Notes Receivable

12 Months Ended

Dec. 31, 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 December 31,
	2020		2019
Notes receivable secured by VOIs:
VOI notes receivable - non-securitized	$	156,078	$	203,872
VOI notes receivable - securitized		395,315		385,326
		551,393		589,198
Allowance for loan losses - non-securitized		(38,750)		(47,894)
Allowance for loan losses - securitized		(103,294)		(92,736)
Allowance for loan losses		(142,044)		(140,630)
VOI notes receivable, net	$	409,349	$	448,568
Allowance as a % of VOI notes receivable		26%		24%

The weighted-average interest rate charged on our notes receivable secured by VOIs was 15.0% and 14.9% at December 31, 2020 and 2019, respectively. 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.

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Future principal payments due on our notes receivable as of December 31, 2020 are as follows (in thousands):



2021	$	62,985
2022		62,858
2023		66,429
2024		68,655
2025		69,333
Thereafter		221,133
Total	$	551,393

Allowance for Loan Losses

The activity in our allowance for loan losses was as follows (in thousands):



	For the Year Ended ‎ December 31,
	2020		2019
Balance, beginning of year	$	140,630	$	134,133
Provision for loan losses		56,941		55,701
Less: defaults		(55,527)		(49,204)
Balance, end of year	$	142,044	$	140,630

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.

The COVID-19 pandemic has had a material adverse impact on unemployment in the United States and economic conditions in general and the impact may continue for some time. We believe that the COVID-19 pandemic will continue to have an impact on the collectability of our VOI notes receivable. Accordingly the estimate of defaults for the 2021 year was increased by approximately $6.0 million, based on historical experience, forbearance requests received from customers, and other factors, including, but not limited to, the seasoning of the notes receivable and FICO scores of the customers. We continue to evaluate the impact of the COVID-19 pandemic on our default or delinquency rates as it is rapidly changing and highly uncertain. Our estimates may not prove to be correct and our allowance for loan losses may need to be further increased in future periods.

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Additional information about our VOI notes receivable by year of origination is as follows as of December 31, 2020 (in thousands):


	Year of Origination
	2020		2019		2018		2017		2016		2015 and Prior		Total
By FICO Score:
701+	$	70,874	$	85,294	$	56,490	$	37,371	$	27,638	$	35,693	$	313,360
601-700		42,660		45,533		34,896		25,259		23,300		35,976		207,624
<601⁽¹⁾		3,172		3,630		2,288		1,554		1,544		2,757		14,945
Other ⁽²⁾		29		567		3,805		3,476		2,336		5,251		15,464
Total	$	116,735	$	135,024	$	97,479	$	67,660	$	54,818	$	79,677	$	551,393

Defaults	$	1,678	$	13,678		14,297	$	9,331	$	7,299	$	9,244	$	55,527
Allowance for loan loss	$	33,441	$	37,845	$	27,552	$	16,794	$	12,097	$	14,315	$	142,044

Delinquency status:
Current	$	113,954	$	129,817	$	89,744	$	61,279	$	50,671	$	71,646	$	517,111
31-60 days		1,040		1,531		1,093		925		547		642		5,778
61-90 days		807		1,137		931		777		365		524		4,541
Over 91 days ⁽²⁾		934		2,539		5,711		4,679		3,235		6,865		23,963
Total	$	116,735	$	135,024	$	97,479	$	67,660	$	54,818	$	79,677	$	551,393

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

(2)Includes $11.4 million related to VOI notes receivable that, as of December 31, 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.

Additional information about our VOI notes receivable by year of origination is as follows as of December 31, 2019 (in thousands):


	Year of Origination
	2019		2018		2017		2016		2015		2014 and Prior		Total

701+	$	115,753	$	77,992	$	50,443	$	37,807	$	23,670	$	29,069	$	334,734
601-700		57,447		46,157		33,540		30,656		22,724		27,854		218,378
<601⁽¹⁾		5,315		4,153		2,719		3,132		2,279		3,632		21,230
Other ⁽²⁾		269		2,762		2,806		2,423		2,772		3,824		14,856
Total by FICO score	$	178,784	$	131,064	$	89,508	$	74,018	$	51,445	$	64,379	$	589,198

Defaults	$	1,487	$	13,858		11,820	$	9,348	$	6,911	$	5,780	$	49,204
Allowance for loan loss	$	44,961	$	34,477	$	20,908	$	16,370	$	13,695	$	10,219	$	140,630

Delinquency status:
Current	$	174,530	$	122,283	$	82,464	$	68,007	$	46,395	$	58,021	$	551,700
31-60 days		1,790		1,672		1,337		763		551		630		6,743
61-90 days		875		1,362		960		1,050		472		494		5,213
Over 91 days ⁽²⁾		1,589		5,747		4,747		4,198		4,027		5,234		25,542
Total	$	178,784	$	131,064	$	89,508	$	74,018	$	51,445	$	64,379	$	589,198

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

(2)Includes $10.6 million related to VOI notes receivable that, as of December 31, 2019, 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 for both December 31, 2020 and 2019 were as follows:


	As of
	December 31,
FICO Score
No Score⁽¹⁾	1	%
<600	3
600-699	37
700+	59
Total	100	%

(1)VOI notes receivable without a FICO score are primarily related to 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 December 31, 2020 and 2019, $24.0 million and $25.5 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 $3.9 million and $5.3 million as of December 31, 2020 and 2019, respectively, and is included within other assets in our consolidated balance sheets herein.