Quarterly report pursuant to Section 13 or 15(d)

Finance Receivables - Special Product (New Neighbor Guaranty program)

v3.21.1
Finance Receivables - Special Product (New Neighbor Guaranty program)
3 Months Ended
Mar. 31, 2021
Receivables [Abstract]  
Finance Receivables – Original Product

Note 2. Finance Receivables – Original Product

The Company’s original funding product provides financing to community associations only up to the secured or “Super Lien Amount” as discussed in Note 1.  Finance receivables for the original product as of March 31, 2021 and December 31, 2020 based on the year of funding are approximately as follows:

 

 

 

March 31, 2021

 

 

December 31,

2020 (Audited)

 

Funded during the current year

 

$

13,000

 

 

$

25,000

 

1-2 years outstanding

 

 

13,000

 

 

 

12,000

 

2-3 years outstanding

 

 

9,000

 

 

 

9,000

 

3-4 years outstanding

 

 

6,000

 

 

 

12,000

 

Greater than 4 years outstanding

 

 

185,000

 

 

 

200,000

 

 

 

 

226,000

 

 

 

258,000

 

Reserve for credit losses

 

 

(125,000

)

 

 

(142,000

)

 

 

$

101,000

 

 

$

116,000

 

 

 

Note 3. Finance Receivables – Special Product (New Neighbor Guaranty program)

The Company typically funds amounts equal to or less than the “Super Lien Amount”.  During 2012 the Company began offering Associations an alternative product under the New Neighbor Guaranty program where the Company funds amounts in excess of the “Super Lien Amount”.  

Under this special product, the Company purchases substantially all of the outstanding past due assessments due from delinquent property owners, in addition to all interest, late fees and other charges in exchange for the Company’s commitment to pay monthly assessments on a going forward basis up to 48 months.  

As of March 31, 2021, maximum future contingent payments under these arrangements was approximately $1,700.  

Delinquent assessments and accrued charges under these arrangements as of March 31, 2021 and December 31, 2020, are as follows:

 

 

 

 

March 31, 2021

 

 

December 31,

2020 (Audited)

 

Finance receivables, net

 

$

54,000

 

 

$

53,000

 

Delinquent assessments

 

 

134,000

 

 

 

148,000

 

Accrued interest and late fees

 

 

40,000

 

 

 

57,000

 

Number of active units with delinquent assessments

 

 

14

 

 

 

20

 

 

Allowance for credit losses are recorded for losses that are considered “probable” and can be “reasonably estimated” in accordance with ASC 450-20.  Recoverability of the Company’s Original Product is generally assured because of the protection of the Super Lien under Florida statute and as such no allowance is recorded.    

Credit losses on the NNG product were estimated by the Company based on analyzing the investment in each unit and comparing that balance to the average payout for completed units for the past 12 months. The allowance for losses based on these analyses, had a remaining balance of $7,000 and $6,500 as of March 31, 2021 and December 31, 2020, respectively.