##### 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 June 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
    
    81-0624254(State or other jurisdiction of
incorporation or organization)
    
    (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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##### 



IMH SECURED LOAN FUND, LLC
QUARTERLY REPORT ON FORM 10-Q
INDEX
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements.Balance Sheets as of June 30, 2007 and December 31, 2006
    
    
    2Statements of Net
Earnings for the Three and Six Months Ended June 30, 2007 and
2006
    
    
    3Statement of
Members Equity for the Six Months Ended June 30, 2007
    
    
    4Statements of Cash
Flows for the Six Months Ended June 30, 2007 and 2006
    
    
    5Notes to Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results
of Operations.
    
    
    12Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risk.
    
    
    34Item 4T.
    
    Controls and Procedures.
    
    
    36PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings.
    
    
    37Item 1A.
    
    Risk Factors.
    
    
    37Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    37Item 6.
    
    Exhibits.
    
    
    39Signatures
    
    
    40Index to Exhibits
    
    
    41EX-31.1EX-31.2EX-32.1
  1




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PART I
FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 IMH SECURED LOAN FUND, LLC
Balance Sheets
 As of June 30,
    
    
    As of December 31,2007
    
    
    2006(Unaudited)ASSETSCash and Cash Equivalents
    
    $
    34,420,974
    
    
    $
    12,159,495Mortgage Loans:Mortgage Loan Note Obligations
    
    
    491,688,720
    
    
    
    309,461,625Less Undisbursed Portion of Loans-in-process and Interest Reserves
    
    
    (86,770,238
    )
    
    
    (50,846,851
    )Principal Outstanding
    
    
    404,918,482
    
    
    
    258,614,774Accrued Interest Receivable
    
    
    4,564,702
    
    
    
    2,599,485Total Assets
    
    $
    443,904,158
    
    
    
    273,373,754LIABILITIESFees Payable to Fund Manager
    
    $
    84,358
    
    
    $
    52,954Member Investments Pending Activation
    
    
    2,280,000
    
    
    
    386,263Deposit Refund Payable
    
    
    
    
    
    
    62,075Redemptions Payable to Members
    
    
    3,165,668
    
    
    
    2,249,482Distributions Payable to Members
    
    
    1,687,292
    
    
    
    920,999Borrowings From Fund Manager
    
    
    6,047,222
    
    
    
    4,449,501Participations in Mortgage Loans Issued
    
    
    5,884,715
    
    
    
    4,937,771Unearned Income and Other Funds Held
    
    
    111,050
    
    
    
    133,971Total Liabilities
    
    
    19,260,305
    
    
    
    13,193,016MEMBERS EQUITYRetained Earnings
    
    
    2,036,833
    
    
    
    1,426,453Members Equity  $10,000 per unit stated value,
authorized units set at discretion of the Manager 
42,260 and 25,875 units issued and outstanding at
June 30, 2007 and December 31, 2006, respectively
    
    
    422,607,020
    
    
    
    258,754,285Total Members Equity
    
    
    424,643,853
    
    
    
    260,180,738Commitments and Contingent LiabilitiesTotal Liabilities and Members Equity
    
    $
    443,904,158
    
    
    $
    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 Six Months Ended
    
    
    For the Three Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006INTEREST AND FEE INCOMEMortgage Loans
    
    $
    20,805,802
    
    
    $
    7,723,441
    
    
    $
    11,424,932
    
    
    $
    4,465,445Investments and Money
Market Account
    
    
    466,530
    
    
    
    214,077
    
    
    
    341,916
    
    
    
    101,763Total Interest Income
    
    
    21,272,332
    
    
    
    7,937,518
    
    
    
    11,766,848
    
    
    
    4,567,208EXPENSESManagement Fees
    
    
    424,939
    
    
    
    169,631
    
    
    
    231,020
    
    
    
    95,633Interest Expense:Borrowings from Fund Manager
    
    
    321,498
    
    
    
    
    
    
    
    87,369
    
    
    
    Participations in Mortgage Loans
Issued
    
    
    806,255
    
    
    
    236,908
    
    
    
    279,861
    
    
    
    139,383Interest Expense
    
    
    1,127,753
    
    
    
    236,908
    
    
    
    367,230
    
    
    
    139,383Total Expenses
    
    
    1,552,692
    
    
    
    406,539
    
    
    
    598,250
    
    
    
    235,016Net Earnings
    
    $
    19,719,639
    
    
    $
    7,530,979
    
    
    $
    11,168,597
    
    
    $
    4,332,192Net Earnings Allocated to Members
per Weighted Average Membership
Units Outstanding
    
    $
    587.91
    
    
    $
    592.85
    
    
    $
    295.18
    
    
    $
    299.81Distribututions to Members per
Weighted Average Membership Units
Outstanding
    
    $
    568.37
    
    
    $
    562.16
    
    
    $
    286.32
    
    
    $
    284.51Weighted Average Membership Units
Outstanding
    
    
    33,542
    
    
    
    12,703
    
    
    
    37,837
    
    
    
    14,450
 The accompanying notes are an integral part of these statements
 3




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IMH SECURED LOAN FUND, LLC
Statement of Members Equity
Six Months ended June 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  six months ended June 30, 2007
    
    
    
    
    
    
    
    
    
    
    19,719,639
    
    
    
    19,719,639Earnings Distributed
    
    
    
    
    
    
    
    
    
    
    (7,957,742
    )
    
    
    (7,957,742
    )Reinvestment of Earnings
    
    
    1,111
    
    
    
    11,106,551
    
    
    
    (11,106,551
    )
    
    
    Capital Investment  New Members
    
    
    14,225
    
    
    
    142,257,771
    
    
    
    
    
    
    
    142,257,771Capital investment  Existing Members
    
    
    3,113
    
    
    
    31,135,487
    
    
    
    
    
    
    
    31,135,487Full Redemptions
    
    
    (508
    )
    
    
    (5,084,994
    )
    
    
    
    
    
    
    (5,084,994
    )Partial Redemptions
    
    
    (1,556
    )
    
    
    (15,562,080
    )
    
    
    
    
    
    
    (15,562,080
    )Retained Earnings paid on Full Redemptions
    
    
    
    
    
    
    
    
    
    
    (44,966
    )
    
    
    (44,966
    )Net Activity for Period
    
    
    16,385
    
    
    
    163,852,735
    
    
    
    610,380
    
    
    
    164,463,115Balances at June 30, 2007
    
    
    42,260
    
    
    $
    422,607,020
    
    
    $
    2,036,833
    
    
    $
    424,643,853
 The accompanying notes are an integral part of these statements
 4




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IMH SECURED LOAN FUND, LLC
Statements of Cash Flows
(Unaudited)
 For the Six Months EndedJune 30,2007
    
    
    2006CASH FLOWS  Operating Activities:Net Earnings
    
    $
    19,719,639
    
    
    $
    7,530,979Adjustments to Reconcile Net Earnings to Net CashProvided (Used) by Operating Activities:Increase in Accrued Interest Receivable
    
    
    (1,965,217
    )
    
    
    (701,775
    )Increase in Fees Payable to Fund Manager
    
    
    31,404
    
    
    
    14,259Increase (decrease) in Deposit Refund Payable
    
    
    (62,075
    )
    
    
    Increase (Decrease) in Unearned Income
    
    
    (22,921
    )
    
    
    (1,330,808
    )Net Cash Provided by Operating Activities
    
    
    17,700,830
    
    
    
    5,512,655CASH FLOWS  Investing Activities:Mortgage Loans Originations
    
    
    (203,544,394
    )
    
    
    (120,898,602
    )Mortgage Loan Repayments
    
    
    59,665,686
    
    
    
    36,929,900Increase in Loan Principal Balances
    
    
    (143,878,708
    )
    
    
    (83,968,701
    )Net Cash Used in Investing Activities
    
    
    (143,878,708
    )
    
    
    (83,968,701
    )CASH FLOWS  Financing Activities:Proceeds from Sale of Whole Loans
    
    
    5,250,000
    
    
    
    12,811,380Repurchase of Whole Loans Sold
    
    
    (7,675,000
    )
    
    
    (1,987,203
    )Increase in Borrowings from Manager
    
    
    10,165,202
    
    
    
    8,430,000Repayments of Borrowings from Manager
    
    
    (8,567,481
    )
    
    
    (8,430,000
    )Proceeds from Loan Participations Issued
    
    
    37,498,052
    
    
    
    5,750,000Loan Participations Reacquired
    
    
    (36,551,108
    )
    
    
    (2,749,229
    )Increase (Decrease) in Member InvestmentsPending Activation
    
    
    1,893,737
    
    
    
    841,835Members Capital Investments
    
    
    173,393,258
    
    
    
    70,555,697Members Redemptions
    
    
    (19,730,888
    )
    
    
    (6,805,976
    )Members Distributions
    
    
    (7,236,416
    )
    
    
    (2,369,804
    )Net Cash Provided by Financing Activities
    
    
    148,439,356
    
    
    
    76,046,699Net Increase in Cash
    
    
    22,261,479
    
    
    
    (2,409,347
    )Cash and Cash Equivalents:Beginning of
Period
    
    
    12,159,495
    
    
    
    12,089,302End of Period
    
    $
    34,420,974
    
    
    $
    9,679,955Supplemental Cash Flow Information:Interest paid
    
    $
    1,071,586
    
    
    $
    505,138
 The accompanying notes are an integral part of these statements
 5




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IMH SECURED LOAN FUND, LLC
 NOTE 1- FUND DESCRIPTION
  NOTE 2  CASH AND CASH EQUIVALENTS
  June 30,
    
    
    December 31,2007
    
    
    2006Cash and Cash Equivalents:Working Capital Reserve
    
    $
    12,147,554
    
    
    $
    7,758,443Retained Earnings
    
    
    1,552,675
    
    
    
    1,426,453Available for Operating Obligations and Lending
    
    
    20,720,745
    
    
    
    2,974,599$
    34,420,974
    
    
    $
    12,159,495
 NOTE 3  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES
   6




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IMH SECURED LOAN FUND, LLC
 NOTE 3  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
 June 30, 2007Fixed Rate
    
    
    Variable Rate
    
    
    Total
    
    
    % ofCurrent Rate:
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    Total11.50%
    
    
    2
    
    
    $
    24,153,516
    
    
    
    5
    
    
    $
    15,666,150
    
    
    
    7
    
    
    $
    39,819,666
    
    
    
    9.8
    %11.75%
    
    
    1
    
    
    
    2,414,675
    
    
    
    2
    
    
    
    4,551,622
    
    
    
    3
    
    
    
    6,966,298
    
    
    
    1.7
    %12.00%
    
    
    13
    
    
    
    90,934,072
    
    
    
    3
    
    
    
    13,620,000
    
    
    
    16
    
    
    
    104,554,072
    
    
    
    25.8
    %12.25%
    
    
    2
    
    
    
    19,741,364
    
    
    
    4
    
    
    
    28,766,825
    
    
    
    6
    
    
    
    48,508,189
    
    
    
    12.0
    %12.50%
    
    
    2
    
    
    
    36,092,245
    
    
    
    2
    
    
    
    22,638,777
    
    
    
    4
    
    
    
    58,731,022
    
    
    
    14.5
    %12.75%
    
    
    0
    
    
    
    
    
    
    
    3
    
    
    
    54,828,103
    
    
    
    3
    
    
    
    54,828,103
    
    
    
    13.5
    %13.00%
    
    
    3
    
    
    
    12,651,000
    
    
    
    1
    
    
    
    2,252,670
    
    
    
    4
    
    
    
    14,903,670
    
    
    
    3.7
    %13.25%
    
    
    1
    
    
    
    6,294,354
    
    
    
    2
    
    
    
    40,466,750
    
    
    
    3
    
    
    
    46,761,104
    
    
    
    11.6
    %13.50%
    
    
    1
    
    
    
    5,613,343
    
    
    
    1
    
    
    
    4,813,888
    
    
    
    2
    
    
    
    10,427,231
    
    
    
    2.6
    %13.75%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    4,848,296
    
    
    
    1
    
    
    
    4,848,296
    
    
    
    1.2
    %14.00%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    14,570,832
    
    
    
    1
    
    
    
    14,570,832
    
    
    
    3.6
    %Total
    
    
    25
    
    
    $
    197,894,569
    
    
    
    25
    
    
    $
    207,023,914
    
    
    
    50
    
    
    $
    404,918,482
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    48.9
    %
    
    
    
    
    
    
    51.1
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    12.20
    %
    
    
    
    
    
    
    12.72
    %
    
    
    
    
    
    
    12.46
    %Number of Loans
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    50Average Principal
    
    
    
    
    
    $
    7,915,783
    
    
    
    
    
    
    
    8,280,957
    
    
    
    
    
    
    $
    8,098,370
 December 31, 2006Current Rate:
    
    Fixed Rate
    
    
    Variable Rate
    
    
    Total
    
    
    % of#
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    Total11.25%
    
    
    
    
    
    $
    
    
    
    
    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
  7




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IMH SECURED LOAN FUND, LLC
 NOTE 3  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
  June 30, 2007Quarter
    
    Number
    
    
    Amount
    
    
    PercentMatured
    
    
    6
    
    
    $
    22,013,052
    
    
    
    5.4
    %Q3 2007
    
    
    18
    
    
    
    118,315,435
    
    
    
    29.2
    %Q4 2007
    
    
    9
    
    
    
    70,056,040
    
    
    
    17.3
    %Q1 2008
    
    
    7
    
    
    
    62,285,836
    
    
    
    15.4
    %Q2 2008
    
    
    10
    
    
    
    132,248,120
    
    
    
    32.7
    %50
    
    
    $
    404,918,482
    
    
    
    100.0
    %
      8




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##### Table of Contents



IMH SECURED LOAN FUND, LLC
 NOTE 3  MORTGAGE LOANS, LOAN PARTICIPATIONS AND LOAN SALES  CONTINUED
 June 30, 2007
    
    
    December 31, 2006Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Pre-entitled Land:Held for Investment
    
    $
    1,397,000
    
    
    
    0.3
    %
    
    
    1
    
    
    $
    
    
    
    
    
    
    
    
    Processing Entitlements
    
    
    221,473,608
    
    
    
    54.7
    %
    
    
    20
    
    
    
    145,219,454
    
    
    
    56.1
    %
    
    
    20222,870,608
    
    
    
    55.0
    %
    
    
    21
    
    
    
    145,219,454
    
    
    
    56.1
    %
    
    
    20Entitled Land:Held for Investment
    
    
    37,409,942
    
    
    
    9.2
    %
    
    
    5
    
    
    
    41,893,482
    
    
    
    16.2
    %
    
    
    8Infrastructure under Construction
    
    
    53,857,606
    
    
    
    13.3
    %
    
    
    5
    
    
    
    17,621,490
    
    
    
    6.8
    %
    
    
    4Improved and Held for Vertical Construction
    
    
    65,248,247
    
    
    
    16.2
    %
    
    
    11
    
    
    
    29,387,627
    
    
    
    11.4
    %
    
    
    4156,515,795
    
    
    
    38.7
    %
    
    
    21
    
    
    
    88,902,599
    
    
    
    34.4
    %
    
    
    16Construction & Existing Structures:New Structure  Construction in-process
    
    
    11,267,906
    
    
    
    2.8
    %
    
    
    3
    
    
    
    16,315,986
    
    
    
    6.3
    %
    
    
    5Existing Structure Held for Investment
    
    
    13,383,463
    
    
    
    3.3
    %
    
    
    4
    
    
    
    8,176,735
    
    
    
    3.2
    %
    
    
    3Existing Structure  Improvements
    
    
    880,710
    
    
    
    0.2
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    25,532,079
    
    
    
    6.3
    %
    
    
    8
    
    
    
    24,492,721
    
    
    
    9.5
    %
    
    
    8$
    404,918,482
    
    
    
    100.0
    %
    
    
    50
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
 June 30, 2007
    
    
    December 31, 2006Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Residential
    
    $
    178,567,829
    
    
    
    48.0
    %
    
    
    25
    
    
    $
    154,279,204
    
    
    
    59.7
    %
    
    
    29Mixed Use
    
    
    179,964,173
    
    
    
    39.2
    %
    
    
    17
    
    
    
    95,258,284
    
    
    
    36.8
    %
    
    
    11Commercial
    
    
    46,386,480
    
    
    
    12.8
    %
    
    
    8
    
    
    
    9,077,286
    
    
    
    3.5
    %
    
    
    4$
    404,918,482
    
    
    
    100.0
    %
    
    
    50
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
  June 30, 2007
    
    
    December 31, 2006Amount
    
    
    Percent
    
    
    #
    
    
    Amount
    
    
    Percent
    
    
    #Arizona
    
    $
    193,735,328
    
    
    
    47.9
    %
    
    
    28
    
    
    $
    149,796,267
    
    
    
    57.9
    %
    
    
    29California
    
    
    118,609,929
    
    
    
    29.3
    %
    
    
    12
    
    
    
    96,726,078
    
    
    
    37.4
    %
    
    
    13New Mexico
    
    
    2,986,690
    
    
    
    0.7
    %
    
    
    2
    
    
    
    812,027
    
    
    
    0.3
    %
    
    
    1Texas
    
    
    26,498,073
    
    
    
    6.5
    %
    
    
    5
    
    
    
    11,280,402
    
    
    
    4.4
    %
    
    
    1Idaho
    
    
    43,977,648
    
    
    
    10.9
    %
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    North Carolina
    
    
    19,110,814
    
    
    
    4.7
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    $
    404,918,482
    
    
    
    100.0
    %
    
    
    50
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
  9




---



##### 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
 Net Earnings, Distributions Reinvested and Distributions Payable to Members
   NOTE 5  MANAGEMENT FEES AND RELATED PARTY ACTIVITY
 Management Fees
   10




---



##### 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
   *******************************************************************************
 11




---



##### 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.
 12




---



##### 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 us from loan
defaults or ensure that sufficient collateral, including collateral pledged by our
guarantors, will exist to protect us 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, including, if our Manager chooses,
potential reimbursement of significant expenses of the Fund that the Manager has
historically paid on its own, 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
   13
    Table of Contents    14




---



##### Table of Contents



Selected Financial Data
  (Unaudited)
    
    (Unaudited)As of and for the
    
    As of and for the
    
    Year ended6 months Ended June 30,
    
    3 months Ended June 30,
    
    December 31,2007
    
    2006
    
    2007
    
    2006
    
    2006Total assets
    
    $
    443,904,158
    
    
    $
    177,417,587
    
    
    $
    443,904,158
    
    
    $
    177,417,587
    
    
    $
    273,373,754Interest income
    
    $
    21,272,332
    
    
    $
    7,937,518
    
    
    $
    11,766,848
    
    
    $
    4,567,208
    
    
    $
    21,145,474Management fees
    
    $
    424,939
    
    
    $
    169,631
    
    
    $
    231,020
    
    
    $
    95,633
    
    
    $
    430,362Interest expense
    
    $
    1,127,753
    
    
    $
    236,908
    
    
    $
    367,230
    
    
    $
    139,383
    
    
    $
    612,999Net earnings
    
    $
    19,719,639
    
    
    $
    7,530,979
    
    
    $
    11,168,597
    
    
    $
    4,332,192
    
    
    $
    20,102,113Net distributions to Members
    
    $
    19,064,293
    
    
    $
    7,141,065
    
    
    $
    10,833,597
    
    
    $
    4,111,126
    
    
    $
    19,379,611Net Member distribution as a % of net earnings
    
    
    96.7
    %
    
    
    94.8
    %
    
    
    97.0
    %
    
    
    94.9
    %
    
    
    96.4
    %Net earnings allocated to Members per weighted
average membership units
    
    $
    587.91
    
    
    $
    592.85
    
    
    $
    295.18
    
    
    $
    299.81
    
    
    $
    1,189.12Average annualized yield to Members (1)
    
    
    11.86
    %
    
    
    11.96
    %
    
    
    11.84
    %
    
    
    12.03
    %
    
    
    11.89
    %Net distributions to Members per weighted average
membership units (annualized) (1)
    
    $
    1,137
    
    
    $
    1,124
    
    
    $
    1,145
    
    
    $
    1,138
    
    
    $
    1,146Member Equity Related:Retained earnings (Loan Loss Reserve)
    
    $
    2,036,833
    
    
    $
    1,241,912
    
    
    $
    2,036,833
    
    
    $
    1,241,912
    
    
    $
    1,426,453Total Members equity
    
    $
    424,643,853
    
    
    $
    165,635,276
    
    
    $
    424,643,853
    
    
    $
    165,635,276
    
    
    $
    260,180,738Number of Member accounts
    
    
    2,409
    
    
    
    820
    
    
    
    2,409
    
    
    
    820
    
    
    
    1,376Average Member account balance
    
    $
    176,274
    
    
    $
    201,994
    
    
    $
    176,274
    
    
    $
    201,994
    
    
    $
    189,085States in which the Fund has Members
    
    
    46
    
    
    
    36
    
    
    
    46
    
    
    
    36
    
    
    
    40New Member investments
    
    $
    173,393,258
    
    
    $
    70,555,697
    
    
    $
    91,716,600
    
    
    $
    42,955,947
    
    
    $
    176,100,685Member earnings distributed
    
    $
    7,957,742
    
    
    $
    2,571,750
    
    
    $
    4,659,663
    
    
    $
    1,451,824
    
    
    $
    7,072,247Member earnings reinvested
    
    $
    11,106,551
    
    
    $
    4,569,315
    
    
    $
    6,173,934
    
    
    $
    2,659,302
    
    
    $
    12,307,364Member earnings retained
    
    $
    655,346
    
    
    $
    389,914
    
    
    $
    335,000
    
    
    $
    221,066
    
    
    $
    722,502% of total earnings reinvested
    
    
    56.32
    %
    
    
    60.67
    %
    
    
    55.28
    %
    
    
    61.38
    %
    
    
    61.20
    %Redemptions
    
    $
    20,647,074
    
    
    $
    6,473,164
    
    
    $
    11,342,205
    
    
    $
    3,662,541
    
    
    $
    26,637,188Redemptions as % of new investment
    
    
    11.91
    %
    
    
    9.17
    %
    
    
    12.37
    %
    
    
    8.53
    %
    
    
    14.14
    %Loan Related:Note balances originated
    
    $
    316,110,500
    
    
    $
    135,583,200
    
    
    $
    212,080,000
    
    
    $
    88,978,000
    
    
    $
    266,101,400Number of notes originated
    
    
    22
    
    
    
    21
    
    
    
    12
    
    
    
    12
    
    
    
    37Average note balance originated
    
    $
    14,368,659
    
    
    $
    6,456,343
    
    
    $
    17,673,333
    
    
    $
    7,414,833
    
    
    $
    7,191,930Principal balances outstanding
    
    $
    404,918,482
    
    
    $
    166,089,917
    
    
    $
    404,918,482
    
    
    $
    166,089,917
    
    
    $
    258,614,774Number of loans outstanding
    
    
    50
    
    
    
    42
    
    
    
    50
    
    
    
    42
    
    
    
    44Average principal balance
    
    $
    8,098,370
    
    
    $
    3,954,522
    
    
    $
    8,098,370
    
    
    $
    3,954,522
    
    
    $
    5,877,609% of Portfolio Principal  Fixed interest rate
    
    
    48.9
    %
    
    
    65.3
    %
    
    
    48.9
    %
    
    
    65.3
    %
    
    
    69.0
    %Number of fixed rate loans
    
    
    25
    
    
    
    30
    
    
    
    25
    
    
    
    30
    
    
    
    30Weighted average interest rate  Fixed
    
    
    12.20
    %
    
    
    12.45
    %
    
    
    12.20
    %
    
    
    12.45
    %
    
    
    12.26
    %% of portfolio  Variable interest rate
    
    
    51.1
    %
    
    
    34.7
    %
    
    
    51.1
    %
    
    
    34.7
    %
    
    
    31.0
    %Number of variable rate loans
    
    
    25
    
    
    
    12
    
    
    
    25
    
    
    
    12
    
    
    
    14Weighted average interest rate  Variable
    
    
    12.72
    %
    
    
    12.16
    %
    
    
    12.72
    %
    
    
    12.16
    %
    
    
    12.50
    %Principal balance % by state:Arizona
    
    
    47.9
    %
    
    
    72.1
    %
    
    
    47.9
    %
    
    
    72.1
    %
    
    
    0.0
    %California
    
    
    29.3
    %
    
    
    22.7
    %
    
    
    29.3
    %
    
    
    22.7
    %
    
    
    0.0
    %New Mexico
    
    
    0.7
    %
    
    
    
    %
    
    
    0.7
    %
    
    
    
    %
    
    
    0.0
    %Texas
    
    
    6.5
    %
    
    
    5.2
    %
    
    
    6.5
    %
    
    
    5.2
    %
    
    
    0.0
    %Idaho
    
    
    10.9
    %
    
    
    
    %
    
    
    10.9
    %
    
    
    
    %
    
    
    0North Carolina
    
    
    4.7
    %
    
    
    
    %
    
    
    4.7
    %
    
    
    
    %
    
    
    0Interest payments over 30 days delinquent
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Loans past scheduled maturity
    
    
    6
    
    
    
    6
    
    
    
    6
    
    
    
    6
    
    
    
    3Principal balances past scheduled maturity
    
    $
    22,013,052
    
    
    $
    17,844,629
    
    
    $
    22,013,052
    
    
    $
    17,844,629
    
    
    $
    13,901,000Loans in non accrual status
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    Principal balances in non accrual status
    
    $
    15,457,663
    
    
    $
    
    
    
    $
    15,457,663
    
    
    $
    
    
    
    $
    Allowance of credit Losses
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Where applicable, quarterly results are annualized to allow for comparibility with annual results. 15




---



##### Table of Contents



Results of Operations for the three and six months ended June 30, 2007 and 2006
   Revenues (in thousands)
 Six Months Ended
    
    
    
    
    
    
    
    
    
    
    Three Months EndedJune 30,
    
    
    $
    
    
    %
    
    
    June 30,
    
    
    $
    
    
    %2007
    
    
    2006
    
    
    Change
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeINTEREST AND FEE
INCOMEMortgage Loans
    
    $
    20,806
    
    
    $
    7,724
    
    
    $
    13,082
    
    
    
    169.4
    %
    
    $
    11,425
    
    
    $
    4,465
    
    
    $
    6,960
    
    
    
    155.9
    %Investments and MoneyMarket Account
    
    
    466
    
    
    
    214
    
    
    
    252
    
    
    
    117.9
    %
    
    
    342
    
    
    
    102
    
    
    
    240
    
    
    
    236.0
    %Total Interest Income
    
    
    21,272
    
    
    
    7,938
    
    
    
    13,334
    
    
    
    168.0
    %
    
    
    11,767
    
    
    
    4,567
    
    
    
    7,200
    
    
    
    157.6
    %
   16




---



##### Table of Contents



Expenses (in thousands)
 Six Months Ended
    
    
    
    
    
    
    
    
    
    
    Three Months EndedJune 30,
    
    
    $
    
    
    %
    
    
    June 30,
    
    
    $
    
    
    %2007
    
    
    2006
    
    
    Change
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeEXPENSESManagement Fees
    
    
    425
    
    
    
    170
    
    
    
    255
    
    
    
    150.5
    %
    
    
    231
    
    
    
    96
    
    
    
    135
    
    
    
    141.6
    %Interest Expense:Borrowings from Fund
Manager
    
    
    322
    
    
    
    
    
    
    
    322
    
    
    
    
    
    
    
    87
    
    
    
    0
    
    
    
    87
    
    
    
    Participations in
Mortgage Loans Issued
    
    
    806
    
    
    
    237
    
    
    
    569
    
    
    
    240.3
    %
    
    
    280
    
    
    
    139
    
    
    
    141
    
    
    
    100.8
    %Interest Expense
    
    
    1,128
    
    
    
    237
    
    
    
    891
    
    
    
    376.0
    %
    
    
    367
    
    
    
    139
    
    
    
    228
    
    
    
    163.5
    %Total Expenses
    
    
    1,553
    
    
    
    407
    
    
    
    1,146
    
    
    
    281.9
    %
    
    
    598
    
    
    
    235
    
    
    
    363
    
    
    
    154.6
    %
    Net Earnings (in thousands)
 Six Months Ended
    
    
    
    
    
    
    
    
    
    
    Three Months EndedJune 30,
    
    
    $
    
    
    %
    
    
    June 30,
    
    
    $
    
    
    %2007
    
    
    2006
    
    
    Change
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    Change
    
    
    ChangeNet Earnings
    
    $
    19,720
    
    
    $
    7,531
    
    
    
    12,189
    
    
    
    161.8
    %
    
    $
    11,168
    
    
    $
    4,332
    
    
    
    6,836
    
    
    
    157.8
    %
   17




---



##### Table of Contents



Changes in the Portfolio Profile
      June 30, 2007
    
    
    December 31, 2006Amount
    
    
    Percent
    
    
    #
    
    
    Amount
    
    
    Percent
    
    
    #Arizona
    
    $
    193,735,328
    
    
    
    47.9
    %
    
    
    28
    
    
    $
    149,796,267
    
    
    
    57.9
    %
    
    
    29California
    
    
    118,609,929
    
    
    
    29.3
    %
    
    
    12
    
    
    
    96,726,078
    
    
    
    37.4
    %
    
    
    13New Mexico
    
    
    2,986,690
    
    
    
    0.7
    %
    
    
    2
    
    
    
    812,027
    
    
    
    0.3
    %
    
    
    1Texas
    
    
    26,498,073
    
    
    
    6.5
    %
    
    
    5
    
    
    
    11,280,402
    
    
    
    4.4
    %
    
    
    1Idaho
    
    
    43,977,648
    
    
    
    10.9
    %
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    North Carolina
    
    
    19,110,814
    
    
    
    4.7
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    $
    404,918,482
    
    
    
    100.0
    %
    
    
    50
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44Average Loan
    
    $
    8,098,370
    
    
    
    
    
    
    
    
    
    
    $
    5,877,609
     18




---



##### Table of Contents



June 30, 2007Fixed Rate
    
    
    Variable Rate
    
    
    Total
    
    
    % ofCurrent Rate:
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    Total11.50%
    
    
    2
    
    
    $
    24,153,516
    
    
    
    5
    
    
    $
    15,666,150
    
    
    
    7
    
    
    $
    39,819,666
    
    
    
    9.8
    %11.75%
    
    
    1
    
    
    
    2,414,675
    
    
    
    2
    
    
    
    4,551,622
    
    
    
    3
    
    
    
    6,966,298
    
    
    
    1.7
    %12.00%
    
    
    13
    
    
    
    90,934,072
    
    
    
    3
    
    
    
    13,620,000
    
    
    
    16
    
    
    
    104,554,072
    
    
    
    25.8
    %12.25%
    
    
    2
    
    
    
    19,741,364
    
    
    
    4
    
    
    
    28,766,825
    
    
    
    6
    
    
    
    48,508,189
    
    
    
    12.0
    %12.50%
    
    
    2
    
    
    
    36,092,245
    
    
    
    2
    
    
    
    22,638,777
    
    
    
    4
    
    
    
    58,731,022
    
    
    
    14.5
    %12.75%
    
    
    0
    
    
    
    
    
    
    
    3
    
    
    
    54,828,103
    
    
    
    3
    
    
    
    54,828,103
    
    
    
    13.5
    %13.00%
    
    
    3
    
    
    
    12,651,000
    
    
    
    1
    
    
    
    2,252,670
    
    
    
    4
    
    
    
    14,903,670
    
    
    
    3.7
    %13.25%
    
    
    1
    
    
    
    6,294,354
    
    
    
    2
    
    
    
    40,466,750
    
    
    
    3
    
    
    
    46,761,104
    
    
    
    11.6
    %13.50%
    
    
    1
    
    
    
    5,613,343
    
    
    
    1
    
    
    
    4,813,888
    
    
    
    2
    
    
    
    10,427,231
    
    
    
    2.6
    %13.75%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    4,848,296
    
    
    
    1
    
    
    
    4,848,296
    
    
    
    1.2
    %14.00%
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    14,570,832
    
    
    
    1
    
    
    
    14,570,832
    
    
    
    3.6
    %Total
    
    
    25
    
    
    $
    197,894,569
    
    
    
    25
    
    
    $
    207,023,914
    
    
    
    50
    
    
    $
    404,918,482
    
    
    
    100.0
    %% of Portfolio
    
    
    
    
    
    
    48.9
    %
    
    
    
    
    
    
    51.1
    %
    
    
    
    
    
    
    100.0
    %Weighted Average Rate
    
    
    
    
    
    
    12.20
    %
    
    
    
    
    
    
    12.72
    %
    
    
    
    
    
    
    12.46
    %Number of Loans
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    50Average Principal
    
    
    
    
    
    $
    7,915,783
    
    
    
    
    
    
    
    8,280,957
    
    
    
    
    
    
    $
    8,098,370
 19




---



##### Table of Contents



December 31, 2006Current Rate:
    
    Fixed Rate
    
    
    Variable Rate
    
    
    
    
    
    
    Total
    
    
    % of#
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    #
    
    
    Principal
    
    
    Total11.25%
    
    
    
    
    
    $
    
    
    
    
    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
    
    
    
    
    
    
    12.23
    %
    
    
    
    
    
    
    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
  June 30, 2007
    
    
    December 31, 2006Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Pre-entitled Land:Held for Investment
    
    $
    1,397,000
    
    
    
    0.3
    %
    
    
    1
    
    
    $
    
    
    
    
    
    
    
    
    Processing Entitlements
    
    
    221,473,608
    
    
    
    54.7
    %
    
    
    20
    
    
    
    145,219,454
    
    
    
    56.1
    %
    
    
    20222,870,608
    
    
    
    55.0
    %
    
    
    21
    
    
    
    145,219,454
    
    
    
    56.1
    %
    
    
    20Entitled Land:Held for Investment
    
    
    37,409,942
    
    
    
    9.2
    %
    
    
    5
    
    
    
    41,893,482
    
    
    
    16.2
    %
    
    
    8Infrastructure under Construction
    
    
    53,857,606
    
    
    
    13.3
    %
    
    
    5
    
    
    
    17,621,490
    
    
    
    6.8
    %
    
    
    4Improved and Held for Vertical Construction
    
    
    65,248,247
    
    
    
    16.1
    %
    
    
    11
    
    
    
    29,387,627
    
    
    
    11.4
    %
    
    
    4156,515,795
    
    
    
    38.7
    %
    
    
    21
    
    
    
    88,902,599
    
    
    
    34.4
    %
    
    
    16Construction & Existing Structures:New Structure  Construction in-process
    
    
    11,267,906
    
    
    
    2.8
    %
    
    
    3
    
    
    
    16,315,986
    
    
    
    6.3
    %
    
    
    5Existing Structure Held for Investment
    
    
    13,383,463
    
    
    
    3.3
    %
    
    
    4
    
    
    
    8,176,735
    
    
    
    3.2
    %
    
    
    3Existing Structure  Improvements
    
    
    880,710
    
    
    
    0.2
    %
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    25,532,079
    
    
    
    6.3
    %
    
    
    8
    
    
    
    24,492,721
    
    
    
    9.5
    %
    
    
    8$
    404,918,482
    
    
    
    100.0
    %
    
    
    50
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
  20




---



##### Table of Contents



June 30, 2007
    
    
    December 31, 2006Amount
    
    
    %
    
    
    #
    
    
    Amount
    
    
    %
    
    
    #Residential
    
    $
    178,567,829
    
    
    
    48.0
    %
    
    
    25
    
    
    $
    154,279,204
    
    
    
    59.7
    %
    
    
    29Mixed Use
    
    
    179,964,173
    
    
    
    39.2
    %
    
    
    17
    
    
    
    95,258,284
    
    
    
    36.8
    %
    
    
    11Commercial
    
    
    46,386,480
    
    
    
    12.8
    %
    
    
    8
    
    
    
    9,077,286
    
    
    
    3.5
    %
    
    
    4$
    404,918,482
    
    
    
    100.0
    %
    
    
    50
    
    
    $
    258,614,774
    
    
    
    100.0
    %
    
    
    44
  Borrower and Borrower Groups
  Changes in the Portfolio Profile  Scheduled Maturities
  June 30, 2007Quarter
    
    Number
    
    
    Amount
    
    
    PercentMatured
    
    
    6
    
    
    $
    22,013,052
    
    
    
    5.4
    %Q3 2007
    
    
    18
    
    
    
    118,315,435
    
    
    
    29.2
    %Q4 2007
    
    
    9
    
    
    
    70,056,040
    
    
    
    17.3
    %Q1 2008
    
    
    7
    
    
    
    62,285,836
    
    
    
    15.4
    %Q2 2008
    
    
    10
    
    
    
    132,248,120
    
    
    
    32.7
    %50
    
    
    $
    404,918,482
    
    
    
    100.0
    %
   21




---



##### Table of Contents



Important Relationships Between Capital Resources and Results of Operations
    Security for Mortgage Loans
  Mortgage Loans, Participations and Loan Sales
  22




---



##### Table of Contents



Distributions to Members
  Annualized Rate of Return to Members
  23




---



##### Table of Contents



Redemptions
   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 will face exposure for owning real estate now that we have commenced foreclosure
proceedings on loans.
 Prospective Trends
 Loan Demand, Selection and Quality
  24




---



##### Table of Contents



Loan Portfolio Valuation Analysis Summary
  Loan
    
    

Hypothetical
Market DeflationTo
    
    
    LTV With
    
    
    LTV With
    
    
    LTV WithValue
    
    
    10%
    
    
    25%
    
    
    35%Portfolio  June 30, 2007 (000 Omitted)
    
    
    (LTV)
    
    
    Decline
    
    
    Decline
    
    
    DeclinePrincipal
    
    
    Percent by
    
    
    Note
    
    
    As
    
    
    In Collateral
    
    
    In Collateral
    
    
    In Collateral#
    
    
    Outstanding
    
    
    Qtr
    
    
    Year
    
    
    Total
    
    
    Originated
    
    
    Value
    
    
    Value
    
    
    Value2005:Q105
    
    
    3
    
    
    $
    13,141
    
    
    
    3.2
    %
    
    
    
    
    
    $
    13,141
    
    
    
    59.2
    %
    
    
    65.8
    %
    
    
    78.9
    %
    
    
    91.1
    %Q205
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Q305
    
    
    5
    
    
    $
    21,766
    
    
    
    5.4
    %
    
    
    
    
    
    $
    22,704
    
    
    
    52.0
    %
    
    
    57.7
    %
    
    
    69.3
    %
    
    
    80.0
    %Q405
    
    
    2
    
    
    $
    14,880
    
    
    
    3.7
    %
    
    
    12.3
    %
    
    $
    16,700
    
    
    
    73.0
    %
    
    
    81.1
    %
    
    
    97.3
    %
    
    
    112.30
    %2006:Q106
    
    
    3
    
    
    $
    10,304
    
    
    
    2.5
    %
    
    
    
    
    
    $
    11,720
    
    
    
    60.7
    %
    
    
    67.5
    %
    
    
    81.0
    %
    
    
    93.4
    %Q206
    
    
    6
    
    
    $
    41,661
    
    
    
    10.3
    %
    
    
    
    
    
    $
    47,868
    
    
    
    48.4
    %
    
    
    53.8
    %
    
    
    64.5
    %
    
    
    74.4
    %Q306
    
    
    7
    
    
    $
    50,969
    
    
    
    12.6
    %
    
    
    
    
    
    $
    58,956
    
    
    
    60.7
    %
    
    
    67.4
    %
    
    
    80.9
    %
    
    
    93.3
    %Q406
    
    
    3
    
    
    $
    26,086
    
    
    
    6.4
    %
    
    
    31.9
    %
    
    $
    32,041
    
    
    
    54.9
    %
    
    
    61.0
    %
    
    
    73.2
    %
    
    
    84.5
    %2007Q107
    
    
    9
    
    
    $
    64,807
    
    
    
    16.0
    %
    
    
    
    
    
    $
    76,781
    
    
    
    47.7
    %
    
    
    53.7
    %
    
    
    63.7
    %
    
    
    73.5
    %Q207
    
    
    12
    
    
    $
    161,314
    
    
    
    39.8
    %
    
    
    55.8
    %
    
    $
    185,580
    
    
    
    56.2
    %
    
    
    62.4
    %
    
    
    74.9
    %
    
    
    86.5
    %50
    
    
    $
    404,928
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    465,491
    
    
    
    54.5
    %
    
    
    60.6
    %
    
    
    72.7
    %
    
    
    83.9
    %
  25




---



##### Table of Contents



Portfolio at
    
    
    
    
    
    
    IMHJune 30, 2007 (000 Omitted)
    
    
    LTV
    
    
    EstimatedPrincipal
    
    
    Note
    
    
    At
    
    
    LTVs at#
    
    
    Out
    
    
    Total
    
    
    Origination
    
    
    8/10/20072005:Q105
    
    
    3
    
    
    $
    13,141
    
    
    $
    13,141
    
    
    
    59.2
    %
    
    
    88.0
    %Q205
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    
    Q305
    
    
    5
    
    
    $
    21,766
    
    
    $
    22,704
    
    
    
    52.0
    %
    
    
    43.2
    %Q405
    
    
    2
    
    
    $
    14,880
    
    
    $
    16,700
    
    
    
    73.0
    %
    
    
    87.5
    %2006:Q106
    
    
    3
    
    
    $
    10,304
    
    
    $
    11,720
    
    
    
    60.7
    %
    
    
    86.6
    %Q206
    
    
    6
    
    
    $
    41,661
    
    
    $
    47,868
    
    
    
    48.4
    %
    
    
    62.1
    %Q306
    
    
    7
    
    
    $
    50,969
    
    
    $
    58,956
    
    
    
    60.7
    %
    
    
    77.1
    %Q406
    
    
    3
    
    
    $
    26,086
    
    
    $
    32,041
    
    
    
    54.9
    %
    
    
    55.2
    %29
    
    
    $
    178,807
    
    
    $
    203,130
    
    
    
    56.3
    %
    
    
    64.9
    %2007:Q107
    
    
    9
    
    
    $
    64,807
    
    
    $
    76,781
    
    
    
    47.7
    %
    
    
    47.7
    %Q207
    
    
    12
    
    
    $
    161,314
    
    
    $
    185,580
    
    
    
    56.2
    %
    
    
    56.2
    %21
    
    
    $
    226,121
    
    
    $
    262,361
    
    
    
    53.2
    %
    
    
    53.2
    %50
    
    
    $
    404,928
    
    
    $
    465,491
    
    
    
    54.4
    %
    
    
    57.7
    %
  26




---



##### 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;
    
    Operating expenses, and
    
    Other anticipated liquidity needs.
  27




---



##### Table of Contents



As of June 30, 2007Asset:
    
    Yield
    
    Deployment RatioLoans
    
    
    12.46
    %
    
    
    87.0
    %
    
    
    89.0
    %
    
    
    91.0
    %
    
    
    93.0
    %
    
    
    95.0
    %
    
    
    97.0
    %Cash
    
    
    4.40
    %
    
    
    13.0
    %
    
    
    11.0
    %
    
    
    9.0
    %
    
    
    7.0
    %
    
    
    5.0
    %
    
    
    3.0
    %Earnings Assets
    
    
    
    
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Weighted Average
Yield on Earning
Assets
    
    
    
    
    
    
    11.41
    %
    
    
    11.57
    %
    
    
    11.73
    %
    
    
    11.90
    %
    
    
    12.06
    %
    
    
    12.22
    %
  Distributions to Members
  Supplemental Liquidity
  28




---



##### Table of Contents



Liquidity and Capital Resources
      29




---



##### Table of Contents



30




---



##### Table of Contents



Cash Flows
    31




---



##### Table of Contents



Critical Accounting Policies
 Revenue Recognition
  Mortgage Loan Valuation, Loans-In-Process, Participations Sold, Whole Loans Sold and
Unearned Income
     32




---



##### Table of Contents




    
    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;
    
    prevailing economic conditions;
    
    historical experience;
    
    evaluation of industry trends; and
    
    nature of collateral and volume of the loan portfolio.
   33




---



##### Table of Contents



Use of Estimates
  Fund Expenses
  
 Item 3. Quantitative and Qualitative Disclosures about Market Risk.
    34




---



##### Table of Contents



CurrentWeighted
    
    
    AnnualCurrent
    
    
    Average
    
    
    Interest
    
    
    Change in Interest Income with a Change in the Prime Interest Rate (Basis Points)Loan Rates:
    
    Principal
    
    
    Yield
    
    
    Income
    
    
    -200
    
    
    -100
    
    
    -50
    
    
    +50
    
    
    +100
    
    
    +200Fixed
    
    $
    178,515,372
    
    
    
    12.26
    %
    
    $
    21,885,985
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Variable
    
    
    80,099,402
    
    
    
    12.49
    %
    
    
    10,004,415
    
    
    
    (536,428
    )
    
    
    (395,610
    )
    
    
    (299,401
    )
    
    
    400,497
    
    
    
    800,994
    
    
    
    1,601,988Totals
    
    $
    258,614,774
    
    
    
    12.33
    %
    
    $
    31,890,400
    
    
    $
    (536,428
    )
    
    $
    (395,610
    )
    
    $
    (299,401
    )
    
    $
    400,497
    
    
    $
    800,994
    
    
    $
    1,601,988
  CurrentWeighted
    
    
    AnnualCurrent
    
    
    Average
    
    
    Interest
    
    
    Change in Interest Income with a Change in the Prime Interest rate (Basis Points)Loan Rates:
    
    Principal
    
    
    Yield
    
    
    Income
    
    
    -200
    
    
    -100
    
    
    -50
    
    
    +50
    
    
    +100
    
    
    +200Fixed
    
    $
    197,894,569
    
    
    
    12.20
    %
    
    $
    24,139,748
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Variable
    
    $
    207,023,914
    
    
    
    12.72
    %
    
    $
    26,326,313
    
    
    $
    (807,919
    )
    
    $
    (611,977
    )
    
    $
    (433,811
    )
    
    $
    1,035,120
    
    
    $
    2,070,239
    
    
    $
    4,140,478$
    404,918,482
    
    
    
    12.46
    %
    
    $
    50,466,061
    
    
    $
    (807,919
    )
    
    $
    (611,977
    )
    
    $
    (433,811
    )
    
    $
    1,035,120
    
    
    $
    2,070,239
    
    
    $
    4,140,478
  Loan Rates:
    
    Matured
    
    
    Q3 2007
    
    
    Q4 2007
    
    
    Q1 2008
    
    
    Q2 2008
    
    
    TotalVariable
    
    $
    2,252,670
    
    
    $
    26,191,192
    
    
    $
    35,970,297
    
    
    $
    12,776,309
    
    
    $
    129,833,445
    
    
    $
    207,023,914Fixed
    
    
    19,760,381
    
    
    
    92,124,243
    
    
    
    34,085,743
    
    
    
    49,509,526
    
    
    
    2,414,675
    
    
    
    197,894,569$
    22,013,052
    
    
    $
    118,315,435
    
    
    $
    70,056,040
    
    
    $
    62,285,836
    
    
    $
    132,248,120
    
    
    $
    404,918,482
 35




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##### Table of Contents



Item 4T. Controls and Procedures
 Disclosure Controls and Procedures
    Changes to Internal Control over Financial Reporting
   36




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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.
  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.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  37




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##### Table of Contents



Member Investments
    
    
    RedemptionsAdditional First
    
    
    Additional
    
    
    ReinvestmentInitial Investment
    
    
    Year Contributions
    
    
    Contributions
    
    
    Contributions
    
    
    Full
    
    
    Partial
    
    
    NetInception
through December 31, 2006 TotalsDollars
    
    $
    195,480,349
    
    
    
    39,949,554
    
    
    
    39,293,907
    
    
    
    17,540,363
    
    
    
    (19,343,845
    )
    
    
    (14,166,043
    )
    
    
    258,754,285# Members
    
    
    1,512
    
    
    
    432
    
    
    
    515
    
    
    
    
    
    
    
    (136
    )
    
    
    (154
    )
    
    
    1,376# Units
    
    
    19,548
    
    
    
    3,995
    
    
    
    3,929
    
    
    
    1,754
    
    
    
    (1,934
    )
    
    
    (1,417
    )
    
    
    25,8752007January 1  March 31Dollars
    
    $
    63,396,594
    
    
    $
    1,681,413
    
    
    $
    16,598,651
    
    
    $
    4,932,617
    
    
    $
    (2,412,438
    )
    
    $
    (6,892,431
    )
    
    $
    77,304,406# Members
    
    
    425
    
    
    
    20
    
    
    
    205
    
    
    
    2,881
    
    
    
    (20
    )
    
    
    (41
    )
    
    
    405# Units
    
    
    6,340
    
    
    
    168
    
    
    
    1,660
    
    
    
    493
    
    
    
    (241
    )
    
    
    (689
    )
    
    
    7,730April 1  June 30Dollars
    
    $
    69,525,084
    
    
    $
    7,654,680
    
    
    $
    14,536,836
    
    
    $
    6,173,934
    
    
    $
    (2,672,556
    )
    
    $
    (8,669,650
    )
    
    $
    86,548,329# Members
    
    
    649
    
    
    
    90
    
    
    
    203
    
    
    
    3,715
    
    
    
    (21
    )
    
    
    (42
    )
    
    
    628# Units
    
    
    6,953
    
    
    
    766
    
    
    
    1,454
    
    
    
    617
    
    
    
    (267
    )
    
    
    (867
    )
    
    
    8,6552007 YTD TotalsDollars
    
    $
    132,921,678
    
    
    $
    9,336,093
    
    
    $
    31,135,487
    
    
    $
    11,106,551
    
    
    $
    (5,084,994
    )
    
    $
    (15,562,080
    )
    
    $
    163,852,735# Members
    
    
    1,074
    
    
    
    110
    
    
    
    408
    
    
    
    6,596
    
    
    
    (41
    )
    
    
    (83
    )
    
    
    1,033# Units
    
    
    13,292
    
    
    
    934
    
    
    
    3,114
    
    
    
    1,111
    
    
    
    (508
    )
    
    
    (1,556
    )
    
    
    16,385Inception To DateDollars
    
    $
    328,402,027
    
    
    $
    49,285,648
    
    
    $
    70,429,393
    
    
    $
    28,646,914
    
    
    $
    (24,428,839
    )
    
    $
    (29,728,123
    )
    
    $
    422,607,020# Members
    
    
    2,586
    
    
    
    542
    
    
    
    923
    
    
    
    6,596
    
    
    
    (177
    )
    
    
    (237
    )
    
    
    2,409# Units
    
    
    32,840
    
    
    
    4,929
    
    
    
    7,043
    
    
    
    2,865
    
    
    
    (2,443
    )
    
    
    (2,973
    )
    
    
    42,260
 38




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##### Table of Contents



Item 6. Exhibits
 Exhibit No.
    
    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
 
 *
    
    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. 39




---



##### Table of Contents



SIGNATURES
  Date: August 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) 40




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    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
 
 *
    
    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. 41