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. No significant future cash flows are anticipated from the disposition of this business.

On May 12, 2011, we entered into an asset purchase agreement that provided 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 completed the sale on June 6, 2012. Discover is now a participating lender in our lending network. We have evaluated the facts and circumstances of the 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 continuing cash flows related to this transaction are not significant, and accordingly, are not deemed to be direct cash flows of the divested business.

We have agreed to indemnify Discover for a breach or inaccuracy of any representation, warranty or covenant made by us in the asset purchase agreement, for any liability of ours that was not assumed, for any claims by our stockholders against Discover and for our failure to comply with any applicable bulk sales law, subject to certain limitations. Discover has submitted a claim for indemnification relating to our sale prior to the closing of certain loans that were listed in the asset purchase agreement as to be conveyed to Discover at closing. We have evaluated this matter as a potential loss contingency, and have determined that it is probable that a loss could be incurred. We also evaluated a range of potential losses, and a reserve of $1.6 million has been established for this matter, which is reflected as a reduction in gain from sale of discontinued operations and in current liabilities of discontinued operations.

The revenue and net loss for the Real Estate businesses that are reported as discontinued operations for the applicable periods were as follows (in thousands):

Net loss for the six months ended June 30, 2011 includes goodwill disposal charges of $8.0 million, intangible asset impairment charges of $4.1 million and restructuring charges of $2.0 million.

The revenue and net income (loss) for LendingTree Loans that are reported as discontinued operations for the applicable periods were as follows (in thousands):

Net loss for the six months ended June 30, 2012 includes intangible asset impairment charges of $1.4 million. Net loss for the six months ended June 30, 2011 includes restructuring charges of $4.0 million.

The assets and liabilities of Real Estate that are reported as discontinued operations as of June 30, 2012 and December 31, 2011 were as follows (in thousands):

The assets and liabilities of LendingTree Loans that are reported as discontinued operations as of June 30, 2012 and December 31, 2011 were as follows (in thousands):

	June 30, 2012			December 31, 2011

Loans held for sale	$	1,054		$	217,467
Other current assets		4,381			14,925

Current assets		5,435			232,392

Property and equipment		—			4,181
Goodwill		—			5,579
Other non-current assets		236			1,187

Non-current assets		236			10,947

Warehouse lines of credit		347			197,659
Other current liabilities		42,405			51,669

Current liabilities		42,752			249,328

Non-current liabilities		452			978

Net liabilities	$	(37,533	)	$	(6,967	)

Upon closing of the sale of substantially all of the operating assets of our LendingTree Loans business on June 6, 2012, LendingTree Loans ceased to originate consumer loans and no longer has additional borrowings available under the warehouse lines of credit. The remaining operations are being wound down. These wind-down activities include, among other things, selling the balance of loans held for sale to investors, which is substantially complete, and paying off and then terminating the warehouse lines of credit, which occurred on July 21, 2012. Additionally, liability for losses on previously sold loans will remain with LendingTree Loans. Below is a discussion of these significant items.

LendingTree Loans originated 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 June 30, 2012 and December 31, 2011 ($ amounts in thousands):

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 June 30, 2012 and December 31, 2011 (in thousands):

There are no repurchased loans included within the loans on nonaccrual status at June 30, 2012 or December 31, 2011. During the six months ended June 30, 2012, LendingTree Loans repurchased two loans with a total unpaid principal balance of $0.7 million. During the six months ended June 30, 2011, LendingTree Loans did not repurchase any loans.

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:

A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Transfers in and out of Level 1, 2 or 3 are recorded at fair value at the beginning of the reporting period.

Following is a description of valuation methodologies used for instruments measured at fair value as well as the general classification of such instruments pursuant to the fair value hierarchy.

LendingTree Loans entered into commitments with consumers to originate loans at a specified interest rate (interest rate lock commitments—"IRLCs"). We reported 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 were hedged using "to be announced mortgage-backed securities" ("TBA MBS") and were 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 included, but were 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 were hedged using best-efforts forward delivery commitments and were valued on an individual loan basis using a proprietary database program prior to January 1, 2012. These valuations were based on investor pricing tables stratified by product, note rate and term. The valuations were adjusted at the loan level to consider the servicing release premium and loan pricing adjustments specific to each loan. Effective January 1, 2012, LendingTree Loans began valuing IRLCs for loans sold to investors on a best-efforts basis using quantitative risk models on a loan level basis. The decision to modify the valuation calculation for IRLCs for loans sold on a best-efforts basis evolved from a desire to achieve principally two goals: 1) to include this portion of the IRLCs into the main operating system we use for fair value (known as QRM) allowing us to improve our estimate of loan funding probability and 2) to include elements of the all-in fair value that we could not previously calculate in the previous models. The most significant data inputs used in the valuation of these IRLCs included, but were not limited to, investor pricing tables stratified by product, note rate and term, adjusted for current market conditions. These valuations were adjusted at the loan level to consider the servicing release premium and loan pricing adjustments specific to each loan. LendingTree Loans applied an anticipated loan funding probability based on its own experience to value IRLCs, which resulted in the classification of these derivatives as Level 3. The value of the underlying loans and the anticipated loan funding probability were the most significant assumptions affecting the valuation of IRLCs. A significant change in the unobservable inputs could have resulted in a significant change in the ending fair value measurement.

Loans held for sale measured at fair value and sold to investors using a mandatory or AOT method were also hedged using TBA MBS and valued using quantitative risk models. The valuation was based on the loan amount, note rate, loan program and expected sale date of the loan. Loans held for sale measured at fair value and sold to investors on a best-efforts basis were hedged using best-efforts forward delivery commitments and were valued using a proprietary database program prior to January 1, 2012. The best-efforts valuations prior to that date were based on daily investor pricing tables stratified by product, note rate and term. These valuations were adjusted at the loan level to consider the servicing release premium and loan pricing adjustments specific to each loan. Effective January 1, 2012, LendingTree Loans began valuing the loans held for sale and sold to investors on a best-efforts basis using quantitative risk models. The most significant data inputs used in the valuation of these loans included investor pricing tables stratified by product, note rate and term, adjusted for current market conditions. Loans held for sale, excluding impaired loans, were classified as Level 2. Loans held for sale measured at fair value that become impaired were transferred from Level 2 to Level 3, as the estimate of fair value was based on LendingTree Loans' experience considering lien position and current status of the loan. A significant change in the unobservable inputs could have resulted in a significant change in the ending fair value measurement. LendingTree Loans recognized interest income separately from other changes in fair value.

Under LendingTree Loans' risk management policy, LendingTree Loans economically hedged 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 were 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. TBA MBS used to hedge both IRLCs and loans were valued using quantitative risk models based primarily on inputs related to characteristics of the MBS stratified by product, coupon and settlement date. These derivatives were classified as Level 2. Prior to January 1, 2012, best-efforts forward delivery commitments were valued using a proprietary database program using investor pricing tables considering the current base loan price. Effective January 1, 2012, best-efforts forward delivery commitments were valued using quantitative risk models based on investor pricing tables stratified by product, note rate and term, adjusted for current market conditions. An anticipated loan funding probability was applied to value best-efforts commitments hedging IRLCs, which resulted in the classification of these contracts as Level 3. The current base loan price and the anticipated loan funding probability were the most significant assumptions affecting the value of the best-efforts commitments. A significant change in the unobservable inputs could have resulted in a significant change in the ending fair value measurement. The best-efforts forward delivery commitments hedging loans held for sale were classified as Level 2, so such contracts were transferred from Level 3 to Level 2 at the time the underlying loan was 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 June 30, 2012 and December 31, 2011 (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

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 three and six months ended June 30, 2012 and 2011 (in thousands):

	Three Months Ended June 30, 2012

	Interest Rate Lock Commitments			Forward Delivery Contracts			Loans Held for Sale
Balance at April 1, 2012	$	9,849		$	132		$	412
Transfers into Level 3		—			—			211
Transfers out of Level 3		—			(329	)		—
Total net gains (losses) included in earnings (realized and unrealized)		30,991			218			215
Purchases, sales, and settlements
Purchases		—			—			—
Sales		(5,640	)		(21	)		(581	)
Settlements		(766	)		—			(90	)
Transfers of IRLCs to closed loans		(34,434	)		—			—

Balance at June 30, 2012	$	—		$	—		$	167

	Six Months Ended June 30, 2012

	Interest Rate Lock Commitments			Forward Delivery Contracts			Loans Held for Sale
Balance at January 1, 2012	$	9,122		$	19		$	295
Transfers into Level 3		—			—			440
Transfers out of Level 3		—			(845	)		—
Total net gains (losses) included in earnings (realized and unrealized)		73,378			847			233
Purchases, sales, and settlements
Purchases		—			—			—
Sales		(5,640	)		(21	)		(581	)
Settlements		(3,401	)		—			(220	)
Transfers of IRLCs to closed loans		(73,459	)		—			—

Balance at June 30, 2012	$	—		$	—		$	167

	Three Months Ended June 30, 2011

	Interest Rate Lock Commitments			Forward Delivery Contracts		Loans Held for Sale
Balance at April 1, 2011	$	5,628		$	112	$	962
Transfers into Level 3		—			—		325
Transfers out of Level 3		—			70		—
Total net gains (losses) included in earnings (realized and unrealized)		25,226			38		29
Purchases, sales, and settlements
Purchases		—			—		—
Sales		—			—		(283	)
Settlements		(2,555	)		—		(172	)
Transfers of IRLCs to closed loans		(22,021	)		—		—

Balance at June 30, 2011	$	6,278		$	220	$	861

	Six Months Ended June 30, 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		—			—			660
Transfers out of Level 3		—			42			—
Total net gains (losses) included in earnings (realized and unrealized)		41,167			233			(3	)
Purchases, sales, and settlements
Purchases(a)		970			(58	)		—
Sales		—			—			(503	)
Settlements		(5,997	)		—			(177	)
Transfers of IRLCs to closed loans		(35,848	)		—			—

Balance at June 30, 2011	$	6,278		$	220		$	861

The following presents the gains (losses) included in earnings for the three and six months ended June 30, 2012 and 2011 relating to our assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):

	Three Months Ended June 30, 2012							Six Months Ended June 30, 2012

	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 included in earnings, which are included in discontinued operations	$	30,991	$	218	$	215		$	73,378	$	847	$	233

Change in unrealized losses relating to assets and liabilities still held at June 30, 2012, which are included in discontinued operations	$	—	$	—	$	(44	)	$	—	$	—	$	(44	)

	Three Months Ended June 30, 2011							Six Months Ended June 30, 2011

	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	$	25,226	$	38	$	29		$	41,167	$	233	$	(3	)

Change in unrealized gains (losses) relating to assets and liabilities still held at June 30, 2011, which are included in discontinued operations	$	6,278	$	220	$	(96	)	$	6,278	$	220	$	(95	)

The following table summarizes our derivative instruments not designated as hedging instruments as of June 30, 2012 and December 31, 2011 (in thousands):

	June 30, 2012				December 31, 2011

	Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
Interest Rate Lock Commitments	Current assets of discontinued operations	$	—		Current assets of discontinued operations	$	9,282
Forward Delivery Contracts	Current assets of discontinued operations		1,470		Current assets of discontinued operations		480
Interest Rate Lock Commitments	Current liabilities of discontinued operations		—		Current liabilities of discontinued operations		(160	)
Forward Delivery Contracts	Current liabilities of discontinued operations		(3,662	)	Current liabilities of discontinued operations		(4,568	)

Total Derivatives		$	(2,192	)		$	5,034

The gain (loss) recognized in the consolidated statements of operations for derivatives for the three and six months ended June 30, 2012 and 2011 was as follows (in thousands):

LendingTree Loans has 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.

LendingTree Loans 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 June 30, 2012 and December 31, 2011, there were no loans held for sale or carried at the lower of cost or market ("LOCOM") value assessed on an individual loan basis.

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 June 30, 2012 and December 31, 2011 (in thousands):

During the six months ended June 30, 2012 and 2011, the change in fair value of loans held for sale for which the fair value option was elected was a gain of $3.1 million and $0.5 million, respectively, and is included in discontinued operations in the accompanying consolidated statements of operations.

Significant unobservable inputs for assets and liabilities measured at fair value on a recurring basis and non-recurring basis

The table below presents quantitative information about the significant unobservable inputs for assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2012 (dollars in thousands):

LendingTree Loans sold loans it originated to investors on a servicing-released basis so the risk of loss or default by the borrower was generally transferred to the investor. However, LendingTree Loans was required by these investors to make certain representations and warranties relating to credit information, loan documentation and collateral. These representations and warranties may extend through the contractual life of the loan. Subsequent to the loan sale, if underwriting deficiencies, borrower fraud or documentation defects are discovered in individual loans, LendingTree Loans may be obligated to repurchase the respective 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, LendingTree Loans is unable to determine, with precision, its maximum exposure for breaches of the representations and warranties it makes to the investors that purchase such loans. 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 its repurchase and warranty obligations related to such loans. The original principal balance of the loans sold to one of these investors is approximately $1.8 billion and $1.5 billion as of June 30, 2012 and December 31, 2011, respectively. The unpaid principal balance of the loans sold to the second investor is approximately $228.6 million and $32.4 million as of June 30, 2012 and December 31, 2011, respectively.

The following table represents the loans sold for the period shown and the aggregate loan losses through June 30, 2012:

	As of June 30, 2012

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)
Six months ended June 30, 2012		9,200	$	1.9		—	$	—	$	—
2011		12,500		2.7		1		0.3		0.1
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		33		6.9		2.2
2007		36,300		6.1		160		22.1		8.2
2006		55,000		7.9		207		24.5		13.4
2005 and prior years		86,700		13.0		89		12.3		5.0

Total		235,900	$	39.4		498	$	68.1	$	29.1

The pipeline of 342 requests for loan repurchases and indemnifications was considered in determining the appropriate reserve amount. The status of these 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 obligation may have a specific term, thereby limiting the exposure to LendingTree Loans. The original principal amount of these loans is approximately $66.4 million, comprised of approximately 68% full documentation first liens, 2% full documentation second liens, 26% limited documentation first liens, and 4% 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. The entire $4.8 million is included in the total settlement amount and was included as a charge-off to the reserve in 2010. The $0.3 million additional liability was recorded as a separate liability from the loss reserve at December 31, 2011, and was paid in January 2012. In the second quarter of 2012, LendingTree Loans completed a settlement with a third buyer of previously purchased loans. This settlement of $3.3 million relates to substantially all future losses on loans sold to this buyer. The settlement amount was included as a charge-off to the reserve in the second quarter of 2012. The settlement amounts for all three of these settlements 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, which was included as a charge-off to the reserve in 2011 and is included in the table above. This $1.2 million settlement was recorded as a liability separate from the loss reserve at December 31, 2011, and was 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 three settlements discussed above will substantially eliminate future repurchase requests from those buyers for the loan types included in those settlements. As of June 30, 2012, LendingTree Loans estimated the range of remaining possible losses due to breach of representations and warranties based on the methodology described above as $30 million to $40 million. We believe that we have adequately reserved for these losses.

The activity related to loss reserves on previously sold loans for the three and six months ended June 30, 2012 and 2011, is as follows (in thousands):

The liability for losses on previously sold loans is presented as current liabilities of discontinued operations in the accompanying consolidated balance sheet.

We continue to be liable for indemnification obligations, repurchase obligations and premium repayment obligations following the sale of substantially all of the operating assets of the LendingTree Loans business. $17.1 million of the initial purchase price is being 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 acceptable terms, or at all.

Borrowings on warehouse lines of credit were $0.3 million and $197.7 million at June 30, 2012 and December 31, 2011, respectively.

As of June 30, 2012, LendingTree Loans had two committed lines of credit and one uncommitted line of credit totaling $325.0 million of borrowing capacity. Borrowings under these lines of credit were used to fund, and were secured by, consumer residential loans that are held for sale. Loans under these lines of credit were repaid using proceeds from the sales of loans by LendingTree Loans. As a result of the closing of the sale of substantially all of the operating assets of our LendingTree Loans business on June 6, 2012, all three warehouse lines of credit expired and terminated on July 21, 2012.

The $125.0 million first line was scheduled to expire on the earliest of (i) forty-five days after the closing date of the sale of substantially all of the operating assets of our LendingTree Loans Business or (ii) October 25, 2012. Accordingly, this line expired on July 21, 2012. This line was also guaranteed by Tree.com, LendingTree, LLC and LendingTree Holdings Corp. The interest rate under this first line was the 30-day adjusted LIBOR or 2.0% (whichever was greater) plus 1.5% to 1.75% for loans being sold to the lender and 30-day adjusted LIBOR or 2.0% (whichever was greater) plus 1.5% for loans not being sold to the lender.

The $100.0 million second line was scheduled to expire on the earliest of (i) forty-five days after the closing date of the sale of substantially all of the operating assets of our LendingTree Loans business or (ii) August 20, 2012. Accordingly, this line expired on July 21, 2012. This line was guaranteed by Tree.com and LendingTree, LLC. The interest rate under this line was 30-day LIBOR (subject to adjustment) plus 3.25%.

The $100.0 million third line was scheduled to expire on the earliest of (i) forty-five days after the closing date of the sale of substantially all of the operating assets of our LendingTree Loans business or (ii) January 4, 2013. Accordingly, this line expired on July 21, 2012. This line was guaranteed by Tree.com, LendingTree, LLC and LendingTree Holdings Corp. The interest rate under this line was 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 lines, LendingTree Loans was required to maintain various financial and other covenants, and was restricted from paying dividends under the terms of the first two lines. These financial covenants included, but were not limited to, maintaining (i) for the first two lines, minimum tangible net worth of $25.0 million, and for the third 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 two lines, a maximum warehouse capacity ratio and (viii) for the third line, a minimum of one additional warehouse line. LendingTree Loans was in compliance with all covenants as of June 30, 2012.