Flip & Gap First Position Funding (FGFPF):

Instructions, Conditions and Procedures (C&P)

Thank you for your interest in our funding product.

If Tod Snodgrass (Trustee of The Edith Capps Trust—TECT, the funding arm of EMD Funding) agrees
to supply funding to you (the funding requestor), after vetting your deal (see No. 17 below for a list of
the items you need to send into us before we can begin the vetting process), see below the key points
that you must agree to.

1. Flip & Gap First Position Funding or FGFPF is:

a. a cash-on-cash investment, not a loan. There are no upfront costs, no points, no interest, no monthly
payments, no appraisals, no credit checks, no background checks, no income verification, no
prepayment penalties. Funding is a Cash-on-Cash-type investment, similar to a Joint Venture: you bring the
right deal, we bring up to 100% of the acquisition funds.

b. directed at Professional Real Estate Investors (PREI), and only for non-owner-occupied properties.

c. TECT/EMD is a private investor whose objective is to invest limited amounts of cash for very short
periods at minimal risk for high return in the real estate sector. Our markup is a share in the PREI’s
anticipated profit from whatever they are investing our cash into, calculated as a cash‐on‐cash return on
the amount invested. Before we will forward any funds, the PREI must demonstrate to us what the funds
are to be used for, and how exactly they plan on coming up with the exit strategy money to pay us back
+ our ROI (markup).

These are our terms in a nutshell:

2. FGFPF funding parameters:

a. Minimum funding: $20,000

b. Maximum funding: $99,000 (normally)
c. LTV, up to 67% based on as is/FMV (Fair Market Value) on improved real estate, less 10%
costs = 60% net LTV; see No. 16 & No. 21 below). Raw land = 20% FMV.

d. Time: 30-90 days (normally)

e. Geography: Available in all 50 states and DC

3. Funds we provide are to be used with a property you:

a. Already own free and clear, or

b. Can flip, preferably in 30 days or less.

4. N.O.O. (Non-Owner-Occupied), investor-owned properties only

5. Investment must be secured by a first position note/deed

6. Referral Fee (based on the actual funded amount):

2.5% to RE pros (LLCs, Corp., etc.) who refer us to those who need FGFPF

5.0% to commercial loan brokers who both refer a lead and do all the investor paperwork as well

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7. Cash-on-cash returns (markups) are as follows: 1% per day, with a 30-day minimum, but do NOT
include 10% fixed cost factor.

NOTE II: Make sure you are dealing with investor-friendly professionals (commercial loan broker,
attorney, title company) who understand cash-on-cash investment funding vs. normal residential finance
deals.

8. Short time extensions may be available, if warranted by us.

9. If exceptions are considered, that may involve higher markups (bigger cash-on-cash returns) as a
result.

10. Funding fundamentals: Investor, commercial loan broker, escrow (closing attorney), time frames

a. FGFPF is directed at professional real estate investors only.

b. Funding requests should be submitted direct to EMD Funding by a commercial loan broker acting on
behalf of their investor-client. The funding requestor will be kept in the information loop whenever
possible.

c. Funding transactions may be proceal ssed by EMD/TECT’s paperwork processor and title/escrow
(closing) professionals or those chosen by the commercial loan broker, and approved by EMD/TECT.

11. To reiterate, first position notes/deeds only:

a. FGFPF fundings are limited to first position notes/deeds, with a LTV (Loan to Value) not to exceed
60% net (67% less 10% fixed costs), based on current FMV (Fair Market Value). Should there be
insufficient collateral in the primary investment property to achieve an LTV of 67%, less 10% fixed
costs equals 60% net, we may, at our sole discretion allow the pledging of other properties or notes, on a
cross-collateral basis, in order to achieve the desired LTV, as long as those other properties are also first
position notes/deeds.

b. You must be able to demonstrate to us that you have already lined up exit strategy money in order to
be able to pay off the note and our markup, i.e. a LOC (Letter of Commitment) from a lender, equity
partner, private lender, etc. or where ever your exit strategy money is coming from when the note/deed
come due in 30-90 days; please send it to us, as an enclosed PDF attachment as a condition of agreeing
to vet your deal.

12. You (the Funding Requestor) agree to Indemnify and Hold Harmless Tod Snodgrass, EMD Funding
and The Edith Capps Trust (TECT), and their officers, employees, agents or instrumentalities (the
indemnified parties), from any and all claims, liabilities, demands, suits, causes of actions or
proceedings of any kind or nature, losses or damages including attorneys’ fees and costs of defense,
which the indemnified parties may incur arising out of the negligence, error, omission, intentional acts,
or other cause arising out of or resulting from the use of funds provided by Tod Snodgrass, EMD
Funding or The Edith Capps Trust. The obligation to Indemnity and Hold Harmless specifically includes
claims, liabilities, demands, suits, causes of actions or proceedings arising from the negligent acts or
omissions of the indemnified parties. The Funding Requestor shall pay claims and losses in connection
with all of the foregoing and shall investigate and defend all claims, suits, or actions of any kind or
nature, including appellate proceedings in the name of the applicable indemnified party, and shall pay all
costs and judgments and attorney’s fees which may issue thereon. The parties agree that this agreement,
and its underlying obligations, will be construed under California law. The Funding Requestor further
agrees not to contest jurisdiction nor venue in the courts situated in the state of California.

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13. Our exit: Once you have paid the note off completely, you will be provided with an appropriate
written release of any claim to the property.

14. What comes next:

a. Once you have sent in the FGFPF Processing Application form + all appropriate Checklist Items (see
#17 below) and assuming we give it a tentative green light, a Promissory Note will be created by EMD
Funding. A Deed will need to be created as well by EMD Funding.

b. EMD Funding, via The Edith Capps Trust, then wires the funds to escrow/closing attorney/title.

c. Subsequently, and as soon as possible, it is required that the Deed get recorded, and a scanned copy of
it (or a certified copy of same) be emailed to us ASAP.

d. Immediately thereafter, we also need to be sent hard copies of the recorded deed (or a certified copy
of same) and notarized note via Next Day Air.

15. Default process. Should the Note not be paid on time, EMD Funding may move to put the property
into a NPN (Non-Performing-Note) status. This may include pursuing legal action to protect our security
interest, up to and including initiating foreclosure action against the property to enforce our claim.

16. The Funding Requestor is responsible for all (100% of) costs associated with the overall transaction.
Those costs are included in a 10% flat fee (against the amount actually funded). The 10% fee
covers/includes, but are not limited to: broker fees, forms/doc processing fees, the costs of wire transfers
of investment funds from TECT to the funding requestor, followed by wire transfer of investment funds
+ our markup from the funding requestor back to TECT when it pays off; escrow (closing attorney) fees;
notary fees; recordation fees, title and fire insurance costs, and other varied and assorted charges, costs,
expenses and fees (escrow-related or otherwise) as may come to the fore as the result of this transaction.
See No. 21 below regarding FPGP funding Costs.

17. Checklist Items. Please send all items (a.-m below or more as the need arises) to both the
commercial loan broker, and to us, all at the same time, as separate files. Please do NOT send in docs,
etc. piecemeal, or one at time. To reiterate, please label each separate file with its own letter designation:
“a”, “b”, etc. Also, for any subsequent docs, forms that are required to be sent in, please letter designate
them as well (p., q., r., etc.). For example: “d.: driver’s license”, “g: Application”, etc.

a) FMV confirmation: Broker’s Price Opinion or an Appraisal. We need to know how much the property
is currently worth.

* Proof of same can be a recent Broker’s Price Opinion (BPO)

* Recent appraisal (3 months old or less).

The BPO or appraisal must include, at a minimum:

--Comps for THREE nearby, recently SOLD properties (not more than 3 months old)
--Area map and photos of the property

b) Copy of the Purchase Contract between you and the seller of the property
c) A copy of your driver’s license
d) Proof of exit strategy money already lined up, i.e. Letter of Commitment (LOC) from a lender, and/or
copy of the sales contract between you and the cash buyer, etc.
e) Copy of your business license, LLC or corporate docs…assuming you have one or more of them. If
not, please indicate in what form & how you DO operate your business (dba, or?)
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f) FGFPF Processing Application fully and completely filled out. Please remit it as a Word file
attachment. The signature page will also need to be scanned, once it is signed, and sent in as a PDF file.
g) Copy of the current hazard (fire) insurance policy on the structure in question
h) Insurance Agent’s contact information: name, telephone, email, etc.
i) A copy of the previous title insurance policy
j) Tax Information (Proof that taxes are paid and current)
k) Grant Deed or Quit Claim deed for the property: scan, then send it out as an email attachment.
l) If our funds are to be used for an acquisition, we need to be provided in advance with a Payoff Letter
(statement) in reference to the property to be acquired. The Letter provides detailed instructions on how
to pay off a loan (lien, etc.). It indicates the amount due (including interest charges up to a specific date),
where to send the money, how to pay, and any additional charges due.
m) If our funds are to be used for a transactional funding deal, there are two separate closings and
therefore two HUD-1 statements are required. One closing statement is the transaction between the
original seller of the property (a) and the wholesaler (b); the second HUD-1 is the transaction between
the wholesaler (b) and the cash buyer (c). Immediately after the first escrow opens (a/b), the cash buyer
(c) is required to wire transfer the purchase funds into escrow. Once the second transaction has been
successfully completed and recorded, (c) will receive title to the property.

* To reiterate, be sure to label each separate file (a. or b. or c.) you send with the corresponding item you
are sending, such as:

a) Broker’s Price Opinion or Appraisal

b) Purchase Contract
c) Driver’s license
d) Exit strategy doc(s)
e) Business license, LLC, etc.
f) Processing Application
g) Insurance policy
h) Insurance Agent’s contact information
i) Previous title insurance policy copy
j) Tax Information (Proof that taxes are paid and current)
k) Grant Deed or Quit Claim deed copy
l) Payoff Letter (statement)

* Send in all the items at once, as separate files, not piecemeal.

* If the funds we provide are to be used for any construction-related purposes (entitlements, drawings,
pre-permit necessities, permits, closing costs, etc.), then we may instruct escrow to allocate funds on a
prescribed, progress payment basis.

* If the property in question is not owned free and clear, and we are requested to provide funding for
same, EMD funding may or may not, at its sole discretion, pay off or not pay off, the remaining balance
on any liens or loans due on the property. We require a current payoff letter/statement to accomplish
same.

* If the property in question is not owned free and clear, no part of the funding we provide can be used
for anything other than paying off the current property owner and/or paying off loans or liens, etc.
against the property. Simply put: we do not allow our funds to be used to provide an interim profit to the
investor, or pay fees, commissions, asset manager remuneration etc. To reiterate, our funds can only be
used to pay off loans, liens or property owners.

* Subsequently, we will be in get back to you in order formalize the Agreement between our firms, as
needed.
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* Normal vetting/funding time frame: 6-8 working days, best case scenario. (Our normal working
schedule is 9-5 PDT, Monday-Friday.)

Cut off time for vetting/funding of docs, etc. is 9 am PDT/PST. Also, we do not start the vetting process
until we have 100% of said docs in our hands. If everything in by 9 am (PDT/PST), then we will
endeavor to start the vetting process that day. Then we require one working day to close our files on the
deal. By the third working day it should be time for us to pass along the vetted files to our funding
process people. It usually takes them one working day to prepare the funding docs, get sign offs, prepare
everything to be sent to our title/escrow company. Our title/escrow company usually needs one working
day to complete their work, sometimes longer. So, normally by the 6th or 7th working day we will wire
transfer the funds to our title escrow company. Our title/insurance company usually needs one business
day to do their final paperwork and wire transfer the funds to the account of the funding requestor.
Total: 6-8 working days on average. But if there are any snafus, delays, etc. of any kind (caused either
by EMD/TECT or the funding requestor or the commercial loan broker or any other key players (bank
pay off dept., etc.) it can take longer. To reiterate, vetting/funding cut off time is 9 am, and we must
have 100% of everything in before we proceed.

Assuming we green light your funding request:

18. Promissory note, deed, sending of funds to escrow

a) EMD Funding will prepare the Promissory Note and Deed and send a copy of it to the commercial
loan broker or paperwork processor (approved of by EMD Funding).
b) The entity handling the transaction (commercial loan broker, processor or closing attorney/agent) next
will request that the funding requestor sign both the Promissory Note and Deed in front of a notary
public.
c) Once the Promissory Note and Deed have both been signed and notarized, the entity handling the
transaction will

1. Scan both of the docs

2. Provide a Commitment for Title Insurance verifying that a title insurance policy will be forthcoming
as regards the property in question; it next needs to be scanned.

d) Once EMD/TECT has received all three scanned copies (Note, Deed, Title Insurance Commitment) in
our hands, EMD/TECT will wire transfer the funds to the title/escrow’s bank account designated by the
commercial loan broker or funding requestor.

PLEASE PROVIDE WIRE TRANSFER INSTRUCTIONS.

e) Once the wire transfer has been received on your end, the entity handling the transaction will
immediately proceed to get the notarized deed recorded.

19. Next, EMD/TECT needs to receive all the following, ASAP:

a) Copy of a (new) current hazard (fire) insurance policy, naming TECT as beneficiary via scanned
email attachment.
b) Scanned copy (emailed to us as an attachment) of the recorded deed, with a (new) recent recording
stamp date, providing proof of recordation.
c) The actual (hard copy) of the (of the previously emailed) recorded deed; send it via Next Day Air.
d) The actual hard copy (of the previously emailed) Promissory Note; send it via Next Day Air.
e) The actual hard copy of the above-mentioned insurance policy
f) The actual hard copy of the above-mentioned Commitment to Title Insurance
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NOTE c), d), e) & f) should be sent together in the same next day air envelope.
e) Repayment to EMD/TECT (in 30-90 days) is to be via wire transfer, by escrow/title, to the same bank
and account number from which the original (TECT) funds were previously wired from in the first
place.

NOTE: All funding is provided by The Edith Capps Trust, 8322 El Paseo Grande, La Jolla, CA 92037.

20. EMD Funding reserves the right, at any time and without restriction, to assign (sell), hypothecate
(borrow against) or pledge the deed and note from this transaction to any other party of its choosing, and
the note will be assigned without recourse.

In addition, the note/deed is due and payable on the date indicated, with no restrictions of any kind,
regardless of whether it closes on time or not at all.

21. 10% FGFPF Costs. To reiterate, FGFPF Costs are fixed at 10% of the amount requested. Thus, 67%
FMV less 10% costs means that you receive approximately 60% of the FMV.

NOTE: Please take into account that the funding requestor (you) pays 100% of all escrow/title,
processing, etc. fees, costs, etc. The 10% fixed costs that we include is to cover all of our backroom
work, underwriting, confirming info, etc.

22. Late charges. EMD Funding may, at its sole discretion, charge a daily per diem late charge fee for
each day that the full amount due (face amount of the note) is past due. See No. 21 above. Here is the
math: Take the Markup dollar amount and divide it by the number of days involved. Thus, for every day
past when the full amount of our investment + markup is late getting to us, you agree that there will be a
penalty charge per day.

23. Funding Worksheet. Once a funding request has been approved by TECT/EMD, a Funding
Worksheet (FW) will be drawn up and signed by the funding requestor, as a prerequisite to creating a
Promissory Note. The FW will indicate how much net money is being provided by TECT/EMD to the
funding requestor, for how long, the markup and fees involved, and finally the total amount due by the
funding requestor when the Promissory Note is due and payable (30-60-90 days out).

The difference between the net amount of money received by the funding requestor, and the total
amount of money due and payable at the end of the term of the Promissory Note is a discounted amount,
stated as a percentage of the total. Simply put, the funding requestor receives money now and repays a
single lump sum in the future.

Example: $40,000 approved funding; 30 days; markup is 1% per day, or 30% over 30 days, equals
$12,000/markup ($40,000 x 30%) + $40,000 approved funding equals $52,000 total ($40,000 +
$12,000), i.e. the face value of the Promissory Note. Further, as detailed above, 10% in FGFPF Costs are
deducted from the $40,000, which equals $4,000 (10% x $40,000). Thus, the net proceeds to the funding
requestor for the above example = $36,000 ($40,000-$4,000).

How to Use First Position Gap Funding for Flip Acquisitions

To qualify, the deal must be as follows:

A. LTV, net 60% (67% less 10% fixed costs) of current FMV

B. ARVs do not enter into the equation since we only deal with current FMV for as-is type properties.

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C. We need to be provided, in advance (see No. 17 above), with the payoff amount due (loans, liens, etc.
if any) on the property to be acquired.

D. Example: 1. Current FMV: $100,000

2. We will fund up to $60,000 (60% of $100,000)
3. So, effectively, the fixer/flipper needs to buy the property, using our funds, at an
extreme discount to FMV
4. This is often the result of a homeowner who finds himself in foreclosure or pre-
foreclosure situation and thus is in a DMF (Distressed, Motivated and Flexible) state of mind.
5. The fixer/flipper will typically make a "deed-in-lieu" proposition to the DMF
homeowner, i.e. cash for keys.
6. Once the fixer/flipper has acquired the property, he needs to have cash lined up at the
ready to either:

a. Immediately (30 days or less) flip the property to a ready buyer

b. Acquire the property themselves, via refi, hard money. private debt or equity
partner, etc. for a fix/flip, and have that money already lined up to take EMD Funding out of the deal in
30 days or less.

E. The good news is that, unlike hard money loans, with EMD Funding, you do NOT need to provide:

1. Any “skin in the game” funds (down payment, etc.); we will provide 100% of your
needs
2. Reserve account funds
3. Monthly payments
4. Credit check
5. Appraisal

F. All the other normal “Free and Clear” terms and conditions apply. See above.

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Referral Fee Program

We are happy to pay a fee (see above) as consideration, based on the actual funded amount that result
from any referrals we receive.

Simply send us an email with their contact info:

1. name
2. email address
3. phone number

We must have all 3 pieces of info. We send them the appropriate info; at the same time, we open up a
folder in your name, that shows you as the one who sent us the lead; simultaneously we open up a file
for the name of the lead. We then track it from there all the way to the close of escrow. We keep you in
the info loop. You are paid your referral fee once we are paid. We request that you send us a billing for
your “services rendered” , and we will then send you a check from our trust account for the amount you
have earned.
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Tod Snodgrass
Managing Director
©EMD Funding™
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Trustee, The Edith Capps Trust
8322 El Paseo Grande
La Jolla, CA 92037
310 408-7015
emdfunding1@gmail.com
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Eff: 06-03-19
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