Note 8. Warehouse Lines of Credit

As a means of financing mortgage loans held for sale, the Company utilizes line of credit agreements for the purpose of temporarily warehousing mortgage loans pending the sale of the loans. The warehouse lines of credit are classified as current on the condensed consolidated balance sheet and secured by mortgage loans held for sale with fair values that approximate the obligations to the lender.

The Company maintained a warehousing credit and security agreement with a bank whereby the Company borrowed funds to finance the origination of eligible mortgage loans. The Company paid interest equal to the greater of Prime Rate less 0.75% or 3.85% per annum. The Prime Rate as of September 30, 2021 was 3.25%. The maximum funding limit of these loans was $15.0 million at September 30, 2021. At September 30, 2021, there was no outstanding balance on this warehouse line. The agreement expired in October 2021.

The Company maintains a master loan warehouse agreement with a bank whereby the Company borrows funds to finance the origination or purchase of eligible loans. The Company pays interest equal to the greater of the mortgage interest rate of the underlying loan or 3.625%. The maximum funding of these loans was $15.0 million at September 30, 2021. At September 30, 2021, the outstanding balance on this warehouse line was approximately $4.1 million. The credit agreement requires the Company to maintain at least $1.0 million in liquid assets. The agreement expires in July 2022.

The Company maintains a mortgage participation purchase agreement with a bank whereby the Company borrows funds to finance the origination or purchase of eligible loans. The Company pays interest equal to the greater of the mortgage interest rate of the underlying loan or 3.5%. The maximum funding of these loans was $25.0 million at September 30, 2021. At September 30, 2021, the outstanding balance on this warehouse line was approximately $6.2 million. The credit agreement requires the Company to maintain at least $1.0 million in liquid assets and have net income for the preceding 12 month period. The agreement expires in April 2023. During the three months ended September 30, 2021, the Company was not in compliance with the income debt covenants and obtained a waiver from the bank through December 31, 2021.

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The Company maintains a warehousing credit and security agreement with a bank whereby the Company borrows funds to finance the origination of eligible mortgage loans. The Company pays interest equal to the Daily Adjusting LIBOR rate plus 2.00% or 3.5% per annum. The Daily Adjusting LIBOR rate plus 2.00% as of September 30, 2021 was 2.09%. The maximum funding limit of these loans was $15.0 million at September 30, 2021. The credit agreement requires the Company to maintain at least $1.0 million in liquid assets, a tangible net worth of $2.3 million, debt-to-tangible net worth ratio of 15 to 1 and have net income for the preceding 12 month period.

The income debt covenant becomes effective in July 2022. The agreement expires in April 2023. At September 30, 2021, there was no outstanding balance on this warehouse line.