Commitments and Contingencies (Policies)

9 Months Ended

Jan. 01, 2022

Commitments and Contingencies Disclosure [Abstract]

Repurchase Contingencies

Repurchase Contingencies. We are contingently liable under terms of repurchase agreements with financial institutions providing inventory financing to independent distributors of our 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 we were liable under such agreements approximated $117.3 million and $74.2 million at January 1, 2022 and April 3, 2021, respectively, without reduction for the resale value of the homes that are repurchased. We had a reserve for repurchase commitments of $3.2 million at January 1, 2022 and $2.3 million at April 3, 2021.

Representations and Warranties of Mortgages Sold

Representations and Warranties of Mortgages Sold. We sell loans to Government-Sponsored Enterprises ("GSEs") and whole-loan purchasers and finance certain loans with long-term credit facilities secured by the respective loans. In connection with these activities, we provide to GSEs and whole-loan purchasers and lenders representations and warranties related to the loans sold or financed. Upon a breach of a representation, we may be required to repurchase the loan or to indemnify a party for incurred losses. We maintain a reserve for these contingent repurchase and indemnification obligations. This reserve of $1.2 million as of January 1, 2022 and April 3, 2021, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss. There were no claim requests that resulted in the execution of an indemnification agreement or in the repurchase of a loan during the nine months ended January 1, 2022.

Derivatives

Interest Rate Lock Commitments. In originating loans for sale, we issue interest rate lock commitments ("IRLCs") to prospective borrowers. These IRLCs bind us 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 January 1, 2022, we had outstanding IRLCs with a notional amount of $29.7 million. During the three months ended January 1, 2022, there were no gains or losses on outstanding IRLCs, and we recognized non-cash gains of $57,000 during the three months ended December 26, 2020. For the nine months ended January 1, 2022 and December 26, 2020, we recognized gains of $42,000 and losses of $87,000, respectively.

Forward Sales Commitments. We manage the risk profiles of a portion of the outstanding IRLCs and mortgage loans held for sale by entering into forward sales of mortgage-backed securities ("MBS") and whole loan sale commitments (collectively "Commitments"). As of January 1, 2022, we had $21.5 million in outstanding Commitments. We recognized non-cash losses of $61,000 and $318,000 for the three months ended January 1, 2022 and December 26, 2020, respectively. During the nine months ended January 1, 2022 and December 26, 2020, we recognized losses of $329,000 and gains of $816,000, respectively.