Finance Receivables Held for Sale

3 Months Ended

Mar. 31, 2012

Note 8. Finance Receivables Held for Sale

During the three months ended March 31, 2012, we transferred $79.2 million of finance receivables from finance receivables held for investment to finance receivables held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. At the time of transfer, we marked these loans to lower of cost or fair value and recorded net losses of $1.9 million in other revenues for the three months ended March 31, 2012. In March 2012, we sold $44.6 million of finance receivables held for sale with no additional loss. In April 2012, we sold $3.5 million of finance receivables held for sale with no additional loss.

When we sell finance receivables, we establish a reserve for sales recourse in other liabilities, which represents our estimate of losses to be: (a) incurred by us on the repurchase of certain finance receivables that we previously sold; and (b) incurred by us for the indemnification of losses incurred by purchasers. We repurchased one loan for $0.1 million during the three months ended March 31, 2012 primarily due to such loan reaching defined delinquency limits under the loan sale agreement, compared to three loans repurchased for $0.5 million during the three months ended March 31, 2011. At March 31, 2012, there were no material unresolved recourse requests.

The activity in our reserve for sales recourse obligations was as follows:

(dollars in thousands) At or for the Three Months Ended March 31,	2012		2011

Balance at beginning of period	$	1,648	$	3,511
Provision for/(reduction in) recourse obligations	117		(517		)
Recourse losses	—		(118		)
Balance at end of period	$	1,765	$	2,876

SPRINGLEAF FINANCE INC 10-Q