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NOTES AND INTEREST RECEIVABLE | 9 Months Ended
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Sep. 30, 2014
NOTES AND INTEREST RECEIVABLE |
NOTES AND INTEREST RECEIVABLE | NOTE 3. 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: |  |  |  |  |  |  |  |  |  |  |
| Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1) | 03/19 |  | 12.00% |  | $ 1,810 |  | Secured
| Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1) | 03/17 |  | 12.00% |  | 1,156 |  | Secured
| Foundation for Better Housing, Inc. (Vista Ridge) (1) |  | 04/19 |  | 12.00% |  | 3,923 |  | Secured
| Foundation for Better Housing, Inc. (Vista Ridge) (1) |  | 06/17 |  | 12.00% |  | 1,492 |  | Secured
| HGH Residential, Inc. (Park West I Apts) |  | 07/19 |  | 12.00% |  | 1,102 |  | Secured
| HGH Residential, Inc. (Park West II Apts) |  | 07/19 |  | 12.00% |  | 4,771 |  | Secured
| HGH Residential, Inc. (Tradewinds Dev) |  | 07/19 |  | 12.00% |  | 6,131 |  | Secured
| One Realco Corporation (1) (2) |  |  | 01/17 |  | 3.00% |  | 7,000 |  | Unsecured
| Realty Advisors Management, Inc. (1) |  | 12/16 |  | 2.20% |  | 20,387 |  | 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 |  | Secured
| 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) |  | 03/17 |  | 5.00% |  | 6,000 |  | Unsecured
| Unified Housing Foundation, Inc. (1) |  | 06/17 |  | 12.00% |  | 1,261 |  | 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
| Other non-related party notes |  |  | Various |  | Various |  | 3,007 |  | Various secured interests
| Other related party notes (1) |  |  | Various |  | Various |  | 2,117 |  | Various secured interests
| Other related party notes (1) |  |  | Various |  | Various |  | 3,568 |  | Various unsecured interests
| Accrued interest |  |  |  |  |  |  |  |  | 7,984 |  |
Total Performing |  |  |  |  |  |  |  |  |  | $ 163,335 |  |
Non-Performing loans: |  |  |  |  |  |  |  |  |  |  |
| Leman Development, Ltd (2) |  |  | 07/11 |  | 7.00% |  | $ 1,500 |  | Unsecured
| Tracy Suttles (2) |  |  |  |  | 12/11 |  | 0.00% |  | 1,077 |  | Unsecured
| Other non-related party notes |  |  | Various |  | Various |  | 507 |  | Secured
| Accrued interest |  |  |  |  |  |  |  |  | 67 |  |
Total Non-Performing |  |  |  |  |  |  |  |  | $ 3,151 |  |
| Allowance for doubtful accounts |  |  |  |  |  |  | $ ( 18,279 ) |  |
Total |  |  |  |  |  |  |  |  |  |  | $ 148,207 |  |
(1) Related party notes |  |  |  |  |  |  |  |  |  |  |
(2) An allowance was taken for estimated losses at full value of note |  |  |  |  |  |
At September 30, 2014, we had junior mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $132.4 million. We recognized interest income of $12.1 million related to these notes receivables. The Company has various notes receivable from Unified Housing Foundation, Inc. (“UHF”) and Foundation for Better Housing, Inc. (“FBH”). UHF and FBH are determined to be related parties 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 of the properties. A sale or refinance of any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes for the specific borrower. These notes are cross-collateralized for the specific borrower, but to the extent cash is received from a specific UHF or FBH property, it is applied first 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. In the 1st quarter of 2014, TCI obtained $3.2 million in notes and accrued interest receivable from Realty Advisors Inc. (“RAI”), a related party. These notes are due from FBH, a related party. The notes accrue interest at 12% and mature at various times. In the 2nd quarter of 2014, TCI obtained $4.0 million in a note receivable from RAI. This note is due from FBH. The note accrues interest at 12% and matures in April, 2019. In the 3rd quarter of 2014, TCI obtained $3.4 million in notes receivable from RAI. $2.8 million of the notes are due from UHF and $0.6 million are due from FBH, both are related parties. These notes accrue interest at 12% and have various maturity dates in 2017. In the 3rd quarter of 2014, TCI obtained $1.5 million in a note receivable from Regis, a related party. This note is due from FBH. The note accrues interest at 12% and matures in June, 2017. In the 3rd quarter of 2014, TCI obtained $0.5 million in a note and accrued interest receivable from Basic Capital Management, Inc. (“Basic”), a related party. The note is due from UHF, The note accrues interest at 5.25% until August, 2015 then at 12% until maturity in December, 2027.

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