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Note 9

9 Months Ended

Jul. 31, 2013

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

9. 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 July 31, 2013 and October 31, 2012, respectively, $60.8 million and $104.6 million of mortgages held for sale were pledged against our mortgage warehouse lines of credit (see Note 10). 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” balances on the Condensed Consolidated Balance Sheet. We received 6 and 30 repurchase or make-whole inquiries during the three and nine months ended July 31, 2013, respectively. We received 15 and 49 repurchase or make-whole inquiries during the three and nine months ended July 31, 2012, respectively.

The activity in our loan origination reserves during the three and nine months ended July 31, 2013 and 2012 was as follows:

	Three Months Ended July 31,					Nine Months Ended July 31,
(In thousands)	2013		2012			2013			2012

Loan origination reserves, beginning of period	$	9,766	$	6,570		$	9,334		$	5,063
Provisions for losses during the period		345		950			1,680			3,339
Adjustments to pre-existing provisions for losses from changes in estimates		260		220			7			272
Payments/settlements		-		(359	)		(650	)		(1,293	)
Loan origination reserves, end of period	$	10,371	$	7,381		$	10,371		$	7,381

- 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.

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