LCGF-PPT-Rev-Final-Capital-Summit-.pptx

ASSET-BACKED
INVESTMENTS
Overview

MISSION STATEMENT:
By Investing in socially responsible ways we will achieve
a heightened level of returns for our investors while
preserving and empowering homeownership and building
better neighborhoods throughout our country

Founding Partners:
Legacy Capital Group (LCG), has been founded to
cultivate current opportunities in the mortgage backed
investments space. Merging the expert capacities of
Pinnacle Investments, and A.K.P. Acquisitions Group, with
over 42 years of combined experience in the space LCG
will be an investment powerhouse.

First Round Capital Raise:
Legacy Capital Group (LCG), has been approached by a
major Wall Street firm, who reviewed our business
plan and offered us leverage capital to purchase large
pools of NPL’s monthly. Since then we have decided to
increase our first-round capital raise from $50M to
$100M.

Opportunities
continued
 Just because the economy is improving; don’t assume that bad debt has gone away or distressed real estate
doesn’t exist
 LCG estimates a $60 billion delinquent mortgage market opportunity in the United States(1)
 LCG has an extensive track record of success in the non-performing loan (NPL) market sector
U.S. Single Family Mortgage Originations(2) U.S. Mortgage Default Rate(3)
0%
10%
20%
30%
40%
50%
Total Mortgage Market Subprime

Favorable Macroeconomic Environment
Banking
Affected by
Dodd Frank
Dodd Frank’s regulatory measures have increased capital requirements for banks and related institutions, which
have increased operating and compliance costs
– U.S. subprime lending levels have increased 45% in 2015 year-over-year, resulting from lenders’ continued reliance on third
party data that assess a consumers’ ability to repay instead of relying on FICO scores(1)
– Banks are securitizing to improve regulatory compliance and meet capital requirements; Securitization volumes have not
reached pre-crisis levels, but continue to trend upward
– Small banks with less than $50 billion in assets are subject to limiting lending activity to avoid regulatory restrictions(2)
– Mortgage lending volume has achieved $2.0 trillion, showing an increase from post-crisis lows of $1.5 trillion
– Freddie Mac has accelerated non-performing single family loan sales from $0.6 billion in 2014 to $2.9 billion in 2015
Slow Recovery
of U.S.
Residential
Residential real estate across the US is slowly recovering from one the most severe corrections in recent history
• Consumers’ increasing reliance on home equity loans have increased subprime issuance
• Midwest has not recovered as well as coasts; shifting demography from continued urbanization and later-stage family
formation creating pockets of over supply in the Midwest and certain other areas
• Millions of US home owners in the Midwest have negative equity in their home and are unable to refinance
• Approximately 1.2 million houses are delinquent or in some stage of foreclosure(3)
• Aggregate U.S. foreclosure inventory is 456,000 homes(3)
Recovering
Market Presents
Unique
Opportunities
Recovering market creates a unique opportunity to invest in distressed loans and undervalued properties. And, the
commercial market could be heading for a major reset in underlying financing
– Recovering economy is not uniform across the country, especially in economically depressed pockets in the Midwest
– Commercial loan delinquency rates of 0.85% in October 2016 on a total U.S. non-farm, non-residential mortgage loan
outstanding of $2.6 trillion implies a $22 billion market opportunity(4)
– Today, non-performing residential and commercial whole loans continue to be sold at discounted prices
– Limited competition as large institutional investors cannot justify purchase or workout of small pools
– Individual investors are unaware of the asset class or overwhelmed by complications associated with this form of investing
Source: Freddie Mac
(1) Source: Equifax
(2) Source: The Economist
(3) Source: Core Logic as of January 2016

LCG Arbitrage Model $100M monthly deployment
 Acquiring and restructuring 1st lien Single Family Residential mortgages to increase value from the earning power of
the loan itself, resale loans that do not modify
 Opportunity to acquire residential whole loans in medium size pools of 25 to 300 assets ($3-100MM) at a discount
provides unique value add model
Path to Increased Value
Selection Criteria
• Loan acquisition price is typically 45-75% of current property value or
UPB, whichever is lowest
Due Diligence
• Pre-acquisition process limits exposure and increases value by:
─ Conducting an internal Broker Price Opinion (BPO) to achieve an
accurate valuation on every asset
• Eliminates “problem” assets from the pools prior to closing or targets
those loans for resale
• Multiple exit strategies planned before acquisition
Value Add and Workout Process
• Our modification and servicing team contacts all borrowers as soon
as permissible to present all modification options
• Loans not suited for modification are earmarked for resale
• Resale strategy is initiated and implemented within 90 days or less
Value Stack as a % of Property Value
20-45%
45-70%

LCG Adds Value Throughout the Process
Sourcing Opportunities
LCG sources and evaluates a large
number of whole loan opportunities
with a focus on value
Exit Strategy
LCG remarkets the loan, or modify loan
on property to add value.
Due Diligence
LCG conducts extensive due
diligence on each asset to quantify
value of underlying collateral
Asset Management
LCG seeks to create additional value
through modification of loan

THE FOLLOWING PAGES DEMONSTRATE
INDIVIDUAL LINE ITEMS FROM A POOL
ACQUISITION

Case Study 1: Mt Morris, MI Non Performing to Performing
Commentary Investment Overview
Loan Origination Date: 9/17/2003
Original Principal Balance: $54,000
Monthly P&I Payment: $384
Interest Rate: 10.00%
Location: Mt. Morris, MI
Current Status: Occupied
Current Loan Status: Performing
Unpaid Principal Balance (UPB):$40,235
Property Value (30-Day Sale): $30,000
Acquisition Price: $6,060
Percentage of UPB: 15%
Percentage of Current Value: 20%
Property Photograph
• Non-Performing Loan on single family residence
• LCG purchased $54,000 loan for $6,060 November 2013
• Internal valuation, home inspection, title work, collateral review
• Assessment: Modify and hold for long term cash-flow
• Approached borrower who agreed to repay loan under original
terms
• Worked out and re-performing in 90 days
• Total cash flow since acquisition: $15,090 to date
• Possible exit strategy: Remarket loan/property package
• A Lender offered to purchase the loan in full for $33,924
• Net cash realized: $9,030 to date

Case Study 2: Detroit, MI Non Performing Rehab and Sale
Commentary
 Non-Performing Loan on Single Family Residence
 Purchased $52,500 loan for $4,000 March of 2016
 Internal valuation, home inspection, title work, collateral
review yielded the following assessment:
– Borrower deceased, a relative occupied home
– Best case strategy: Foreclose, Rehab/Remodel and list
for sale
– Fallback strategy: (RTO) Rent to Own, new lessee
– Rehabilitation with total spend of $55,000 including legal
and acquisition expenses
 Turnover: 10 months from purchase to sale
 Property sold for $121,500 net of commissions, fee
 Net cash realized: $66,500
Investment Overview
Loan Origination Date : 12/19/2005
Location: Detroit, MI
Current Loan Status: Foreclosed
Property Photograph

Case Study 3: Detroit, MI Non-Performing to
Performing Loan
Location: Detroit, MI
Current Loan Status: Performing
Property Photograph
 Purchased $80,000 loan for $16,001 March of 2016
 Internal valuation, physical inspection, title work, collateral
review and interviews with local agents and municipalities
– Best-case strategy: Approach Borrower with loan
modification proposal
– Loan was re-performing 90 days from acquisition and
continues to date – 3 full quarters
 Total cash flow since acquisition: $19,150
 Loan/property package may be remarketed to bank

Case Study 4: Grand Rapids, MI Non-Performing Foreclose/Sale
 Purchased $56,900 loan for $28,000 in March of 2016
 Internal valuation, physical inspection, title work, collateral
review and interviews with local agents and municipalities
– Best case strategy: Obtain a Deed in Lieu of
Foreclosure, conduct rehab and retail sale
– Borrower initially agreed to loan modification and offered
to repay arrearages using retirement funds
– Borrower did not follow through, foreclosed
– Day of the Sheriff Sale, Borrower files Chapter 13
– Aggressively litigates bankruptcy and follows through
with successful Sheriff Sale
– Sheriff Sale nets $69,000 January of 2017
 Length of time to workout: 11 Months plus $4,000 expenses
 Net cash realized: $37,000
Location: Grand Rapids, MI
Current Loan Status: Foreclosed
Property Photograph

Strategy Illustration: New York City Non Performing Loan
 Non Performing Loan on Single Family Residence
 Purchased $279,000 loan for $32,000 in January of 2017
 Internal valuation, BPO, physical inspection, title work and
collateral review, interviews with local agents, municipalities
 Projected return: 50% net of expenses
 Exit strategy options:
– Foreclose and sell for $100,000
– Foreclose/Rehab for $25-40K and sell for $185,000
 Length of time to work out:
– Anticipated 12-18 months
Interest Rate: 5.0%
Location: Wyandanch, NY
Current Status: Vacant
Current Loan Status: Non-performing
Property Photograph

Pinnacle Investments is a nationwide principal buyer of 1st lien
performing and non-performing real estate notes. Troy has
assembled a team of professionals whose main focus is to
quickly assemble and close each and every transaction. He has
done over 15,000+ real estate note deals since 1996, through a
combination of both single and bulk transactions.
Troy built the first distressed asset fund on Wall Street for non-
performing residential mortgages back in early 2007 to capitalize
on the market crash. He spent 2 years running the distressed
asset fund which operated and produced a solid 91.15% IRR for
himself and the investors that were involved, in late 2008 he
sold off his majority interest in the fund to a Wall Street Capital
group.
The core focus of the fund was purchasing first lien NPN’s and
modifying the loans to preserve home ownership for
homeowners. He helped over 1700 people stay in their homes
during his time at the fund.
DIRECTORS OF LEGACY CAPITAL GROUP
Troy Fullwood, Founder
Pinnacle Investments
www.pinnacle-investments.com

DIRECTORS OF LEGACY CAPITAL GROUP
Experience is a great teacher and Darron Ross is no stranger to
adversity. During the 2006 Real Estate Crash, Mr. Ross suffered
greatly losing his primary residence to foreclosure. This lesson
led him to study and consume all components of the Real Estate
Industry.
Ross has established extensive experience with private capital
investors in a myriad of industry sectors spotlighting
negotiations, acquisitions, dispositions and renovation of
residential and multi-family properties. He manages acquisition
due diligence, property evaluations, inspections, appraisals, and
implements all property maintenance and rehabilitation
programs.
Under the tutelage of some of the most skilled minds in Real
Estate, Darron Ross is confirmed to be an exceptional talent in
multiple facets of the industry. Founder and president of A.K.P.
Acquisitions Group, where he focuses on investors relations,
capital management, and asset acquisition. Prior to joining
Legacy Capital Group (LCG), Darron has had immense success in
raising and leveraging private capital, while building strong bank
and asset management relations.
Darron Ross
Founder of A.K.P. Acquisitions Group
www.akpacquisitions.net

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