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Note 7 - Mortgage Loans Held for Sale
 12 Months Ended
Oct. 31, 2015
Receivables [Abstract]  
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 Consolidated Statements of Operations in “Revenues: Financial services.” We currently use forward sales of MBS, interest rate commitments from borrowers and mandatory and/or best efforts forward commitments to sell loans to third-party purchasers 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 Consolidated Statements of Operations in “Revenues: Financial services.”


At October 31, 2015 and 2014, $114.0 million and $78.6 million, respectively, 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” balances on the Consolidated Balance Sheets. As of October 31, 2015 and 2014, we had reserves specifically for 131 and 130 identified mortgage loans, respectively, as well as reserves for an estimate for future losses on mortgages sold but not yet identified to us.


The activity in our loan origination reserves in fiscal 2015 and 2014 was as follows:


   

Year Ended

  
   

October 31,

  

(In thousands)

  

2015

    

2014

  
             

Loan origination reserves, beginning of period

   $7,352     $11,036  

Provisions for losses during the period

   221     3,814  

Adjustments to pre-existing provisions for losses from changes in estimates

   452     (2,574

)

Payments/settlements (1)

   -     (4,924

)

Loan origination reserves, end of period

   $8,025     $7,352  

(1)

Includes the global settlement of all loans sold to one of our previously significant mortgage purchasers, which settlements covers all of our potential liability for such loans.

The decrease in the volume of activity in loan origination reserves from fiscal 2014 to fiscal 2015 is due to only two loan repurchase requests during fiscal 2015, compared to 78 in fiscal 2014. In addition, adjustments to pre-existing provisions for losses from changes in estimates and payments/settlements were both impacted in fiscal 2014 by the global settlement of all loans sold to one of our previously significant mortgage purchasers.