Real Estate Assets Owned

12 Months Ended

Dec. 31, 2016

Real Estate [Abstract]

Real Estate Assets Owned

Note 5. Real Estate Assets Owned

Real estate assets owned as reported in the accompanying consolidated balance sheets consist of the fair market value less cost to dispose for those foreclosed units acquired free and clear of any mortgage or other liens plus costs incurred by the Company in excess of original funding on units.  Real estate assets owned at December 31, 2016, and 2015, were approximately $734,700 and $285,300 respectively, consisting of fifteen and eleven units owned respectively, at these dates.  The Company acquired four and nine new unencumbered units, net of disposals during 2016 and 2015 that were capitalized at fair value less cost to dispose of approximately $57,000 and $237,000, respectively.  The fair market value of each unit was first applied to recover the Company’s investment with any remaining proceeds applied next to interest, late fees, legal fees, collection costs, and payable to the association.  Any excess proceeds still remaining were recognized as a gain.

Most units are quitclaimed to the Company without the Company incurring additional cost and are subject to mortgage. Total units within the real estate portfolio at December 31, 2016 and 2015 as a result of foreclosure action were, including those discussed above, 67 and 43, respectively.  During 2016 and 2015, the Company sold four and one units, respectively, and realized proceeds of approximately $105,000 and $10,000, respectively.  Any proceeds collected are first applied to recover the Company’s investment with any remaining proceeds applied next to interest, late fees, legal fees, collection costs and any amounts due to the community association.  Any excess proceeds still remaining are recognized as gain on sale of real estate assets.  If the future proceeds collected are lower than the Company’s carrying value, then a loss is recognized on the sale.  There was no significant gain or loss on the disposal of real estate assets during 2016 or 2015.  Rental revenues collected in 2016 and 2015 were approximately $347,000 (net of cost recovery of $128,000) and $180,000, respectively.

As mentioned above, upon a unit being quitclaim deeded to the Company, the Company becomes responsible for current association assessments.  The monthly contingent obligation for assessments due on these units to associations as of December 31, 2016 and 2015 approximates $23,000 and $15,000, respectively.