FREEDOM Mortgage Final BP(3)

Ken Parker, Co-Founder | 408.575.1714 | [email protected] | Prepared by Growthink Inc.

FREEDOM Home Mortgage Inc.

Executive Summary January 2014

2 The Company | FREEDOM Funding Company.

Disclaimer

This Business Plan (and any and all drafts and parts thereof) is/are based upon information supplied by the Company, its managing executives and its stockholders or membership shareholders (collectively “the company” and/or “management”), and is being furnished on a confidential basis, solely for use by prospective investors in and/or potential strategic business associates of the company (collectively “recipient”). The use or distribution of this Business Plan to any other parties or for any other purpose is not authorized. Neither the company nor any of its employees, affiliates or representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of any of the information contained in this Business Plan or in any other written or oral communication transmitted or made available to a recipient. Each of such parties expressly disclaims any and all liability relating to or resulting from the use of this or such communications by a recipient or any of its affiliates or representatives. Only those specific, express representations and warranties, if any, which may be made to a recipient in one or more definitive written agreements when, as and if executed, and subject to all such limitations and restrictions as may be specified in such definitive written agreements, may be relied on by a recipient or have any legal effect whatsoever. Material portions of the information presented in this Business Plan constitute “forward-looking statements” which can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “estimate”, “plan”, or “continue” or the negative form thereof or other variations thereon or comparable terminology. Such forward-looking statements represent the subjective views of the management of the company, and management’s current estimates of future performance are based on assumptions which management believes are reasonable but which may or may not prove to be correct. There can be no assurance that management’s views are accurate or that management’s estimates will be realized, and nothing contained herein is or should be relied on as a representation, warranty or promise as to the future performance or condition of the company. Industry experts may disagree with these assumptions and with management’s view of the market and the prospects of the company. The sole purpose of this Business Plan is to assist a recipient in deciding whether to proceed with further investigation but this Business Plan does not purport to contain all material information that an interested party might consider in investigating the company. A recipient should conduct his or her own independent analysis and investigation. This Business Plan should not be construed to indicate that there has been no change in the financial condition, business, operations, plans or other affairs of the company since the date of preparation. The company does not expect to update or otherwise revise this Plan to reflect any such changes. No representation or warranty of any kind is made with respect thereto. The recipient of this Business Plan acknowledges and agrees that: (a) all of the information contained herein or received in written or oral form from the company will be kept confidential; (b) the recipient will not reproduce this Plan, in whole or in part; (c) if the recipient does not wish to pursue this matter, it will return the Business Plan to the company as soon as practicable, together with any other material relating to the company which the recipient may have received from the company; and (d) proposed actions by the recipient which are inconsistent in any manner with the foregoing agreement will require the prior written consent of the company, which may be granted or withheld in the Company’s sole discretion. THIS BUSINESS PLAN IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. The company reserves the right, in its sole discretion, to reject any and all proposals made by or on behalf of any recipient, to accept any such proposal, to negotiate with one or more recipients at any time, and to enter into a definitive agreement without prior notice to other recipients. The company also reserves the right to terminate, at any time, further participation in the investigation and proposal process by, or discussions or negotiations with, any recipient without reason.


TABLE OF CONTENTS

The Company .......................................................................................................................................... 4

Management Team and Advisors ........................................................................................................ 6

Market Opportunity ................................................................................................................................ 7

Competitive Framework ......................................................................................................................... 9

Marketing Plan ....................................................................................................................................... 11

Financial Plan ......................................................................................................................................... 13

Appendix ................................................................................................................................................ 16


FREEDOM Funding Company’s mission is threefold:

§ To provide a fair and affordable lending protocol for Americans to purchase their homes

§ To help America fix its distressed housing market

§ To donate its net proceeds to charitable initiatives

THE COMPANY O V E R V I E W

The Freedom Home Mortgage and Freedom Funding Co are part of a three-piece national program designed to help restore our nation’s economy. It is separate from the second piece which is a proposed congressional bill to help existing homeowners modify their mortgage payment to 4%. The Third piece is the Freedom Foundation which is a non-profit 501(c) 3 dedicated to supporting other nonprofit organizations.

Freedom Funding Co (also referred as “The Funding Company” or the “Company”)is the only business that offers a U.S. home purchase mortgage at 4% fixed annual rate based on an applicant’s debt/income ratio (and is not FICO score driven).

This privately funded program also has unique funding guidelines with a lending limit of $2.5 million per mortgage. It is tailored for both homebuyers and existing homeowners who own their primary residence debt free and wish to purchase another home.

E L I G I B I L I T Y § Prospective home purchaser must be a U.S. citizen § Restricted to first mortgage only, no additional liens permitted or allowed § The home has to be the primary residence (unless the prospective borrower already owns a home

free and clear), making a new purchase available for investing in a vacation or rental property. § In addition, the program allows homebuyers who were previously ineligible to now re-enter the

housing market.

A P P L I C A T I O N P R O C E S S I N G § The Freedom Home Mortgage is implemented by a major portfolio lender, allowing qualification,

implementation, and funding for applicants. § While standard lending limits need to be met, FICO scores do not apply. All forms are modified

accordingly to mortgage program enforcement guidelines. § The borrower’s debt is verified from the credit report to determine their capacity to service the

mortgage payments. The program will follow the Dodd Franks debt equity guidelines The borrower’s credit is not to exceed these debt ratios. Borrowers cannot use credit cards over their limit, or get new debt that would exceed these limits.1

§ Income verification is used to determine each applicant’s debt ratio (six months payroll statements or W2). If the borrower’s income increases while enrolled in the Freedom Home Mortgage they may apply for an income reassessment2 to allow for a higher credit allowance.

§ The 4% interest rate is fixed for 5 years with a yearly adjustable arm for the balance of 30 years total.

1 Any major purchases with credit (i.e. a vehicle) will still have to be checked and approved not to exceed their maximum ratio. 2 A $100.00 fee will be charged to cover administrative costs and the issuance of a current credit report


§ There is a maximum mortgage enrollment period of one year up to eighteen month, after which the program will no longer be available.

§ All borrowers wave any kind of anti-deficiency right by signing an “anti-deficiency wavier” – protecting investors from default risk.

P R O F I T S D O N A T E D T O C H A R I T A B L E I N I T I A T I V E S Profits derived from the mortgage program will flow into a charitable 501(c) 3 Foundation that will provide support to other 501 (c) 3 charitable organizations.

A W I N - W I N P A R A D I G M Banks give priority to the Freedom Home Mortgage product due to the larger origination fees involved, ease of funding, greater income passed directly to customers through higher savings account rates, and because it will allow banks to fund the high-tier market loans, which are currently underserved. The refinance market has shrunk considerably and the mortgage industry is shifting back to home purchase financing. It is effectively an innovative and specialized product for a substantial market niche.

Borrowers using the Freedom Home Mortgage benefit from a very affordable home financing solution. In addition, borrowers that cannot be served under the traditional mortgage system can be approved under the fair guidelines of FREEDOM Home Mortgage.

Investors providing the lending capital “to purchase mortgage paper” receive notes bearing a minimum interest of 3%+ and secured with claims on U.S. real estate. The investor has a cushion of the borrower’s down payment and required debit-equity ratios. Further, secured underwriting guidelines also require all borrowers to be responsible for repaying their mortgage commitment by waving any kind of anti-deficiency rights. In addition, investors that are seeking to meet social and ethical investment criteria can find a perfect balance with high returns and the pride of helping the recovery of the U.S. real estate market in this program. The Company is currently lobbying for a congressional bill, which when passed will provide tax-free returns and other financial benefits for all “Investors purchasing mortgage papers.”

B U S I N E S S M O D E L Freedom Funding Company operates under the following directives:

§ Mortgage amounts: Because the program allows for a maximum of $2.5 million per mortgage, the FREEDOM Mortgage can be marketed immediately to a pent up real estate demand in both mid-tier and upper-tier real estate.

§ Underwriting entities: Freedom Funding Co underwrites from 85% up to 100% of the mortgage amount through privately funded capital; the borrower’s Mortgage originator underwrites the Difference. The private capital provided for lending activity is to be repaid per a standard amortization schedule.

§ Funding fees: Funding closing fee of 1% applies and covers all administrative fees providing for the balance of the proceeds to flow into the Freedom Foundation. The income to be realized will vary according to the amount financed.

§ Spread on the interest payment: The borrower pays a 4% annual interest (fixed monthly payments). Freedom Funding Co pays a minimum 3% annual interest on the same total mortgage amount to the investor(s) of the capital, therefore leaving a 1% interest rate spread to be used to pay broker/dealers, servicing organizations, and other fees associated with the mortgage. Any balance will flow into the funding company. Borrowers Option: Due to the mortgage guidelines it is estimated many borrowers will refinance or sell their properties after two or three years. The program is designed for borrowers to take advantage of the current real estate market.

6 Management Team and Advisors | FREEDOM Funding Company.

MANAGEMENT TEAM AND ADVISORS K E N N E T H P A R K E R , P R E S I D E N T A N D CEO Kenneth Parker has professional experience that spans many disciplines including international trade, solar energy consulting, luxury home building, resort developing and housing market analysis.

As the founder and owner of Parker Development, Ken has been responsible for the company’s marketing, cash flow analyses, budgets, banking relationships, contract negotiations, financial reporting and economic feasibility studies. Additionally, as a CEO he has experienced first-hand what it means to be a problem solver and trouble shooter in all areas of residential building.

Over the years, Parker Properties/Parker Development has worked on many residential and commercial properties including the 306 acre land assemblage in Sedona, various town home projects, the Ridge Spa and Racquet Club, and 18 Estate homes; some of which were featured in The Arizona Republic, Phoenix Magazine, Arizona Magazine, and Arizona Foothills.

Prior to Parker Properties/Parker Development, Ken honed his corporate business skills while working in New York City for one of the largest energy trading firms in the world. He then returned to his roots in Arizona, where he pioneered the first solar powered air-conditioner and simultaneously launched Parker Development as a licensed general contractor. It was through his involvement in solar and new home construction that he acted as a Regional Marketing Director for the Reynolds Metals Company in their nationwide effort to help market new homes with solar hot water.

He is a third generation Arizonian with strong ties to the community. Ken’s grandparents came to Arizona at the turn of the 1900's and Parker County, Texas is named after his descendants, as well as the inception of the Texas Rangers. He is a member of The First Families of Arizona.

Ken holds an undergraduate degree from Arizona State University as well as a Master's and Bachelor's Degree from the Thunderbird School of Global Management. He founded a youth ministry outreach program and personally provides aid to impoverished families and villages in Mexico.

L E E A L T O N , COO Lee Alton is currently President of Alton Financial Management, LLC. He provides daily money management services for individuals who lack the time or ability to manage their day to day finances. He also provides Estate Management and Estate Organization as well as fiduciary type services to his clients.

Prior to his position at Alton, he served for five and one half years as the COO of a highly successful Prison Ministry, where he developed the overall organizational structure to include special risk management considerations. He established and implemented company personnel policies, operational procedures, and employee benefits. Lee also designed the Ministry’s Web site and promotional materials, an initial 3 year strategic plan and annual budgets.

During his 26 year Air Force Career, Lee commanded several large Air Force organizations to include the 21st Tactical Fighter Wing, Elmendorf AFB Alaska, the 32nd Tactical Fighter Group, Netherlands where

he also served as the US Air Force Europe’s Country Representative for the Netherlands; and Commander of the F-15 Fighter Weapons Squadron (Air Force’s Top Gun equivalent).

Additionally, Lee held several Senior Staff positions including the following: Deputy Director, Air Force International Programs where he directed the management of the Air Force’s $72 billion security

7 Market Opportunity | FREEDOM Funding Company.

assistance programs for 108 countries around the world; Country Director, Office of the Secretary Of Defense, International Security Policy which developed DOD policy initiatives and analysis of policy options for European countries; and Director of Assignments, US Air Forces Europe (USAFE), where he managed the assignment of 59,000 officer and enlisted personnel throughout Europe. He retired as a Full Colonel.

EDUCATION:

Lee holds a Master’s Degree in Business from Webster College and a Bachelor of Science degree from the United States Air Force Academy. He completed graduate studies in international policy, history, management and decision-making. Lee is also a certified senior advisor and board member for two non-profit organizations.

G R E G J A N O S , CFO With over 30 years of experience, Gregory Janos is a seasoned executive in the mortgage and banking industry. He currently is a partner with 20-20 Financial, a firm that specializes in bank asset reviews, management reviews, and new capital investments. In the past few years, Greg has worked on multiple aspects of the industry including, mortgage repurchase reviews, regulatory reclassification of assets, foreclosure reviews, residential and commercial real estate asset purchase reviews, and new capital formation for troubled banks. His clients have ranged from the largest banks in the U.S. and Europe to small community banks.

Prior to this, he worked at Taylor Bean & Whittaker, where he was recruited to clean up a troubled portfolio and operations a of non-prime and commercial loan group. He was also the president and COO of Sun State Capital, a $1 billion dollar Savings Association, and he was the COO of First City Financial, a bank holding company with a large mortgage production and servicing division. Greg is also the founding director of a NYSE traded mortgage REIT, CEO, and COO of three other mortgage wholesale/retail companies that retained servicing.

S T R A T E G I C A D V I S O R S P O L S I N E L L I L A W F I R M Incorporation, Legal counsel, Private Placement Memorandum

G R O W T H I N K I N C . Strategic planning and analysis, Marketing Plan, Fundraising support

T O D D N I S S L E IP(?) protection regarding copy right laws, trademark and patent filing

D E S S A U L E S L A W G R O U P Advisory on the anti-deficiency portion of underwriting guidelines

D I G I T A L R I S K Digital Risk will be responsible for all risk, compliance and transaction management processing.

MARKET OPPORTUNITY M O R T G A G E M A R K E T O V E R V I E W Early this year, Ellie Mae, a leading provider of mortgage loan origination software, began publishing an Origination Insight Report. This monthly report draws data from the significant volume of loans originated from companies using their software. The data is then analyzed for insights and trends on current

8 Market Opportunity | FREEDOM Funding Company.

mortgage lending. Last month, if an individual’s FICO score was below 720 or had a down payment or equity of less than 25%, there was a good chance that the individual’s application for a conventional loan was denied or the individual was offered a significantly less attractive interest rate.

E L L I E M A E ’ S I N D U S T R Y A V E R A G E O F D E N I E D L O A N S

E L L I E M A E ’ S I N D U S T R Y A V E R A G E O F C L O S E D L O A N S

These statistics show that, nationwide, over 50% of all loans originated were denied. This is despite a borrower’s average credit scores being above a respectable 711. Not only is this higher than the average score for approved loans as recently as November, it is also far beyond the 620-640 FICOs that Fannie Mae and Freddie Mac once considered the minimum for a conventional prime mortgage. The current average declined mortgage applicant has a credit score of 710 while 44% of the U.S. public has credit scores below 700.

A loan-to-value (LTV) ratio of 82% signifies a down payment of 18% with Debt-to-income ratios of 24% for housing expenses, 37% for total household monthly debt in August 2013.

H O M E S A L E S B Y T R A N S A C T I O N S I Z E FREEDOM Home Mortgage’s unique lending product is especially well suited for individuals and families with above average income levels and DTI ratios. The Company therefore specifically caters to individuals that have high income levels and have the ability to purchase medium to high-end homes, but have credit scores that were adversely affected by the latest financial recession. The FREEDOM

9 Competitive Framework | FREEDOM Funding Company.

Home Mortgage products provides these individuals the ability to purchase a home that is a good fit for their current and projected financial situation and not a few years of their financial history.

I M P O R T A N C E O F H O U S I N G American history has shown that housing is the major factor in driving our nation’s economy. There have ben 14 recessions since the Great Depression. In each of those recessions the U.S. economy did not recover until housing recovered. This simple fact is evidence that housing drives the economy. We must fix housing to restore the U.S. Economy. Many have pointed to the housing recovery as a positive move for U.S. economic activity going forward. For example, Bill Dudley, the president of the Federal Reserve Bank of New York, said last March that he sees “The recovery in home prices as particularly important because houses are a significant component of household wealth.”

The single largest category of expenditure by households in the U.S. is housing. Any action taken to reduce overall housing costs will have the greatest and quickest impact on the U.S. Economy. On average, annual homeowner expenditures with a mortgage are 35.3% of total cost of living expenditures. It is estimated that upwards of an additional 15% of income is spent on related items for the home.

Research done by Carroll and Zhou estimates that households not only increase their annual consumption by 6 cents for every additional dollar of home equity, but also, the U.S. household sector employs millions of Americans nationally. Housing contributes to GDP in two basic ways: through private residential investment and consumption spending on housing services. Historically, residential investment has averaged roughly 5% of GDP while housing services have averaged between 12% and 13%, for a combined 17% to 18% of GDP.

Housing is also important when designing targeted policies that attempt to stimulate spending within an economy. Most stimulus packages typically include additional government spending and/or tax cuts. A tax cut has an indirect effect on spending, increasing a household’s disposable income and, therefore, allowing an increased level of spending. <1> get insert from ken

COMPETIT IVE FRAMEWORK C O M P E T I T I V E O V E R V I E W FREEDOM Home Mortgage’s competitive advantage over other mortgage solutions stems from the fact none of its competitors are focusing on alternative and other affordable mortgage lending options. Current solutions in the marketplace are overly dependent on outdated FICO scores and irrelevant metrics important to the big banking institutions’ borrowing process. Freedom Funding Co will differentiate itself by focusing on DTI ratios and other income related metrics. The Company’s most important differentiation is proved by its ability to offer the FREEDOM Mortgage to qualified and strong candidates.

The Dodd–Frank Wall Street Reform and Consumer Protection Act, was passed into law in response to the financial crisis and recession of 2008. Extensive new federal regulation of mortgage lenders and homebuyers is slated to kick off January 10. Virtually every aspect of financing a home—including mortgage options, eligibility standards, and even the structure and schedule of payments—will be governed by regulations - limiting financing options and access to credit. At the same time increased regulations and a decline in national refinancing volumes are causing established banks like Wells Fargo and Citibank to exit or wind down their mortgage brokerage operations and partnerships – limiting

10 Competitive Framework | FREEDOM Funding Company.

options for homebuyers while increasing the FREEDOM Home Mortgage’s positioning in the marketplace.

C O M P E T I T I V E A D V A N T A G E FREEDOM Mortgage has the capability to fund loans above FHA and conventional Jumbo Mortgages, because it it can provide borrowers with a $2.5 million dollar limit. Unlike the bulk of other mortgage programs, Freedom Mortgage is specifically designed to meet the severely underserved mid to high tier market.– specifically targeted at applicants seeking loans above $500,000.

FREEDOM Mortgage will significantly simplify the ability of American homebuyers (particularily in high cost areas) to qualify for jumbo mortgages at attractive interest rates. A jumbo mortgage refers to one with a higher loan amount, typically $417,000 to $750,000, and these are not backed by a government guarantee. Prior to the financial crisis, jumbo loans were priced around .25% higher than conforming loans. After the financial crisis, the gap has widened to as much as 1.8%, yet another indicator of the flight of private capital. More than 16% of the borrowers who applied for a jumbo mortgage in 2012 were denied a loan, according to the LendingPatterns.com. The FREEDOM Mortgage is for all home buyers, not just first time and young buyers.

The FREEDOM Mortgage competitive advantage will be further strengthened by the ongoing withdrawal of several mortgage originators from the jumbo mortgage market. The Company’s role as the co-funder of the mortgage paper and not as mortgage originator or broker further differentiates it in the marketplace.

The FREEDOM Mortgage product provides mortgages with three distinct advantages: a simpler application process, a debt/income drive qualifying system (not FICO score driven), and an affordable 4% rate. This will drive the product’s popularity providing it a significant marketing and promotional competitive advantage. Major real estate companies will promote the product because it will help market their listings to their clients and potential new homebuyers. At the same time, being affiliated with FREEDOM Mortgage will drive their competitive advantage in the marketplace.

SO ANALYS I S While the strengths of the Company are internal factors that Freedom Funding Co can directly influence and leverage, the opportunities rise from the surrounding economic, competitive, and regulatory framework in which the Company operates. The ability to combine the two can set the Company apart from its competition.

11 Marketing Plan | FREEDOM Funding Company.

MARKETING PLAN P O S I T I O N I N G The company leverages its integrity to position itself as a provider of a high-level service for the special needs of Alt-A(?) and non-prime borrowers. With extensive expertise in alternative mortgage types, Freedom Funding Copartners with real estate agents, brokers, banks, and financial institutions to co-market and refer its products to home buyers. Management has already networked with regional real estate representatives of Caldwell Banker, ReMax, Keller Williams, Sotheby’s and other firms to support the product, because it helps to market existing inventories of homes. In addition Ken Parker, with FREEDOM Management, has support from three major national homebuilders and has personally met with Steve Forbs (Forbs Magazine) and the Wall Street Journal in New York City. Consumers are attracted to the FREEDOM Mortgage program because is privately funded, offers 4% interest, has a high lending limit of $2.5 million and is driven by debt/income ratios and not FICO scores.

Further still, the Company plans to enhance its market presence through continuous product innovations, ultimately leading to state-of-the-art proprietary products and services. In the beginning, the company plans to focus its business operations in Arizona first before expanding it’s operations to other parts of the United States, Freedom Funding Co invests funds into various marketing and communication initiatives to earn brand recognition, and spread awareness. It has therefore developed an aggressive marketing plan to spearhead its growth.

FREEDOM Home Mortgage’s marketing strategy is centered on increasing brand awareness of its lending and mortgage products within its end-user target market. To achieve this, it targets Media, national real estate companies and market participants who can educate the end-customer on lending products.

• Provides financing for the underserved high -tier market • Applicants are judged on current income levels and DTI levels—not FICO scores

• Limited competition due to product design • 4% rates are significantly lower than other alternatives in the jumbo loan markets

• Helps borrowers to start creating wealth, while at the same time stimulating the economy

• Helps build credit scores and repair credit history • Helps borrowers learn about financial education and responsible borrowing

Strengths

• Opens home purchase to individuals who would otherwise not qalify due to their FICO scores

• Provides financing for an underserved market need • Provdes a strong investment opportunity and higher returns • Increases real estste business • Increased investor interest in financing and investing in the rebound of the housing market

Opportunities

Real EstateBroker & Agent Awareness

End Consumer Awareness

National & Local Bank Awareness

More Consumer Awareness

12 Marketing Plan | FREEDOM Funding Company.

T A R G E T M A R K E T S Freedom Funding Co has already attained a significant market interest nationally and is planning to expand its business across the United States.

The Freedom Home Mortgage will be marketed nationally, with a primary launch focus in the states of Arizona and California. The population between both states exceeds 44.5 million. The state of Arizona is currently doing less than three hundred jumbo mortgages monthly. California does historically fifty times more, approximately 15,300 mortgages.

Each of these market areas creates a very good opportunity for the business to capitalize on its brand image, service differentiation, and unique selling proposition. The lending product is especially designed to capture homebuyers with net worth and acceptable debt/income ratios that are looking to purchase mid to higher tier homes but are unable to qualify for existing jumbo mortgages

S T R A T E G I C P A R T N E R S FREEDOM Home Mortgage’s support will come from the entire real estate community due to the current need and uniqueness of the product. Mortgage companies and their brokers will participate in addition to banking entities.

National MLS data shows that currently about 80% of home loans issued in the U.S. are negotiated by brokers. As of 2012, there were approximately 20,000 mortgage brokerage operations across the United States, occupying 60-70% of the marketplace. The United State is also home to close to 1 million real estate agents that represent close to 94% of all homes for sale in the United States. The Company’s management and advisors believe that these numbers significantly under-represent the demand for jumbo mortgages and higher priced homes.

The impact of the switch from a refinance boom to a lukewarm purchase market is already being felt. The decline nationally in refinance mortgages is estimated to exceed 35%. Home purchase mortgages are the future of real estate finance.

MLS numbers verify that there is a huge pent-up pool of unsold property in the mid-tier and upper-tier markets. Current national marketing data does not reflect or take into account the amount of jumbo mortgage that could be processed due to this huge pool of stagnant real estate. Freedom Home Mortgage will significantly expand the applicant pool for jumbo mortgages and higher priced homes in the United States.

M A R K E T I N G C H A N N E L S A N D I N I T I A T I V E S Freedom Funding Co uses direct sales channels to market its service offerings to national real estate firms. The company leverages its key contacts to drum up further business and might appoint a sales manager to assist with their efforts. As the company expands across different markets, it brings in sales agents based on the market potential. Freedom Funding Co use the following methods to create awareness among its target customers:

I N T E R N E T A D V E R T I S I N G The Internet, with its mass reach, cost-effectiveness, convenience, flexibility, and speed, is an excellent medium to create mass awareness.

§ Company’s website: Freedom Funding Co creates a website, which provides information about the product, the philosophy and advantages of the product to borrowers that have been rejected by the current mortgage lending system. The website is a powerful marketing tool and acts as a medium of information dissemination.

13 Financial Plan | FREEDOM Funding Company.

D I R E C T M A R K E T I N G Freedom Funding Co intends to approach its prospective brokers, agents, banks and borrowers directly. The company is also exploring an ongoing direct mail campaign that continuously keeps market participants aware of the differentiations. The Company is to employ a marketing team to establish direct contact with prospective customers. The Company will also use telemarketing to promote its products directly to its customers and get feedback and other enquiries.

P U B L I C R E L A T I O N S A public relations strategy can help build a brand’s visibility and credibility. A traditional media outreach program will target newspapers, local television, and radio. This tactic enables the company to reach a large number of people in a given geographic area and help the company to generate national and local editorial coverage, which keeps their brand top-of-mind amongst consumers.

A D V E R T I S I N G I N I N D U S T R Y S P E C I F I C P U B L I C A T I O N S Freedom Funding Co places advertisements (both print and online) in industry-specific publications and journals, which have wide coverage in California. Publications such as Mortgage Press, Mortgage Originator, Origination News, and Mortgage Banker allow for a better targeting of audience. Furthermore, the Company advertises in the Yellow Pages (classifieds) where it becomes easier for the company to reach out to mortgage brokers in a focused manner. Advertisements can also be placed at cheaper rates in the classified category of newspapers such as the San Francisco Chronicle, The New York Times.

N A T I O N A L C O N V E N T I O N S The Company participates in conventions organized by various associations such as the California Mortgage Broker Association, Natonal Mortgage Bankers Association the Florida Association, the Western Regional Broker, and the National Home Builders Association. The Company utilizes the channels provided by these events to expand its reach, potentially increasing its client base while aiding the company in consolidating other areas.

F INANCIAL PLAN C A P I T A L R E Q U I R E M E N T S A N D U S E O F F U N D S Freedom Funding Co intends to raise $1,000,000 to cover initial capital investments and operating expenses. In addition, as the Company starts operations funds for the lending activity will be needed. For both funding sources the preferred form of capital by the Company is debt with fixed payment amortization schedule.

R E V E N U E M O D E L Freedom Funding Co derives revenue from two main sources:

§ Funding fees: 1% charge on the mortgage amount underwritten by Freedom Funding Co Inc. § Spread on the interest payment: While the borrower pays a 4% annual interest (fixed monthly

payments) Freedom Funding Co reverts ¾ of such payments (3% annual) to investors of the capital, therefore leaving a 1% differential for the Company. For the average mortgage, such differential is estimated at approximately $35,000 over the course of the repayment schedule and will be used to pay broker/dealers, servicing organizations, sales fees, rainy day fund, or any other need associated with the mortgage. The Company will generate revenue of 25% of this spread (or 0.25% of the loan amount) while 75% of this spread (0.75% of the loan amount) will go towards fees, commissions and marketing.

Net Revenue Distribution Year 1 Year 2 Year 3 Year 4 Year 5


Mortgages Issued 34,300 66,000 - - -

Funding fees 71% 42% 0% 0% 0%

Yield Spread 29% 58% 100% 100% 100%

F I N A N C I A L S U M M A R Y Freedom Funding Co plans to begin the lending activity after three months from launch, increasing the number of mortgage issued start at 300 per month and increase to a stabilized level of 5,500 per month over the first 24 months. Freedom Funding Co will pause new lending post the initial 24-month period after which revenue is expected to exclusively be generated form the yield spread fees from existing loans.

Under these volume projections the Company is expected to see net revenues increasing from $1.25 billion in Year 1 to $2.4 billion in Year 5. Thanks to a lean operational structure, the Company estimates to reach profitability starting in the first year of operations quickly rising to $875 million at the end of the fifth year.

Year 1 Year 2 Year 3 Year 4 Year 5

Gross Revenues $338,753,097 $1,094,071,593 $901,250,929 $619,582,051 $188,482,305 Direct Cost ($122,009,822) ($566,453,695) ($675,938,197) ($464,686,538) ($141,361,729) Net Revenues $216,743,274 $527,617,898 $225,312,732 $154,895,513 $47,120,576 Gross Profit Margin (%) 64% 48% 25% 25% 25% Total Other Expenses ($15,637,630) ($28,519,200) ($1,257,601) ($1,111,406) ($1,136,406) EBITDA $201,105,644 $499,098,698 $224,055,131 $153,784,107 $45,984,170 Depreciation & Amortization

($4,550) ($5,200) ($5,700) ($5,830) ($6,218)

Impairment $0 $0 $0 $0 $0 EBIT $201,101,094 $499,093,498 $224,049,431 $153,778,277 $45,977,952 Interest expense ($28,844) ($8,729) $0 $0 $0 Net Income $201,072,250 $499,084,769 $224,049,431 $153,778,277 $45,977,952 Net Profit Margin(%) 59% 46% 25% 25% 24%

Cash Balance $282,792,622 $1,290,470,513 $2,201,289,248 $2,338,378,307 $2,358,970,562

71% 42%

0% 0% 0%

29% 58%

100% 100% 100%

0%

20%

40%

60%

80%

100%


Revenue Distribu-on

Funding fees Yield Spread


K E Y A S S U M P T I O N S T O T H E F I N A N C I A L P R O J E C T I O N S The following table summarizes the main assumptions and data points used in the financial projections for Freedom Funding Co.

Parameter Input to the model Notes Average mortgage amount $700,0000 Weighted average between residential

mortgages of size between $500,000 and $2.5 million, across the United States. Please see Appendix for detail and calculations.

Percentage financed by Freedom Funding Co Inc.

90% Freedom Funding Co Inc. underwriting guidelines

Average mortgage amount financed by the Company

$630,000 -

Funding fee 1% Company’s underwriting guidelines

Interest rate 4% annual, fixed Company’s underwriting guidelines

Cost of capital (debt) 3% annual, due consistently with borrowers’ payments

Company’s underwriting guidelines

Amortization period 30 years Company’s underwriting guidelines

Repayment schedule Monthly fixed payments, full amortization schedule

Company’s underwriting guidelines

Percentage of mortgages refinanced (out of our program by year 5)

85% Refinance share for Fannie Mae was 72% in 2012, 66% in 2011, and 68% in 2010.

Gross Spread Fees 0.25% of loan amounts 0.75% towards other fees / expenses

Average time lag for refinancing 30 months Internal estimate

Marketing and advertising cost $50,000 a month for first 24 months

In the loan brokerage industry marketing costs are quantified as 3.8% of revenue across the United States. In the model a conservative 5% of net revenues was used. Source: Ibisworld.

Initial Investor Repayment Terms Monthly interest payments (10% annual rate) that start in Month 7

and full principal repayment in Month 18

Internal assumption

16 Appendix | FREEDOM Funding Company.

APPENDIX I N C O M E S T A T E M E N T


Revenues Funding fees $240,100,000 $462,000,000 $0 $0 $0

Spread $98,653,097 $632,071,593 $901,250,929 $619,582,051 $188,482,305 Gross Revenues $338,753,097 $1,094,071,593 $901,250,929 $619,582,051 $188,482,305

Payment to Partners & Investors ($73,989,822) ($474,053,695) ($675,938,197) ($464,686,538) ($141,361,729)

Commissions & Bonuses ($48,020,000) ($92,400,000) $0 $0 $0

Interest Payments - Direct Cost $0 $0 $0 $0 $0 Direct Costs ($122,009,822) ($566,453,695) ($675,938,197) ($464,686,538) ($141,361,729)

Net Revenues $216,743,274 $527,617,898 $225,312,732 $154,895,513 $47,120,576

Gross margin (%) 64% 48% 25% 25% 25%

Operating Expenses Non-personnel G&A ($14,417,550) ($27,112,680) ($117,423) ($122,584) ($128,228)

Personnel Expenses ($1,220,080) ($1,406,520) ($1,140,178) ($988,822) ($1,008,178)

Total Operating Expenses ($15,637,630) ($28,519,200) ($1,257,601) ($1,111,406) ($1,136,406)

EBITDA $201,105,644 $499,098,698 $224,055,131 $153,784,107 $45,984,170

EBITDA % 59% 46% 25% 25% 24%

Depreciation & Amortization ($4,550) ($5,200) ($5,700) ($5,830) ($6,218)

Impairment $0 $0 EBIT

$201,101,094 $499,093,498 $224,049,431 $153,778,277 $45,977,952

EBIT% Interest Expense-Debt ($28,844) ($8,729) $0 $0 $0

Other Income (Expenses) $0 $0 $0 $0 $0

NET INCOME $201,072,250 $499,084,769 $224,049,431 $153,778,277 $45,977,952

Net Profit Margin (%) 59% 46% 25% 25% 24%


B A L A N C E S H E E T


ASSETS Cash $282,792,622 $1,290,470,513 $2,201,289,248 $2,338,378,307 $2,358,970,562

Accounts Receivable $2,143,039 $3,797,283 $2,422,340 $1,721,061 $523,562

Prepaid Expenses $642,912 $1,139,185 $726,702 $516,318 $157,069

Inventory $0 $0 $0 $0 $0

Other Current Assets $642,912 $1,139,185 $726,702 $516,318 $157,069

Total Current Assets $286,221,485 $1,296,546,166 $2,205,164,992 $2,341,132,005 $2,359,808,261

Property & Equipment Property & Equipment $47,000 $52,000 $57,000 $59,000 $64,000

Leased Asset $0 $0 $0 $0 $0

Accumulated Depreciation ($4,550) ($9,750) ($15,450) ($21,280) ($27,498)

Property & Equipment, net $42,450 $42,250 $41,550 $37,720 $36,502

Intangible & Other Assets Intangible & Other Assets $35,000 $35,000 $40,000 $40,000 $40,000

Amortization & Impairment $0 $0 $0 $0 $0

TOTAL ASSETS $286,298,935 $1,296,623,416 $2,205,246,542 $2,341,209,725 $2,359,884,763

LIABILITIES & EQUITY Accounts Payable $10,167,485 $47,204,475 $56,328,183 $38,723,878 $11,780,144

Accrued Expenses & Payroll Taxes Payable $79,208 $79,220 $3,493 $3,087 $3,157

Line of Credit $0 $0 $0 $0 $0

Other Current Liabilities $642,912 $1,139,185 $726,702 $516,318 $157,069

Debt $347,257 $0 $0 $0 $0

Due to Related Parties $0 $0 $0 $0 $0

Total Liabilities $11,236,862 $48,422,879 $57,058,378 $39,243,283 $11,940,370

Shareholder's Equity Paid in Capital $0 $0 $0 $0 $0

Retained earnings $275,062,073 $1,248,200,536 $2,148,188,164 $2,301,966,441 $2,347,944,393

Total Equity $275,062,073 $1,248,200,536 $2,148,188,164 $2,301,966,441 $2,347,944,393

TOTAL LIABILITIES & EQUITY $286,298,935 $1,296,623,416 $2,205,246,542 $2,341,209,725 $2,359,884,763


C A S H F L O W S T A T E M E N T


CASH FLOW FROM OPERATIONS

Net Income (Loss) $275,062,073 $973,138,464 $899,987,628 $153,778,277 $45,977,952

Plus Depreciation $4,550 $5,200 $5,700 $5,830 $6,218

Plus Amortization & Impairment $0 $0 $0 $0 $0

Changes in Working Capital

Changes in A/R

($2,143,039) ($1,654,244) $1,374,943 $701,279 $1,197,499

Changes in Prepaid Expenses ($642,912) ($496,273) $412,483 $210,383 $359,250

Changes in Inventory $0 $0 $0 $0 $0

Changes in Other Current Assets ($642,912) ($496,273) $412,483 $210,383 $359,250

Changes in A/P

$10,167,485 $37,036,989 $9,123,708 ($17,604,305) ($26,943,734)

Changes in Accrued Expenses $79,208 $12 ($75,727) ($406) $70

Changes in Other Current Liabilities $642,912 $496,273 ($412,483) ($210,383) ($359,250)

Net Change in Working Capital $7,460,743 $34,886,484 $10,835,407 ($16,693,049) ($25,386,915)

Net Cash Flow from Operations $282,527,365 $1,008,030,148 $910,828,735 $137,091,058 $20,597,255

CASH FLOW FROM INVESTMENTS

Purchase of Intangibles & Other Assets ($35,000) $0 ($5,000) $0 $0

Fixed Assets

($47,000) ($5,000) ($5,000) ($2,000) ($5,000)

Net Cash Flow from Investments ($82,000) ($5,000) ($10,000) ($2,000) ($5,000)

CASH FLOW FROM FINANCING

Paid in Capital

$0 $0 $0 $0 $0

Line of Credit

$0 $0 $0 $0 $0

Debt

$347,257 ($347,257) $0 $0 $0

Lease Payments

$0 $0 $0 $0 $0

Net Cash Flow from Financing $347,257 ($347,257) $0 $0 $0

Net Cash Flow

$282,792,622 $1,007,677,891 $910,818,735 $137,089,058 $20,592,255

Cash at Beginning of Period $0 $282,792,622 $1,290,470,513 $2,201,289,248 $2,338,378,307

Cash at End of Period $282,792,622 $1,290,470,513 $2,201,289,248 $2,338,378,307 $2,358,970,562


P E R S O N N E L P L A

Annual Year 1 Year 2 Year 3 Year 4 Year 5

Headcount Operating Expenses CEO 129,250 153,000 156,060 159,181 162,365

COO 115,325 137,700 140,454 143,263 146,128 President 129,250 153,000 156,060 159,181 162,365 CFO 131,800 137,700 140,454 143,263 146,128 Accountant1 60,300 61,200 62,424 63,672 64,946 Accountant 2 34,000 51,000 - - - Underwriter 1 60,300 61,200 62,424 - - Underwriter 2 35,167 51,000 - - - Underwriter 3 34,750 51,000 - - - Salesmen 1 49,750 51,000 52,020 - - Salesman 2 40,167 51,000 - - - Admin 1 36,799 40,800 41,616 42,448 43,297 Admin 2 28,409 35,700 - - - Directors (5) 91,050 91,800 93,636 95,508.72 97,418.89 Salary $976,317 $1,127,100 $905,148 $806,518 $822,648

Total Headcount (end of year) 18 18 9 7 7

Tax & Benefits $195,263 $225,420 $181,030 $161,304 $164,530

Health insurance $48,500 $54,000 $54,000 $21,000 $21,000

$1,220,080 $1,406,520 $1,140,178 $988,822 $1,008,178

Documents

FREEDOM Mortgage Final BP(3)