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NOTES AND INTEREST RECEIVABLE FROM RELATED PARTIES
 6 Months Ended
Jun. 30, 2014
NOTES AND INTEREST RECEIVABLE FROM RELATED PARTIES  
NOTES AND INTEREST RECEIVABLE FROM RELATED PARTIES

Junior Mortgage Loans.    Junior mortgage loans are loans secured by mortgages that are subordinate to one or more prior liens on the underlying real estate. Recourse on the loans ordinarily includes the real estate which secures the loan, other collateral and personal guarantees of the borrower.

 

At June 30, 2014, we had junior mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $25.6 million.  The loans mature in December 2032 and have interest rates at 12.0%.  As of June 30, 2014, we recognized interest income of $1.5 million related to these notes receivable.

 

Payments are due from surplus cash flow or sale or refinancing of the underlying properties.  These notes are cross collateralized to the extent that any surplus cash available from the sale or refinance of any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes.  The allowance on the notes was a purchase allowance that was netted against the notes when acquired.  Our mortgage notes receivable consist of junior mortgage loans (dollars in thousands):

 

    Maturity      Interest      
Borrower Date   Rate   Amount   Security
Performing loans:              
  Unified Housing Foundation, Inc. (Echo Station) 12/32   12.00%    $          1,481   100% Membership Interest in Unified Housing of Temple, LLC
  Unified Housing Foundation, Inc. (Lakeshore Villas) 12/32   12.00%                2,000   Unsecured
  Unified Housing Foundation, Inc. (Lakeshore Villas) 12/32   12.00%                6,363   Membership Interest in Housing for Seniors of Humble, LLC
  Unified Housing Foundation, Inc. (Limestone Canyon) 12/32   12.00%                3,057   100% Membership Interest in Unified Housing of Austin, LLC
  Unified Housing Foundation, Inc. (Limestone Ranch) 12/32   12.00%                2,250   100% Membership Interest in Unified Housing of Vista Ridge, LLC
  Unified Housing Foundation, Inc. (Parkside Crossing) 12/32   12.00%                1,936   100% Membership Interest in Unified Housing of Parkside Crossing, LLC
  Unified Housing Foundation, Inc. (Sendero Ridge) 12/32   12.00%                5,174   100% Membership Interest in Unified Housing of Sendero Ridge, LLC
  Unified Housing Foundation, Inc. (Timbers of Terrell) 12/32   12.00%                1,323   100% Membership Interest in Unified Housing of Terrell, LLC
  Unified Housing Foundation, Inc. (Tivoli) 12/32   12.00%                1,826   100% Membership Interest in Unified Housing of Tivoli, LLC
  Accrued interest                      2,021    
Total Performing          $        27,431    
                 
  Allowance for doubtful accounts                    (1,826)    
Total          $        25,605    
                 
All are related party notes.              

 

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.