XML 23 R11.htm IDEA: XBRL DOCUMENT

Loans Held for Sale

3 Months Ended

Mar. 31, 2024

4) Loans Held for Sale

The Company’s loans held for sale portfolio is valued using the fair value option. Changes in the fair value of the loans are included in mortgage fee income. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on recognition of mortgage loan interest income and is included in mortgage fee income on the condensed consolidated statement of earnings. Included in loans held for sale are loans in the process of foreclosure with an aggregate unpaid principal balance of $311,117 and $1,636,090 as of March 31, 2024 and December 31, 2023, respectively. See Note 8 to the condensed consolidated financial statements for additional disclosures regarding loans held for sale.

The following table presents the aggregate fair value and the aggregate unpaid principal balance of loans held for sale:

	As of March 31, 2024			As of December 31, 2023

Aggregate fair value	$	112,678,958		$	126,549,190
Unpaid principal balance		113,616,499			127,185,867
Unrealized loss		(937,541	)		(636,677	)

Mortgage Fee Income

Mortgage fee income consists of origination fees, processing fees, interest income and other income related to the origination and sale of mortgage loans held for sale.

Major categories of mortgage fee income for loans held for sale are summarized as follows:


	Three Months Ended March 31,
	2024			2023
Loan fees	$	5,520,465		$	4,388,414
Interest income		1,482,819			2,007,058
Secondary gains		14,730,974			17,961,358
Change in fair value of loan commitments		561,778			677,952
Change in fair value of loans held for sale		(300,890	)		794,614
Provision for loan loss reserve		(163,476	)		159,610
Mortgage fee income	$	21,831,670		$	25,989,006

Loan Loss Reserve

Repurchase demands from third party investors that correspond to mortgage loans previously held for sale and sold are reviewed and relevant data is captured so that an estimated future loss can be calculated. The key factors that are used in the estimated future loss calculation are as follows: (i) lien position, (ii) payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand. Other data is captured and is useful for management purposes; the actual estimated loss is generally based on these key factors. The Company conducts its own review upon the receipt of a repurchase demand. In many instances, the Company can resolve the issues relating to the repurchase demand by the third-party investor without having to make any payments to the investor.

The loan loss reserve, which is included in other liabilities and accrued expenses, is summarized as follows:

	As of March 31, 2024			As of December 31, 2023
Balance, beginning of period	$	547,233		$	1,725,667
Provision on current loan originations (1)		163,476			27,164
Charge-offs, net of recaptured amounts		(210,102	)		(1,205,598	)
Balance, end of period	$	500,607		$	547,233

(1)

Included in mortgage fee income

The Company maintains reserves for estimated losses on current production volumes. For the three month period ended March 31, 2024, $163,476 in reserves were added at a rate of 3.5 basis points per loan, the equivalent of $350 per $1,000,000 in loans originated. This is a decrease over the three month period ended March 31, 2023, when reserves of $239,801 were added at a rate of 4.5 basis points per loan originated, the equivalent of $450 per $1,000,000 in loans originated. The Company monitors market data and trends, economic conditions (including forecasts) and its own experience to maintain adequate loss reserves on current production.