Walker Investing Group 2 nd Lien Mortgage Debt

Walker Investing Group, a division of CVW Investing Inc., was formed in March of 2007, to assemble and offer non-correlated investments to investors. Walker Investing Group specializes in unique and innovative opportunities for our clients. Our programs are tailored to offer a minimum of double digit annual returns and are not tied to stocks, bonds or mutual funds. Our investments are not affected by the economy or world events. Who Is Walker Investing Group? Who Is Walker Investing Group?

Walker Investing Group is offering individuals the opportunity to purchase unsecured, non-performing, 2 nd lien mortgage debt pools through traditional secondary markets. This type of debt is typically available only to institutional buyers. This debt is available at historically deep discounts due to the prior collapse of the real estate markets, which will be discussed later in greater detail. When partnered with the right debt restructuring or collection firm, the purchaser of this debt can expect to generate high gross returns and significant cash flow for many years. 2 nd Lien Mortgage Debt Opportunity

 Average 2 nd lien note is face value  Most of the debt is from California, New York, Florida, Nevada, etc.  Our clients purchase the notes for.0125 cents on the dollar.  Minimum purchase of $10,000 = $800,000 in debt  2 nd lien notes only  Non-performing notes  Unsecured notes  Our Initial offer to the debtor is to settle for a minimum of 20% of the value of the note. Example $60,000 = $12,000  The $60,000 note cost the investor $750  Down payment and monthly payment programs are available to the debtor  The debtor will receive significant credit rehabilitation when they agree to pay the note, and make their initial payment. Facts… Facts…

Overview  Between 2003 and 2007, over $1 trillion in U.S. 2 nd lien mortgages were underwritten. These included Purchase Money Loans, Home Equity Lines of Credit (HELOC), Cash Outs and Home Improvement Loans.  As is well known, very lax mortgage underwriting standards ($3 trillion in subprime by 2007), coupled with inflated property values, produced a classic financial bubble – a colossal bubble that was blown dangerously thin by derivatives (credit default swaps).  The first hole in the bubble appeared in February 2007 and quickly set off a chain reaction of foreclosures.  Delinquencies in subprime mortgages increased six-fold.  With derivatives (in the $Trillions$ by 2007) acting as an accelerant, the secondary mortgage market collapsed, and the bubble burst.

Overview By the fourth quarter of 2008, the deterioration of the U.S. and world economy, especially in the consumer real estate sector, placed banks and other lenders under stresses unknown since “The Great Depression”. Where there is Panic there is Profit! Banks began selling off this toxic debt (TARP) at historically low discounts to clear their books and charge off this debt. Heritage Pacific (HP Debt Exchange) - a member of FDIC - began buying this debt in large multi-million dollar blocks in September of Heritage Pacific would then break these blocks down to smaller blocks and sell to joint venture partners.

In January of 2009, the initial investors funded the first purchase of blocks of 2 nd lien debt. Heritage Pacific would then clean out the bankruptcies and break the debt into smaller blocks; mark the debt up and “flip” it to joint venture partners. Joint venture partners are investors with significant funds who wanted to get into the 2 nd lien business, but did not have direct buying access to FDIC notes. Between January of 2009 and August of 2009, the initial clients earned a return on their investment totaling 101% while “flipping” this debt to the joint venture partners. Results Results

State of the Art Debt Service Heritage Pacific opened a debt servicing division in April of 2009 to service their joint venture clients. Relying initially on out-bound calling, they had about 100 representatives working three shifts. Trial and error proved that the best formula was to send out demand letters before making out-bound calls. These demand letters produced a high amount of in-bound calls, greatly reducing the number of in-house collectors. Heritage Pacific then initiated the development of custom software to manage the debt servicing division. They also designed an extremely efficient skip tracing system, including the use of in-house employees as well as third party vendors.

Debtors are always treated with the utmost respect! Below is the process, if clients choose to work with Heritage Pacific After the first payment is received from the debtor, the debtor receives a “Thank You” call from Heritage Pacific! The Debt is immediately removed from their credit report, which could increase the debtors score by as much as 100 points! By September 2009, the Heritage Pacific collection process had progressed to the point of being very efficient in collecting 2 nd lien debt. Walker Investing Group began offering $10,000 units of 2 nd lien debt ($800,000 of debt at face value), with the option of using Heritage Pacific to service their debt. Results to date have confirmed the expectations of far above average returns and monthly cash flow.

Historical  September 6.42%  October 4.01%  November 3.41%  December 1.64%  January 1.75%  February 2.69% Performance  March 2.85%  April 3.13%  May 2.84%  June 2.58%  July 3.24%  August 3.01% The figures above represent the monthly ROI for the initial 12 months: 9/01/2009 to 8/31/ % Average Monthly Return 37.62% Annual Return The returns above, DO NOT include the Sale of Judgments or Errors and Omissions Insurance Claims, and are NET after paying the collection costs. We anticipate the ROI will increase as Judgments are Secured, and the Errors and Omissions Insurance Claims are filed and payment is received. The Judgment Process, and Errors and Omissions Claims take at least 90 to 180 days.

Each debt collection company pays their clients differently. Investors must inquire and negotiate payments and the cost of collecting their debt, with the debt collection firm they choose to work with. We will offer you the name of three debt collection firms, other than Heritage Pacific, to help you choose a firm for the collection of your debt. If our clients choose to work with Heritage Pacific, they are paid every month, on the 15 th business day, for the prior month’s collections. The 1 st check is received in 45 – 60 days, depending on which day of the month the funds cleared for the initial purchase of debt. Clients who choose to personally collect their debt will be paid on a case by case basis, according to their results and the arrangements made with their debtors. When are Investors Paid?

Below are the collection charges from Heritage Pacific. We do not have current information pertaining to the charges of other collection firms. Heritage Pacific charges 30¢ of every dollar collected to fund the servicing company, which covers their operating cost, and 70¢ of every dollar collected goes to the investor or owner of the debt. Once the investor recovers their initial investment, the collections are split 50/50, between Heritage Pacific and the Investor. The numbers on a prior page are Net after 30% was paid to Heritage Pacific. If the investor chooses to collect their own debt, or work with another debt collection firm, the return could be different, depending on their success. There are Absolutely No Guarantees as to the results, regardless of collection process, or collection firm chosen by the investor. Profit Sharing

Fraud = Judgment It is estimated that over 90% of the notes contain fraud. Fraud can be overstated income, or misleading statements about homestead or investment purposes. Every attempt is made to settle the debt in the first 90 days, for a minimum of 20% of note. Lawsuits are filed by the Heritage Pacific’s in-house attorney after 90 days when fraud is found. Once fraud is proven to be involved, the debt cannot be dismissed through bankruptcy, and if bankruptcy has been filed, it can be over-turned. Heritage Pacific is able to garnish wages in 47 states. Once a Judgment is received, Judgment debt is worth 500 to 700 basis points (5 to 7 cents on the dollar) immediately on the market. The debtor is now ready to settle.

Errors and Omissions Insurance ◦ Each business involved with the loan process, is required to carry Errors and Omissions Insurance. ◦ This includes appraisers, banks, mortgage companies, title companies and anyone else involved with the process. ◦ Because of the “Fraud” connected to virtually every loan, the Errors and Omissions Insurance is potentially liable for any and all mistakes involved with the loans. This could be a “Windfall” for investors, and it was not included in our initial business and investment model! We consider it an extra “Bonus” to an excellent investment! ◦ The largest error uncovered thus far, pertains to a $250,000 home that was appraised at $2,200,000. More than one individual or company involved in this loan, was probably aware of the error. The acceptable margin of error is plus or minus 10%. Obviously this instance is well out of the acceptable margin of error. ◦ Errors and Omissions Claims are currently being filed, and will continue to be filed as necessary and appropriate

Our primary concern, for our clients, is Principal Protection! There are 4 main factors in protecting the principal with 2 nd lien debt.  COST! … Our clients purchase debt at the low cost of 1¼¢ on the dollar.  FRAUD!... This opportunity is “Excellent” as it is, but when fraud is proven and judgments are awarded, the returns are expected to increase!  Errors and Omissions Insurance! … When fraud is proven, Errors and Omissions Insurance may pay off, and the policies pay up to 100% of the debt. This could easily triple or quadruple the ROI.  Second Lien Debt…the law of large numbers! Principal Protection Principal Protection

Collection Process  Data Entry: Data is entered into the system  Quality Control Level 1: All data inspected for accuracy and scrubbed for bankruptcies  Research Analyst: Full skip tracing - including 3rd party vendor  Quality Control Level 2: All data inspected again for accuracy  Pre-Law Suit: Loans go to in-house legal team for review, based on legal strategy  Quality Control Level 3: All data inspected again for accuracy  Lawsuits: Loans enter Legal System

Process Flow Chart

Q. What am I buying? A. 2nd lien charged off notes that have no security interest (unsecured). You receive the original note and collateral files which are held in trust by the collection company. Q. How much does the debt cost? A. The market values this debt at 125 basis points, or 1¼% of the unpaid balance (UPB), or.0125¢ on the dollar. A minimum purchase of $10,000 buys $800,000 in debt. This price is subject to change at any time based on market conditions. Q. What makes unsecured 2nd lien notes collectable and valuable? A. Unlike 1st lien notes, which are usually forgiven at the time of foreclosure, 2nd lien notes become an unsecured note similar to a credit card. The collection company pursues the 2nd lien borrower for the deficiency. Fraud in obtaining the loan and Errors and Omissions Insurance are also two issues which must be addressed. Frequently Asked Questions

Q.Which debt collection company should I use? A. As the buyer, you may choose any debt collection company to assist you in the collection process. Walker Investing Group will give you names of at least three debt collection companies, or you may choose to collect the notes yourself. Walker Investing Group recommends Heritage Pacific Financial because of their expertise in 2nd lien mortgage debt. Walker Investing Group has absolutely no connection, financial or otherwise, to or with Heritage Pacific. Q.How long will it take to make back my purchase price? A. Audited results predict that it will take approximately 36 months, on average, to recover the initial investment. It could be sooner as Judgments, and Errors and Omissions Insurance become a factor. Q.How long does the collection company collect on these loans? A. Industry research shows that the total collectable value of this type of debt is between 5% and 7% of the UPB. Walker Investing Group expects that purchasers of this debt will receive monthly distributions at least 5 to 7 years, and possibly up to 20 years, as Fraud, Judgments, Errors and Omissions Insurance and monthly payouts become a factor. Frequently Asked Questions (cont.)

Q.How often can I receive distributions? A. It depends on the collection company you choose. Heritage Pacific offers monthly distributions. Q.Can I purchase debt for my IRA, SEP, or other qualified retirement plan? A. Yes. The investment direction must come from an established custodian for qualified retirement plans. We use SunWest Trust located in Albuquerque, NM. Q.Are there any additional or recurring costs associated with the ownership of the debt? A. No (unless it’s in an IRA – annual custodial fee) Q.Can I reinvest my distributions? A. Yes. Frequently Asked Questions (cont.)