Note 9 - Commitments and Financial Instruments with Off-Balance-Sheet Risk

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Text Block]

NOTE 9: Commitments and Financial Instruments with Off-Balance-Sheet Risk

C&F Mortgage sells substantially all of the residential mortgage loans it originates to third-party counterparties. As is customary in the industry, the agreements with these counterparties require C&F Mortgage to extend representations and warranties with respect to program compliance, borrower misrepresentation, fraud, and early payment performance. Under the agreements, the counterparties are entitled to make loss claims and repurchase requests of C&F Mortgage for loans that contain covered deficiencies. C&F Mortgage has obtained early payment default recourse waivers for a significant portion of its business. Recourse periods for early payment default for the remaining counterparties vary from 90 days up to one year. Recourse periods for borrower misrepresentation or fraud, or underwriting error do not have a stated time limit. C&F Mortgage maintains an indemnification reserve for potential claims made under these recourse provisions. The following table presents the changes in the allowance for indemnification losses for the periods presented:

	Three Months Ended March 31,
(Dollars in thousands)	2013			2012
Allowance, beginning of period	$	2,092		$	1,702
Provision for indemnification losses		225			125
Payments		(235	)		—
Allowance, end of period	$	2,082		$	1,827