NOTE 7—WAREHOUSE NOTES PAYABLE

At June 30, 2017, to provide financing to borrowers, the Company has arranged for warehouse lines of credit. In support of the Agencies’ programs, the Company has warehouse lines of credit in the amount of $2.3 billion with certain national banks and a $1.5 billion uncommitted facility with Fannie Mae (collectively, the “Agency Warehouse Facilities”). The Company has pledged substantially all of its loans held for sale against the Agency Warehouse Facilities. The Company has arranged for warehouse lines of credit in the amount of $0.4 billion with certain national banks to assist in funding loans held for investment under the Interim Program (“Interim Warehouse Facilities”). The Company has pledged substantially all of its loans held for investment against these Interim Warehouse Facilities. The maximum amount and outstanding borrowings under the warehouse notes payable at June 30, 2017 are shown in the table below:


	June 30, 2017
(dollars in thousands)	Maximum		Outstanding		Loan Type
Facility	Amount		Balance		Funded (1)	Interest rate
Agency warehouse facility #1	$	425,000	$	224,431	LHFS	30-day LIBOR plus 1.40%
Agency warehouse facility #2		650,000		470,003	LHFS	30-day LIBOR plus 1.40%
Agency warehouse facility #3		880,000		387,932	LHFS	30-day LIBOR plus 1.25%
Agency warehouse facility #4		350,000		238,902	LHFS	30-day LIBOR plus 1.40%
Agency warehouse facility #5		30,000		20,348	LHFS	30-day LIBOR plus 1.80%
Fannie Mae repurchase agreement, uncommitted line and open maturity		1,500,000		93,112	LHFS	30-day LIBOR plus 1.15%
Total agency warehouse facilities	$	3,835,000	$	1,434,728

Interim warehouse facility #1	$	85,000	$	43,440	LHFI	30-day LIBOR plus 1.90%
Interim warehouse facility #2		200,000		100,591	LHFI (2)	30-day LIBOR plus 2.00%
Interim warehouse facility #3		75,000		52,131	LHFI (2)	30-day LIBOR plus 2.00% to 2.50%
Total interim warehouse facilities	$	360,000	$	196,162
Debt issuance costs		—		(622)
Total warehouse facilities	$	4,195,000	$	1,630,268

(1)

Type of loan the borrowing facility is used to fully or partially fund – loans held for sale (“LHFS”) or loans held for investment (“LHFI”).

(2)

These warehouse lines were used to fund Interim Program loans held for sale and held for investment as of June 30, 2017. $88.6 million of the aggregate balance of these two warehouse lines was used to fund Interim Program loans held for sale as of June 30, 2017, with the remaining $64.1 million used to fund Interim Program loans held for investment. NOTE 1 contains additional details about these loans held for sale.

During the second quarter of 2017, the Company executed a short-term extension to the agreement related to Agency Warehouse Facility #2 that extends the maturity date to September 11, 2017. Prior to the expiration of the short-term extension, we expect to execute an amendment to extend the maturity date one year and to enter into a new, separate warehousing credit agreement with one of the lenders under the existing facility. The new, separate warehousing credit agreement will be Agency Warehouse Facility #6. No other material modifications have been made to the agreement during 2017.

During the second quarter of 2017, the Company executed the seventh amendment to the warehouse agreement related to Agency Warehouse Facility #3. The amendment reduced the interest rate to the 30-day London Interbank Offered Rate (“LIBOR”) plus 125 basis points, extended the maturity date to April 30, 2018, and increased the permanent borrowing capacity to $480.0 million. Additionally, the amendment provided for a temporary increase to the borrowing capacity of $400.0 million that expired July 30, 2017. No other material modifications have been made to the agreement during 2017.

During the second quarter of 2017, the Company executed the seventh amendment to the credit and security agreement related to Interim Warehouse Facility #1 that extended the maturity date to April 30, 2018. No other material modifications have been made to the agreement during 2017.

During the second quarter of 2017, the Company exercised its option to extend the maturity date of Interim Warehouse Facility #3 to May 19, 2018. No other material modifications have been made to the agreement during 2017.

The warehouse notes payable and the note payable are subject to various financial covenants, all of which the Company was in compliance with as of the current period end.