An industry standard is for a Broker to strengthen the offering (to Investors) of the Trust Deed to investors by creating an interest reserve for the borrower.  An interest reserve account is money set aside to ensure the investors interest payments on a loan over a specified term.  This can be a good feature in the correct circumstances; however often times the actual source of the interest reserve and the math is not to the benefit of the investors and this may hide the weakness in the borrower’s cash flow and qualifications. The PITFALL occurs by a taking a good attribute and distorting it with the Deed of Trust originator and the borrower.  For example: Borrower acquires a parcel of land for $100,000 with $50,000 down payment.  This land later ‘appraises’ for $500,000.00 based on that value; Borrower requests a loan of $375,000 (75% LTV) The investor is offered...