Consumer Loans Receivable

3 Months Ended

Jun. 30, 2011

Consumer Loans Receivable and Inventory Finance Receivables and Allowance for Loan Loss [Abstract]

5. Consumer Loans Receivable

The Company acquired consumer loans receivable during the first quarter of fiscal 2012 as a part of the Palm Harbor transaction. Acquired consumer loans receivable held for investment were acquired at fair value and subsequently are accounted for in a manner similar to ASC 310-30. Consumer loans receivable held for sale is carried at the lower of cost or market value. The following table summarizes consumer loans receivable (in thousands):


	June 30,
	2011

Consumer loans receivable held for investment	$	118,377
Consumer loans receivable held for sale		4,931
Construction advances on non-conforming mortgages		3,206

Consumer loans receivable		126,514
Deferred financing cost, net		(363	)


Consumer loans receivable, net	$	126,151

At the Acquisition Date, management evaluated consumer loans receivable held for investment to determine whether there was evidence of deterioration of credit quality prior to acquisition and if it was probable that the Company would be unable to collect all amounts due according to the loan’s 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 pool’s scheduled contractual principal and contractual interest payments over all cash flows expected as of the acquisition date as an amount that should not be accreted (the non-accretable difference). The remaining difference 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 sales.


	June 30,			April 23,
	2011			2011

Consumer loans receivable held for investment — contractual amount	$	330,781		$	339,166
Purchase Discount
Accretable		(115,471	)		(118,335	)
Non-accretable		(96,472	)		(100,151	)
Allowance for loan losses		—			—
Less consumer loans receivable reclassified as other assets		(461	)		—


Total consumer loans receivable held for investment, net	$	118,377		$	120,680

Over the life of the loans, the Company continues to estimate cash flows expected to be collected. The Company evaluates at the balance sheet date whether the present value of its loans determined using the effective interest rate, has decreased and if so, recognizes an allowance for loan loss subsequent to the acquisition date. The present value of any subsequent increase in the loan pool’s actual cash flows expected to be collected is used first to reverse any existing allowance for loan loss. Any remaining increase in cash flows expected to be collected adjusts the amount of accretable yield recognized on a prospective basis over the loan pool’s remaining life.

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


	June 30,
	2011

Balance at the beginning of the period	$	—
Additions		118,335
Accretion		(2,864	)
Reclassifications from (to) nonaccretable discount		—
Disposals		—

Balance at the end of the period	$	115,471

The Company’s consumer loans receivable consists of fixed-rate, fixed-term, fully-amortizing single-family home loans. These loans are either secured by a manufactured home, excluding the land upon which the home is located (chattel property loans and retail installment sale contracts), or by a combination of the home and the land upon which the home is located (real property mortgage loans). The real property mortgage loans are primarily for manufactured homes. 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 purchase of a home. In rare instances the Company may provide other types of loans in second-lien or unsecured positions. Accordingly, the Company classifies its loans receivable assets as follows: chattel loans, conforming mortgages, non-conforming mortgages, and other loans.

The following tables disaggregate consumer loans receivable for each class by portfolio segment as of June 30, 2011 (in thousands):


	Consumer Loans Held for Investment								Consumer
	Securitized		Securitized				Construction		Loans Held
Asset Class	2005		2007		Unsecuritized		Advances		For Sale		Total

Chattel loans	$	49,808	$	33,763	$	3,055	$	—	$	—	$	86,626
Conforming mortgages		—		—		1,571		3,205		4,931		9,707
Non-conforming mortgages		4,864		15,187		10,081		—		—		30,132
Other loans		—		—		49		—		—		49


	$	54,672	$	48,950	$	14,756	$	3,205	$	4,931	$	126,514

In measuring credit quality within each segment and class, the Company uses commercially available credit scores (“FICO”). At the time of each loan’s origination, the Company obtained 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. Except in the case of troubled debt restructurings or other loan modifications, the Company does not update credit bureau scores after the time of origination.

The following table disaggregates the Company’s consumer loans receivable by class and credit quality indicator as of June 30, 2011 (in thousands):


	Consumer Loans Held for Investment								Consumer
Asset Class	Securitized		Securitized				Construction		Loans Held
Credit Quality Indicator	2005		2007		Unsecuritized		Advances		For Sale		Total

Chattel loans
0-619	$	1,553	$	995	$	954	$	—	$	—	$	3,502
620-719		22,241		15,160		1,307		—		—		38,708
720+		26,014		17,608		793		—		—		44,415

Conforming mortgages
0-619		—		—		420		54		537		1,011
620-719		—		—		1,040		2,286		2,754		6,080
720+		—		—		111		865		1,640		2,616

Non-conforming mortgages
0-619		97		933		2,951		—		—		3,981
620-719		2,405		9,070		5,580		—		—		17,055
720+		2,362		5,184		1,551		—		—		9,097

Other loans
Total other		—		—		49		—		—		49


	$	54,672	$	48,950	$	14,756	$	3,205	$	4,931	$	126,514