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Mortgage Loans Held for Investment and Related Assets | 12 Months Ended
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Apr. 30, 2011
Mortgage Loans Held For Investment And Related Assets |
Mortgage Loans Held for Investment and Related Assets | NOTE 6: MORTGAGE LOANS HELD FOR INVESTMENT AND RELATED ASSETS The composition of our mortgage loan portfolio as of April 30, 2011 and 2010 is as follows:
(dollars in 000s) |  |  |  |
As of April 30, |  | 2011 |  |  | 2010 |  |  |  |
|  | Amount |  |  | % of Total |  |  | Amount |  |  | % of Total |  |  |  |
Adjustable-rate loans |  | $ | 333,828 |  |  |  | 58 | % |  | $ | 411,122 |  |  |  | 60 | % |  |  |  |
Fixed-rate loans |  |  | 239,146 |  |  |  | 42 | % |  |  | 272,562 |  |  |  | 40 | % |  |  |  |
|  |  | 572,974 |  |  |  | 100 | % |  |  | 683,684 |  |  |  | 100 | % |  |  |  |
Unamortized deferred fees and costs |  |  | 4,121 |  |  |  |  |  |  |  | 5,256 |  |  |  |  |  |  |  |  |
Less: Allowance for loan losses |  |  | (92,087 | ) |  |  |  |  |  |  | (93,535 | ) |  |  |  |  |  |  |  |
|  | $ | 485,008 |  |  |  |  |  |  | $ | 595,405 |  |  |  |  |  |  |  |  |
Activity in the allowance for loan losses for the years ended April 30, 2011, 2010 and 2009 is as follows:
(in 000s) |  |  |  |
Year Ended April 30, |  | 2011 |  |  | 2010 |  |  | 2009 |  |  |  |
Balance at beginning of the year |  | $ | 93,535 |  |  | $ | 84,073 |  |  | $ | 45,401 |  |  |  |  |
Provision |  |  | 35,567 |  |  |  | 47,750 |  |  |  | 63,897 |  |  |  |  |
Recoveries |  |  | 272 |  |  |  | 88 |  |  |  | 54 |  |  |  |  |
Charge-offs |  |  | (37,287 | ) |  |  | (38,376 | ) |  |  | (25,279 | ) |  |  |  |
Balance at end of the year |  | $ | 92,087 |  |  | $ | 93,535 |  |  | $ | 84,073 |  |  |  |  |
Our loan loss allowance as a percent of mortgage loans was 16.1% at April 30, 2011, compared to 13.7% at April 30, 2010. When determining our allowance for loan losses, we evaluate loans less than 60 days past due on a pooled basis, while loans we consider impaired (which includes those loans more than 60 days past due or that have been modified) are evaluated individually. The balance of these loans and the related allowance is as follows:
(in 000s) |  |  |  |
As of April 30, |  | 2011 |  |  | 2010 |  |  |  |
|  | Portfolio |  |  | Related |  |  | Portfolio |  |  | Related |  |  |  |
|  | Balance |  |  | Allowance |  |  | Balance |  |  | Allowance |  |  |  |
Pooled (less than 60 days past due) |  | $ | 304,325 |  |  | $ | 11,238 |  |  | $ | 372,823 |  |  | $ | 15,924 |  |  |  |  |
Impaired: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually (TDRs) |  |  | 106,328 |  |  |  | 11,056 |  |  |  | 144,977 |  |  |  | 8,915 |  |  |  |  |
Individually (60 days or more past due) |  |  | 162,321 |  |  |  | 69,793 |  |  |  | 165,884 |  |  |  | 68,696 |  |  |  |  |
|  | $ | 572,974 |  |  | $ | 92,087 |  |  | $ | 683,684 |  |  | $ | 93,535 |  |  |  |  |
We review the credit quality of our portfolio based on the following criteria: (1) originator, (2) the level of documentation obtained for loan at origination, (3) occupancy status of property at origination, (4) geography, and (5) credit score and loan to value at origination. We specifically evaluate each loan and assign an internal risk rating of high, medium or low to each loan. The risk rating is based upon multiple loan characteristics that correlate to delinquency and loss. These characteristics include, but are not limited to, the five criteria listed above. These loan attributes are evaluated quarterly against a variety of additional characteristics to ensure the appropriate data is being utilized to determine the level of risk within the portfolio. All criteria are obtained at the time of origination and are only subsequently updated if the loan is refinanced. Our portfolio includes loans originated SCC and purchased by HRB Bank which constitute 62% of the total loan portfolio at April 30, 2011. We have experienced higher rates of delinquency and have greater exposure to loss with respect to this segment of our loan portfolio. Our remaining loan portfolio totaled $215.2 million and is characteristic of a prime loan portfolio, and we believe subject to a lower loss exposure. Detail of our mortgage loans held for investment and the related allowance at April 30, 2011 is as follows:
(dollars in 000s) |  |  |  |
|  | Outstanding |  |  | Loan Loss Allowance |  |  | % 30+ Days |  |  |  |
|  | Principal Balance |  |  | Amount |  |  | % of Principal |  |  | Past Due |  |  |  |
Purchased from SCC |  | $ | 357,814 |  |  | $ | 81,396 |  |  |  | 22.7 | % |  |  | 41.7 | % |  |  |  |
All other |  |  | 215,160 |  |  |  | 10,691 |  |  |  | 5.0 | % |  |  | 11.0 | % |  |  |  |
|  | $ | 572,974 |  |  | $ | 92,087 |  |  |  | 16.1 | % |  |  | 30.2 | % |  |  |  |
Credit quality indicators at April 30, 2011 include the following:
(in 000s) |  |  |  |
Credit Quality Indicators |  | Purchased from SCC |  |  | All Other |  |  | Total Portfolio |  |  |  |
Occupancy status: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | 249,048 |  |  | $ | 136,380 |  |  | $ | 385,428 |  |  |  |  |
Non-owner occupied |  |  | 108,766 |  |  |  | 78,780 |  |  |  | 187,546 |  |  |  |  |
|  | $ | 357,814 |  |  | $ | 215,160 |  |  | $ | 572,974 |  |  |  |  |
Documentation level: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Full documentation |  | $ | 108,509 |  |  | $ | 157,270 |  |  | $ | 265,779 |  |  |  |  |
Limited documentation |  |  | 11,146 |  |  |  | 23,355 |  |  |  | 34,501 |  |  |  |  |
Stated income |  |  | 205,485 |  |  |  | 21,705 |  |  |  | 227,190 |  |  |  |  |
No documentation |  |  | 32,674 |  |  |  | 12,830 |  |  |  | 45,504 |  |  |  |  |
|  | $ | 357,814 |  |  | $ | 215,160 |  |  | $ | 572,974 |  |  |  |  |
Internal risk rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
High |  | $ | 151,522 |  |  | $ | 357 |  |  | $ | 151,879 |  |  |  |  |
Medium |  |  | 206,292 |  |  |  | – |  |  |  | 206,292 |  |  |  |  |
Low |  |  | – |  |  |  | 214,803 |  |  |  | 214,803 |  |  |  |  |
|  | $ | 357,814 |  |  | $ | 215,160 |  |  | $ | 572,974 |  |  |  |  |
Loans given our internal risk rating of "high" are generally originated by SCC, have no documentation or are stated income and are non-owner occupied. Loans given our internal risk rating of "medium" are generally full documentation or stated income, with loan-to-value at origination of more than 80% and have credit scores at origination below 700. Loans given our internal risk rating of "low" are generally full documentation, with loan-to-value at origination of less than 80% and have credit scores greater than 700. Detail of the aging of the mortgage loans in our portfolio that are past due as of April 30, 2011 is as follows:
(in 000s) |  |  |  |
|  | Less than 60 |  |  | 60 - 89 Days |  |  | 90 + Days |  |  | Total |  |  |  |  |  |  |  |  |  |
|  | Days Past Due |  |  | Past Due |  |  | Past Due(1) |  |  | Past Due |  |  | Current |  |  | Total |  |  |  |
Purchased from SCC |  | $ | 37,371 |  |  | $ | 4,882 |  |  | $ | 132,326 |  |  | $ | 174,579 |  |  | $ | 183,235 |  |  | $ | 357,814 |  |  |  |  |
All other |  |  | 10,250 |  |  |  | 1,594 |  |  |  | 20,546 |  |  |  | 32,390 |  |  |  | 182,770 |  |  |  | 215,160 |  |  |  |  |
|  | $ | 47,621 |  |  | $ | 6,476 |  |  | $ | 152,872 |  |  | $ | 206,969 |  |  | $ | 366,005 |  |  | $ | 572,974 |  |  |  |  |
(1) | No loans past due 90 days or more are still accruing interest.
Information related to our non-accrual loans is as follows:
(in 000s) |  |  |  |
As of April 30, |  | 2011 |  |  | 2010 |  |  |  |
Loans: |  |  |  |  |  |  |  |  |  |  |  |
Purchased from SCC |  | $ | 143,358 |  |  |  |  |  |  |  |  |
Other |  |  | 14,106 |  |  |  |  |  |  |  |  |
|  |  | 157,464 |  |  | $ | 160,124 |  |  |  |  |
TDRs: |  |  |  |  |  |  |  |  |  |  |  |
Purchased from SCC |  |  | 2,849 |  |  |  |  |  |  |  |  |
Other |  |  | 329 |  |  |  |  |  |  |  |  |
|  |  | 3,178 |  |  |  | 31,506 |  |  |  |  |
Total non-accrual loans |  | $ | 160,642 |  |  | $ | 191,630 |  |  |  |  |
Information related to impaired loans is as follows:
(in 000s) |  |  |  |
|  | Portfolio Balance |  |  | Portfolio Balance |  |  | Total |  |  |  |  |  |  |
|  | With Allowance |  |  | With No Allowance |  |  | Portfolio Balance |  |  | Related Allowance |  |  |  |
As of April 30, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased from SCC |  | $ | 190,074 |  |  | $ | 54,000 |  |  | $ | 244,074 |  |  | $ | 75,373 |  |  |  |  |
Other |  |  | 19,340 |  |  |  | 5,235 |  |  |  | 24,575 |  |  |  | 5,476 |  |  |  |  |
|  | $ | 209,414 |  |  | $ | 59,235 |  |  | $ | 268,649 |  |  | $ | 80,849 |  |  |  |  |
As of April 30, 2010 |  | $ | 288,309 |  |  | $ | 22,552 |  |  | $ | 310,861 |  |  | $ | 77,611 |  |  |  |  |
Information related to the allowance for impaired loans is as follows:
(in 000s) |  |  |  |
As of April 30, |  | 2011 |  |  | 2010 |  |  |  |
Portion of total allowance for loan losses allocated to impaired loans and TDR loans: |  |  |  |  |  |  |  |  |  |  |  |
Based on collateral value method |  | $ | 69,794 |  |  | $ | 68,696 |  |  |  |  |
Based on discounted cash flow method |  |  | 11,055 |  |  |  | 8,915 |  |  |  |  |
|  | $ | 80,849 |  |  | $ | 77,611 |  |  |  |  |
Information related to activities of our non-performing assets is as follows:
(in 000s) |  |  |  |
For the Year Ended April 30, |  | 2011 |  |  | 2010 |  |  | 2009 |  |  |  |
Average impaired loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased from SCC |  | $ | 252,673 |  |  |  |  |  |  |  |  |  |  |  |  |
All other |  |  | 37,082 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | $ | 289,755 |  |  | $ | 307,351 |  |  | $ | 216,391 |  |  |  |  |
Interest income on impaired loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased from SCC |  | $ | 5,795 |  |  |  |  |  |  |  |  |  |  |  |  |
All other |  |  | 829 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | $ | 6,624 |  |  | $ | 8,548 |  |  | $ | 5,964 |  |  |  |  |
Interest income on impaired loans recognized on a cash basis on non-accrual status: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased from SCC |  | $ | 5,567 |  |  |  |  |  |  |  |  |  |  |  |  |
All other |  |  | 744 |  |  |  |  |  |  |  |  |  |  |  |  |
|  | $ | 6,311 |  |  | $ | 7,452 |  |  | $ | 4,927 |  |  |  |  |
As of April 30, 2011 and 2010, accrued interest receivable on mortgage loans held for investment totaled $2.1 million and $2.6 million, respectively. At April 30, 2011, HRB Bank had interest-only mortgage loans in its investment portfolio totaling $3.7 million. Our real estate owned includes loans accounted for as in-substance foreclosures of $7.7 million and $12.5 million at April 30, 2011 and 2010, respectively. Activity related to our real estate owned is as follows:
(in 000s) |  |  |  |
Year Ended April 30, |  | 2011 |  |  | 2010 |  |  | 2009 |  |  |  |
Balance, beginning of the period |  | $ | 29,252 |  |  | $ | 44,533 |  |  | $ | 350 |  |  |  |  |
Additions |  |  | 16,463 |  |  |  | 19,341 |  |  |  | 65,171 |  |  |  |  |
Sales |  |  | (21,889 | ) |  |  | (24,308 | ) |  |  | (9,072 | ) |  |  |  |
Impairments |  |  | (4,294 | ) |  |  | (10,314 | ) |  |  | (11,916 | ) |  |  |  |
Balance, end of the period |  | $ | 19,532 |  |  | $ | 29,252 |  |  | $ | 44,533 |  |  |  |  |

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- Definition Mortgage Loans Held For Investment And Related Assets [Abstract] + Details
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- Definition The entire disclosure for mortgage loans on real estate, this includes the supplemental information pertaining to each mortgage loan receivable that equals or exceeds three percent of the carrying amount of mortgages. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 948 -SubTopic 310 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-29) -URI http://asc.fasb.org/extlink&oid=6589523&loc=d3e617274-123014 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule IV -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 29 -Article 12 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 10 -Section S99 -Paragraph 6 -Subparagraph (SX 210.5-04.(c) Schedule IV) -URI http://asc.fasb.org/extlink&oid=6882300&loc=d3e5864-122674 + Details
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