Castle Rock is one of the Nation's leaders in distressed commercial and residential mortgage-backed notes. This presentation provides a brief look at Castle Rock and how they manage residential distressed debt for their investors.

1. CASTLE ROCK COMMERCIAL ACQUISTIONS
Residential Note Program

2. Castle Rock Commercial Acquisitions purchases distressed real estate
backed loans at significant discounts, works through the process to either
get the property back or get the mortgage note to perform again, and
then sells the notes or property off to investors for a profit. Because of
our unique position as both a direct buyer and/or as a direct seller
between larger hedge funds/banks and individual real estate investors
and aggregator funds, we’ve been able to carve out a successful niche in
the distressed debt market.

3. Note vs Real Estate Investing
• Quality real estate investments at reasonable prices are becoming harder and harder to find
for investors. Large aggregation funds are purchasing real estate at an alarming pace and are
paying retail prices to do so. Real estate investors have started to look at other sources for
their product…us!
• Rather than purchase real estate directly, we buy the mortgage notes on distressed real
estate for an average of 30% to 45% of the underlying value of the collateral real estate. We
specifically target mortgage notes where the borrower has given an indication that they want
to turn over the property through a deed in lieu of foreclosure. We also look for mortgage
notes in states where the foreclosure process is relatively quick and painless. This allows us to
effectively “purchase” the property by buying the note and converting it to REO for less than
50% of the property value. We then quickly sell the asset off to investors in our
pool, including aggregator funds, for anywhere from 80% to 90% of the property value. The
investor is pleased as they obtain desirable property at a discount and our funds make a
handsome profit with minimal risk on each transaction.
• Most see the times we are living in as an opportunity to purchase real estate, we feel we
have not hit bottom yet and that there is a better way to partake in the lower market prices
for real estate…purchase loans using desirable real estate as collateral rather than own the
property outright.
• We have less risk with more reward potential through buying the mortgage rather than
buying real estate.

4. Note vs Real Estate Investing
• * Investing at or just below market * Investing at 50% or less of market value
•
• * Must pay real estate taxes and * Borrower pays these costs
• insurance
• * Must worry about finding tenants * Borrower finds tenants, not the lender
•
• * 25% market drop means 25% loss * 25% market drop…we’re still OK.
•
• * In case of default, lose the property * Gain a property at a discount
•
• * Pay for repairs and maintenance * No such costs, the borrower pays
INVESTING IN REAL ESTATE INVESTING IN NOTES

5. • Castle Rock Commercial Acquisitions
is a Tampa-based firm that deals in
commercial and residential real
estate-backed bank loans. We
purchase these loans at a significant
discount of the current value of the
underlying collateral from banks and
larger hedge funds and resell them for
a profit to investors. Our team
members have a minimum of 20 years
of lending and collection experience
in the banking, real estate, and title
industries, so we not only have access
to the loans, but we know how to
assess each loan to ensure that we
are avoiding pitfalls in the process.
• We are the experts in the field! Our
experience is unmatched in the note
buying industry as is our ability to
minimize investor risk while
maximizing investor returns.

6. • Castle Rock enjoys a significant advantage in
the market because it has built an efficient
machine from the acquisition to disposition of
the assets we purchase. We have unparalleled
access to quality distressed notes. We have the
staff, systems, and structures in place to
properly evaluate the opportunities for
purchase as well as the strategic partnerships to
service and efficiently collect the debts owed to
us. We also have, through years of cultivating
relationships, a broad base of real estate
investors who purchase our REO products and
re-performing notes once we convert the notes
from a non-performing status. These investors
include decision-making asset managers with
aggregators, so in many instances we are able
to have a property sold before we even receive
the loan back through the foreclosure/deed in
lieu process.
• After 20 years in banking and finance, our
management is closely connected to bank
executives, the legal community, and the
brokerage community. Where others are unable
to gain unfettered access to bank portfolios, we
can. We certainly have a competitive advantage
when it comes to picking up the cream of the
crop.

7. Steve Dorsett is a well-known expert in the field of the processing of distressed debt.
He handles Castle Rock’s loss mitigation, funding, and disposition functions. Dorsett is
a CPA with 30 years of experience in the real estate consulting field with such firms as
Arthur Andersen and Deloitte & Touche. He also heads up Clear Title America, one of
the most successful closing agents for distressed residential real estate in the Nation.
It is Dorsett’s relationships with real estate investors that give us our huge bank of
buyers for our products. It is also his extensive experience in the title field that helps
Castle Rock dramatically minimize risk to its portfolio. He has built a pool of hundreds
of individual investors that actively seek our products for their portfolios.
MANAGEMENT TEAM
Doug Smith spent more than 20 years in Private and Commercial banking and
handles the analysis and collection strategy functions for Castle Rock. He started
his career with Norwest in the St. Louis market where he cut his teeth in lending
and heavy collection. Upon moving the Bank One’s B, C, & D residential lending
division, he rose through the ranks to run the operations support division which
ensured that loans moved through the processing system smoothly to package
them for bulk-sale to institutional investors. He moved to Florida in 1996 and
soon became an expert in commercial and private lending. He has served some
of the Nation’s largest financial institutions such Wells Fargo and NationsBank.
His expertise in loan underwriting, collections, and distressed asset disposition
allows Castle Rock to have an unmatched record of success in the distressed
debt market. It is also Smith’s connections in the lending world that provide
Castle Rock with its pipeline of loans to purchase.

8. Sources of Product
• Castle Rock leverages the relationships it has built
throughout the years to garner a large supply of assets for
review. On a weekly basis, Castle Rock averages between
250 and 400 assets under review. These numbers are
growing as more and more lenders turn to Castle Rock as
an outlet for distressed assets in their respective
portfolios.
• We typically purchase loans directly from banks or from
hedge funds that have made large bulk purchases of loans
from GSEs. They are typically in the business of handling
performing loans and are not as well equipped to handle
distressed assets. These funds and banks typically do not
have the same due diligence and collection capabilities that
we have, therefore, we are able to squeeze value out of the
assets that they may not be able to.

9. Our Process
• Castle Rock takes a disciplined approach to choosing the assets for
its portfolio.
• First, we run new potential investments through a series of
proprietary filters to identify those assets that might fit our
stringent investment criteria. We then use our years of experience
to pour over all available data including every page of loan
documentation including but not limited to the
note, mortgage, past appraisals, client correspondence, property
reports, lender notes, and title reports. We also use all of our
resources to identify things about the loan and the current
borrower that many times even the lender we are buying the loan
from does not know. It is through this process that we determine
likely potential exit strategies before the loan is even purchased.

10. • Each State has unique rules and regulations
that require expert handling of the loan
collection process. We have built a network of
professionals and servicers to assist us in
complying with all of those State-specific laws
in the jurisdictions we deal in. Upon
purchase, we immediately board each and
every loan with a licensed servicer for that
State. We quickly execute our exit strategy
keeping in mind that we need to be flexible as
collection circumstances warrant. Through our
exhaustive due diligence process prior to
buying the loan, we greatly mitigate downside
risk to the portfolio while maximizing investor
return.
• Downside risk mitigation is the key to any
purchase we make. We do not lack for buying
opportunities and pushing a bad purchase by
letting emotion enter into a decision is
something we avoid. We look at every
transaction and ask ourselves “what is the
worst thing that can happen if we purchase
this note? If we can not develop a decisive
exit strategy for a purchase, then we don’t
buy the note. It is that simple. With this in
mind, more than one approval is required
with any purchase we make. More than one
person looks at each file to ensure that we are
minimizing the risk to the portfolio.

11. Possible Outcomes
We enter into each and every transaction we do with a pre-planned exit strategy in mind before we
purchase the asset. We attempt to identify the most likely outcome of the collection process before
we buy the asset being especially mindful to identify the worst-case scenarios of each asset
purchase. Through our experience, we have found that three main scenarios typically develop in
almost all asset workouts.
Deed In Lieu of Foreclosure, approximately 65%: By the time we purchase a loan, the borrowers
are usually severely delinquent on their loan. Many borrowers have not paid for over 2 years and
the prospect of them moving out is an inevitability that many have already accepted. As we are not
federally regulated, we have more options to expedite the process than a bank would. We are not
required to report to any credit-reporting agency nor do we have to chase a deficiency balance. We
simply want the property and have no interest in ruining the borrowers lives. Many borrowers
welcome an offer of “if you move out, leave the property in good condition and sign this deed in
lieu of foreclosure, we will waive any deficiency balance on your loan. You can start your life anew.”
That offer is something that many, about 65% of severely delinquent borrowers, are waiting for. It
keeps our collection costs to a minimum and allows us to dramatically cut the turn time in
liquidating an asset.

12. Reworking the Note, approximately 10%: We find that some homeowner’s,
approximately 10% of borrowers, are delinquent because of a temporary problem and
are closely tied to the property. They may have inherited the home or they may have
children in local schools. Many have lost jobs and now have taken jobs for less pay.
They may be able to afford a lower payment, but have no hope of paying the
arrearage. Here again, we can simply rework the payment schedule to bring the
payments down to a level they can afford and get them paying again. We have an
extensive market for performing and re-performing mortgages. This market allows us
to keep borrowers in the home, get them to perform again, and sell the loan off for a
significant profit.
Foreclosure, approximately 25%: Our last resort on any transaction is to actually
foreclose on the underlying collateral. Although this is a last resort, we have the
resources in place to efficiently retrieve the property from the borrower and liquidate
it for a profit. Because we carefully analyze the loan files and we tend to focus on
States where quicker foreclosures are possible, we are typically very efficient at the
foreclosure process.

13. Every month, more and more investors turn to Castle Rock to
assist them with the management of the real estate portion of
their portfolio. By buying notes at a fraction of the value of the
underlying collateral, we are able to dramatically reduce the risk
to our portfolios while we maximize returns. We look forward to
adding more investors as well as those looking for new product for
their own portfolios.