On March 10, 2011, management made the decision and finalized a plan to close all of the field offices of the proprietary full service real estate brokerage business known as RealEstate.com, REALTORS®. We exited all markets by March 31, 2011. In September 2011, we sold the remaining assets of RealEstate.com, which consisted primarily of internet domain names and trademarks. Accordingly, these Real Estate businesses are presented as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations and cash flows for all periods presented.

On May 12, 2011, we entered into an asset purchase agreement with Discover, which provides for the sale of substantially all of the operating assets of our LendingTree Loans business to Discover. On February 7, 2012, we entered into an amendment to the asset purchase agreement. We have evaluated the facts and circumstances of the pending transaction and the applicable accounting guidance for discontinued operations, and have concluded that the LendingTree Loans business should be reflected as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations and cash flows for all periods presented.

The revenue and net loss for the Real Estate businesses that are reported as discontinued operations for the years ended December 31, 2011 and 2010 were as follows (in thousands):

	Year Ended December 31,

	2011			2010
Revenue	$	3,857		$	14,084

Loss before income taxes	$	(16,804	)	$	(16,340	)
Income tax benefit (expense)		—			6,225
Gain from sale of discontinued operations		7,752			—

Net loss	$	(9,052	)	$	(10,115	)

Net loss for the year ended December 31, 2011 includes goodwill disposal charges totaling $8.0 million, trademark impairment charges of $4.1 million and restructuring expense totaling $2.6 million.

The revenue and net income (loss) for LendingTree Loans that are reported as discontinued operations for the years ended December 31, 2011 and 2010 were as follows (in thousands):

	Year Ended December 31,

	2011			2010
Revenue	$	117,509		$	124,180

Income (loss) before income taxes	$	(741	)	$	30,026
Income tax benefit (expense)		—			(11,484	)

Net income (loss)	$	(741	)	$	18,542

Net loss for the year ended December 31, 2011 includes restructuring expense totaling $4.0 million.

The assets and liabilities of Real Estate that are reported as discontinued operations as of December 31, 2011 and December 31, 2010 were as follows (in thousands):

	December 31, 2011			December 31, 2010

Current assets	$	33		$	305

Property and equipment		—			2,123
Goodwill		—			7,967
Other non-current assets		—			4,285

Non-current assets		—			14,375

Current liabilities		702			1,213
Non-current liabilities		54			288

Net assets (liabilities)	$	(723	)	$	13,179

The assets and liabilities of LendingTree Loans that are reported as discontinued operations as of December 31, 2011 and December 31, 2010 were as follows (in thousands):

	December 31, 2011			December 31, 2010

Loans held for sale	$	217,467		$	116,681
Other current assets		14,925			13,715

Current assets		232,392			130,396

Property and equipment		4,181			3,074
Goodwill		5,579			—
Other non-current assets		1,187			406

Non-current assets		10,947			3,480

Warehouse lines of credit		197,659			100,623
Other current liabilities		51,669			16,384

Current liabilities		249,328			117,007

Non-current liabilities		978			12,134

Net assets (liabilities)	$	(6,967	)	$	4,735

Upon closing of the sale of substantially all of the operating assets of our LendingTree Loans business to Discover, LendingTree Loans will cease to originate consumer loans and will no longer have additional borrowings available under the warehouse lines of credit. The remaining operations will be wound down following the closing of the transaction. These wind-down activities will include, among other things, selling the balance of loans held for sale to investors, which historically has occurred within thirty days of funding, and paying off and then terminating the warehouse lines of credit. Additionally, liability for losses on previously sold loans will remain with LendingTree Loans. Below is a discussion of these significant items.

LendingTree Loans originates all of its residential real estate loans with the intent to sell them in the secondary market. Loans held for sale consist primarily of residential first mortgage loans that are secured by residential real estate throughout the United States.

The following table represents the loans held for sale by type of loan as of December 31, 2011 and December 31, 2010 ($ amounts in thousands):

	December 31, 2011					December 31, 2010

	Amount		%			Amount		%
Conforming	$	171,375		79	%	$	86,451		74	%
FHA and Alt-A		40,433		18	%		20,431		18	%
Jumbo		5,659		3	%		9,129		8	%
Subprime		—		—	%		580		—	%
Home equity		—		—	%		90		—	%

Total	$	217,467		100	%	$	116,681		100	%

The following presents the difference between the aggregate principal balance of loans on nonaccrual status for which the fair value option has been elected and for loans measured at lower of cost or market valuation as of December 31, 2011 and December 31, 2010 (in thousands):

	As of December 31, 2011

	Loans on Nonaccrual— Measured at Fair Value			Loans on Nonaccrual— Measured at LOCOM		Total Loans on Nonaccrual
Aggregate unpaid principal balance	$	539			—	$	539
Difference between fair value and aggregate unpaid principal balance		(244	)		—		(244	)

Loans on nonaccrual	$	295		$	—	$	295

	As of December 31, 2010

	Loans on Nonaccrual— Measured at Fair Value			Loans on Nonaccrual— Measured at LOCOM			Total Loans on Nonaccrual
Aggregate unpaid principal balance	$	1,380		$	2,290		$	3,670
Difference between fair value and aggregate unpaid principal balance		(496	)		—			(496	)
Lower of cost or market valuation allowance		—			(1,508	)		(1,508	)
Deferred loan fees, net of costs		—			(9	)		(9	)

Loans on nonaccrual	$	884		$	773		$	1,657

Included within the loans on nonaccrual status are repurchased loans with a net book value of $-0- and $0.2 million at December 31, 2011 and December 31, 2010, respectively. During the year ended December 31, 2011, LendingTree Loans did not repurchase any loans, but sold fifteen loans on nonaccrual status for $1.2 million, which approximated the net book value. During the year ended December 31, 2010, LendingTree Loans repurchased one loan with a balance of $0.3 million.

We categorize our assets and liabilities measured at fair value into a fair value hierarchy that prioritizes the assumptions used in pricing the asset or liability into the following three levels:

LendingTree Loans enters into commitments with consumers to originate loans at specified interest rates (interest rate lock commitments—"IRLCs"). LendingTree Loans reports IRLCs as derivative instruments at fair value with changes in fair value being recorded in discontinued operations. IRLCs for loans to be sold to investors using a mandatory or assignment of trade ("AOT") method are hedged using "to be announced mortgage-backed securities" ("TBA MBS") and are valued using quantitative risk models. The IRLCs derive their base value from an underlying loan type with similar characteristics using the TBA MBS market which is actively quoted and easily validated through external sources. The most significant data inputs used in this valuation include, but are not limited to, loan type, underlying loan amount, note rate, loan program, and expected sale date of the loan. IRLCs for loans sold to investors on a best-efforts basis are hedged using best-efforts forward delivery commitments and are valued on an individual loan basis using a proprietary database program. These valuations are based on investor pricing tables stratified by product, note rate and term, and adjusted at the loan level to consider the servicing release premium and loan pricing adjustments specific to each loan. LendingTree Loans applies an anticipated loan funding probability based on its own experience to value IRLCs, which results in the classification of these derivatives as Level 3. The value of the underlying loan and the anticipated loan funding probability are the most significant assumptions affecting the valuation of IRLCs. There were no significant changes to the methods and assumptions for valuing IRLCs in 2011. At December 31, 2011 and 2010, there were $363.8 million and $216.6 million, respectively, of IRLCs notional value outstanding.

Loans held for sale measured at fair value and sold to investors using a mandatory or AOT method are also hedged using TBA MBS and valued using quantitative risk models. The valuations are based on loan amounts, note rates, loan programs, and expected sale dates of the loans. Loans held for sale measured at fair value and sold to investors on a best-efforts basis are hedged using best-efforts forward delivery commitments and are valued using a proprietary database program. The best-efforts valuations are based on daily investor pricing tables stratified by product, note rate and term. These valuations are adjusted at the loan level to consider the servicing release premium and loan pricing adjustments specific to each loan. Loans held for sale, excluding impaired loans, are classified as Level 2. Loans held for sale measured at fair value that become impaired are transferred from Level 2 to Level 3, as the estimate of fair value is based on LendingTree Loans' experience considering lien position and current status of the loan. There were no significant changes to the method and assumptions used to estimate the fair value of impaired loans in 2011. LendingTree Loans recognizes interest income separately from other changes in fair value.

Under LendingTree Loans' risk management policy, LendingTree Loans economically hedges the changes in fair value of IRLCs and loans held for sale caused by changes in interest rates by using TBA MBS and entering into best-efforts forward delivery commitments. These hedging instruments are recorded at fair value with changes in fair value recorded in current earnings as a component of revenue from the origination and sale of loans. There were no significant changes to the methods and assumptions for valuing hedging instruments in the period ended December 31, 2011. TBA MBS used to hedge both IRLCs and loans are valued using quantitative risk models based primarily on inputs related to characteristics of the MBS stratified by product, coupon, and settlement date. These derivatives are classified as Level 2. Best-efforts forward delivery commitments are valued using a proprietary database program using investor pricing tables considering the current base loan price. An anticipated loan funding probability is applied to value best-efforts commitments hedging IRLCs, which results in the classification of these contracts as Level 3. The current base loan price and the anticipated loan funding probability are the most significant assumptions affecting the value of the best-efforts commitments. The best-efforts forward delivery commitments hedging loans held for sale are classified as Level 2, so such contracts are transferred from Level 3 to Level 2 at the time the underlying loan is originated. For the purposes of the tables below, we refer to TBA MBS and best-efforts forward delivery commitments collectively as "Forward Delivery Contracts".

The following presents our assets and liabilities that are measured at fair value on a recurring basis at December 31, 2011 and 2010 (in thousands):

	As of December 31, 2011

	Recurring Fair Value Measurements Using
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Loans held for sale	$	—	$	217,172		$	295	$	217,467
Interest rate lock commitments ("IRLCs")		—		—			9,122		9,122
Forward delivery contracts		—		(4,107	)		19		(4,088	)

Total	$	—	$	213,065		$	9,436	$	222,501

	As of December 31, 2010

	Recurring Fair Value Measurements Using
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Loans held for sale	$	—	$	115,024	$	884	$	115,908
Interest rate lock commitments ("IRLCs")		—		—		5,986		5,986
Forward delivery contracts		—		1,001		3		1,004

Total	$	—	$	116,025	$	6,873	$	122,898

The following presents the changes in our assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2011 and 2010 (in thousands):

	December 31, 2011

	Interest Rate Lock Commitments			Forward Delivery Contracts			Loans Held for Sale
Balance at January 1, 2011	$	5,986		$	3		$	884
Transfers into Level 3		—			—			859
Transfers out of Level 3		—			(285	)		—
Total net gains (losses) included in earnings (realized and unrealized)		114,889			359			(87	)
Purchases, sales, and settlements
Purchases		970			(58	)		—
Sales		—			—			(1,041	)
Settlements		(11,977	)		—			(320	)
Transfers of IRLCs to closed loans		(100,746	)		—			—

Balance at December 31, 2011	$	9,122		$	19		$	295

	December 31, 2010

	Interest Rate Lock Commitments			Forward Delivery Contracts			Loans Held for Sale
Balance at January 1, 2010	$	3,680		$	487		$	777
Transfers into Level 3		—			—			991
Transfers out of Level 3		—			(119	)		—
Total net gains (losses) included in earnings (realized and unrealized)		107,656			(365	)		(98	)
Purchases, sales, and settlements
Purchases		—			—			—
Sales		—			—			(774	)
Settlements		(17,301	)		—			(12	)
Transfers of IRLCs to closed loans		(88,049	)		—			—

Balance at December 31, 2010	$	5,986		$	3		$	884

The following presents the gains (losses) included in earnings for the years ended December 31, 2011 and 2010 relating to our assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Year Ended December 31, 2011							Year Ended December 31, 2010

	Interest Rate Lock Commitments		Forward Delivery Contracts		Loans Held for Sale			Interest Rate Lock Commitments		Forward Delivery Contracts			Loans Held for Sale
Total net gains (losses) included in earnings, which are included in discontinued operations	$	114,889	$	359	$	(87	)	$	107,656	$	(365	)	$	(98	)

Change in unrealized gains (losses) relating to assets and liabilities still held at December 31, 2011 and 2010, which are included in discontinued operations	$	9,122	$	19	$	(38	)	$	5,986	$	3		$	(102	)

The following table summarizes our derivative instruments not designated as hedging instruments as of December 31, 2011 and 2010 (in thousands):

	Balance Sheet Location	December 31, 2011 Fair Value			December 31, 2010 Fair Value

Interest Rate Lock Commitments	Current assets of discontinued operations	$	9,282		$	5,991
Forward Delivery Contracts	Current assets of discontinued operations		480			2,633
Interest Rate Lock Commitments	Current liabilities of discontinued operations		(160	)		(5	)
Forward Delivery Contracts	Current liabilities of discontinued operations		(4,568	)		(1,629	)

Total Derivatives		$	5,034		$	6,990

The gain (loss) recognized in the consolidated statements of operations for derivatives for the periods ended December 31, 2011 and 2010 was as follows (in thousands):

	Location of Gain (Loss) Recognized in Income on Derivative	Year Ended December 31, 2011			Year Ended December 31, 2010

Interest Rate Lock Commitments	Discontinued operations	$	114,889		$	107,656
Forward Delivery Contracts	Discontinued operations		(4,938	)		(1,970	)

Total		$	109,951		$	105,686

We have elected to account for loans held for sale originated on or after January 1, 2008 at fair value. Electing the fair value option allows a better offset of the changes in fair values of the loans and the forward delivery contracts used to economically hedge them without the burden of complying with the requirements for hedge accounting.

We did not elect the fair value option on loans held for sale originated prior to January 1, 2008 and on loans that were repurchased from investors on or subsequent to that date. As of December 31, 2011 and 2010, -0- and 23 such loans, respectively, all of which were impaired, were included in loans held for sale and were carried at the lower of cost or market ("LOCOM") value assessed on an individual loan basis. The market value (or fair value) of these impaired loans at December 31, 2011 and 2010, measured on a non-recurring basis using significant unobservable inputs (Level 3), was $-0- and $0.8 million, respectively. This fair value measurement is management's best estimate of the market value of such loans and considers the lien position and loan status. During the year ended December 31, 2011, fifteen impaired loans were sold for $1.2 million, which approximated the net book value.

The following presents the difference between the aggregate principal balance of loans held for sale for which the fair value option has been elected and for loans measured at LOCOM as of December 31, 2011 and 2010 (in thousands):

	As of December 31, 2011

	Loans Held for Sale— Measured at Fair Value		Loans Held for Sale— Measured at LOCOM		Total Loans Held For Sale
Aggregate unpaid principal balance	$	208,918	$	—	$	208,918
Difference between fair value and aggregate unpaid principal balance		8,549		—		8,549

Loans held for sale	$	217,467	$	—	$	217,467

	As of December 31, 2010

	Loans Held for Sale— Measured at Fair Value		Loans Held for Sale— Measured at LOCOM			Total Loans Held For Sale
Aggregate unpaid principal balance	$	113,116	$	2,290		$	115,406
Difference between fair value and aggregate unpaid principal balance		2,792		—			2,792
Lower of cost or market valuation allowance		—		(1,508	)		(1,508	)
Deferred loan fees, net of costs		—		(9	)		(9	)

Loans held for sale	$	115,908	$	773		$	116,681

During the years ended December 31, 2011 and 2010, the change in fair value of loans held for sale for which the fair value option was elected was a gain of $4.7 million and $4.8 million, respectively, and is included in discontinued operations in the accompanying consolidated statements of operations.

LendingTree Loans sells loans it originates to investors on a servicing-released basis so the risk of loss or default by the borrower is generally transferred to the investor. However, LendingTree Loans is required by these investors to make certain representations relating to credit information, loan documentation and collateral. These representations and warranties may extend through the contractual life of the mortgage loan. Subsequent to the sale, if underwriting deficiencies, borrower fraud or documentation defects are discovered in individual mortgage loans, LendingTree Loans may be obligated to repurchase the respective mortgage loan or indemnify the investors for any losses from borrower defaults if such deficiency or defect cannot be cured within the specified period following discovery.

In the case of early loan payoffs and early defaults on certain loans, LendingTree Loans may be required to repay all or a portion of the premium initially paid by the investor. The estimated obligation associated with early loan payoffs and early defaults is calculated based on historical loss experience by type of loan.

The obligation for losses related to the representations and warranties and other provisions discussed above is initially recorded at its estimated fair value, which includes a projection of expected future losses as well as a market-based premium. Because LendingTree Loans does not service the loans it sells, it does not maintain nor have access to the current balances and loan performance data with respect to the individual loans previously sold to investors. Accordingly, the Company is unable to determine, with precision, its maximum exposure under its representations and warranties. However, LendingTree Loans utilizes the original loan balance (before it was sold to an investor), historical and projected loss frequency and loss severity ratios by loan type as well as analyses of losses in process to estimate its exposure to losses on loans previously sold. LendingTree Loans maintains a liability related to this exposure based, in part, on historical and projected loss frequency and loss severity using its loan loss history (adjusted for recent trends in loan loss experience), the original principal amount of the loans previously sold, the years the loans were sold and loan types. Accordingly, subsequent adjustments to the obligation, if any, are not made based on changes in the fair value of the obligation, which might include an estimated change in losses that may be expected in the future, but are made once further losses are determined to be both probable and estimable. As such, given current general industry trends in mortgage loans as well as housing prices, market expectations around losses related to LendingTree Loans' obligations could vary significantly from the obligation recorded as of the balance sheet date or the range estimated below. In estimating its exposure to loan losses, LendingTree Loans segments its loan sales into four segments based on the extent of the documentation provided by the borrower to substantiate income and/or assets (full or limited documentation) and the lien position of the mortgage in the underlying property (first or second position). Each of these segments has a different loss experience, with full documentation, first lien position loans generally having the lowest loss ratios, and limited documentation, second lien position loans generally having the highest loss ratios.

Tree.com has guaranteed certain loans sold to two investors in the event that LendingTree Loans is unable to satisfy those repurchase and warranty obligations. The original principal balance of such loans sold to these investors is approximately $1.5 billion as of December 31, 2011. Subsequent to December 31, 2011, Tree.com entered into an agreement to guarantee certain loans sold to a third investor, for which the unpaid principal balance of such loans is approximately $32.4 million.

The following table represents the loans sold for the period shown and the aggregate loan losses through December 31, 2011:

	As of December 31, 2011

Period of Loan Sales	Number of loans sold		Original principal balance		Number of loans with losses		Original principal balance of loans with losses		Amount of aggregate losses
			(in billions)				(in millions)		(in millions)
2011		12,500	$	2.7		—	$	—	$	—
2010		12,400		2.8		4		1.1		0.1
2009		12,800		2.8		4		0.9		0.1
2008		11,000		2.2		28		5.8		1.5
2007		36,300		6.1		155		21.2		7.7
2006		55,000		7.9		205		23.9		13.3
2005 and prior years		86,700		13.0		88		12.1		5.0

Total		226,700	$	37.5		484	$	65.0	$	27.7

The pipeline of 289 loan repurchase requests and indemnifications was considered in determining the appropriate reserve amount. The status of these 289 loans varied from an initial review stage, which may result in a rescission of the request, to in process, where the probability of incurring a loss is high, to indemnification, whereby LendingTree Loans has agreed to reimburse the purchaser of that loan if and when losses are incurred. The indemnification may have a specific term, thereby limiting the exposure to LendingTree Loans. The original principal amount of these loans is approximately $54.1 million, comprised of approximately 70% full documentation first liens, 2% full documentation second liens, 23% limited documentation first liens, and 5% limited documentation second liens.

In the fourth quarter of 2009, LendingTree Loans entered into settlement negotiations with two buyers of previously purchased limited documentation loans. The settlement with one buyer was completed in December 2009 and included a payment of $1.9 million related to all second lien loans sold to this buyer, including both full and limited documentation. The settlement was included as a charge-off to the reserve in 2009. Negotiations with the second buyer were completed in January 2010. This settlement of $4.5 million, which was paid in four equal quarterly installments in 2010, relates to all future losses on limited documentation second lien loans sold to this buyer. LendingTree Loans was also required to pay an additional amount of up to $0.3 million in conjunction with this settlement since it did not sell a certain volume of loans to this buyer in 2010. This amount is included in the total settlement amount and was included as a charge-off to the reserve in 2010. These settlement amounts were not determined on an individual loan basis and are, therefore, not included in the loss amounts disclosed above for the years such loans were sold.

In December 2011, LendingTree Loans agreed to a $1.2 million settlement related to specific loans, and such losses were charged to the reserve in 2011. Hence, these losses are included in the table above. The $0.3 million settlement amount discussed above and this $1.2 million settlement were recorded as liabilities separate from the loss reserve at December 31, 2011, and were paid in January 2012.

Based on historical experience, it is anticipated that LendingTree Loans will continue to receive repurchase requests and incur losses on loans sold in prior years. However, the two global settlements discussed above will eliminate future repurchase requests from those buyers for the loan types included in those settlements. As of December 31, 2011, LendingTree Loans estimated the range of remaining possible losses due to representations and warranty issues based on the methodology described above, excluding the $0.3 million and the $1.2 million settlements paid in January 2012, as $27 million to $37 million. We believe that we have adequately reserved for these losses.

The activity related to loss reserves on previously sold loans for the years ended December 31, 2011 and 2010, is as follows (in thousands):

	December 31,

	2011			2010
Balance, beginning of period	$	16,984		$	16,985
Provisions		16,798			12,390
Charge-offs to reserves(a)		(2,270	)		(12,391	)

Balance, end of period	$	31,512		$	16,984

(a): The year ended December 31, 2011 includes a charge-off for the amount of $1.2 million that is tracked separately from the loan loss reserve (see table below) and was paid in January 2012. The year ended December 31, 2010 includes a charge-off for the amount of the $4.5 million loan loss settlement plus the $0.3 million additional accrual discussed above. The remaining settlement payment due of $0.3 million is tracked as a liability separate from the loan loss reserve (see table below) and was also paid in January 2012.

Based on an analysis of the LendingTree Loans' historical loan loss experience, it was determined as of December 31, 2010 that a portion of the loan losses expected to be made by investors will be made more than twelve months following the initial sale of the underlying loans. Accordingly, LendingTree Loans estimated the portion of its loans sold reserve that it anticipated it would be liable for after twelve months and has classified that portion of the reserve as a long-term liability as of December 31, 2010. In anticipation of the pending sale of the LendingTree Loans assets, we have classified the entire reserve as a current liability as of December 31, 2011. The liability for losses on previously sold loans is presented in the accompanying consolidated balance sheet as of December 31, 2011 and 2010 as follows (in thousands):

	As of December 31, 2011		As of December 31, 2010

Current portion related to settlements discussed above, included in current liabilities of discontinued operations	$	1,500	$	300
Other current portion, included in current liabilities of discontinued operations		31,512		5,459
Long-term portion, included in non-current liabilities of discontinued operations		—		11,525

Total	$	33,012	$	17,284

Tree.com will continue to be liable for indemnification obligations, repurchase obligations and premium repayment obligations following the anticipated sale of substantially all of the operating assets of the LendingTree Loans business to Discover. A portion of the initial purchase price to be paid by Discover will be held in escrow pending resolution of certain of these contingent liabilities. We plan to negotiate with secondary market purchasers to settle any then-existing and future contingent liabilities, but we may not be able to do so on terms acceptable to it, or at all.

Borrowings on warehouse lines of credit were $197.7 million and $100.6 million at December 31, 2011 and 2010, respectively.

As of December 31, 2011, LendingTree Loans had three committed lines of credit totaling $275.0 million of borrowing capacity. The $50.0 million first line expired on January 30, 2012. LendingTree Loans also had a $25.0 million uncommitted line with this lender, which was terminated on October 31, 2011. In addition, LendingTree Loans obtained a fourth warehouse line for $100.0 million on January 9, 2012, which is uncommitted, bringing its total borrowing capacity to $325.0 million. Borrowings under these lines of credit are used to fund, and are secured by, consumer residential loans that are held for sale. Loans under these lines of credit are repaid using proceeds from the sales of loans by LendingTree Loans.

The $50.0 million first line was scheduled to expire on the earliest of (i) the closing date of the pending sale of LendingTree Loans assets or (ii) January 30, 2012, and it expired on January 30, 2012. On November 1, 2011, the terms of this line were amended so that it could be cancelled at the option of the lender at any time upon notice. This first line included an additional uncommitted credit facility of $25.0 million, which was terminated on October 31, 2011. This first line was guaranteed by Tree.com, Inc., LendingTree, LLC and LendingTree Holdings Corp. The interest rate under the first line was the 30-day London InterBank Offered Rate ("LIBOR") or 2.00% (whichever was greater) plus 2.25%. The interest rate under the $25.0 million uncommitted line was the 30-day LIBOR plus 1.50%.

The second line was previously for $100.0 million and scheduled to expire on October 28, 2011, but was increased to $125.0 million and is scheduled to expire on the earliest of (i) forty-five days after the closing date of the pending sale of LendingTree Loans assets or (ii) April 25, 2012. This line is also guaranteed by Tree.com, Inc., LendingTree, LLC and LendingTree Holdings Corp. The interest rate under this second line is the 30-day Adjusted LIBOR or 2.0% (whichever is greater) plus 1.5% to 1.75% for loans being sold to the lender and 30-day Adjusted LIBOR or 2.0% (whichever is greater) plus 1.5% for loans not being sold to the lender.

The $100.0 million third line was scheduled to expire on December 13, 2011, but upon certain interim renewals of the line, the expiration date was extended to the earlier of (i) forty-five days after the closing date of the pending sale of LendingTree Loans assets or (ii) August 20, 2012. This line is guaranteed by Tree.com, Inc. and LendingTree, LLC. The interest rate under this line is 30-day LIBOR plus 3.25% (LIBOR may be adjusted upward for any increase in the reserve requirement of the lender as further described in the Master Repurchase Agreement).

The $100.0 million fourth line is scheduled to expire on the earliest of (i) forty-five days after the closing date of the pending sale of LendingTree Loans assets or (ii) January 4, 2013. This line is guaranteed by Tree.com, Inc., LendingTree, LLC and LendingTree Holdings Corp. The interest rate under this line is the overnight interest rate incurred by the lender for borrowing funds plus 3.25% to 3.75% for most loans.

Under the terms of these warehouse lines, LendingTree Loans is required to maintain various financial and other covenants, and is restricted from paying dividends under the terms of the first two lines. These financial covenants include, but are not limited to, maintaining (i) for the first three lines, minimum tangible net worth of $20.0 million, which was increased to $25.0 million upon renewal of the first line in November 2011 and the second line in October 2011, or for the fourth line, minimum adjusted net worth equaling the sum of $20.0 million plus 50% of the positive quarterly net income for the three months prior to any date of determination, (ii) minimum liquidity, (iii) a minimum current ratio, (iv) a maximum ratio of total liabilities to net worth, (v) a minimum unrestricted cash amount, (vi) pre-tax net income requirements, (vii) for the first three lines, a maximum warehouse capacity ratio and (viii) for the fourth line, minimum of one additional warehouse line. LendingTree Loans was not in compliance with the maximum ratio of total liabilities to net worth covenant under the first line at December 31, 2011. However, a waiver was not obtained as there was no outstanding borrowing under this line as of December 31, 2011 and the line expired on January 30, 2012. We were in compliance with all other covenants at December 31, 2011, except for the requirement to provide audited financial statements to each of our lenders within 90 days after the end of the fiscal year. We have obtained a waiver for this violation.

The LendingTree Loans business is highly dependent on the availability of these warehouse lines. Although we believe that our existing lines of credit are adequate for our current operations, reductions in our available credit, or the inability to extend, renew or replace these lines before completion of the pending sale of the operating assets of LendingTree Loans, would have a material adverse effect on our business, financial condition, results of operations and cash flows. Management has determined that it could continue to operate the LendingTree Loans business at a reduced capacity as long as one of the warehouse lines remains available.