Notes Receivable

9 Months Ended

Sep. 30, 2012

Notes Receivable [Abstract]

Notes Receivable

2. Notes Receivable

The table below provides information relative to our notes receivable and our allowance for loan losses as of December 31, 2011 and September 30, 2012 (dollars in thousands):

	As of
	December 31, 2011			September 30, 2012
Notes receivable secured by VOIs:
VOI notes receivable - non-securitized	$	154,020		$	130,917
VOI notes receivable - securitized		459,778			441,951
		613,798			572,868
Allowance for loan losses - non-securitized		(22,739	)		(16,508	)
Allowance for loan losses - securitized		(83,874	)		(71,830	)
VOI notes receivable, net	$	507,185		$	484,530
Allowance as a % of gross notes receivable		17	%		15	%
Notes receivable secured by homesites:
Notes receivable	$	5,801		$	5,323
Allowance for loan losses		(469	)		(413	)
Homesite notes receivable, net	$	5,332		$	4,910
Allowance as a % of gross notes receivable		8	%		8	%
Total notes receivable:
Gross notes receivable	$	619,599		$	578,191
Allowance for loan losses		(107,082	)		(88,751	)
Notes receivable, net	$	512,517		$	489,440
Allowance as a % of gross notes receivable		17	%		15	%

The weighted-average interest rate on our notes receivable was 15.3% and 15.5% at December 31, 2011 and September 30, 2012, respectively. All of our VOI loans bear interest at fixed rates. The weighted-average interest rate charged on loans secured by VOIs was 15.4% at December 31, 2011 and 15.5% at September 30, 2012. The majority of our notes receivable secured by homesites, which were excluded from the sale of Bluegreen Communities to Southstar, bear interest at variable rates. The weighted-average interest rate charged on loans secured by homesites was 7.8% and 7.7% at December 31, 2011 and September 30, 2012, respectively.

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. Our VOI notes receivable are generally written off as uncollectible when they have become approximately 120 days past due. As of December 31, 2011 and September 30, 2012, $20.9 million and $13.2 million, respectively, of our VOI notes receivable were more than three months past due and, in accordance with our policy, were not accruing interest income.

Credit Quality for Financed Receivables and the Allowance for Credit Losses

The activity in our allowance for loan losses (including our homesite notes receivable) was as follows (dollars in thousands):

Balance, December 31, 2011	$	107,082
Provision for loan losses (1)		21,437
Less: Write-offs of uncollectible receivables		(39,768	)
Balance, September 30, 2012	$	88,751

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 and prepayment rates by origination year, as well as 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, 2011 and September 30, 2012 (dollars in thousands):

	As of
	December 31,		September 30,
	2011		2012
Current	$	576,063	$	548,506
31-60 days		9,038		6,183
61-90 days		7,836		5,001
Over 91 days (1)		20,861		13,178
Total	$	613,798	$	572,868

(1) Includes $12.1 million and $7.5 million as of December 31, 2011 and September 30, 2012, respectively, related to VOI transactions that, as of the applicable date, had been foreclosed 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. These VOI notes receivable have been reflected in the allowance for loan loss.