We periodically securitize, without recourse, through bankruptcy remote special purpose entities, notes receivable originated in connection with the sale of vacation ownership products. These vacation ownership notes receivable securitizations provide funding for us and transfer the economic risks and substantially all the benefits of the consumer loans we originate to third parties. In a vacation ownership notes receivable securitization, various classes of debt securities issued by a special purpose entity are generally collateralized by a single tranche of transferred assets, which consist of vacation ownership notes receivable. With each vacation ownership notes receivable securitization, we may retain a portion of the securities, subordinated tranches, interest-only strips, subordinated interests in accrued interest and fees on the securitized vacation ownership notes receivable or, in some cases, overcollateralization and cash reserve accounts.

We created these bankruptcy remote special purpose entities to serve as a mechanism for holding assets and related liabilities, and the entities have no equity investment at risk, making them VIEs. We continue to service the vacation ownership notes receivable, transfer all proceeds collected to these special purpose entities, and retain rights to receive benefits that are potentially significant to the entities. Accordingly, we concluded that we are the entities’ primary beneficiary and, therefore, consolidate them. There is no noncontrolling interest balance related to these entities and the creditors of these entities do not have general recourse to us.

As part of the ILG Acquisition, we acquired the variable interests in the entities associated with ILG’s outstanding vacation ownership notes receivable securitization transactions. As these vacation ownership notes receivable securitizations are similar in nature to the Legacy-MVW vacation ownership notes receivable securitizations, they have been aggregated for disclosure purposes.


($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Total
Consolidated Assets
Vacation ownership notes receivable, net of reserves	$	1,650	$	—	$	1,650
Interest receivable	12		—		12
Restricted cash	69		—		69
Total	$	1,731	$	—	$	1,731
Consolidated Liabilities
Interest payable	$	2	$	—	$	2
Securitized Debt	1,769		—		1,769
Total	$	1,771	$	—	$	1,771


($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Total
Interest income	$	59	$	—	$	59
Interest expense to investors	$	14	$	1	$	15
Debt issuance cost amortization	$	1	$	1	$	2
Administrative expenses	$	1	$	—	$	1


($ in millions)	Vacation Ownership Notes Receivable Securitizations		Warehouse Credit Facility		Total
Interest income	$	168	$	18	$	186
Interest expense to investors	$	39	$	4	$	43
Debt issuance cost amortization	$	5	$	1	$	6
Administrative expenses	$	1	$	—	$	1


	Nine Months Ended
($ in millions)	September 30, 2020		September 30, 2019
Cash Inflows
Net proceeds from vacation ownership notes receivable securitizations	$	371	$	445
Principal receipts	360		355
Interest receipts	166		156
Reserve release	16		107
Total	913		1,063
Cash Outflows
Principal to investors	(370)		(379)
Voluntary repurchases of defaulted vacation ownership notes receivable	(69)		(35)
Voluntary clean-up call	(18)		(19)
Interest to investors	(37)		(36)
Funding of restricted cash	(20)		(93)
Total	(514)		(562)
Net Cash Flows	$	399	$	501

Under the terms of our vacation ownership notes receivable securitizations, we have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations. Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance of the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral.


	Nine Months Ended
($ in millions)	September 30, 2020		September 30, 2019
Cash Inflows
Proceeds from vacation ownership notes receivable securitizations	$	315	$	181
Principal receipts	34		14
Interest receipts	17		13
Reserve release	2		1
Total	368		209
Cash Outflows
Principal to investors	(33)		(12)
Voluntary repurchases of defaulted vacation ownership notes receivable	(3)		—
Repayment of Warehouse Credit Facility	(300)		(228)
Interest to investors	(4)		(4)
Funding of restricted cash	(2)		(1)
Total	(342)		(245)
Net Cash Flows	$	26	$	(36)

We have a commitment to purchase an operating property located in San Francisco, California, that we currently manage as Marriott Vacation Club Pulse, San Francisco. Refer to Footnote 11 “Contingencies and Commitments” for additional information on the commitment. We are required to purchase the property from the third-party developer unless the developer has sold the property to another party. The property is held by a VIE for which we are not the primary beneficiary as we cannot prevent the VIE from selling the property at a higher price. Accordingly, we have not consolidated the VIE. As of September 30, 2020, our Balance Sheet reflected $2 million in Accounts Receivable, including a note receivable of less than $1 million, and $5 million in Other assets for a deposit related to the acquisition of a portion of this property. We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $7 million as of September 30, 2020.

We have a commitment to purchase an operating property located in New York, New York, that we currently manage as Marriott Vacation Club Pulse, New York City. Refer to Footnote 11 “Contingencies and Commitments” for additional information on the commitment. We are required to purchase the completed property from the third-party developer unless the developer has sold the property to another party. The property is held by a VIE for which we are not the primary beneficiary as we cannot prevent the VIE from selling the property at a higher price. Accordingly, we have not consolidated the VIE. As of September 30, 2020, our Balance Sheet reflected $22 million in Other assets for a deposit related to the acquisition of a portion of this property, and a note receivable of less than $1 million that is included in the Accounts receivable line. We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $23 million as of September 30, 2020.

We have a commitment to purchase a property located in Waikiki, Hawaii. Refer to Footnote 11 “Contingencies and Commitments” for additional information on the commitment. If we are unable to negotiate a capital efficient inventory arrangement, we are committed to purchase the property, in its then current form, unless it has been sold to another party. The property is held by a VIE for which we are not the primary beneficiary as we do not control the operations of the VIE. Accordingly, we have not consolidated the VIE. As of September 30, 2020, our Balance Sheet reflected $1 million in Accounts Receivable, including a note receivable of less than $1 million. We believe that our maximum exposure to loss as a result of our involvement with this VIE is less than $1 million as of September 30, 2020.

We consolidate the liabilities of the Marriott Vacations Worldwide Deferred Compensation Plan and the related assets, which consist of the COLI policies held in the rabbi trust. The rabbi trust is considered a VIE. We are considered the primary beneficiary of the rabbi trust because we direct the activities of the trust and are the beneficiary of the trust. At September 30, 2020, the value of the assets held in the rabbi trust was $45 million, which is included in the Other line within assets on our Balance Sheets.