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:


	September 30,		December 31,
	2018		2017
Government (1)	$	89,127	$	263,512
Conventional (2)		70,060		193,055
Other (3)		178,475		93,012
Fair value adjustment (4)		7,019		19,202
Total mortgage loans held for sale	$	344,681	$	568,781

(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 non-qualified mortgages (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 and comprehensive (loss) earnings.

Gain on mortgage loans held-for-sale (LHFS), included in gain on sale of loans, net in the consolidated statements of operations and comprehensive (loss) earnings, is comprised of the following the three and nine months ended September 30, 2018 and 2017:


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Gain on sale of mortgage loans	$	27,949	$	56,230	$	85,928	$	143,752
Premium from servicing retained loan sales		5,717		17,855		22,473		42,728
Unrealized gains (losses) from derivative financial instruments		324		1,711		(341)		2,462
Realized (losses) gains from derivative financial instruments		(537)		(2,484)		11,281		(7,526)
Mark to market (loss) gain on LHFS		(6,901)		(1,336)		(12,182)		8,262
Direct origination expenses, net		(9,038)		(27,734)		(47,828)		(72,884)
Provision for repurchases		(3,841)		(1,766)		(5,435)		(192)
Total gain on sale of loans, net	$	13,673	$	42,476	$	53,896	$	116,602