Risk Management
Investment risk can never be totally eliminated. Risk is the reason some investments yield higher returns than others. There are however prudent steps that a manager can take to help mitigate some risks. As with all investments, there are inherent risks in USAHF’s strategy including non-payment by borrowers or depreciation of collateral (the homes that secure the investment).
Following is a table which outlines some of the risk management strategies which USAHF employs. These strategies are subject to change without notice and should not be construed as a contractual obligation. These are instead provided as a guide for experienced and accredited investors who understand the nature of investment risk.
| Risk |
Management Strategy |
| Currency |
All transactions are conducted in US dollars. There is no exposure to other currencies. |
| Early Repayment |
We align, to the extent possible, investment in-flow with availability of home finance contracts. In other words, we only take in investor money as home finance contracts are available to support that investment |
| Legal |
All home finance contracts are written with applicable US law. There is thus legal recourse in the United States. |
| Loan Default |
We employ a variety of underwriting criteria to help minimize loan default. We believe one of the most effective is the requirement for a 30% minimum down payment (20% for contracts before Jan 1, 2018) on all home finance contracts USAHF purchases. As a result, the average LTV (Loan-to-Value) ratio of the entire USAHF portfolio is approximately 0.6. This means that on average all contracts in the portfolio are about 40% paid-off. This of course provides a very strong incentive for the borrower NOT to default. |
