Quarterly report pursuant to Section 13 or 15(d)

Notes Receivable

v3.20.2
Notes Receivable
9 Months Ended
Sep. 30, 2020
Notes Receivable [Abstract]  
Notes Receivable 3. Notes Receivable

The table below sets forth information relating to Bluegreen’s notes receivable and related allowance for loan losses (dollars in thousands):

September 30,

December 31,

2020

2019

Notes receivable secured by VOIs:

VOI notes receivable - non-securitized

$

197,845

203,872

VOI notes receivable - securitized

362,073

385,326

Gross VOI notes receivable

559,918

589,198

Allowance for loan losses - non-securitized

(59,271)

(47,894)

Allowance for loan losses - securitized

(90,534)

(92,736)

Allowance for loan losses

(149,805)

(140,630)

VOI notes receivable, net

$

410,113

448,568

Allowance as a % of gross VOI notes receivable

27%

24%

The weighted-average interest rate charged on Bluegreen’s notes receivable secured by VOIs was 14.9% as of September 30, 2020 and December 31, 2019. Bluegreen’s VOI notes receivable bear interest at fixed rates and are generally secured by property located in Florida, Missouri, Nevada, South Carolina, Tennessee, and Wisconsin.

Credit Quality of Notes Receivable and the Allowance for Loan Losses

Bluegreen monitors the credit quality of its receivables on an ongoing basis. Bluegreen holds large amounts of homogeneous VOI notes receivable and assesses uncollectibility based on pools of receivables as Bluegreen does not believe that there are significant concentrations of credit risk with any individual counterparty or groups of counterparties. In estimating loan losses, Bluegreen does not use a single primary indicator of credit quality but instead evaluates its VOI notes receivable based upon a static pool analysis that incorporates the aging of the respective receivables, default trends, and prepayment rates by origination year, as well as the FICO scores of the borrowers.

While Bluegreen does not believe the full impact of COVID-19 is reflected in its default or delinquency rates, Bluegreen believes that COVID-19 pandemic has had and is expected to continue to have a significant impact on its VOI notes receivable. Accordingly, in March 2020, Bluegreen recorded an additional allowance for loan losses of $12.0 million, which includes its estimate of customer defaults as a result of the COVID-19 pandemic based on Bluegreen’s historical experience, forbearance requests received from its customers, and other factors, including, but not limited to, the seasoning of the notes receivable and FICO scores of the customers.

The activity in Bluegreen’s allowance for loan losses on VOI notes receivable was as follows (in thousands):

For the Nine Months Ended

September 30,

2020

2019

Balance, beginning of period

$

140,630

134,133

Provision for loan losses

44,083

39,483

Write-offs of uncollectible receivables

(34,908)

(38,340)

Balance, end of period

$

149,805

135,276

The table below sets forth information relating to Bluegreen’s VOI notes receivable by year of origination, including the FICO score of the borrower at the time of origination and delinquency status, as of September 30, 2020 (in thousands):

Year of Origination

2020 (3)

2019

2018

2017

2016

2015 and Prior

Total

By FICO score:

701+

$

49,843

$

92,561

$

61,442

$

39,863

$

29,802

$

39,607

$

313,118

601-700

30,057

47,499

36,549

26,616

24,508

38,616

203,845

<601 (1)

2,492

4,815

3,266

2,239

2,429

4,445

19,686

Other (2)

225

3,009

4,848

4,484

3,551

7,152

23,269

Total

$

82,617

$

147,884

$

106,105

$

73,202

$

60,290

$

89,820

$

559,918

Defaults

$

610

$

8,251

$

9,484

$

6,559

$

4,901

$

5,103

$

34,908

Allowance for loan loss

$

22,945

$

43,188

$

29,545

$

18,070

$

17,126

$

18,931

$

149,805

Delinquency status:

Current

$

81,169

$

141,008

$

99,478

$

68,010

$

56,417

$

81,387

$

527,469

31-60 days

612

1,521

1,243

736

558

936

5,606

61-90 days

315

1,510

764

946

408

568

4,511

Over 91 days (2)

521

3,845

4,620

3,510

2,907

6,929

22,332

Total

$

82,617

$

147,884

$

106,105

$

73,202

$

60,290

$

89,820

$

559,918

(1)Includes VOI notes receivable attributable to borrowers without a FICO score (primarily foreign borrowers).

(2)Includes $15.2 million related to VOI notes receivable that, as of September 30, 2020, had defaulted, but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain of Bluegreen’s receivable-backed notes payable transactions. These VOI notes receivable have been reflected in the allowance for loan losses.

(3)VOI originations for the nine months ended September 30, 2020.

The table below sets forth information regarding the percentage of gross notes receivable outstanding by FICO score of the borrower at the time of origination:

September 30,

December 31,

FICO Score

2020

2019

700+

59.00

%

59.00

%

600-699

37.00

37.00

<601(1)

4.00

4.00

Total

100.00

%

100.00

%

(1)Includes VOI notes receivable attributable to borrowers without a FICO score (primarily foreign borrowers).

Bluegreen’s notes receivable are carried at amortized cost less an allowance for loan losses. Generally, interest income is suspended, and previously accrued but unpaid interest income is reversed on delinquent notes receivable when principal or interest payments are more than 90 days contractually past due and not resumed until such loans are less than 90 days past due. As of September 30, 2020 and December 31, 2019, $22.3 million and $19.3 million, respectively, of Bluegreen’s VOI notes receivable were more than 90 days past due, and accordingly, consistent with Bluegreen’s policy, were not accruing interest income. After approximately 127 days, Bluegreen’s VOI notes receivable are generally written off against the allowance for loan loss. Accrued interest was $3.8 million and $5.3 million as of September 30, 2020 and December 31, 2019, respectively, and is included within other assets in the Company’s condensed consolidated statements of financial condition herein.

The table below sets forth information regarding the delinquency status of Bluegreen’s VOI notes receivable (in thousands):

September 30,

December 31,

2020

2019

Current

$

527,469

557,849

31-60 days

5,606

6,794

61-90 days

4,511

5,288

> 91 days (1)

22,332

19,267

Total

$

559,918

589,198

(1)Includes $15.2 million and $10.6 million of VOI notes receivable as of September 30, 2020 and December 31, 2019, respectively, that, as of such dates, had defaulted but the related VOI note receivable balance had not yet been charged off in accordance with the provisions of certain of Bluegreen’s receivable-backed notes payable transactions. These VOI notes receivable have been included in the allowance for loan losses.