ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ☐ | ☒ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging Growth Company |
Page | ||||||||
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands)(1) | ||||||||||||||||||||||
October 1, 2023 to October 31, 2023 | 62,872 | $ | 11.30 | 62,872 | $ | 11,590 | ||||||||||||||||||||
November 1, 2023 to November 30, 2023 | 22,153 | $ | 12.10 | 22,153 | $ | 11,322 | ||||||||||||||||||||
December 1, 2023 to December 31, 2023 | 12,532 | $ | 12.88 | 12,532 | $ | 11,161 | ||||||||||||||||||||
Total | 97,557 | $ | 11.69 | 97,557 |
Year Ended December 31, | Change | % Change | ||||||||||||||||||||||||
($ and units in thousands) | 2023 | 2022 | ||||||||||||||||||||||||
Origination Data | ||||||||||||||||||||||||||
$ Total in-house origination(1) | $ | 14,959,070 | $ | 19,123,199 | $ | (4,164,129) | (21.8) | % | ||||||||||||||||||
# Total in-house origination | 46 | 59 | (13) | (22.0) | % | |||||||||||||||||||||
$ Retail forward in-house origination | $ | 14,162,819 | $ | 18,314,160 | $ | (4,151,341) | (22.7) | % | ||||||||||||||||||
# Retail forward in-house origination | 43 | 56 | (13) | (23.2) | % | |||||||||||||||||||||
$ Retail reverse in-house origination | $ | 49,791 | $ | — | $ | 49,791 | NM | |||||||||||||||||||
# Retail reverse in-house origination | — | — | — | — | % | |||||||||||||||||||||
$ Retail brokered origination(2) | $ | 267,917 | $ | 196,714 | $ | 71,203 | 36.2 | % | ||||||||||||||||||
$ Wholesale reverse origination | $ | 36,841 | $ | — | $ | 36,841 | NM | |||||||||||||||||||
Total originations | $ | 15,263,828 | $ | 19,319,913 | $ | (4,056,085) | (21.0) | % | ||||||||||||||||||
Gain on sale margin (bps)(3) | 340 | 368 | (28) | (7.6) | % | |||||||||||||||||||||
Gain on sale margin on pull-through adjusted locked volume (bps)(4) | 329 | 347 | (18) | (5.2) | % | |||||||||||||||||||||
30-year conventional conforming par rate(5) | 7.3 | % | 6.6 | % | 0.7 | % | 10.6 | % | ||||||||||||||||||
Servicing Data(6) | ||||||||||||||||||||||||||
UPB (period end) | $ | 85,033,899 | $ | 78,892,987 | $ | 6,140,912 | 7.8 | % | ||||||||||||||||||
Loans serviced (period end) | 345 | 324 | 21 | 6.5 | % | |||||||||||||||||||||
MSR multiple (period end)(7) | 4.5 | 4.9 | (0.4) | (8.2) | % | |||||||||||||||||||||
Weighted average coupon rate | 4.1 | % | 3.6 | % | 0.5 | % | 13.9 | % | ||||||||||||||||||
Loan payoffs(8) | $ | 3,565,959 | $ | 6,461,937 | $ | (2,895,978) | (44.8) | % | ||||||||||||||||||
Loan delinquency rate 60-plus days (period end) | 1.8 | % | 1.7 | % | 0.1 | % | 5.9 | % |
Reconciliation of Net (Loss) Income to Adjusted Net Income and (Loss) Earnings Per Share to Adjusted Earnings Per Share | Year Ended December 31, | |||||||||||||
(in thousands, except per share amounts) | 2023 | 2022 | ||||||||||||
Net (loss) income attributable to Guild | $ | (39,009) | $ | 328,598 | ||||||||||
Add adjustments: | ||||||||||||||
Change in fair value of MSRs due to model inputs and assumptions | 83,972 | (300,941) | ||||||||||||
Change in fair value of contingent liabilities and notes receivable due to acquisitions, net | 2,066 | (45,075) | ||||||||||||
Amortization of acquired intangible assets | 7,950 | 7,950 | ||||||||||||
Stock-based compensation | 8,662 | 7,322 | ||||||||||||
Tax impact of adjustments(1) | (15,603) | 72,102 | ||||||||||||
Adjusted Net Income | $ | 48,038 | $ | 69,956 | ||||||||||
Weighted average shares outstanding of Class A and Class B Common Stock: | ||||||||||||||
Basic | 60,967 | 60,981 | ||||||||||||
Diluted | 60,967 | 61,379 | ||||||||||||
Adjusted Diluted(2) | 61,675 | 61,379 | ||||||||||||
(Loss) earnings per share—Basic | $ | (0.64) | $ | 5.39 | ||||||||||
(Loss) earnings per share—Diluted | $ | (0.64) | $ | 5.35 | ||||||||||
Adjusted Earnings Per Share—Basic | $ | 0.79 | $ | 1.15 | ||||||||||
Adjusted Earnings Per Share—Diluted | $ | 0.78 | $ | 1.14 |
Reconciliation of Net (Loss) Income to Adjusted EBITDA | Year Ended December 31, | |||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
Net (loss) income | $ | (39,137) | $ | 328,630 | ||||||||||
Add adjustments: | ||||||||||||||
Interest expense on non-funding debt | 11,616 | 6,675 | ||||||||||||
Income tax (benefit) expense | (6,994) | 91,389 | ||||||||||||
Depreciation and amortization | 14,580 | 15,525 | ||||||||||||
Change in fair value of MSRs due to model inputs and assumptions | 83,972 | (300,941) | ||||||||||||
Change in fair value of contingent liabilities and notes receivable due to acquisitions, net | 2,066 | (45,075) | ||||||||||||
Stock-based compensation | 8,662 | 7,322 | ||||||||||||
Adjusted EBITDA | $ | 74,765 | $ | 103,525 |
Reconciliation of Return on Equity to Adjusted Return on Equity | Year Ended December 31, | |||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
Income Statement Data: | ||||||||||||||
Net (loss) income attributable to Guild | $ | (39,009) | $ | 328,598 | ||||||||||
Adjusted Net Income | $ | 48,038 | $ | 69,956 | ||||||||||
Denominator: Average stockholders' equity | $ | 1,216,390 | $ | 1,084,650 | ||||||||||
Return on equity | (3.2) | % | 30.3 | % | ||||||||||
Adjusted Return on Equity | 3.9 | % | 6.4 | % |
Reconciliation of Book Value Per Share to Tangible Net Book Value Per Share | December 31, | ||||||||||
(in thousands, except per share amounts) | 2023 | 2022 | |||||||||
Total stockholders' equity | $ | 1,183,493 | $ | 1,249,287 | |||||||
Less: non-controlling interests | 337 | 66 | |||||||||
Total stockholders' equity attributable to Guild | $ | 1,183,156 | $ | 1,249,221 | |||||||
Adjustments: | |||||||||||
Intangible assets, net | (25,125) | (33,075) | |||||||||
Goodwill | (186,181) | (176,769) | |||||||||
Tangible common equity | $ | 971,850 | $ | 1,039,377 | |||||||
Ending shares of Class A and Class B common stock outstanding | 61,120 | 60,916 | |||||||||
Book value per share | $ | 19.36 | $ | 20.51 | |||||||
Tangible Net Book Value Per Share(1) | $ | 15.90 | $ | 17.06 |
Consolidated Statements of Operations | Year Ended December 31, | |||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
Loan origination fees and gain on sale of loans, net | $ | 501,303 | $ | 703,674 | $ | (202,371) | (28.8) | % | ||||||||||||||||||
Gain on reverse mortgage loans held for investment and HMBS-related borrowings, net | 8,233 | — | 8,233 | NM | ||||||||||||||||||||||
Loan servicing and other fees | 246,144 | 223,403 | 22,741 | 10.2 | % | |||||||||||||||||||||
Valuation adjustment of mortgage servicing rights | (139,560) | 217,551 | (357,111) | (164.2) | % | |||||||||||||||||||||
Interest income | 104,404 | 68,144 | 36,260 | 53.2 | % | |||||||||||||||||||||
Interest expense | (66,364) | (49,240) | (17,124) | (34.8) | % | |||||||||||||||||||||
Other income, net | 1,027 | 1,289 | (262) | (20.3) | % | |||||||||||||||||||||
Net revenue | 655,187 | 1,164,821 | (509,634) | (43.8) | % | |||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||
Salaries, incentive compensation and benefits | 529,861 | 619,185 | (89,324) | (14.4) | % | |||||||||||||||||||||
General and administrative | 83,213 | 38,085 | 45,128 | 118.5 | % | |||||||||||||||||||||
Occupancy, equipment and communication | 72,476 | 71,707 | 769 | 1.1 | % | |||||||||||||||||||||
Depreciation and amortization | 14,580 | 15,525 | (945) | (6.1) | % | |||||||||||||||||||||
Provision for foreclosure losses | 1,188 | 300 | 888 | 296.0 | % | |||||||||||||||||||||
Total expenses | 701,318 | 744,802 | (43,484) | (5.8) | % | |||||||||||||||||||||
(Loss) income before income tax (benefit) expense | (46,131) | 420,019 | (466,150) | (111.0) | % | |||||||||||||||||||||
Income tax (benefit) expense | (6,994) | 91,389 | (98,383) | (107.7) | % | |||||||||||||||||||||
Net (loss) income | (39,137) | 328,630 | (367,767) | (111.9) | % | |||||||||||||||||||||
Net (loss) income attributable to non-controlling interests | (128) | 32 | (160) | (500.0) | % | |||||||||||||||||||||
Net (loss) income attributable to Guild | $ | (39,009) | $ | 328,598 | $ | (367,607) | (111.9) | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
Gain on sale of loans | $ | 303,743 | $ | 490,366 | $ | (186,623) | (38.1) | % | ||||||||||||||||||
Loan origination fees | 50,350 | 55,550 | (5,200) | (9.4) | % | |||||||||||||||||||||
Fair value of originated MSRs | 145,563 | 230,400 | (84,837) | (36.8) | % | |||||||||||||||||||||
Changes in fair value of MLHS and IRLCs | 22,303 | (58,432) | 80,735 | 138.2 | % | |||||||||||||||||||||
Changes in fair value of forward commitments | (11,981) | (7,334) | (4,647) | (63.4) | % | |||||||||||||||||||||
Provision for investor reserves | (8,675) | (6,876) | (1,799) | (26.2) | % | |||||||||||||||||||||
Total loan origination fees and gain on sale of loans, net | $ | 501,303 | $ | 703,674 | $ | (202,371) | (28.8) | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ and units in thousands) | 2023 | 2022 | Change | % Change | ||||||||||||||||||||||
Loan origination volume by type: | ||||||||||||||||||||||||||
Conventional conforming | $ | 8,846,844 | $ | 12,576,588 | $ | (3,729,744) | (29.7) | % | ||||||||||||||||||
Government | 4,339,973 | 4,700,684 | (360,711) | (7.7) | % | |||||||||||||||||||||
State housing | 1,427,245 | 991,515 | 435,730 | 43.9 | % | |||||||||||||||||||||
Non-agency | 345,008 | 854,412 | (509,404) | (59.6) | % | |||||||||||||||||||||
Total in-house originations(1) | $ | 14,959,070 | $ | 19,123,199 | $ | (4,164,129) | (21.8) | % | ||||||||||||||||||
Wholesale loans | $ | 36,841 | $ | — | $ | 36,841 | NM | |||||||||||||||||||
Brokered loans | $ | 267,917 | $ | 196,714 | $ | 71,203 | 36.2 | % | ||||||||||||||||||
Total originations | $ | 15,263,828 | $ | 19,319,913 | $ | (4,056,085) | (21.0) | % | ||||||||||||||||||
In-house loans closed | 46 | 59 | (13) | (22.0) | % | |||||||||||||||||||||
Average loan amount | $ | 325 | $ | 324 | $ | 1 | 0.3 | % | ||||||||||||||||||
Service retained(2) | 81.7 | % | 89.0 | % | (7.3) | % | (8.2) | % | ||||||||||||||||||
Service released(3) | 18.3 | % | 11.0 | % | 7.3 | % | 66.4 | % | ||||||||||||||||||
Gain on sale margin (bps)(4) | 340 | 368 | (28) | (7.6) | % | |||||||||||||||||||||
Weighted average note rate | 6.8 | % | 4.9 | % | 1.9 | % | 38.8 | % | ||||||||||||||||||
Excludes reverse and brokered loans: | ||||||||||||||||||||||||||
Purchase | 93.4 | % | 81.2 | % | 12.2 | % | 15.0 | % | ||||||||||||||||||
Refinance | 6.6 | % | 18.8 | % | (12.2) | % | (64.9) | % | ||||||||||||||||||
Total locked volume(5) | $ | 17,599,054 | $ | 21,704,719 | $ | (4,105,665) | (18.9) | % | ||||||||||||||||||
Pull-through adjusted locked volume(6) | $ | 15,223,182 | $ | 20,272,208 | $ | (5,049,026) | (24.9) | % | ||||||||||||||||||
Gain on sale margin on pull-through adjusted locked volume (bps)(7) | 329 | 347 | (18) | (5.2) | % | |||||||||||||||||||||
Weighted average loan-to-value | 84.7 | % | 82.1 | % | 2.6 | % | 3.2 | % | ||||||||||||||||||
Weighted average credit score | 741 | 738 | 3 | 0.4 | % | |||||||||||||||||||||
Days application to close | 38 | 44 | (6) | (13.6) | % | |||||||||||||||||||||
Days close to purchase by investors | 18 | 16 | 2 | 12.5 | % | |||||||||||||||||||||
Purchase recapture rate | 28.0 | % | 33.8 | % | (5.8) | % | (17.2) | % | ||||||||||||||||||
Refinance recapture rate | 25.4 | % | 43.0 | % | (17.6) | % | (40.9) | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
Servicing fee income | $ | 242,003 | $ | 218,734 | $ | 23,269 | 10.6 | % | ||||||||||||||||||
Other ancillary fees | 6,474 | 5,766 | 708 | 12.3 | % | |||||||||||||||||||||
Loan modification fees | 1,901 | 920 | 981 | 106.6 | % | |||||||||||||||||||||
Interest paid on impound accounts | (4,234) | (2,017) | (2,217) | (109.9) | % | |||||||||||||||||||||
Total loan servicing and other fees | $ | 246,144 | $ | 223,403 | $ | 22,741 | 10.2 | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ and units in thousands) | 2023 | 2022 | Change | % Change | ||||||||||||||||||||||
Beginning UPB of servicing portfolio | $ | 78,892,987 | $ | 70,938,588 | $ | 7,954,399 | 11.2 | % | ||||||||||||||||||
New UPB origination additions(1) | 14,909,279 | 19,123,199 | (4,213,920) | (22.0) | % | |||||||||||||||||||||
Less: | ||||||||||||||||||||||||||
UPB originations sold service released(2) | $ | 2,639,022 | $ | 2,345,394 | $ | 293,628 | 12.5 | % | ||||||||||||||||||
Loan payoffs | 3,565,959 | 6,461,937 | (2,895,978) | (44.8) | % | |||||||||||||||||||||
Loan principal reductions | 2,508,145 | 2,328,656 | 179,489 | 7.7 | % | |||||||||||||||||||||
Loan foreclosures | 55,241 | 32,813 | 22,428 | 68.4 | % | |||||||||||||||||||||
Ending UPB of servicing portfolio(3) | $ | 85,033,899 | $ | 78,892,987 | $ | 6,140,912 | 7.8 | % | ||||||||||||||||||
Average UPB of servicing portfolio | $ | 81,963,443 | $ | 74,915,788 | $ | 7,047,655 | 9.4 | % | ||||||||||||||||||
Weighted average servicing fee | 0.31 | % | 0.30 | % | 0.01 | % | 3.3 | % | ||||||||||||||||||
Weighted average coupon rate | 4.1 | % | 3.6 | % | 0.5 | % | 13.9 | % | ||||||||||||||||||
Weighted average prepayment speed(4) | 8.5 | % | 7.5 | % | 1.0 | % | 13.3 | % | ||||||||||||||||||
Weighted average credit score | 733 | 733 | — | — | % | |||||||||||||||||||||
Weighted average loan age (in months) | 33.1 | 26.3 | 6.8 | 25.9 | % | |||||||||||||||||||||
Weighted average loan-to-value | 80.9 | % | 80.4 | % | 0.5 | % | 0.6 | % | ||||||||||||||||||
MSR multiple (period end)(5) | 4.5 | 4.9 | (0.4) | (8.2) | % | |||||||||||||||||||||
Loans serviced (period end) | 345 | 324 | 21 | 6.5 | % | |||||||||||||||||||||
Loans delinquent 60-plus days (period end) | 6.2 | 5.5 | 0.7 | 12.7 | % | |||||||||||||||||||||
Loan delinquency rate 60-plus days (period end) | 1.8 | % | 1.7 | % | 0.1 | % | 5.9 | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
Change in fair value of MSRs due to collection/realization of cash flows | $ | (55,588) | $ | (83,390) | $ | 27,802 | 33.3 | % | ||||||||||||||||||
Change in fair value of MSRs due to model inputs and assumptions | (83,972) | 300,941 | (384,913) | (127.9) | % | |||||||||||||||||||||
Total MSR valuation adjustment | $ | (139,560) | $ | 217,551 | $ | (357,111) | (164.2) | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
Interest income, funding | $ | 55,235 | $ | 52,210 | $ | 3,025 | 5.8 | % | ||||||||||||||||||
Interest income earnings credit | 45,932 | 13,051 | 32,881 | 251.9 | % | |||||||||||||||||||||
Other | 3,237 | 2,883 | 354 | 12.3 | % | |||||||||||||||||||||
Total interest income | $ | 104,404 | $ | 68,144 | $ | 36,260 | 53.2 | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
Interest expense, funding facilities | $ | 45,861 | $ | 26,351 | $ | 19,510 | 74.0 | % | ||||||||||||||||||
Interest expense, other financing | 12,927 | 8,113 | 4,814 | 59.3 | % | |||||||||||||||||||||
Bank servicing charges | 5,974 | 8,589 | (2,615) | (30.4) | % | |||||||||||||||||||||
Payoff interest expense | 1,602 | 6,149 | (4,547) | (73.9) | % | |||||||||||||||||||||
Other | — | 38 | (38) | NM | ||||||||||||||||||||||
Total interest expense | $ | 66,364 | $ | 49,240 | $ | 17,124 | 34.8 | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
Salaries | 282,986 | 303,391 | (20,405) | (6.7) | % | |||||||||||||||||||||
Incentive compensation | 166,752 | 241,444 | (74,692) | (30.9) | % | |||||||||||||||||||||
Benefits | 80,123 | 74,350 | 5,773 | 7.8 | % | |||||||||||||||||||||
Total salaries, incentive compensation and benefits expense | $ | 529,861 | $ | 619,185 | $ | (89,324) | (14.4) | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
Contingent liability fair value adjustment, net | $ | 2,066 | $ | (45,075) | $ | 47,141 | 104.6 | % | ||||||||||||||||||
Professional fees | 45,211 | 48,515 | (3,304) | (6.8) | % | |||||||||||||||||||||
Advertising and promotions | 18,133 | 18,661 | (528) | (2.8) | % | |||||||||||||||||||||
Office supplies, travel and entertainment | 12,070 | 10,787 | 1,283 | 11.9 | % | |||||||||||||||||||||
Miscellaneous | 5,733 | 5,197 | 536 | 10.3 | % | |||||||||||||||||||||
Total general and administrative expense | $ | 83,213 | $ | 38,085 | $ | 45,128 | 118.5 | % |
Year Ended December 31, | ||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||
Occupancy | $ | 41,230 | $ | 40,658 | $ | 572 | 1.4 | % | ||||||||||||||||||
Equipment | 8,254 | 8,665 | (411) | (4.7) | % | |||||||||||||||||||||
Communication | 22,992 | 22,384 | 608 | 2.7 | % | |||||||||||||||||||||
Total occupancy, equipment and communication expense | $ | 72,476 | $ | 71,707 | $ | 769 | 1.1 | % |
Year Ended December 31, | ||||||||||||||
($ and units in thousands) | 2023 | 2022 | ||||||||||||
Total in-house originations | $ | 14,959,070 | $ | 19,123,199 | ||||||||||
Funded loans | 46 | 59 | ||||||||||||
Loan origination fees and gain on sale, net | $ | 501,789 | $ | 697,822 | ||||||||||
Gain on reverse mortgage loans held for investment and HMBS-related borrowings, net | 8,233 | — | ||||||||||||
Interest income, net | 5,544 | 20,115 | ||||||||||||
Other income, net | 805 | (57) | ||||||||||||
Net revenue | 516,371 | 717,880 | ||||||||||||
Salaries, incentive compensation and benefits | 456,059 | 562,194 | ||||||||||||
General and administrative | 57,683 | 15,249 | ||||||||||||
Occupancy, equipment and communication | 62,799 | 62,556 | ||||||||||||
Depreciation and amortization | 13,485 | 13,889 | ||||||||||||
Total expenses | 590,026 | 653,888 | ||||||||||||
Net (loss) income allocated to origination | $ | (73,655) | $ | 63,992 |
Year Ended December 31, | ||||||||||||||
($ and units in thousands) | 2023 | 2022 | ||||||||||||
UPB of servicing portfolio (period end) | $ | 85,033,899 | $ | 78,892,987 | ||||||||||
Loans serviced (period end) | 345 | 324 | ||||||||||||
Loan servicing and other fees | $ | 246,144 | $ | 223,403 | ||||||||||
Loan origination fees and gain on sale, net | (486) | 5,852 | ||||||||||||
Other income, net | 199 | 1,146 | ||||||||||||
Total revenue | 245,857 | 230,401 | ||||||||||||
Valuation adjustment of MSRs | (139,560) | 217,551 | ||||||||||||
Interest income, net | 43,024 | 5,465 | ||||||||||||
Net revenue | 149,321 | 453,417 | ||||||||||||
Salaries, incentive compensation and benefits | 31,298 | 29,001 | ||||||||||||
General and administrative | 11,191 | 9,657 | ||||||||||||
Occupancy, equipment and communication | 4,785 | 4,819 | ||||||||||||
Depreciation and amortization | 496 | 654 | ||||||||||||
Provision for foreclosure losses | 1,188 | 300 | ||||||||||||
Total expenses | 48,958 | 44,431 | ||||||||||||
Net income allocated to servicing | $ | 100,363 | $ | 408,986 |
Facility ($ in thousands) | Outstanding Indebtedness | Total Facility Size | Maturity Date | |||||||||||||||||
Warehouse lines of credit | $ | 122,462 | $ | 345,000 | January 2025 | |||||||||||||||
99,059 | 150,000 | August 2024 | ||||||||||||||||||
158,412 | 300,000 | June 2024 | ||||||||||||||||||
87,252 | 200,000 | May 2024 | ||||||||||||||||||
91,039 | 200,000 | September 2024 | ||||||||||||||||||
134,964 | 300,000 | (1) | September 2024 | |||||||||||||||||
30,185 | 50,000 | (2) | N/A | |||||||||||||||||
78,682 | 200,000 | (3) | N/A | |||||||||||||||||
34,280 | 75,000 | (4) | March 2025 | |||||||||||||||||
Total warehouse lines of credit | 836,335 | 1,820,000 | ||||||||||||||||||
MSR notes payable | 87,766 | 400,000 | (5) | September 2028 | ||||||||||||||||
31,000 | 200,000 | (6) | August 2027 | |||||||||||||||||
30,000 | 100,000 | (1) | September 2024 | |||||||||||||||||
Total MSR notes payable | 148,766 | 700,000 |
Year Ended December 31, | ||||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
Net cash (used in) provided by operating activities | $ | (91,719) | $ | 1,259,593 | ||||||||||
Net cash used in investing activities | (136,603) | (7,178) | ||||||||||||
Net cash provided by (used in) financing activities | 208,949 | (1,353,781) | ||||||||||||
Decrease in cash, cash equivalents and restricted cash | $ | (19,373) | $ | (101,366) |
Year Ended December 31, | ||||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
Loans held for sale | $ | (55,452) | $ | 1,358,441 | ||||||||||
Other operating sources | (36,267) | (98,848) | ||||||||||||
Net cash (used in) provided by operating activities | $ | (91,719) | $ | 1,259,593 |
Year Ended December 31, | ||||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
Warehouse lines of credit | $ | 121,534 | $ | (1,213,742) | ||||||||||
MSR notes payable | 22,516 | (123,750) | ||||||||||||
Other financing sources | 64,899 | (16,289) | ||||||||||||
Net cash provided by (used in) financing activities | $ | 208,949 | $ | (1,353,781) |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Percentage of | Percentage of | |||||||||||||||||||||||||||||||||||||
Level/Description ($ in thousands) | Carrying Value of Assets | Total Assets | Stockholders' Equity | Carrying Value of Assets | Total Assets | Stockholders' Equity | ||||||||||||||||||||||||||||||||
Level Three: Prices determined using significant unobservable inputs that reflect our judgements about the factors that market participants use in pricing an asset or liability and are based on the best information available in the circumstances. | $ | 1,503,759 | 41 | % | 127 | % | $ | 1,142,018 | 35 | % | 91 | % | ||||||||||||||||||||||||||
Total assets | $ | 3,676,720 | $ | 3,239,591 | ||||||||||||||||||||||||||||||||||
Total stockholders' equity | $ | 1,183,493 | $ | 1,249,287 |
Prepayment Speeds | Discount Rate | Cost to Service (per loan) | ||||||||||||||||||||||||||||||
10% Adverse Change | 20% Adverse Change | 10% Adverse Change | 20% Adverse Change | 10% Adverse Change | 20% Adverse Change | |||||||||||||||||||||||||||
$ | (36,968) | $ | (72,701) | $ | (47,899) | $ | (93,196) | $ | (11,315) | $ | (23,573) |
Prepayment Speeds | Discount Rate | Cost to Service (per loan) | ||||||||||||||||||||||||||||||
10% Favorable Change | 20% Favorable Change | 10% Favorable Change | 20% Favorable Change | 10% Favorable Change | 20% Favorable Change | |||||||||||||||||||||||||||
$ | 41,031 | $ | 83,528 | $ | 53,297 | $ | 109,166 | $ | 13,070 | $ | 25,187 |
December 31, 2023 | ||||||||
Unobservable Input | Range (Weighted Average) | |||||||
Life in years | 0.1 - 8.9 (7.2) | |||||||
Discount rate | 12.0% - 12.0% (12.0%) | |||||||
Conditional prepayment rate including voluntary and involuntary prepayments | 6.9% - 11.3% (8.1%) |
Change in input(1) | Effect on fair value of IRLC of a change in pull-through rate (in thousands) | |||||||
(10)% | $ | (1,431) | ||||||
(5)% | $ | (716) | ||||||
5% | $ | 680 | ||||||
10% | $ | 1,216 |
December 31, | |||||||||||
2023 | 2022 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Mortgage loans held for sale | |||||||||||
Reverse mortgage loans held for investment | |||||||||||
Ginnie Mae loans subject to repurchase right | |||||||||||
Accounts and notes receivable, net | |||||||||||
Derivative assets | |||||||||||
Mortgage servicing rights, net | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and stockholders’ equity | |||||||||||
Warehouse lines of credit, net | $ | $ | |||||||||
Home Equity Conversion Mortgage-Backed Securities (“HMBS”) related borrowings | |||||||||||
Notes payable | |||||||||||
Ginnie Mae loans subject to repurchase right | |||||||||||
Accounts payable and accrued expenses | |||||||||||
Accrued compensation and benefits | |||||||||||
Investor reserves | |||||||||||
Contingent liabilities due to acquisitions | |||||||||||
Derivative liabilities | |||||||||||
Operating lease liabilities | |||||||||||
Note due to related party | |||||||||||
Deferred compensation plan | |||||||||||
Deferred tax liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 18) | |||||||||||
Stockholders’ equity | |||||||||||
Preferred stock, $ | |||||||||||
Class A common stock, $ | |||||||||||
Class B common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Non-controlling interests | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Revenue | |||||||||||
Loan origination fees and gain on sale of loans, net | $ | $ | |||||||||
Gain on reverse mortgage loans held for investment and HMBS-related borrowings, net | |||||||||||
Loan servicing and other fees | |||||||||||
Valuation adjustment of mortgage servicing rights | ( | ||||||||||
Interest income | |||||||||||
Interest expense | ( | ( | |||||||||
Other income, net | |||||||||||
Net revenue | |||||||||||
Expenses | |||||||||||
Salaries, incentive compensation and benefits | |||||||||||
General and administrative | |||||||||||
Occupancy, equipment and communication | |||||||||||
Depreciation and amortization | |||||||||||
Provision for foreclosure losses | |||||||||||
Total expenses | |||||||||||
(Loss) income before income tax (benefit) expense | ( | ||||||||||
Income tax (benefit) expense | ( | ||||||||||
Net (loss) income | ( | ||||||||||
Net (loss) income attributable to non-controlling interests | ( | ||||||||||
Net (loss) income attributable to Guild | $ | ( | $ | ||||||||
(Loss) earnings per share attributable to Class A and Class B Common Stock: | |||||||||||
Basic | $ | ( | $ | ||||||||
Diluted | $ | ( | $ | ||||||||
Weighted average shares outstanding of Class A and Class B Common Stock: | |||||||||||
Basic | |||||||||||
Diluted |
Class A Shares | Class A Amount | Class B Shares | Class B Amount | Additional Paid-In Capital | Retained Earnings | Non-controlling Interests | Total | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Dividend equivalents on unvested restricted stock units forfeited | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
Vesting of restricted stock units | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Shares of Class A common stock withheld related to net share settlement | ( | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Repurchase and retirement of Class A common stock | ( | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Dividends paid on Class A and Class B common stock ($ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Dividend equivalents issued on unvested restricted stock units, net of forfeitures | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
Vesting of restricted stock units | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Shares of Class A common stock withheld related to net share settlement | ( | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Repurchase and retirement of Class A common stock | ( | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Non-controlling interest related to consolidated joint venture | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Deconsolidation of a joint venture | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | $ | $ | $ |
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net (loss) income | $ | ( | $ | ||||||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Valuation adjustment of mortgage servicing rights | ( | ||||||||||
Valuation adjustment of mortgage loans held for sale | ( | ||||||||||
Valuation adjustment of reverse mortgage loans held for investment and HMBS-related borrowings | ( | ||||||||||
Unrealized (gain) loss on derivatives | ( | ||||||||||
Amortization of right-of-use assets | |||||||||||
Provision for investor reserves | |||||||||||
Provision for foreclosure losses | |||||||||||
Valuation adjustment of contingent liabilities due to acquisitions, net | ( | ||||||||||
Gain on sale of mortgage loans excluding fair value of other financial instruments, net | ( | ( | |||||||||
Earnings from unconsolidated joint ventures, net of distributions received | ( | ||||||||||
Paid-in-kind interest income | ( | ||||||||||
Deferred income taxes | ( | ||||||||||
Benefit from investor reserves | ( | ( | |||||||||
Foreclosure loss reserve | ( | ( | |||||||||
Stock-based compensation | |||||||||||
Origination of mortgage loans held for sale | ( | ( | |||||||||
Proceeds on sale of and payments from mortgage loans held for sale | |||||||||||
Other | ( | ||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts and notes receivable, net | ( | ||||||||||
Other assets | ( | ||||||||||
Mortgage servicing rights | ( | ( | |||||||||
Accounts payable and accrued expenses | ( | ( | |||||||||
Accrued compensation and benefits | ( | ||||||||||
Income taxes | |||||||||||
Contingent liability payments | ( | ||||||||||
Operating lease liabilities | ( | ( | |||||||||
Deferred compensation plan liability | ( | ||||||||||
Real estate owned, net | ( | ( | |||||||||
Net cash (used in) provided by operating activities | ( | ||||||||||
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from investing activities | |||||||||||
Acquisition of businesses | ( | ( | |||||||||
Acquisition of reverse mortgage loans held for investment, net | ( | ||||||||||
Origination and purchase of reverse mortgage loans held for investment | ( | ||||||||||
Principal payments received on reverse mortgage loans held for investment | |||||||||||
Issuance of notes receivable | ( | ||||||||||
Repayments on notes receivable | |||||||||||
Purchases of property and equipment, net | ( | ( | |||||||||
Other | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Borrowings on warehouse lines of credit | |||||||||||
Repayments on warehouse lines of credit | ( | ( | |||||||||
Proceeds from issuance of reverse mortgage loans and tails accounted for as HMBS-related obligations | |||||||||||
Repayments on HMBS-related obligations | ( | ||||||||||
Borrowings on notes payable | |||||||||||
Repayments on notes payable | ( | ( | |||||||||
Contingent liability payments | ( | ( | |||||||||
Net change in related party notes payable | ( | ( | |||||||||
Taxes paid related to net share settlement of equity awards | ( | ( | |||||||||
Repurchases of Class A common stock | ( | ( | |||||||||
Dividends paid | ( | ||||||||||
Other | ( | ||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
Cash, cash equivalents and restricted cash, beginning of year | |||||||||||
Cash, cash equivalents and restricted cash, end of year | $ | $ | |||||||||
Supplemental information | |||||||||||
Cash paid for interest, net | $ | $ | |||||||||
Cash paid for income taxes, net of refunds | $ | ( | $ | ( | |||||||
Supplemental disclosure of non-cash investing activities: | |||||||||||
Reverse mortgage loans held for investment acquired at fair value | $ | $ | |||||||||
HMBS-related borrowings assumed at fair value | ( | ||||||||||
Purchase price holdback | ( | ||||||||||
Net cash paid to acquire loans held for investment | $ | $ | |||||||||
Measurement period adjustment to goodwill | $ | $ | ( |
2023 | 2022 | |||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows | $ | $ |
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Trading securities | $ | $ | $ | $ | ||||||||||||||||||||||
Notes receivable | ||||||||||||||||||||||||||
Derivative assets | ||||||||||||||||||||||||||
Forward delivery commitments | ||||||||||||||||||||||||||
Interest rate lock commitments | ||||||||||||||||||||||||||
Mortgage loans held for sale | ||||||||||||||||||||||||||
Reverse mortgage loans held for investment | ||||||||||||||||||||||||||
Mortgage servicing rights | ||||||||||||||||||||||||||
Investment in warrants | ||||||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Derivative liabilities | ||||||||||||||||||||||||||
Forward commitments and best efforts sales commitments | $ | $ | $ | $ | ||||||||||||||||||||||
HMBS-related borrowings | $ | $ | $ | $ | ||||||||||||||||||||||
Contingent liabilities due to acquisitions | ||||||||||||||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Trading securities | $ | $ | $ | $ | ||||||||||||||||||||||
Derivative | ||||||||||||||||||||||||||
Forward delivery commitments | ||||||||||||||||||||||||||
Interest rate lock commitments | ||||||||||||||||||||||||||
Mortgage loans held for sale | ||||||||||||||||||||||||||
Mortgage servicing rights | ||||||||||||||||||||||||||
Investment in warrants | ||||||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Derivative | ||||||||||||||||||||||||||
Forward commitments and best efforts sales commitments | $ | $ | $ | $ | ||||||||||||||||||||||
Contingent liabilities due to acquisitions | ||||||||||||||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
Notes Receivable | Interest Rate Lock Commitments | Contingent Liabilities | ||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | |||||||||||||||||
Net transfers and revaluation losses | — | ( | — | |||||||||||||||||
Payments | — | — | ( | |||||||||||||||||
Additions | — | — | ||||||||||||||||||
Valuation adjustments | — | — | ( | |||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | |||||||||||||||||
Net transfers and revaluation losses | — | — | ||||||||||||||||||
Payments | ( | — | ( | |||||||||||||||||
Additions | — | |||||||||||||||||||
Valuation adjustments | ( | — | ||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ |
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Ginnie Mae loans subject to repurchase right | $ | $ | $ | $ | ||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Ginnie Mae loans subject to repurchase right | $ | $ | $ | $ | ||||||||||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Ginnie Mae loans subject to repurchase right | $ | $ | $ | $ | ||||||||||||||||||||||
Total assets at fair value | $ | $ | $ | $ | ||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Ginnie Mae loans subject to repurchase right | $ | $ | $ | $ | ||||||||||||||||||||||
Total liabilities at fair value | $ | $ | $ | $ |
Balance at December 31, 2023 | Fair Value | Principal Amount Due Upon Maturity | Difference | |||||||||||||||||
Assets: | ||||||||||||||||||||
Mortgage loans held for sale(1) | $ | $ | $ | |||||||||||||||||
Reverse mortgage loans held for investment(2) | ||||||||||||||||||||
Notes receivable | ( | |||||||||||||||||||
Liabilities: | ||||||||||||||||||||
HMBS-related borrowings | $ | $ | $ | |||||||||||||||||
Balance at December 31, 2022 | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Mortgage loans held for sale(1) | $ | $ | $ | ( |
2023 | 2022 | |||||||||||||
Trust advances | $ | $ | ||||||||||||
Foreclosure advances, net | ||||||||||||||
Notes receivable | ||||||||||||||
Other | ||||||||||||||
Total accounts and notes receivable, net | $ | $ |
2023 | 2022 | |||||||||||||
Balance — beginning of year | $ | $ | ||||||||||||
Utilization of foreclosure reserve | ( | ( | ||||||||||||
Provision for foreclosure losses | ||||||||||||||
Balance — end of year | $ | $ |
2023 | 2022 | ||||||||||
Prepaid expenses | $ | $ | |||||||||
Company owned life insurance | |||||||||||
Property and equipment, net | |||||||||||
Right-of-use assets | |||||||||||
Income tax receivable | |||||||||||
Real estate owned, net | |||||||||||
Land | |||||||||||
Trading securities | |||||||||||
Investments in unconsolidated joint ventures, net | |||||||||||
Investment in warrants | |||||||||||
Total other assets | $ | $ |
2023 | 2022 | ||||||||||
Computer equipment | $ | $ | |||||||||
Furniture and equipment | |||||||||||
Leasehold improvements | |||||||||||
Internal-use software in production | |||||||||||
Internal-use software | |||||||||||
Property and equipment, gross | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Property and equipment, net | $ | $ |
2023 | 2022 | ||||||||||
Unrealized hedging gains (losses) | $ | $ | ( |
Fair Value | |||||||||||||||||
Notional Value | Derivative Asset | Derivative Liability | |||||||||||||||
Balance at December 31, 2023 | |||||||||||||||||
IRLCs | $ | $ | $ | ||||||||||||||
Forward delivery commitments and best efforts sales commitments | $ | $ | $ | ||||||||||||||
Balance at December 31, 2022 | |||||||||||||||||
IRLCs | $ | $ | $ | ||||||||||||||
Forward delivery commitments and best efforts sales commitments | $ | $ | $ |
2023 | 2022 | |||||||||||||
Unobservable Input | Range (Weighted Average) | |||||||||||||
Loan funding probability (“pull-through”) |
Gross Amounts of Recognized Assets (Liabilities) | Gross Amounts Offset in the Balance Sheet | Cash Collateral Paid and Offset in the Balance Sheet | Net Amounts of Recognized Assets (Liabilities) in the Balance Sheet | ||||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||
Forward delivery commitments | $ | $ | ( | $ | |||||||||||||||||||
Total assets | $ | $ | ( | $ | $ | ||||||||||||||||||
Forward delivery commitments and best efforts sales commitments | $ | ( | $ | $ | $ | ( | |||||||||||||||||
Total liabilities | $ | ( | $ | $ | $ | ( | |||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||
Forward delivery commitments | $ | $ | ( | $ | $ | ||||||||||||||||||
Total assets | $ | $ | ( | $ | $ | ||||||||||||||||||
Forward delivery commitments and best efforts sales commitments | $ | ( | $ | $ | $ | ( | |||||||||||||||||
Total liabilities | $ | ( | $ | $ | $ | ( |
2023 | 2022 | ||||||||||
Balance — beginning of year | $ | $ | |||||||||
MSRs originated and acquired through acquisitions | |||||||||||
Changes in fair value: | |||||||||||
Due to collection/realization of cash flows | ( | ( | |||||||||
Due to changes in valuation model inputs or assumptions | ( | ||||||||||
Balance — end of year | $ | $ |
2023 | 2022 | ||||||||||
Unobservable Input | Range (Weighted Average) | ||||||||||
Discount rate | |||||||||||
Prepayment rate | |||||||||||
Cost to service (per loan) | $ | $ |
2023 | 2022 | ||||||||||
Servicing fees from servicing portfolio | $ | $ | |||||||||
Late fees | |||||||||||
Other ancillary servicing revenue and fees | ( | ( | |||||||||
Total loan servicing and other fees | $ | $ |
Prepayment Speeds | Discount Rate | Cost to Service (per loan) | |||||||||||||||||||||||||||||||||
10% Adverse Change | 20% Adverse Change | 10% Adverse Change | 20% Adverse Change | 10% Adverse Change | 20% Adverse Change | ||||||||||||||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||||||||||||||
Mortgage servicing rights | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||||||||||||||
Mortgage servicing rights | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( |
2023 | 2022 | ||||||||||
Balance at the beginning of period | $ | $ | |||||||||
Origination of mortgage loans held for sale | |||||||||||
Proceeds on sale of and payments from mortgage loans held for sale | ( | ( | |||||||||
Gain on sale of mortgage loans excluding fair value of other financial instruments, net | |||||||||||
Valuation adjustment of mortgage loans held for sale | ( | ||||||||||
Balance at the end of period | $ | $ |
December 31, 2023 | |||||||||||
Reverse Mortgage Loans Held for Investment | HMBS-Related Borrowings(1) | ||||||||||
Balance — beginning of period | $ | $ | |||||||||
Originations and purchases | — | ||||||||||
Securitization of HECM loans and tails accounted for as a financing (including realized fair value changes) | — | ( | |||||||||
Acquisition of loans held for investment, net(2) | ( | ||||||||||
Repayments (principal payments received) | ( | ||||||||||
Change in fair value recognized in earnings(3) | ( | ||||||||||
Balance — end of period | $ | $ | ( | ||||||||
Securitized loans (pledged to HMBS-related borrowings) | $ | $ | ( | ||||||||
Unsecuritized loans and tail advances | |||||||||||
Total | $ |
Gain on Reverse Mortgage Loans Held for Investment | December 31, 2023 | |||||||
Gain on new originations(1) | $ | |||||||
Gain on tail securitizations(2) | ||||||||
Net interest income | ||||||||
Change in fair value of reverse mortgage loans held for investment | ||||||||
Fair value gain recognized in earnings(3) | ||||||||
Gain on reverse mortgage loans held for investment | $ |
December 31, 2023 | ||||||||
Unobservable Input | Range (Weighted Average) | |||||||
Life in years | ||||||||
Discount rate | ||||||||
Conditional prepayment rate including voluntary and involuntary prepayments |
2023 | 2022 | |||||||||||||
Office leases | $ | $ | ||||||||||||
Equipment | ||||||||||||||
$ | $ | |||||||||||||
Office leases | $ | $ | ||||||||||||
Equipment | ||||||||||||||
Total lease liability | $ | $ |
2023 | 2022 | |||||||||||||
Operating lease cost | $ | $ | ||||||||||||
Short-term lease cost | ||||||||||||||
Variable lease cost | ||||||||||||||
Total lease cost | $ | $ |
December 31, | |||||||||||
2023 | 2022 | ||||||||||
Weighted-average lease term (years) | |||||||||||
Weighted-average discount rate | % | % |
2023 | 2022 | |||||||||||||
Cash paid for operating leases | ||||||||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities |
Amount | ||||||||
2024 | $ | |||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
Thereafter | ||||||||
Total future minimum lease payments | ||||||||
Less: imputed interest | ( | |||||||
Total lease liabilities | $ |
Balance at December 31, 2021 | $ | ||||
Purchase accounting adjustments | ( | ||||
Acquisition | |||||
Balance at December 31, 2022 | |||||
Purchase accounting adjustments | |||||
Acquisitions | |||||
Balance at December 31, 2023 | $ |
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Gross Intangibles | Accumulated Amortization | Net Intangibles | Gross Intangibles | Accumulated Amortization | Net Intangibles | |||||||||||||||||||||||||||||||||
Referral network | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Non-compete agreements | ||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ |
Amount | ||||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
$ |
2023 | 2022 | ||||||||||
Balance — beginning of year | $ | $ | |||||||||
Benefit from investor reserves | ( | ( | |||||||||
Provision for investor reserves | |||||||||||
Balance — end of year | $ | $ |
Maturity as of December 31, 2023 | 2023 | 2022 | |||||||||||||||
$ | January 2025 | $ | $ | ||||||||||||||
$ | August 2024 | ||||||||||||||||
$ | June 2024 | ||||||||||||||||
$ | May 2024 | ||||||||||||||||
$ | September 2024 | ||||||||||||||||
$ | September 2024 | ||||||||||||||||
$ | N/A | ||||||||||||||||
$ | N/A | ||||||||||||||||
$ | March 2025 | ||||||||||||||||
$ | N/A | ||||||||||||||||
Prepaid commitment fees | ( | ( | |||||||||||||||
Warehouse lines of credit, net | $ | $ |
2023 | 2022 | ||||||||||
Current tax (benefit) expense: | |||||||||||
Federal | $ | ( | $ | ( | |||||||
State | |||||||||||
$ | $ | ||||||||||
Deferred tax (benefit) expense: | |||||||||||
Federal | $ | ( | $ | ||||||||
State | |||||||||||
( | |||||||||||
Income tax (benefit) expense | $ | ( | $ |
2023 | 2022 | ||||||||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||||||||
Income tax (benefit) expense at federal statutory rate | $ | ( | % | $ | % | ||||||||||||||||||
State income taxes, net of federal tax benefit | ( | % | % | ||||||||||||||||||||
Contingent consideration | ( | ( | % | ||||||||||||||||||||
Nondeductible compensation | ( | % | ( | ( | % | ||||||||||||||||||
Permanent items | ( | % | ( | ( | % | ||||||||||||||||||
Federal and state tax credits, net of federal tax benefit | ( | % | ( | ( | % | ||||||||||||||||||
Other, net | ( | % | ( | % | |||||||||||||||||||
Total income tax (benefit) expense | $ | ( | % | $ | % |
2023 | 2022 | ||||||||||
Deferred tax assets: | |||||||||||
Investor reserves | $ | $ | |||||||||
Accrued compensation and benefits | |||||||||||
Derivatives, net | |||||||||||
Deferred compensation | |||||||||||
Lease liability | |||||||||||
Research and development credit carryforwards | |||||||||||
Net operating loss carryforwards | |||||||||||
Capitalized research and experimental expenditures | |||||||||||
Charitable contributions | |||||||||||
Total deferred tax assets | $ | $ | |||||||||
Deferred tax liabilities: | |||||||||||
Mortgage servicing rights | $ | ( | $ | ( | |||||||
Intangible assets | ( | ( | |||||||||
Trading securities | ( | ( | |||||||||
Other accrued liabilities | ( | ( | |||||||||
Right-of-use assets | ( | ( | |||||||||
Securitized reverse mortgage | ( | ||||||||||
Property and equipment | ( | ( | |||||||||
Total deferred tax liabilities | ( | ( | |||||||||
Net deferred tax liabilities | $ | ( | $ | ( |
2023 | 2022 | ||||||||||
Net (loss) income attributable to Guild | $ | ( | $ | ||||||||
Weighted-average shares outstanding, Class A Common Stock | |||||||||||
Weighted-average shares outstanding, Class B Common Stock | |||||||||||
Weighted-average shares outstanding - basic | |||||||||||
Add dilutive effects of unvested shares of restricted stock - Class A | |||||||||||
Weighted-average shares outstanding - diluted | |||||||||||
Basic (loss) earnings per share: | |||||||||||
Class A and Class B Common Stock | $ | ( | $ | ||||||||
Diluted (loss) earnings per share: | |||||||||||
Class A and Class B Common Stock | $ | ( | $ |
Weighted Average | |||||||||||
Number of Shares | Grant Date Fair Value | ||||||||||
Restricted stock units, unvested, December 31, 2022 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
Restricted stock units, unvested, December 31, 2023 | $ |
Origination | Servicing | Total Segments | All Other | Total | |||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Loan origination fees and gain on sale of loans, net | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||
Gain on reverse mortgage loans held for investment and HMBS-related borrowings, net | |||||||||||||||||||||||||||||
Loan servicing and other fees | |||||||||||||||||||||||||||||
Valuation adjustment of mortgage servicing rights | ( | ( | ( | ||||||||||||||||||||||||||
Interest income (expense) | ( | ||||||||||||||||||||||||||||
Other income, net | |||||||||||||||||||||||||||||
Net revenue | ( | ||||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||
Salaries, incentive compensation and benefits | |||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||
Occupancy, equipment and communication | |||||||||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||
Provision for foreclosure losses | |||||||||||||||||||||||||||||
Income tax benefit | ( | ( | |||||||||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | $ | ( | $ | ( |
Origination | Servicing | Total Segments | All Other | Total | |||||||||||||||||||||||||
Revenue | |||||||||||||||||||||||||||||
Loan origination fees and gain on sale of loans, net | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Loan servicing and other fees | |||||||||||||||||||||||||||||
Valuation adjustment of mortgage servicing rights | |||||||||||||||||||||||||||||
Interest income (expense) | ( | ||||||||||||||||||||||||||||
Other income, net | ( | ||||||||||||||||||||||||||||
Net revenue | ( | ||||||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||||||
Salaries, incentive compensation and benefits | |||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||
Occupancy, equipment and communication | |||||||||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||
Provision for foreclosure losses | |||||||||||||||||||||||||||||
Income tax expense | |||||||||||||||||||||||||||||
Net income (loss) | $ | $ | $ | $ | ( | $ |
Equity Compensation Plan Information | ||||||||||||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted- average exercise price of outstanding options, warrants and rights ($) (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||||||||||
Equity compensation plans approved by security holders | 1,787,604 | — | 4,546,549 | |||||||||||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
Total | 1,787,604 | — | 4,546,549 |
Exhibit | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
10.1 | ||||||||
10.2 | ||||||||
10.3† | ||||||||
10.4† | ||||||||
10.5† | ||||||||
10.6† | ||||||||
10.7† | ||||||||
10.8† | ||||||||
10.9† | ||||||||
10.10† | ||||||||
10.11† | ||||||||
10.12† | ||||||||
10.13† | ||||||||
21.1* | ||||||||
23.1* | ||||||||
31.1* |
Exhibit | Description | |||||||
31.2* | ||||||||
32.1** | ||||||||
97.1* | ||||||||
101 | The following financial information from Guild's Annual Report on Form 10-K for the year ended December 31, 2023 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Statements of Changes in Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to the Consolidated Financial Statements | |||||||
104 | Cover Page Interactive Data File - (formatted as Inline XBRL and contained in Exhibit 101) |
GUILD HOLDINGS COMPANY | ||||||||
Dated: March 14, 2024 | By: | /s/ Terry L. Schmidt | ||||||
Name: | Terry L. Schmidt | |||||||
Title: | Chief Executive Officer |
Signature | Title | Date | ||||||||||||
/s/ Terry L. Schmidt | Chief Executive Officer | March 14, 2024 | ||||||||||||
Terry L. Schmidt | (Principal Executive Officer) and Director | |||||||||||||
/s/ Desiree A. Kramer | Chief Financial Officer | March 14, 2024 | ||||||||||||
Desiree A. Kramer | (Principal Financial Officer and Principal Accounting Officer) | |||||||||||||
/s/ Patrick J. Duffy | Chairman of the Board of Directors | March 14, 2024 | ||||||||||||
Patrick J. Duffy | ||||||||||||||
/s/ Edward Bryant, Jr. | Director | March 14, 2024 | ||||||||||||
Edward Bryant, Jr. | ||||||||||||||
/s/ Martha E. Marcon | Director | March 14, 2024 | ||||||||||||
Martha E. Marcon | ||||||||||||||
/s/ Mary Ann McGarry | Director | March 14, 2024 | ||||||||||||
Mary Ann McGarry | ||||||||||||||
/s/ Gioia Messinger | Director | March 14, 2024 | ||||||||||||
Gioia Messinger | ||||||||||||||
/s/ Michael C. Meyer | Director | March 14, 2024 | ||||||||||||
Michael C. Meyer |
Date: March 14, 2024 | By: | /s/ Terry L. Schmidt | ||||||
Terry L. Schmidt Chief Executive Officer |
Date: March 14, 2024 | By: | /s/ Desiree A. Kramer | ||||||
Desiree A. Kramer Chief Financial Officer |
Date: March 14, 2024 | By: | /s/ Terry L. Schmidt | ||||||
Terry L. Schmidt Chief Executive Officer | ||||||||
Date: March 14, 2024 | By: | /s/ Desiree A. Kramer | ||||||
Desiree A. Kramer Chief Financial Officer |
2 |
3 |
4 |
Audit Information |
12 Months Ended |
---|---|
Dec. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Name | KPMG LLP |
Auditor Location | Los Angeles, California |
Auditor Firm ID | 185 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Preferred stock, par value per share | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares, issued | 0 | 0 |
Preferred stock, shares, outstanding | 0 | 0 |
Class A Common Stock | ||
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares, issued | 20,786,814 | 20,583,130 |
Common stock, shares, outstanding | 20,786,814 | 20,583,130 |
Class B Common Stock | ||
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares, issued | 40,333,019 | 40,333,019 |
Common stock, shares, outstanding | 40,333,019 | 40,333,019 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares |
12 Months Ended | |
---|---|---|
Sep. 07, 2023 |
Dec. 31, 2023 |
|
Statement of Stockholders' Equity [Abstract] | ||
Common stock dividends per share (in dollars per share) | $ 0.50 | $ 0.50 |
BUSINESS, BASIS OF PRESENTATION, AND ACCOUNTING POLICIES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS, BASIS OF PRESENTATION, AND ACCOUNTING POLICIES | BUSINESS, BASIS OF PRESENTATION, AND ACCOUNTING POLICIES Organization Guild Holdings Company, including its consolidated subsidiaries (collectively, “Guild” or the “Company”) was incorporated in Delaware on August 11, 2020 for the purpose of facilitating an initial public offering (“IPO”) of its Class A common stock and other related transactions in order to carry on the business of Guild Mortgage Company LLC (“GMC”) and its wholly owned subsidiaries. GMC was incorporated in California on August 10, 1960 and in October of 2020 was converted to a California limited liability company. On October 21, 2020 Guild completed its IPO. The Company originates, sells, and services residential mortgage loans. The Company operates approximately 350 branches with licenses in 49 states and the District of Columbia. The Company’s residential mortgage originations are generated in 49 states from two channels of business: retail and correspondent. For the year ended December 31, 2023 the channel production was as follows: retail 95.0% and correspondent 5.0%. For the year ended December 31, 2022, the channel production was as follows: retail 96.0% and correspondent 4.0%. The Company is certified with the United States Department of Housing and Urban Development (“HUD”) and the Department of Veterans Affairs (“VA”) and operates as a Federal Housing Administration (“FHA”) non-supervised lender. In addition, the Company is an approved issuer with the Government National Mortgage Association (“GNMA” or “Ginnie Mae”), as well as an approved seller and servicer with the Federal National Mortgage Association (“FNMA” or “Fannie Mae”, the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”) and the United States Department of Agriculture Rural Development (“USDA”). Properties securing the mortgage loans in the Company’s servicing portfolio are geographically dispersed throughout the United States; however, at December 31, 2023, approximately 12.4% of such properties were located in California, 10.1% were located in Texas, and 9.9% were located in Washington. At December 31, 2022, approximately 13.0% of such properties were located in California, 10.3% were located in Washington, and 10.2% were located in Texas. Loan production in Texas, California, and Washington represented 9.7%, 8.9%, and 8.7%, respectively, of the Company’s total loan production in 2023. For the year ended December 31, 2022, California, Washington and Texas represented 10.8%, 10.5%, and 8.8%, respectively, of the Company’s total loan production. Principles of Consolidation The Company's consolidated financial statements include the accounts of the Company, GMC, and their consolidated subsidiaries, variable interest entities (“VIE”) of which the Company is the primary beneficiary, and joint ventures in which the Company has a majority voting interest and control. The Company evaluates its relationships and investments to determine if it is the primary beneficiary of a VIE. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. In determining whether the Company is the primary beneficiary of a VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Company's investment; the obligation or likelihood for the Company or other investors to provide financial support; and the similarity with and significance to the Company's business activities and the business activities of the other investors. The carrying amount of the consolidated VIEs' and consolidated joint ventures' assets and liabilities were immaterial as of December 31, 2023 and 2022. All intercompany accounts and transactions have been eliminated in consolidation. Investments in Unconsolidated Joint Ventures The Company has investments in unconsolidated joint ventures involved in the mortgage lending business, which are included in other assets in the Consolidated Balance Sheets. The Company's investments in these unconsolidated joint ventures are accounted for under the equity method of accounting as the Company does not have a majority voting interest, operational control or financial control. As a result, the Company does not recognize the assets and liabilities of these unconsolidated joint ventures in its financial statements. The Company's share of the net earnings or losses of the investee are included in other income, net in the Consolidated Statements of Operations. The Company classifies distributions received from its unconsolidated joint ventures using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although management is not currently aware of any factors that would significantly change its estimates and assumptions, actual results could materially differ from those estimates. The following accounting policies, together with those disclosed elsewhere in the consolidated financial statements, represent the significant accounting policies of the Company. Cash, Cash Equivalents and Restricted Cash For cash flow purposes, the Company considers cash and temporary investments with original maturities of three months or less, to be cash and cash equivalents. The Company typically maintains cash in financial institutions in excess of Federal Deposit Insurance Corporation limits. The Company evaluates the creditworthiness of these financial institutions in determining the risk associated with these cash balances. The Company maintains cash balances that are restricted under the terms of its warehouse lines of credit. The following table summarizes the Company’s cash, cash equivalents and restricted cash at December 31, 2023 and 2022:
Mortgage Loans Held for Sale The Company measures newly originated prime residential mortgage loans held for sale (“MLHS”) at fair value in accordance with ASC 825, Financial Instruments. Included in MLHS are loans originated as held for sale that are expected to be sold into the secondary market and loans that have been previously sold and repurchased from investors that management intends to resell into the secondary market, which are recorded at fair value. The Company estimates fair value by evaluating a variety of market indicators, including recent trades and outstanding commitments, calculated on an individual loan basis and aggregated (see “Note 2—Fair Value Measurements”). Changes in the fair value of mortgage loans are recognized in current period income and are included in loan origination fees and gain on sale of loans, net. Fair value for mortgage loans covered by investor commitments is based on commitment prices. Fair value for uncommitted loans is based on current delivery prices. In accordance with ASC 825-10, the Company immediately recognizes loan origination fees, net of direct loan origination costs associated with these loans. Loans are considered sold when the Company surrenders control over the financial assets. Control is considered to have been surrendered when the transferred assets have been isolated from the Company, beyond the reach of the Company and its creditors; the purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through an agreement that both entitles and obligates the Company to repurchase or redeem the transferred assets before their maturity. The Company typically considers the above criteria to have been met upon acceptance and receipt of sales proceeds from the purchaser. Reverse Mortgage Loans Held for Investment and HMBS-Related Borrowings, Net In April 2023, the Company acquired certain assets of Cherry Creek Mortgage, LLC ("CCM") (see “Note 3 —Acquisitions), which expanded its range of services by offering reverse mortgages to its customers. Reverse mortgage loans are residential mortgage loans for which neither principal nor interest is due until the borrower dies, the home is sold, or other trigger events occur. Reverse mortgage loans can have either fixed interest rates or adjustable interest rates. In the case of most fixed-rate reverse mortgage loans, the borrower must draw the loan proceeds up front in one lump sum, while many adjustable-rate mortgage loans provide the borrower with a line of credit that can be drawn over time. The Company has elected to measure these loans at fair value, on a recurring basis, with changes in fair value recorded as a charge or credit to gain on reverse mortgage loans held for investment and HMBS-related borrowings, net in the Consolidated Statements of Operations. The Company securitizes home equity conversion mortgages (“HECM”) into HMBS, which Ginnie Mae guarantees, and sells them in the secondary market while retaining the rights to service. The Company has determined that HECM loans transferred under the current Ginnie Mae HMBS securitization program do not meet the requirements for sale accounting under ASC 860, Transfers and Servicing, and are therefore not derecognized upon date of transfer. The Ginnie Mae HMBS securitization program includes certain terms that do not meet the participating interest requirements and require or provide an option for the Company to reacquire the loans prior to maturity. Due to these terms, the transfer of the loans does not meet the requirements of sale accounting. As a result, the Company accounts for HECM loans transferred into HMBS securitizations as secured borrowings and continues to recognize the loans as held for investment, along with the corresponding liability for the HMBS related obligations. As an issuer of HMBS, the Company is required to repurchase reverse loans out of the Ginnie Mae securitization pools once the outstanding principal balance of the related HECM is equal to or greater than 98% of the maximum claim amount (“MCA”) (referred to as unpoolable loans). Performing repurchased loans are conveyed to the HUD and payment is received from HUD typically within 75 days of repurchase. Nonperforming repurchased loans are generally liquidated through foreclosure, subsequent sale of the real estate owned (“REO”) and claim submissions to HUD. Gain on Reverse Mortgage Loans Held for Investment and HMBS-Related Borrowings, Net The Company has elected to measure the HECM loans held for investment and HMBS-related borrowings at fair value on a recurring basis. The fair value gains and losses of the HECM loans and HMBS-related borrowings and the gains and losses on tail securitization are included in gain on reverse mortgage loans held for investment and HMBS-related borrowings, net in the Consolidated Statements of Operations. Tail securitizations are participations in previously securitized HECMs and are created by additions to principal for borrower draws on lines-of-credit (scheduled and unscheduled), interest, servicing fees, and mortgage insurance premiums. In addition, gain on reverse mortgage loans held for investment and HMBS-related borrowings, net includes interest income on the securitized HECM loans, interest expense on the HMBS-related borrowings, together with the realized cash gains or losses on tail securitization and the fair value changes related to new reverse mortgage loans through the securitization date. The reverse mortgage loan production activity is included in the Company's origination segment. Ginnie Mae Loans Subject to Repurchase Right In accordance with ASC 860-50, certain loans, as defined by the servicer guidelines, serviced by the Company on behalf of GNMA are recognized as an asset, and carried at the unpaid principal balance (“UPB”) of the loans. The Company has a right to repurchase any loans serviced on behalf of GNMA that are three or more consecutive payments delinquent (“GNMA Loan Inventory”). The Company recognizes a corresponding liability (“GNMA Loan Payable”) which is recorded at the unpaid principal balance, for loans in which the Company has not exercised the right to repurchase the loans. If the loan goes through foreclosure and is an FHA loan, HUD acts as the insurer for GNMA and reimburses the servicer for the UPB plus allowable interest and foreclosure fees. The Company reserves for unreimbursed interest and fees as part of the general foreclosure reserve. If the loan goes through foreclosure and is a VA loan, the VA acts as the insurer and reimburses the Company based on the net value of the underlying property. At the amount determined by the VA, the Company accounts for any loss on VA loans in its foreclosure loss reserve to a certain threshold with any excess charged to its investor reserves. If a foreclosure sale has been held on an FHA loan, the deed is transferred to the Company and the loan becomes a GNMA REO. These are foreclosed real estate properties securing GNMA loans. Both principal and interest for government insured/guaranteed loans secured by the foreclosed real estate properties are collectible because the loans are insured by the FHA or guaranteed by the VA. The GNMA Loan Inventory and real estate owned is equal, and offsetting, to the GNMA Loan Payable. Mortgage Servicing Rights Mortgage servicing rights (“MSRs”) are recognized as assets in the Consolidated Balance Sheet when loans are sold, and the associated servicing rights are retained. The Company maintains one class of MSR asset and has elected the fair value option. To determine the fair value of the servicing right when created, the Company uses a valuation model that calculates the present value of future cash flows. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, including estimates of contractual service fees, ancillary income and late fees, the cost of servicing, the discount rate, float value, the inflation rate, estimated prepayment speeds, and default rates. Derivative Instruments The Company enters into interest rate lock commitments (“IRLCs”) and forward commitments to sell mortgage loans and to be announced mortgage-backed securities which are considered derivative financial instruments. These items are accounted for as free-standing derivatives and are included in the Consolidated Balance Sheets at fair value. The Company treats all of its derivative instruments as economic hedges; therefore, none of its derivative instruments qualify for designation as accounting hedges. The Company enters into IRLCs to originate residential mortgage loans at specified interest rates and within a specified period of time, with customers who have applied for a loan and meet certain credit and underwriting criteria. IRLCs on mortgage loans in process that have not closed, but are intended to be sold, are considered to be derivatives and changes in fair value are recorded in the Consolidated Statements of Operations as part of loan origination fees and gain on sale of loans, net. Fair value is based upon changes in the fair value of the underlying mortgages, estimated to be realizable upon sale into the secondary market, net of estimated incentive compensation expenses. Fair value estimates also consider loan commitments not expected to be exercised by customers for unforeseen reasons, commonly referred to as fallout. IRLCs and uncommitted MLHS expose the Company to the risk that the value of the mortgage loans held and mortgage loans underlying the commitments may decline due to increases in mortgage interest rates during the life of the commitments. To protect against this risk the Company enters into derivative instruments such as forward loan sales commitments, mandatory delivery commitments, options and futures contracts. Management expects the changes in the fair value of these derivatives to have a negative correlation to the changes in fair value of the derivative loan commitments and MLHS, thereby reducing earnings volatility. The changes in fair value are recorded in the Consolidated Statements of Operations as part of loan origination fees and gain on sale of loans, net. The Company considers various factors and strategies in determining the portion of the mortgage pipeline and loans held for sale it wants to economically hedge. The Company has elected to net derivative asset and liability positions, including cash collateral received from or paid to its counterparties when amounts are subject to legally enforceable master netting arrangements. IRLCs are not subject to master netting arrangements. Forward commitments include to be announced mortgage-backed securities that have been aggregated at the counterparty level for presentation and disclosure purposes. Counterparty agreements contain a legal right to offset amounts due to and from the same counterparty under legally enforceable master netting agreements to settle with the same counterparty, on a net basis, as well as the right to obtain cash collateral. Forward commitments also include commitments to sell loans to counterparties and to purchase loans from counterparties at determined prices. See “Note 2—Fair Value Measurements” and “Note 6—Derivative Financial Instruments” for additional information. Property and Equipment, Net Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset, usually three years. Leasehold improvements are amortized using the straight-line method over the shorter of the term of the related lease or the estimated useful life. The Company recognizes internal-use software within property and equipment which consists of both internal and external costs incurred in the development, testing and implementation directly related to the new software. The internal-use software is amortized over a three-year period and begins amortization upon the “go-live” date of the software. The Company determines the “go-live” date as the date in which the software is readily available to be used companywide. Acquisitions When making an acquisition, the Company recognizes separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values under ASC 805, Business Combinations. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the assets acquired and the liabilities assumed. The Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and actual results may differ from expectations. The Company may record measurement period adjustments during the measurement period (one year from the acquisition date) that result from obtaining additional information about the facts and circumstances that existed as of the acquisition date. If this additional information had been known, it would have affected the accounting for the business combination as of the acquisition date. Accounting for business combinations requires the Company’s management to make estimates and assumptions, especially at the acquisition date with respect to MSRs and contingent considerations. Although the Company believes the assumptions and estimates it has made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Intangible Assets, Net Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives in a manner that best reflects their economic benefit. All intangible assets are reviewed for impairment when events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Goodwill Goodwill is recorded at fair value and is tested for potential impairment at least annually. The Company performs its annual goodwill impairment analysis as of October 1 or more frequently if events and circumstances indicate that the carrying value may not be recoverable. The Company’s goodwill is allocated by reporting unit and is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. Qualitative factors include, among other things, macroeconomic conditions, industry and market considerations, financial performance of the respective reporting unit and other relevant entity and reporting-unit specific considerations. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than the carrying amount, or if significant adverse changes in the Company's future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. A quantitative assessment for impairment requires the Company to use significant judgment and estimates, including, but not limited to, estimates of future cash flows, revenue growth rates, operating margins, and a discount rate. Such estimates are based upon assumptions which are inherently uncertain and unpredictable. The fair value of goodwill is determined by assigning the fair value of the reporting unit to all the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination. If the fair value is less than the carrying value, the amount of impairment expense is equal to the difference between the reporting unit’s fair value and the reporting unit’s carrying value. See “Note 11—Goodwill and Intangibles” for additional information. Contingent Liabilities due to Acquisitions The Company may be required to pay future consideration to the former shareholders of acquired companies, depending upon the terms of the applicable purchase agreement, which is contingent upon the achievement of certain financial and operating targets. The Company determines the fair value for its contingent consideration obligations using an income approach whereby the Company forecasts the cash outflows related to the earn-outs, which are based on a percentage of net income specified in the purchase agreements. The Company then discounts these expected payment amounts to calculate the fair value as of the valuation date. The Company’s management evaluates the underlying projections used in determining fair value each period and makes updates to these underlying projections when there have been significant changes in management’s expectations of the future business performance. The principal significant unobservable input used in the valuations of the Company’s contingent consideration obligations is a risk-adjusted discount rate. Whereas management’s underlying projections adjust for market penetration and other economic expectations, the discount rate is risk-adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), upfront payments, and credit risk. An increase in the discount rate will result in a decrease in the fair value of contingent consideration. Conversely, a decrease in the discount rate will result in an increase in the fair value of contingent consideration. At each reporting date, or whenever there are significant changes in underlying key assumptions, a review of these assumptions is performed and the contingent consideration liability is updated to its estimated fair value. If there are no significant changes in the assumptions, the quarterly determination of the fair value of contingent consideration reflects the implied interest for the passage of time. Changes in the estimated fair value of the contingent consideration obligations may result from changes in the terms of the contingent payments, changes in discount periods and rates and changes in probability assumptions with respect to the timing and likelihood of achieving the certain financial targets. Actual progress toward achieving the financial targets for the remaining measurement periods may be different than the Company’s expectations of future performance. The change in the estimated fair value of contingent consideration is included in general and administrative expense in the Consolidated Statements of Operations. Leases The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The Company also considers whether its service arrangements include the right to control the use of an asset. If an arrangement is determined to be a lease, the Company recognizes a right-of-use (“ROU”) asset and a corresponding operating lease liability in its Consolidated Balance Sheet based on the present value of lease payments over the expected lease term, except leases with initial terms of 12 months or less. Lease payments may include fixed rent escalation clauses or payments that depend on an index or a rate (such as the consumer price index) measured using the index or applicable rate at lease commencement. Subsequent changes in the index or rate and any other variable payments, such as market-rate base rent adjustments, are recognized as variable lease expense in the period incurred. To determine the present value of lease payments, the Company uses its incremental borrowing rate, as the leases generally do not have a readily determinable implicit discount rate. The Company applies judgement in assessing factors such as Company-specific credit risk, lease term, nature and quality of the underlying collateral and the economic environment in determining the lease-specific incremental borrowing rate. The ROU assets are also adjusted for any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by lease incentives. The Company’s leases generally include a non-lease component representing additional services transferred to the Company, such as common area maintenance for real estate. The Company accounts for lease and non-lease components in its contracts as a single lease component for all asset classes. The non-lease components are usually variable in nature and recorded in variable lease expense in the period incurred. The Company recognizes lease expense on a straight-line basis excluding short-term and variable lease payments which are recognized as incurred. Short-term lease cost represents payments for leases with a lease term of 12 months or less, excluding leases with a term of one month or less. Real Estate Owned There are two types of REO properties held by the Company. The first is considered a traditional REO where the Company owns, markets, and sells the property. At the time of foreclosure, other real estate owned is recorded at the asset’s fair value less selling costs, which becomes the property’s new basis. After foreclosure, these assets are carried at the lower of their new cost basis or fair value less selling costs. Costs incurred in maintaining foreclosed real estate and subsequent write-downs to reflect declines in the fair value of the property are expensed as incurred. At December 31, 2023 and 2022, the Company had $1.5 million and $0.3 million of traditional REOs, respectively. The second type is foreclosed real estate securing GNMA loans in process of conveyance to HUD but insured by the FHA, where the Company is the controller of the deed for a period of time. For GNMA loans, the property becomes REO if not sold to a third party at its foreclosure sale. Both principal and debenture rate interest for government insured loans secured by the foreclosed real estate are collectible because the loans are insured by the FHA. This is valued at the UPB of the loan, which is considered to be fair value, as HUD reimburses the Company for the UPB plus debenture rate interest and fees. The Company reserves for unreimbursed interest in excess of the debenture rate and fees as part of the foreclosure loss reserve. The total REO property that will be conveyed to HUD was valued at $0.5 million at December 31, 2023 and the Company held no such REO property at December 31, 2022. Revenue Recognition Loan origination fees and gain on sale of loans, net — loan origination fees and gain on sale of loans, net includes all components related to the origination and sale of mortgage loans, including (1) net gain on sale of loans, which represents the premium the Company receives in excess of the loan principal amount and certain fees charged by investors upon sale of loans into the secondary market, (2) loan origination fees (credits), points and certain costs, (3) provision for or benefit from investor reserves, (4) the change in fair value of interest rate locks and MLHS, (5) the gain or loss on forward commitments hedging loans held for sale and IRLCs, and (6) the fair value of originated MSRs. An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of a pull-through factor. Subsequent changes in the fair value of IRLCs and MLHS are recognized in current period earnings. When the mortgage loan is sold into the secondary market, any difference between the proceeds received and the current fair value of the loan is recognized in current period earnings. Included in gain on sale of loans, net is the fair value of originated MSRs, which represents the estimated fair value of MSRs related to loans which the Company has sold and retained the right to service. See sections “—Mortgage Loans Held for Sale”, “—Mortgage Servicing Rights,” and “—Derivative Instruments” under “Note 1—Business, Basis of Presentation, and Accounting Policies,” for more information related to fair value measurements of MLHS, the gain/(loss) on changes in the fair value of MSRs and the gain/(loss) on changes in the fair value of IRLCs, respectively. At December 31, 2023 and 2022, loan origination fees and gain on sale of loans were net of direct expenses of $112.7 million and $138.3 million, respectively. Gain on reverse mortgage loans held for investment and HMBS-related borrowings, net — This represents certain cash and non-cash components recognized related to our reverse mortgage loans held for investment including the net fair value changes of securitized reverse mortgage loans and HMBS-related borrowings, fair value changes of unsecuritized reverse loans, and realized gains or losses on tail securitization. In addition, this includes interest income on the reverse mortgage loans held for investment and the interest expense on the HMBS-related borrowings. Loan servicing and other fees — Loan servicing fees represent fees earned for servicing loans for various investors. The servicing fees are based on a contractual percentage of the outstanding principal balance and recognized into revenue as the related mortgage payments are received. Loan servicing expenses are charged to operations as incurred. Valuation adjustment of mortgage servicing rights — In accordance with Accounting Standards Codification (“ASC”) 860-50, Transfers and Servicing — Servicing Assets and Liabilities (“ASC 860-50”), the Company records MSRs as an asset, at fair value. The change in fair value is recorded within the Consolidated Statements of Operations on a monthly basis. See “Note 1—Business, Basis of Presentation, and Accounting Policies—Mortgage Servicing Rights,” for information related to the gain/(loss) on changes in the fair value of MSRs. Interest income — interest income includes interest earned on MLHS and interest income earnings credit. Interest expense — interest expense includes interest paid to the Company’s loan funding facilities and MSR facilities. Investor Reserves In the ordinary course of business, the Company has exposure to liabilities with respect to certain representations and warranties that we make to the investors who purchase the loans that we originate that under certain circumstances could require the Company to repurchase forward mortgage loans, or indemnify the purchaser of such loans for losses incurred, if there has been a breach of these representations and warranties, or in the case of early payment defaults. The estimation of the liability for probable losses related to the repurchase and indemnification obligation considers an estimate of probable future repurchase or indemnification obligations from breaches of representations and warranties. The liability related to specific non-performing loans is based on a loan-level analysis considering the current collateral value, estimated sales proceeds and selling costs. The liability related to probable future repurchase or indemnification obligations is segregated by year of origination and considers the amount of unresolved repurchase and indemnification requests, as well as an estimate of future repurchase demands. Future repurchase demands are estimated based upon recent and historical repurchase and indemnification experience, as well as the success rate in appealing repurchase requests and an estimated loss severity, based on current loss rates for similar loans. The Company also has exposure to early payment defaults (“EPD”) and/or early payoff fees (“EPO”). When the Company sells a loan to an investor and the loan either pays off or goes into default within a certain timeframe, the Company could be exposed to EPD and/or EPO fees in accordance with each investor’s contract. In addition, in the event of an early payment default, we are contractually obligated to refund certain premiums paid to us by the investors who purchased the related loan. The Company reserves for these fees by estimating early payment defaults and payoff fees based on prior loan activity and current loan origination volume. Foreclosure Loss Reserve and Provision for Foreclosure Losses The Company has exposure for losses associated with government loans in foreclosure related to nonrefundable interest and foreclosure servicing costs. The Company maintains a reserve for government loans currently in foreclosure based on historical loss experience. The Company also accrues for any additional known losses above the current loss per loan; for example, losses due to servicer delays. Advertising Advertising is expensed as incurred and amounted to $10.6 million and $11.4 million for the years ended December 31, 2023 and 2022, respectively, and is included within general and administrative expenses in the Consolidated Statements of Operations. Stock-Based Compensation Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The fair value of restricted stock units (“RSUs”) is based on the value of the Company’s common stock on the date of grant. The Company accounts for forfeitures as they occur and reverses previously recognized expense for the unvested portion of the forfeited shares. Stock-based compensation is included in salaries, incentive compensation and benefits in the Consolidated Statements of Operations. See “Note 17—Stock-based Compensation and Employee Benefit Plans” for additional information. Earnings or Loss Per Share The Company determines earnings or loss per share in accordance with the authoritative guidance in ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing the net income or loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period using the two-class method. Diluted earnings or loss per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to assume the issuance of potentially dilutive shares using the treasury stock method, unless the effect of such increase would be anti-dilutive. Under the treasury stock method, the average amount of compensation cost for future service that the Company has not yet recognized is assumed to be used to repurchase shares. Common Stock Dividends Dividends are recorded if and when declared by the board of directors. The ability to declare dividends may be limited by restrictive covenants in connection with the Company’s indebtedness. Dividends are accrued as a liability on the Consolidated Balance Sheets when declared and recorded as a decrease to retained earnings when paid. Unvested RSUs under the 2020 Omnibus Incentive Plan (the “2020 Plan”) have rights to dividends, which entitle holders to the same dividend value per share as holders of shares of Class A common stock in the form of dividend equivalent units (“DEUs”). DEUs will be credited as additional RSUs on the dividend payment date and will vest on the same date as the underlying RSUs and are forfeited if the underlying RSUs forfeit prior to vesting. The number of additional RSUs credited will equal (1) the per share cash dividend amount, multiplied by (2) the number of RSUs, divided by (3) the fair market value of a share of Class A common stock on the last trading day before the date of the dividend payment, rounded up to the nearest whole number of RSUs. The Company declared and paid a dividend of $0.50 per share on its Class A and Class B common stock during 2023 totaling $30.5 million and paid no such dividend in 2022. In conjunction with the payment of Guild's dividend in 2023, Guild issued 95,413 DEUs to holders of RSUs. Since the DEUs are forfeitable, the value of the DEUs was recorded as a reduction to retained earnings and a credit to additional paid-in capital in the Consolidated Balance Sheets. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more-likely than-not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and records penalties as a component of income taxes. Escrow and Fiduciary Funds As a loan servicer, the Company maintains segregated bank accounts in trust for investors and escrow balances for mortgagors, which are excluded from the Company’s Consolidated Balance Sheets. These accounts totaled $646.5 million and $580.2 million at December 31, 2023 and 2022, respectively. Risks and Uncertainties In the normal course of business, companies in the mortgage banking industry encounter certain economic, liquidity, and regulatory risks. Economic risk includes interest rate risk and credit risk. Interest rate risk The Company’s MLHS, commitments to originate loans, and MSRs are subject to interest rate risk. For MLHS and commitments to originate loans, to the extent that a rising interest rate environment exists, the Company may experience a decrease in loan production and decreases in value, which may negatively impact the Company’s operations. To mitigate this risk, the Company uses hedging strategies designed to ensure any fluctuations in rates would not have a material impact on the Company’s financial position. For the Company’s MSRs, the fair value generally decreases in periods where interest rates are declining and as prepayments speeds are increasing. The fair value generally increases in periods where interest rates are increasing and as prepayments speeds are decreasing. For the years ended December 31, 2023 and 2022, the Company experienced an increase and a decrease, respectively, in the valuation of its MSR portfolio. Since the Company also has a large origination platform the Company believes it was able to mitigate this risk by recapturing a significant portion of the runoff through refinances. Credit risk Credit risk is the risk of default that may result from borrowers’ inability or unwillingness to make contractually required payments during the period in which loans are being held for sale. The Company considers credit risk associated with these loans to be insignificant as it holds the loans for a short period of time, typically less than a month, and historically the Company has not experienced any material losses due to credit risk on loans held for sale. The Company sells loans to investors without recourse. As such, the investors have assumed the risk of loss or default by the borrower. However, the Company is usually required by these investors to make certain standard representations and warranties relating to credit information, loan documentation and collateral. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase the loans or indemnify these investors for any losses from borrower defaults, defects in the collateral or errors made in the credit decision. The Company is also subject to counterparty credit risk in the event of contractual nonperformance by its trading counterparties to its various over-the-counter derivative financial instruments. The Company manages this credit risk by selecting only counterparties that it believes to be financially strong, spreading the credit risk among many such counterparties, placing contractual limits on the amount of unsecured credit extended to any single counterparty, and entering into netting agreements with the counterparties as appropriate. The master netting agreements contain a legal right to offset amounts due to and from the same counterparty. Derivative assets in the Consolidated Balance Sheets represent derivative contracts in a gain position net of loss positions with the same counterparty and, therefore, also represent the Company’s maximum counterparty credit risk. The Company incurred no credit losses due to nonperformance of any of its counterparties during the years ended December 31, 2023 and 2022. Liquidity risk The Company encounters liquidity risk as the business requires substantial cash to support its operating activities. As a result, the Company is dependent on its lines of credit, and other financing facilities in order to finance its continued operations. If the Company’s principal lenders decided to terminate or not to renew these credit facilities with the Company, the loss of borrowing capacity could have an adverse impact on the Company’s financial statements unless the Company found a suitable alternative source. To mitigate this risk, the Company has multiple financing facilities with different lenders and varied maturity dates. Historically, the Company has not had a line of credit involuntarily terminated by a lender. The Company assesses market conditions and closely monitors and projects cash flows over multiple time periods to anticipate and mitigate liquidity risk. Regulatory risk The Company is subject to extensive and comprehensive regulation under federal, state and local laws in the United States. These laws and regulations significantly affect the way in which the Company does business and can restrict the scope of the Company’s existing business and limit the Company’s ability to expand product offerings or pursue acquisitions, or can make costs to service or originate loans higher, which could impact financial results. The Company continually monitors its regulatory environment for any changes that could have a significant impact on operations. Recent Accounting Standards In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. For public business entities the update will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the disclosure requirements related to the new standard. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) (“ASU 2023-07”). ASU 2023-07 requires disclosure, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. ASU 2023-07 requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. The Company is currently evaluating the disclosure requirements related to the new standard. In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). ASU 2023-05 applies to the formation of a “joint venture” or a “corporate joint venture” and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance does not impact accounting by the venturers. The new guidance is applicable to joint venture entities with a formation date on or after January 1, 2025 on a prospective basis and early adoption is permitted. The Company is currently evaluating the impact of adoption of the new guidance on its financial statements. Adopted Accounting Standards In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. ASU 2020-04 generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies that the practical expedients in ASU 2020-04 apply to derivatives impacted by changes in the interest rate used for margining, discounting, or contract price alignment. The guidance in ASU 2020-04 is optional and may be elected over time, through December 31, 2022, as reference rate reform activities occur. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, to extend the temporary accounting rules from December 31, 2022 to December 31, 2024. Once ASU 2020-04 is elected, the guidance must be applied prospectively for all eligible contract modifications. For contracts to which ASC 470, Debt applies, the Company has applied the optional expedients available from ASU 2020-04 and accounted for the contract modifications related to reference rate reform prospectively. The Company transitioned its funding facilities and financing facilities that utilized LIBOR as the reference rate to alternative reference rates prior to the LIBOR cessation date of June 30, 2023 and there was no material impact on the Company's consolidated financial statements.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are prioritized within a three-level fair value hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The categorization of assets and liabilities measured at fair value within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three levels of inputs used to measure fair value are as follows: •Level One - Level One inputs are unadjusted, quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. •Level Two - Level Two inputs are observable for that asset or liability, either directly or indirectly, and include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, observable inputs for the asset or liability other than quoted prices and inputs derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified contractual term, the inputs must be observable for substantially the full term of the asset or liability. •Level Three - Level Three inputs are unobservable inputs for the asset or liability that reflect the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, and are developed based on the best information available. The Company updates the valuation of each instrument recorded at fair value on a monthly or quarterly basis, evaluating all available observable information, which may include current market prices or bids, recent trade activity, changes in the levels of market activity and benchmarking of industry data. The assessment also includes consideration of identifying the valuation approach that would be used currently by market participants. If it is determined that a change in valuation technique or its application is appropriate, or if there are other changes in availability of observable data or market activity, the current methodology will be analyzed to determine if a transfer between levels of the valuation hierarchy is appropriate. Such reclassifications are reported as transfers into or out of a level as of the beginning of the quarter that the change occurs. Fair value is based on quoted market prices, when available. If quoted prices are not available, fair value is estimated based upon other observable inputs. Unobservable inputs are used when observable inputs are not available and are based upon judgments and assumptions, which are the Company’s assessment of the assumptions market participants would use in pricing the asset or liability. These inputs may include assumptions about risk, counterparty credit quality, the Company’s creditworthiness and liquidity and are developed based on the best information available. When a determination is made to classify an asset or liability within Level Three of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement of the asset or liability. The fair value of assets and liabilities classified within Level Three of the valuation hierarchy also typically includes observable factors and the realized or unrealized gain or loss recorded from the valuation of these instruments would also include amounts determined by observable factors. Recurring Fair Value Measurements The Company’s fair value measurements are evaluated within the fair value hierarchy, based on the nature of the inputs used to determine the fair value at the measurement date. At December 31, 2023 and 2022, the Company had the following assets and liabilities that are measured at fair value on a recurring basis: Trading Securities — Trading securities are classified within Level One of the valuation hierarchy. Valuation is based upon quoted prices for identical instruments traded in active markets. Level One trading securities include securities traded on active exchange markets, such as the New York Stock Exchange. Trading securities are included within other assets in the Consolidated Balance Sheets. Notes Receivable — Notes receivable are classified within Level Three of the valuation hierarchy as the Company's valuation includes significant unobservable inputs, including consideration of estimates of future earn-out payments, discount rates and expectations about settlement. Derivative Instruments — Derivative instruments are classified within Level Two and Level Three of the valuation hierarchy, and include the following: Interest Rate Lock Commitments — IRLCs are classified within Level Three of the valuation hierarchy. IRLCs represent an agreement to extend credit to a mortgage loan applicant, or an agreement to purchase a loan from a third-party originator, whereby the interest rate on the loan is set (or “locked”) prior to funding. The fair value of IRLCs recorded at lock inception is based upon the estimated fair value of the underlying mortgage loan, including the expected net future cash flows related to servicing the mortgage loan, net of estimated incentive compensation expenses, and adjusted for: (i) estimated costs to complete and originate the loan and (ii) an adjustment to reflect the estimated percentage of IRLCs that will result in a closed mortgage loan under the original terms of the agreement (pull-through rate). The pull-through rate is considered a significant unobservable input and is estimated based on changes in pricing and actual borrower behavior using a historical analysis of loan closing and fallout data. The average pull-through rate used to calculate the fair value of IRLCs as of December 31, 2023 and 2022, was 86.5% and 93.4%, respectively. On a quarterly basis, actual loan pull-through rates are compared to the modeled estimates to confirm the assumptions are reflective of current trends. Generally, a change in interest rates is accompanied by a directionally opposite change in the assumption used for the pull-through percentage, and the impact to fair value of a change in pull-through would be partially offset by the related change in price. Forward Delivery Commitments — Forward delivery commitments are classified within Level Two of the valuation hierarchy. Forward delivery commitments fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market. The fair value of forward delivery commitments is primarily based upon the current agency mortgage-backed security market to-be-announced pricing specific to the loan program, delivery coupon and delivery date of the trade. Best efforts sales commitments are also entered into for certain loans at the time the borrower commitment is made. These best-efforts sales commitments are valued using the committed price to the counterparty against the current market price of the IRLC or mortgage loan held for sale. Option contracts are a type of forward commitment that represents the rights to buy or sell mortgage-backed securities at specified prices in the future. Their value is based upon the underlying current to-be-announced pricing of the agency mortgage-backed security market, and market-based volatility. The Company regularly reviews its critical estimates and assumptions used in the valuation of our IRLCs and forward delivery commitments. See “Note 6—Derivative Financial Instruments” for additional information on derivative instruments. Mortgage Loans Held for Sale — MLHS are carried at fair value. The fair value of MLHS is based on secondary market pricing for loans with similar characteristics, and as such, is classified as a Level Two measurement. Fair value is estimated through a market approach by using either: (i) the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to servicing rights and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted for credit risk and other individual loan characteristics. The agency mortgage-backed security market is a highly liquid and active secondary market for conforming conventional loans whereby quoted prices exist for securities at the pass-through level and are published on a regular basis. The Company has the ability to access this market and it is the market into which conforming mortgage loans are typically sold. We regularly review our critical estimates and assumptions used in the valuation of our MLHS. Reverse Mortgage Loans Held for Investment — Reverse mortgage loans held for investment are carried at fair value and classified within Level Three of the valuation hierarchy. Fair value is estimated using a present value methodology that discounts estimated projected cash flows over the life of the loan using unobservable inputs which include conditional prepayment rates and discount rates. The conditional prepayment rate assumption is inclusive of voluntary (repayment or payoff) and involuntary (inactive/delinquent status and default) prepayments. The discount rate assumption used is primarily based on an assessment of current market yields on reverse mortgage loan and tail securitizations, expected duration of the asset and current market interest rates. The Company engages a third-party valuation expert to assist in estimating the fair value. See “Note 9—Reverse Mortgage Loans Held for Investment and HMBS-related Borrowings” for additional information on the Company's reverse mortgage loans held for investment. Mortgage Servicing Rights — MSRs are classified within Level Three of the valuation hierarchy due to the use of significant unobservable inputs and the lack of an active market for such assets. The fair value of MSRs is estimated based upon projections of expected future cash flows considering prepayment estimates, the Company’s historical prepayment rates, portfolio characteristics, interest rates based on interest rate yield curves, implied volatility, costs to service and other economic factors. The Company obtains valuations from an independent third party on a monthly basis, and records an adjustment based on this third-party valuation. See “Note 7—Mortgage Servicing Rights” for additional information on the Company's MSRs. Investment in Warrants — The Company was a party to a joint marketing agreement with a private independent insurance carrier whereby the Company marketed their products and submitted leads for borrowers needing insurance. In connection with satisfying the conditions set forth under such agreement, the Company received warrants that may be exercised to purchase shares of common stock of the private company. The Company’s equity investment in the warrants is carried at its estimated fair value, which was determined using the price per share paid by an investor in an equity sale transaction completed by the private company, resulting in a Level Three classification. The warrants are exercisable until June 2025. The warrants are initially and subsequently measured at fair value until they are exercised or expire, with material changes in the fair value reported in other income, net in the Consolidated Statements of Operations each reporting period. The Company's investment in warrants is included within other assets in the Consolidated Balance Sheets. Contingent Liabilities Due to Acquisitions — Contingent liabilities represent future obligations of the Company to make payments to the former owners of its acquired companies. The Company determines the fair value of its contingent liabilities using a discounted cash flow approach whereby the Company forecasts the cash outflows related to the future payments, which are based on a percentage of net income specified in the purchase agreements. The Company then discounts these expected payment amounts to calculate the present value, or fair value, as of the valuation date. The Company’s management evaluates the underlying projections used in determining fair value each period and makes updates to these underlying projections. The Company uses a risk-adjusted discount rate to value the contingent liabilities which is considered a significant unobservable input, and as such, the liabilities are classified as a Level Three measurement. Management’s underlying projections adjust for market penetration and other economic expectations, and the discount rate is risk-adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), upfront payments, and credit risk. An increase in the discount rate will result in a decrease in the fair value of the contingent liabilities. Conversely, a decrease in the discount rate will result in an increase in the fair value of the contingent liabilities. At December 31, 2023 the risk adjusted discount rate was 25.0% and at December 31, 2022 the range of the risk adjusted discount rate was 14.5% - 25.0%, with a median of 15.0%. Adjustments to the fair value of the contingent liabilities (other than payments) are recorded as a gain or loss and are included within general and administrative expenses in the Consolidated Statements of Operations. HMBS-Related Borrowings — HMBS-related borrowings are carried at fair value and classified within Level Three of the valuation hierarchy. These borrowings are not actively traded; therefore, quoted market prices are not available. The Company determines fair value using a discounted cash flow model, by discounting the projected payment of principal and interest over the estimated life of the borrowing at a market rate, due to significant unobservable inputs, including conditional prepayment rates and discount rates. The discount rate assumption used is primarily based on an assessment of current market yields for newly issued HMBS, expected duration and current market interest rates. The Company engages a third-party valuation expert to assist in estimating the fair value. See “Note 9— Reverse Mortgage Loans Held for Investment and HMBS-related Borrowings” for additional information on the Company's HMBS-related borrowings. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2023:
The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2022:
The table below presents a reconciliation of certain Level Three assets and liabilities measured at fair value on a recurring basis, excluding those deemed immaterial, for the years ended:
Changes in the availability of observable inputs may result in reclassifications of certain assets or liabilities. Such reclassifications are reported as transfers in or out of Level Three as of the beginning of the period that the change occurs. There were no transfers between fair value levels during the years ended December 31, 2023 and 2022. Non-Recurring Fair Value Measurements Certain assets and liabilities that are not typically measured at fair value on a recurring basis may be subject to fair value measurement requirements under certain circumstances. These adjustments to fair value usually result from write-downs of individual assets. At December 31, 2023 and 2022, the Company had the following financial assets measured at fair value on a non-recurring basis: Ginnie Mae Loans Subject to Repurchase Right — GNMA securitization programs allow servicers to buy back individual delinquent mortgage loans from the securitized loan pool once certain conditions are met. If a borrower makes no payment for three consecutive months, the servicer has the option to repurchase the delinquent loan for an amount equal to 100% of the loan’s remaining principal balance. Under ASC 860, Transfers and Servicing, this buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. The Company records these assets and liabilities at their fair value, which is determined to be the remaining UPB. The Company’s future expected realizable cash flows are the cash payments of the remaining UPB whether paid by the borrower or reimbursed through a claim filed with HUD. The Company considers the fair value of these assets and liabilities to fall into the Level Two bucket in the valuation hierarchy due to the assets and liabilities having specified contractual terms and the inputs are observable for substantially the full term of the assets' and liabilities' lives. The following table summarizes the Company’s financial assets and liabilities measured at fair value on a non-recurring basis at December 31, 2023:
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a non-recurring basis at December 31, 2022:
Fair Value Option The Company has elected to measure its MLHS, reverse mortgage loans held for investment, notes receivable and HMBS-related borrowings at fair value. The following is the estimated fair value and UPB of assets and liabilities that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected as the Company believes fair value best reflects their expected future economic performance and to align with the Company’s business and risk management strategies.
(1)At December 31, 2023 MLHS that were 90 days or more past due had a fair value of $7.3 million and UPB of $9.9 million. At December 31, 2022 MLHS that were 90 days or more past due had a fair value of $6.3 million and UPB of $8.8 million. (2)At December 31, 2023 reverse mortgage loans held for investment that were 90 days or more past due had a fair value of $3.4 million and UPB of $3.3 million.
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ACQUISITIONS |
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Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS First Centennial Mortgage Corporation On September 11, 2023, the Company acquired certain assets of First Centennial Mortgage Corporation (“FCM”) under the terms of an asset purchase agreement to expand the Company’s operations in the Midwest region. The total fair value of consideration transferred was $2.1 million, which was paid in cash. Cherry Creek Mortgage, LLC On April 3, 2023, the Company acquired substantially all the assets of CCM under the terms of an asset purchase agreement to expand the Company’s operations throughout the United States. The total fair value of consideration transferred was $8.3 million, which consisted of $2.6 million of cash, contingent consideration of $4.4 million and an original issuance discount on note receivable of $1.3 million. The note receivable issued to CCM in March 2023 represents advances made to CCM (see “Note 4—Accounts and Notes Receivable, Net” for additional information on the note receivable). Legacy Mortgage, LLC On February 13, 2023, the Company acquired certain assets of Legacy Mortgage, LLC (“Legacy”) under the terms of an asset purchase agreement to expand the Company’s operations in the Southwest region. The total fair value of consideration transferred was $5.0 million, which consisted of $3.3 million of cash and contingent consideration of $1.7 million. Inlanta Mortgage, Inc. On December 12, 2022, the Company acquired certain assets of Inlanta Mortgage, Inc. (“Inlanta”) under the terms of an asset purchase agreement to expand the Company’s operations in the Midwest region. The total fair value of consideration transferred was $4.0 million, which consisted of $3.5 million of cash and the fair value of contingent consideration of $0.5 million. The Company does not consider these acquisitions to be material, individually or in the aggregate. The acquisitions were accounted for as business combinations, under which the total purchase price was allocated to the net tangible and intangible assets acquired and liabilities assumed based on their preliminary fair values and the excess was recorded as goodwill. The preliminary fair values are subject to subsequent adjustments during the measurement period, not to exceed one year from the date of acquisition. The goodwill resulting from the purchase price allocation reflects the expected synergistic benefits of expanding the Company's geographic locations and the existing workforce. The acquired goodwill was allocated to the Origination segment and is deductible for tax purposes. The results of FCM, CCM, Legacy and Inlanta have been included in the Company’s consolidated financial statements since the date of the acquisitions and did not have a material impact on the Company’s consolidated financial statements and related disclosures. Transaction costs associated with these transactions were not material and were expensed as incurred within general and administrative expenses in the Consolidated Statements of Operations.
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ACCOUNTS AND NOTES RECEIVABLE, NET | ACCOUNTS AND NOTES RECEIVABLE, NET Accounts and notes receivable consisted of the following at December 31, 2023 and 2022:
Management has established a foreclosure reserve for estimated uncollectible balances of the foreclosure and trust advances. Management believes that substantially all other accounts and interest receivable amounts are collectible and, accordingly, no allowance for credit loss is necessary. The activity of the foreclosure loss reserve was as follows for the years ended December 31, 2023 and 2022:
Note Receivable In March 2023, the Company issued a note receivable to CCM in the amount of $11.3 million in connection with the acquisition of CCM, which closed in April 2023. The Company recognized a discount on the note receivable of approximately $1.3 million on the date the acquisition closed. The note bears interest at a variable rate tied to the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin. Also, pursuant to the acquisition, CCM will be entitled to earn-out payments for four years based on certain performance criteria. The earn-out payments will be first allocated to repay the interest and principal due on the note receivable. The note receivable matures in April 2027. If an earn-out payment is not due to CCM, 50% of the interest payment may be “paid-in-kind,” and thereby added to the principal balance.
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER ASSETS | OTHER ASSETS Other assets consisted of the following at December 31, 2023 and 2022:
Property and equipment, net consisted of the following at December 31, 2023 and 2022:
Depreciation and amortization expense for property and equipment was $6.6 million and $7.6 million for the years ended December 31, 2023 and 2022, respectively.
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DERIVATIVE FINANCIAL INSTRUMENTS |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | DERIVATIVE FINANCIAL INSTRUMENTS The Company uses forward commitments in hedging the interest rate risk exposure on its fixed and adjustable rate commitments. The Company’s derivative instruments are not designated as hedging instruments for accounting purposes; therefore, changes in fair value are recognized in current period earnings. Realized and unrealized gains and losses from the Company's non-designated derivative instruments are included in loan origination fees and gain on sale of loans, net in the Consolidated Statements of Operations. Changes in the fair value of the Company's derivative financial instruments are as follows for the years ended December 31, 2023 and 2022:
Notional and Fair Value The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows at December 31, 2023 and 2022:
The Company had an additional $163.8 million and $256.3 million of outstanding forward contracts and mandatory sell commitments, comprised of closed loans with equal and offsetting UPB amounts allocated to them, at December 31, 2023 and 2022, respectively. The Company also had $343.0 million and $470.8 million in closed hedge instruments not yet settled at December 31, 2023 and 2022, respectively. See “Note 2—Fair Value Measurements” for fair value disclosure of the derivative instruments. The following table presents the quantitative information about IRLCs and the fair value measurements as of December 31, 2023 and 2022:
Counterparty agreements for forward commitments contain master netting agreements. The master netting agreements contain a legal right to offset amounts due to and from the same counterparty, including the right to obtain cash collateral. The Company incurred no credit losses due to nonperformance of any of its counterparties during the years ended December 31, 2023 and 2022. The table below represents financial assets and liabilities that are subject to master netting arrangements categorized by financial instrument:
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MORTGAGE SERVICING RIGHTS |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE SERVICING RIGHTS | MORTGAGE SERVICING RIGHTS The activity of MSRs was as follows for the years ended December 31, 2023 and 2022:
The following table presents the weighted average discount rate, prepayment speed and cost to service assumptions used to determine the fair value of MSRs as of December 31, 2023 and 2022:
At December 31, 2023 and 2022, the MSRs had a weighted average life of approximately 8.0 years and 8.5 years, respectively. See “Note 2—Fair Value Measurements” for additional information regarding the valuation of MSRs. Actual revenue generated from servicing activities included contractually specified servicing fees, as well as late fees and other ancillary servicing revenue, which were recorded within loan servicing and other fees as follows for the years ended December 31, 2023 and 2022:
At December 31, 2023 and 2022, the UPB of mortgage loans serviced totaled $85.0 billion and $78.9 billion, respectively. Conforming conventional loans serviced by the Company are sold to FNMA or FHLMC programs on a nonrecourse basis, whereby foreclosure losses are generally the responsibility of FNMA and FHLMC and not the Company. Similarly, certain loans serviced by the Company are secured through GNMA programs, whereby the Company is insured against loss by the FHA or partially guaranteed against loss by the VA. The key assumptions used to estimate the fair value of MSRs are prepayment speeds, the discount rate and costs to service. Increases in prepayment speeds generally have an adverse effect on the value of MSRs as the underlying loans prepay faster. In a declining interest rate environment, the fair value of MSRs generally decreases as prepayments increase and therefore, the estimated life of the MSRs and related cash flows decrease. Decreases in prepayment speeds generally have a positive effect on the value of MSRs as the underlying loans prepay less frequently. In a rising interest rate environment, the fair value of MSRs generally increases as prepayments decrease and therefore, the estimated life of the MSRs and related cash flows increase. Increases in the discount rate generally have an adverse effect on the value of the MSRs. The discount rate is risk adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), premium for market liquidity, and credit risk. A higher discount rate would indicate higher uncertainty of the future cash flows. Conversely, decreases in the discount rate generally have a positive effect on the value of the MSRs. Increases in the costs to service generally have an adverse effect on the value of the MSRs as an increase in costs to service would reduce the Company’s future net cash inflows from servicing a loan. Conversely, decreases in the costs to service generally have a positive effect on the value of the MSRs. MSR uncertainties are hypothetical and do not always have a direct correlation with each assumption. Changes in one assumption may result in changes to another assumption, which might magnify or counteract the uncertainties. The following table illustrates the impact of adverse changes on the prepayment speeds, discount rate and cost to service at two different data points at December 31, 2023 and 2022, respectively:
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MORTGAGE LOANS HELD FOR SALE |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Loans Held For Sale [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE LOANS HELD FOR SALE | MORTGAGE LOANS HELD FOR SALE The Company sells substantially all of its originated mortgage loans into the secondary market. The Company may retain the right to service these loans upon sale through ownership of servicing rights. A reconciliation of the changes in MLHS to the amounts presented in the Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 is set forth below:
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REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS | REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS A reconciliation of the changes in reverse mortgage loans held for investment and HMBS-related borrowings for the period presented is below:
(1)HMBS-related borrowings represent the issuance of pools of HMBS, which are guaranteed by GNMA, to third-party security holders. The Company accounts for the transfers of these advances in the related HECM loans as secured borrowings, retaining the initial HECM loans in the Consolidated Balance Sheet as reverse mortgage loans held for investment and recording the pooled HMBS as HMBS-related borrowings. (2)During 2023, the Company purchased a reverse mortgage servicing portfolio of HECM loans securitized in Ginnie Mae pools. As the Ginnie Mae HMBS program does not qualify for sale accounting, the transaction conveyed the HECM loans and associated HMBS-related borrowings to us. The Company has accounted for this transaction as a secured financing, as a purchase of loans held for investment and assumption of an HMBS securitization liability for the obligation to Ginnie Mae. (3)See further breakdown in the table below. Gain on Reverse Mortgage Loans Held for Investment and HMBS-related Borrowings
(1)Includes the changes in fair value of newly originated loans held for investment in the period from origination through securitization date. (2)Includes the cash realized gains upon securitization of tails. (3)See breakdown between Loans held for investment and HMBS-related borrowings in the table above. Below are the significant unobservable inputs used to value the reverse mortgage loans held for investment and HMBS-related borrowings:
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LEASES |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES The Company leases office space under operating lease agreements that have initial terms ranging from 1 to 12 years. Some leases include one or more options to exercise renewal terms, generally at the Company's sole discretion, that can extend the lease term. Certain leases contain rights to terminate whereby those termination options are held by either the Company, the lessor, or both parties. These options to extend or terminate a lease are included in the lease term only when it is reasonably certain that the Company will exercise that option. The Company’s leases generally do not contain any material restrictive covenants. All leases recognized in the Company's Consolidated Balance Sheets as of December 31, 2023 and 2022 are classified as operating leases, which include leases related to the asset classes reflected in the table below. ROU assets are included in other assets in the Company's Consolidated Balance Sheets.
The following table summarizes the components of the Company's gross operating lease costs incurred during the years ended December 31, 2023 and 2022:
The weighted-average lease term and discount rate used are as follows:
The following table summarizes supplemental cash flow information related to operating leases:
Minimum future commitments by year for the Company's long-term operating leases as of December 31, 2023 are presented in the table below. Such commitments are reflected at undiscounted values and are reconciled to the discounted present value recognized in the balance sheet as follows:
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GOODWILL AND INTANGIBLE ASSETS, NET |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLE ASSETS, NET | GOODWILL AND INTANGIBLE ASSETS, NET Goodwill The changes in the carrying amount of goodwill allocated to the origination segment are presented in the following table:
No impairment charges were recorded during the years ended December 31, 2023 and 2022. Intangible Assets, Net The following table presents the Company's intangible assets, net as of December 31, 2023 and 2022:
Amortization expense related to intangible assets was $8.0 million for each of the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, expected amortization expense for the unamortized acquired intangible assets is as follows:
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INVESTOR RESERVES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTOR RESERVES | INVESTOR RESERVES The Company’s estimate of the investor reserves considers the current macro-economic environment and recent repurchase trends; however, if the Company experiences a prolonged period of higher repurchase and indemnification activity, then the realized losses from loan repurchases and indemnifications may ultimately be in excess of the liability. The maximum exposure under the Company’s representations and warranties would be the outstanding principal balance and any premium received on all loans ever sold by the Company, less any loans that have already been paid in full by the mortgagee, that have defaulted without a breach of representations and warranties, that have been indemnified via settlement or make-whole, or that have been repurchased. Additionally, the Company may receive relief of certain representations and warranty obligations on loans sold to FNMA or FHLMC on or after January 1, 2013 if FNMA or FHLMC satisfactorily concludes a quality control loan file review or if the borrower meets certain acceptable payment history requirements within 12 or 36 months after the loan is sold to FNMA or FHLMC. The activity of the investor reserves was as follows for the years ended December 31, 2023 and 2022:
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WAREHOUSE LINES OF CREDIT, NET |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
WAREHOUSE LINES OF CREDIT, NET | WAREHOUSE LINES OF CREDIT, NET Warehouse lines of credit consisted of the following at December 31, 2023 and 2022. Changes subsequent to December 31, 2023 have been described in the notes referenced with the below table.
______________________________ (1)The variable interest rate is calculated using a base rate tied to SOFR. Subsequent to December 31, 2023, this facility was reduced $165.0 million. (2)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This line of credit requires a minimum deposit of $750,000, included in restricted cash. (3)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This facility requires a minimum deposit to $1.5 million, included in restricted cash. (4)The variable interest rate is calculated using a base rate plus SOFR, with a floor of 0.375% plus the applicable interest rate margin. This facility requires a minimum deposit of $300,000, included in restricted cash. (5)The variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.40%, plus the applicable interest rate margin. (6)The variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.50%, plus the applicable interest rate margin. (7)The facility matured in July 2023 and was not renewed. (8)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This facility’s maturity date is 30 days from written notice by either the financial institution or the Company. (9)The interest rate on this facility is 3.375%. This facility is used for GNMA delinquent buyouts. Each buyout represents a separate transaction that can remain on the facility for up to four years. (10)This facility agreement is due on demand and the variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.75%. The weighted average interest rate for warehouse lines of credit was 7.0% and 3.3% at December 31, 2023 and 2022, respectively. All warehouse lines of credit are collateralized by underlying mortgages and related documents. Existing balances on warehouse lines are repaid through the sale proceeds from the collateralized loans held for sale. The Company had cash balances of $8.7 million and $50.7 million in its warehouse buy down accounts as offsets to certain lines of credit at December 31, 2023 and 2022, respectively. The agreements governing the Company’s warehouse lines of credit contain covenants that include certain financial requirements, including maintenance of maximum adjusted leverage ratio, minimum net worth, minimum tangible net worth, minimum liquidity, adjusted pre-tax net income and limitations on additional indebtedness, dividends, sale of assets, and decline in the mortgage loan servicing portfolio’s fair value. At December 31, 2023 and 2022, the Company believes it was in compliance with all debt covenants. The Company has an optional short-term financing agreement between FNMA and the lender described as “As Soon As Pooled” ("ASAP"). The Company can elect to assign FNMA Mortgage-Backed Security (“MBS”) trades to FNMA in advance of settlement and enter into a financing transaction and revenue related to the assignment is deferred until the final pool settlement date. The Company determines utilization based on warehouse availability and cash needs. There was no outstanding balance as of December 31, 2023 and 2022. NOTES PAYABLERevolving Notes The Company entered into an agreement for a revolving note from one of its warehouse banks, which it can draw upon as needed. The agreement currently expires in August 2027. Borrowings on the revolving note are collateralized by the Company’s GNMA MSRs. Monthly interest on the outstanding balance is calculated using a base rate tied to the SOFR rate plus the applicable margin, with a SOFR floor of 0.5%. The revolving note also has an unused facility fee on the average unused balance, which is also paid quarterly. The unused facility fee is waived if the average outstanding balance exceeds 50% of the available facility. The revolving note has a committed amount of $135.0 million and the agreement allows for the Company to increase the committed amount up to a maximum of $200.0 million. The Company has the option to convert the outstanding balance of the revolving note into a term note at its discretion. At December 31, 2023 and 2022, the Company had $31.0 million and $20.0 million, respectively, in outstanding borrowings on this credit facility. The Company has an agreement for a revolving note of up to $100.0 million from one of its warehouse banks, which it can draw upon as needed. The agreement currently expires in September 2024. Borrowings on the revolving note are collateralized by the Company’s FHLMC MSRs. Monthly interest on the outstanding balance is calculated using a base rate tied to the SOFR rate plus the applicable margin, with a floor of 0.50%. The revolving note also had an unused facility fee on the average unused balance, which was also paid quarterly. The unused facility fee was waived if the average outstanding balance exceeded 35% of the available combined warehouse and MSR facility. In September 2023 the revolving note was amended to remove the unused facility fee. The lender has the option to convert the outstanding balance of the revolving note into a term note at its discretion. At December 31, 2023 and 2022, the Company had $30.0 million balance and no balance, respectively, in outstanding borrowings on this credit facility. In September 2023, the Company entered into a new revolving note agreement, which it can draw upon as needed. The agreement currently expires in September 2028. Borrowings on the revolving note are collateralized by the Company’s FNMA MSRs. Monthly interest on the outstanding balance is calculated using a base rate tied to the SOFR rate plus the applicable margin, with a SOFR floor of 2.0%. The revolving note has a committed amount of $250.0 million and the agreement allows for the Company to increase the committed amount up to a maximum of $400.0 million. At December 31, 2023, the Company had $87.8 million in outstanding borrowings on this credit facility. Term Note The Company had a term note agreement with one of its warehouse banks collateralized by the Company’s FNMA MSRs. The term note had a committed amount of $125.0 million and the agreement allowed for the Company to increase the committed amount up to a maximum of $175.0 million. The Company could draw on the committed amount through March 2022 and the note had a maturity date of March 2024. Interest on the principal was paid monthly and was based upon a margin plus the highest of the (i) Prime Rate, (ii) Federal Funds Rate plus 0.5%, or (iii) the Eurodollar Base Rate plus 1.0%. Principal payments of 5% of the outstanding balance as of March 31, 2022 were due quarterly beginning April 15, 2022, with the remaining principal balance due upon maturity. The term note also had an unused facility fee on the average unused balance, which was also paid quarterly. In September 2023, the Company paid in full the $87.5 million remaining balance due on the term note with funds borrowed under a new revolving note agreement with a different lender (see section above describing the new revolving note agreement). At December 31, 2023 there was no outstanding balance on this facility. As of December 31, 2022, the Company had an outstanding balance of $106.3 million on this facility.
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NOTES PAYABLE |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTES PAYABLE | WAREHOUSE LINES OF CREDIT, NET Warehouse lines of credit consisted of the following at December 31, 2023 and 2022. Changes subsequent to December 31, 2023 have been described in the notes referenced with the below table.
______________________________ (1)The variable interest rate is calculated using a base rate tied to SOFR. Subsequent to December 31, 2023, this facility was reduced $165.0 million. (2)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This line of credit requires a minimum deposit of $750,000, included in restricted cash. (3)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This facility requires a minimum deposit to $1.5 million, included in restricted cash. (4)The variable interest rate is calculated using a base rate plus SOFR, with a floor of 0.375% plus the applicable interest rate margin. This facility requires a minimum deposit of $300,000, included in restricted cash. (5)The variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.40%, plus the applicable interest rate margin. (6)The variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.50%, plus the applicable interest rate margin. (7)The facility matured in July 2023 and was not renewed. (8)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This facility’s maturity date is 30 days from written notice by either the financial institution or the Company. (9)The interest rate on this facility is 3.375%. This facility is used for GNMA delinquent buyouts. Each buyout represents a separate transaction that can remain on the facility for up to four years. (10)This facility agreement is due on demand and the variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.75%. The weighted average interest rate for warehouse lines of credit was 7.0% and 3.3% at December 31, 2023 and 2022, respectively. All warehouse lines of credit are collateralized by underlying mortgages and related documents. Existing balances on warehouse lines are repaid through the sale proceeds from the collateralized loans held for sale. The Company had cash balances of $8.7 million and $50.7 million in its warehouse buy down accounts as offsets to certain lines of credit at December 31, 2023 and 2022, respectively. The agreements governing the Company’s warehouse lines of credit contain covenants that include certain financial requirements, including maintenance of maximum adjusted leverage ratio, minimum net worth, minimum tangible net worth, minimum liquidity, adjusted pre-tax net income and limitations on additional indebtedness, dividends, sale of assets, and decline in the mortgage loan servicing portfolio’s fair value. At December 31, 2023 and 2022, the Company believes it was in compliance with all debt covenants. The Company has an optional short-term financing agreement between FNMA and the lender described as “As Soon As Pooled” ("ASAP"). The Company can elect to assign FNMA Mortgage-Backed Security (“MBS”) trades to FNMA in advance of settlement and enter into a financing transaction and revenue related to the assignment is deferred until the final pool settlement date. The Company determines utilization based on warehouse availability and cash needs. There was no outstanding balance as of December 31, 2023 and 2022. NOTES PAYABLERevolving Notes The Company entered into an agreement for a revolving note from one of its warehouse banks, which it can draw upon as needed. The agreement currently expires in August 2027. Borrowings on the revolving note are collateralized by the Company’s GNMA MSRs. Monthly interest on the outstanding balance is calculated using a base rate tied to the SOFR rate plus the applicable margin, with a SOFR floor of 0.5%. The revolving note also has an unused facility fee on the average unused balance, which is also paid quarterly. The unused facility fee is waived if the average outstanding balance exceeds 50% of the available facility. The revolving note has a committed amount of $135.0 million and the agreement allows for the Company to increase the committed amount up to a maximum of $200.0 million. The Company has the option to convert the outstanding balance of the revolving note into a term note at its discretion. At December 31, 2023 and 2022, the Company had $31.0 million and $20.0 million, respectively, in outstanding borrowings on this credit facility. The Company has an agreement for a revolving note of up to $100.0 million from one of its warehouse banks, which it can draw upon as needed. The agreement currently expires in September 2024. Borrowings on the revolving note are collateralized by the Company’s FHLMC MSRs. Monthly interest on the outstanding balance is calculated using a base rate tied to the SOFR rate plus the applicable margin, with a floor of 0.50%. The revolving note also had an unused facility fee on the average unused balance, which was also paid quarterly. The unused facility fee was waived if the average outstanding balance exceeded 35% of the available combined warehouse and MSR facility. In September 2023 the revolving note was amended to remove the unused facility fee. The lender has the option to convert the outstanding balance of the revolving note into a term note at its discretion. At December 31, 2023 and 2022, the Company had $30.0 million balance and no balance, respectively, in outstanding borrowings on this credit facility. In September 2023, the Company entered into a new revolving note agreement, which it can draw upon as needed. The agreement currently expires in September 2028. Borrowings on the revolving note are collateralized by the Company’s FNMA MSRs. Monthly interest on the outstanding balance is calculated using a base rate tied to the SOFR rate plus the applicable margin, with a SOFR floor of 2.0%. The revolving note has a committed amount of $250.0 million and the agreement allows for the Company to increase the committed amount up to a maximum of $400.0 million. At December 31, 2023, the Company had $87.8 million in outstanding borrowings on this credit facility. Term Note The Company had a term note agreement with one of its warehouse banks collateralized by the Company’s FNMA MSRs. The term note had a committed amount of $125.0 million and the agreement allowed for the Company to increase the committed amount up to a maximum of $175.0 million. The Company could draw on the committed amount through March 2022 and the note had a maturity date of March 2024. Interest on the principal was paid monthly and was based upon a margin plus the highest of the (i) Prime Rate, (ii) Federal Funds Rate plus 0.5%, or (iii) the Eurodollar Base Rate plus 1.0%. Principal payments of 5% of the outstanding balance as of March 31, 2022 were due quarterly beginning April 15, 2022, with the remaining principal balance due upon maturity. The term note also had an unused facility fee on the average unused balance, which was also paid quarterly. In September 2023, the Company paid in full the $87.5 million remaining balance due on the term note with funds borrowed under a new revolving note agreement with a different lender (see section above describing the new revolving note agreement). At December 31, 2023 there was no outstanding balance on this facility. As of December 31, 2022, the Company had an outstanding balance of $106.3 million on this facility.
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INCOME TAXES |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES The components of income tax expense or benefit were as follows for the years ended December 31, 2023 and 2022:
The following table presents a reconciliation of the recorded income tax expense or benefit of continuing operations to the amount of taxes computed by applying the applicable federal statutory tax rate of 21.0% to income or loss from continuing operations before income taxes, as of December 31, 2023 and 2022, respectively:
The tax effects of significant temporary differences which gave rise to the Company’s deferred tax assets and liabilities are as follows at December 31, 2023 and 2022:
At December 31, 2023, the Company has federal and state net operating loss (“NOL”) carryforwards of approximately $76.9 million and $70.8 million, respectively. The federal NOL carryforwards can be carried forward indefinitely and can offset up to 80% of future taxable income each year. The state NOL carryforwards begin to expire in 2027. The Company does not expect the federal and state net operating loss carryforwards to expire unused. At December 31, 2023, the Company has federal and state research tax credit carryforwards of approximately $1.6 million and $0.8 million, respectively. The federal research tax credit carryovers begin to expire in 2042 and the state tax credit carryovers do not expire and can be carried forward indefinitely until utilized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities including the impact of available carryback and carryforward periods and projected future taxable income. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. There are no valuation allowances on deferred tax assets as of December 31, 2023 or 2022. The Company records interest related to unrecognized tax benefits in interest expense and records penalties as a component of income taxes. There are no unrecognized tax benefits as of December 31, 2023 or 2022, and there were no changes in unrecognized tax benefits during the year. The Company is required to analyze all open years, as defined by the statutes of limitations, for all major jurisdictions, which includes federal and state jurisdictions. The Company is no longer subject to federal examinations prior to 2020 tax year or for state examinations prior to 2019 tax year.
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STOCKHOLDERS' EQUITY AND EARNINGS (LOSS) PER SHARE |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY AND EARNINGS (LOSS) PER SHARE | STOCKHOLDERS' EQUITY AND EARNINGS (LOSS) PER SHARE Common Stock The Company has two classes of common stock: Class A and Class B. The Company's Class A common stock is traded on the New York Stock Exchange under the symbol “GHLD.” There is no public market for the Company’s Class B common stock. However, under the terms of the Company’s Certificate of Incorporation, the holder of Class B common stock may convert any portion or all of the holder’s shares of Class B common stock into an equal number of shares of Class A common stock at any time. The holders of shares of Class A common stock and Class B common stock are entitled to dividends when and if declared by the Company’s Board of Directors out of legally available funds. Any stock dividend must be paid in shares of Class A common stock with respect to Class A common stock and in shares of Class B common stock with respect to Class B common stock. The voting powers, preferences and relative rights of Class A common stock and Class B common stock are identical in all respects, except that the holders of shares of Class A common stock have one vote per share and the holders of shares of Class B common stock have ten votes per share. Restricted Stock Units The Company issues RSUs under the 2020 Plan, which represent the right to receive, upon vesting, one share of the Company’s Class A common stock. The number of potentially dilutive shares related to RSUs is based on the number of shares, if any, that would be issuable at the end of the respective reporting period, assuming that date was the end of the vesting period. Unvested RSUs under the 2020 Plan have rights to dividends, which entitle holders to the same dividend value per share as holders of common shares in the form of DEUs. DEUs will be credited as additional RSUs on the dividend payment date, will vest on the same date as the underlying RSUs and are forfeited if the underlying RSUs forfeit prior to vesting. The number of additional RSUs credited will equal (1) the per share cash dividend amount, multiplied by (2) the number of RSUs, divided by (3) the fair market value of a share of Class A common stock on the last trading day before the date of the dividend payment, rounded up to the nearest whole number of RSUs. Common Stock Dividends The Company declared and paid dividends of $0.50 per share on its Class A and Class B common stock on September 7, 2023 totaling $30.5 million and paid no such dividends in 2022. In conjunction with the payment of Guild's dividend in 2023, Guild issued 95,413 DEUs to holders of RSUs. Since the DEUs are forfeitable, the value of the DEUs was recorded as a reduction to retained earnings and a credit to additional paid-in capital. Share Repurchase Program On May 5, 2022, the Company’s Board of Directors authorized the Company to repurchase up to $20.0 million of the Company’s outstanding Class A common stock over the next 24 months from such date. The share repurchase program allows the Company to repurchase shares of its Class A common stock from time to time on the open market or in privately negotiated transactions. The Company is not obligated to purchase any shares under the share repurchase program and the timing of any repurchases will depend on a number of factors, including, but not limited to, stock price, trading volume, market conditions, and other general business considerations. The share repurchase program may be modified, suspended or terminated by the Company’s Board of Directors at any time. The Company intends to fund any repurchases under the share repurchase program with cash on hand. During year ended December 31, 2023, the Company repurchased and subsequently retired 286,398 shares of the Company’s Class A common stock at an average purchase price of $11.41 per share. As of December 31, 2023, $11.2 million remains available for repurchase. Earnings (loss) Per Share Basic earnings or loss per share is computed based on the weighted average number of shares of Class A and Class B common stock outstanding during the period using the two-class method. Diluted earnings or loss per share is computed based on the weighted average number of shares plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include RSUs for Class A common stock. The following table sets forth the components of basic and diluted earnings per share for the years ended December 31, 2023 and 2022:
Approximately 0.7 million potential shares of Class A common stock related to unvested RSUs were excluded from the calculation of diluted loss per share for the year ended December 31, 2023 because they were anti-dilutive due to the net loss. No shares of Class A common stock were excluded from the calculation of earnings per share as a result of being anti-dilutive for the year ended December 31, 2022.
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STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS Incentive Plan In October 2020, the Company’s stockholders approved the 2020 Plan, which is administered by the Compensation Committee of the Board of Directors. The 2020 Plan reserves for issuance a total of 5.5 million shares of Class A common stock to the Company's officers, directors, employees or consultants eligible to receive awards under the 2020 Plan. The 2020 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, other stock-based awards, cash awards or a combination of the foregoing, to employees, directors or consultants, provided that only employees may be granted incentive stock options. As of December 31, 2023, there were approximately 2.8 million shares of Class A common stock available to be granted under the 2020 Plan. The 2020 Plan will terminate ten years after its adoption, unless terminated earlier by the Company’s Board of Directors. Restricted Stock Units RSUs granted to employees in connection with the Company's IPO vest 25% on the second and third anniversary of the grant and 50% on the fourth anniversary. Subsequent RSUs granted to employees vest over to three years. RSUs granted to non-employee directors generally vest on the first anniversary of the grant. RSUs are authorized to settle in shares of the Company's Class A common stock. The following table shows a summary of the unvested RSUs under the 2020 Plan as of December 31, 2023 as well as activity during the year:
Compensation costs recognized for these restricted stock grants were approximately $8.7 million and $7.3 million for the years ended December 31, 2023 and 2022, respectively. The income tax benefit recognized related to this expense was approximately $0.9 million and $1.4 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, there was approximately $11.6 million of unrecognized compensation costs related to these restricted stock grants which is expected to be recognized over a weighted average period of 1.5 years. The total fair value of RSUs vested during the years ended December 31, 2023 and 2022 was $7.5 million and $4.8 million, respectively. Defined Contribution Plan The Company has a 401(k) profit sharing plan covering substantially all employees. Employees may contribute amounts subject to certain Internal Revenue Service and plan limitations. The Company may make discretionary matching and nonelective contributions. Upon completion of the acquisition of Residential Mortgage Services Holdings, Inc. (“RMS”) on July 1, 2021, employees of RMS were eligible to participate in the Company's 401(k) plan or continue participating in RMS’s plan through December 31, 2022. The RMS plan was merged into the Company's plan in January 2023. For the years ended December 31, 2023 and 2022, the Company contributed $7.1 million and $8.8 million, respectively, for 401(k) contributions and related administrative expenses. Deferred Compensation Plans The Company has a deferred compensation plan for executives which was frozen effective December 31, 2007. Distribution of a participant’s vested balance is payable in a single lump sum upon death or disability, termination of employment, retirement after attaining age 65 (55 for participants who had an account balance in the plan as of May 1, 2001), or upon termination of the plan. During 2023, the Company distributed cash payments of $5.8 million under this plan. There were no distributions in 2022. In 2017, the Company commenced a Non-Qualified Deferred Compensation Plan for certain highly compensated executives and employees that allows the participants to defer a portion of their earnings. Distribution of a participant’s vested balance is payable in a single lump sum upon death or disability, termination of employment, retirement, or upon termination of the plan.
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COMMITMENTS AND CONTINGENCIES |
12 Months Ended |
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Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Commitments to Extend Credit The Company enters into IRLCs with customers who have applied for residential forward mortgage loans and meet certain credit and underwriting criteria. These commitments expose the Company to market risk if interest rates change and the loan is not economically hedged or committed to an investor. The Company is also exposed to credit loss if the loan is originated and not sold to an investor and the customer does not perform. The collateral upon extension of credit typically consists of a first deed of trust in the mortgagor’s residential property. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon. Total commitments to originate forward mortgage loans at December 31, 2023 and 2022 were approximately $821.9 million and $810.5 million, respectively. The Company manages the interest rate price risk associated with its outstanding IRLCs and loans held for sale by entering into derivative loan instruments such as forward loan sales commitments, mandatory delivery commitments, options and futures contracts. Total commitments related to these derivatives at December 31, 2023 and 2022 were approximately $933.9 million and $1.1 billion, respectively. The Company has originated reverse mortgage loans under which the borrowers have additional borrowing capacity of $107.3 million at December 31, 2023. This additional borrowing capacity is available on a scheduled or unscheduled payment basis. The Company also had short-term commitments to lend $0.3 million in connection with our reverse mortgage loans, outstanding at December 31, 2023. The Company finances origination of reverse mortgage loans with warehouse lines. Legal Proceedings The Company is involved in various lawsuits arising in the ordinary course of business. While the ultimate results of these lawsuits cannot be predicted with certainty, management does not expect that these matters will have a material adverse effect on the consolidated financial position or results of operations of the Company.
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RELATED PARTY TRANSACTIONS |
12 Months Ended |
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Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS On January 1, 2019, one of GMC’s former executives retired, which triggered a repurchase of the executive’s membership interest in Guild Management, LLC, and a one-time payout of $2.0 million of deferred compensation. GMC’s former parent, Guild Investors, LLC, sold 13.7038 shares of GMC to the executive in exchange for the executive’s membership interest in Guild Management, LLC. The executive in turn sold the shares back to GMC in exchange for a promissory note of $8.0 million, which is payable over 16 quarters. During 2023 and 2022, the Company made payments of $0.5 million and $2.1 million, respectively, to the executive, and there is no remaining balance as of December 31, 2023.
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REGULATORY CAPITAL AND LIQUIDITY REQUIREMENTS |
12 Months Ended |
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Dec. 31, 2023 | |
Mortgage Banking [Abstract] | |
REGULATORY CAPITAL AND LIQUIDITY REQUIREMENTS | REGULATORY CAPITAL AND LIQUIDITY REQUIREMENTS Certain secondary market investors and state regulators require the Company to maintain minimum net worth and capital requirements. To the extent that these requirements are not met, secondary market investors and/or the state regulators may utilize a range of remedies including sanctions, and/or suspension or termination of selling and servicing agreements, which may prohibit the Company from originating, securitizing or servicing these specific types of mortgage loans. The Company is subject to certain minimum net worth, minimum capital ratio and minimum liquidity requirements established by the Federal Housing Finance Agency ("FHFA") for Fannie Mae and Freddie Mac Seller/Servicers, and Ginnie Mae for single family issuers. The most restrictive of the minimum net worth and capital requirements require the Company to maintain a minimum adjusted net worth balance of $253.5 million and $87.0 million as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the Company was in compliance with this requirement.
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SEGMENTS |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENTS | SEGMENTS ASC 280, Segment Reporting, establishes the standards for reporting information about segments in financial statements. In applying the criteria set forth in that guidance, the Company has determined that it has two reportable segments — Origination and Servicing. Origination — The Company operates its loan origination business throughout the United States. Its licensed sales professionals and support staff cultivate deep relationships with referral partners and clients and provide a customized approach to the loan transaction whether it is a purchase or refinance. The origination segment is primarily responsible for loan origination, acquisition and sale activities. Servicing — The Company services loans out of its corporate office in San Diego, California. Properties of the loans serviced by the Company are disbursed throughout the United States and as of December 31, 2023 the Company serviced at least one loan in forty-nine different states. The servicing segment provides a steady stream of cash flow to support the origination segment, and more importantly it allows for the Company to build long-standing client relationships that drive repeat and referral business back to the origination segment to recapture the client’s next mortgage transaction. The servicing segment is primarily responsible for the servicing activities of all loans in the Company’s servicing portfolio, which includes, but is not limited to, collection and remittance of loan payments, managing borrower’s impound accounts for taxes and insurance, loan payoffs, loss mitigation and foreclosure activities. The Company does not allocate assets to its reportable segments as they are not included in the review performed by the Chief Operating Decision Maker for purposes of assessing segment performance and allocating resources. The balance sheet is managed on a consolidated basis and is not used in the context of segment reporting. The Company also does not allocate certain corporate expenses, which are represented by All Other in the tables below. The following table presents the financial performance and results by segment for the year ended December 31, 2023:
The following table presents the financial performance and results by segment for the year ended December 31, 2022:
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SUBSEQUENT EVENT |
12 Months Ended |
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Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENT On February 12, 2024, the Company entered into an asset purchase agreement to acquire certain retail lending assets of privately held Utah-based lender Academy Mortgage Corporation (“Academy Mortgage” or the “sellers”) for $13.4 million in cash paid at closing plus the sellers have the opportunity to receive cash payments based on the performance of the Academy Mortgage branches. The transaction closed on February 26, 2024. The Company also entered into a Mortgage Servicing Rights Agreement (the “MSR Agreement”) on February 12, 2024 to acquire MSRs. The MSR Agreement is expected to close in the second quarter of 2024. The addition of Academy Mortgage will extend Guild’s market share across its national footprint and will increase the Company’s branches and origination staff. The purchase was financed with a combination of cash and existing borrowings. The Company is evaluating the accounting for this acquisition.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
12 Months Ended | |
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Dec. 31, 2023 |
Dec. 31, 2022 |
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Pay vs Performance Disclosure | ||
Net income | $ (39,009) | $ 328,598 |
Insider Trading Arrangements |
3 Months Ended |
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Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BUSINESS, BASIS OF PRESENTATION, AND ACCOUNTING POLICIES (Policies) |
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Principles of Consolidation | Principles of Consolidation The Company's consolidated financial statements include the accounts of the Company, GMC, and their consolidated subsidiaries, variable interest entities (“VIE”) of which the Company is the primary beneficiary, and joint ventures in which the Company has a majority voting interest and control. The Company evaluates its relationships and investments to determine if it is the primary beneficiary of a VIE. Generally, a VIE is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. In determining whether the Company is the primary beneficiary of a VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Company's investment; the obligation or likelihood for the Company or other investors to provide financial support; and the similarity with and significance to the Company's business activities and the business activities of the other investors. The carrying amount of the consolidated VIEs' and consolidated joint ventures' assets and liabilities were immaterial as of December 31, 2023 and 2022. All intercompany accounts and transactions have been eliminated in consolidation.
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Investments in Unconsolidated Joint Ventures | Investments in Unconsolidated Joint Ventures The Company has investments in unconsolidated joint ventures involved in the mortgage lending business, which are included in other assets in the Consolidated Balance Sheets. The Company's investments in these unconsolidated joint ventures are accounted for under the equity method of accounting as the Company does not have a majority voting interest, operational control or financial control. As a result, the Company does not recognize the assets and liabilities of these unconsolidated joint ventures in its financial statements. The Company's share of the net earnings or losses of the investee are included in other income, net in the Consolidated Statements of Operations. The Company classifies distributions received from its unconsolidated joint ventures using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although management is not currently aware of any factors that would significantly change its estimates and assumptions, actual results could materially differ from those estimates. The following accounting policies, together with those disclosed elsewhere in the consolidated financial statements, represent the significant accounting policies of the Company.
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Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash For cash flow purposes, the Company considers cash and temporary investments with original maturities of three months or less, to be cash and cash equivalents. The Company typically maintains cash in financial institutions in excess of Federal Deposit Insurance Corporation limits. The Company evaluates the creditworthiness of these financial institutions in determining the risk associated with these cash balances. The Company maintains cash balances that are restricted under the terms of its warehouse lines of credit. The following table summarizes the Company’s cash, cash equivalents and restricted cash at December 31, 2023 and 2022:
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Mortgage Loans Held for Sale | Mortgage Loans Held for Sale The Company measures newly originated prime residential mortgage loans held for sale (“MLHS”) at fair value in accordance with ASC 825, Financial Instruments. Included in MLHS are loans originated as held for sale that are expected to be sold into the secondary market and loans that have been previously sold and repurchased from investors that management intends to resell into the secondary market, which are recorded at fair value. The Company estimates fair value by evaluating a variety of market indicators, including recent trades and outstanding commitments, calculated on an individual loan basis and aggregated (see “Note 2—Fair Value Measurements”). Changes in the fair value of mortgage loans are recognized in current period income and are included in loan origination fees and gain on sale of loans, net. Fair value for mortgage loans covered by investor commitments is based on commitment prices. Fair value for uncommitted loans is based on current delivery prices. In accordance with ASC 825-10, the Company immediately recognizes loan origination fees, net of direct loan origination costs associated with these loans. Loans are considered sold when the Company surrenders control over the financial assets. Control is considered to have been surrendered when the transferred assets have been isolated from the Company, beyond the reach of the Company and its creditors; the purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through an agreement that both entitles and obligates the Company to repurchase or redeem the transferred assets before their maturity. The Company typically considers the above criteria to have been met upon acceptance and receipt of sales proceeds from the purchaser.
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Reverse Mortgage Loans Held for Investment and HMBS-Related Borrowings, Net / Gain on Reverse Mortgage Loans Held for Investment and HMBS-Related Borrowings, Net | Reverse Mortgage Loans Held for Investment and HMBS-Related Borrowings, Net In April 2023, the Company acquired certain assets of Cherry Creek Mortgage, LLC ("CCM") (see “Note 3 —Acquisitions), which expanded its range of services by offering reverse mortgages to its customers. Reverse mortgage loans are residential mortgage loans for which neither principal nor interest is due until the borrower dies, the home is sold, or other trigger events occur. Reverse mortgage loans can have either fixed interest rates or adjustable interest rates. In the case of most fixed-rate reverse mortgage loans, the borrower must draw the loan proceeds up front in one lump sum, while many adjustable-rate mortgage loans provide the borrower with a line of credit that can be drawn over time. The Company has elected to measure these loans at fair value, on a recurring basis, with changes in fair value recorded as a charge or credit to gain on reverse mortgage loans held for investment and HMBS-related borrowings, net in the Consolidated Statements of Operations. The Company securitizes home equity conversion mortgages (“HECM”) into HMBS, which Ginnie Mae guarantees, and sells them in the secondary market while retaining the rights to service. The Company has determined that HECM loans transferred under the current Ginnie Mae HMBS securitization program do not meet the requirements for sale accounting under ASC 860, Transfers and Servicing, and are therefore not derecognized upon date of transfer. The Ginnie Mae HMBS securitization program includes certain terms that do not meet the participating interest requirements and require or provide an option for the Company to reacquire the loans prior to maturity. Due to these terms, the transfer of the loans does not meet the requirements of sale accounting. As a result, the Company accounts for HECM loans transferred into HMBS securitizations as secured borrowings and continues to recognize the loans as held for investment, along with the corresponding liability for the HMBS related obligations. As an issuer of HMBS, the Company is required to repurchase reverse loans out of the Ginnie Mae securitization pools once the outstanding principal balance of the related HECM is equal to or greater than 98% of the maximum claim amount (“MCA”) (referred to as unpoolable loans). Performing repurchased loans are conveyed to the HUD and payment is received from HUD typically within 75 days of repurchase. Nonperforming repurchased loans are generally liquidated through foreclosure, subsequent sale of the real estate owned (“REO”) and claim submissions to HUD. Gain on Reverse Mortgage Loans Held for Investment and HMBS-Related Borrowings, Net The Company has elected to measure the HECM loans held for investment and HMBS-related borrowings at fair value on a recurring basis. The fair value gains and losses of the HECM loans and HMBS-related borrowings and the gains and losses on tail securitization are included in gain on reverse mortgage loans held for investment and HMBS-related borrowings, net in the Consolidated Statements of Operations. Tail securitizations are participations in previously securitized HECMs and are created by additions to principal for borrower draws on lines-of-credit (scheduled and unscheduled), interest, servicing fees, and mortgage insurance premiums. In addition, gain on reverse mortgage loans held for investment and HMBS-related borrowings, net includes interest income on the securitized HECM loans, interest expense on the HMBS-related borrowings, together with the realized cash gains or losses on tail securitization and the fair value changes related to new reverse mortgage loans through the securitization date. The reverse mortgage loan production activity is included in the Company's origination segment.
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Ginnie Mae Loans Subject to Repurchase Right | Ginnie Mae Loans Subject to Repurchase Right In accordance with ASC 860-50, certain loans, as defined by the servicer guidelines, serviced by the Company on behalf of GNMA are recognized as an asset, and carried at the unpaid principal balance (“UPB”) of the loans. The Company has a right to repurchase any loans serviced on behalf of GNMA that are three or more consecutive payments delinquent (“GNMA Loan Inventory”). The Company recognizes a corresponding liability (“GNMA Loan Payable”) which is recorded at the unpaid principal balance, for loans in which the Company has not exercised the right to repurchase the loans. If the loan goes through foreclosure and is an FHA loan, HUD acts as the insurer for GNMA and reimburses the servicer for the UPB plus allowable interest and foreclosure fees. The Company reserves for unreimbursed interest and fees as part of the general foreclosure reserve. If the loan goes through foreclosure and is a VA loan, the VA acts as the insurer and reimburses the Company based on the net value of the underlying property. At the amount determined by the VA, the Company accounts for any loss on VA loans in its foreclosure loss reserve to a certain threshold with any excess charged to its investor reserves. If a foreclosure sale has been held on an FHA loan, the deed is transferred to the Company and the loan becomes a GNMA REO. These are foreclosed real estate properties securing GNMA loans. Both principal and interest for government insured/guaranteed loans secured by the foreclosed real estate properties are collectible because the loans are insured by the FHA or guaranteed by the VA. The GNMA Loan Inventory and real estate owned is equal, and offsetting, to the GNMA Loan Payable.
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Mortgage Servicing Rights | Mortgage Servicing Rights Mortgage servicing rights (“MSRs”) are recognized as assets in the Consolidated Balance Sheet when loans are sold, and the associated servicing rights are retained. The Company maintains one class of MSR asset and has elected the fair value option. To determine the fair value of the servicing right when created, the Company uses a valuation model that calculates the present value of future cash flows. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, including estimates of contractual service fees, ancillary income and late fees, the cost of servicing, the discount rate, float value, the inflation rate, estimated prepayment speeds, and default rates.
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Derivative Instruments | Derivative Instruments The Company enters into interest rate lock commitments (“IRLCs”) and forward commitments to sell mortgage loans and to be announced mortgage-backed securities which are considered derivative financial instruments. These items are accounted for as free-standing derivatives and are included in the Consolidated Balance Sheets at fair value. The Company treats all of its derivative instruments as economic hedges; therefore, none of its derivative instruments qualify for designation as accounting hedges. The Company enters into IRLCs to originate residential mortgage loans at specified interest rates and within a specified period of time, with customers who have applied for a loan and meet certain credit and underwriting criteria. IRLCs on mortgage loans in process that have not closed, but are intended to be sold, are considered to be derivatives and changes in fair value are recorded in the Consolidated Statements of Operations as part of loan origination fees and gain on sale of loans, net. Fair value is based upon changes in the fair value of the underlying mortgages, estimated to be realizable upon sale into the secondary market, net of estimated incentive compensation expenses. Fair value estimates also consider loan commitments not expected to be exercised by customers for unforeseen reasons, commonly referred to as fallout. IRLCs and uncommitted MLHS expose the Company to the risk that the value of the mortgage loans held and mortgage loans underlying the commitments may decline due to increases in mortgage interest rates during the life of the commitments. To protect against this risk the Company enters into derivative instruments such as forward loan sales commitments, mandatory delivery commitments, options and futures contracts. Management expects the changes in the fair value of these derivatives to have a negative correlation to the changes in fair value of the derivative loan commitments and MLHS, thereby reducing earnings volatility. The changes in fair value are recorded in the Consolidated Statements of Operations as part of loan origination fees and gain on sale of loans, net. The Company considers various factors and strategies in determining the portion of the mortgage pipeline and loans held for sale it wants to economically hedge. The Company has elected to net derivative asset and liability positions, including cash collateral received from or paid to its counterparties when amounts are subject to legally enforceable master netting arrangements. IRLCs are not subject to master netting arrangements. Forward commitments include to be announced mortgage-backed securities that have been aggregated at the counterparty level for presentation and disclosure purposes. Counterparty agreements contain a legal right to offset amounts due to and from the same counterparty under legally enforceable master netting agreements to settle with the same counterparty, on a net basis, as well as the right to obtain cash collateral. Forward commitments also include commitments to sell loans to counterparties and to purchase loans from counterparties at determined prices.
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Property and Equipment, Net | Property and Equipment, Net Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset, usually three years. Leasehold improvements are amortized using the straight-line method over the shorter of the term of the related lease or the estimated useful life. The Company recognizes internal-use software within property and equipment which consists of both internal and external costs incurred in the development, testing and implementation directly related to the new software. The internal-use software is amortized over a three-year period and begins amortization upon the “go-live” date of the software. The Company determines the “go-live” date as the date in which the software is readily available to be used companywide.
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Acquisitions | Acquisitions When making an acquisition, the Company recognizes separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values under ASC 805, Business Combinations. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the assets acquired and the liabilities assumed. The Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and actual results may differ from expectations. The Company may record measurement period adjustments during the measurement period (one year from the acquisition date) that result from obtaining additional information about the facts and circumstances that existed as of the acquisition date. If this additional information had been known, it would have affected the accounting for the business combination as of the acquisition date. Accounting for business combinations requires the Company’s management to make estimates and assumptions, especially at the acquisition date with respect to MSRs and contingent considerations. Although the Company believes the assumptions and estimates it has made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.
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Intangible Assets, Net | Intangible Assets, Net Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives in a manner that best reflects their economic benefit. All intangible assets are reviewed for impairment when events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.
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Goodwill | Goodwill Goodwill is recorded at fair value and is tested for potential impairment at least annually. The Company performs its annual goodwill impairment analysis as of October 1 or more frequently if events and circumstances indicate that the carrying value may not be recoverable. The Company’s goodwill is allocated by reporting unit and is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. Qualitative factors include, among other things, macroeconomic conditions, industry and market considerations, financial performance of the respective reporting unit and other relevant entity and reporting-unit specific considerations. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than the carrying amount, or if significant adverse changes in the Company's future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. A quantitative assessment for impairment requires the Company to use significant judgment and estimates, including, but not limited to, estimates of future cash flows, revenue growth rates, operating margins, and a discount rate. Such estimates are based upon assumptions which are inherently uncertain and unpredictable. The fair value of goodwill is determined by assigning the fair value of the reporting unit to all the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination. If the fair value is less than the carrying value, the amount of impairment expense is equal to the difference between the reporting unit’s fair value and the reporting unit’s carrying value.
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Contingent Liabilities due to Acquisitions | Contingent Liabilities due to Acquisitions The Company may be required to pay future consideration to the former shareholders of acquired companies, depending upon the terms of the applicable purchase agreement, which is contingent upon the achievement of certain financial and operating targets. The Company determines the fair value for its contingent consideration obligations using an income approach whereby the Company forecasts the cash outflows related to the earn-outs, which are based on a percentage of net income specified in the purchase agreements. The Company then discounts these expected payment amounts to calculate the fair value as of the valuation date. The Company’s management evaluates the underlying projections used in determining fair value each period and makes updates to these underlying projections when there have been significant changes in management’s expectations of the future business performance. The principal significant unobservable input used in the valuations of the Company’s contingent consideration obligations is a risk-adjusted discount rate. Whereas management’s underlying projections adjust for market penetration and other economic expectations, the discount rate is risk-adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), upfront payments, and credit risk. An increase in the discount rate will result in a decrease in the fair value of contingent consideration. Conversely, a decrease in the discount rate will result in an increase in the fair value of contingent consideration. At each reporting date, or whenever there are significant changes in underlying key assumptions, a review of these assumptions is performed and the contingent consideration liability is updated to its estimated fair value. If there are no significant changes in the assumptions, the quarterly determination of the fair value of contingent consideration reflects the implied interest for the passage of time. Changes in the estimated fair value of the contingent consideration obligations may result from changes in the terms of the contingent payments, changes in discount periods and rates and changes in probability assumptions with respect to the timing and likelihood of achieving the certain financial targets. Actual progress toward achieving the financial targets for the remaining measurement periods may be different than the Company’s expectations of future performance. The change in the estimated fair value of contingent consideration is included in general and administrative expense in the Consolidated Statements of Operations.
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Leases | Leases The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The Company also considers whether its service arrangements include the right to control the use of an asset. If an arrangement is determined to be a lease, the Company recognizes a right-of-use (“ROU”) asset and a corresponding operating lease liability in its Consolidated Balance Sheet based on the present value of lease payments over the expected lease term, except leases with initial terms of 12 months or less. Lease payments may include fixed rent escalation clauses or payments that depend on an index or a rate (such as the consumer price index) measured using the index or applicable rate at lease commencement. Subsequent changes in the index or rate and any other variable payments, such as market-rate base rent adjustments, are recognized as variable lease expense in the period incurred. To determine the present value of lease payments, the Company uses its incremental borrowing rate, as the leases generally do not have a readily determinable implicit discount rate. The Company applies judgement in assessing factors such as Company-specific credit risk, lease term, nature and quality of the underlying collateral and the economic environment in determining the lease-specific incremental borrowing rate. The ROU assets are also adjusted for any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by lease incentives. The Company’s leases generally include a non-lease component representing additional services transferred to the Company, such as common area maintenance for real estate. The Company accounts for lease and non-lease components in its contracts as a single lease component for all asset classes. The non-lease components are usually variable in nature and recorded in variable lease expense in the period incurred. The Company recognizes lease expense on a straight-line basis excluding short-term and variable lease payments which are recognized as incurred. Short-term lease cost represents payments for leases with a lease term of 12 months or less, excluding leases with a term of one month or less.
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Real Estate Owned | Real Estate Owned There are two types of REO properties held by the Company. The first is considered a traditional REO where the Company owns, markets, and sells the property. At the time of foreclosure, other real estate owned is recorded at the asset’s fair value less selling costs, which becomes the property’s new basis. After foreclosure, these assets are carried at the lower of their new cost basis or fair value less selling costs. Costs incurred in maintaining foreclosed real estate and subsequent write-downs to reflect declines in the fair value of the property are expensed as incurred. At December 31, 2023 and 2022, the Company had $1.5 million and $0.3 million of traditional REOs, respectively. The second type is foreclosed real estate securing GNMA loans in process of conveyance to HUD but insured by the FHA, where the Company is the controller of the deed for a period of time. For GNMA loans, the property becomes REO if not sold to a third party at its foreclosure sale. Both principal and debenture rate interest for government insured loans secured by the foreclosed real estate are collectible because the loans are insured by the FHA. This is valued at the UPB of the loan, which is considered to be fair value, as HUD reimburses the Company for the UPB plus debenture rate interest and fees. The Company reserves for unreimbursed interest in excess of the debenture rate and fees as part of the foreclosure loss reserve.
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Revenue Recognition | Revenue Recognition Loan origination fees and gain on sale of loans, net — loan origination fees and gain on sale of loans, net includes all components related to the origination and sale of mortgage loans, including (1) net gain on sale of loans, which represents the premium the Company receives in excess of the loan principal amount and certain fees charged by investors upon sale of loans into the secondary market, (2) loan origination fees (credits), points and certain costs, (3) provision for or benefit from investor reserves, (4) the change in fair value of interest rate locks and MLHS, (5) the gain or loss on forward commitments hedging loans held for sale and IRLCs, and (6) the fair value of originated MSRs. An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of a pull-through factor. Subsequent changes in the fair value of IRLCs and MLHS are recognized in current period earnings. When the mortgage loan is sold into the secondary market, any difference between the proceeds received and the current fair value of the loan is recognized in current period earnings. Included in gain on sale of loans, net is the fair value of originated MSRs, which represents the estimated fair value of MSRs related to loans which the Company has sold and retained the right to service. See sections “—Mortgage Loans Held for Sale”, “—Mortgage Servicing Rights,” and “—Derivative Instruments” under “Note 1—Business, Basis of Presentation, and Accounting Policies,” for more information related to fair value measurements of MLHS, the gain/(loss) on changes in the fair value of MSRs and the gain/(loss) on changes in the fair value of IRLCs, respectively. At December 31, 2023 and 2022, loan origination fees and gain on sale of loans were net of direct expenses of $112.7 million and $138.3 million, respectively. Gain on reverse mortgage loans held for investment and HMBS-related borrowings, net — This represents certain cash and non-cash components recognized related to our reverse mortgage loans held for investment including the net fair value changes of securitized reverse mortgage loans and HMBS-related borrowings, fair value changes of unsecuritized reverse loans, and realized gains or losses on tail securitization. In addition, this includes interest income on the reverse mortgage loans held for investment and the interest expense on the HMBS-related borrowings. Loan servicing and other fees — Loan servicing fees represent fees earned for servicing loans for various investors. The servicing fees are based on a contractual percentage of the outstanding principal balance and recognized into revenue as the related mortgage payments are received. Loan servicing expenses are charged to operations as incurred. Valuation adjustment of mortgage servicing rights — In accordance with Accounting Standards Codification (“ASC”) 860-50, Transfers and Servicing — Servicing Assets and Liabilities (“ASC 860-50”), the Company records MSRs as an asset, at fair value. The change in fair value is recorded within the Consolidated Statements of Operations on a monthly basis. See “Note 1—Business, Basis of Presentation, and Accounting Policies—Mortgage Servicing Rights,” for information related to the gain/(loss) on changes in the fair value of MSRs. Interest income — interest income includes interest earned on MLHS and interest income earnings credit. Interest expense — interest expense includes interest paid to the Company’s loan funding facilities and MSR facilities.
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Investor Reserves | Investor Reserves In the ordinary course of business, the Company has exposure to liabilities with respect to certain representations and warranties that we make to the investors who purchase the loans that we originate that under certain circumstances could require the Company to repurchase forward mortgage loans, or indemnify the purchaser of such loans for losses incurred, if there has been a breach of these representations and warranties, or in the case of early payment defaults. The estimation of the liability for probable losses related to the repurchase and indemnification obligation considers an estimate of probable future repurchase or indemnification obligations from breaches of representations and warranties. The liability related to specific non-performing loans is based on a loan-level analysis considering the current collateral value, estimated sales proceeds and selling costs. The liability related to probable future repurchase or indemnification obligations is segregated by year of origination and considers the amount of unresolved repurchase and indemnification requests, as well as an estimate of future repurchase demands. Future repurchase demands are estimated based upon recent and historical repurchase and indemnification experience, as well as the success rate in appealing repurchase requests and an estimated loss severity, based on current loss rates for similar loans. The Company also has exposure to early payment defaults (“EPD”) and/or early payoff fees (“EPO”). When the Company sells a loan to an investor and the loan either pays off or goes into default within a certain timeframe, the Company could be exposed to EPD and/or EPO fees in accordance with each investor’s contract. In addition, in the event of an early payment default, we are contractually obligated to refund certain premiums paid to us by the investors who purchased the related loan. The Company reserves for these fees by estimating early payment defaults and payoff fees based on prior loan activity and current loan origination volume.
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Foreclosure Loss Reserve and Provision for Foreclosure Losses | Foreclosure Loss Reserve and Provision for Foreclosure Losses The Company has exposure for losses associated with government loans in foreclosure related to nonrefundable interest and foreclosure servicing costs. The Company maintains a reserve for government loans currently in foreclosure based on historical loss experience. The Company also accrues for any additional known losses above the current loss per loan; for example, losses due to servicer delays.
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Advertising | Advertising Advertising is expensed as incurred and amounted to $10.6 million and $11.4 million for the years ended December 31, 2023 and 2022, respectively, and is included within general and administrative expenses in the Consolidated Statements of Operations.
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Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The fair value of restricted stock units (“RSUs”) is based on the value of the Company’s common stock on the date of grant. The Company accounts for forfeitures as they occur and reverses previously recognized expense for the unvested portion of the forfeited shares. Stock-based compensation is included in salaries, incentive compensation and benefits in the Consolidated Statements of Operations. See “Note 17—Stock-based Compensation and Employee Benefit Plans” for additional information.
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Earnings or Loss Per Share | Earnings or Loss Per Share The Company determines earnings or loss per share in accordance with the authoritative guidance in ASC 260, Earnings Per Share. Basic earnings per share is computed by dividing the net income or loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period using the two-class method. Diluted earnings or loss per share is computed in the same manner as basic earnings per share, except that the number of shares is increased to assume the issuance of potentially dilutive shares using the treasury stock method, unless the effect of such increase would be anti-dilutive. Under the treasury stock method, the average amount of compensation cost for future service that the Company has not yet recognized is assumed to be used to repurchase shares.
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Common Stock Dividends | Common Stock Dividends Dividends are recorded if and when declared by the board of directors. The ability to declare dividends may be limited by restrictive covenants in connection with the Company’s indebtedness. Dividends are accrued as a liability on the Consolidated Balance Sheets when declared and recorded as a decrease to retained earnings when paid. Unvested RSUs under the 2020 Omnibus Incentive Plan (the “2020 Plan”) have rights to dividends, which entitle holders to the same dividend value per share as holders of shares of Class A common stock in the form of dividend equivalent units (“DEUs”). DEUs will be credited as additional RSUs on the dividend payment date and will vest on the same date as the underlying RSUs and are forfeited if the underlying RSUs forfeit prior to vesting. The number of additional RSUs credited will equal (1) the per share cash dividend amount, multiplied by (2) the number of RSUs, divided by (3) the fair market value of a share of Class A common stock on the last trading day before the date of the dividend payment, rounded up to the nearest whole number of RSUs.
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Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more-likely than-not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and records penalties as a component of income taxes.
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Escrow and Fiduciary Funds | Escrow and Fiduciary Funds As a loan servicer, the Company maintains segregated bank accounts in trust for investors and escrow balances for mortgagors, which are excluded from the Company’s Consolidated Balance Sheets.
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Risks and Uncertainties | Risks and Uncertainties In the normal course of business, companies in the mortgage banking industry encounter certain economic, liquidity, and regulatory risks. Economic risk includes interest rate risk and credit risk. Interest rate risk The Company’s MLHS, commitments to originate loans, and MSRs are subject to interest rate risk. For MLHS and commitments to originate loans, to the extent that a rising interest rate environment exists, the Company may experience a decrease in loan production and decreases in value, which may negatively impact the Company’s operations. To mitigate this risk, the Company uses hedging strategies designed to ensure any fluctuations in rates would not have a material impact on the Company’s financial position. For the Company’s MSRs, the fair value generally decreases in periods where interest rates are declining and as prepayments speeds are increasing. The fair value generally increases in periods where interest rates are increasing and as prepayments speeds are decreasing. For the years ended December 31, 2023 and 2022, the Company experienced an increase and a decrease, respectively, in the valuation of its MSR portfolio. Since the Company also has a large origination platform the Company believes it was able to mitigate this risk by recapturing a significant portion of the runoff through refinances. Credit risk Credit risk is the risk of default that may result from borrowers’ inability or unwillingness to make contractually required payments during the period in which loans are being held for sale. The Company considers credit risk associated with these loans to be insignificant as it holds the loans for a short period of time, typically less than a month, and historically the Company has not experienced any material losses due to credit risk on loans held for sale. The Company sells loans to investors without recourse. As such, the investors have assumed the risk of loss or default by the borrower. However, the Company is usually required by these investors to make certain standard representations and warranties relating to credit information, loan documentation and collateral. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase the loans or indemnify these investors for any losses from borrower defaults, defects in the collateral or errors made in the credit decision. The Company is also subject to counterparty credit risk in the event of contractual nonperformance by its trading counterparties to its various over-the-counter derivative financial instruments. The Company manages this credit risk by selecting only counterparties that it believes to be financially strong, spreading the credit risk among many such counterparties, placing contractual limits on the amount of unsecured credit extended to any single counterparty, and entering into netting agreements with the counterparties as appropriate. The master netting agreements contain a legal right to offset amounts due to and from the same counterparty. Derivative assets in the Consolidated Balance Sheets represent derivative contracts in a gain position net of loss positions with the same counterparty and, therefore, also represent the Company’s maximum counterparty credit risk. The Company incurred no credit losses due to nonperformance of any of its counterparties during the years ended December 31, 2023 and 2022. Liquidity risk The Company encounters liquidity risk as the business requires substantial cash to support its operating activities. As a result, the Company is dependent on its lines of credit, and other financing facilities in order to finance its continued operations. If the Company’s principal lenders decided to terminate or not to renew these credit facilities with the Company, the loss of borrowing capacity could have an adverse impact on the Company’s financial statements unless the Company found a suitable alternative source. To mitigate this risk, the Company has multiple financing facilities with different lenders and varied maturity dates. Historically, the Company has not had a line of credit involuntarily terminated by a lender. The Company assesses market conditions and closely monitors and projects cash flows over multiple time periods to anticipate and mitigate liquidity risk. Regulatory risk The Company is subject to extensive and comprehensive regulation under federal, state and local laws in the United States. These laws and regulations significantly affect the way in which the Company does business and can restrict the scope of the Company’s existing business and limit the Company’s ability to expand product offerings or pursue acquisitions, or can make costs to service or originate loans higher, which could impact financial results. The Company continually monitors its regulatory environment for any changes that could have a significant impact on operations.
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Recent Accounting Standards | Recent Accounting Standards In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. For public business entities the update will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the disclosure requirements related to the new standard. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) (“ASU 2023-07”). ASU 2023-07 requires disclosure, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. ASU 2023-07 requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. The Company is currently evaluating the disclosure requirements related to the new standard. In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). ASU 2023-05 applies to the formation of a “joint venture” or a “corporate joint venture” and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance does not impact accounting by the venturers. The new guidance is applicable to joint venture entities with a formation date on or after January 1, 2025 on a prospective basis and early adoption is permitted. The Company is currently evaluating the impact of adoption of the new guidance on its financial statements. Adopted Accounting Standards In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. ASU 2020-04 generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies that the practical expedients in ASU 2020-04 apply to derivatives impacted by changes in the interest rate used for margining, discounting, or contract price alignment. The guidance in ASU 2020-04 is optional and may be elected over time, through December 31, 2022, as reference rate reform activities occur. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, to extend the temporary accounting rules from December 31, 2022 to December 31, 2024. Once ASU 2020-04 is elected, the guidance must be applied prospectively for all eligible contract modifications. For contracts to which ASC 470, Debt applies, the Company has applied the optional expedients available from ASU 2020-04 and accounted for the contract modifications related to reference rate reform prospectively. The Company transitioned its funding facilities and financing facilities that utilized LIBOR as the reference rate to alternative reference rates prior to the LIBOR cessation date of June 30, 2023 and there was no material impact on the Company's consolidated financial statements.
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Fair Value Measurements | Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are prioritized within a three-level fair value hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The categorization of assets and liabilities measured at fair value within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three levels of inputs used to measure fair value are as follows: •Level One - Level One inputs are unadjusted, quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. •Level Two - Level Two inputs are observable for that asset or liability, either directly or indirectly, and include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, observable inputs for the asset or liability other than quoted prices and inputs derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified contractual term, the inputs must be observable for substantially the full term of the asset or liability. •Level Three - Level Three inputs are unobservable inputs for the asset or liability that reflect the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, and are developed based on the best information available.
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BUSINESS, BASIS OF PRESENTATION, AND ACCOUNTING POLICIES (Tables) |
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Summary of Cash, Cash Equivalents and Restricted Cash | The following table summarizes the Company’s cash, cash equivalents and restricted cash at December 31, 2023 and 2022:
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FAIR VALUE MEASUREMENTS (Tables) |
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Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2023:
The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2022:
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Summary of Reconciliation of Level 3 Assets Measured at Fair Value on Recurring Basis | The table below presents a reconciliation of certain Level Three assets and liabilities measured at fair value on a recurring basis, excluding those deemed immaterial, for the years ended:
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Summary of Reconciliation of Level 3 Liabilities Measured at Fair Value on Recurring Basis | The table below presents a reconciliation of certain Level Three assets and liabilities measured at fair value on a recurring basis, excluding those deemed immaterial, for the years ended:
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Summary of Financial Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes the Company’s financial assets and liabilities measured at fair value on a non-recurring basis at December 31, 2023:
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a non-recurring basis at December 31, 2022:
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Summary of Fair Value Option for Mortgage Loans Held For Sale | The following is the estimated fair value and UPB of assets and liabilities that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected as the Company believes fair value best reflects their expected future economic performance and to align with the Company’s business and risk management strategies.
(1)At December 31, 2023 MLHS that were 90 days or more past due had a fair value of $7.3 million and UPB of $9.9 million. At December 31, 2022 MLHS that were 90 days or more past due had a fair value of $6.3 million and UPB of $8.8 million. (2)At December 31, 2023 reverse mortgage loans held for investment that were 90 days or more past due had a fair value of $3.4 million and UPB of $3.3 million.
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ACCOUNTS AND NOTES RECEIVABLE, NET (Tables) |
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Schedule of Accounts and Interest Receivable | Accounts and notes receivable consisted of the following at December 31, 2023 and 2022:
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Schedule of Activity of the Foreclosure Loss Reserve | The activity of the foreclosure loss reserve was as follows for the years ended December 31, 2023 and 2022:
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Other Assets | Other assets consisted of the following at December 31, 2023 and 2022:
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Summary of Property and Equipment | Property and equipment, net consisted of the following at December 31, 2023 and 2022:
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Unrealized Hedging Gains | Changes in the fair value of the Company's derivative financial instruments are as follows for the years ended December 31, 2023 and 2022:
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Schedule of Notional and Fair Value of Derivative Financial Instruments Not Designated as Hedging Instruments | The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows at December 31, 2023 and 2022:
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Schedule of Quantitative Information About IRLCs and Fair Value Measurements | The following table presents the quantitative information about IRLCs and the fair value measurements as of December 31, 2023 and 2022:
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Schedule of Financial Liabilities are Subject to Master Netting Arrangements or Similar Agreements Categorized by Financial Instrument | The table below represents financial assets and liabilities that are subject to master netting arrangements categorized by financial instrument:
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MORTGAGE SERVICING RIGHTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity of Mortgage Servicing Rights | The activity of MSRs was as follows for the years ended December 31, 2023 and 2022:
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Summary of Weighted Average Discount Rate, Prepayment Speed and Cost to Service Assumptions Used to Determine Fair Value of MSRs | The following table presents the weighted average discount rate, prepayment speed and cost to service assumptions used to determine the fair value of MSRs as of December 31, 2023 and 2022:
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Summary of Actual Revenue Generated from Servicing Activities | Actual revenue generated from servicing activities included contractually specified servicing fees, as well as late fees and other ancillary servicing revenue, which were recorded within loan servicing and other fees as follows for the years ended December 31, 2023 and 2022:
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Summary of Impact of Adverse Changes on Prepayment Speeds, Discount Rate and Cost to Service at Two Different Data Points | The following table illustrates the impact of adverse changes on the prepayment speeds, discount rate and cost to service at two different data points at December 31, 2023 and 2022, respectively:
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MORTGAGE LOANS HELD FOR SALE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage Loans Held For Sale [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Reconciliation of Changes in Mortgage Loans Held for Sale to Amounts Presented in Condensed Consolidated Statements of Cash Flows | A reconciliation of the changes in MLHS to the amounts presented in the Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 is set forth below:
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REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Held For Investment | A reconciliation of the changes in reverse mortgage loans held for investment and HMBS-related borrowings for the period presented is below:
(1)HMBS-related borrowings represent the issuance of pools of HMBS, which are guaranteed by GNMA, to third-party security holders. The Company accounts for the transfers of these advances in the related HECM loans as secured borrowings, retaining the initial HECM loans in the Consolidated Balance Sheet as reverse mortgage loans held for investment and recording the pooled HMBS as HMBS-related borrowings. (2)During 2023, the Company purchased a reverse mortgage servicing portfolio of HECM loans securitized in Ginnie Mae pools. As the Ginnie Mae HMBS program does not qualify for sale accounting, the transaction conveyed the HECM loans and associated HMBS-related borrowings to us. The Company has accounted for this transaction as a secured financing, as a purchase of loans held for investment and assumption of an HMBS securitization liability for the obligation to Ginnie Mae. (3)See further breakdown in the table below. Gain on Reverse Mortgage Loans Held for Investment and HMBS-related Borrowings
(1)Includes the changes in fair value of newly originated loans held for investment in the period from origination through securitization date. (2)Includes the cash realized gains upon securitization of tails. (3)See breakdown between Loans held for investment and HMBS-related borrowings in the table above. Below are the significant unobservable inputs used to value the reverse mortgage loans held for investment and HMBS-related borrowings:
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LEASES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Lease-related Assets and Liabilities | All leases recognized in the Company's Consolidated Balance Sheets as of December 31, 2023 and 2022 are classified as operating leases, which include leases related to the asset classes reflected in the table below. ROU assets are included in other assets in the Company's Consolidated Balance Sheets.
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Summary of Components of Gross Operating Lease Costs | The following table summarizes the components of the Company's gross operating lease costs incurred during the years ended December 31, 2023 and 2022:
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Summary of Weighted-average Lease Term and Discount Rate Used | The weighted-average lease term and discount rate used are as follows:
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Summary of Supplemental Cash Flow Information Related to Operating Leases | The following table summarizes supplemental cash flow information related to operating leases:
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Schedule of Minimum Future Commitments or Rental Payments Under Operating Leases | Minimum future commitments by year for the Company's long-term operating leases as of December 31, 2023 are presented in the table below. Such commitments are reflected at undiscounted values and are reconciled to the discounted present value recognized in the balance sheet as follows:
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GOODWILL AND INTANGIBLE ASSETS, NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity in Goodwill | The changes in the carrying amount of goodwill allocated to the origination segment are presented in the following table:
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Schedule of Finite-Lived Intangible Assets | The following table presents the Company's intangible assets, net as of December 31, 2023 and 2022:
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Schedule of Expected Amortization Expense | As of December 31, 2023, expected amortization expense for the unamortized acquired intangible assets is as follows:
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INVESTOR RESERVES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Activity of Investor Reserves | The activity of the investor reserves was as follows for the years ended December 31, 2023 and 2022:
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WAREHOUSE LINES OF CREDIT, NET (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Warehouse Lines of Credit | Warehouse lines of credit consisted of the following at December 31, 2023 and 2022. Changes subsequent to December 31, 2023 have been described in the notes referenced with the below table.
______________________________ (1)The variable interest rate is calculated using a base rate tied to SOFR. Subsequent to December 31, 2023, this facility was reduced $165.0 million. (2)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This line of credit requires a minimum deposit of $750,000, included in restricted cash. (3)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This facility requires a minimum deposit to $1.5 million, included in restricted cash. (4)The variable interest rate is calculated using a base rate plus SOFR, with a floor of 0.375% plus the applicable interest rate margin. This facility requires a minimum deposit of $300,000, included in restricted cash. (5)The variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.40%, plus the applicable interest rate margin. (6)The variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.50%, plus the applicable interest rate margin. (7)The facility matured in July 2023 and was not renewed. (8)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This facility’s maturity date is 30 days from written notice by either the financial institution or the Company. (9)The interest rate on this facility is 3.375%. This facility is used for GNMA delinquent buyouts. Each buyout represents a separate transaction that can remain on the facility for up to four years. (10)This facility agreement is due on demand and the variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.75%.
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INCOME TAXES (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense | The components of income tax expense or benefit were as follows for the years ended December 31, 2023 and 2022:
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Schedule of Reconciliation of Recorded Income Tax Expense of Continuing Operations | The following table presents a reconciliation of the recorded income tax expense or benefit of continuing operations to the amount of taxes computed by applying the applicable federal statutory tax rate of 21.0% to income or loss from continuing operations before income taxes, as of December 31, 2023 and 2022, respectively:
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Schedule of Tax Effects of Significant Temporary Differences to Deferred Tax Assets and Liabilities | The tax effects of significant temporary differences which gave rise to the Company’s deferred tax assets and liabilities are as follows at December 31, 2023 and 2022:
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STOCKHOLDERS' EQUITY AND EARNINGS (LOSS) PER SHARE (Tables) |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Basic and Diluted Earnings Per Share | The following table sets forth the components of basic and diluted earnings per share for the years ended December 31, 2023 and 2022:
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STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Tables) |
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Unvested Restricted Stock | The following table shows a summary of the unvested RSUs under the 2020 Plan as of December 31, 2023 as well as activity during the year:
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SEGMENTS (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Performance and Results by Segment | The following table presents the financial performance and results by segment for the year ended December 31, 2023:
The following table presents the financial performance and results by segment for the year ended December 31, 2022:
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BUSINESS, BASIS OF PRESENTATION, AND ACCOUNTING POLICIES - Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 120,260 | $ 137,891 | |
Restricted cash | 7,121 | 8,863 | |
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows | $ 127,381 | $ 146,754 | $ 248,120 |
FAIR VALUE MEASUREMENTS - Summary of Reconciliation of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Level 3 - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
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Notes Receivable | ||
Assets | ||
Beginning balance | $ 0 | $ 0 |
Payments | (5,000) | |
Additions | 16,556 | |
Valuation adjustments | (929) | |
Ending balance | 10,627 | 0 |
Contingent Liabilities | ||
Contingent Liabilities | ||
Beginning balance | 526 | 59,500 |
Payments | (388) | (14,425) |
Additions | 6,103 | 526 |
Valuation adjustments | 2,479 | (45,075) |
Ending balance | 8,720 | 526 |
Interest Rate Lock Commitments | ||
Assets | ||
Beginning balance | 1,518 | 22,119 |
Net transfers and revaluation losses | 13,384 | (20,601) |
Ending balance | $ 14,902 | $ 1,518 |
ACQUISITIONS (Details) - USD ($) $ in Millions |
Sep. 11, 2023 |
Apr. 03, 2023 |
Feb. 13, 2023 |
Dec. 12, 2022 |
---|---|---|---|---|
First Centennial Mortgage Corporation (“FCM”) | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 2.1 | |||
Cherry Creek Mortgage, LLC | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 8.3 | |||
Payments to acquire businesses, gross | 2.6 | |||
Fair value of contingent consideration | 4.4 | |||
Issuance discount on note receivable | $ 1.3 | |||
Legacy Mortgage LLC | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 5.0 | |||
Payments to acquire businesses, gross | 3.3 | |||
Fair value of contingent consideration | $ 1.7 | |||
Inlanta Mortgage, Inc. | ||||
Business Acquisition [Line Items] | ||||
Purchase price | $ 4.0 | |||
Payments to acquire businesses, gross | 3.5 | |||
Fair value of contingent consideration | $ 0.5 |
ACCOUNTS AND NOTES RECEIVABLE, NET - Schedule of Accounts , Notes and Interest Receivable (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Receivables [Abstract] | ||
Trust advances | $ 44,487 | $ 44,164 |
Foreclosure advances, net | 20,261 | 12,320 |
Notes receivable | 10,627 | 0 |
Other | 9,981 | 1,820 |
Total accounts and notes receivable, net | $ 85,356 | $ 58,304 |
ACCOUNTS AND NOTES RECEIVABLE, NET - Schedule of Activity of the Foreclosure Loss Reserve (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
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Foreclosure Loss Reserve [Roll Forward] | ||
Balance — beginning of year | $ 8,698 | $ 10,355 |
Utilization of foreclosure reserve | (4,192) | (1,957) |
Provision for foreclosure losses | 1,188 | 300 |
Balance — end of year | $ 5,694 | $ 8,698 |
ACCOUNTS AND NOTES RECEIVABLE, NET - Additional Information (Details) - USD ($) $ in Thousands |
1 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2023 |
Dec. 31, 2022 |
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Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Notes receivable | $ 10,627 | $ 0 | |
Cherry Creek Mortgage, LLC | |||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Notes receivable | $ 11,300 | ||
Discount on note receivable | $ 1,300 | ||
Term of earn out payment | 4 years | ||
Percentage of interest payment allowed to be paid-in-kind | 50.00% |
OTHER ASSETS - Summary of Other Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Other Assets [Abstract] | ||
Prepaid expenses | $ 28,730 | $ 31,499 |
Company owned life insurance | 41,840 | 37,871 |
Property and equipment, net | 13,913 | 12,118 |
Right-of-use assets | 65,273 | 74,660 |
Income tax receivable | 3,507 | 26,531 |
Real estate owned, net | 1,991 | 306 |
Land | 1,978 | 2,034 |
Trading securities | 100 | 96 |
Investments in unconsolidated joint ventures, net | 671 | 0 |
Investment in warrants | 961 | 961 |
Total other assets | $ 158,964 | $ 186,076 |
OTHER ASSETS - Summary of Property and Equipment (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 92,566 | $ 84,361 |
Accumulated depreciation | (78,653) | (72,243) |
Property and equipment, net | 13,913 | 12,118 |
Computer equipment | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | 30,755 | 29,447 |
Furniture and equipment | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | 25,687 | 25,072 |
Leasehold improvements | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | 20,286 | 18,713 |
Internal-use software in production | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,963 | 772 |
Internal-use software | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 11,875 | $ 10,357 |
OTHER ASSETS - Additional Information (Details) - USD ($) $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Other Assets [Abstract] | ||
Depreciation | $ 6.6 | $ 7.6 |
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Net Unrealized Hedging Gains (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized hedging gains (losses) | $ 1,404 | $ (27,936) |
Not Designated as Hedging Instruments | Loan Origination Fees and Gain on Sale of Loans, Net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Unrealized hedging gains (losses) | $ 1,404 | $ (27,936) |
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Notional and Fair Value of Derivative Financial Instruments Not Designated as Hedging Instruments (Details) - Not Designated as Hedging Instruments - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Interest Rate Lock Commitments | ||
Derivative [Line Items] | ||
Notional Value | $ 821,865 | $ 810,514 |
Derivative Asset | 14,902 | 1,518 |
Derivative Liability | 0 | 0 |
Forward delivery commitments and best efforts sales commitments | ||
Derivative [Line Items] | ||
Notional Value | 933,850 | 1,127,154 |
Derivative Asset | 693 | 1,602 |
Derivative Liability | $ 16,245 | $ 5,173 |
DERIVATIVE FINANCIAL INSTRUMENTS - Additional Information (Details) - Not Designated as Hedging Instruments - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Derivative [Line Items] | ||
Outstanding forward contracts and mandatory sell commitments | $ 163,800,000 | $ 256,300,000 |
Closed hedge instruments not yet settled | 343,000,000 | 470,800,000 |
Credit losses due to nonperformance of counterparties | $ 0 | $ 0 |
DERIVATIVE FINANCIAL INSTRUMENTS - Schedule of Quantitative Information About IRLCs and Fair Value Measurements (Details) - Interest Rate Lock Commitments |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loan funding probability (“pull-through”) | 0.00% | 0.00% |
Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loan funding probability (“pull-through”) | 100.00% | 100.00% |
Weighted Average | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Loan funding probability (“pull-through”) | 86.50% | 93.40% |
MORTGAGE SERVICING RIGHTS - Summary of Activity of Mortgage Servicing Rights (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Servicing Asset at Amortized Cost, Balance [Roll Forward] | ||
Balance — beginning of year | $ 1,139,539 | $ 675,340 |
MSRs originated and acquired through acquisitions | 161,378 | 246,648 |
Changes in fair value: | ||
Due to collection/realization of cash flows | (55,588) | (83,390) |
Due to changes in valuation model inputs or assumptions | (83,972) | 300,941 |
Balance — end of year | $ 1,161,357 | $ 1,139,539 |
MORTGAGE SERVICING RIGHTS - Summary of the Weighted Average Discount Rate, Prepayment Speed and Cost to Service Assumptions Used to Determine the Fair Value of MSRs (Details) - $ / loan |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Minimum | ||
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items] | ||
Discount rate | 9.60% | 9.60% |
Prepayment rate | 6.40% | 6.60% |
Cost to service (in USD per loan) | 72.1 | 66.7 |
Maximum | ||
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items] | ||
Discount rate | 15.50% | 15.70% |
Prepayment rate | 32.00% | 28.60% |
Cost to service (in USD per loan) | 366.3 | 330.4 |
Weighted Average | ||
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items] | ||
Discount rate | 10.90% | 10.60% |
Prepayment rate | 8.50% | 7.50% |
Cost to service (in USD per loan) | 96.4 | 92.0 |
MORTGAGE SERVICING RIGHTS - Additional Information (Details) - USD ($) $ in Billions |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Transfers and Servicing [Abstract] | ||
Mortgage servicing rights weighted average life | 8 years | 8 years 6 months |
Unpaid principal balance of mortgage loans serviced | $ 85.0 | $ 78.9 |
MORTGAGE SERVICING RIGHTS - Summary of Actual Revenue Generated from Servicing Activities (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Transfers and Servicing [Abstract] | ||
Servicing fees from servicing portfolio | $ 242,003 | $ 218,734 |
Late fees | 6,788 | 5,825 |
Other ancillary servicing revenue and fees | (2,647) | (1,156) |
Total loan servicing and other fees | $ 246,144 | $ 223,403 |
MORTGAGE SERVICING RIGHTS - Summary of Impact of Adverse Changes on Prepayment Speeds, Discount Rate and Cost to Service at Two Different Data Points (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Transfers and Servicing [Abstract] | ||
Mortgage servicing rights, Prepayment Speeds 10% Adverse Change | $ (36,968) | $ (36,298) |
Mortgage servicing rights, Prepayment Speeds 20% Adverse Change | (72,701) | (70,878) |
Mortgage servicing rights, Discount Rates 10% Adverse Change | (47,899) | (50,392) |
Mortgage servicing rights, Discount Rates 20% Adverse Change | (93,196) | (96,848) |
Mortgage servicing rights, Cost to Service (per loan) 10% Adverse Change | (11,315) | (11,880) |
Mortgage servicing rights, Cost to Service (per loan) 20% Adverse Change | $ (23,573) | $ (24,162) |
MORTGAGE LOANS HELD FOR SALE (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Mortgages Held For Sale [Roll Forward] | ||
Balance at the beginning of period | $ 845,775 | $ 2,204,216 |
Origination of mortgage loans held for sale | 14,193,944 | 19,220,547 |
Proceeds on sale of and payments from mortgage loans held for sale | (14,504,592) | (21,062,670) |
Gain on sale of mortgage loans excluding fair value of other financial instruments, net | 336,245 | 528,243 |
Valuation adjustment of mortgage loans held for sale | 29,855 | (44,561) |
Balance at the end of period | $ 901,227 | $ 845,775 |
REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS - Schedule of Gain on Reverse Mortgage Loans Held for Investment (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Fair Value Disclosures [Abstract] | ||
Gain on new originations | $ 4,172 | |
Gain on tail securitizations | 195 | |
Net interest income | 78 | |
Change in fair value of reverse mortgage loans held for investment | 3,788 | |
Fair value gain recognized in earnings | 8,233 | |
Gain on reverse mortgage loans held for investment | $ 8,233 | $ 0 |
LEASES - Additional Information (Details) |
Dec. 31, 2023 |
---|---|
Minimum | |
Leases [Line Items] | |
Operating lease, term | 1 year |
Maximum | |
Leases [Line Items] | |
Operating lease, term | 12 years |
LEASES - Schedule of Lease-related Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Line Items] | ||
Right-of-use assets | $ 65,273 | $ 74,660 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Operating lease liabilities | $ 75,832 | $ 85,977 |
Office leases | ||
Leases [Line Items] | ||
Right-of-use assets | 65,273 | 74,603 |
Operating lease liabilities | 75,832 | 85,892 |
Equipment | ||
Leases [Line Items] | ||
Right-of-use assets | 0 | 57 |
Operating lease liabilities | $ 0 | $ 85 |
LEASES - Summary of Components of Gross Operating Lease Costs (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Leases [Abstract] | ||
Operating lease cost | $ 24,919 | $ 26,085 |
Short-term lease cost | 5,141 | 3,374 |
Variable lease cost | 4,236 | 4,664 |
Total lease cost | $ 34,296 | $ 34,123 |
LEASES - Summary of Weighted-average Lease Term and Discount Rate Used (Details) |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
Weighted-average lease term (years) | 5 years 1 month 6 days | 5 years 8 months 12 days |
Weighted-average discount rate | 4.10% | 4.00% |
LEASES- Summary of Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Leases [Abstract] | ||
Cash paid for operating leases | $ 25,682 | $ 15,972 |
Cash paid for operating leases | $ 12,199 | $ 16,008 |
LEASES - Summary of Future Commitments by Year for Long-term Operating Leases (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2024 | $ 22,721 | |
2025 | 16,491 | |
2026 | 11,978 | |
2027 | 9,748 | |
2028 | 8,415 | |
Thereafter | 14,477 | |
Total future minimum lease payments | 83,830 | |
Less: imputed interest | (7,998) | |
Total lease liabilities | $ 75,832 | $ 85,977 |
GOODWILL AND INTANGIBLE ASSETS, NET - Schedule of Changes in the Carrying Amount of Goodwill Allocated to the Origination Segment (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Goodwill [Roll Forward] | ||
Beginning balance | $ 176,769 | $ 175,144 |
Purchase accounting adjustments | 758 | (1,710) |
Acquisition | 8,654 | 3,335 |
Ending balance | $ 186,181 | $ 176,769 |
GOODWILL AND INTANGIBLE ASSETS, NET - Additional Information (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Impairment charge | $ 0 | $ 0 |
Amortization of intangible assets | $ 8,000,000 | $ 8,000,000 |
GOODWILL AND INTANGIBLE ASSETS, NET - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangibles | $ 45,000 | $ 45,000 |
Accumulated Amortization | 19,875 | 11,925 |
Net Intangibles | 25,125 | 33,075 |
Referral network | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangibles | 42,300 | 42,300 |
Accumulated Amortization | 17,625 | 10,575 |
Net Intangibles | 24,675 | 31,725 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangibles | 2,700 | 2,700 |
Accumulated Amortization | 2,250 | 1,350 |
Net Intangibles | $ 450 | $ 1,350 |
GOODWILL AND INTANGIBLE ASSETS, NET - Schedule of Expected Amortization Expense (Details) - USD ($) $ in Thousands |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2024 | $ 7,500 | |
2025 | 7,050 | |
2026 | 7,050 | |
2027 | 3,525 | |
Net Intangibles | $ 25,125 | $ 33,075 |
INVESTOR RESERVES (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Investor Reserves [Roll Forward] | ||
Balance — beginning of year | $ 16,094 | $ 18,437 |
Benefit from investor reserves | (4,796) | (9,219) |
Provision for investor reserves | 8,675 | 6,876 |
Balance — end of year | $ 19,973 | $ 16,094 |
WAREHOUSE LINES OF CREDIT, NET - Additional Information (Details) - USD ($) |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit, net | $ 833,781,000 | $ 713,151,000 |
Warehouse Agreement Borrowings | Line of Credit | ||
Warehouse Lines of Credit [Line Items] | ||
Weighted average interest rate | 7.00% | 3.30% |
Cash balances | $ 8,700,000 | $ 50,700,000 |
Line of Credit | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit, net | $ 0 | $ 0 |
INCOME TAXES - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Current tax (benefit) expense: | ||
Federal | $ (236) | $ (199) |
State | 1,183 | 870 |
Current tax expense | 947 | 671 |
Deferred tax (benefit) expense: | ||
Federal | (10,091) | 72,764 |
State | 2,150 | 17,954 |
Deferred tax expense | (7,941) | 90,718 |
Income tax (benefit) expense | $ (6,994) | $ 91,389 |
INCOME TAXES - Additional Information (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Operating Loss Carryforwards [Line Items] | ||
Deferred tax assets, valuation allowance | $ 0 | $ 0 |
Unrecognized tax benefits | 0 | $ 0 |
Changes in unrecognized tax benefits | 0 | |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 76,900,000 | |
Tax credit carryforwards | 1,600,000 | |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 70,800,000 | |
Tax credit carryforwards | $ 800,000 |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Summary of Unvested Restricted Stock (Details) - Restricted Stock Units |
12 Months Ended |
---|---|
Dec. 31, 2023
$ / shares
shares
| |
Number of Shares | |
Beginning balance (in shares) | shares | 1,686,632 |
Granted (in shares) | shares | 817,130 |
Vested (in shares) | shares | (659,936) |
Forfeited (in shares) | shares | (56,222) |
Ending balance (in shares) | shares | 1,787,604 |
Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 12.78 |
Granted (in dollars per share) | $ / shares | 10.90 |
Vested (in dollars per share) | $ / shares | 12.34 |
Forfeited (in dollars per share) | $ / shares | 13.14 |
Ending balance (in dollars per share) | $ / shares | $ 12.10 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Total commitments to originate loans | $ 821.9 | $ 810.5 |
Total commitments related to derivatives | 933.9 | $ 1,100.0 |
Reverse mortgage loans borrowers | 107.3 | |
Short-term commitments to lend | $ 0.3 |
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jan. 01, 2019 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Related Party | |||
Related Party Transaction [Line Items] | |||
One-time payment | $ 2.0 | ||
Number of shares sold | 13.7038 | ||
Promissory note | $ 8.0 | ||
Payments to related party | $ 0.5 | $ 2.1 | |
Executive | |||
Related Party Transaction [Line Items] | |||
Debt instrument, term | 4 years |
REGULATORY CAPITAL AND LIQUIDITY REQUIREMENTS (Details) - USD ($) $ in Millions |
Dec. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Mortgage Banking [Abstract] | ||
Minimum adjusted net worth balance required | $ 253.5 | $ 87.0 |
SEGMENTS - Additional Information (Details) |
12 Months Ended |
---|---|
Dec. 31, 2023
segment
state
loan
| |
Segment Reporting Information [Line Items] | |
Number of reportable segments | segment | 2 |
Servicing Segment | |
Segment Reporting Information [Line Items] | |
Number of states in which entity operates | state | 49 |
Minimum | Servicing | |
Segment Reporting Information [Line Items] | |
Number of loans serviced | loan | 1 |
SUBSEQUENT EVENT (Details) $ in Millions |
Feb. 12, 2024
USD ($)
|
---|---|
Subsequent Event | Academy Mortgage Corporation | |
Subsequent Event [Line Items] | |
Payments to acquire businesses, gross | $ 13.4 |
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