Note 2.—Mortgage Loans Held-for-Sale

A summary of the unpaid principal balance (UPB) of mortgage loans held-for-sale by type is presented below:


	March 31,		December 31,
	2017		2016
Government (1)	$	153,905	$	146,305
Conventional (2)		148,653		168,581
Other (3)		115,726		62,701
Fair value adjustment (4)		16,038		10,835
Total mortgage loans held for sale	$	434,322	$	388,422

(1)

Includes all government-insured loans including Federal Housing Administration (FHA), Veterans Affairs (VA) and United States Department of Agriculture (USDA).

(2)

Includes loans eligible for sale to Federal National Mortgage Association (Fannie Mae or FNMA) and Federal Home Loan Mortgage Corporation (Freddie Mac or FHLMC).

(3)

Includes NonQM and Jumbo loans.

(4)

Changes in fair value are included in gain on sale of loans, net in the accompanying consolidated statements of operations.

Gain on mortgage loans held-for-sale (LHFS), included in gain on sale of loans, net in the consolidated statements of operations, is comprised of the following for the three months ended March 31, 2017 and 2016:


	For the Three Months Ended
	March 31,
	2017		2016
Gain on sale of mortgage loans	$	38,240	$	59,212
Premium from servicing retained loan sales		12,066		18,822
Unrealized (losses) gains from derivative financial instruments		(1,145)		4,945
Realized gains (losses) from derivative financial instruments		1,125		(8,457)
Mark to market gain on LHFS		5,203		11,185
Direct origination expenses, net		(19,836)		(31,459)
Recovery (provision) for repurchases		1,666		(379)
Total gain on sale of loans, net	$	37,319	$	53,869