5. Consumer Loans Receivable

The following table summarizes consumer loans receivable (in thousands):



	March 31, 2018			April 1, 2017
Loans held for investment (at Acquisition Date)	$	51,798		$	60,513
Loans held for investment (originated after Acquisition Date)	21,183			11,108
Loans held for sale	12,830			18,570
Construction advances	11,088			6,957
Consumer loans receivable	96,899			97,148
Deferred financing fees and other, net	(1,551		)	(1,095		)
Allowance for loan losses	(397		)	(252		)
Consumer loans receivable, net	$	94,951		$	95,801

The allowance for loan losses is developed at the loan level and allocated to specific individual loans or to impaired loans. A range of probable losses is calculated after giving consideration to, among other things, the loan characteristics, and historical loss experience. The Company then makes a determination of the best estimate within the range of loan losses. The allowance for loan losses reflects the Company's judgment of the probable loss exposure on its loans held for investment portfolio.

As of the Acquisition Date, the Company determined the excess of the loan pool's scheduled contractual principal and contractual interest payments over all cash flows expected as an amount that includes interest that cannot be accreted into interest income (the non-accretable difference). The cash flow expected to be collected in excess of the carrying value of the acquired loans includes interest that is accreted into interest income over the remaining life of the loans (referred to as accretable yield). Interest income on consumer loans receivable is recognized as net revenue (see further discussion in Note 1).



	March 31, 2018			April 1, 2017
	(in thousands)
Consumer loans receivable held for investment – contractual amount	$	120,096		$	142,391
Purchase discount:
Accretable	(44,481		)	(56,686		)
Non-accretable difference	(23,711		)	(25,032		)
Less consumer loans receivable reclassified as other assets	(106		)	(160		)
Total acquired consumer loans receivable held for investment, net	$	51,798		$	60,513

Over the life of the acquired loans, the Company estimates cash flows expected to be collected to determine if an allowance for loan loss subsequent to the Acquisition Date is required (see further discussion in Note 1). The weighted averages of assumptions used in the calculation of expected cash flows to be collected are as follows:



	March 31, 2018		April 1, 2017
Prepayment rate	16.0	%	13.8	%
Default rate	1.2	%	1.1	%

Assuming there was a 1% unfavorable variation from the expected level, for each key assumption, the expected cash flows for the life of the portfolio, as of March 31, 2018, would decrease by approximately $1.2 million and $3.5 million for the expected prepayment rate and expected default rate, respectively.

The changes in accretable yield on acquired consumer loans receivable held for investment were as follows (in thousands):



	Year Ended
	March 31, 2018			April 1, 2017
Balance at the beginning of the period	$	56,686		$	69,053
Additions	—			—
Accretion	(8,453		)	(9,621		)
Reclassifications from (to) nonaccretable discount	(3,752		)	(2,746		)
Balance at the end of the period	$	44,481		$	56,686

The consumer loans held for investment have the following characteristics:



	March 31, 2018		April 1, 2017
Weighted average contractual interest rate	8.57	%	8.87	%
Weighted average effective interest rate	9.34	%	9.35	%
Weighted average months to maturity	168		165

The following table disaggregates CountryPlace's gross consumer loans receivable for each class by portfolio segment and credit quality indicator as of the time of origination (in thousands):



	March 31, 2018
	Consumer Loans Held for Investment
	Securitized 2005		Securitized 2007		Unsecuritized		Construction Advances		Consumer Loans Held For Sale		Total
Asset Class
Credit Quality Indicator (FICO® score)
Home-only loans
0-619	$	465	$	354	$	330	$	—	$	—	$	1,149
620-719	10,102		7,107		8,587		—		245		26,041
720+	10,594		6,410		11,285		—		155		28,444
Other	49		—		403		—		—		452
Subtotal	21,210		13,871		20,605		—		400		56,086
Conforming mortgages
0-619	—		—		156		141		179		476
620-719	—		—		2,137		6,428		6,479		15,044
720+	—		—		199		4,519		5,663		10,381
Other	—		—		116		—		109		225
Subtotal	—		—		2,608		11,088		12,430		26,126
Non-conforming mortgages
0-619	82		405		1,047		—		—		1,534
620-719	1,120		4,378		3,093		—		—		8,591
720+	1,348		2,526		395		—		—		4,269
Other	—		—		282		—		—		282
Subtotal	2,550		7,309		4,817		—		—		14,676
Other Loans	—		—		11		—		—		11
	$	23,760	$	21,180	$	28,041	$	11,088	$	12,830	$	96,899



	April 1, 2017
	Consumer Loans Held for Investment
	Securitized 2005		Securitized 2007		Unsecuritized		Construction Advances		Consumer Loans Held For Sale		Total
Asset Class
Credit Quality Indicator (FICO® score)
Home-only loans
0-619	$	705	$	411	$	393	$	—	$	—	$	1,509
620-719	11,681		8,072		5,406		—		697		25,856
720+	12,748		7,800		5,081		—		3,097		28,726
Other	51		—		433		—		—		484
Subtotal	25,185		16,283		11,313		—		3,794		56,575
Conforming mortgages
0-619	—		—		161		261		99		521
620-719	—		—		1,792		4,231		10,553		16,576
720+	—		—		247		2,465		4,124		6,836
Subtotal	—		—		2,200		6,957		14,776		23,933
Non-conforming mortgages
0-619	86		435		1,327		—		—		1,848
620-719	1,242		4,947		3,372		—		—		9,561
720+	1,527		2,909		484		—		—		4,920
Other	—		—		299		—		—		299
Subtotal	2,855		8,291		5,482		—		—		16,628
Other loans	—		—		12		—		—		12
	$	28,040	$	24,574	$	19,007	$	6,957	$	18,570	$	97,148

Loan contracts secured by collateral that is geographically concentrated could experience higher rates of delinquencies, default and foreclosure losses than loan contracts secured by collateral that is more geographically dispersed. As of March 31, 2018, 44% of the outstanding principal balance of consumer loans receivable portfolio is concentrated in Texas and 11% is concentrated in Florida. As of April 1, 2017, 43% of the outstanding principal balance of consumer loans receivable portfolio was concentrated in Texas and 12% was concentrated in Florida. No other state had concentrations in excess of 10% of the principal balance of the consumer loan receivable as of March 31, 2018 or April 1, 2017.

Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home, less the costs to sell. At repossession, the fair value of the collateral is computed based on the historical recovery rates of previously charged-off loans; the loan is charged off and the loss is charged to the allowance for loan losses. On a monthly basis, the fair value of the collateral is adjusted to the lower of the amount recorded at repossession or the estimated sales price less estimated costs to sell, based on current information. Repossessed homes totaled approximately $1.5 million and $1.2 million as of March 31, 2018 and April 1, 2017, respectively, and are included in prepaid and other assets in the consolidated balance sheets. Foreclosure or similar proceedings in progress totaled approximately $1.1 million and $694,000 as of March 31, 2018 and April 1, 2017, respectively.