Disclaimers - Charlotte Wealth Partners

Disclosures and Disclaimers and Risks

DISCLOSURE

Neither A+ Results, LLC, Charlotte Wealth Partners, The Gold Seal Homes Group, LLC nor any of its affiliates or officers (the Company) does not guarantee or warrant that the data provided herein is accurate, complete, or current and shall not be liable to you for any loss or injury arising out of or caused in whole or in part by the acts, errors or omissions of A+ Results, whether negligent or otherwise, in procuring, compiling, gathering, formatting, interpreting, reporting, communicating or delivering the information contained in this website. The Company does not undertake any obligation to update, modify, revise or reorganize the information provided herein, or to notify you or any third party should the information be updated, modified, revised or reorganized. In no event shall A+ Results be liable to you or any third party for any direct, indirect, incidental, consequential or special damages (including, but not limited to, damages arising from the disallowance of a potential claim against a client of The Company or damages to business reputation, lost business or lost profits), whether foreseeable or unforeseeable and however caused, even if The Company is advised of the possibility of such damages. The Company is not in the business of providing professional or legal advice with respect to this publication and this publication should not be relied on as a substitute for financial, legal or other professional advice.DISCLAIMER

Not an Offer or a Solicitation of an Offer to Purchase or Sell Securities. This overview is for informational purposes and is not an offer to sell or a solicitation of an offer to buy any securities. Any offering or solicitation will be made only in compliance with securities laws of the countries and states where the investors reside.

RISK FACTORS

As with any investment there are many risk factors associated with any investment in real estate. It is incumbent upon the investor to understand and evaluate the risks and rewards and act according to their own willingness to accept the risks inherent in each type of investment.

Loss of Investment: An investor could lose some or all of his, her or its investment.
Lack of Diversification: Investing only in real estate and only in certain communities creates a concentration of risk that is not as strong when a portfolio is invested in a variety of investment classes that are geographically and politically diverse.
Lack of Liquidity: There is a secondary market for mortgages which is very lively, but there is typically a substantial discount incurred when a mortgage or promissory note is bought or sold.
Limited Transferability: There are few restrictions on transferring the interests in Mortgage notes.
Volatility: The performance of mortgage notes may be volatile if adjustable rates are involved or if economic conditions precipitate dislocations that result in foreclosures.
Fees: Fees are very limited and will not reduce the return on investment.
Taxes: The tax treatment of the earnings could be subject to challenges from the Internal Revenue Service.
Dependence Upon a Limited Group of Principals. The operations of the Company are substantially dependent upon the skill, judgment and expertise of a limited group of officers and employees. The death, disability or other unavailability of one or more of these individuals could be material and adverse to the Investor.
Managers Will Not Devote Full Time to The Company. The principals will devote as much time as each believes is necessary to the activities of the Company. They will not devote full time to the Company’s activities.
Fraud. The loan business in which the Company will operate has a significant amount of fraud. It is possible the Company will generate loans that are based on fraudulent information and such loans would probably result in a complete loss for the Investor.
Default and Prepayment Risks. The Company’s results of operations, financial condition and liquidity will depend, to a material extent, on the performance of loans in the Company’s portfolio. Obligors under contracts acquired by the Company may default during the term of their loan. Generally, the Company will bear the full risk of losses resulting from defaults. In the event of a default, the collateral value of the financed vehicle in most cases will cover the outstanding loan balance and costs of recovery.
The ability to accurately forecast loan performance will be critical to the Company’s success. Prior to making any loan, the Company will forecast future expected cash flows from that loan. There can be no assurance that estimates will be accurate or that loan performance will be as expected. Based on these forecasts, the Company will determine whether to fund any particular loan and a purchase price designed to achieve an acceptable return on capital. If the loan performance equals or exceeds original expectations, it is likely the target return on capital will be achieved. However, actual cash flows from any individual loan are often different than cash flows estimated at the inception of the loan.
Implementation of Business Strategy. The Company’s financial position, liquidity and results of operations will depend on the General Partner’s ability to execute the Company’s business strategy. Key factors involved in the execution of the Company’s business strategy will include achieving the desired loan origination volume, continued and successful use of confidential scoring models for credit risk assessment and risk-based pricing, the use of effective credit risk management techniques and servicing strategies, implementation of effective loan servicing and collection practices, continued investment in technology to support operating efficiency, continued expansion of new loan origination channels and continued access to funding and liquidity sources. The Company’s failure or inability to execute any element of its business strategy could materially adversely affect its financial position, liquidity and results of operations.
Target Consumer Base. The Company’s purchasing and servicing activities will involve sub-prime real estate receivables. Sub-prime borrowers are associated with higher-than-average delinquency and default rates. While the General Partners believes that the Company will effectively manage these risks with its confidential credit scoring system, risk-based loan pricing and other underwriting policies and collection methods, no assurance can be given that these criteria or methods will be effective in the future. In the event that the Company underestimates the default risk or under-price contracts that it purchases, the Company’s financial position, liquidity and results of operations would be adversely affected, possibly to a material degree.
Adverse changes in economic conditions, or in the real estate or finance industries or the sub-prime consumer market, could adversely affect the Company’s financial position, liquidity and results of operations. The Company will be subject to changes in general economic conditions that are beyond its control. During periods of economic slowdown or recession, such as the United States economy has at times experienced, delinquencies, defaults, foreclosures and losses generally increase. These periods also may be accompanied by increased unemployment rates, decreased consumer demand for real estate and declining values of houses securing outstanding loans, which weakens collateral coverage and increases the amount of a loss in the event of default. Significant increases in the inventory of homes during periods of economic recession may also depress the prices at which foreclosed houses may be sold or delay the timing of these sales. Additionally, unstable real estate values, reset of adjustable rate mortgages to higher interest rates, increasing unemployment levels, general availability of consumer credit or other factors that impact consumer confidence or disposable income could increase loss frequency and decrease consumer demand for real estate as well as weaken collateral values on certain types of homes. Because the Company will focus on consumers who do not qualify for conventional home financing, the actual rates of delinquencies, defaults, repossessions and losses on these loans may be higher than those experienced in the general real estate finance industry and could be more dramatically affected by a general economic downturn. In addition, during an economic slowdown or recession, the Company’s servicing costs may increase without a corresponding increase in the Company’s income. While the Company will seek to manage the higher risk inherent in loans made to sub-prime borrowers through the underwriting criteria and collection methods the Company will employ, no assurance can be given that these criteria or methods will afford adequate protection against these risks. Any sustained period of increased delinquencies, defaults, foreclosures or losses or increased servicing costs could adversely affect the Company’s returns, financial position, liquidity and results of operations and the Company’s ability to enter into future credit facilities.
Wholesale Auction Values. The Company will arrange for the sale of foreclosed homes at wholesale auction markets located throughout the United States. Auction proceeds from the sale of foreclosed homes and other recoveries are usually not sufficient to cover the outstanding balance of the contract, and the resulting deficiency is charged off. Decreased auction proceeds resulting from the depressed prices at which homes may be sold during periods of economic slowdown or recession will result in higher credit losses for the Company. Furthermore, depressed wholesale prices for homes may result from significant liquidations of rental or commercial inventories, and from increased volume of vacant homes or discounted homes due to struggling real estate developers or government sponsored promotional programs.
No Prior Operating History. Because the Company was formed in late 2009 it will very little operating history, there can be no assurance as to what the Company’s recovery rates or investment return will be in the future.
Interest Rates. The profitability of any private loan may be directly affected by the level of and fluctuations in interest rates, which affects the access to alternative funding sources available to Home Buyers, and may be advantageous or disadvantageous to the Private Lender. If the level of interest rates increases, the fixed nature and extended duration of the loans will be to the advantage of the Home Buyer and to the disadvantage of the Private Lender. If rates go down, the Home Buyer will be more inclined to refinance at a lower rate. This will reduce the lifetime earnings from the private loan because of early payoff.
The Company will monitor the interest rate environment and may employ hedging strategies designed to mitigate the impact of increases or decreases in interest rates and may adjust the recommended rates on private loans. The Company can provide no assurance, however, that hedging strategies will mitigate the impact of increases in interest rates.
Liquidity and Capital Needs. The Company’s ability to fund its operations and planned capital expenditures will depend on the Company’s ability to generate cash and raise more assets in the future. This, to a certain extent, will be subject to general economic, financial, competitive, legislative, regulatory, capital markets and other factors that are beyond the Company’s control. Because the Company expects to require substantial amounts of cash for the foreseeable future to purchase homes and fund their rehabilitation, the Company anticipates that it may choose to enter into debt financings. The type, timing and terms of financing selected by the Company will be dependent upon its cash needs, the availability of other financing sources and the prevailing conditions in the capital markets. There can be no assurance that funding will be available to the Company through these sources or, if available, that the funding will be on acceptable terms. If the Company is unable to achieve its expected rate of return on its contract portfolio, the Company could not have sufficient funds to finance new loan originations and, in such event, the Company would be required to revise the scale of its business, including possible discontinuation of home purchase activities, which would have a material adverse effect on the Company’s ability to achieve its business and financial objectives.
Leverage. The Company will not offer packages that initially exceed 70% exposure for private lenders. In some cases the Company may offer seller financing packages that reach initial 95% exposure. The Company will bear the risk of the additional initial exposure. Market changes could increase the amount of exposure if they cause home values to drop. The degree to which any property may be leveraged in the future may create risks including: (i) the Company may be unable to satisfy its obligations under its then outstanding indebtedness; (ii) the Company may find it more difficult to fund future operating costs, income tax payments, capital expenditures or general corporate purposes; (iii) the Company may have to dedicate a substantial portion of its cash resources to the payments on it’s then-outstanding indebtedness, thereby reducing the funds available for operations and future business opportunities; and (iv) the Company may be vulnerable to adverse general economic, capital markets and industry conditions. It is anticipated that the indebtedness will be secured by the assets of the Company.
Labor Market Conditions. Competition to hire and retain personnel possessing the skills and experience required by the Company to operate its collections and evaluation of loans could contribute to an increase in the Company’s employee turnover rate. High turnover or an inability to attract and retain qualified personnel could have an adverse effect on the Company’s delinquency, default and net loss rates, the Company’s ability to grow and, ultimately, the Company’s financial condition, results of operations and liquidity.
The substantial regulation to which the Company will be subject will limit the business and could result in potential liability. The Company’s business will be subject to various laws and regulations which require licensing and qualification; limit interest rates, fees and other charges associated with the loans originated by the Company; require specified disclosures by dealer-partners to consumers; govern the sale and terms of ancillary products; and define the rights to foreclose, evict and sell collateral. Failure to comply with, or an adverse change in, these laws or regulations could have a material adverse effect on the Company by, among other things, limiting the jurisdictions in which the Company may operate, restricting the ability to realize the value of the collateral securing the loans, making it more costly or burdensome to do business, or resulting in potential liability. In addition, governmental regulations which would deplete the supply of existing homes, such as municipal buy-back programs, could have a material adverse effect on the Company.
The sale of insurance products in connection with loans which may be assigned to the Company by dealers is also subject to state laws and regulations. As the holder of loans that contain these products, some of these state laws and regulations may apply to the Company’s servicing and collection of the loans. Although the Company does not believe that such laws and regulations will significantly affect its business because it will not deal directly with consumers in the sale of insurance products, there can be no assurance that insurance regulatory authorities in the jurisdictions in which such products are offered by dealer-partners will not seek to regulate or restrict the operation of the business in such jurisdictions. Any such action could materially adversely affect the income received from such products. In some cases the cost of an insurance product or warranty may also be amortized into the periodic payment required from the Home Buyer.
Due to increased competition from traditional financing sources and nontraditional lenders, the Company may not be able to compete successfully. Competition in the field of home finance exists. The home finance market is highly fragmented and is served by a variety of financial entities including the captive finance affiliates of major banks, thrifts, credit unions, independent finance companies and “buy here, pay here” developers at which developers finance consumers’ purchases and service the loans themselves. Many of these competitors have substantially greater financial resources and lower costs of funds than the Company will have. In addition, the Company’s competitors often provide financing on terms more favorable to home purchasers or dealers than the Company will offer. Many of these competitors also have long standing relationships with house developers and real estate agencies and may offer other forms of financing, including adjustable seller financing or revolving credit products, which will not be provided by the Company. Providers of home financing have traditionally competed on the basis of interest rates charged, the quality of credit accepted, the flexibility of loan terms offered and the quality of service provided to lenders and customers. There can be no assurance that the Company will be able to compete successfully in this market or against these competitors.
Litigation in which the Company could be involved from time to time may adversely affect its financial condition, results of operations and cash flows. As a result of the consumer-oriented nature of the industry in which the Company will operate and uncertainties with respect to the application of various laws and regulations in some circumstances, the Company will be subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful foreclosure, violations of bankruptcy stay provisions, title disputes, fraud and breach of contract. Some litigation against the Company could take the form of class action complaints by consumers. As the assignee of finance contracts originated by private lenders, the Company may also be named as a co-defendant in lawsuits filed by consumers principally against lenders. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages. The General Partners believes that the Company will take prudent steps to address and mitigate the litigation risks associated with the Company’s business activities. However, any adverse resolution of litigation pending or threatened against the Company could have a material adverse affect on the Company’s financial condition, results of operations and cash flows.