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NOTES RECEIVABLE FROM MOBILE HOME PARKS

9 Months Ended

Sep. 30, 2025

NOTES RECEIVABLE FROM MOBILE HOME PARKS

4. NOTES RECEIVABLE FROM MOBILE HOME PARKS

The notes receivable from mobile home parks (“MHP Notes”) relate to mobile homes sold to mobile home parks and financed through notes receivable. The MHP Notes have varying maturity dates and require monthly principal and interest payments. The interest rate on the MHP Notes can be fixed or variable, and the interest rates range from 4.9% to 12%. The average interest rate per loan was approximately 8.09% as of September 30, 2025 and 7.8% as of December 31, 2024, with maturities that range from 1 to 10 years. The collateral underlying the MHP Notes are individual mobile homes which can be repossessed and resold. The MHP Notes are generally personally guaranteed by borrowers.

As of September 30, 2025, the Company had concentrations of MHP Notes with three independent third parties and their respective affiliates that equated to 24.1%, 8.6% and 10.3% of the principal balance outstanding, all of which were secured by the mobile homes. As of December 31, 2024, the Company had concentrations of MHP Notes with three independent third-parties and their respective affiliates that equated to 23.5%, 14.6% and 11.4% of the principal balance outstanding, all of which were secured by the mobile homes.

MHP Notes are stated at amounts due from customers, net of allowance for loan losses. The Company determines the allowance by considering several factors, including the aging of the past due balance, the customer’s payment history, and the Company’s previous loss history. The Company establishes an allowance composed of specific and general reserve amounts. As of September 30, 2025 and December 31, 2024, the MHP Notes balance is presented net of unamortized finance fees of $962 and $1,057, respectively. The finance fees are amortized over the life of the MHP Notes.

As of September 30, 2025, there were past due balances of $702 on MHP Notes. As of December 31, 2024, there were past due balances of $17 on the MHP Notes. For the three and nine months ended September 30, 2025 and 2024, there were no charge offs recorded for MHP Notes. Allowance for loan loss for the MHP Notes was $979 and $654 as of September 30, 2025 and December 31, 2024, respectively. As of September 30, 2025, there was an impaired balance of $410 of MHP Notes. As of December 31, 2024, there was a minimal impaired balance of MHP Notes. 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.

Settlement Agreement

Legacy and numerous entities owned or operated by one individual (the “Makers”) previously entered into several Promissory Notes (the “Notes”) valued at approximately $55 million. In January 2024, the Makers defaulted on, and Legacy accelerated, a portion of the Notes valued at approximately $37 million. The Notes were secured by mobile homes and mobile-home parks located in Texas, Mississippi, and Louisiana, and personally guaranteed by individuals (the “Personal Guarantors”). During 2024, Legacy filed several lawsuits against the Makers and the Personal Guarantors and aggressively pursued the collateral.

On July 27, 2024, Legacy, the Makers, and the Personal Guarantors entered into a Settlement Agreement and Release (the “Agreement”). The parties to the Agreement are Legacy, Legacy’s Executive Chairman, Curtis D. Hodgson (collectively, the “Plaintiffs”), William Rodwell, Cynthia Rodwell, Tony Hartsgrove, Robert T. Hutson II, Yakov Plotnikov, Eric D. Wooten (collectively, the “Individual Defendants”), Cleveland MHC, LLC (“Cleveland”), Country Aire Homes of LA, LLC, Forest Hollow, LLC (“Forest Hollow”), Gulf Stream Homes of LA, LLC, Gulf Stream Homes of MS, LLC, Stellar GS Homes, LLC, SINOP GS Homes, LLC, Gulf Stream Manor Phase 2 Homes, LLC, Iowa Homes, LLC, Southern Pointe Homes, LLC, Southern Pointe Investments, LLC, Southern Pointe Investments II, LLC, Stellar GS Homes LLC, and Country Aire MHP LLC (collectively, the “Entity Defendants”).

As consideration for the mutual releases contained in the Agreement:

●

Forest Hollow conveyed clear title, and the undisputed right to possess, all real and personal property located on or at the Forest Hollow Mobile Home Community, 6650 Broad Oak Street, Beaumont, TX 77713 (the “Forest Hollow Mobile Home Community”) to Legacy;

●

Cleveland conveyed clear title, and the undisputed right to possess, all real and personal property located on or at the Cleveland Mobile Home Community, 110 Old Hwy 49 S. Richland, MS 39218 (the “Cleveland Mobile Home Community”) to Legacy;

●

Cleveland and Forest Hollow assigned all intangible assets, including all leases, contracts, and goodwill applicable or related to the real and personal property located on or at the Forest Hollow Mobile Home Community and the Cleveland Mobile Home Community to Legacy;

●

The Individual and Entity Defendants irrevocably waived any and all claims related to existing deposits; and

●

Legacy refinanced the Entity and Individual Defendants’ remaining debt, pursuant to a new two-year, $48.6 million Promissory Note (the “New Note”). The New Note bears interest at a fixed rate of 7.9%, requires monthly payments of interest only for twenty-four months, and matures in July, 2026.

●

Payments due on the New Note are current as of September 30, 2025.

The New Note is secured by a first priority interest in more than 1,000 mobile homes and two mobile-home parks located in Louisiana, and personal guarantees signed by the Individual Defendants. The New Note is secured by the same Louisiana collateral as the old Notes, while providing additional legal efficiencies. The Individual Defendants have personally guaranteed the New Note to the same extent they personally guaranteed the Entity Defendants’ prior debt.

The Company presents the entire New Note on the accompanying balance sheets under the heading Notes receivable from mobile home parks (“MHP”), and interest income associated with the New Note is presented on the accompanying statement of income under the heading Consumer, MHP and dealer loans interest. Prior to the three months ending September 30, 2024, the Company classified the old Notes as MHP notes and other notes.

The Company sold the Forest Hollow Mobile Home Community in December, 2024. The Company recorded the fair value of the real property from Cleveland on the accompanying balance sheets under the heading Property, plant and equipment, net and the fair value of the personal property from Cleveland on the accompanying balance sheets under the heading Other assets. The Company recorded a gain of $5.4 million in 2024 on the settlement agreement and transactions related to the Cleveland Mobile Home Community and the Forest Hollow Mobile Home Community.

The Company evaluated the recoverability of the New Note as of September 30, 2025 and determined a provision for expected loan losses is not necessary based on the analysis of the fair value of underlying collateral.

Notes receivable from mobile home parks, net of allowance for loan losses and deferred financing fees, consisted of the following at September 30, 2025, December 31, 2024, and December 31, 2023:


	As of September 30,		As of December 31,		As of December 31,
	2025		2024		2023
Outstanding principal balance	$	203,467	$	208,175	$	184,280
Loan discount and deferred financing fees		(961)		(1,057)		(1,565)
Allowance for loan losses		(979)		(654)		(735)
Total	$	201,527	$	206,464	$	181,980

The following table presents a detail of the activity in the allowance for loan losses for the three and nine months ended September 30, 2025 and 2024:


	Three months ended				Nine months ended
	September 30,				September 30,
	2025		2024		2025		2024
Allowance for loan losses, beginning of period	$	900	$	711	$	654	$	735
Provision for loan losses		79		42		325		18
(Charge offs) recoveries		—		—		—		—
Allowance for loan losses, end of period	$	979	$	753	$	979	$	753

The following table presents impaired and general reserve for allowance for loan losses at September 30, 2025 and December 31, 2024:


	As of September 30,		As of December 31,
	2025		2024
Total MHP loans	$	203,467	$	208,175
Allowance for loan losses		979		654
Impaired loans individually evaluated for impairment		410		—
Specific reserve against impaired loans		29		—
Other loans collectively evaluated for allowance		203,057		208,175
General allowance for loan losses		949		654

We evaluate the credit quality of our MHP 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 MHP receivable by credit quality indicator based on delinquency status and fiscal year of origination and is presented as of September 30, 2025:


	Year of Origination
	2025		2024		2023		2022		2021		Prior		Total		% of Portfolio
< 30 days past due	$	31,642	$	83,936	$	31,119	$	28,139	$	16,165	$	11,252	$	202,253		99.4
30-90 days past due		—		—		343		461		—		—		804		0.4
> 90 days past due		—		410		—		—		—		—		410		0.2
Total	$	31,642	$	84,346	$	31,462	$	28,600	$	16,165	$	11,252	$	203,467		100.0