Quarterly Update - 2013 Q1

April 2013

Dear Rubicon Mortgage Fund Investor:

Management at Rubicon Mortgage Fund, LLC (“the Fund”) is pleased to announce that the first quarter return for the Fund in 2013 was 7.17% (assuming investors reinvested their distributions monthly). 

The Fund currently has 31 loans in its portfolio and holds two REO properties. We funded five new loans during the first quarter totaling approximately $2,000,000, and we received three pay offs from current borrowers. The Fund’s portfolio of loans currently consists solely of first trust deeds. The portfolio of loans remains strong and as a whole management is pleased with the Fund’s overall position.

Troubled Loan and REO Status Updates:

Nehalem, Oregon (NOD):
The Fund made a loan in June of 2009 secured by two rental properties along the Nehalem River just off the coast south of Cannon Beach, Oregon. After three years of consistent monthly interest payments, one of the properties was sold with the proceeds paying the loan down to $235,000. The remaining property has been on the market priced from $365,000-$400,000.  Since the borrower has been unable to make his payments despite some rental income on the property, we may be forced to foreclose.  The property was purchased for $400,000 with an additional $100,000 invested in improvements just prior to the Fund financing the original loan. The house is now in escrow with an all cash offer. (There is also a back-up offer for a higher purchase price should this transaction not close.)  If the current escrow does close the Fund would receive 100% of its outstanding principal, late fees and accrued interest.

Fund Growth and Outlook for 2013:

The fund added eleven new investors this quarter and several existing investors added capital for a total increase of about $1,300,000. This consistent growth has allowed the fund to continue to diversify its portfolio while remaining focused on quality loans.

As we have communicated in our prior quarterly letters, interest rates and fees have dropped in all sectors of our Industry thus keeping our returns modest.  Our loan underwriting criteria continues to focus on quality deals.  However by focusing on quality (and subsequently reducing our risk), our rate of return to investors may be lower. We still believe our targeted compounded rate of return for the Fund in 2013 of 7.75% is achievable.

Please note that our best sources of referrals come from our current stable of Investors.  Please feel free to give our contact information to any interested colleagues, and as always, contact us directly with any questions.

Sincerely,

Rubicon Management