Q: Why is Pathfinder interested in purchasing my share of the Gramercy Court, Ltd. loan? How does Pathfinder make money?

A: Pathfinder will purchase your Loan Share at a discount in anticipation of receiving a favorable return following (i) Gramercy Court’s emergence from bankruptcy or (ii) foreclosure of the Deed of Trust on the Gramercy Court property. In the event of purchase of the property following foreclosure or receipt of a deed in lieu of foreclosure, Pathfinder is prepared to operate the property as an apartment complex or eventually market the units as condominiums. Pathfinder’s principals have substantial real estate investment and operating experience. As such, Pathfinder is prepared to maintain its investment in the Gramercy Court project for several years, if necessary, in order to generate an appropriate return on its investment. Our intention is to vote, if necessary, to aggressively cause the loan servicer to enforce the mortgage loan.

Q: Why should we sell our Loan Share?

A: Pathfinder will provide you with a way to immediately turn an otherwise illiquid investment into cash. Furthermore, by selling, you would no longer have to contend with the risk, expense and uncertainty of the USACM bankruptcy process or the Gramercy Court, Ltd. bankruptcy process nor continue to expend valuable time or money to follow and monitor the bankruptcy proceedings in order to protect your rights.

Q: Why should we sell our loans to Pathfinder?

A: Pathfinder affiliates are the largest direct lenders, holding positions several times larger than the next largest direct lender, in two other USACM loans. To date, Pathfinder affiliates have purchased loan shares from more than 100 USACM direct lenders. Pathfinder operates in a straightforward fashion and provides very prompt payment for Loan Shares. Pathfinder also processes all transactions through a national title company’s escrow division and pays all escrow costs, recording fees and other expenses. Other companies that may be seeking to purchase Loan Shares do not operate in a similarly transparent fashion and do not pay lenders in what we consider to be a timely manner or with the appropriate protections for the lenders, including use of a national title company. If you receive other offers, Pathfinder recommends that you read all letters and assignment agreements carefully to ensure that you will be paid in a timely fashion.

Q: Is Pathfinder affiliated with or hired by USA Commercial Mortgage Company or Compass Financial Partners, LLC?

A: No. Pathfinder is an independent investment company that is NOT affiliated with or hired by USACM, its affiliates, the new loan servicer, Compass Financial Partners, LLC or the bankruptcy trustee.

Q: How much of my original investment could I recover by selling my loans to Pathfinder?

A: You will recover 51.2% of your initial principal investment through a sale to Pathfinder.

Q: Why has Pathfinder’s offer price been reduced?

A: Our offer price has been reduced because of the considerable deterioration in the real estate market, the severe dislocation in the equity and debt markets – particularly the mortgage markets. Pathfinder also believes that it is unlikely that the borrower will be able to secure new financing with which to repay the loan, given the borrower’s history and the fact that the project is in bankruptcy.

Q: How can we be assured that Pathfinder will pay us?

A: Pathfinder is a reputable company whose principals have been engaged in corporate finance and real estate investment for more than 20 years. Pathfinder has concluded Loan Share purchases from more than 100 other USACM direct lenders. Pathfinder has teamed up with Contrarian Capital Management, LLC, an investment company with $5 billion under management and extensive experience evaluating and investing in distressed debt and real estate.

Pathfinder processes all transactions through Chicago Title Insurance Company, the leading U.S. title company and one of the largest national escrow agencies. Chicago Title, founded in 1847, has a solid reputation for integrity. More information on Chicago Title can be found at www.ctic.com.

Q: How much will I have to pay for escrow expenses?

A: Nothing. Pathfinder pays all escrow expenses connected with the Gramercy Court transaction.

Q: How does Pathfinder determine its offer price?

A: Our offer price is based on a number of factors, including the face value of the loans, the financial condition of USACM, the financial condition of Gramercy Court, Ltd., the borrower, our estimate of the term of the bankruptcy, our estimate of the costs of additional construction required to complete the property, the risks associated with a potential “cram down” of the principal balance of the loan through the borrower’s Chapter 11 reorganization, and the potential liabilities associated with the borrower’s claim that it was damaged as a result of USACM’s failure to fully fund the loan. We have also considered the potential claims of other creditors in the bankruptcy – including mechanic’s liens filed by the general contractor and its sub-contractors and the City of Houston for unpaid property taxes and other fees – and our anticipated return requirements. Furthermore, we have considered other risks associated with the transaction, including the expenditure of significant legal costs related to both the USACM and the Gramercy Court bankruptcies, operating expenses and vacancy costs due to the challenges of managing a mixed owner/renter complex and a partially completed project, selling and leasing expenses, our potential liability for any previously unpaid Home Owner Association fees and our share of any deferred maintenance costs.

Q: How long will it take for Pathfinder to pay us?

A: Pathfinder makes all payments through the escrow division of Chicago Title Insurance Company. Pathfinder pays all escrow expenses. Standard payment method will be by check issued by Chicago Title within five (5) business days of our receipt and review of your documents. Alternatively, we can send your payment by wire transfer or overnight mail for a nominal fee. Since you are concurrently transferring an interest in the Mortgage encumbering real property, it is important that we coordinate that process through an escrow account to insure that legal ownership to that interest is properly documented and transferred.

Q: What else will we have to do to transfer our loans to Pathfinder?

A: Once Pathfinder receives your Acceptance of our offer and Assignment, your recent USACM Investor History Report for Gramercy Court and your USACM Loan Summary Statement or USACM Check Statement, no further action will be required by you. Pathfinder will file all Notices of Transfer of Claim with Harris County, TX and Compass Financial Partners, LLC.

Q: Do you have any requirements for the sale of our Loan Shares?

A: Pathfinder requires that you have a valid economic interest in the Gramercy Court loan that has not been previously sold, transferred, assigned, pledged, objected to or satisfied. Pathfinder recommends that you check your records carefully prior to accepting our offer. Pathfinder reserves the right to review the validity of any Loan Share presented and may refuse to purchase it for any reason.

Q: If I keep my Loan Shares, won’t I be repaid soon?

A: The Borrower did not repay the Gramercy Court loan when it came due in June, 2006. Consequently, the Gramercy Court loan is currently classified by USACM as “Maturity Default”. No principal or interest payments have been made to the direct lenders since the loan was made in 2004. The Borrower has been unable to close the sale of any units since June, 2006 because USACM refused to grant partial lien releases as a result of the maturity default. As such, the Borrower changed its strategy and began leasing units in the complex. One building is complete and estimated to be 50% occupied. The second building appears to require considerable additional work and can not be leased until such work is completed. The Borrower filed for Chapter 11 bankruptcy protection in April, 2007. Pathfinder believes it likely that an adversary proceeding in the Gramercy Court bankruptcy case will be required to enforce the lenders’ rights under the loans.

Pathfinder has conducted extensive due diligence on the USACM bankruptcy, the Gramercy Court loan, Gramercy Court, Ltd. – the Borrower – and its principals and believes there is a substantial risk of non-payment by Gramercy Court, Ltd. on this loan and on other loans made to its entities affiliated with Tracy Suttles through USACM. Affiliated entities of Mr. Suttles have other defaulted loans from USACM. Mr. Suttles has a history of defaulting on loans and filing for bankruptcy with his projects. We also believe that the recent bankruptcy filing of Gramercy Court, LLC, the drastic decline in the condominium market, the lack of institutional financing now available to “take out” the current loan as part of a plan of reorganization, and the unfinished nature of the Gramercy Court project will continue to significantly impede the Borrower’s ability to repay the loan.

Q: Can’t we simply foreclose on Gramercy Court?

A: The recent bankruptcy filing by the Borrower effectively “stays” the ability of the lender from filing a foreclosure action. In the event the lender is able to foreclose on Gramercy Court in a reasonable period of time (which would require cooperation from Compass Partners, LLC), Pathfinder has further concerns about the underlying real estate asset and what are likely to be significant expenses associated with a foreclosure and subsequent ownership of the property.

Notwithstanding the current default maturity status of the loan and the Borrower’s recent bankruptcy filing, it appears that the Borrower will object to any attempt at foreclosure and will endeavor to exert significant delays on the process, including possibly the filing of various motions and objections in the bankruptcy proceeding. We anticipate that if we are successful with obtaining relief from stay, the foreclosure process itself will result in the incurrence of over $200,000 in additional fees (including legal expenses, documentary transfer taxes to the State of Texas and title insurance premiums, among others) and we estimate that the bankruptcy process could extend for 12-24 months and require legal expenses of $200,000-$500,000. Moreover, we have been advised that successor ownership of the complex following a foreclosure action could result in significant additional costs. Pathfinder is prepared to undertake this risk. These additional costs include potential payment of Homeowner’s Association monthly dues for each of the approximately 220 unsold units, expenses associated with refurbishing and leasing up the large number of vacant units in the project, and most importantly, the liability exposure for construction defects and related claims arising from the sale of the condominium units (both prior sales as well as any new sales) as successor in interest to the developer (Borrower).

Pathfinder evaluated the multi-family apartment and condominium markets in the Medical Center District of Houston, TX and observes a significant increase in the number of available condominiums being offered for sale as of April, 2007. Consultations with experts in multi-family sales in Houston indicate that the market has experienced price declines and reduced sales levels over the past 12-18 months. Based on the competitive environment, Pathfinder believes it is highly unlikely that the remaining Gramercy Court units can be sold as condominiums in a reasonable period of time, even at substantial discounts to the Borrower’s most recent asking prices. Based on its analysis, Pathfinder believes many of the units now being marketed as condominiums, including many of the currently unsold Gramercy Court units, will instead return to the rental market.

Q: What is happening to the rental income on the unsold Gramercy Court units?

A: Pathfinder believes that approximately 98% of the Gramercy Court units remain unsold and approximately 75% of the Gramercy Court units were vacant as of April, 2007. The Borrower has been collecting rents on approximately 60 units but has not been making principal or interest payments on the loans. In a recent Order, the Bankruptcy Court permitted the Borrower to use the cash collected from the operations of the complex to fund its operating expenses, even though the debt is not being serviced. In that same Order, the Court requires the Borrower to pay $30,000 per month to the direct lenders’ loan servicer, Compass Financial Partners.

Q: Why is the Borrower in default on the Gramercy Court loan?

A: In addition to the rapid decline of the condominium market, USACM refused to grant partial lien releases to facilitate the sale of condominium units because the Borrower was in maturity default. The combination made it essentially impossible for the Borrower to sell condominiums. Furthermore, there is additional construction required on one of the two Gramercy Court buildings. Pathfinder does not believe the complex is viable – either as a condominium or as an apartment complex – until the construction of the second building is completed.

Q: Does Pathfinder have account or invoice numbers to help me reconcile the claim to my books and records?

A:  Pathfinder is an independent investment company that is not affiliated with or hired by USACM or its affiliates. Therefore, we do not have full access to the books and records of USACM or Compass Financial Partners, LLC. No account information, invoice numbers or other details are available from Pathfinder.

Q: If we sell our loans, can we take a tax loss deduction on our income tax returns?

A: Losses sustained on investments are typically deductible on federal and state income tax returns in the year the loss is realized. Since we are not able to provide legal or accounting advice, we strongly urge you to consult with your accountant or tax advisor for specific tax guidance.

Q: Are payments received from Pathfinder subject to recovery in the event the Bankruptcy Court trustee seeks to recover monies previously paid to Gramercy Court lenders?

A: Pathfinder is purchasing Gramercy Court loans on a non-recourse basis, meaning we can not look to you for a return of our purchase price unless you have previously sold, encumbered, assigned or otherwise had your Loan Share satisfied. Furthermore, Pathfinder would be responsible for the repayment of any interest that USA Commercial Mortgage prepaid to you on account of this note.

Q: What if we do not have documents to support our Loan Share?

A: Pathfinder will do its best to help all Gramercy Court direct lenders, even those without complete documentation. Please contact Pathfinder for further instructions.

Q: What if we disagree with the amount Pathfinder lists as our Loan Share?

A: Pathfinder will review any documentation you may have to support a revision of your claim amount. After such documentation is approved, Pathfinder may forward a revised offer to you.

Q: Are you interested in purchasing other USA Commercial Mortgage loans?

A: At the present time, we are interested in purchasing Bay Pompano, LLC, Palm Harbor One, LLC and Gramercy Court, Ltd. Loan Shares in separately negotiated transactions. We may be interested in purchasing other USACM loans in the future. If you would like to email a listing of your other USACM loans to us at info@pathfinderpartnersllc.com, we will review it and contact you if we are interested in purchasing your interest any such Loan Shares.