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Commitments and Contingencies (Policies)
6 Months Ended
Sep. 26, 2020
Commitments and Contingencies Disclosure [Abstract]  
Repurchase Contingencies Repurchase Contingencies. The Company is contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for independent distributors of its products. These arrangements, which are customary in the industry, provide for the repurchase of products sold to distributors in the event of default by the distributor.The maximum amount for which the Company was liable under such agreements approximated $77.6 million and $79.3 million at September 26, 2020 and March 28, 2020, respectively, without reduction for the resale value of the homes. The Company applies ASC 460, Guarantees, and ASC 450-20, Loss Contingencies, to account for its liability for repurchase commitments. The Company had a reserve for repurchase commitments of $2.5 million and $2.7 million at September 26, 2020 and March 28, 2020, respectively.
Representations and Warranties of Mortgages Sold Representations and Warranties of Mortgages Sold. CountryPlace sells loans to Government-Sponsored Enterprises ("GSEs") and whole-loan purchasers and finances certain loans with long-term credit facilities secured by the respective loans. In connection with these activities, CountryPlace provides to the GSEs and whole-loan purchasers and lenders representations and warranties related to the loans sold or financed. Upon a breach of a representation, CountryPlace may be required to repurchase the loan or to indemnify a party for incurred losses. The Company maintains a reserve for these contingent repurchase and indemnification obligations. This reserve of $1.3 million as of September 26, 2020 and $1.0 million as of March 28, 2020, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss. During the six months ended September 26, 2020, no claim request resulted in the execution of an indemnification agreement or in the repurchase of a loan
Derivatives
Interest Rate Lock Commitments. In originating loans for sale, CountryPlace issues interest rate lock commitments ("IRLCs") to prospective borrowers. These IRLCs represent an agreement to extend credit to a loan applicant, whereby the interest rate on the loan is set prior to loan closing or sale. These IRLCs bind the Company to fund the approved loan at the specified rate regardless of whether interest rates or market prices for similar loans have changed between the commitment date and the closing date.
As of September 26, 2020, CountryPlace had outstanding IRLCs with a notional amount of $23.2 million, which are recorded at fair value in accordance with ASC 815, Derivatives and Hedging. During the three months ended September 26, 2020 and September 28, 2019, the Company recognized losses of $19,000 and $2,000, respectively, on outstanding IRLCs. During the six months ended September 26, 2020 and September 28, 2019, the Company recognized losses of $144,000 and $3,000, respectively, on outstanding IRLCs.
Forward Sales Commitments. CountryPlace manages the risk profiles of a portion of its outstanding IRLCs and mortgage loans held for sale by entering into forward sales of mortgage-backed securities ("MBS") and whole loan sale commitments. As of September 26, 2020, CountryPlace had $58.8 million in outstanding notional forward sales of MBSs and forward sales commitments. Commitments for forward sales of whole loans are typically in an amount proportionate with the amount of IRLCs expected to close in particular time frames, assuming no change in mortgage interest rates, for the respective loan products intended for whole loan sale.
The estimated fair values of forward sales of MBS and whole loan sale commitments are based on quoted market values and are recorded within Prepaid expenses and other current assets in the Consolidated Balance Sheets. During the three months ended September 26, 2020 and September 28, 2019, the Company recognized gains of $118,000 and $49,000 on forward sales of MBS and whole loan sale commitments, respectively. During the six months ended September 26, 2020 and September 28, 2019, the Company recognized gains of $1.1 million and $84,000 on forward sales of MBS and whole loan sale commitments, respectively.