Consumer Loans Receivable (Tables)

12 Months Ended

Mar. 31, 2018

Inventory Finance Receivables Geographic Concentration

The Company has concentrations of commercial loans receivable related to factory-built homes located in the following states, measured as a percentage of commercial loans receivables principal balance outstanding:



	March 31, 2018		April 1, 2017
Arizona	16.7	%	21.3	%
Oregon	14.7	%	15.7	%
California	14.4	%	11.0	%

Loans and Leases Receivable, Nonperforming Loan and Lease, Policy

Consumer Loans Receivable. Consumer loans receivable consists of manufactured housing loans originated by CountryPlace (securitized, held for investment or held for sale) and construction advances on mortgages. The fair value of consumer loans receivable held on the Acquisition Date was calculated as of that date, as determined by the present value of expected future cash flows, with no allowance for loan loss recorded.

Loans held for investment consist of loan contracts collateralized by the borrowers' homes and, in some instances, related land. Construction loans in progress are stated at the aggregate amount of cumulative funded advances. Loans held for sale are loans that, at the time of origination, are originated with the intent to resell to investors which the Company has pre-existing purchase agreements, such as Fannie Mae and Freddie Mac, or to sell as part of a Ginnie Mae insured pool of loans and consist of loan contracts collateralized by single-family residential mortgages. Loans held for sale are stated at the lower of cost or market on an aggregate basis.

Combined land and home loans are further disaggregated by the type of loan documentation: those conforming to the requirements of Government-Sponsored Enterprises ("GSEs") and those that are non-conforming. In most instances, the Company's loans are secured by a first-lien position and are provided for the consumer purchase of a home. Unsecuritized consumer loans held for investment include home-only personal property loans originated under the Company's home-only lending programs. Accordingly, the Company classifies its loans receivable as follows: conforming mortgages, non-conforming mortgages, home-only loans and other loans.

In measuring credit quality within each segment and class, the Company uses commercially available credit scores (such as FICO®). At the time of each loan's origination, the Company obtains credit scores from each of the three primary credit bureaus, if available. To evaluate credit quality of individual loans, the Company uses the mid-point of the available credit scores or, if only two scores are available, the Company uses the lower of the two. The Company does not update credit bureau scores after the time of origination.

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

Revenue Recognition, Interest

Financial Services Revenue Recognition. Premium amounts collected on policies issued and assumed by Standard Casualty are amortized on a straight-line basis into net revenue over the life of the policy. Premiums earned are net of reinsurance ceded. Policy acquisition costs are also amortized as cost of sales over the life of the policy.

Upon acquisition of the securitized loan portfolio (the "Acquisition Date"), management evaluated consumer loans receivable held for investment by CountryPlace to determine whether there was evidence of deterioration of credit quality and if it was probable that CountryPlace would be unable to collect all amounts due according to the loans' contractual terms. The Company also considered expected prepayments and estimated the amount and timing of undiscounted expected principal, interest and other cash flows. The Company determined the excess of the loan pool's scheduled contractual principal and contractual interest payments over the undiscounted cash flows expected as of the Acquisition Date as an amount that is not 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 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 Note 5).

For loans originated by CountryPlace and held for sale, loan origination fees and gains or losses on sales are recognized as net revenue upon title transfer of the loans. CountryPlace provides third-party servicing of mortgages and earns servicing fees each month based on the aggregate outstanding balances. Servicing fees are recognized as net revenue when earned.

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

Acquired Consumer Loans Receivable Held for Investment



	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

Weighted average assumptions cash flows

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.

Accretable Yield Movement on Acquired Consumer Loans Receivable

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

Consumer Loans Held for Investment Characteristics

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

Gross Consumer Loans Receivable by Portfolio Segment and Credit Risk Score

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

Geographic Concentration of Consumer Loans Receivable

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