Q: Why is Pathfinder interested in purchasing my share of the Bay Pompano, LLC loans? How does Pathfinder make money?

A: Pathfinder will purchase your Loan Share at a discount in anticipation of receiving a favorable return on investment following (i) USA Commercial Mortgage’s (“USACM”) emergence from bankruptcy or (ii) foreclosure of the Bay Pompano property. In the event of purchase of the property following foreclosure or receipt of deed in lieu of foreclosure, Pathfinder is prepared to operate the property as an apartment complex and 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 Bay Pompano project for several years, if necessary, in order to generate an appropriate return on its investment.

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 nor continue to expend valuable time or money to follow and monitor the bankruptcy proceeding in order to protect your rights. According to the Las Vegas Review-Journal, $550,800 is spent each week on attorneys, interim managers and other professionals associated with the USA Capital bankruptcy case.

Q: Why should we sell our loans to Pathfinder?

A: Pathfinder operates in a straightforward fashion and provides prompt payment for Loan Shares. Other companies that may be seeking to purchase loans may not operate in a transparent fashion and may not pay creditors in what we consider to be a timely manner. 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 the developer, Bay Pompano, LLC?

A: No. Pathfinder is an independent investment company that is NOT affiliated with or hired by either USACM or its affiliates or the bankruptcy trustee or Bay Pompano, LLC, the developer.

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

A: We believe that by selling your remaining Bay Pompano, LLC Loan Share to Pathfinder, you could potentially recover as much as 85% of your initial investment through a combination of cash and claims for “diverted principal” through the Bankruptcy Court. By our calculations, Direct Lenders to Bay Pompano, LLC have remaining principal balances equal to about 47% of their original loan amounts. Pathfinder is offering you 67.8% of your remaining principal balance. The Borrower has already repaid approximately 53% of the original loan amounts to USACM. Approximately one-half of the previously repaid principal amounts were repaid to Direct Lenders with the balance being “diverted principal”.

Direct Lenders have a claim through the Bankruptcy Court for this diverted principal owed to them by USACM. We express no opinion as to whether any diverted principal will be recovered. However, if it is, you will share in the amount recovered.

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 since the mid-1980s. Pathfinder has teamed up with Contrarian Capital Management, LLC, an investment company with over $5.0 billion under management and extensive experience evaluating and investing in distressed debt and real estate. If you have further questions, do not hesitate to contact us.

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 Bay Pompano transaction.

Q: How does Pathfinder determine its offer price?

A: Our offer price is based on several factors, including the face value of the loans, the financial condition of USACM, our estimate of the current value of the Bay Pompano property, our assessment of the financial condition of Bay Communities – the Bay Pompano borrower – our estimate of the term of the bankruptcy, our perception of the risks inherent in the transaction and our anticipated return requirements. We have also considered the cost of improvements to prepare the property for future sale, legal costs related to USACM and enforcing the Mortgage, operating expenses and vacancy costs due to the challenges of managing a mixed owner/renter complex, and our potential liability for any previously unpaid Home Owner Association fees and our share of any deferred maintenance costs.

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

A: Our offer price has been reduced because of the considerable deterioration in the Florida 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 borrower is no longer actively managing the property (a receiver has been appointed).

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

A: Pathfinder will make 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 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 properly completed and signed acceptance of our offer and Assignment, no further action will be required. Pathfinder files all Notices of Transfer of Claim with Broward County, FL and the U.S. Bankruptcy Court.

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

A: Pathfinder requires that you have a valid economic interest in the 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 Share, won’t I be repaid soon?

A: The Borrower did not repay the Bay Pompano loans when they came due in June, 2006. Consequently, the Bay Pompano loans are currently classified by USACM as “Maturity Default”. No principal or interest payments have been made to the direct lenders since August, 2006 and the Borrower has been unable to close the sale of any units since that time. Pathfinder believes it likely that a foreclosure action will be required to enforce the lenders’ rights under the loans.

Pathfinder has conducted extensive due diligence on the USACM bankruptcy, the Bay Pompano loans, Bay Communities – the developer of the Bay Pompano project – and its principals and believes there is a substantial risk of non-payment by Bay Communities on the Bay Pompano loan. We also believe that the recent decline in the South Florida condominium market could continue to significantly impede the borrower’s ability to repay the loan.

Q: If Bay Communities defaults, can’t we simply foreclose on Bay Pompano?

A: The foreclosure process and its timing are highly uncertain, particularly in light of USACM’s bankruptcy proceedings. In the event the lenders are able to foreclose on Bay Pompano in a reasonable period of time (which is extremely uncertain, given USACM’s lack of action to date on commencing the foreclosure process, coupled with the uncertainty of the possible sale of the servicing business), 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.

In particular, under Florida law, foreclosure must occur through a litigation process. Notwithstanding the current default maturity status of the loan, it is highly likely that the borrower will object to the foreclosure and attempt to exert significant delays on the process, including possibly the filing of its own bankruptcy proceeding. The foreclosure process itself is likely to result in the incurrence of over $200,000 in additional fees (including legal expenses, documentary transfer taxes to the State of Florida and title insurance premiums, among others). Moreover, we have been advised that successor ownership of the project following a foreclosure action could result in significant additional costs and individual liability exposure. Pathfinder is prepared to undertake that risk. These additional costs include up to six months of Homeowner’s Association dues for each of the approximately 150 unsold units, expenses associated with refurbishing and leasing up the large number of vacant units in the project, and most importantly, the individual 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 Pompano Beach and Broward County and observes a significant increase in the number of available condominiums being offered for sale in south Florida’s Broward and Dade counties as of August, 2007. Consultations with experts in multi-family sales in south Florida indicate that the market has experienced a price decline of up to 35% to 40% over the last 9 to 12 months. Based on the competitive environment, Pathfinder believes there is substantial uncertainty as to whether the Bay Pompano units can be sold as condominiums in a reasonable period of time, even at substantial discounts to the prices currently sought by the developer. Based on its analysis, Pathfinder believes many of the units now being marketed as condominiums in south Florida, including many of the currently unsold Bay Pompano units, will instead return to the rental market, further depressing rental rates and increasing vacancy rates.

Q: What is happening to the rental income on the unsold Bay Pompano units?

A: We believe approximately 60% of the Bay Pompano units remain unsold. Just over half of these units were being rented by the Borrower (developer) with the rest remaining vacant. The Borrower has been collecting rents but has not been making principal or interest payments on the Bay Pompano loans since August, 2006. Pathfinder hopes that some funds should now be available, following the appointment of a receiver in August, 2007.

Q: Why is the developer in default on the Bay Pompano loan?

A: In addition to the decline in the south Florida condominium market, the developer was restricted by the terms of the loan to certain “release prices” for the sale of condominium units at the project. These prices, while perhaps reflective of market conditions in 2005, are not reflective of current market conditions. To date, USACM has not permitted a modification to the loan. Furthermore, USACM has also been unwilling to grant the developer a partial release of the mortgage because the developer has been in a default maturity status. The combination has severely restricted the developer’s ability to sell condominiums. For more information on the Bay Pompano developer’s background, please visit the following links:

From opulent roost, the Condo King crows

Kaan, Condo King Lilly Float Message: We Won

Judge Reopens Restitution Case Involving Valerie Kaan, Condo King

http://www.stewart.com/docs/specialAlerts/NL000116.pdf

William Lilly Agrees to Pay $5 Million to Settle Federal Civil Lawsuit

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. No account information, invoice numbers or other details are available from Pathfinder.

Q: What happens to our claim for "diverted principal"?

A: Approximately one-fourth of the Bay Pompano units were sold and the developer repaid a portion of the loans in exchange for a partial release of the mortgage. Apparently, this principal was diverted by USACM and paid to lenders on other USACM loans. Bay Pompano lenders have a claim on the diverted principal through the Bankruptcy Court process. Pathfinder is not purchasing those claims.

Q: If I sell my Loan Share, can I take a tax loss deduction on my 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. So, if you sell your loans before December 31, 2007, the tax deduction – in an amount equal to the difference in the face amount of the note and the discounted purchase price – should be available to you for the 2007 tax year. 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: What happens if the Bankruptcy Court trustee tries to recover monies that were previously paid to me?

A: Pathfinder believes that Bay Pompano investors suffered diverted principal. Consequently, we do not believe they were overpaid on their Bay Pompano loans and should not be subject to recovery of overpayments. Certain Bay Pompano investors who also have loans in other USACM properties where overpayments were made may be subject to recovery by the Bankruptcy Court trustee. We suggest you consult with your attorneys for specific legal guidance in this area.

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

A: Pathfinder is purchasing Bay Pompano 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, we 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: 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: Pathfinder’s offer has expired. Will Pathfinder still purchase my claim?

A: Pathfinder’s tender offer for Bay Pompano expired on January 9, 2007. Pathfinder extended the tender offer until March 5, 2007. Pathfinder has not extended the offering period beyond March 5, 2007 and currently has no plans to do so. Pathfinder has continued to purchase loan shares from holders who contact us but is not doing so through a tender offer. If we hold a tender offer or extend the offering period in the future, we will attempt to notify all of the persons holding Loan Shares.

Q: Are you interested in purchasing our Bay Pompano, LLC bankruptcy claims? Are you interested in purchasing other USA Commercial Mortgage loans?

A: We are not interested in purchasing Bay Pompano, LLC bankruptcy claims. At the present time, we are only purchasing Bay Pompano, LLC Loan Shares but 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 info@pathfinderpartnersllc.com, we will review it and contact you if we are interested in purchasing your interest any such Loan Shares.