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Note 7 - Mortgage Loans Held for Sale
 12 Months Ended
Oct. 31, 2012
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]
7. Mortgage Loans Held for Sale

Our mortgage banking subsidiary originates mortgage loans, primarily from the sale of our homes. Such mortgage loans are sold in the secondary mortgage market within a short period of time of origination. Mortgage loans held for sale consist primarily of single-family residential loans collateralized by the underlying property. We have elected the fair value option to record loans held for sale and therefore these loans are recorded at fair value with the changes in the value recognized in the Statements of Operations in “Revenues: Financial services.” We currently use forward sales of mortgage-backed securities, interest rate commitments from borrowers and mandatory and/or best efforts forward commitments to sell loans to investors to protect us from interest rate fluctuations. These short-term instruments, which do not require any payments to be made to the counterparty or investor in connection with the execution of the commitments, are recorded at fair value. Gains and losses on changes in the fair value are recognized in the Statements of Operations in “Revenues: Financial services”.

At October 31, 2012 and 2011, respectively, $104.6 million and $52.7 million of mortgages held for sale were pledged against our mortgage warehouse lines of credit (see Note 8). We may incur losses with respect to mortgages that were previously sold that are delinquent and which had underwriting defects, but only to the extent the losses are not covered by mortgage insurance or resale value of the home. The reserves for these estimated losses are included in the "Financial services – Accounts payable and other liabilities" balance on the Consolidated Balance Sheet. Our reserves for these estimated losses increased in fiscal 2012 as the number of repurchase or make-whole inquiries increased in fiscal 2012 to 66 compared to 39 in fiscal 2011.

The activity in our loan origination reserves in fiscal 2012 and 2011 was as follows:

   
Twelve Months Ended
 
   
October 31,
 
(In thousands)
 
2012
   
2011
 
             
Loan origination reserves, beginning of period
 
$
5,063
   
$
5,486
 
Provisions for losses during the period
   
4,060
     
2,108
 
Adjustments to pre-existing provisions for losses from changes in estimates
   
1,802
     
(1,520
)
Payments/settlements
   
(1,591
)
   
(1,011
)
Loan origination reserves, end of period
 
$
9,334
   
$
5,063