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Note 9 - Mortgage Loans Held for Sale
 6 Months Ended
Apr. 30, 2017
Notes to Financial Statements  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]
9.
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 Condensed Consolidated Statements of Operations in “Revenues: Financial services.” We currently use forward sales of mortgage-backed securities (“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 purchaser 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 Condensed Consolidated Statements of Operations in “Revenues: Financial services.”
 
At
April 30, 2017
and
October 31, 2016, $
72.0
million and
$147.4
million, respectively, 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 the 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 Sheets. As of
April 30, 2017
and
2016,
we had reserves specifically for
94
and
132
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 during the
three
and
six
months ended
April 30,
2017
and
2016
was as follows:
 
   
Three Months Ended
April 30,
    
Six Months Ended
April 30,
  
(In thousands)
  
2017
    
2016
    
2017
    
2016
  
                                 
Loan origination reserves, beginning of period
   $
5,077
     $
8,028
     $
8,137
     $
8,025
  
Provisions for losses during the period
    
45
      
117
      
79
      
158
  
Adjustments to pre-existing provisions for
losses from changes in estimates
    
(1,340
 )    
161
      
(4,434
 )    
123
  
Loan origination reserves, end of period
   $
3,782
     $
8,306
     $
3,782
     $
8,306