MORTGAGE INVESTMENTS, LOAN PARTICIPATIONS AND LOAN SALES

Lending Activities

The Company did not originate any new loans during the three months ended March 31, 2016 or 2015. During the three months ended March 31, 2016, the Company collected mortgage loan payoffs totaling $7.6 million, which represented the negotiated payoffs of two of our performing loans at a discount of $0.2 million. We recorded an adjustment as of December 31, 2015 to provide for this discount.

A roll-forward of loan activity for the three months ended March 31, 2016 is as follows (in thousands):



	Principal Outstanding			Interest Receivable			Valuation Allowance			Carrying Value
Balance, December 31, 2015	$	23,592		$	447		$	(12,892	)	$	11,147
Additions:
Accrued interest revenue	—			192			—			192
Reductions:
Mortgage loan payoffs	(7,843		)	(180		)	210			(7,813		)
Balance, March 31, 2016	$	15,749		$	459		$	(12,682	)	$	3,526

As of March 31, 2016, the Company had four loans outstanding with an average principal and interest balance of $4.0 million, as compared to $3.9 million for six loans at December 31, 2015. Of the four outstanding loans at March 31, 2016, two of the loans were performing with an average outstanding principal and interest balance of $1.8 million and a weighted average interest rate of 8.3%. Of the six outstanding loans at December 31, 2015, there were four performing loans with an average outstanding principal and interest balance of $2.8 million and a weighted average interest rate of 10.5%. As of March 31, 2016 and December 31, 2015, the valuation allowance represented 78.2% and 53.6%, respectively, of the total outstanding loan principal and interest balances. The valuation allowance at March 31, 2016 relates to two legacy loans which have been fully reserved and have a zero carrying value.

Loan Sales

We did not sell any mortgage loans during the three months ended March 31, 2016. During the three months ended March 31, 2015, we sold two loans with a carrying value of $13.7 million for a net loss of approximately $0.1 million.

Scheduled Loan Maturities

The outstanding principal and interest balance of mortgage investments, net of the valuation allowance, as of March 31, 2016, have scheduled maturity dates within the next several quarters as follows (in thousands):



Quarter	Outstanding Balance			Percent		#
Matured	$	12,682		78.2	%	2
Q4 2017	3,173			19.6	%	1
Thereafter	353			2.2	%	1
Total Principal and Interest	16,208			100.0	%	4
Less: Valuation Allowance	(12,682		)
Net Carrying Value	$	3,526

From time to time, the Company may extend a mortgage loan’s maturity date in the normal course of business. In this regard, the Company has modified certain loans, extending maturity dates in some cases to two or more years, and the Company may modify additional loans in the future in an effort to preserve collateral. Accordingly, repayment dates of the loans may vary from their currently scheduled maturity date. If the maturity date of a loan is not extended, the loans are classified and reported as matured and in default.

During the three months ended March 31, 2016, we collected mortgage loan payoffs totaling $7.6 million. This amount represents the negotiated payoffs of two of our performing loans at a collective discount of $0.2 million. The discounted payoffs on these loans did not represent troubled debt restructuring because the loans were fully performing and the Company initiated the discounted payoffs in order to generate liquidity.

Given the non-performing status of our legacy loans, we do not expect to receive any loan payoffs on loans that are past their respective maturity dates. We may find it necessary to foreclose, modify, extend, make protective advances or sell such loans in order to protect collateral, maximize return or generate additional liquidity.

Summary of Loans in Default

The Company’s portfolio loan defaults were attributed to, among other reasons, loan balances that exceeded the fair value of the underlying collateral and the absence of takeout financing in the marketplace. The two loans that were in default at December 31, 2015, remained in default status as of March 31, 2016 with an aggregate principal balance of $12.3 million and an aggregate interest balance of $0.4 million, both of which have been fully reserved. The completion and/or timing of foreclosure on the Company’s remaining portfolio loans is dependent on several factors, including, but not limited to, applicable state statutes, potential bankruptcy filings by the borrowers, the nature and extent of other liens secured by the underlying real estate.

At March 31, 2016 and December 31, 2015, all loans in default were also in non-accrual status. In addition, as of March 31, 2016 and December 31, 2015, interest receivable recorded on such loans prior to being placed in non-accrual status totaled $0.4 million for each period and is included in mortgage loans held for sale on the accompanying condensed consolidated balance sheets.

No interest income was recognized on any non-accrual loans on a cash or accrual basis during the periods ended March 31, 2016 or 2015. Borrower concentrations, geographic concentrations of our loan portfolio, related loan classifications and end-user categories have not materially changed since December 31, 2015, except as a result of loan payoffs.