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NOTES AND INTEREST RECEIVABLE FROM RELATED PARTIES
 9 Months Ended
Sep. 30, 2021
Receivables [Abstract]  
NOTES AND INTEREST RECEIVABLE FROM RELATED PARTIES

NOTE 2. NOTES AND INTEREST RECEIVABLE FROM RELATED PARTIES

 

Notes and interest receivable from related parties is comprised of junior mortgage loans, which 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.

 

The Company has various notes receivable from Unified Housing foundation, Inc. “UHF”. UHF is determined to be a related party due to our significant investment in the performance of the collateral secured under the notes receivable. Payments are due from surplus cash flow from operations, sale or refinancing of the underlying properties. These notes are cross collateralized to the extent that any surplus cash available from any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes. Furthermore, any surplus cash available from any of the properties UHF owns, besides the properties underlying these notes, can be used to repay outstanding interest and principal for these notes.

 

All of the Company’s notes receivable are with UHF. The notes mature in December 2032 and have interest rates of 12.0%.

 

In February 2021, the Company collected $1.017 million which is the remaining balance of a fully reserved note receivable and is included in other income. In addition, in February, the Company collected $1.9 million of principal and $.6 million of accrued interest on the UHF notes receivable listed below.

 

On September 30, 2021, we had mortgage loans and accrued interest receivable from related parties totaling $11.5 million. As of September 30, 2021, we recognized interest income of $1 million related to these notes receivable. Below is a summary of notes and interest receivable from related parties (dollars in thousands):

 

   Maturity  Interest      
Borrower  Date  Rate  Amount  Collateral
Performing loans:                    
Unified Housing Foundation, Inc. (Echo Station)   12/32   12.00%  $1,481    Secured 
Unified Housing Foundation, Inc. (Lakeshore Villas)   12/32   12.00%  $2,000    Secured 
Unified Housing Foundation, Inc. (Lakeshore Villas)   12/32   12.00%  $6,369    Secured 
Unified Housing Foundation, Inc. (Timbers of Terrell)   12/32   12.00%  $1,323    Secured 
Total Notes Receivable             11,173      
Accrued interest             337      
Total Performing            $11,510      

 

All are related party notes.