Note 6: Loans Held For Investment: Loans and Leases Receivable, Real Estate Acquired Through Foreclosure, Policy (Policies)

12 Months Ended

Sep. 30, 2012

Policies

Loans and Leases Receivable, Real Estate Acquired Through Foreclosure, Policy

During the quarter ended September 30, 2012, eleven properties were acquired in the settlement of loans, while 17 previously foreclosed upon properties were sold.  As of September 30, 2012, real estate owned was comprised of 18 properties with a net fair value of $5.2 million, primarily located in Southern California.  This compares to 24 real estate owned properties, primarily located in Southern California, with a net fair value of $5.5 million at June 30, 2012.  A new appraisal was obtained on each of the properties at the time of foreclosure and fair value was calculated by using the lower of the appraised value or the listing price of the property, net of disposition costs.  Any initial loss was recorded as a charge to the allowance for loan losses before being transferred to real estate owned.  Subsequently, if there is further deterioration in real estate values, specific real estate owned loss reserves are established and charged to the statement of operations.  In addition, the Corporation records costs to carry real estate owned as real estate operating expenses as incurred.