54.2
    %
    
    
    32.1
    %
    
    
    31.0
    %Number of variable rate loans
    
    
    28
    
    
    
    12
    
    
    
    28
    
    
    
    12
    
    
    
    14Weighted average interest rate  Variable
    
    
    12.58
    %
    
    
    12.61
    %
    
    
    12.58
    %
    
    
    12.16
    %
    
    
    12.50
    %Principal balance % by state:Arizona
    
    
    45.2
    %
    
    
    59.0
    %
    
    
    45.2
    %
    
    
    59.0
    %
    
    
    57.9
    %California
    
    
    29.7
    %
    
    
    36.3
    %
    
    
    29.7
    %
    
    
    36.3
    %
    
    
    37.4
    %New Mexico
    
    
    0.8
    %
    
    
    0.3
    %
    
    
    0.8
    %
    
    
    0.3
    %
    
    
    0.3
    %Texas
    
    
    6.1
    %
    
    
    4.4
    %
    
    
    6.1
    %
    
    
    4.4
    %
    
    
    4.4
    %Idaho
    
    
    10.3
    %
    
    
    
    %
    
    
    10.3
    %
    
    
    
    %
    
    
    
    %North Carolina
    
    
    4.5
    %
    
    
    
    %
    
    
    4.5
    %
    
    
    
    %
    
    
    
    %Minnesota
    
    
    3.2
    %
    
    
    
    %
    
    
    3.2
    %
    
    
    
    %
    
    
    
    %Nevada
    
    
    0.2
    %
    
    
    
    %
    
    
    0.2
    %
    
    
    
    %
    
    
    
    %Interest payments over 30 days delinquent
    
    $
    1,210,461
    
    
    $
    
    
    
    $
    1,210,461
    
    
    $
    
    
    
    $
    Loans past scheduled maturity
    
    
    9
    
    
    
    4
    
    
    
    9
    
    
    
    4
    
    
    
    3Principal balances past scheduled maturity
    
    $
    42,793,341
    
    
    $
    17,844,629
    
    
    $
    42,793,341
    
    
    $
    17,844,629
    
    
    $
    13,901,000Loans in non accrual status
    
    
    5
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    Principal balances in non accrual status
    
    $
    17,857,852
    
    
    $
    
    
    
    $
    17,857,852
    
    
    $
    
    
    
    $
    Allowance for credit Losses
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Where applicable, quarterly results are annualized to allow for comparibility with annual results. 17




---



##### Table of Contents



Results of Operations for the three and nine months ended September 30, 2007 and 2006
   Revenues (dollars in thousands)Nine Months Ended September 30,
    
    
    Three Months Ended September 30,2007
    
    
    2006
    
    
    $ Change
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeINTEREST AND FEE INCOMEMortgage Loans
    
    $
    33,771
    
    
    $
    13,414
    
    
    $
    20,357
    
    
    
    151.8
    %
    
    $
    12,968
    
    
    $
    5,691
    
    
    $
    7,277
    
    
    
    127.9
    %Investments and Money
Market Accounts
    
    
    1,177
    
    
    
    365
    
    
    
    812
    
    
    
    222.7
    %
    
    
    710
    
    
    
    151
    
    
    
    559
    
    
    
    370.2
    %Total Interest and Fee Income
    
    $
    34,948
    
    
    $
    13,779
    
    
    $
    21,169
    
    
    
    153.6
    %
    
    $
    13,678
    
    
    $
    5,842
    
    
    $
    7,836
    
    
    
    134.1
    %
   18




---



##### Table of Contents



Expenses (dollars in thousands)Nine Months Ended September 30,
    
    
    Three Months Ended September 30,2007
    
    
    2006
    
    
    $ Change
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeEXPENSESManagement Fees
    
    $
    682
    
    
    $
    286
    
    
    $
    396
    
    
    
    138.5
    %
    
    $
    257
    
    
    $
    117
    
    
    $
    140
    
    
    
    119.7
    %Interest Expense:Borrowings from Fund Manager
    
    
    390
    
    
    
    
    
    
    
    390
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    44
    
    
    
    Participations in Mortgage Loans
    
    
    909
    
    
    
    377
    
    
    
    532
    
    
    
    141.1
    %
    
    
    127
    
    
    
    140
    
    
    
    (13
    )
    
    
    (9.3
    )%Interest Expense
    
    
    1,299
    
    
    
    377
    
    
    
    922
    
    
    
    244.6
    %
    
    
    171
    
    
    
    140
    
    
    
    31
    
    
    
    22.1
    %Total Expenses
    
    $
    1,981
    
    
    $
    663
    
    
    $
    1,318
    
    
    
    198.8
    %
    
    $
    428
    
    
    $
    257
    
    
    $
    171
    
    
    
    66.5
    %
    Net Earnings (dollars in thousands)Nine Months Ended September 30,
    
    
    Three Months Ended September 30,2007
    
    
    2006
    
    
    $ Change
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    $ Change
    
    
    % ChangeNet Earnings
    
    $
    32,967
    
    
    $
    13,115
    
    
    $
    19,852
    
    
    
    151.4
    %
    
    $
    13,250
    
    
    $
    5,584
    
    
    $
    7,666
    
    
    
    137.3
    %
   19




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##### Table of Contents



Changes in the Portfolio Profile
      September 30, 2007
    
    
    December 31, 2006Amount
    
    
    Percent
    
    
    #
    
    
    Amount
    
    
    Percent
    
    
    #Arizona
    
    $
    203,850,695
    
    
    
    45.2
    %
    
    
    29
    
    
    $
    149,796,267
    
    
    
    57.9
    %
    
    
    29California
    
    
    133,893,042
    
    
    
    29.7
    %
    
    
    14
    
    
    
    96,726,078
    
    
    
    37.4
    %
    
    
    13New Mexico
    
    
    3,792,227
    
    
    
    0.8
    %
    
    
    2
    
    
    
    812,027
    
    
    
    0.3
    %
    
    
    1Texas
    
    
    27,498,737
    
    
    
    6.1
    %
    
    
    5
    
    
    
    11,280,402
    
    
    
    4.4
    %
    
    
    1Idaho
    
    
    46,596,015
    
    
    
    10.3
    %
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    North Carolina
    
    
    20,087,396
    
    
    
    4.5
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Minnesota
    
    
    14,349,577
    
    
    
    3.2
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Nevada
    
    
    1,111,050
    
    
    
    0.2
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    $
    451,178,739
    
    
    
    100.0
    %
    
    
    55
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44Average Loan
    
    $
    8,203,250
    
    
    
    
    
    
    
    
    
    
    $
    5,877,609
  20




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21




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##### Table of Contents



September 30, 2007Fixed Rate
    
    
    Variable Rate
    
    
    TotalCurrent Rate:
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    %11.50%
    
    
    2
    
    
    $
    25,850,978
    
    
    
    6
    
    
    $
    22,928,650
    
    
    
    8
    
    
    $
    48,779,628
    
    
    
    10.8
    %11.75%
    
    
    1
    
    
    
    2,836,241
    
    
    
    1
    
    
    
    5,340,000
    
    
    
    2
    
    
    
    8,176,241
    
    
    
    1.8
    %12.00%
    
    
    13
    
    
    
    96,483,465
    
    
    
    5
    
    
    
    27,326,784
    
    
    
    18
    
    
    
    123,810,249
    
    
    
    27.5
    %12.25%
    
    
    2
    
    
    
    20,717,946
    
    
    
    6
    
    
    
    63,799,127
    
    
    
    8
    
    
    
    84,517,073
    
    
    
    18.7
    %12.50%
    
    
    3
    
    
    
    38,983,139
    
    
    
    2
    
    
    
    21,279,568
    
    
    
    5
    
    
    
    60,262,707
    
    
    
    13.4
    %12.75%
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    34,502,302
    
    
    
    3
    
    
    
    34,502,302
    
    
    
    7.6
    %13.00%
    
    
    5
    
    
    
    16,303,670
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    16,303,670
    
    
    
    3.6
    %13.25%
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    43,994,184
    
    
    
    2
    
    
    
    43,994,184
    
    
    
    9.8
    %13.50%
    
    
    1
    
    
    
    5,680,000
    
    
    
    1
    
    
    
    4,840,167
    
    
    
    2
    
    
    
    10,520,167
    
    
    
    2.3
    %13.75%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    5,016,873
    
    
    
    1
    
    
    
    5,016,873
    
    
    
    1.1
    %14.00%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    15,295,645
    
    
    
    1
    
    
    
    15,295,645
    
    
    
    3.4
    %Total
    
    
    27
    
    
    $
    206,855,439
    
    
    
    28
    
    
    $
    244,323,300
    
    
    
    55
    
    
    $
    451,178,739
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    45.8
    %
    
    
    
    
    
    
    54.2
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    12.17
    %
    
    
    
    
    
    
    12.58
    %
    
    
    
    
    
    
    12.39
    %Number of Loans
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    55Average Principal
    
    
    
    
    
    $
    7,661,313
    
    
    
    
    
    
    $
    8,725,832
    
    
    
    
    
    
    $
    8,203,250
 December 31, 2006Fixed Rate
    
    
    Variable Rate
    
    
    TotalCurrent Rate:
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    %11.25%
    
    
    
    
    
    $
    
    
    
    
    1
    
    
    $
    3,359,700
    
    
    
    1
    
    
    $
    3,359,700
    
    
    
    1.3
    %11.50%
    
    
    2
    
    
    
    21,020,500
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    21,020,500
    
    
    
    8.1
    %11.75%
    
    
    1
    
    
    
    3,286,400
    
    
    
    2
    
    
    
    4,609,962
    
    
    
    3
    
    
    
    7,896,362
    
    
    
    3.1
    %12.00%
    
    
    13
    
    
    
    72,698,645
    
    
    
    2
    
    
    
    12,220,020
    
    
    
    15
    
    
    
    84,918,665
    
    
    
    32.8
    %12.25%
    
    
    4
    
    
    
    32,061,511
    
    
    
    3
    
    
    
    30,882,905
    
    
    
    7
    
    
    
    62,944,416
    
    
    
    24.3
    %12.50%
    
    
    2
    
    
    
    8,219,573
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    8,219,573
    
    
    
    3.2
    %12.75%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    4,278,676
    
    
    
    1
    
    
    
    4,278,676
    
    
    
    1.7
    %13.00%
    
    
    6
    
    
    
    31,542,816
    
    
    
    3
    
    
    
    7,180,225
    
    
    
    9
    
    
    
    38,723,041
    
    
    
    15.0
    %13.25%
    
    
    1
    
    
    
    4,437,002
    
    
    
    1
    
    
    
    6,287,512
    
    
    
    2
    
    
    
    10,724,514
    
    
    
    4.1
    %13.50%
    
    
    1
    
    
    
    5,248,925
    
    
    
    1
    
    
    
    11,280,402
    
    
    
    2
    
    
    
    16,529,327
    
    
    
    6.4
    %Total
    
    
    30
    
    
    $
    178,515,372
    
    
    
    14
    
    
    $
    80,099,402
    
    
    
    44
    
    
    $
    258,614,774
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    69.0
    %
    
    
    
    
    
    
    31.0
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    12.23
    %
    
    
    
    
    
    
    12.50
    %
    
    
    
    
    
    
    12.31
    %Number of Loans
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    44Average Principal
    
    
    
    
    
    $
    5,950,512
    
    
    
    
    
    
    $
    5,721,386
    
    
    
    
    
    
    $
    5,877,609
 Concentration by Category based on Collaterals Development Status
  22




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##### Table of Contents



September 30, 2007
    
    
    December 31, 2006Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Pre-entitled Land:Held for Investment
    
    $
    1,398,500
    
    
    
    0.3
    %
    
    
    1
    
    
    $
    
    
    
    
    
    
    
    
    Processing Entitlements
    
    
    229,242,555
    
    
    
    50.8
    %
    
    
    20
    
    
    
    145,219,454
    
    
    
    56.1
    %
    
    
    20230,641,055
    
    
    
    51.1
    %
    
    
    21
    
    
    
    145,219,454
    
    
    
    56.1
    %
    
    
    20Entitled Land:Held for Investment
    
    
    59,654,380
    
    
    
    13.2
    %
    
    
    7
    
    
    
    41,893,482
    
    
    
    16.2
    %
    
    
    8Infrastructure under Construction
    
    
    59,660,566
    
    
    
    13.2
    %
    
    
    6
    
    
    
    17,621,490
    
    
    
    6.8
    %
    
    
    4Improved and Held for Vertical Construction
    
    
    13,319,926
    
    
    
    3.0
    %
    
    
    3
    
    
    
    29,387,627
    
    
    
    11.4
    %
    
    
    4132,634,872
    
    
    
    29.4
    %
    
    
    16
    
    
    
    88,902,599
    
    
    
    34.4
    %
    
    
    16Construction & Existing Structures:New Structure  Construction in-process
    
    
    69,459,268
    
    
    
    15.4
    %
    
    
    12
    
    
    
    16,315,986
    
    
    
    6.3
    %
    
    
    5Existing Structure Held for Investment
    
    
    18,018,875
    
    
    
    4.0
    %
    
    
    5
    
    
    
    8,176,735
    
    
    
    3.2
    %
    
    
    3Existing Structure  Improvements
    
    
    424,669
    
    
    
    0.1
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    87,902,812
    
    
    
    19.5
    %
    
    
    18
    
    
    
    24,492,721
    
    
    
    9.5
    %
    
    
    8$
    451,178,739
    
    
    
    100.0
    %
    
    
    55
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
  September 30, 2007
    
    
    December 31, 2006Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Residential
    
    $
    193,512,294
    
    
    
    48.0
    %
    
    
    27
    
    
    $
    154,279,204
    
    
    
    59.7
    %
    
    
    29Mixed Use
    
    
    203,188,811
    
    
    
    39.2
    %
    
    
    17
    
    
    
    95,258,284
    
    
    
    36.8
    %
    
    
    11Commercial
    
    
    54,477,634
    
    
    
    12.8
    %
    
    
    11
    
    
    
    9,077,286
    
    
    
    3.5
    %
    
    
    4$
    451,178,739
    
    
    
    100.0
    %
    
    
    55
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
  Borrower and Borrower Groups
  Changes in the Portfolio Profile  Scheduled Maturities
  23




---



##### Table of Contents



September 30, 2007Quarter
    
    Amount
    
    
    Percent
    
    
    #Matured
    
    $
    42,793,340
    
    
    
    9.5
    %
    
    
    9Q4 2007
    
    
    120,975,755
    
    
    
    26.8
    %
    
    
    12Q1 2008
    
    
    78,223,319
    
    
    
    17.3
    %
    
    
    14Q2 2008
    
    
    112,859,373
    
    
    
    25.0
    %
    
    
    9Q3 2008
    
    
    66,205,339
    
    
    
    14.7
    %
    
    
    10Q4 2008
    
    
    30,121,613
    
    
    
    6.7
    %
    
    
    1$
    451,178,739
    
    
    
    100.0
    %
    
    
    55
   Important Relationships Between Capital Resources and Results of Operations
   24




---



##### Table of Contents



Security for Mortgage Loans
  Mortgage Loans, Participations and Loan Sales
    25




---



##### Table of Contents



Distributions to Members
  Annualized Rate of Return to Members on Distributions
  Redemptions
   26




---



##### Table of Contents



Trends and Uncertainties
  
    
    the real estate markets or economies of the states in which we invest will experience or
suffer worsening declines;
    
    we will be able to reduce or manage the geographic concentration of our portfolio;
    
    we will be able to adapt to becoming a publicly-reporting company and adequately comply
with all the rules and regulations required to remain a publicly-reporting company;
    
    IMH will be able to continue devoting an adequate amount of time to the Funds
operations;
    
    we will be able to participate or sell loans to maintain short term liquidity or
temporarily reduce portfolio risk, if necessary; and
    
    we may face exposure for owning real estate now that we have commenced foreclosure
proceedings on loans because we not be able to liquidate the real-estate owned at amounts
equal to or in excess of its carrying value.
 Prospective Trends
 Loan Demand, Selection and Quality
   Loan Portfolio Valuation Analysis Summary
  27




---



##### Table of Contents



Loan
    
    
    Market DeflationTo
    
    
    LTV With
    
    
    LTV With
    
    
    LTV WithValue
    
    
    10%
    
    
    25%
    
    
    35%Portfolio  Sept. 30, 2007 (000s)
    
    
    (LTV)
    
    
    Decline
    
    
    Decline
    
    
    DeclinePrincipal
    
    
    Percent by
    
    
    Note
    
    
    As
    
    
    In
    
    
    In
    
    
    In#
    
    
    Outstanding
    
    
    Qtr
    
    
    Year
    
    
    Total
    
    
    Originated
    
    
    Value
    
    
    Value
    
    
    Value2005:Q105
    
    
    2
    
    
    $
    11,160
    
    
    
    2.5
    %
    
    
    
    
    
    $
    11,160
    
    
    
    57.7
    %
    
    
    64.1
    %
    
    
    77.0
    %
    
    
    88.8
    %Q205
    
    
    1
    
    
    
    2,160
    
    
    
    0.5
    %
    
    
    
    
    
    
    2,164
    
    
    
    69.0
    %
    
    
    76.7
    %
    
    
    92.0
    %
    
    
    106.2
    %Q305
    
    
    6
    
    
    
    23,526
    
    
    
    5.2
    %
    
    
    
    
    
    
    25,154
    
    
    
    51.9
    %
    
    
    57.7
    %
    
    
    69.2
    %
    
    
    79.9
    %Q405
    
    
    2
    
    
    
    14,880
    
    
    
    3.3
    %
    
    
    11.5
    %
    
    
    16,700
    
    
    
    73.0
    %
    
    
    81.1
    %
    
    
    97.3
    %
    
    
    112.3
    %2006:Q106
    
    
    2
    
    
    
    7,178
    
    
    
    1.6
    %
    
    
    
    
    
    
    7,214
    
    
    
    62.0
    %
    
    
    68.9
    %
    
    
    82.7
    %
    
    
    95.5
    %Q206
    
    
    4
    
    
    
    35,720
    
    
    
    7.9
    %
    
    
    
    
    
    
    40,630
    
    
    
    46.5
    %
    
    
    51.7
    %
    
    
    62.0
    %
    
    
    71.6
    %Q306
    
    
    7
    
    
    
    54,775
    
    
    
    12.1
    %
    
    
    
    
    
    
    64,076
    
    
    
    61.0
    %
    
    
    67.8
    %
    
    
    81.4
    %
    
    
    93.9
    %Q406
    
    
    3
    
    
    
    28,574
    
    
    
    6.3
    %
    
    
    28.0
    %
    
    
    32,041
    
    
    
    54.9
    %
    
    
    61.0
    %
    
    
    73.2
    %
    
    
    84.5
    %2007:Q107
    
    
    9
    
    
    
    67,103
    
    
    
    14.9
    %
    
    
    
    
    
    
    76,781
    
    
    
    47.7
    %
    
    
    53.0
    %
    
    
    63.7
    %
    
    
    73.5
    %Q207
    
    
    12
    
    
    
    171,882
    
    
    
    38.1
    %
    
    
    
    
    
    
    212,080
    
    
    
    56.8
    %
    
    
    63.1
    %
    
    
    75.7
    %
    
    
    87.4
    %Q307
    
    
    7
    
    
    
    34,220
    
    
    
    7.6
    %
    
    
    60.6
    %
    
    
    47,040
    
    
    
    55.3
    %
    
    
    61.4
    %
    
    
    73.7
    %
    
    
    85.0
    %55
    
    
    $
    451,178
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    535,040
    
    
    
    54.9
    %
    
    
    60.9
    %
    
    
    73.1
    %
    
    
    84.4
    %
   28




---



##### Table of Contents



Portfolio atSept. 30, 2007 (000s)
    
    
    As
    
    
    8/10/2007
    
    
    10/31/2007Principal
    
    
    Note
    
    
    Originated
    
    
    Estimated
    
    
    Estimated#
    
    
    Outstanding
    
    
    Total
    
    
    LTV
    
    
    LTV
    
    
    LTV2005:Q105
    
    
    2
    
    
    $
    11,160
    
    
    $
    11,160
    
    
    
    57.7
    %
    
    
    88.0
    %
    
    
    88.6
    %Q205
    
    
    1
    
    
    
    2,160
    
    
    
    2,164
    
    
    
    69.0
    %
    
    
    
    
    
    
    85.0
    %Q305
    
    
    6
    
    
    
    23,526
    
    
    
    25,154
    
    
    
    51.9
    %
    
    
    43.2
    %
    
    
    44.6
    %Q405
    
    
    2
    
    
    
    14,880
    
    
    
    16,700
    
    
    
    73.0
    %
    
    
    87.5
    %
    
    
    87.5
    %2006:Q106
    
    
    2
    
    
    
    7,178
    
    
    
    7,214
    
    
    
    62.0
    %
    
    
    86.6
    %
    
    
    86.8
    %Q206
    
    
    4
    
    
    
    35,720
    
    
    
    40,630
    
    
    
    46.5
    %
    
    
    62.1
    %
    
    
    66.9
    %Q306
    
    
    7
    
    
    
    54,775
    
    
    
    64,076
    
    
    
    61.0
    %
    
    
    77.1
    %
    
    
    78.4
    %Q406
    
    
    3
    
    
    
    28,574
    
    
    
    32,041
    
    
    
    54.9
    %
    
    
    55.2
    %
    
    
    70.0
    %2007:Q107
    
    
    9
    
    
    
    67,103
    
    
    
    76,781
    
    
    
    47.7
    %
    
    
    47.7
    %
    
    
    61.5
    %Q207
    
    
    12
    
    
    
    171,882
    
    
    
    212,080
    
    
    
    56.8
    %
    
    
    56.2
    %
    
    
    63.8
    %Q307
    
    
    7
    
    
    
    34,220
    
    
    
    47,040
    
    
    
    55.3
    %
    
    
    
    
    
    
    55.3
    %55
    
    
    $
    451,178
    
    
    $
    535,040
    
    
    
    54.9
    %
    
    
    57.7
    %
    
    
    64.5
    %
    29




---



##### Table of Contents



Trends in Interest Income and Effective Portfolio Yield
  Leverage to Enhance Portfolio Yields
  Interest Earning Assets Deployment Ratio
   
    
    pending fundings of loans that have completed the underwriting process;
    
    anticipated loan fundings in the loan origination pipeline;
    
    average size of loans in the underwriting process;
    
    expected loan reductions or payoffs;
    
    pending Member redemptions;
    
    direct expenses, and
    
    other anticipated liquidity needs.
  30




---



##### Table of Contents



As of September 30, 2007Asset:
    
    Yield
    
    Deployment RatioLoans
    
    
    12.39
    %
    
    
    87
    %
    
    
    89
    %
    
    
    91
    %
    
    
    93
    %
    
    
    95
    %
    
    
    97
    %Cash
    
    
    4.40
    %
    
    
    13
    %
    
    
    11
    %
    
    
    9
    %
    
    
    7
    %
    
    
    5
    %
    
    
    3
    %Earning Assets
    
    
    
    
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Weighted Average
Yield on Earning Assets
    
    
    
    
    
    
    11.35
    %
    
    
    11.51
    %
    
    
    11.67
    %
    
    
    11.83
    %
    
    
    11.99
    %
    
    
    12.15
    %
  Distributions to Members
  Supplemental Liquidity
  31




---



##### Table of Contents



Liquidity and Capital Resources
 Requirements
  Loan Fundings
  Management Fees and Loan Enforcement Costs
  Interest Expense
  32




---



##### Table of Contents



Distributions to Members
  Member Redemptions
  Sources of Liquidity
  New Member Investments
  Participations and Whole Loans Sold
  33




---



##### Table of Contents



Interest Income
  Loan Payments
   Cash Flows
  34




---



##### Table of Contents



35




---



##### Table of Contents



Critical Accounting Policies
 Revenue Recognition
  Mortgage Loan Valuation, Classification of Loan Activities, Loans-In-Process, Participations
Issued, Whole Loans Sold and Unearned Income,
 Mortgage Loan Valuation
  
    
    estimated net realizable value of any underlying collateral in relation to the loan
amounts;
    
    the borrowers financial condition and any adverse factors that may affect their ability
to pay;
    
    the quality and track record of the borrower as a seasoned, core operator;
    
    the financial wherewithal of the loan guarantors;
    
    prevailing economic conditions of the specific market;
    
    historical experience;
    
    evaluation of industry trends;
    
    the as-is versus build-out valuation; and
    
    nature of collateral.
  Classification of Loan Activities
  36




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Loans-in-Process
  Participations Issued
  Whole Loans Sold
  37




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##### Table of Contents



Unearned Income
  Use of Estimates
  Fund Expenses
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk.
     38




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##### Table of Contents



Impact on Annual Interest Income based on Pro-forma Changes in the Prime Interest Rate
 December 31, 2006 Portfolio InformationFixed Rate
    
    
    Variable Rate
    
    
    TotalCurrent Principal
    
    $
    178,515,372
    
    
    $
    80,099,402
    
    
    $
    258,614,774Current Weighted Average Yield
    
    
    12.26
    %
    
    
    12.49
    %
    
    
    12.39
    %Annualized Interest Income
    
    $
    21,885,985
    
    
    $
    10,004,415
    
    
    $
    31,890,400Pro-forma
    
    ChangeYield
    
    In YieldIncrease in Prime Rate:0.5% or 50 basis points
    
    $
    
    
    
    $
    400,497
    
    
    $
    400,497
    
    
    
    12.49
    %
    
    
    0.10
    %1.0% or 100 basis points
    
    $
    
    
    
    $
    800,994
    
    
    $
    800,994
    
    
    
    12.64
    %
    
    
    0.25
    %2.0% or 200 basis points
    
    $
    
    
    
    $
    1,601,988
    
    
    $
    1,601,988
    
    
    
    12.95
    %
    
    
    0.56
    %Decreases in Prime Rate:0.5% or 50 basis points
    
    $
    
    
    
    $
    (299,401
    )
    
    $
    (299,401
    )
    
    
    12.22
    %
    
    
    (0.17
    )%1.0% or 100 basis points
    
    $
    
    
    
    $
    (395,610
    )
    
    $
    (395,610
    )
    
    
    12.18
    %
    
    
    (0.21
    )%2.0% or 200 basis points
    
    $
    
    
    
    $
    (536,428
    )
    
    $
    (536,428
    )
    
    
    12.12
    %
    
    
    (0.27
    )%
  39




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##### Table of Contents



Impact on Annual Interest Income based on Pro-forma Changes in the Prime Interest Rate
 September 30, 2007 Portfolio InformationFixed Rate
    
    
    Variable Rate
    
    
    TotalCurrent Principal
    
    $
    206,855,439
    
    
    $
    244,323,300
    
    
    $
    451,178,739Current Weighted Average Yield
    
    
    12.17
    %
    
    
    12.58
    %
    
    
    12.39
    %Annualized Interest Income
    
    $
    25,181,255
    
    
    $
    30,731,704
    
    
    $
    55,912,958Pro-forma
    
    ChangeYield
    
    In YieldIncrease in Prime Rate:0.5% or 50 basis points
    
    $
    
    
    
    $
    257,877
    
    
    $
    257,877
    
    
    
    12.45
    %
    
    
    0.06
    %1.0% or 100 basis points
    
    $
    
    
    
    $
    1,479,493
    
    
    $
    1,479,493
    
    
    
    12.72
    %
    
    
    0.33
    %2.0% or 200 basis points
    
    $
    
    
    
    $
    3,922,726
    
    
    $
    3,922,726
    
    
    
    13.26
    %
    
    
    0.87
    %Decreases in Prime Rate:0.5% or 50 basis points
    
    $
    
    
    
    $
    (50,136
    )
    
    $
    (50,136
    )
    
    
    12.38
    %
    
    
    (0.01
    )%1.0% or 100 basis points
    
    $
    
    
    
    $
    (67,336
    )
    
    $
    (67,336
    )
    
    
    12.38
    %
    
    
    (0.01
    )%2.0% or 200 basis points
    
    $
    
    
    
    $
    (67,336
    )
    
    $
    (67,336
    )
    
    
    12.38
    %
    
    
    (0.01
    )%
  Loan Rates:
    
    Matured
    
    
    Q4 2007
    
    
    Q1 2008
    
    
    Q2 2008
    
    
    Q3 2008
    
    
    Q4 2008
    
    
    TotalFixed
    
    $
    11,134,520
    
    
    $
    48,548,850
    
    
    $
    19,834,829
    
    
    $
    112,859,373
    
    
    $
    21,824,115
    
    
    $
    30,121,613
    
    
    $
    244,323,300Variable
    
    
    31,658,820
    
    
    
    72,426,905
    
    
    
    58,388,490
    
    
    
    
    
    
    
    44,381,224
    
    
    
    
    
    
    
    206,855,439$
    42,793,340
    
    
    $
    120,975,755
    
    
    $
    78,223,319
    
    
    $
    112,859,373
    
    
    $
    66,205,339
    
    
    $
    30,121,613
    
    
    $
    451,178,739
  
 Item 4T. Controls and Procedures
 Disclosure Controls and Procedures
   40




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##### Table of Contents



Changes to Internal Control over Financial Reporting
   41




---



##### 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.
  Our loan portfolio is concentrated geographically and a downturn in the economies or markets in
which we operate could have a material adverse effect our loan portfolio and Member
distributions.
  Recent developments in the mortgage market could adversely effect our markets.
  42




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  43




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##### Table of Contents



Member Investments
    
    
    RedemptionsAdditional First
    
    
    Additional
    
    
    ReinvestmentInitial Investment
    
    
    Year Contributions
    
    
    Contributions
    
    
    Contributions
    
    
    Full
    
    
    Partial
    
    
    NetJuly 1  Sept 30DirectDollars
    
    $
    5,726,019
    
    
    $
    4,874,498
    
    
    $
    7,377,776
    
    
    $
    3,116,563
    
    
    $
    (1,110,208
    )
    
    $
    (2,159,052
    )
    
    $
    17,825,596# Members
    
    
    55
    
    
    
    41
    
    
    
    48
    
    
    
    1,496
    
    
    
    (7
    )
    
    
    (24
    )
    
    
    48# Units
    
    
    573
    
    
    
    487
    
    
    
    738
    
    
    
    312
    
    
    
    (111
    )
    
    
    (216
    )
    
    
    1,783Broker/DealerDollars
    
    $
    62,746,499
    
    
    $
    5,725,711
    
    
    $
    13,242,019
    
    
    $
    4,022,542
    
    
    $
    (1,163,066
    )
    
    $
    (547,000
    )
    
    $
    84,026,704# Members
    
    
    598
    
    
    
    87
    
    
    
    73
    
    
    
    3,200
    
    
    
    (16
    )
    
    
    (7
    )
    
    
    582# Units
    
    
    6,275
    
    
    
    573
    
    
    
    1,324
    
    
    
    402
    
    
    
    (116
    )
    
    
    (55
    )
    
    
    8,403Third
Quarter
TotalsDollars
    
    $
    68,472,518
    
    
    $
    10,600,209
    
    
    $
    20,619,795
    
    
    $
    7,139,105
    
    
    $
    (2,273,274
    )
    
    $
    (2,706,052
    )
    
    $
    101,852,300# Members
    
    
    653
    
    
    
    128
    
    
    
    121
    
    
    
    4,696
    
    
    
    (23
    )
    
    
    (31
    )
    
    
    630# Units
    
    
    6,846
    
    
    
    1,060
    
    
    
    2,062
    
    
    
    714
    
    
    
    (227
    )
    
    
    (271
    )
    
    
    10,1852007 YTD TotalsDollars
    
    $
    201,394,196
    
    
    $
    19,936,302
    
    
    $
    51,755,282
    
    
    $
    18,245,656
    
    
    $
    (7,358,268
    )
    
    $
    (18,268,132
    )
    
    $
    265,705,035# Members
    
    
    1,727
    
    
    
    238
    
    
    
    529
    
    
    
    11,292
    
    
    
    (64
    )
    
    
    (114
    )
    
    
    1,663# Units
    
    
    20,136
    
    
    
    1,994
    
    
    
    5,176
    
    
    
    1,825
    
    
    
    (736
    )
    
    
    (1,827
    )
    
    
    26,571Inception To DateDollars
    
    $
    396,874,545
    
    
    $
    59,885,857
    
    
    $
    91,049,188
    
    
    $
    35,786,019
    
    
    $
    (26,702,113
    )
    
    $
    (32,434,175
    )
    
    $
    524,459,320# Members
    
    
    3,239
    
    
    
    670
    
    
    
    1,044
    
    
    
    11,292
    
    
    
    (200
    )
    
    
    (268
    )
    
    
    3,039# Units
    
    
    39,684
    
    
    
    5,989
    
    
    
    9,105
    
    
    
    3,579
    
    
    
    (2,670
    )
    
    
    (3,243
    )
    
    
    52,445
 44




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##### Table of Contents



Item 6. Exhibits
 ExhibitNo.
    
    Description4.1
    
    IMH Secured Loan Fund, LLC Restated Limited Liability Company
Operating Agreement (incorporated by reference to Exhibit 4.1
of the Companys Registration Statement on Form 10, File No.
000-52611, filed April 30, 2007)4.2
    
    Form Subscription Agreement (incorporated by reference to
Exhibit 4.2 of the Companys Registration Statement on Form
10, File No. 000-52611, filed 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 Securities Exchange Act
of 1934, as amended, and is not to be incorporated by reference into any filings of the
Company, whether made before or after the date hereof, regardless of any general incorporation
language in such filing. 45




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##### Table of Contents



SIGNATURES
  Date: November 14, 2007
    IMH SECURED LOAN FUND, LLCBy:
    Investors Mortgage Holdings, Inc.Its:
    ManagerBy:
    /s/ Steven DarakSteven DarakChief Financial Officer(Principal Financial and Accounting Officer and
Duly Authorized Officer) 46




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNo.
    
    Description4.1
    
    IMH Secured Loan Fund, LLC Restated Limited Liability Company
Operating Agreement (incorporated by reference to Exhibit 4.1
of the Companys Registration Statement on Form 10, File No.
000-52611, filed April 30, 2007)4.2
    
    Form Subscription Agreement (incorporated by reference to
Exhibit 4.2 of the Companys Registration Statement on Form
10, File No. 000-52611, filed 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 Securities Exchange Act
of 1934, as amended, and is not to be incorporated by reference into any filings of the
Company, whether made before or after the date hereof, regardless of any general incorporation
language in such filing. 47