Note 8. Warehouse Lines of Credit

Encompass Lending Group (“Encompass”), an indirect wholly owned subsidiary of the Company, utilizes line of credit facilities as a means of temporarily financing mortgage loans pending their sale.  The underlying warehouse lines of credit agreements, as described below, contain financial and other debt covenants. As of March 31, 2022, Encompass was in compliance with these debt covenants.

Encompass maintains a master loan warehouse agreement with a bank whereby Encompass borrows funds to finance the origination or purchase of eligible loans. Interest on funds borrowed is equal to the greater of the mortgage interest rate of the underlying loan or 3.625%. The agreement expires in July 2022. The maximum funding of these loans at March 31, 2022 and December 31, 2021 was $15.0 million. At March 31, 2022 and December 31, 2021, the outstanding balance on this warehouse line was approximately $2.4 million and $4.3 million, respectively.

Encompass maintains a mortgage participation purchase agreement with a bank whereby Encompass borrows funds to finance the origination or purchase of eligible loans. Interest on funds borrowed is equal to the greater of the mortgage interest rate of the underlying loan or 3.5%. The agreement expires in April 2023.The maximum funding of these loans at March 31, 2022 and December 31, 2021 was $25.0 million. At March 31, 2022 and December 31, 2021, the outstanding balance on this warehouse line was approximately $3.5 million and $3.1 million, respectively.

Encompass maintains a warehousing credit and security agreement with a bank whereby Encompass borrows funds to finance the origination of eligible mortgage loans. Interest on funds borrowed is equal to the daily LIBOR rate plus 2.00% or 3.5% per annum. The agreement expires in April 2023. The Daily Adjusting LIBOR rate plus 2.00% as of March 31, 2022 and December 31, 2021 was 2.33% and 2.09, respectively%. The maximum funding limit of these loans at March 31, 2022 and December 31, 2021 was $15.0 million. At March 31, 2022 and December 31, 2021, the outstanding balance on this warehouse line was approximately $2.3 million and $2.2 million, respectively.