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3. NOTES AND INTEREST RECEIVABLE | 6 Months Ended
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Jun. 30, 2014
NOTES AND INTEREST RECEIVABLE |
NOTES AND INTEREST RECEIVABLE | A portion of our assets are invested in mortgage notes receivable, principally secured by real estate. We may originate mortgage loans in conjunction with providing purchase money financing of property sales. Notes receivable are generally collateralized by real estate or interests in real estate and personal guarantees of the borrower and, unless noted otherwise, are so secured. Management intends to service and hold for investment the mortgage notes in our portfolio. A majority of the notes receivable provide for principal to be paid at maturity. Our mortgage notes receivable consist of first, wraparound and junior mortgage loans (dollars in thousands):
|  |  |  |  |  |  | Maturity |  | Interest |  |  |  |
Borrower |  |  |  |  |  |  | Date |  | Rate |  | Amount |  | Security
Performing loans: |  |  |  |  |  |  |  |  |  |  |  |
| Miscellaneous non-related party notes |  |  | Various |  | Various |  | $ 3,297 |  | Various secured interests
| Miscellaneous related party notes (1) |  |  | Various |  | Various |  | 3,441 |  | Various secured interests
| One Realco Corporation (1) (2) |  |  | 01/17 |  | 3.00% |  | 7,000 |  | Unsecured
| Realty Advisors Management, Inc. (1) |  |  | 12/16 |  | 2.20% |  | 20,387 |  | Unsecured
| S Breeze I-V, LLC |  |  |  |  | 06/14 |  | 5.00% |  | 3,314 |  | 6% Class A and 25% Class B Limited Partner Interests
| Woodhaven-Hawthorn, Inc. (1) |  |  | 10/19 |  | 5.50% |  | 985 |  | Unsecured
| Unified Housing Foundation, Inc. (Cliffs of El Dorado) (1) |  | 12/32 |  | 12.00% |  | 2,097 |  | 100% Membership Interest in Unified Housing of McKinney, LLC
| Unified Housing Foundation, Inc. (Echo Station) (1) |  | 12/32 |  | 12.00% |  | 1,481 |  | 100% Membership Interest in Unified Housing of Temple, LLC
| Unified Housing Foundation, Inc. (Inwood on the Park) (1) |  | 12/32 |  | 12.00% |  | 5,059 |  | 100% Membership Interest in Unified Housing Inwood, LLC
| Unified Housing Foundation, Inc. (Kensington Park) (1) |  | 12/32 |  | 12.00% |  | 3,936 |  | 100% Membership Interest in Unified Housing Kensington, LLC
| Unified Housing Foundation, Inc. (Lakeshore Villas) (1) |  | 12/32 |  | 12.00% |  | 2,000 |  | Unsecured
| Unified Housing Foundation, Inc. (Lakeshore Villas) (1) |  | 12/32 |  | 12.00% |  | 9,096 |  | Membership interest in Housing for Seniors of Humble, LLC
| Unified Housing Foundation, Inc. (Limestone Canyon) (1) |  | 12/32 |  | 12.00% |  | 3,057 |  | 100% Membership Interest in Unified Housing of Austin, LLC
| Unified Housing Foundation, Inc. (Limestone Canyon) (1) |  | 12/32 |  | 12.00% |  | 4,663 |  | 100% Membership Interest in Unified Housing of Austin, LLC
| Unified Housing Foundation, Inc. (Limestone Ranch) (1) |  | 12/32 |  | 12.00% |  | 2,250 |  | 100% Membership Interest in Unified Housing of Vista Ridge, LLC
| Unified Housing Foundation, Inc. (Limestone Ranch) (1) |  | 12/32 |  | 12.00% |  | 6,000 |  | 100% Membership Interest in Unified Housing of Vista Ridge, LLC
| Unified Housing Foundation, Inc. (Parkside Crossing) (1) |  | 12/32 |  | 12.00% |  | 2,272 |  | 100% Membership Interest in Unified Housing of Parkside Crossing, LLC
| Unified Housing Foundation, Inc. (Sendero Ridge) (1) |  | 12/32 |  | 12.00% |  | 5,174 |  | 100% Membership Interest in Unified Housing of Sendero Ridge, LLC
| Unified Housing Foundation, Inc. (Sendero Ridge) (1) |  | 12/32 |  | 12.00% |  | 4,812 |  | 100% Membership Interest in Unified Housing of Sendero Ridge, LLC
| Unified Housing Foundation, Inc. (Timbers at the Park) (1) |  | 12/32 |  | 12.00% |  | 1,323 |  | 100% Membership Interest in Unified Housing of Terrell, LLC
| Unified Housing Foundation, Inc. (Tivoli) (1) |  | 12/32 |  | 12.00% |  | 7,966 |  | 100% Membership Interest in Unified Housing of Tivoli, LLC
| Unified Housing Foundation, Inc. (Reserve at White Rock Phase I) (1) | 12/32 |  | 12.00% |  | 2,485 |  | 100% Membership Interest in Unified Housing of Harvest Hill I, LLC
| Unified Housing Foundation, Inc. (Reserve at White Rock Phase II) (1) | 12/32 |  | 12.00% |  | 2,555 |  | 100% Membership Interest in Unified Housing of Harvest Hill, LLC
| Unified Housing Foundation, Inc. (Trails at White Rock) (1) |  | 12/32 |  | 12.00% |  | 3,815 |  | 100% Membership Interest in Unified Housing of Harvest Hill III, LLC
| Unified Housing Foundation, Inc. (1) |  |  | 12/13 |  | 5.00% |  | 6,000 |  | Unsecured
| Unified Housing Foundation, Inc. (1) |  |  | 12/15 |  | 12.00% |  | 17,928 |  | Unsecured
| Unified Housing Foundation, Inc. (1) |  |  | 12/16 |  | 12.00% |  | 3,657 |  | Unsecured
| Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1) | 03/19 |  | 12.00% |  | 1,810 |  | Unsecured
| Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1) | 03/17 |  | 12.00% |  | 1,156 |  | Unsecured
| Foundation for Better Housing, Inc. (Vista Ridge) (1) |  | 04/19 |  | 12.00% |  | 3,923 |  | Unsecured
| Accrued interest |  |  |  |  |  |  |  |  | 11,471 |  |
Total Performing |  |  |  |  |  |  |  |  |  | $ 154,410 |  |
Non-Performing loans: |  |  |  |  |  |  |  |  |  |  |
| Leman Development, Ltd (2) |  |  |  | 07/11 |  | 7.00% |  | 1,500 |  | Unsecured
| Tracy Suttles (2) |  |  |  |  | 12/11 |  | 0.00% |  | 1,077 |  | Unsecured
| Miscellaneous non-related party notes |  |  | Various |  | Various |  | 507 |  | Various secured interests
| Accrued interest |  |  |  |  |  |  |  |  | 57 |  |
Total Non-Performing |  |  |  |  |  |  |  |  | $ 3,141 |  |
| Allowance for doubtful accounts |  |  |  |  |  |  | (19,537) |  |
Total |  |  |  |  |  |  |  |  |  |  | $ 138,014 |  |
(1) Related party notes |  |  |  |  |  |  |  |  |  |  |
(2) An allowance was taken for estimated losses at full value of note |  |  |  |  |  |  |
At June 30, 2014, we had junior mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $131.0 million. We recognized interest income of $7.8 million related to these notes receivables. The Company has various notes receivable from Unified Housing Foundation, Inc. (“UHF”). UHF is determined to be a related party to the Company due to our significant investment in the performance of the collateral secured under the notes receivable. Payments are due from surplus cash flow of operations. Sale or refinance of any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes. These notes are cross-collateralized but to the extent cash is received from a specific UHF property, it is applied against any outstanding interest for the related-property note. The allowance on the UHF notes was a purchase allowance that was netted against the notes when acquired. On March 31, 2014, TCI invested $3.2 million of notes and accrued interest receivable from Foundation for Better Housing, Inc. for the acquisition and refinance of Preserve at Prairie Pointe. The notes accrue interest at 12% and mature at various times. On April 1, 2014, TCI invested $4.0 million of a note and accrued interest receivable from Foundation for Better Housing, Inc. for the acquisition of Vista Ridge. The note accrues interest at 12% and matures in April 2019.

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