XML 25 R14.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Commercial Loans | 9 Months Ended
--- | ---
Sep. 30, 2016
Commercial Loans |
Accounts, Notes, Loans and Financing Receivable [Line Items] |
Loans | Commercial Loans We invest in commercial loans that we historically originated or acquired. In February 2016, we ceased originating commercial loans and in June 2016, we engaged a broker to sell our commercial loan portfolio. As a result, we reclassified most of our loans from held-for-investment to held-for-sale. As discussed further below, during the third quarter of 2016, we sold a significant portion of our commercial loans. The following table summarizes the classifications and carrying value of commercial loans at September 30, 2016 and December 31, 2015. Table 7.1 – Classifications and Carrying Value of Commercial Loans
(In Thousands) |  | September 30, 2016 |  | December 31, 2015
Held-for-sale |  |  |  |
At fair value |  | $ | — |  |  | $ | 39,141 |
At lower of cost or fair value |  | 30,400 |  |  | — |
Held-for-investment |  |  |  |
At fair value |  | — |  |  | 67,657 |
At amortized cost |  | — |  |  | 295,849 |
Total Commercial Loans |  | $ | 30,400 |  |  | $ | 402,647 |
Of the held-for-investment commercial loans at amortized cost shown above at December 31, 2015, $166 million were financed through the Commercial Securitization entity and $135 million were pledged as collateral under short-term borrowing arrangements. Commercial Loans Held-for-Sale At Fair Value In June 2016, we transferred commercial mezzanine loans with an unpaid principal balance of $67 million and a carrying value of $70 million from held-for-investment at fair value to held-for-sale at fair value. During the third quarter of 2016, we sold all of our remaining commercial loans held-for-sale at fair value. At December 31, 2015, commercial loans held-for-sale at fair value included four senior commercial mortgage loans with an aggregate outstanding principal balance of $39 million and an aggregate fair value of $39 million. During the three months ended September 30, 2016, we did not acquire or sell any senior commercial mortgage loans and we did not record any market valuation gains or losses on senior commercial mortgage loans. During the nine months ended September 30, 2016, we acquired $38 million (principal balance) of senior commercial loans for which we elected the fair value option and sold $76 million (principal balance) of loans to third parties. During the nine months ended September 30, 2016, we recorded $0.4 million of net market valuation gains on senior commercial mortgage loans, for which we elected the fair value option, through Mortgage banking activities, net on our consolidated statements of income. During the three and nine months ended September 30, 2015, we acquired $168 million and $518 million (principal balance), respectively, of senior commercial loans for which we elected the fair value option and sold $254 million and $602 million (principal balance), respectively, of loans to third parties. During the three and nine months ended September 30, 2015, we recorded $4 million and $11 million, respectively, of net market valuation gains on senior commercial mortgage loans for which we elected the fair value option through Mortgage banking activities, net on our consolidated statements of income. At Lower of Cost or Fair Value Commercial loans held-for-sale at the lower of cost or fair value primarily include mezzanine loans that are secured by a borrower’s ownership interest in a single purpose entity that owns commercial property. At September 30, 2016, we held six commercial loans at the lower of cost or fair value with $31 million in outstanding principal balance, a carrying value of $30 million, and an estimated net fair value of $32 million. In June 2016, we transferred loans with an unpaid principal balance of $237 million and a carrying value of $233 million from held-for-investment at amortized cost to held-for-sale at the lower of cost or fair value, resulting from our decision to sell these loans. As we determined that the fair value of these loans was greater than their carrying value, we recorded the loans at their then current amortized cost, eliminating $4 million of net purchase discount and establishing a valuation adjustment of $4 million. During the third quarter of 2016, we entered into an agreement with a third party to sell most of our remaining commercial mezzanine loans and, as of September 30, 2016, had completed the sale of loans with a principal balance of $203 million, which resulted in gains of $5 million that are presented in Realized gains, net on our consolidated statements of income. At September 30, 2016, we held six loans, of which five are pending sale pursuant to the sale agreement entered into during the third quarter of 2016, subject to the satisfaction of certain conditions. The remaining loan had a carrying value of $3 million at September 30, 2016, and during the third quarter of 2016, this loan experienced a technical default and we recorded a valuation adjustment of $0.3 million through Investment fair value changes, net, a component of our consolidated statements of income. Commercial Loans Held-for-Investment At Amortized Cost Commercial loans held-for-investment include mezzanine loans that are secured by a borrower’s ownership interest in a single purpose entity that owns commercial property. As described above, in June 2016, we transferred most of our held for investment loans to held-for-sale. The following table provides additional information for our commercial loans held-for-investment at amortized cost at September 30, 2016 and December 31, 2015. Table 7.2 – Carrying Value for Commercial Loans Held-for-Investment at Amortized Cost
(In Thousands) |  | September 30, 2016 |  | December 31, 2015
Principal balance |  | $ | — |  |  | $ | 307,047 |
Unamortized discount, net |  | — |  |  | (4,096 | )
Recorded investment |  | — |  |  | 302,951 |
Allowance for loan losses |  | — |  |  | (7,102 | )
Carrying Value |  | $ | — |  |  | $ | 295,849 |
At September 30, 2016 and December 31, 2015, we held zero and 59 commercial loans held-for-investment at amortized cost, respectively. Allowance for Loan Losses on Commercial Loans For commercial loans classified as held-for-investment, we establish and maintain an allowance for loan losses. The allowance includes a component for loans collectively evaluated for impairment and a component for loans individually evaluated for impairment. During the second quarter of 2016, we transferred most of our held-for-investment loans to held-for-sale and recorded a reversal of provision for loan losses. This was based on our determination that the fair market value of these loans was higher than their amortized cost basis. As such, no valuation adjustment for the held-for-sale loans was charged against the allowance for loan losses during that quarter and the previously outstanding allowance associated with these loans was eliminated and a reversal of provision for loan losses was recorded in the second quarter of 2016. During the third quarter of 2016, our remaining commercial loans held-for-investment were repaid in full and, as result, we reversed our remaining provision for loan losses. The following table presents the principal balance of commercial loans held-for-investment by risk category. Table 7.3 – Principal Balance of Commercial Loans Held-for-Investment by Risk Category
(In Thousands) |  | September 30, 2016 |  | December 31, 2015
Pass |  | $ | — |  |  | $ | 272,768 |
Watch list |  | — |  |  | 34,279 |
Workout |  | — |  |  | — |
Total Commercial Loans Held-for-Investment |  | $ | — |  |  | $ | 307,047 |
The following table summarizes the activity in the allowance for commercial loan losses for the three and nine months ended September 30, 2016 and 2015. Table 7.4 – Activity in the Allowance for Commercial Loan Losses
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In Thousands) |  | 2016 |  | 2015 |  | 2016 |  | 2015
Balance at beginning of period |  | $ | 859 |  |  | $ | 7,401 |  |  | $ | 7,102 |  |  | $ | 7,456 |
Reversal of provision for loan losses |  | (859 | ) |  | (60 | ) |  | (7,102 | ) |  | (115 | )
Balance at End of Period |  | $ | — |  |  | $ | 7,341 |  |  | $ | — |  |  | $ | 7,341 |
At December 31, 2015, all of our commercial loans collectively evaluated for impairment were current. The following table summarizes the balances for loans collectively evaluated for impairment at September 30, 2016 and December 31, 2015. Table 7.5 – Loans Collectively Evaluated for Impairment Review
(In Thousands) |  | September 30, 2016 |  | December 31, 2015
Principal balance |  | $ | — |  |  | $ | 307,047 |
Recorded investment |  | — |  |  | 302,951 |
Related allowance |  | — |  |  | 7,102 |

X
- Definition Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table. + References No definition available. + Details
Name: | us-gaap_AccountsNotesAndLoansReceivableLineItems
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=49124121&loc=d3e5066-111524 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.3,4) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=49124121&loc=d3e5162-111524 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=49124121&loc=d3e5074-111524 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 7 -Article 9 + Details
Name: | us-gaap_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | us-gaap_FinancingReceivableRecordedInvestmentByClassOfFinancingReceivableAxis=us-gaap_CommercialLoanMember
Namespace Prefix: |
Data Type: | na
Balance Type: |
Period Type: |