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OTHER NOTES RECEIVABLE

3 Months Ended

Mar. 31, 2024

5. OTHER NOTES RECEIVABLE

Other notes receivable relate to notes issued to mobile home park owners and dealers and are not directly tied to the sale of mobile homes. These other notes have varying maturity dates and generally require monthly principal and interest payments. They are collateralized by mortgages on real estate, mobile homes that we have financed for which the borrower uses as offices, as well as vehicles. These notes typically are personally guaranteed by the borrowers. The interest rates on the other notes generally are fixed and range from 5.00% to 17.90%. The Company reserves for estimated losses on the other notes based on current economic conditions that may affect the borrower’s ability to pay, the borrower’s financial strength, and historical loss experience.

As of March 31, 2024 and December 31, 2023 there were past due balances of $286 and $22, respectively, on the other notes excluding the Default Loans, as defined below. For the three months ended March 31, 2024 and 2023, there were no charge offs recorded for other notes. Allowance for loan loss for the other notes was $176 and $236 as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024 and December 31, 2023, the impaired balance of other notes was $76 and $84, respectively. Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home, less the costs to sell.

Approximately $54 million of MHP Notes and Other notes receivable is with borrowers either owned or operated by one individual. Approximately $36 million of these notes currently is in default (the “Default Loans” as defined in Note 4 above) and is the subject of ongoing litigation in which the Company is the plaintiff. These notes are collateralized by mobile homes and land and are personally guaranteed by multiple borrowers. The Company evaluated the recoverability of these notes as of March 31, 2024 and determined a provision for expected loan losses is not deemed necessary based on the analysis of the underlying collateral. The Company accelerated the Default Loans at the end of January, 2024. Upon acceleration, the loans accrue interest at a rate of 17.5% and are due on demand. At March 31, 2024 the Default Loans are presented on the accompanying balance sheets under the heading Current assets, with $26 million in Current portion of notes receivable from mobile home parks (“MHP”) and $10 million in Current portion of other notes receivable. During the three months ended March 31, 2024, the Company foreclosed on property and homes of $2.3 million that is included on the accompanying balance sheets in Property, plant and equipment, net.

Other notes receivable, net of allowance for loan losses and deferred financing fees, consisted of the following at March 31, 2024 and December 31, 2023:


	As of March 31,		As of December 31,
	2024		2023
Outstanding principal balance	$	30,694	$	35,353
Loan discount and deferred financing fees		(323)		(527)
Allowance for loan losses		(176)		(236)
Total	$	30,195	$	34,590

The following table presents a detail of the activity in the allowance for loan losses for the three months ended March 31, 2024 and 2023:


	Three months ended March 31,		Three months ended March 31,
	2024		2023
Allowance for loan losses, beginning of period	$	236	$	—
Provision for loan losses		(60)		433
Charge offs (recoveries)		—		—
Allowance for loan losses, end of period	$	176	$	433

The following table presents impaired and general reserve for allowance for loan losses at March 31, 2024 and December 31, 2023:


	As of March 31,		As of December 31,
	2024		2023
Total Other notes receivable	$	30,694	$	35,353
Allowance for loan losses		176		236
Impaired loans individually evaluated for impairment		24,609		25,135
Specific reserve against impaired loans		76		84
Other notes receivable collectively evaluated for allowance		6,085		10,218
General allowance for loan losses		100		152

We evaluate the credit quality of our Other notes receivable portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is generally based upon borrower payment activity, relative to the contractual terms of the loan. The following table disaggregates the outstanding principal balance of Other notes receivable by credit quality indicator based on delinquency status and fiscal year of origination and is presented as of March 31, 2024:


	Year of Origination
	2024		2023		2022		2021		2020		Prior		Total		% of Portfolio
< 30 days past due	$	—	$	17,493	$	466	$	—	$	300	$	101	$	18,360	%	59.8
30-90 days past due		—		11,274		229		183		—		—		11,686		38.1
> 90 days past due		—		—		—		648		—		—		648		2.1
Total	$	—	$	28,767	$	695	$	831	$	300	$	101	$	30,694	%	100.0