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Financial Instruments
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Financial Instruments Financial Instruments
Derivatives

Our primary market exposure is to interest rate risk, specifically U.S. treasury and mortgage interest rates, due to their impact on mortgage-related assets and commitments. We use forward sales commitments on whole loans and mortgage-backed securities to manage and reduce this risk. We do not have any derivative instruments designated as hedging instruments.

Forward Sales Commitments—We are exposed to interest rate and price risk on loans held for sale from the funding date until the date the loan is sold. Forward sales commitments on whole loans and mortgage-backed securities are used to fix the forward sales price that will be realized at the sale of each loan.

Interest Rate Lock Commitments—Interest rate lock commitments ("IRLCs") represent an agreement to extend credit to a mortgage loan applicant. We commit (subject to loan approval) to fund the loan at the specified rate, regardless of changes in market interest rates between the commitment date and the funding date. Outstanding IRLCs are subject to interest rate risk and related price risk during the period from the date of commitment through the loan funding date or expiration date. Loan commitments generally range between 30 and 90 days and the borrower is not obligated to obtain the loan. Therefore, IRLCs are subject to fallout risk, which occurs when approved borrowers choose not to close on the underlying loans. We review our commitment-to-closing ratio ("pull-through rate") as part of an estimate of the number of mortgage loans that will fund according to the IRLCs.

The notional amounts of our forward sales commitments and IRLCs were as follows:
InstrumentJune 30, 2024December 31, 2023
Forward sales commitments$435,861 $274,400 
IRLCs350,852 188,554 
The locations and amounts of gains (losses) recognized in income related to our derivatives were as follows:
Three Months Ended June 30,Six Months Ended June 30,
InstrumentClassification2024202320242023
Forward sales commitmentsRevenue$(470)$2,285 $1,936 $2,032 
IRLCsRevenue(2,624)(5,302)(99)2,572 

Fair Value of Financial Instruments

A summary of assets and liabilities related to our financial instruments, measured at fair value on a recurring basis and as reflected in our consolidated balance sheets, is set forth below:
Balance at June 30, 2024Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets
Cash equivalents
Money market funds$148,890 $148,890 $— $— 
Total cash equivalents148,890 148,890 — — 
Loans held for sale208,460 — 208,460 — 
Other current assets
Forward sales commitments1,392 — 1,392 — 
IRLCs4,901 — — 4,901 
Total other current assets6,293 — 1,392 4,901 
Mortgage servicing rights, at fair value2,695 — — 2,695 
Total assets$366,338 $148,890 $209,852 $7,596 
Liabilities
Accrued liabilities
Forward sales commitments$1,884 $— $1,884 $— 
IRLCs548 — — 548 
Total liabilities$2,432 $— $1,884 $548 
Balance at December 31, 2023Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets
Cash equivalents
        Money market funds$115,276 $115,276 $— $— 
Total cash equivalents115,276 115,276 — — 
Short-term investments
   U.S. treasury securities10,720 10,720 — — 
Agency bonds31,232 31,232 — — 
Total short-term investments41,952 41,952 — — 
Loans held for sale159,587 — 159,587 — 
Other current assets
IRLCs4,600 — — 4,600 
Total other current assets4,600 — — 4,600 
Mortgage servicing rights, at fair value32,171 — — 32,171 
Long-term investments
U.S. treasury securities3,149 3,149 — — 
Total assets$356,735 $160,377 $159,587 $36,771 
Liabilities
Accrued liabilities
Forward sales commitments$2,429 $— $2,429 $— 
IRLCs147 — — 147 
Total liabilities$2,576 $— $2,429 $147 

There were no transfers into or out of Level 3 financial instruments during the periods presented.

The significant unobservable input used in the fair value measurement of IRLCs is the pull-through rate. Significant changes in the input could result in a significant change in fair value measurement.

The following is a quantitative summary of key unobservable inputs used in the valuation of IRLCs and Mortgage Servicing Rights (“MSRs”):
June 30, 2024December 31, 2023
Key InputsValuation TechniqueRangeWeighted-AverageRangeWeighted-Average
IRLCs
Pull-through rate
Market pricing
75.0% - 100.0%
91.3%
67.2% - 100.0%
87.7%
MSRs
Prepayment speedDiscounted cash flow
6.0% - 19.0%
7.4%
 6.0% - 19.0%
6.8%
Default ratesDiscounted cash flow
0.1% - 1.2%
0.2%
0.1% - 1.2%
0.2%
Discount rateDiscounted cash flow
10.0% - 15.0%
10.1%
10.0% - 17.0%
10.2%
The following is a summary of changes in the fair value of IRLCs:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Balance, net—beginning of period$6,977 $9,170 $4,453 $1,297 
Issuances of IRLCs13,262 13,168 29,324 29,131 
Settlements of IRLCs(14,670)(16,353)(29,409)(26,591)
Fair value changes recognized in earnings(1,216)(2,115)(15)33 
Balance, net—end of period$4,353 $3,870 $4,353 $3,870 

The following is a summary of changes in the fair value of MSRs:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Balance—beginning of period$32,328 $35,061 $32,171 $36,261 
MSRs originated23 232 84 579 
MSRs sales(1)
(30,234)(399)(30,503)(738)
Fair value changes recognized in earnings
578 609 943 (599)
Balance, net—end of period$2,695 $35,503 $2,695 $35,503 
(1) On May 31, 2024 we sold $30,038 of our MSRs to Freedom Mortgage Corporation.

The following table presents the estimated fair values of our convertible senior notes that are not recorded at fair value on our consolidated balance sheets:
June 30, 2024December 31, 2023
2025 notes$66,559 $164,113 
2027 notes276,940 325,927 

The estimated fair value of our convertible senior notes is based on the closing trading price of the notes on the last day of trading for the period and is classified as Level 2 within the fair value hierarchy due to the limited trading activity of the notes. See Note 14 for additional details on our convertible senior notes.

See Note 10 for the carrying amount of our convertible preferred stock.

Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis include items such as property and equipment, goodwill and other intangible assets, and other assets. These assets are remeasured at fair value if determined to be impaired.
The cost or amortized cost, gross unrealized gains and losses, and estimated fair market value of our cash, money market funds, restricted cash, and available-for-sale investments were as follows:
June 30, 2024
Fair Value HierarchyCost or Amortized CostUnrealized GainsUnrealized LossesEstimated Fair ValueCash, Cash Equivalents, and Restricted CashShort-term InvestmentsLong-term Investments
CashN/A$52,922 $— $— $52,922 $52,922 $— $— 
Money markets fundsLevel 1148,890 — — 148,890 148,890 — — 
Restricted cashN/A756 — — 756 756 — — 
Total$202,568 $— $— $202,568 $202,568 $— $— 
December 31, 2023
Fair Value HierarchyCost or Amortized CostUnrealized GainsUnrealized LossesEstimated Fair ValueCash, Cash Equivalents, and Restricted CashShort-term InvestmentsLong-term Investments
CashN/A$34,483 $— $— $34,483 $34,483 $— $— 
Money markets fundsLevel 1115,276 — — 115,276 115,276 — — 
Restricted cashN/A1,241 — — 1,241 1,241 — — 
U.S. treasury securitiesLevel 113,895 1 (27)13,869 — 10,720 3,149 
Agency bondsLevel 131,246 — (14)31,232 — 31,232 — 
Total$196,141 $1 $(41)$196,101 $151,000 $41,952 $3,149 

As of June 30, 2024 and December 31, 2023, we had no accrued interest and accrued interest of $332, respectively, on our available-for-sale investments, of which we have recorded no expected credit losses. Accrued interest receivable is recorded in other current assets in our consolidated balance sheets.