Notes Receivable

6 Months Ended

Jun. 30, 2011

Notes Receivable

2. Notes Receivable

The table below sets forth additional information relative to our notes receivable and our allowance for loan losses as of December 31, 2010 and June 30, 2011 (dollars in thousands):

	December 31, 2010			June 30, 2011
Notes receivable secured by VOIs:
Notes receivable - non-securitized	$	171,901		$	165,585
VOI notes receivable - securitized		533,479			486,138
		705,380			651,723
Allowance for loan losses		(142,468	)		(116,116	)
VOI notes receivable, net	$	562,912		$	535,607
Allowance as a % of gross notes receivable		20	%		18	%
Notes receivable secured by homesites:
Notes receivable	$	6,765		$	6,173
Allowance for loan losses		(692	)		(509	)
Homesite notes receivable, net	$	6,073		$	5,664
Allowance as a % of gross notes receivable		10	%		8	%
Total notes receivable:
Gross notes receivable		712,145			657,896
Allowance for loan losses		(143,160	)		(116,625	)
Notes receivable, net	$	568,985		$	541,271
Allowance as a % of gross notes receivable		20	%		18	%

The weighted-average interest rate on our VOI notes receivable was 15.2% and 15.3% at December 31, 2010 and June 30, 2011, respectively. All of our VOI receivables bear interest at fixed rates. The weighted-average interest rate on our homesite notes receivable was 7.8% and 7.7% at December 31, 2010 and June 30, 2011, respectively. The majority of our notes receivable secured by homesites bear interest at variable rates.

Our VOI receivables are generally secured by property located in Florida, Louisiana, Nevada, New Jersey, Michigan, Missouri, Pennsylvania, South Carolina, Tennessee, Virginia, Wisconsin, and Aruba. The majority of our homesite notes receivable are secured by homesites in Georgia, Texas, and Virginia.

Our notes receivable are carried at amortized cost less an allowance for bad debts. 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 three months contractually past due and not resumed until such loans are less than three months past due. As of December 31, 2010 and June 30, 2011, $28.3 million and $22.8 million, respectively, of notes receivable were more than three months past due, and accordingly, consistent with our policy, were not accruing interest income.

The activity in our allowance for uncollectible notes receivable was as follows (in thousands):

Balance, December 31, 2010	$   143,160
Provision for loan losses	10,720
Less: Write-offs of uncollectible receivables	(37,255)
Balance, June 30, 2011	$   116,625

We hold large amounts of homogeneous VOI notes receivable and assess uncollectibility based on pools of receivables. In estimating future credit losses, we do not use a single primary indicator of credit quality but instead evaluate our VOI notes receivable based upon a combination of factors, including a static pool analysis, the aging of the respective receivables, current default trends, prepayment rates by origination year, and the FICO^® scores of the borrowers at the time of origination.

The following table shows the delinquency status of our VOI notes receivable as of December 31, 2010 and June 30, 2011 (in thousands):

	As of
	December 31, 2010		June 30, 2011
Current	$	655,304	$	615,179
31-59 days		12,063		7,504
60-89 days		10,228		6,600
90 days and over (1)		27,785		22,440
Total	$	705,380	$	651,723

(1)Includes $16.9 million and $14.4 million as of December 31, 2010 and June 30, 2011, respectively, related to VOI notes receivable that have been foreclosed but the related VOI note receivable balance has not yet been charged off in accordance with the provisions of certain of our receivable-backed notes payable. These VOI notes receivable are reflected in the allowance for loan loss.