v3.26.1
Note 8 - Allowance for Loan Losses From Mortgage Loans on Real Estate
6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Premiums Receivable Note [Text Block]

8. Allowance for Loan Losses from Mortgage Loans on Real Estate

 

As of June 30, 2026, $1,012,490 of independent residential mortgage loans on real estate is held in escrow by a third party for the benefit of the Company.   As of June 30, 2026, $1,003,023 of that escrow amount is available to the Company as additional collateral on $5,195,898 of advances to the loan originator. The remaining June 30, 2026 escrow amount of $9,467 is available to the Company as additional collateral on its investment of $1,893,321 in residential mortgage loans on real estate. In addition, the Company has an additional $1,282,804 allowance for possible loan losses in the remaining $255,278,115 of investments in mortgage loans on real estate as of June 30, 2026.

 

As of December 31, 2025, $890,250 of independent residential mortgage loans on real estate are held in escrow by a third party for the benefit of the Company.   As of December 31, 2025, $879,146 of that escrow amount is available to the Company as additional collateral on $4,722,878 of advances to the loan originator. The remaining December 31, 2025 escrow amount of $11,104 is available to the Company as additional collateral on its investment of $2,220,809 in mortgage loans on real estate. In addition, the Company has an additional $1,249,643 allowance for possible loan losses in the remaining $206,157,105 of investments in mortgage loans on real estate as of December 31, 2025.

 

As of June 30, 2026, the Company’s Chairman, President and Chief Executive Officer has provided approximately $2,504,608 of loans to this mortgage loan originator and with Board of Directors approval, may provide an additional amount of $495,392 so not to exceed $3.0 million in the aggregate.

 

The balances of and changes in the Company’s credit losses related to mortgage loans on real estate as of and for the three and six months ended June 30, 2026 and 2025 are summarized as follows (excluding $1,893,321 and $2,357,772 of mortgage loans on real estate as of June 30, 2026 and 2025, respectively, with one loan originator where independent mortgage loan balances are held in escrow by a third party for the benefit of the Company):

 

   

(Unaudited)

 
   

Three Months Ended June 30,

 
   

Residential Mortgage Loans

   

Commercial Mortgage Loans

   

Total

 
   

2026

   

2025

   

2026

   

2025

   

2026

   

2025

 

Allowance, beginning

  $ 1,090,024     $ 1,027,453     $ 171,988     $ 71,288     $ 1,262,012     $ 1,098,741  

Charge offs

    -       -       -       -       -       -  

Recoveries

    -       -       -       -       -       -  

Provision

    3,339       123,150       17,453       18,983       20,792       142,133  

Allowance, ending

  $ 1,093,363     $ 1,150,603     $ 189,441     $ 90,271     $ 1,282,804     $ 1,240,874  
                                                 

Allowance, ending:

                                               

Individually evaluated for impairment

  $ -     $ -     $ -     $ -     $ -     $ -  

Collectively evaluated for impairment

  $ 1,093,363     $ 1,150,603     $ 189,441     $ 90,271     $ 1,282,804     $ 1,240,874  
                                                 

Carrying Values:

                                               

Individually evaluated for reserve allowance

  $ -     $ -     $ -     $ -     $ -     $ -  

Collectively evaluated for reserve allowance

  $ 217,579,322     $ 228,970,075     $ 37,698,793     $ 17,963,830     $ 255,278,115     $ 246,933,905  

 

   

(Unaudited)

 
   

Six Months Ended June 30,

 
   

Residential Mortgage Loans

   

Commercial Mortgage Loans

   

Total

 
   

2026

   

2025

   

2026

   

2025

   

2026

   

2025

 

Allowance, beginning

  $ 1,099,470     $ 964,035     $ 150,173     $ 71,930     $ 1,249,643     $ 1,035,965  

Charge offs

    -       -       -       -       -       -  

Recoveries

    -       -       -       -       -       -  

Provision

    (6,107 )     186,568       39,268       18,341       33,161       204,909  

Allowance, ending

  $ 1,093,363     $ 1,150,603     $ 189,441     $ 90,271     $ 1,282,804     $ 1,240,874  
                                                 

Allowance, ending:

                                               

Individually evaluated for impairment

  $ -     $ -     $ -     $ -     $ -     $ -  

Collectively evaluated for impairment

  $ 1,093,363     $ 1,150,603     $ 189,441     $ 90,271     $ 1,282,804     $ 1,240,874  
                                                 

Carrying Values:

                                               

Individually evaluated for reserve allowance

  $ -     $ -     $ -     $ -     $ -     $ -  

Collectively evaluated for reserve allowance

  $ 217,579,322     $ 228,970,075     $ 37,698,793     $ 17,963,830     $ 255,278,115     $ 246,933,905  

 

 

The Company utilizes the ratio of the carrying value of individual mortgage loans compared to the individual appraisal value to evaluate the credit quality of its mortgage loans on real estate (commonly referred to as the loan-to-value ratio). The Company’s residential and commercial mortgage loans on real estate by credit quality using this ratio as of June 30, 2026 and December 31, 2025 are summarized as follows:

 

   

Residential Mortgage Loans

   

Commercial Mortgage Loans

   

Total Mortgage Loans

 
   

(Unaudited)

           

(Unaudited)

           

(Unaudited)

         

Loan-To-Value Ratio

 

June 30, 2026

   

December 31, 2025

   

June 30, 2026

   

December 31, 2025

   

June 30, 2026

   

December 31, 2025

 

Over 70% to 80%

  $ 83,614,686     $ 80,961,159     $ 2,750,745     $ 2,994,034     $ 86,365,431     $ 83,955,193  

Over 60% to 70%

    59,847,321       57,882,384       6,388,109       4,219,456       66,235,430       62,101,840  

Over 50% to 60%

    37,086,795       41,230,931       7,939,553       2,955,812       45,026,348       44,186,743  

Over 40% to 50%

    19,790,519       20,034,515       7,124,837       8,882,500       26,915,356       28,917,015  

Over 30% to 40%

    8,275,609       10,765,292       4,585,662       4,641,724       12,861,271       15,407,016  

Over 20% to 30%

    6,001,339       5,555,166       4,439,626       2,916,747       10,440,965       8,471,913  

Over 10% to 20%

    3,712,765       3,899,780       4,221,782       3,018,417       7,934,547       6,918,197  

10% or less

    1,143,609       686,081       248,479       255,716       1,392,088       941,797  

Total

  $ 219,472,643     $ 221,015,308     $ 37,698,793     $ 29,884,406     $ 257,171,436     $ 250,899,714