The composition of our mortgage loan portfolio is as follows:



(dollars in 000s)
As of	October 31, 2013					October 31, 2012					April 30, 2013
	Amount			% of Total		Amount			% of Total		Amount			% of Total
Adjustable-rate loans	$	165,289		54	%	$	210,610		55	%	$	191,093		55	%
Fixed-rate loans	140,814			46	%	175,257			45	%	159,142			45	%
	306,103			100	%	385,867			100	%	350,235			100	%
Unamortized deferred fees and costs	2,508					3,108					2,868
Less: Allowance for loan losses	(12,704		)			(18,125		)			(14,314		)
	$	295,907				$	370,850				$	338,789

Our loan loss allowance as a percent of mortgage loans was 4.2% as of October 31, 2013, compared to 4.7% as of October 31, 2012 and 4.1% as of April 30, 2013.

Activity in the allowance for loan losses for the six months ended October 31, 2013 and 2012 is as follows:



(in 000s)
Six months ended October 31,	2013			2012
Balance at beginning of the period	$	14,314		$	26,540
Provision	7,224			6,750
Recoveries	2,409			2,291
Charge-offs	(11,243		)	(17,456		)
Balance at end of the period	$	12,704		$	18,125

During the first quarter of fiscal year 2014, we transferred $7.6 million of mortgage loans into the held-for-sale portfolio from the held-for-investment portfolio. At the time of the transfer, the amount by which cost exceeded fair value totaled $2.9 million. This write-down to fair value was recorded as a provision during the six months ended October 31, 2013 and subsequently charged-off. These loans were sold during the three months ended October 31, 2013.

When determining our allowance for loan losses, we evaluate loans less than 60 days past due on a pooled basis, while loans we consider impaired, including those loans more than 60 days past due or modified as a troubled debt restructuring (TDR), are evaluated individually. The balance of these loans and the related allowance is as follows:



(in 000s)
As of	October 31, 2013				October 31, 2012				April 30, 2013
	Portfolio Balance		Related Allowance		Portfolio Balance		Related Allowance		Portfolio Balance		Related Allowance
Pooled (less than 60 days past due)	$	178,497	$	5,523	$	229,761	$	6,892	$	207,319	$	5,628
Impaired:
Individually (TDRs)	47,011		4,598		63,602		5,972		55,061		4,924
Individually (60 days or more past due)	80,595		2,583		92,504		5,261		87,855		3,762
	$	306,103	$	12,704	$	385,867	$	18,125	$	350,235	$	14,314

Detail of our mortgage loans held for investment and the related allowance as of October 31, 2013 is as follows:



(dollars in 000s)
	Outstanding Principal Balance		Loan Loss Allowance				% 30+ Days Past Due
	Outstanding Principal Balance		Amount		% of Principal		% 30+ Days Past Due
Purchased from SCC	$	175,566	$	10,236	5.8	%	31.0	%
All other	130,537		2,468		1.9	%	8.0	%
	$	306,103	$	12,704	4.2	%	21.2	%

Credit quality indicators as of October 31, 2013 include the following:



(in 000s)
Credit Quality Indicators	Purchased from SCC		All Other		Total Portfolio
Occupancy status:
Owner occupied	$	128,932	$	84,025	$	212,957
Non-owner occupied	46,634		46,512		93,146
	$	175,566	$	130,537	$	306,103
Documentation level:
Full documentation	$	57,821	$	95,174	$	152,995
Limited documentation	5,744		13,412		19,156
Stated income	97,591		13,656		111,247
No documentation	14,410		8,295		22,705
	$	175,566	$	130,537	$	306,103
Internal risk rating:
High	$	53,679	$	—	$	53,679
Medium	121,887		—		121,887
Low	—		130,537		130,537
	$	175,566	$	130,537	$	306,103

Loans given our internal risk rating of “high” were originated by Sand Canyon Corporation, formerly known as Option One Mortgage Corporation, and its subsidiaries (SCC), and generally had no documentation or were based on stated income. Loans given our internal risk rating of “medium” were generally full documentation or based on stated income, with loan-to-value ratios at origination of more than 80%, and were made to borrowers with credit scores below 700 at origination. Loans given our internal risk rating of “low” were generally obtained from parties other than SCC, with loan-to-value ratios at origination of less than 80% and were made to borrowers with credit scores greater than 700 at origination.

Our mortgage loans held for investment include concentrations of loans to borrowers in certain states, which may result in increased exposure to loss as a result of changes in real estate values and underlying economic or market conditions related to a particular geographical location. Approximately 59% of our mortgage loan portfolio consists of loans to borrowers located in the states of Florida, California, New York and Wisconsin.

Detail of the aging of the mortgage loans in our portfolio as of October 31, 2013 is as follows:



(in 000s)
	Less than 60 Days Past Due		60 – 89 Days Past Due		90+ Days Past Due⁽¹⁾		Total Past Due		Current		Total
Purchased from SCC	$	14,794	$	627	$	56,107	$	71,528	$	104,038	$	175,566
All other	5,964		677		9,115		15,756		114,781		130,537
	$	20,758	$	1,304	$	65,222	$	87,284	$	218,819	$	306,103


⁽¹⁾	We do not accrue interest on loans past due 90 days or more.

Information related to our non-accrual loans is as follows:



(in 000s)
As of	October 31, 2013		October 31, 2012		April 30, 2013
Loans:
Purchased from SCC	$	67,641	$	75,414	$	70,327
Other	12,723		16,427		14,906
	80,364		91,841		85,233
TDRs:
Purchased from SCC	3,832		3,776		3,719
Other	881		506		502
	4,713		4,282		4,221
Total non-accrual loans	$	85,077	$	96,123	$	89,454

Information related to impaired loans is as follows:



(in 000s)
	Balance With Allowance		Balance With No Allowance		Total Impaired Loans		Related Allowance
As of October 31, 2013:
Purchased from SCC	$	30,100	$	77,052	$	107,152	$	5,762
Other	5,196		15,258		20,454		1,419
	$	35,296	$	92,310	$	127,606	$	7,181
As of October 31, 2012:
Purchased from SCC	$	40,142	$	90,516	$	130,658	$	7,992
Other	7,951		17,497		25,448		3,241
	$	48,093	$	108,013	$	156,106	$	11,233
As of April 30, 2013:
Purchased from SCC	$	33,791	$	84,592	$	118,383	$	6,573
Other	7,601		16,932		24,533		2,113
	$	41,392	$	101,524	$	142,916	$	8,686

Information related to the allowance for impaired loans is as follows:



(in 000s)
As of	October 31, 2013		October 31, 2012		April 30, 2013
Portion of total allowance for loan losses allocated to impaired loans and TDR loans:
Based on collateral value method	$	2,583	$	5,261	$	3,762
Based on discounted cash flow method	4,598		5,972		4,924
	$	7,181	$	11,233	$	8,686

Information related to activities of our non-performing assets is as follows:



(in 000s)
Six months ended October 31,	2013		2012
Average impaired loans:
Purchased from SCC	$	121,532	$	141,521
All other	23,646		26,343
	$	145,178	$	167,864
Interest income on impaired loans:
Purchased from SCC	$	1,727	$	1,992
All other	136		158
	$	1,863	$	2,150
Interest income on impaired loans recognized on a cash basis on non-accrual status:
Purchased from SCC	$	1,689	$	1,956
All other	134		145
	$	1,823	$	2,101

Activity related to our real estate owned (REO) is as follows:



(in 000s)
Six months ended October 31,	2013			2012
Balance, beginning of the period	$	13,968		$	14,972
Additions	3,889			5,312
Sales	(9,972		)	(5,189		)
Impairments	(792		)	(1,278		)
Balance, end of the period	$	7,093		$	13,817