Mortgage Loans

3 Months Ended

Dec. 31, 2024

SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract]

MORTGAGE LOANS

MORTGAGE LOANS

Mortgage loans held for sale consist primarily of single-family residential loans collateralized by the underlying property. The Company typically sells the servicing rights for the majority of loans when the loans are sold. Servicing rights retained are typically sold within six months of loan origination. At December 31, 2024, mortgage loans held for sale of $1.8 billion had an aggregate outstanding principal balance of $1.9 billion. At September 30, 2024, mortgage loans held for sale of $2.5 billion had an aggregate outstanding principal balance of $2.5 billion. Mortgage loans held for sale at both dates were primarily composed of mortgage loans measured at fair value on a recurring basis using Level 2 inputs.

During the three months ended December 31, 2024 and 2023, mortgage loans originated totaled $5.15 billion and $5.12 billion, respectively, and mortgage loans sold totaled $5.74 billion and $5.69 billion, respectively. The Company had gains on sales of loans and servicing rights of $120.1 million during the three months ended December 31, 2024 compared to $128.7 million in the prior year period. Net gains on sales of loans and servicing rights are included in revenues in the consolidated statements of operations. During the three months ended December 31, 2024, approximately 69% of the Company’s mortgage loans were sold directly to Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) or into securities backed by Government National Mortgage Association (Ginnie Mae), and 30% were sold to one other major financial entity.

The Company also uses hedging instruments as part of a program to offer below market interest rate financing to its homebuyers. At December 31, 2024 and September 30, 2024, the Company had mortgage-backed securities (MBS) totaling $673.5 million and $637.9 million, respectively, that did not yet have interest rate lock commitments (IRLCs) or closed loans created or assigned. The Company recorded an asset of $3.4 million and $2.4 million at December 31, 2024 and September 30, 2024, respectively, for the fair value of such MBS position, which is measured using Level 2 inputs.

The Company is party to IRLCs, which are extended to borrowers who have applied for loan funding and meet defined credit and underwriting criteria. At December 31, 2024 and September 30, 2024, the notional amount of IRLCs, which are accounted for as derivative instruments recorded at fair value using Level 3 inputs, totaled $1.99 billion and $2.05 billion, respectively.