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Mortgage Secured Notes

Mortgage Secured Notes

Mortgage Secured Notes (MSNs) are only available for purchase through broker dealers and not through Korth Direct Mortgage directly. Investors purchasing MSNs should fully understand the risks involved with these securities and have a willingness to assume the risks listed in the RISK FACTORS section of this site.

What does Korth Direct Mortgage (KDM) do?

KDM originates and sources commercial real estate first lien mortgages. Simultaneously, it issues Mortgage Secured Notes to fund the financing the commercial real estate lending. Each MSN is tied to the specific property that it funds.

About MSNs

Each Mortgage Secured Note offering on the KDM platform is a syndication of a single loan made by KDM to a Borrower. A loan is evidenced by a promissory note and secured by a first mortgage on a specific commercial or multi-family residential property. The Borrower is a special purpose entity created solely to own the Property to borrow money evidenced by the Loan and grant the Mortgage.

  • MSNs are notes secured by first lien mortgages.
  • Each MSNs provides a means for investors to own an undivided interest in a commercial mortgage loan.
  • Although KDM is the issuer, the cash flow that pays the Note flows directly from the underlying mortgage. A default by the borrower does not constitute a default by KDM.
  • In most cases, KDM will also be servicing the loans and handling any foreclosure and liquidation proceedings of the property.
  • Where applicable, KDM will include an assignment of rents from the underlying property in the event of borrower default.
  • MSNs are typically offered in $1,000 increments with a minimum purchase of $50,000.
  • MSNs are offered through broker dealers and trade book entry.

Who sells MSNs?

MSNs are distributed by broker dealers. You can find a list of participating broker dealers by contacting J W Korth & Company, the Underwriter at This email address is being protected from spambots. You need JavaScript enabled to view it.. The Underwriter and participating broker/dealers are responsible for determining sutiability and investor qualifications.

Taxation

Each investor should consult a tax advisor before purchasing a participation in this loan. It is expected that all interest received will be taxable as ordinary income unless held in a tax deferred account. Interest received on MPIs will be paid into each participant’s brokerage account and that the interest and principal received will be recorded on each participant’s brokerage account tax statements.