Notes Receivable

6 Months Ended

Jun. 30, 2020

4. Notes Receivable

The table below provides information relating to our notes receivable and our allowance for loan losses (dollars in thousands):



	As of
	June 30,		December 31,
	2020		2019
Notes receivable secured by VOIs:
VOI notes receivable - non-securitized	$	167,638	$	203,872
VOI notes receivable - securitized		384,223		385,326
Gross VOI 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)
VOI notes receivable, net	$	404,232	$	448,568
Allowance as a % of VOI notes receivable		27%		24%

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

Allowance for Loan Losses

The activity in our allowance for loan losses 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
Less: Write-offs of uncollectible receivables		(25,200)		(23,719)
Balance, end of period	$	147,629	$	133,486

We monitor the credit quality of our receivables on an ongoing basis. We hold large amounts of homogeneous VOI notes receivable and assess uncollectibility based on pools of receivables as we do not believe that there are significant concentrations of credit risk with any individual counterparty or groups of counterparties. In estimating loan losses, we do not use a single primary indicator of credit quality but instead evaluate our 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 COVID- 19 on our default or delinquency rates as of June 30, 2020, we believe that the COVID-19 pandemic will have a significant impact on our VOI notes receivable. Accordingly, during the six months ended June 30, 2020, we recorded an additional allowance for loan losses of $12.0 million, which includes our estimate of customer defaults as a result of the COVID – 19 pandemic based on our historical experience, forbearance requests received from our customers, and other factors, including but not limited to, the seasoning of the notes receivable and FICO scores of the customers.

Additional information about our VOI notes receivable by year of origination is as follows 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 our receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.

The percentage of gross notes receivable outstanding by FICO score of the borrower at the time of origination, were as follows:


	As of

	June 30,		December 31,
	2020		2019
FICO Score
701+	59	%	59	%
601-700	37		37
<601⁽¹⁾	4		4
Total	100	%	100	%

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

Our 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 our VOI notes receivable were more than 90 days past due, and accordingly, consistent with our policy, were not accruing interest income. After approximately 127 days, our 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 our unaudited consolidated balance sheets herein.

The following table shows the delinquency status of our VOI notes receivable as of June 30, 2020 and December 31, 2019 (in thousands):



	As of
	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
Over 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, related to VOI notes receivable that as of such date, had defaulted, but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain of our receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.