WHY INVEST IN DEEDS OF TRUST
 THROUGH R. C. TEMME CORPORATION?

Those of you who, during the last 20 years, have been receiving payments from R.C. Temme Corporation on your trust deed investments have probably taken us for granted. After all, 20 years in business does suggest stability. However, reading a daily newspaper provides enough evidence to suggest it takes more than a 20 year history to give investors the peace of mind they deserve.

You may never have revisited your original decision to invest in 1st or 2nd Deeds of Trust through R.C. Temme Corporation. After all, most investors on our loans have probably never taken back a property in foreclosure. Most investors who have taken back a property, as the result of an R.C. Temme Corporation arranged loan, have had their principal returned with at least some profit after reselling the property.

SECURITY OF YOUR FUNDS WITHIN R.C. TEMME CORPORATION

In accordance with Regulation 260.105.30 of the California Department of Corporations, R.C. Temme Corporation is required to have our trust accounts and bank reconciliations reviewed by an independent certified public accountant at least every three months. The accountant is required to file a report with the Department of Corporations each quarter and, in accordance with Business and Professions Code 10232.25, with the Department of Real Estate once a year.

In 1989 there were approximately 750 companies in the state of California that were known to offer investments in deeds of trust. Most of those companies were required to periodically have their trust accounts reviewed by an independent CPA in accordance with either Department of Real Estate regulations or Department of Corporations regulations or in many instances, both. Yet, in a recent letter, legal counsel from the Department of Corporations states that only approximately 40 companies in California are complying with the requirements of the Department of Corporations by filing these CPA reviews. R.C. Temme Corporation is, of course, one of the 40 companies. We have been filing these reports in accordance with Regulation 260.105.30 since the regulation went into effect in approximately 1983.

 Our larger investors have automatically received a copy of this CPA trust account report for last year. However, ANY CURRENT INVESTOR OF R.C. TEMME CORPORATION IS WELCOME TO A COPY OF THAT REPORT. Our present investors should not be embarrassed to ask for a copy. You will not be insulting us to ask for one. The extra money we spend for these CPA reviews is ultimately for your peace of mind. We want you to enjoy that peace of mind when you invest with R.C. Temme Corporation.

R.C. Temme Corporation has additional reasons to maintain good security and trust account integrity. Unlike many mortgage brokers who live off of the loan commissions they can generate each month, most of you have noticed that R.C. Temme Corporation often does not charge a large commission to the borrower. Instead, we often derive a large portion of our income on a deferred basis, taken monthly, over the life of the loan. This gives us stability in all economic scenarios by providing guaranteed income for many years into the future. Most of our investors particularly appreciate this stability.

MOST OF OUR LOANS ARE PREFUNDED BEFORE
THEY ARE OFFERED TO YOU FOR INVESTMENT.

Richard Temme and Elisabeth Temme Stauffer are brother and sister who own the funding company that prefunds over 95% of the loans we offer to our investors. The California Department of Real Estate considers these broker controlled funds.

 Prefunding loans as we do is the exception in the industry. Most companies in our business require no capital of their own and simply give your money to the borrower in exchange for a commission for themselves and a note and deed of trust for you.

R.C. Temme Corporation's method of operation requires much more capital availability. R.C. Temme Corporation prefers to prefund our loans for a variety of reasons. The most important reason to the investor is the fact that our funding company is willing to invest this money in each loan, not knowing how long the loan may have to be held before all or a small portion of the loan is selected by an investor. Prefunding our loans often provides investors a chance to look at a few months of payment history prior to investing in a particular loan. Hopefully, our willingness to place our corporate officers in the investor's position on each loan gives our appraisal staff and underwriting judgement far greater credibility than the industry as a whole. Because our corporate officers, through their separate funding company, have money invested in these loans before the investors, we have an additional incentive to obtain the most accurate appraisals available.

The fact that we often have millions of dollars of loans prefunded by our funding company and available for investment is generally appreciated by our investors. This allows investors to immediately invest their money in a loan or small portion of several loans instead of waiting one, two, three or more months hoping to find a suitable loan in which to invest. Also, investors who prefer to view a property, prior to investing in a deed of trust, generally prefer investing in prefunded loans. The investor knows the loan is definitely available and the borrower will not change its mind regarding taking the loan or loan terms. As a result, a drive to view the property is rarely wasted unless the investor does not like the property.

COMPLIANCE WITH STATE AND FEDERAL REGULATIONS

As many of you know, the rules and regulations involving loans secured by notes and deeds of trust have become more and more complex through the years. Recently, our bank became concerned as to their liability if loans pledged on our credit line were found not to be in compliance with all applicable state and federal regulations.

We invited our bank to have their chief compliance officer inspect our files. We are happy to report that the bank was pleased with our very high level of compliance. It is our hope that you, as an investor, would also find comfort with this knowledge.

March, 1997

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