Notes Receivable

6 Months Ended

Jun. 30, 2020

3. Notes Receivable

The table below sets forth information relating to Bluegreen’s notes receivable and related allowance for loan losses (in thousands):



	June 30,		December 31,
	2020		2019
Notes receivable:
VOI notes receivable - non-securitized	$	167,638		203,872
VOI notes receivable - securitized		384,223		385,326
Gross notes receivable		551,861		589,198
Allowance for loan losses - non-securitized		(51,764)		(47,894)
Allowance for loan losses - securitized		(95,865)		(92,736)
Allowance for loan losses		(147,629)		(140,630)
Notes receivable, net	$	404,232		448,568
Allowance as a % of gross notes receivable		27%		24%

The weighted-average interest rate charged on Bluegreen’s notes receivable was 14.9% as of June 30, 2020 and December 31, 2019. Bluegreen’s VOI notes receivable bear interest at fixed rates and are generally secured by property located in Florida, Missouri, Nevada, South Carolina, Tennessee, and Wisconsin.

Credit Quality of Notes Receivable and the Allowance for Loan Losses

Bluegreen monitors the credit quality of its receivables on an ongoing basis. Bluegreen holds large amounts of homogeneous VOI notes receivable and assesses uncollectibility based on pools of receivables as Bluegreen does not believe that there are significant concentrations of credit risk with any individual counterparty or groups of counterparties. In estimating loan losses, Bluegreen does not use a single primary indicator of credit quality but instead evaluates its VOI notes receivable based upon a static pool analysis that incorporates the aging of the respective receivables, default trends, and prepayment rates by origination year, as well as the FICO scores of the borrowers.

While it is still too early to realize the full impact of the COVID-19 pandemic on Bluegreen’s default or delinquency rates as of June 30, 2020, Bluegreen believes that the pandemic will have a significant impact on its VOI notes receivable. Accordingly, during the six months ended June 30, 2020, Bluegreen recorded an additional allowance for loan losses of $12.0 million, which includes its estimate of customer defaults as a result of the COVID-19 pandemic based on Bluegreen’s historical experience, forbearance requests received from its customers, and other factors, including, but not limited to, the seasoning of the notes receivable and FICO scores of the customers.

The activity in Bluegreen’s allowance for loan losses on VOI notes receivable was as follows (in thousands):



	For the Six Months Ended
	June 30,
	2020		2019
Balance, beginning of period	$	140,630		134,133
Provision for loan losses		32,199		23,072
Write-offs of uncollectible receivables		(25,200)		(23,719)
Balance, end of period	$	147,629		133,486

The table below sets forth information relating to Bluegreen’s VOI notes receivable by year of origination, including the FICO score of the borrower at the time of origination and delinquency status, as of June 30, 2020 (in thousands):


	Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Total

701+	$	29,419	$	99,830	$	66,310	$	43,027	$	32,118	$	42,784	$	313,488
601-700		13,504		50,438		39,403		28,705		26,256		41,312		199,618
<601⁽¹⁾		1,266		5,061		3,473		2,358		2,692		4,836		19,686
Other ⁽²⁾		—		1,728		4,045		3,866		3,156		6,274		19,069
Total by FICO score	$	44,189	$	157,057	$	113,231	$	77,956	$	64,222	$	95,206	$	551,861

Defaults	$	35	$	5,602		7,198	$	4,990	$	3,941	$	3,434	$	25,200
Allowance for loan loss	$	11,137	$	45,863	$	31,939	$	19,924	$	18,662	$	20,104	$	147,629

Delinquency status:
Current	$	43,501	$	151,466	$	106,788	$	72,848	$	60,126	$	87,203	$	521,932
31-60 days		311		1,430		1,117		894		652		723		5,127
61-90 days		197		1,437		1,213		775		683		826		5,131
Over 91 days ⁽²⁾		180		2,724		4,113		3,439		2,761		6,454		19,671
Total	$	44,189	$	157,057	$	113,231	$	77,956	$	64,222	$	95,206	$	551,861

(1)Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

(2)Includes $12.1 million related to VOI notes receivable that, as of June 30, 2020, had defaulted, but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain of Bluegreen’s receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.

The table below sets forth information regarding the percentage of gross notes receivable outstanding by FICO score of the borrower at the time of origination:



	June 30,		December 31,
FICO Score	2020		2019
700+	59.00	%	59.00	%
601-699	37.00		37.00
<601⁽¹⁾	4.00		4.00
Total	100.00	%	100.00	%

(1)Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

Bluegreen’s notes receivable are carried at amortized cost less an allowance for loan losses. Interest income is suspended, and previously accrued but unpaid interest income is reversed, on all delinquent notes receivable when principal or interest payments are more than 90 days contractually past due and not resumed until such loans are less than 90 days past due. As of June 30, 2020 and December 31, 2019, $19.7 million and $19.3 million, respectively, of Bluegreen’s VOI notes receivable were more than 90 days past due, and accordingly, consistent with Bluegreen’s policy, were not accruing interest income. After approximately 127 days, Bluegreen’s VOI notes receivable are generally written off against the allowance for loan loss. Accrued interest was $4.7 million and $5.3 million as of June 30, 2020 and December 31, 2019, respectively, and is included within other assets in the Company’s condensed consolidated statements of financial condition herein.

The table below sets forth information regarding the delinquency status of Bluegreen’s VOI notes receivable (in thousands):



	June 30,		December 31,
	2020		2019
Current	$	521,932		557,849
31-60 days		5,127		6,794
61-90 days		5,131		5,288
> 91 days ⁽¹⁾		19,671		19,267
Total	$	551,861		589,198

(1)Includes $12.1 million and $10.6 million of VOI notes receivable as of June 30, 2020 and December 31, 2019, respectively, that, as of such dates, had defaulted but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain of Bluegreen’s receivable-backed notes payable transactions. These VOI notes receivable have been included in the allowance for loan losses.