Consumer Loans Receivable (Tables)

12 Months Ended

Mar. 30, 2019

Loans and Leases Receivable, Nonperforming Loan and Lease, Policy

Consumer Loans Receivable. Consumer loans receivable consists primarily 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 30, 2019			March 31, 2018
Loans held for investment (at Acquisition Date)	$	44,375		$	51,798
Loans held for investment (originated after Acquisition Date)	20,580			21,183
Loans held for sale	11,288			12,830
Construction advances	12,883			11,088
Consumer loans receivable	89,126			96,899
Deferred financing fees and other, net	(1,926		)	(1,551		)
Allowance for loan losses	(415		)	(397		)
Consumer loans receivable, net	$	86,785		$	94,951

Revenue Recognition, Interest

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 30, 2019			March 31, 2018
	(in thousands)
Consumer loans receivable held for investment – contractual amount	$	100,595		$	120,096
Purchase discount:
Accretable	(36,672		)	(44,481		)
Non-accretable difference	(19,502		)	(23,711		)
Less consumer loans receivable reclassified as other assets	(46		)	(106		)
Total acquired consumer loans receivable held for investment, net	$	44,375		$	51,798

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 30, 2019		March 31, 2018
Prepayment rate	17.1	%	16.0	%
Default rate	1.1	%	1.2	%

Assuming there was a 1% (100 basis points) unfavorable variation from the expected level, for each key assumption, the expected cash flows for the life of the portfolio, as of March 30, 2019, would decrease by approximately $938,000 and $2.6 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 30, 2019			March 31, 2018
Balance at the beginning of the period	$	44,481		$	56,686
Additions	—			—
Accretion	(7,588		)	(8,453		)
Reclassifications to nonaccretable discount	(221		)	(3,752		)
Balance at the end of the period	$	36,672		$	44,481

Consumer Loans Held for Investment Characteristics

The consumer loans held for investment have the following characteristics:



	March 30, 2019		March 31, 2018
Weighted average contractual interest rate	8.49	%	8.57	%
Weighted average effective interest rate	9.11	%	9.34	%
Weighted average months to maturity	163		168

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 30, 2019
	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	$	401	$	245	$	266	$	—	$	—	$	912
620-719	8,448		5,996		10,266		—		—		24,710
720+	9,090		5,419		8,436		—		617		23,562
Other	47		—		390		—		—		437
Subtotal	17,986		11,660		19,358		—		617		49,621
Conforming mortgages
0-619	—		—		83		—		460		543
620-719	—		—		2,202		8,061		6,885		17,148
720+	—		—		684		4,822		3,326		8,832
Subtotal	—		—		2,969		12,883		10,671		26,523
Non-conforming mortgages
0-619	78		344		991		—		—		1,413
620-719	994		4,008		2,687		—		—		7,689
720+	1,238		2,053		369		—		—		3,660
Other	—		—		214		—		—		214
Subtotal	2,310		6,405		4,261		—		—		12,976
Other Loans	—		—		6		—		—		6
	$	20,296	$	18,065	$	26,594	$	12,883	$	11,288	$	89,126

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 30, 2019, 44% of the outstanding principal balance of consumer loans receivable portfolio is concentrated in Texas and 12% is concentrated in Florida. As of March 31, 2018, 44% of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and 11% 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 30, 2019