USA COMMERCIAL MORTGAGE CO. FILES MOTION TO DISTRIBUTE FUNDS TO DIRECT LENDERS, FUND MEMBERS

USACM Will Be Ready to Promptly Mail Checks When Court Approves Motion

LAS VEGAS, July 10, 2006 – USA Commercial Mortgage Company (USACM) today announced it filed a motion with the U.S. Bankruptcy Court requesting an order authorizing USACM to distribute certain funds held in USACM’s collection account to direct lenders, and authorizing the USA Capital Diversified Trust Deed Fund, LLC and USA Capital First Trust Deed Fund, LLC (the “Funds”) to further distribute certain funds to their respective fund members. 

The motion is scheduled to be heard in U.S. Bankruptcy Court in Las Vegas on Aug. 4.  The complete motion including exhibits can be viewed and downloaded from the USACM website – www.usacapitalcorp.com.  

USACM also announced that it will mail account statements today to direct lenders showing, as of April 13, 2006, the position of each direct lender with respect to each of the serviced loans in which the direct lender invested.  Statements showing direct lender positions through June 30, 2006 are intended to be mailed on or about July 14, 2006.  Similar statements for Fund members are being mailed as well.

USACM had approximately $93 million in its collection account as of June 30, 2006, including about $14 million in interest collected post-petition on nonperforming loans and approximately $60 million collected post-petition in loan principal repayments.  USACM had approximately $9 million in its loan servicing collection account as of April 12, 2006.

USACM suspended payments to all 3,600 direct lenders and 3,200 fund members on April 13, 2006 when the company and its affiliates filed for reorganization under Chapter 11.

“It has been the highest priority of the Mesirow team and the post-petition USACM management and staff to resume payments to investors who are owed money from loans serviced by USACM,” said Thomas J. Allison, president and chief restructuring officer of USACM.  “We still have a lot of work to do, but we believe this is a major step toward restoring the confidence of all interested parties that our restructuring efforts will be successful.  We will be ready to begin mailing checks as soon as we have court approval.”

The proposed total amount to be distributed by USACM will be disclosed in a supplemental filing on or before July 14, 2006.

Proposed Distribution Plan
The aggregate proposed distribution amount will be the sum of the amounts proposed to be distributed to each Direct Lender by account number (legal vesting name), which in turn will be the net of the amounts shown on Line 12 of the Direct Lender Statements for each Direct Lender by account number.  Line 12 shows the net amount per loan due to or from each Direct Lender based on whether USACM is holding collected funds to be paid to the Direct Lender, or funds overpaid to the Direct Lender by USACM that USACM did not receive from the Borrower.

USACM has disclosed repeatedly in court since its Chapter 11 filing that USACM paid interest to its investors on all loans every month whether the loan was performing or nonperforming, and the company utilized principal payoffs on some loans to fund interest payments to all investors.

An example of the proposed netting would be if a particular Direct Lender invested in five different loans under a single vesting name, the amounts (which may be positive or negative) shown on Line 12 of each of the five Direct Lender Statements for that vesting name will be netted together and the resulting amount, if positive, will be distributed to the Direct Lender.

In USACM’s pre-petition loan servicing system, USACM assigned a unique account number to each Direct Lender for each discrete legal “vesting” name through which the Direct Lender invested.  For example, “John Doe” would have a different account number and is considered a different vesting name than “John Doe IRA” or “John Doe, Trustee of the Doe Family Trust.”  John Doe may have invested individually in several loans, and his interest in each loan would be under the same account number, but he also may have invested in loans through other legal vesting names, and each distinct vesting name would have a distinct account number.

The Funds also seek permission to distribute a portion of the funds that will become property of their respective estates after the distributions proposed above are received by the Funds in their capacity as Direct Lenders.  Each Fund would reserve amounts sufficient to pay scheduled claims against their respective estates and estimated unpaid administrative expenses of the estate, and would distribute the excess amount pro rata to Fund Members in accordance with the share ownership indicated on the Fund Member Statements.

USACM also seeks authority to make monthly distributions on a regular basis, after deducting USACM’s servicing fees and other fees and costs it is entitled to charge and after netting amounts that may still be owed from those Direct Lenders on a vesting-name basis.  The Funds also seek authority to make monthly distributions on a regular basis based on their pro rata share of the funds available for distribution in excess of appropriate reserves for scheduled claims and administrative expenses.

Related to monthly distributions, USACM also seeks authority to accept loan payment proceeds from borrowers and provide partial or full releases of collateral on an ongoing basis, and to disburse funds that USACM thereby receives into its collection account to the Direct Lenders to which such loan payment proceeds are due and payable.

USA Commercial Mortgage Company
USA Commercial Mortgage Company and certain of its affiliates filed on April 13, 2006 voluntary petitions for reorganization under Chapter 11 with the U.S. Bankruptcy Court for the Southern District of Nevada.  The company also does business under the name USA Capital.
Filings for Chapter 11 were made for USA Commercial Mortgage Company; USA Capital Realty Advisors, LLC; USA Securities, LLC; USA Capital First Trust Deed Fund, LLC; and, USA Capital Diversified Trust Deed Fund, LLC.

USA Commercial Mortgage Company, a privately-held company, is one of the nation’s leading real estate lenders.  Since 1989, USA Commercial Mortgage Company has provided more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide.  The company is licensed by the State of Nevada Mortgage Lending Division (NV MBR #333) and has its headquarters at 4484 South Pecos Road, Las Vegas, Nevada, 89121.

MEDIA CONTACTS:

COMPANY
Mark L. Olson
USA Commercial Mortgage Co.
702.734.2400
702.353.6540 cell
molson@usacapitalcorp.com

PR AGENCY
Rob Santwer
Purdue Marion & Associates
702.734.2400 option 4
rob@purduemarion.com