Real Estate Assets Owned

12 Months Ended

Dec. 31, 2017

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 (free and clear of any mortgage) at December 31, 2017, and 2016, were approximately $196,700 and $734,700 respectively, consisting of two and fifteen units respectively, at these dates.  The Company acquired one and four new unencumbered units, net of disposals during 2017 and 2016 that were capitalized at fair value less cost to dispose of approximately $0 and $57,000, 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, 2017 and 2016 as a result of foreclosure action were, including those discussed above, 66 and 67, respectively.  During 2017 and 2016, the Company sold eighteen and four units, respectively, and realized proceeds of approximately $797,000 and $105,000, 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 2017 or 2016.  Rental revenues collected in 2017 and 2016 were approximately $737,000 (net of cost recovery of $73,000) and $347,000, respectively (net of cost recovery of $128,000).

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, 2017 and 2016 approximates $23,000 and $23,000, respectively.