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What changed in loanDepot, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of loanDepot, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+436 added−458 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-13)

Top changes in loanDepot, Inc.'s 2025 10-K

436 paragraphs added · 458 removed · 374 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn particular, we are required to comply with: • Title V of the GLBA and Regulation P, which requires initial and periodic communication with consumers on privacy matters and the maintenance of privacy regarding certain consumer data in our possession; • the Fair Debt Collection Practices Act (“FDCPA”) and Regulation F, which regulates the timing and content of communications on debt collections; • the TILA and Regulation Z, which, in conjunction with the RESPA under the TILA-RESPA Integrated Disclosure Rule, require certain disclosures be made to mortgagors regarding terms of mortgage financing, including but not limited to information designed to promote consumer understanding of the cost of a loan, expressed in terms of an annual percentage rate, and other credit terms including the disclosure of the number, amount and due dates or periods of scheduled repayments; TILA and Regulation Z also include the rules on loan officer compensation, require special disclosures and treatment for certain high-cost loans, require certain disclosures in connection with the servicing, assumption or refinancing of mortgage loans, provide for consumers’ right to rescind loans under certain circumstances, contain rules with respect to the ordering and review of appraisals and interaction with appraisers, and provide rules requiring a determination of the consumer’s ability to repay certain mortgage loans and providing either a safe harbor or rebuttable presumption of compliance for certain qualified mortgage loans; • the FCRA and Regulation V, which collectively regulate the use and reporting of information related to the credit history of consumers and provides a national legal standard for lenders in sharing information with affiliates and certain third parties and in providing firm offers of credit to consumers; • the ECOA and Regulation B, which prohibit discrimination on the basis of age, race and certain other characteristics in the extension of credit and requires that in certain circumstances, creditors provide appraisal-related disclosures and copies of appraisals to borrowers; • the Homeowners Protection Act, which requires the cancellation of mortgage insurance once certain equity levels are reached; • the Home Mortgage Disclosure Act and Regulation C, which require public reporting of certain loan data; • the Fair Housing Act, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics; • the SCRA, which provides certain legal protections and relief to members of the military; • RESPA and Regulation X, which governs the actions of servicers related to escrow accounts, servicing transfers, general mortgage servicing and loss mitigation practices, and other customer communications, and prohibits certain practices, such as giving or accepting a fee, kickback, or anything of value in exchange for referrals of settlement service business; • Regulation N (the Mortgage Acts and Practices Advertising Rule), which prohibits deceptive claims in mortgage advertising and other commercial communications; • Regulation AB under the Securities Act, which requires registration, reporting and disclosure for MBS; • the Secure and Fair Enforcement for Mortgage Licensing Act, commonly known as the SAFE Act, which is designed to enhance consumer protection and reduce fraud by requiring states to establish minimum standards for the licensing and registration of state licensed mortgage loan originators; • the CCPA, which provides California consumers with new privacy rights and increases the privacy and security obligations of entities handling certain personal information of such consumers, as well as other state privacy laws; • the Telephone Consumer Protection Act, which prohibits telemarketers, banks, debt collectors, and other companies from using an automatic dialer or robocalls to call people either at home or on their cell phones without their consent; • Dodd-Frank Act provisions prohibiting unfair, deceptive or abusive acts or practices; and 9 Table of Contents • certain other provisions of the Dodd-Frank Act, which, as discussed elsewhere, is extensive in scope and authorizes the CFPB to engage in rulemaking activity and to enforce compliance with federal consumer financial laws, including TILA, RESPA, and the FDCPA.
Biggest changeIn particular, we are required to comply with: 8 T a b l e o f C o n t e n t s • Title V of the GLBA and Regulation P, FCRA and Regulation V, CCPA/CPRA and other state privacy laws which outline various privacy requirements, including initial and periodic communication with consumers on privacy matters, the maintenance of privacy regarding certain consumer data in our possession, and sharing information with affiliates and certain third parties; • the Fair Debt Collection Practices Act (“FDCPA”) and Regulation F, which regulates the timing and content of communications on debt collections; • the TILA and Regulation Z, which, in conjunction with the RESPA under the TILA-RESPA Integrated Disclosure Rule, require certain disclosures be made to mortgagors regarding terms of mortgage financing, including but not limited to information designed to promote consumer understanding of the cost of a loan, expressed in terms of an annual percentage rate, and other credit terms including the disclosure of the number, amount and due dates or periods of scheduled repayments; TILA and Regulation Z also include the rules on loan officer compensation, require special disclosures and treatment for certain high-cost loans, require certain disclosures in connection with the servicing, assumption or refinancing of mortgage loans, provide for consumers’ right to rescind loans under certain circumstances, contain rules with respect to the ordering and review of appraisals and interaction with appraisers, and provide rules requiring a determination of the consumer’s ability to repay certain mortgage loans and providing either a safe harbor or rebuttable presumption of compliance for certain qualified mortgage loans; • federal and state anti-predatory lending laws regarding “high cost” and net tangible benefit requirements, which tests may be highly subjective and open to interpretation; • fair lending regulations, including the ECOA and Regulation B, the Fair Housing Act and other state laws, which prohibit discrimination on the basis of age, race and certain other characteristics in the extension of credit and requires that in certain circumstances, creditors provide appraisal-related disclosures and copies of appraisals to borrowers; • the Homeowners Protection Act, which requires the cancellation of mortgage insurance once certain equity levels are reached; • the Home Mortgage Disclosure Act and Regulation C, which require public reporting of certain loan data; • the SCRA, which provides certain legal protections and relief to members of the military; • RESPA and Regulation X, which governs the actions of servicers related to escrow accounts, servicing transfers, general mortgage servicing and loss mitigation practices, and other customer communications, and prohibits certain practices, such as giving or accepting a fee, kickback, or anything of value in exchange for referrals of settlement service business; • state mortgage loan servicing laws, such as California’s Homeowner’s Bill of Rights, which can result in delays or rescission of foreclosure, and subject servicers to penalties and damages; • advertising requirements, including Regulation N (the Mortgage Acts and Practices Advertising Rule) and the Telephone Consumer Protection Act, which prohibits companies from using an automatic dialer or robocalls to call people either at home or on their cell phones without their consent; • Regulation AB under the Securities Act, which requires registration, reporting and disclosure for MBS; • the Secure and Fair Enforcement for Mortgage Licensing Act, commonly known as the SAFE Act, and state laws requiring minimum standards for the licensing and registration of state licensed mortgage loan originators; • state artificial intelligence laws regulating the development and use of AI technology; • Dodd-Frank Act and other state laws prohibiting unfair, deceptive or abusive acts or practices; • certain other provisions of the Dodd-Frank Act, which, as discussed elsewhere, is extensive in scope and authorizes the CFPB to engage in rulemaking activity and to enforce compliance with federal consumer financial laws, including TILA, RESPA, and the FDCPA; and • The PATRIOT Act, which requires anti-money laundering programs and to file suspicious activity reports under the Bank Secrecy Act of 1970.
The U.S. federal, state and local laws, rules and regulations to which we are subject, among other things: • limit certain practices related to loan officer compensation; • impose licensing obligations and financial requirements; • limit the interest rates, finance charges and other fees that we may charge or pay; • regulate the use of credit reports and the reporting of credit information; • impose underwriting requirements; • mandate disclosures and notices to consumers; • mandate maintenance and retention of loan records; • mandate the collection and reporting of statistical data regarding applications for, originations of and purchases of mortgage loans; • regulate any direct consumer marketing techniques and practices; • require us to safeguard public and non-public information about our customers and regulate the sharing of such non-public personal information with third parties and affiliates; 8 Table of Contents • regulate our privacy and cybersecurity obligations; • regulate our servicing practices, including but not limited to collection and foreclosure practices, the manner and timing for responding to consumer complaints, and the administration of escrow accounts; • require us to take precautions against money-laundering and doing business with certain government-designated parties, such as suspected terrorists and parties engaged in narcotics trafficking; • regulate the method by which appraisals are ordered and reviewed and our interaction with appraisers; and • mandate the terms and conditions under which we must offer and approve loan modification programs for our servicing customers.
The U.S. federal, state and local laws, rules and regulations to which we are subject, among other things: • limit certain practices related to loan officer compensation; • impose licensing obligations and financial requirements; • limit the interest rates, finance charges and other fees that we may charge or pay; • regulate the use of credit reports and the reporting of credit information; • impose underwriting requirements; • mandate disclosures and notices to consumers; • mandate maintenance and retention of loan records; • mandate the collection and reporting of statistical data regarding applications for, originations of and purchases of mortgage loans; • regulate consumer marketing techniques and practices; • require us to safeguard public and non-public information about our customers and regulate the sharing of such non-public personal information with third parties and affiliates; • regulate our privacy and cybersecurity obligations; • regulate our servicing practices, including but not limited to collection and foreclosure practices, the manner and timing for responding to consumer complaints, and the administration of escrow accounts; • require us to take precautions against money-laundering and doing business with certain government-designated parties, such as suspected terrorists and parties engaged in narcotics trafficking; • regulate the method by which appraisals are ordered and reviewed and our interaction with appraisers; and • mandate the terms and conditions under which we must offer and approve loan modification programs for our servicing customers.
Products We have a broad loan product suite including conventional agency-conforming loans, conventional prime jumbo loans, FHA & VA loans, and home equity lines of credit. i) Conventional Agency-Conforming loans: our conventional Agency-conforming loans meet the general underwriting guidelines established by Fannie Mae and Freddie Mac, and may be modified through special arrangements we have with both GSEs. ii) Conventional prime jumbo loans: comprised of our proprietary “Jumbo Advantage” product, and other white label products, these loans generally conform to the underwriting guidelines of the GSEs but exceed the maximum loan size allowed for single unit properties. iii) FHA & VA loans: FHA loans are federal assistance residential mortgage loans that insure the lender against default on the loan.
Products We have a broad loan product suite including conventional agency-conforming loans, conventional prime jumbo loans, FHA & VA loans, home equity lines of credit, and closed-end second liens. i) Conventional Agency-Conforming loans: our conventional Agency-conforming loans meet the general underwriting guidelines established by Fannie Mae and Freddie Mac, and may be modified through special arrangements we have with both GSEs. ii) Conventional prime jumbo loans: comprised of our proprietary “Jumbo Advantage” product, and other white label products, these loans generally conform to the underwriting guidelines of the GSEs but exceed the maximum loan size allowed for single unit properties. iii) FHA & VA loans: FHA loans are federal assistance residential mortgage loans that insure the lender against default on the loan.
Our dedicated capital markets team actively manages the pooling and sale of loans into the secondary market as well as hedging of the Company’s whole-loans, origination pipeline, and MSRs. 6 Table of Contents Liquidity is crucial to the overall success of our business and is primarily managed by our treasury and capital markets teams.
Our dedicated capital markets team actively manages the pooling and sale of loans into the secondary market as well as hedging of the Company’s whole-loans, origination pipeline, and MSRs. Liquidity is crucial to the overall success of our business and is primarily managed by our treasury and capital markets teams.
This includes an intensive development program for those who are just starting their career in lending that provides the opportunity to become a fully-licensed professional. 10 Table of Contents We provide all team members with unrestricted access to professional development and leadership courses via our learning management system and support ongoing education through our tuition reimbursement program.
This includes an intensive development program for those who are just starting their career in lending that provides the opportunity to become a fully-licensed professional. We provide all team members with unrestricted access to professional development and leadership courses via our learning management system and support ongoing education through our tuition reimbursement program.
Our servicing portfolio is comprised of 56% Agency MSRs associated with mortgage loans that conform to the guidelines set forth by GSEs, and 34% Government MSRs associated with mortgage loans that are insured or guaranteed by government agencies, primarily through Ginnie Mae mortgage-backed securities. Our servicing portfolio and in-house capabilities complement our loan origination strategy.
Our servicing portfolio is comprised of 54% Agency MSRs associated with mortgage loans that conform to the guidelines set forth by GSEs, and 36% government MSRs associated with mortgage loans that are insured or guaranteed by government agencies, primarily through Ginnie Mae mortgage-backed securities. Our servicing portfolio and in-house capabilities complement our loan origination strategy.
We service loans on behalf of investors or owners of the underlying mortgages, and because we do not generally hold loans for investment purposes, our loss exposure is limited to investor guidelines regarding the servicing of delinquent loans.
We service loans on behalf of investors in the underlying mortgages, and because we do not generally hold loans for investment purposes, our loss exposure is generally limited to investor guidelines regarding the servicing of delinquent loans.
Unlike origination and sale, servicing revenues are recurring in nature and repeat throughout the life of the underlying mortgage loan. In February 2023, we completed the transition of our servicing portfolio to our in-house platform. For the years ended December 31, 2024 and 2023, we retained servicing rights on 63% and 66% of loans sold, respectively.
Unlike origination and sales, servicing revenues are recurring in nature and repeat throughout the life of the underlying mortgage loan. In February 2023, we completed the transition of our servicing portfolio to our in-house platform. For the years ended December 31, 2025 and 2024, we retained servicing rights on 65% and 63% of loans sold, respectively.
Joint Ventures and Other Referral Partners: We've formed joint ventures with national home builders and affinity partners, aiming to offer integrated mortgage products. This approach reduces acquisition costs compared to our other channels. Our collaboration with home builders in this channel emphasizes a high percentage of purchase originations.
Joint Ventures and Other Partners: We've formed joint ventures with national home builders and affinity partners, aiming to offer integrated mortgage products. This approach reduces acquisition costs and emphasizes a high percentage of purchase originations in collaboration with home builders.
Ancillary Business Settlement Services. LDSS is our captive title and escrow business. Title insurance is one of the most significant pieces of a real estate transaction, with vast potential to be digitized and better integrated with our lending operation. Real Estate Services. mello Home Services , LLC is our wholly-owned captive real estate referral business.
Ancillary Business Settlement Services. LDSS is our captive title and escrow business. Title insurance is one of the most significant pieces of a real estate transaction, with vast potential to be digitized and better integrated with our lending operation.
A large portion of our purchase-oriented customer leads have not yet selected a realtor, thus affording us the opportunity to provide a more integrated customer service between the two key home-buying functions, as well as capture ancillary revenue in a RESPA-compliant manner.
A large portion of our purchase-oriented customer leads have not yet selected a realtor or a homeowners or other consumer insurance policy, thus affording us the opportunity to provide a more integrated customer service between these key home-buying functions, as well as capture ancillary revenue in a RESPA-compliant manner.
With respect to our mortgage loan businesses, we face and may in the future face competition in such areas as loan product offerings, rates, fees and customer service. With respect to servicing, we face competition in areas such as fees, compliance capabilities and performance in reducing delinquencies.
With respect to our mortgage loan businesses, we face, and may face in the future, competition in such areas as loan product offerings, rates, fees and customer service. With respect to servicing, we face competition in areas such as fees, borrower satisfaction, compliance, and operational performance.
Our preliminary organic refinance, consumer-direct recapture rate for the year ended December 31, 2024 was 70%.
Our preliminary organic refinance, consumer-direct recapture rate for the year ended December 31, 2025 was 68%.
Intellectual Property As of December 31, 2024, we hold 34 registered United States trademarks and 27 United States trademark applications, including with respect to the name “loanDepot,” “mello” and other logos and various additional designs and word marks relating to the “loanDepot” name, as well as 3 issued United States patents and 14 United States patent applications.
Intellectual Property As of December 31, 2025, we hold 26 registered United States trademarks and 19 United States trademark applications, including with respect to the name “loanDepot,” “mello” and other logos and various additional designs and word marks relating to the “loanDepot” name, as well as 5 issued United States patents and 11 United States patent applications.
In February 2025, the MBA forecast a 16% increase in U.S. annual one-to-four family residential mortgage origination volume from $1.8 trillion in 2024 to $2.1 trillion in 2025, with a 30% increase in refinance activity.
In February 2026, the MBA forecast an 8% increase in U.S. annual one-to-four family residential mortgage origination volume from $2.05 trillion in 2025 to $2.22 trillion in 2026, with a 10% increase in refinance activity.
The CFPB has broad supervisory and enforcement powers with regard to nonbanking companies, such as us, that engage in the origination and servicing of mortgage loans.
While CFPB staffing, funding and enforcement are uncertain at this time, the CFPB still has broad supervisory and enforcement powers with regard to nonbanking companies, such as us, that engage in the origination and servicing of mortgage loans.
We offer a wide variety of loan products and our in-house servicing platform complements our loan origination strategy. We are the sixth largest retail-focused non-bank mortgage originator and the eighth largest overall retail originator (based on data through March 13, 2025, published by Inside Mortgage Finance).
We offer a wide variety of loan products and our in-house servicing platform complements our loan origination strategy. We were the fifth largest retail-focused non-bank mortgage originator and the ninth largest overall retail originator during 2025 (based on data, published by Inside Mortgage Finance on February 12, 2026).
We believe we compete favorably on the basis of our proprietary technology, diversified customer acquisition model and origination channels, scale, brand, and broad suite of products.
We believe we compete favorably on the basis of our diversified customer acquisition model and origination channels, scale, brand, broad suite of products and we believe our proprietary technology platform has positioned us to profitably gain market share.
Accordingly, we must comply with state licensing requirements in all of the states in which we conduct business. We are licensed as a loan originator in all 50 states and the District of Columbia and also are licensed as a loan servicer and loan broker in states and jurisdictions where we are required to be licensed.
We are licensed as a loan originator in all 50 states and the District of Columbia and also are licensed as a loan servicer and loan broker in states and jurisdictions where we are required to be licensed.
Additionally, we source originations through direct referrals from our partners' customer interactions. 5 Table of Contents Servicing Servicing involves collecting loan payments, sending principal and interest payments to investors, managing escrow funds for mortgage-related expenses like taxes and insurance, conducting loss mitigation activities on behalf of investors, and administering our mortgage loan servicing portfolio in compliance with state and federal regulations.
Additionally, we source originations through direct referrals from our partners' customer interactions and from our network of independent wholesale brokers. 5 T a b l e o f C o n t e n t s Servicing Servicing involves collecting loan payments, sending principal and interest payments to investors, managing escrow funds for mortgage-related expenses like taxes and insurance, conducting loss mitigation activities, and administering our mortgage loan servicing portfolio in compliance with state and federal regulations and investor guidelines.
Regulatory Compliance We operate within a complex area of the financial services industry, and our business requires a significant compliance and regulatory infrastructure. We have developed an operating platform designed to meet the needs of today’s compliance and regulatory environment. We leverage our proprietary technology powered by mello® and automated systems, which are designed to reduce errors and standardize processes.
Regulatory Compliance We operate within a complex area of the financial services industry, and our business requires a significant compliance and regulatory infrastructure. We have developed an operating platform designed to meet the needs of today’s compliance and regulatory environment.
We employ an in-house team of lawyers and other professionals dedicated to legal, regulatory and compliance related matters. Our compliance functions sit independently of our production operations from a reporting perspective, which allows for autonomy.
We leverage our proprietary technology powered by mello® and automated systems, which are designed to reduce errors, standardize processes, and facilitate compliance. We employ an in-house team of lawyers and other professionals dedicated to legal, regulatory and compliance related matters. Our compliance functions sit independently of our production operations from a reporting perspective, which allows for autonomy.
As of December 31, 2024, we serviced 417,875 customers with $116.0 billion in UPB of residential mortgage loans, 79% of which was associated with FICO scores above 680.
As of December 31, 2025, we serviced 448,261 customers with $119.1 billion in UPB of residential mortgage loans, 78% of which was associated with FICO scores above 680.
The information found on our website is not a part of this Annual Report on Form 10-K or any other report we file with or furnish to the SEC. 11 Table of Contents
The information found on our website is not a part of and is not incorporated by reference into this Annual Report on Form 10-K or any other report we file with or furnish to the SEC. 10 T a b l e o f C o n t e n t s
In addition, we utilize third-party verification and internal audit procedures to assist with compliance as appropriate.
In addition, we utilize third-party verification and internal audit procedures to assist with compliance as appropriate. Supervision and Regulation We describe below the material elements of the regulatory and supervisory framework applicable to us.
However, prevailing interest rates and strength of the housing market coupled with existing economic conditions such as market volatility, geopolitical risks, inflation, and uncertainties in the banking sector, contribute to inherent uncertainties in estimates and assumptions.
However, prevailing interest rates and strength of the housing market coupled with existing economic conditions such as market volatility, geopolitical risks, and inflation, contribute to inherent uncertainties in estimates and assumptions. Strategy We believe in our diversified business model, with robust origination capabilities across multiple channels that provide access to purchase, refinance and home equity lending opportunities across market cycles.
As of December 31, 2024, we had $421.6 million of cash and cash equivalents, along with $3.7 billion of loan funding capacity across nine credit facilities, of which $2.4 billion was outstanding. Our $3.7 billion loan funding capacity was comprised of maturities staggered throughout 2025 and 2026.
As of 6 T a b l e o f C o n t e n t s December 31, 2025, we had $337.2 million of cash and cash equivalents, along with $4.2 billion of loan funding capacity across eleven credit facilities, of which $2.9 billion was outstanding.
We are also subject to a variety of regulatory and contractual obligations imposed by the GSEs, Ginnie Mae, the VA, the FHA, and others. Human Capital Our People. Our success is anchored in the dedication, expertise, and diversity of our workforce. As of December 31, 2024, we had approximately 4,900 employees. Culture and Engagement.
We are also subject to a variety of investor and contractual obligations imposed by the GSEs, Ginnie Mae, the VA, the FHA, and others. Human Capital 9 T a b l e o f C o n t e n t s Our People.
Market Considerations During 2023 and 2024, the U.S. residential mortgage market experienced the impact of geopolitical risks and inflation, leading the Federal Reserve to raise interest rates and transition from a low-rate to a rising-rate environment. In July 2023, the Federal Reserve increased the Federal Funds rate to a range of 5.25% - 5.50%.
Market Considerations During 2024 and 2025, the U.S. residential mortgage market continued to experience the impact of geopolitical risks and inflation. While the Federal Reserve lowered the Federal Funds rate three times in 2025, market concerns regarding, among other things, the long-term impacts of tariff policy and inflation resulted in long-term rates remaining elevated.
Concurrently, the average rate for a 30-year fixed rate mortgage as reported by the St. Louis Fed increased during this period and peaked in October 2023. The heightened rate environment negatively affected the affordability and loan qualification of homebuyers and decreased demand for refinancing, shrinking mortgage loan origination volumes.
The heightened rate environment negatively affected the affordability and loan qualification of homebuyers, contributed to the “lock-in” effect of borrowers that secured lower long-term interest rates during 2020 and 2021 giving rise to a lack of supply of homes available for sale and decreased demand for refinancing, shrinking mortgage loan origination volumes.
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Despite the Federal Reserve reducing the Federal Funds rate three times in 2024 to a range of 4.25% - 4.50%, the 30-year fixed rate mortgages remained elevated except for a brief period during the third quarter of 2024 when long-term rates decreased somewhat only to return to higher levels in the fourth quarter of 2024.
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Despite the Federal Reserve reducing the Federal Funds rate to a range of 3.50% to 3.75%, the 30-Year Fixed Rate Mortgage Average in the United States as reported by the St. Louis Fed remained above 6% during all of 2025.
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Vision 2025 and Project North Star In response to the headwinds posed by challenging market dynamics beginning in 2022, we introduced our Vision 2025 Plan in July 2022, characterized by four key elements: 1. Transforming our originations business to drive purchase money transactions with an expanded emphasis on purpose-driven lending; 2.
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These origination capabilities are complemented by our in-house servicing platform and recapture capabilities, all of which are enhanced by our technology assets and our nationally-recognized brand, which we believe gives us a distinct advantage in new customer acquisition. Our strategic plan rests on four primary objectives: 1. Investing in the business through growth, operational efficiency and infrastructure.
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Investing in profitable growth-generating initiatives and critical business platforms and processes to support operating leverage and best-in-class quality and delivery; 3. Aggressively right sizing our cost structure to address current and future projected market conditions; and 4. Optimizing and simplifying our organizational structure. Vision 2025 was a critical factor in our successful navigation of unprecedented and challenging market conditions.
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We intend to continue investing in recruiting and hiring sales talent across all origination channels. We also plan to further leverage technology to improve the customer experience and manufacturing processes. Finally, we expect to make additional investments in critical hardware and data upgrades which we believe will position us for future growth opportunities and to better mitigate risk. 2.
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During the third quarter of 2024 we announced the completion of Vision 2025 and the launch of Project North Star, the Company’s strategic blueprint for the next three years.
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Becoming a Best-in-Class Mortgage Banker . Our goals are simple: find another loan, close it faster, produce it cheaper, and maintain superior loan quality. We plan to do this by utilizing our scale and marketing prowess, leveraging our multi-channel origination strategy, investing in technology, and improving our processes. 3. Growing profitable market share .
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Project North Star builds on the foundational imperatives of Vision 2025, including our focus on durable revenue growth, positive operating leverage, best in class productivity and investments in platforms and solutions that support and ultimately transform our customers’ homeownership journey. Project North Star is comprised of five initiatives: 4 Table of Contents 1.
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By hiring and training sales professionals in our direct channel, recruiting and attracting loan officers that have existing relationships with real estate professionals in our retail channel, and 4 T a b l e o f C o n t e n t s partnering with national and regional homebuilders in our joint venture channel, we plan to grow our origination capacity to capture profitable market share growth across refinance, resale and new home loans. 4.
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Becoming the lifetime lending partner of choice for homeowners, with an emphasis on first-time home buyers. We plan to develop and launch a unique AI-powered relationship management and engagement platform that allows our customers to optimize their home buying, selling, equity optimization and home management experience. 2.
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Returning to profitability . By investing in our origination and new customer acquisition capabilities, growing our servicing portfolio, improving our recapture rates, growing our brand and marketing, and increasing our operating leverage, we believe we can return to consistent profitability and create shareholder value.
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Growing our purchase mortgage reach and capabilities through an expanded geographic footprint and partnerships with key industry participants, including realtors and builders, increasing our share of originations 3. Continuing to invest in and scale our servicing portfolio and maintain best-in-class recapture rates. 4.
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In addition to the above product categories, we originate certain first-lien mortgage loans that are not underwritten in accordance with qualified mortgage underwriting standards and instead are underwritten based on the specific guidelines required by our network of buyers for these loans.
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Building out our “low touch” automated, data-driven mortgage loan processing workflow to drive operating leverage, quality, and faster turn times. We believe this will support a superior customer experience and ultimately higher revenue by delivering consistent, durable margins and profitability. 5. Becoming the mortgage industry’s employer of choice, by successfully recruiting, developing and retaining the best talent available.
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Real Estate and Insurance Services. mello Home Services , LLC and mello Insurance Services , LLC are our wholly-owned captive real estate referral and insurance businesses.
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We intend to continue to simplify our organization, reduce management layers and eliminate unnecessary silos to increase innovation and ownership throughout the Company.
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Our $4.2 billion loan funding capacity was comprised primarily of maturities staggered throughout 2026 and one maturity in 2028.
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Insurance Services. mello Insurance Services , LLC is our wholly-owned captive insurance broker established to sell homeowners and other consumer insurance policies to loanDepot’s customers who typically do not have a quote at the time of loan application.
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Accordingly, we must comply with state 7 T a b l e o f C o n t e n t s licensing requirements in all of the states in which we conduct business.
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We have increased our originations market share from 1.0% in 2014 to 1.4% for the year ended December 31, 2024 1 and we believe our strong consumer brand and proprietary technology platform have positioned us to continue gaining additional share.
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Our success is anchored in the dedication, expertise, and broad range of perspectives, viewpoints, and backgrounds of our workforce. As of December 31, 2025, we had approximately 4,700 employees and 960 independent contractors. Culture and Engagement.
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We view our infrastructure and culture of compliance to be a competitive advantage, as it enables us to leverage our platform and rapidly scale our business while minimizing, as much as possible, compliance risk. 1 Total market originations based on data as of December 2024, from the Mortgage Bankers Association. 7 Table of Contents Supervision and Regulation We describe below the material elements of the regulatory and supervisory framework applicable to us.
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In addition, various federal, state and local laws have been enacted that are designed to discourage predatory lending and servicing practices. HOEPA, which amended TILA, in particular prohibits inclusion of certain provisions in residential loans that have mortgage rates or origination costs in excess of prescribed levels and requires that borrowers be given certain disclosures prior to origination.
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The Dodd-Frank Act amended HOEPA to enhance its protections. Some states have enacted, or may enact, similar laws or regulations, which in some cases impose restrictions and requirements greater than those in HOEPA.
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Also, under the anti-predatory lending laws of some states, the origination of certain residential loans, including loans that are not classified as “high cost” loans under applicable law, must satisfy a net tangible benefits test with respect to the related borrower. This test may be highly subjective and open to interpretation.
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As a result, a court may determine that a residential loan, for example, does not meet the test even if the related originator reasonably believed that the test was satisfied.
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Failure of residential loan originators or servicers to comply with these laws, to the extent any of their residential loans are or become part of our mortgaged-related assets, could subject us, as an originator, servicer, or as an assignee or purchaser, in the case of acquired loans, to monetary penalties and could result in the borrowers rescinding the affected residential loans.
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Lawsuits have been brought in various states making claims against originators, servicers, assignees and purchasers of high cost loans for violations of state law. Named defendants in these cases have included numerous participants within the secondary mortgage market.
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If our loans are found to have been originated in violation of predatory or abusive lending laws, we could incur losses, which could materially and adversely impact our results of operations, financial condition and business.
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We are subject to compliance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (commonly known as the PATRIOT Act), which is intended to strengthen the ability of U.S. law enforcement agencies and intelligence communities to work together to combat terrorism on a variety of fronts, and are required to establish anti-money laundering programs and file suspicious activity reports under the Bank Secrecy Act of 1970.
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Some states have special rules that govern mortgage loan servicing practices, such as California’s Homeowner’s Bill of Rights. Failure to comply with these rules can result in delays or rescission of foreclosure, and subject the servicer to penalties and damages.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditional discussion of the risks summarized in this risk factor summary can be found below and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock: • We may not achieve some or all of the expected benefits of our Project North Star strategic plan. • Our new products, services, enhancements or expansions may not achieve sufficient acceptance or result in anticipated efficiencies and revenues. • We may fail to promote and maintain our brands in a cost-effective manner, or experience negative publicity. • We may not be able to identify or consummate acquisitions or otherwise manage our future growth effectively. • We may not be able to retain loans from customers who refinance. • Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates. • Our models may fail to produce reliable and/or valid results. • Our loan originations may be too geographically concentrated. • We may be required to indemnify the purchasers of loans that we originate (including securitization trusts), or repurchase those loans. • Our collateral for our loan funding facilities may decrease in value and require us to satisfy margin calls. • Our servicing rights are highly volatile assets with continually changing values that my decrease or be inaccurate. • We have liability exposure for the performance of our prior subservicer. • Our in-house servicing of loans carries with it increased operational and compliance costs and risks. • We are required to make servicing advances. • Our counterparties may terminate our servicing rights. • Our servicing rights portfolio may experience unanticipated increased delinquencies and defaults as it ages. • We may incur increased costs and related losses in connection with foreclosure actions. • We rely on our joint ventures and any failures in these relationships could decrease mortgage loan originations. • Our business could be adversely affected by challenges to the MERS System. • Our information about borrowers could be inaccurate, incomplete or misrepresented. • Our underwriting guidelines may not be able to accurately predict the likelihood of defaults. • Our financial statement assumptions and estimates, including those used for fair values, could be incorrect or inaccurate. • Our vendor relationships subject us to a variety of risks and they may failure to adequately provide essential services. • Our risk management policies and procedures may not be effective. 12 Table of Contents • Our business could suffer if we fail to attract and retain a highly skilled workforce, including senior management. • We face litigation and legal proceedings that could have a material adverse effect on us. • We may be impacted by severe weather, wildfires, natural disasters, health crises, terrorists and other catastrophic events. • We may not adequately adapt to and implement technological changes and operate effective and reliable systems. • Our use of artificial intelligence in our business, and challenges with properly managing its use could result in harm. • We are subject to cyberattacks, information or security breaches and technology disruptions or failures. • Our intellectual property and proprietary rights may be inadequate and we may encounter disputes. • Our mortgage loan originations are highly dependent on macroeconomic and U.S. residential real estate market conditions. • Our earnings have been and may be adversely affected by elevated interest rates and other market factors. • Our industry is highly competitive, and we may not compete successfully. • We may experience increases in mortgage loan delinquencies and defaults. • We are vulnerable to adverse developments in the secondary mortgage loan market, including the MBS market. • We operate in a highly regulated industry that is subject to federal, state and local laws that evolve regularly, as well as changing regulatory enforcement policies and priorities. • We depend on the programs of the Agencies and Ginnie Mae and changes could materially alter our business. • We are subject to regulatory investigations and inquiries and may incur fines, penalties and increased costs. • We are subject to state licensing and operational requirements that result in substantial compliance costs. • Our regulators at the federal and state levels are increasingly focused on privacy and information security. • We rely on warehouse lines of credit and other sources of capital and liquidity to meet our financing requirements. • Our indebtedness and other financial obligations may limit our financial and operating activities and our ability to incur additional debt to fund future needs. • We depend on our subsidiaries for cash to fund all of our operations and expenses, including dividend payments, if any. • We are a “controlled company” and rely on exemptions from certain corporate governance requirements.
Biggest changeAdditional discussion of the risks summarized in this risk factor summary can be found below and should be carefully considered, together with other information in this Form 10-K and our other filings with the SEC, before making an investment decision regarding our common stock: • We may not achieve some or all of the expected benefits of our strategic plan. • Our new products, services, enhancements or expansions may not achieve sufficient acceptance or result in anticipated efficiencies and revenues. • We may fail to promote and maintain our brands in a cost-effective manner, or experience negative publicity. • We may not be able to identify or consummate acquisitions or otherwise manage our future growth effectively. • We may not be able to retain loans from customers who refinance. • Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates. • Our models may fail to produce reliable and/or valid results. • Our loan originations may be too geographically concentrated. • We may be required to indemnify the purchasers of loans that we originate (including securitization trusts), or repurchase those loans. • Our collateral for our loan funding facilities may decrease in value and require us to satisfy margin calls. • Our servicing rights are highly volatile assets with continually changing values that may decrease or be inaccurate. • We have liability exposure for the performance of our prior subservicer. • Our in-house servicing of loans carries with it increased operational and compliance costs and risks. • We are required to make servicing advances. • Our counterparties may terminate our servicing rights. • Our servicing rights portfolio may experience increased delinquencies and defaults as it ages. • We rely on our joint ventures and any failures in these relationships could decrease mortgage loan originations. • Our business could be adversely affected by challenges to the MERS System. • Our information about borrowers could be inaccurate, incomplete or misrepresented. • Our underwriting guidelines may not be able to accurately predict the likelihood of defaults. • Our financial statement assumptions and estimates, including those used for fair values, could be incorrect or inaccurate. 11 T a b l e o f C o n t e n t s • Our vendor relationships subject us to a variety of risks and they may fail to adequately provide essential services. • Our risk management policies and procedures may not be effective. • Our business could suffer if we fail to attract and retain a highly skilled workforce, including senior management. • We face litigation and legal proceedings that could have a material adverse effect on us. • We may be impacted by severe weather, wildfires, natural disasters, health crises, terrorists and other catastrophic events. • We may not adequately adapt to and implement technological changes and operate effective and reliable systems. • Our use of artificial intelligence in our business, and challenges with properly managing its use could result in harm. • We are subject to cyberattacks, information or security breaches and technology disruptions or failures. • Our intellectual property and proprietary rights may be inadequate and we may encounter disputes. • Our mortgage loan originations are highly dependent on macroeconomic and U.S. residential real estate market conditions. • Our earnings have been and may be adversely affected by elevated interest rates and other market factors. • Our industry is highly competitive, and we may not compete successfully. • We may experience increases in mortgage loan delinquencies and defaults. • We are vulnerable to adverse developments in the secondary mortgage loan market, including the MBS market. • We operate in a highly regulated industry that is subject to federal, state and local laws that evolve regularly, as well as changing regulatory enforcement policies and priorities. • We depend on the programs of the Agencies and Ginnie Mae and changes or failures to comply with guidelines could materially alter our business. • We are subject to regulatory investigations and inquiries and may incur fines, penalties and increased costs. • We are subject to state licensing and operational requirements that result in substantial compliance costs. • Our regulators at the federal and state levels are increasingly focused on privacy and information security. • We rely on warehouse lines of credit and other sources of capital and liquidity to meet our financing requirements. • Our indebtedness and other financial obligations may limit our financial and operating activities and our ability to incur additional debt to fund future needs. • We depend on our subsidiaries for cash to fund all of our operations and expenses, including dividend payments, if any. • Control of the Company is concentrated with a few large stockholders whose interests may conflict with yours, limit or preclude your ability to influence corporate matters and may adversely affect the trading market for our Class A Common Stock. • We have large stockholders with the right to engage or invest in the same or similar businesses as us. • We are required to make payments under the tax receivable agreement that may be substantial and may significantly exceed the actual benefits we realize. • Our Class A Common Stock experiences volatile trading volumes and market prices, and may not sustain an active, liquid trading market. • Our internal controls over financial reporting could be ineffective. • We may offer additional debt or equity securities that could adversely affect the market price of our Class A Common Stock. • Our existing stockholders may sell, or be expected to sell, significant quantities of our Class A Common Stock that could cause the market price of our Class A Common Stock to decline. • We are not paying any dividends on our Class A Common Stock. • Our amended and restated certificate of incorporation and our amended and restated bylaws contain certain provisions that could hinder, delay or prevent an unsolicited acquisition proposal or potential change of control that the Company’s stockholders might consider favorable, as well as discourage lawsuits against our directors and officers. 12 T a b l e o f C o n t e n t s Risks Related to our Business and Strategy We may not achieve some or all of the expected benefits of our strategic plan and our initiatives may adversely affect our business .
Homeowners’ insurance in California, Florida, Texas and other states has become increasingly expensive and harder to obtain, including as a result of wildfires, hurricanes and other calamities, which has resulted in, may continue to result in, higher delinquency rates relative to other states and may adversely affect our lending business.
Homeowners’ insurance in California, Florida, Texas and other states has become increasingly expensive and harder to obtain, including as a result of wildfires, hurricanes and other calamities, which has resulted in, and may continue to result in, higher delinquency rates relative to other states and may adversely affect our lending business.
Accordingly, our estimates may change from time to time and such changes may be material to our consolidated results of operations, and the ultimate settlement of such matters may have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Accordingly, our estimates may change from time to time and such changes may be material to our consolidated results of operations, and the ultimate settlement of such matters may have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Homeowners’ insurance in areas affected by these events has become increasingly expensive and harder to obtain, which has made, is likely to continue to make, it more difficult for home buyers to qualify for a mortgage loan and to comply with the homeowners insurance requirements of their loan.
Homeowners’ insurance in areas affected by these events has become increasingly expensive and harder to obtain, which has made, and is likely to continue to make, it more difficult for home buyers to qualify for a mortgage loan and to comply with the homeowners insurance requirements of their loan.
An event of default, an adverse action by a regulatory authority, or a general deterioration in the economy that constricts the availability of credit may increase our cost of funds and make it difficult or impossible for us to renew existing warehouse lines, secured credit or other debt facilities or obtain new warehouse lines, secured credit or debt facilities, any of which would have a material adverse effect on our business and results of operations, and would result in substantial diversion of our management’s attention.
In addition, an event of default, an adverse action by a regulatory authority, or a general deterioration in the economy that constricts the availability of credit may increase our cost of funds and make it difficult or impossible for us to renew existing warehouse lines, secured credit or other debt facilities or obtain new warehouse lines, secured credit or debt facilities, any of which would have a material adverse effect on our business and results of operations, and would result in substantial diversion of our management’s attention.
Neither third party indemnities nor our insurance may cover potential claims of this type adequately or at all, and we may be required to pay significant money damages, lose significant revenues, be prohibited from using the relevant systems, processes, technologies or other intellectual property, cease offering certain products or services, alter the content of our classes, or incur significant license, royalty or technology development expenses.
Neither third party indemnities nor our insurance may cover potential claims of this type adequately or at all, and we may be required to pay significant money damages, lose significant revenues, be prohibited from using the relevant systems, processes, technologies or other intellectual property, cease offering certain products or services, alter our content, or incur significant license, royalty or technology development expenses.
Loans made on rental properties, to self-employed customers, or on other higher-risk loans may have a higher risk of default and may be more expensive to service because of regulatory or Agency requirements and more involved monitoring and oversight. Any increase in default rates could have a material adverse effect on our business, financial condition, liquidity and results of operations.
Loans made on rental properties, to self-employed customers, or on other higher-risk loans often have a higher risk of default and may be more expensive to service because of regulatory or Agency requirements and more involved monitoring and oversight. Any increase in default rates could have a material adverse effect on our business, financial condition, liquidity and results of operations.
In addition, the structuring of future transactions may take into consideration these existing unitholders’ tax considerations even where no similar benefit would accrue to us. See Note 1- Description of Business, Presentation and Summary of Significant Accounting Policies “Income Taxes” of the Notes to Consolidated Financial Statements contained in “Item 8.
In addition, the structuring of future transactions may take into consideration these existing unitholders’ tax considerations even where no similar benefit would accrue to us. See Note 1- Description of Business and Summary of Significant Accounting Policies—“Income Taxes” of the Notes to Consolidated Financial Statements contained in “Item 8.
A loan subject to a material misrepresentation is typically unsalable or subject to repurchase. We are also subject to the risk of fraudulent activity associated with the origination of loans, and this risk is compounded with recent advancements in technology innovation such as AI which has the ability to make fraud schemes more sophisticated.
A loan subject to a material misrepresentation is typically unsalable or subject to repurchase. We are also subject to the risk of fraudulent activity associated with the origination and servicing of loans, and this risk is compounded with recent advancements in technology innovation such as AI which has the ability to make fraud schemes more sophisticated.
Certain of our loan funding and MSR-backed facilities are subject to margin calls based on the lender’s opinion of the value of the loan collateral securing such financing. In addition, certain of our hedges related to newly originated mortgages are also subject to margin calls. A margin call would require us to repay a portion of the outstanding borrowings.
Certain of our loan funding and MSR-backed facilities are subject to margin calls based on the lender’s opinion of the value of the loan collateral securing such financing. In addition, certain of our hedges related to newly originated mortgages are subject to margin calls. A margin call would require us to repay a portion of the outstanding borrowings.
Any significant increase in required servicing advances or delinquent loan repurchases, could have a significant adverse impact on our cash flows, even if they are reimbursable, and could also have a detrimental effect on our business and financial condition. Our counterparties may terminate our servicing rights, which could adversely affect our business.
Any significant increase in required servicing advances or delinquent or other loan repurchases, could have a significant adverse impact on our cash flows, even if they are reimbursable, and could also have a detrimental effect on our business and financial condition. Our counterparties may terminate our servicing rights, which could adversely affect our business.
As a result of our losses incurred in fiscal 2023 and 2024, we were required to amend certain of our warehouse lines, secured credit facilities and other debt obligations related to financial covenants and we may need to execute additional amendments from certain of our lending counterparties related to our financial covenants in the future.
As a result of our losses incurred in fiscal 2023, 2024 and 2025, we were required to amend certain of our warehouse lines, secured credit facilities and other debt obligations related to financial covenants and we may need to execute additional amendments from certain of our lending counterparties related to our financial covenants in the future.
In addition, our results of operations could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our 46 Table of Contents quarterly or annual results of operations; additions or departures of key management personnel; changes in our earnings estimates (if provided) or failure to meet analysts’ earnings estimates; publication of research reports about our industry; litigation and government investigations; changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business; adverse market reaction to any indebtedness we may incur or securities we may issue in the future; changes in market valuations of similar companies or speculation in the press or the investment community with respect to us or our industry; adverse announcements by us or others and developments affecting us; announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments; actions by institutional stockholders; increases in market interest rates that may lead investors in our shares to demand a higher yield; and other risk factors detailed in this Item 1A, and in response the market price of shares of our Class A Common Stock could decreases significantly.
In addition, our results of operations could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly or annual results of operations; additions or departures of key management personnel; changes in our earnings estimates (if provided) or failure to meet analysts’ earnings estimates; publication of research reports about our industry; litigation and government investigations; changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business; adverse market reaction to any indebtedness we may incur or securities we may issue in the future; changes in market valuations of similar companies or speculation in the press or the investment community with respect to us or our industry; adverse announcements by us or others and developments affecting us; announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments; actions by institutional stockholders; increases in market interest rates that may lead investors in our shares to demand a higher yield; and other risk factors detailed in this Item 1A, and in response the market price of shares of our Class A Common Stock could decreases significantly.
We may have our operations disrupted and be harmed if our technology or technological solutions become non-compliant with existing industry standards or regulations; fail to meet or exceed the capabilities of our competitors’ equivalent technologies or technological solutions; become increasingly expensive to service, retain and update; become subject to third-party claims of intellectual property infringement, misappropriation or other violation; contain errors, defects, or vulnerabilities or otherwise malfunction or function in a way we did not anticipate, including in ways that results in loan defects potentially requiring repurchase or indemnification and increased operational expense.
We may have our operations disrupted and be harmed if our technology or technological solutions become non-compliant with existing industry standards or regulations; fail to meet or exceed the capabilities of our competitors’ equivalent technologies or technological solutions; become increasingly expensive to service, retain and update; become subject to third-party claims of intellectual property infringement, misappropriation or other violation; contain errors, defects, or vulnerabilities or otherwise malfunction or function in a way we did not anticipate, including in ways that result in loan defects potentially requiring repurchase or indemnification and increased operational expense.
If we are unable to execute on our business strategies, including Project North Star, we may face significant challenges in: • securing funding to maintain our operations and future growth; • maintaining and improving our loan retention and recapture rates; • maintaining and scaling adequate financial, business and risk controls; • implementing new or updated information and financial systems and procedures; • effectively applying emerging technologies, such as advanced artificial intelligence applications; • training, managing and appropriately sizing our work force and other components of our business on a timely and cost-effective basis; • increasing and maintaining the number of borrowers utilizing our products and services; • increasing the volume of loans originated and facilitated through us; • entering into new markets and introducing new products; • continuing to develop, maintain and scale our platform; • effectively using personnel and technology resources; • maintaining the security of our platform, systems and infrastructure and the confidentiality of the information (including personally identifiable information) provided and utilized across our platform; and • attracting, integrating and retaining an appropriate number of qualified employees.
If we are unable to execute on our business strategies we may face significant challenges in: • securing funding to maintain our operations and future growth; • maintaining and improving our loan retention and recapture rates; • maintaining and scaling adequate financial, business and risk controls; • implementing new or updated information and financial systems and procedures; • effectively applying emerging technologies, such as advanced artificial intelligence applications; • training, managing and appropriately sizing our work force and other components of our business on a timely and cost-effective basis; • increasing and maintaining the number of borrowers utilizing our products and services; • increasing the volume of loans originated and facilitated through us; • entering into new markets and introducing new products; • continuing to develop, maintain and scale our platform; • effectively using personnel and technology resources; • maintaining the security of our platform, systems and infrastructure and the confidentiality of the information (including personally identifiable information) provided and utilized across our platform; and • attracting, integrating and retaining an appropriate number of qualified employees.
In addition, we may increasingly rely on technological innovation, including AI, other emerging technologies, and third party solutions, as we introduce new products, expand our current products into new markets and continue to streamline various loan-related and lending processes.
In addition, we increasingly rely on technological innovation, including AI, other emerging technologies, and third party solutions (including related party solutions), as we introduce new products, expand our current products into new markets and continue to streamline various loan-related and lending processes.
We are a holding company and have no material assets other than our equity interest in LD Holdings, which is itself a holding company that has no material assets other than its 99.99% equity interests in LDLLC, and 100% equity interests in ART, LDSS, MSC and Mello (and indirect interests in other subsidiaries).
We are a holding company and have no material assets other than our equity interest in LD Holdings, which is itself a holding company that has no material assets other than its 99.96% equity interests in LDLLC, and 100% equity interests in ART, LDSS, MSC and Mello (and indirect interests in other subsidiaries).
These ambiguities and uncertainties could lead to material disruptions in our business practices and result in signification costs or reputational harm. The CFPB monitors the loan origination and servicing sectors, and its rules increase our regulatory compliance burden and associated costs.
These ambiguities and uncertainties could lead to material disruptions in our business practices and result in signification costs or reputational harm. The CFPB monitors the loan origination and servicing sectors, and its rules and activities increase our regulatory compliance burden and associated costs.
Such risk profiles are subsequently utilized by warehouse line counterparties who lend us capital to fund mortgage loans. We also may rely on representations of borrowers as to the accuracy and completeness of that information.
Such risk profiles are subsequently utilized by warehouse line counterparties who lend us capital to fund mortgage loans. We also rely on representations of borrowers as to the accuracy and completeness of that information.
We have significant and critical vendors that, among other things, provide us with financial, technology and other services to support our loan servicing and originations activities. Our servicing vendors help us provide escrow, print, loss mitigation, foreclosure, insurance and bankruptcy services.
We have significant and critical vendors that, among other things, provide us with financial, technology, marketing and other services to support our loan servicing and originations activities. Our servicing vendors help us provide escrow, print, loss mitigation, foreclosure, insurance and bankruptcy services.
We face significant competition for attractive acquisition opportunities from other well-capitalized companies, who may have greater financial resources and a greater access to debt and equity capital to secure and complete acquisitions than we do.
We face significant competition for attractive acquisition opportunities from other well-capitalized companies, who may have greater financial resources and greater access to debt and equity capital to secure and complete acquisitions than we do.
As a result, our ability to maintain existing, and secure new, relationships with such traditional market participants will influence our ability to grow our purchase money mortgage loan volume and, thus, our mobile and local retail originations business.
As a result, our ability to maintain existing, and secure new, relationships with such traditional market participants will influence our ability to grow our purchase money mortgage loan volume and, thus, our local retail originations business.
Various federal regulatory agencies and departments, including the DOJ and CFPB, take the position that these laws apply not only to intentional discrimination, but also to neutral practices that have a disparate impact on a group that shares a characteristic that a creditor may not consider in making credit decisions relating to protected classes (i.e., creditor or servicing practices that have a disproportionate negative affect on a protected class of individuals), as well as to redlining and reverse redlining practices that exclude or target certain neighborhoods.
Various federal regulatory agencies and departments, including the DOJ and CFPB, have taken the position that these laws apply not only to intentional discrimination, but also to neutral practices that have a disparate impact on a group that shares a characteristic that a creditor may not consider in making credit decisions relating to protected classes (i.e., creditor or servicing practices that have a disproportionate negative affect on a protected class of individuals), as well as to redlining and reverse redlining practices that exclude or target certain neighborhoods.
The sale of substantial amounts of shares of our Class A Common Stock in the public market, whether in concentrated transactions or over time, or the perception that such sales could occur, including sales by the Hsieh Stockholders, the Parthenon Stockholders, or other Continuing LLC Members, may have had, and could have, an adverse effect on our stock price and could impair our ability to raise capital through the sale of additional stock.
The sale of substantial amounts of shares of our Class A Common Stock in the public market, whether in concentrated transactions or over time, or the perception that such sales could occur, including sales by the Hsieh Stockholders, the Parthenon Stockholders, other Continuing LLC Members, our directors, or our management may have had, and could have, an adverse effect on our stock price and could impair our ability to raise capital through the sale of additional stock.
Furthermore, such techniques change frequently and are often not recognized or detected until after they have been launched and security attacks can originate from a wide variety of sources, including employees or third parties such as computer hackers, persons involved with organized crime or associated with external service providers, or foreign state or foreign state-supported actors.
Furthermore, such techniques change frequently and are often not recognized or detected until after they have been launched and security attacks can originate from a wide variety of sources, including employees or third parties such as computer hackers, persons involved with organized crime or associated with external service providers, or foreign state. foreign state-supported or other bad actors.
We have derived substantially all of our revenue from originating, selling and servicing traditional mortgage loans. Efforts to expand into new consumer products, such as HELOCs, closed-end second lien mortgage loans, insurance, real estate services, or other products consistent with our business purpose, may not succeed and may reduce expected revenue growth.
We have derived substantially all of our revenue from originating, selling and servicing traditional mortgage loans. Efforts to expand with new or revised consumer products and services, such as HELOCs, closed-end second lien mortgage loans, insurance, real estate services, or other products consistent with our business purpose, may not succeed and may reduce expected revenue growth.
For mortgage loans, during any period in which a borrower is not making payments, we are required under most of our servicing agreements in respect of our servicing rights to advance our own funds to meet contractual principal and interest remittance requirements for investors and pay property taxes and insurance premiums, legal expenses and other protective advances.
For mortgage loans, during any period in which a borrower is not making payments, we are required under most of our servicing agreements to advance our own funds to meet contractual principal and interest remittance requirements for investors and pay property taxes and insurance premiums, legal expenses and other protective advances.
Our competitors or other third parties may incorporate AI into their business, services, and products more rapidly or more successfully than us, which could hinder our ability to compete effectively and adversely affect our results of operations. Implementing the use of AI successfully, ethically and as intended, will require significant resources.
Our competitors or other third parties may incorporate AI into their business, services, and products more rapidly or more successfully than us, which could hinder our ability to compete effectively and adversely affect our market share and results of operations. Implementing the use of AI successfully, ethically and as intended, will require significant resources.
If a vendor fails to comply with applicable legal requirements on our behalf, or provide to us the services we are contractually owed, we may incur significant costs to resolve any such disruptions in service and this could adversely affect our business, financial condition and results of operations.
If a vendor fails to comply with applicable legal requirements, or provide to us the services we are contractually owed, we may incur significant costs to resolve any such disruptions in service and this could adversely affect our business, financial condition and results of operations.
Losses resulting from these types of events may not be fully insurable. The frequency, severity, duration, and geographic location and scope of such events are inherently unpredictable, and, therefore, we are unable to predict the ultimate impact climate change and catastrophe and these other events and responses to them will have on our businesses.
Losses resulting from these types of events may not be fully insurable. The frequency, severity, duration, and geographic location and scope of such events are inherently unpredictable, and, therefore, we are unable to predict the ultimate impact climate change, catastrophic events, and these other events and responses to them will have on our businesses.
Any inadequacy of our loss reserves established for delinquencies and defaults may result in future financial restatements or other adverse events. We rely on joint ventures with industry partners through which we originate mortgage loans. If any of these joint ventures are terminated, our revenues could decline.
Any inadequacy of our loss reserves established for delinquencies, defaults, or otherwise may result in future financial restatements or other adverse events. We rely on joint ventures with industry partners through which we originate mortgage loans. If any of these joint ventures are terminated, our revenues could decline.
In addition, the trading volume in our Class A Common Stock has fluctuated, and may continue to fluctuate, and cause significant price variations. In fact, the closing market price of our Class A Common Stock has ranged between $31.48 and $1.18 since our IPO priced in February 2021. Securities markets worldwide experience significant price and volume fluctuations.
In addition, the trading volume in our Class A Common Stock has fluctuated, and may continue to fluctuate, and cause significant price variations. In fact, the closing market price of our Class A Common Stock has ranged between $1.02 and $31.48 since our IPO priced in February 2021. Securities markets worldwide experience significant price and volume fluctuations.
Failure to comply with any of these laws could result in enforcement action against us, including fines, imprisonment of company officials and public censure, any of which could result in serious harm to our reputation, business and have a material adverse effect on our business, financial condition and results of operations.
Failure to comply with any of these laws could result in litigation and/or enforcement action against us, including fines, imprisonment of company officials and public censure, any of which could result in serious harm to our reputation and business and have a material adverse effect on our business, financial condition and results of operations.
Our servicing rights portfolio may experience unanticipated increased delinquencies and defaults as it ages, which may adversely affect our business and financial condition.
Our servicing rights portfolio may experience increased delinquencies and defaults as it ages, which may adversely affect our business and financial condition.
Any such intellectual property claims could subject us to costly litigation and impose a significant strain on our financial resources and management personnel, regardless of whether such claim has merit. Such claims may also result in adverse judgements or settlement on unfavorable terms.
Any such intellectual property claims could subject us to costly litigation and impose a significant strain on our financial resources and management personnel, regardless of whether such claim has merit. Such claims may also result in adverse judgments or settlement on unfavorable terms.
If we fail to promote and maintain our brands in a cost-effective manner, or if we experience negative publicity, we may lose market share and our revenue may decrease. We believe that developing and maintaining awareness of our brands in a cost-effective manner is critical to attracting new and retaining existing consumers.
If we fail to promote and maintain our brands in a cost-effective manner, or if we experience negative publicity, we may lose market share and our revenue may decrease. We believe that developing and maintaining awareness of our brands in a cost-effective manner is critical to attracting new and retaining existing customers.
In connection with large scale catastrophe or other adverse events, particularly in jurisdictions where we have large concentrations of serviced loans, we may be required to advance funds in excess of our funding capacity, which could materially and adversely affect our mortgage loan servicing activities and our 20 Table of Contents status as an approved servicer by Fannie Mae and Freddie Mac and result in our termination as an issuer and approved servicer by Ginnie Mae.
In connection with large scale catastrophe or other adverse events, particularly in jurisdictions where we have large concentrations of serviced loans, we may be required to advance funds in excess of our funding capacity, which could materially and adversely affect our mortgage loan servicing activities and our status as an approved servicer by Fannie Mae and Freddie Mac and result in our termination as an issuer and approved servicer by Ginnie Mae.
See “Business— Supervision and regulation.” The continued focus of regulators on the practices of the loan origination and servicing industry have resulted and could continue to result in new enforcement actions that could directly or indirectly affect the manner in which we conduct our business and increase the costs of defending and settling any such matters, which could adversely impact our reputation and/or results of operations.
See “Business— Supervision and Regulation.” The continued focus of regulators on the practices of the loan origination and servicing industry have resulted and could continue to result in new investigations and enforcement actions that could directly or indirectly affect the manner in which we conduct our business and increase the costs of defending and settling any such matters, which could adversely impact our reputation, financial condition and/or results of operations.
Our derivative instruments, which currently consist of forward sale contracts, interest rate swap futures, and put options on treasuries are accounted for as free-standing derivatives and are included on our consolidated balance sheet at fair market value.
Our derivative instruments, which currently consist of forward sale contracts, interest rate swap futures, and put options on treasuries are accounted for as free-standing derivatives and are included on our consolidated balance sheets at fair market value.
As a result, large moves and substantial volatility in interest rates materially affect our consolidated financial position, results of operations and cash flows. 16 Table of Contents We employ various economic hedging strategies that utilize derivative instruments to mitigate the interest rate and fall-out risks that are inherent in many of our assets, including our IRLCs, our LHFS and our MSRs.
As a result, large moves and substantial volatility in interest rates materially affect our consolidated financial position, results of operations and cash flows. We employ various economic hedging strategies that utilize derivative instruments to mitigate the interest rate and fall-out risks that are inherent in many of our assets, including our IRLCs, our LHFS and our MSRs.
Falling home prices across the United States historically have generally resulted in higher LTV ratios, lower recoveries in foreclosure and an increase in loss severity above those that would have been realized had property values remained the same or continued to increase. When housing prices decline, borrower equity is reduced and some borrowers become less incentivized to repay.
Falling home prices historically have generally resulted in higher LTV ratios, lower recoveries in foreclosure and an increase in loss severity above those that would have been realized had property values remained the same or continued to increase. When housing prices decline, borrower equity is reduced and some borrowers become less incentivized to repay.
Consequently, the risks described in this risk factor may be greater for our closed-end second lien mortgage loans and HELOC loans, including that we may not be able 32 Table of Contents to sell these loans, or we may be required to sell the loans at a significant loss, which could materially adversely affect our business, financial condition and results of operations.
Consequently, the risks described in this risk factor may be greater for our closed-end second lien mortgage loans and HELOC loans, including that we may not be able to sell these loans, or we may be required to sell the loans at a significant loss, which could materially adversely affect our business, financial condition and results of operations.
Successful promotion of our brands will depend largely on the effectiveness of our marketing efforts and the experience of our consumers. Our efforts to build our brands have involved significant expense, and our future marketing efforts will require us to maintain or incur significant additional expense.
Successful promotion of our brands will depend largely on the effectiveness of our marketing efforts and the experience of our customers. Our efforts to build our brands have involved significant expense, and our future marketing efforts will require us to maintain or incur significant additional expense.
When the subservicing of a loan is transferred to the Company to be serviced in-house, the loan may have been previously serviced in a manner that will contribute towards our not meeting certain servicing guidelines. If not recovered from a prior servicer, such event could lead to the eventual realization of a loss to us.
When the subservicing of a loan is transferred to the Company to be serviced in-house, the loan may have been previously serviced in a manner that will contribute towards our not meeting certain servicing guidelines or legal requirements. If not recovered from a prior servicer, such event could lead to the eventual realization of a loss to us.
The level of our fraud charge-offs and results of operations could be materially adversely affected if fraudulent activity were to significantly increase or if we were unable to adequately prevent fraud.
The level of our fraud charge-offs, fraud-related expenses, and results of operations could be materially adversely affected if fraudulent activity were to significantly increase or if we were unable to adequately prevent fraud.
Federal regulators and consumer advocates have also recently expressed concerns of biased appraisal practices throughout the industry, and are investigating claims of consumer complaints. Although the Company, as a lender, does not control the appraisal process, it has been and may be involved in litigation and borrower claims regarding appraisal bias.
Federal regulators and consumer advocates have also expressed concerns of biased appraisal practices throughout the industry, and are investigating claims of consumer complaints. Although the Company, as a lender, does not control the appraisal process, it has been and may be involved in regulatory investigations, litigation, and borrower claims regarding appraisal bias.
If we fail to successfully promote and maintain our brands or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brands, we may lose our existing consumers to our competitors or be unable to attract new consumers.
If we fail to successfully promote and maintain our brands or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brands, we may lose our existing customers to our competitors or be unable to attract new customers.
Additionally, efforts to move Fannie Mae and Freddie Mac out of conservatorship could impact the appetite of, and terms demanded by, MBS investors for the mortgages that we originate and could create a higher level of non-Agency product for which demand could be less consistent than Agency mortgages.
Additionally, efforts to move Fannie Mae and Freddie Mac out of conservatorship and their possible privatization could impact the appetite of, and terms demanded by, MBS investors for the mortgages that we originate and could create a higher level of non-Agency product for which demand could be less consistent than Agency mortgages.
In addition, our failure to comply (or to ensure that our agents and third-party service providers comply) with these laws or regulations may result in costly litigation or enforcement actions, the penalties for which could include but are not limited to: revocation of required licenses; fines and other monetary penalties; civil and criminal liability; substantially reduced payments by borrowers; modification of the original terms of loans, permanent forgiveness of debt, or inability to directly or indirectly collect all or a part of the principal of or interest on loans; delays in the foreclosure process and increased servicing advances; and increased repurchase and indemnification claims.
In addition, our failure to comply (or our agents’ and third-party service providers’ failure to comply) with these laws or regulations may result in costly litigation or enforcement actions, the penalties for which could include but are not limited to: revocation of required licenses; fines and other monetary penalties; civil and criminal liability; substantially reduced payments by borrowers; modification of the original terms of loans, permanent forgiveness of debt, or inability to directly or indirectly collect all or a part of the principal of or interest on loans; delays in the foreclosure process and increased servicing advances; and increased repurchase and indemnification claims.
The adverse effect on our financial results may be particularly acute because of the significant development, marketing, sales and other expenses we will have incurred in connection with the new products or enhancements before such products or enhancements generate sufficient revenue.
The adverse effect on our financial results may be particularly acute because of the significant development, marketing, sales and other expenses we will have incurred in connection with the new or revised products or services before such products or services generate sufficient revenue.
These complexities and significant assumptions could lead to a delay in the preparation of financial information and also increase the risk of errors and restatements, as well as the cost of compliance. Changes in accounting 23 Table of Contents interpretations or assumptions could impact our financial statements and our ability to timely prepare our financial statements.
These complexities and significant assumptions could lead to a delay in the preparation of financial information and also increase the risk of errors and restatements, as well as the cost of compliance. Changes in accounting interpretations or assumptions could impact our financial statements and our ability to timely prepare our financial statements.
These provisions: • provide for a multi-class structure with high vote/low vote until the applicable sunset; • authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our stockholders; • provide that the board of directors is expressly authorized to make, alter or repeal our amended and restated bylaws; 49 Table of Contents • establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; • establish a classified board of directors, as a result of which our board of directors will be divided into three classes, with each class serving for staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at an annual meeting; • limit the ability of stockholders to remove directors by requiring that removal be “for cause”; • make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with us for a three-year period; • prohibit stockholders from calling special meetings of stockholders; and • require the approval of holders of at least 66 2⁄3% of the outstanding shares of our voting common stock to amend the amended and restated bylaws and certain provisions of the amended and restated certificate of incorporation.
These provisions: • authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock; • prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our stockholders; • provide that the board of directors is expressly authorized to make, alter or repeal our amended and restated bylaws; • establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; • establish a classified board of directors, as a result of which our board of directors will be divided into three classes, with each class serving for staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at an annual meeting; • limit the ability of stockholders to remove directors by requiring that removal be “for cause”; • make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with us for a three-year period; • prohibit stockholders from calling special meetings of stockholders; and • require the approval of holders of at least 66 2⁄3% of the outstanding shares of our voting common stock to amend the amended and restated bylaws and certain provisions of the amended and restated certificate of incorporation.
Antidiscrimination statutes and regulations, including the Fair Housing Act, ECOA, and other federal and state fair lending laws, prohibit creditors from discriminating against loan applicants and borrowers based on certain characteristics, such as race, ethnicity, gender, religion and national origin.
Anti-discrimination statutes and regulations, including the Fair Housing Act, ECOA, and other federal and state fair lending laws, prohibit creditors from discriminating against loan applicants and borrowers based on certain characteristics, such as race, ethnicity, gender, religion and national origin.
The Continuing LLC Members have the right to exchange one Holdco Unit and one share of Class B common stock or Class C common stock, as applicable, together for cash or one share of Class A common stock at our election, subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications.
The Continuing LLC Members have the right to exchange one Holdco Unit and one share of Class B common stock together for cash or one share of Class A common stock at our election, subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications.
The Parthenon Stockholders, Parthenon affiliates owning Holdco Units and certain of the Continuing LLC Members will receive 45 Table of Contents payments under the tax receivable agreement until such time that they validly assign or otherwise transfer their rights to receive such payments.
The Parthenon Stockholders, Parthenon affiliates owning Holdco Units and certain of the Continuing LLC Members will receive payments under the tax receivable agreement until such time that they validly assign or otherwise transfer their rights to receive such payments.
In addition, former employers of our current, former 29 Table of Contents or future employees may assert claims that such employees have improperly disclosed to us the confidential or proprietary information of these former employers. The resolution of any such disputes or litigation is difficult to predict.
In addition, former employers of our current, former or future employees may assert claims that such employees have improperly disclosed to us the confidential or proprietary information of these former employers. The resolution of any such disputes or litigation is difficult to predict.
If any of our mortgage loans are found to have been 37 Table of Contents originated in violation of predatory or abusive lending laws, we could incur losses, which could adversely impact our results of operations, financial condition and business.
If any of our mortgage loans are found to have been originated in violation of predatory or abusive lending laws, we could incur losses, which could adversely impact our results of operations, financial condition and business.
Also, although we re-evaluate our reserves for repurchase losses each quarter, evaluations are estimates and the reserves may 18 Table of Contents not be adequate. Additionally, if home values decrease, our realized mortgage loan losses from mortgage loan indemnifications and repurchases may increase. Our indemnification and repurchase costs may materially exceed the reserves we have recorded in our financial statements.
Also, although we re-evaluate our reserves for repurchase losses each quarter, evaluations are estimates and the reserves may not be adequate. Additionally, if home values decrease, our realized mortgage loan losses from mortgage loan indemnifications and repurchases may increase. Our indemnification and repurchase costs may materially exceed the reserves we have recorded in our financial statements.
There may also be risks that exist, or 24 Table of Contents that develop in the future, that we are not able to anticipate, or that we have not appropriately anticipated, identified or mitigated. As regulations and markets in which we operate continue to evolve, our risk management framework may not always keep sufficient pace with those changes.
There may also be risks that exist, or that develop in the future, that we are not able to anticipate, or that we have not appropriately anticipated, identified or mitigated. As regulations and markets in which we operate continue to evolve, our risk management framework may not always keep sufficient pace with those changes.
A substantial portion of our aggregate mortgage loan origination is secured by properties concentrated in the states of California, Texas and Florida, and properties securing a substantial portion of our outstanding UPB of mortgage loan servicing rights portfolio are located in California, Texas, Florida, Virginia, Arizona and Washington.
A substantial portion of our aggregate mortgage loan origination is secured by properties concentrated in the states of California, Texas and Florida, and properties securing a substantial portion of our outstanding UPB of mortgage loan servicing rights portfolio are located in California, Texas, Florida, Arizona, Virginia and New York.
Whether a misrepresentation is made by the loan applicant, another third-party or one of our employees, we generally bear the risk of loss associated with the misrepresentation. We may not detect all misrepresented information in our mortgage loan originations or from service 22 Table of Contents providers we engage to assist in the loan approval process.
Whether a misrepresentation is made by the loan applicant, another third-party or one of our employees, we generally bear the risk of loss associated with such misrepresentation. We may not detect all misrepresented information in our mortgage loan originations or from service providers we engage to assist in the loan approval process.
Additionally, more restrictive loan underwriting standards have resulted in a more homogenous product offering, which has increased competition across the mortgage loan industry for loan originations. Furthermore, our existing and potential competitors may decide to modify their business models to compete more directly with our loan origination and servicing models.
Additionally, more restrictive loan underwriting standards have resulted in a more homogenous product offering, which has increased competition across the mortgage loan industry for loan originations. Furthermore, some of our competitors have decided to, and other existing and potential competitors may decide to, modify their business models to compete more directly with our loan origination and servicing models.
For instance, properties have been, and are likely to continue to be, particularly susceptible to certain types of hazards, some of which are uninsurable, such as earthquakes, mudslides, wildfires, hurricanes, flooding, and other natural disasters.
For instance, properties have been, and are likely to continue to be, particularly susceptible to certain types of hazards, some of which are uninsurable, such as earthquakes, mudslides, wildfires, hurricanes, flooding, rising sea levels, and other natural disasters.
In addition, the Continuing LLC Members (including the Hsieh Stockholders) own 38.5% of the Holdco Units. Because they hold their ownership interest in our business through LD Holdings, rather than us, these existing unitholders may have conflicting interests with holders of our Class A Common Stock.
In addition, the Continuing LLC Members (including the Hsieh Stockholders) own 31.7% of the Holdco Units. Because they hold their ownership interest in our business through LD Holdings, rather than us, these existing unitholders may have conflicting interests with holders of our Class A Common Stock.
They also set forth restrictions on lending, brokering, servicing, collection insurance, and real estate practices, restrictions related to fees and charges, including loan interest rate limits, and disclosure and record-keeping requirements. They establish a variety of borrowers’ and consumers’ rights in the event of violations of such rules.
They also set forth restrictions on lending, brokering, servicing, collection insurance, real estate practices, and fees and charges, including loan interest rate limits, as well as disclosure and record-keeping requirements. They establish a variety of borrowers’ and consumers’ rights in the event of violations of such rules.
An adverse decision in any jurisdiction may delay the foreclosure process in other jurisdictions. We depend on the accuracy and completeness of information about borrowers and any misrepresented information could adversely affect our business.
An adverse decision in any jurisdiction may delay the foreclosure process in other jurisdictions and compound such adverse effects. We depend on the accuracy and completeness of information about borrowers and any misrepresented information could adversely affect our business.
Continuing concerns about inflation, rising interest rates, energy costs, supply chain disruptions, geopolitical issues (including the conflicts involving Russia and Ukraine and in the Middle East), political gridlock on United States federal budget matters including full or partial government shutdowns, trade wars, pandemics, and the availability and cost of credit have and could continue to contribute to increased volatility and diminished expectations for the economy and markets going forward.
Continuing concerns about inflation, interest rates, energy costs, supply chain disruptions, geopolitical issues (including the conflicts involving Russia and Ukraine and in the Middle East), political gridlock on United States federal budget matters including full or partial government shutdowns, tariffs, trade regulation or wars, changes in tax laws, pandemics, and the availability and cost of credit have and could continue to contribute to increased volatility and diminished expectations for the economy and markets going forward.
Preferred shares, if issued, could have a preference with 47 Table of Contents respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Class A Common Stock.
Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Class A Common Stock.
The TCPA, Telemarketing Sales Rule and related laws and regulations govern, among other things, communications via telephone and text and the use of automatic telephone dialing systems (“ATDS”) and artificial and prerecorded or AI generated voices. The Federal Communications Commission (“FCC”) and the FTC have responsibility for regulating various aspects of these laws.
The TCPA, TSR and related laws and regulations govern, among other things, communications via telephone and text and the use of automatic telephone dialing systems (“ATDS”) and artificial and prerecorded or AI generated voices. The Federal Communications Commission (“FCC”) and the FTC have responsibility for regulating various aspects of these laws.
Demand for our loan and other real estate-related products typically decreases when mortgage interest rates are high or rising; there is inadequate inventory of homes for sale, particularly affordable homes; there is slow growth in the level of new home purchase activity; and economic conditions are unfavorable or uncertain, including during periods of high unemployment.
Demand for our loan and other real estate-related products typically decreases when mortgage interest rates are rising or high, especially relative to the interest rates of outstanding mortgages; there is inadequate inventory of homes for sale, particularly affordable homes; there is slow growth in the level of new home purchase activity; and economic conditions are unfavorable or uncertain, including during periods of high unemployment.
However, the selected risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations.
Any of the following risks could materially and adversely affect our business, reputation, financial condition, and results of operations. However, the selected risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect us.
This has resulted in a substantial decrease in our revenues and we incurred a net loss in fiscal 2023 and 2024 and we may continue to experiences net losses. Our earnings have decreased and may continue to be adversely affected because of elevated interest rates and other market factors.
This has resulted in a substantial decrease in our revenues and we incurred a net loss in fiscal 2022, 2023, 2024 and 2025 and we may continue to experience net losses. Our earnings have decreased and may continue to be adversely affected because of elevated interest rates and other market factors.
We generally cannot negotiate the terms of these guidelines nor predict the penalties that the Agencies might impose for a failure to comply with those guidelines. Any failure by us to perform within Agency guidelines could materially adversely affect us.
We generally cannot negotiate the terms of these guidelines or requirements nor predict the penalties that the Agencies or Ginnie Mae might impose for a failure to comply with those guidelines or requirements. Any failure by us to perform within Agency or Ginnie Mae guidelines or requirements could materially adversely affect us.
Additionally, we may not be able to recover amounts from some third parties from whom we may seek indemnification or against whom we may assert a loan repurchase demand in connection with a breach of a representation or warranty due to financial difficulties or otherwise.
Additionally, we are not always able to recover amounts from third parties from whom we may seek indemnification or against whom we may assert a loan repurchase demand in connection with a breach of a representation or warranty due to financial difficulties or otherwise.
We also advance funds under these agreements to maintain, repair and market real estate properties on behalf of investors. When home values rise, costs increase, or delinquencies increase, as they recently have, we are typically required to advance greater amounts.
We also advance funds under these agreements to maintain, repair and market real estate properties on behalf of investors. When home values rise, costs increase, or delinquencies increase, we are typically required to advance greater amounts.
In particular, the nature of the GSEs’ guidelines for servicing delinquent mortgage loans that they own, or that back securities which they guarantee, can result in monetary incentives for servicers that perform well and penalties for those that do not.
In particular, the nature of the GSE and Ginnie Mae guidelines for servicing delinquent mortgage loans that they own, or that back securities which they guarantee, can result in monetary incentives for servicers that perform well and penalties for those that do not.
Additionally, there is a risk that, following the date of the credit report that we obtain and review, a borrower may have become delinquent in the payment of an outstanding obligation, defaulted on a pre-existing debt obligation, taken on additional debt, lost his or her job or other sources of income; or sustained other adverse financial events.
Additionally, there is a risk that, following the date of the credit report that we obtain and review, a borrower may have become delinquent in the payment of an outstanding obligation, defaulted on a pre-existing debt obligation, taken on additional debt, lost his or her job or other sources of income; or sustained other adverse financial events, which could also lower the value of the loan.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or stockholders to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL or our certificate of incorporation or our amended and restated bylaws or (iv) any action asserting a claim against us governed by the internal affairs doctrine will have to be brought only in the Court of Chancery of the State of Delaware (or if the Court of Chancery of the State of Delaware lacks jurisdiction, any other state court of the State of Delaware, or if no state court of the State of Delaware has jurisdiction, the federal district court for the District of Delaware), unless we consent in writing to the selection of an alternative forum.
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or stockholders to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL or our certificate of incorporation or our amended and restated bylaws or (iv) any action asserting a claim against us governed by the internal affairs doctrine will have to be brought only in the Court of Chancery of the State of Delaware (or if the Court of Chancery of the State of Delaware lacks jurisdiction, any other state court of the State of Delaware, or if no state court of the State of Delaware has jurisdiction, the federal district court for the District of Delaware), 46 T a b l e o f C o n t e n t s unless we consent in writing to the selection of an alternative forum.
These included both intentional actions Cenlar took in running their businesses such as management of staffing levels and the number of customers serviced, and the occurrence of external events, including, but not limited to regulatory changes, enforcement actions, and natural disasters that may have posed challenges to Cenlar.
These included actions taken by Cenlar in running their businesses such as management of staffing levels and the number of customers serviced, and the occurrence of external events, including, but not limited to regulatory changes, enforcement actions, and natural disasters that may have posed challenges to Cenlar.
Our selling and servicing obligations under our contracts with the Agencies may be amended, restated, supplemented or otherwise modified by the Agencies from time to time without our specific consent. A significant modification to our selling and/or servicing obligations under our Agency contracts could adversely affect our business, financial condition and results of operations.
Our selling and servicing obligations under our contracts with the Agencies and Ginnie Mae may be amended, restated, terminated, supplemented or otherwise modified by the Agencies and Ginnie Mae from time to time without our specific consent. A significant modification to our selling and/or servicing or issuing obligations could adversely affect our business, financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe recognized $24.6 million of expenses related to the Cybersecurity Incident, net of insurance recoveries during fiscal 2024. In addition, we were named, and may still be named, as a defendant in lawsuits related to this Cybersecurity Incident, which are seeking various remedies, including monetary and injunctive relief.
Biggest changeWe recognized $1.8 million of expenses related to the Cybersecurity Incident during fiscal 2025 and $24.6 million of related expenses, net of insurance recoveries, during fiscal 2024, including amounts paid to settle lawsuits related to this Cybersecurity Incident. Further, we have engaged with and continue to engage with regulators related to the Cybersecurity Incident.
Certain risk topics, such as cybersecurity and compliance, are discussed at Enterprise Risk Management Committee (consisting of executive management) meetings, and are included in reports to the Board and Audit Committee. We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management program.
Certain risk topics, such as cybersecurity and compliance, are regularly discussed at Enterprise Risk Management Committee (consisting of executive management) meetings, and are included in reports to the Board and Audit Committee. We consider cybersecurity, along with other significant risks that we face, within our overall enterprise risk management program.
Our CISO, who reports to the Chief Information Officer and has over twenty years of experience managing information technology and cybersecurity matters, together with our senior leadership team, is responsible for assessing and managing cybersecurity risks.
Our CISO, who reports to the Chief Digital Officer and has over twenty years of experience managing information technology and cybersecurity matters, together with our senior leadership team, is responsible for assessing and managing cybersecurity risks.
In addition, we consult with outside advisors and experts, when appropriate, on a regular basis to assist with assessing, identifying, and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk environment. We also utilize a third party for cybersecurity incident monitoring and response.
In addition, we consult with outside advisors and experts, when appropriate, to assist with assessing, identifying, and managing cybersecurity risks, including to anticipate future threats and trends, and their impact on the Company’s risk environment. We also utilize a third party for cybersecurity incident monitoring and response.
The Audit Committee, which is comprised solely of independent directors, has been designated by our Board to oversee cybersecurity risks. The Audit Committee receives regularly scheduled and as needed updates on cybersecurity and information technology matters and related risk exposures from our CISO and Chief Information Officer.
The Audit Committee, which is comprised solely of independent directors, has been designated by our Board to oversee cybersecurity risks. The Audit Committee receives regularly scheduled and as needed updates on cybersecurity and information technology matters and related risk exposures from our CISO and Chief Digital Officer. The Board also receives periodic updates on cybersecurity risks.
The CISO receives regular reports prepared by experienced information security officers on cybersecurity threats, based on data from the Information Security Department and, in conjunction with management, regularly reviews risk management measures implemented by the Company to help identify and mitigate data protection and 50 Table of Contents cybersecurity risks.
The CISO receives regular reports prepared by experienced information security officers on cybersecurity threats, based on data from the Information Security Department and, in conjunction with management, regularly reviews risk management measures implemented by the Company to help identify and mitigate data protection and cybersecurity risks.
For example, we conduct penetration and vulnerability testing, data recovery testing, security audits, and ongoing risk assessments, including due diligence on and audits of our key technology vendors, and other contractors and suppliers. We also conduct regular employee training on cyber and information security topics, phishing and simulations.
For example, we conduct penetration and vulnerability testing, data recovery testing, security audits, and ongoing risk assessments, including due diligence on and audits of our key technology vendors, and other contractors and suppliers. We also conduct regular employee training on phishing and other cyber and information security topics, including with the use of simulation exercises.
The Board also receives regular updates from our CISO and Chief Information Officer on cybersecurity risks. In addition, we have protocols by which certain cybersecurity incidents are escalated within the Company and, where appropriate, reported in a timely manner to the Audit Committee and the Board of Directors.
In addition, we have protocols by which certain cybersecurity incidents are escalated within the Company and, where appropriate, reported in a timely manner to the Audit Committee and the Board of Directors. 48 T a b l e o f C o n t e n t s
While we cannot presently quantify the full scope of expenses and other related impacts associated with this Cybersecurity Incident, including costs associated with any related current or future litigation or regulatory inquiries or investigations, we currently do not expect that the Cybersecurity Incident will have a material effect on our overall financial condition or on our ongoing results of operations beyond those amounts already accrued.
We expect to have additional expenses and other related impacts associated with this Cybersecurity Incident, including costs associated with any related future litigation or regulatory matters, which could have a material effect on our financial condition or on our results of operations.
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Further, we have engaged with and continue to engage with regulators related to the Cybersecurity Incident.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor a further discussion of our material legal proceedings, see Note 20 - Commitments and Contingencies of the Notes to Consolidated Financial Statements included in “Item 8 Financial Statements and Supplementary Data.” Item 4. Mine Safety Disclosures Not applicable. 51 Table of Contents PART II.
Biggest changeFor a further discussion of our material legal proceedings, see Note 20 - Commitments and Contingencies of the Notes to Consolidated Financial Statements included in “Item 8 Financial Statements and Supplementary Data.”

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” Unregistered Sales of Equity Securities 52 Table of Contents Shares of the Company's Class B common stock or Class C common stock may each be converted, together with a corresponding Holdco Unit, as applicable, at any time and from time to time at the option of the holder of such share of Class B common stock or Class C common stock, as applicable, for one fully paid and non-assessable share of Class A common stock.
Biggest change“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.” Unregistered Sales of Equity Securities 50 T a b l e o f C o n t e n t s For the year ended December 31, 2025, shares of the Company's Class B common stock or Class C common stock could each be converted, together with a corresponding Holdco Unit, as applicable, at any time and from time to time at the option of the holder of such share of Class B common stock or Class C common stock, as applicable, for one fully paid and non-assessable share of Class A common stock.
There is no cash or other consideration paid by the holder converting such shares and, accordingly, there is no cash or other consideration received by the Company. The shares of Class A common stock issued by the Company in such conversions are exempt from registration pursuant to Section 3(a)(9) of the Securities Act.
There was no cash or other consideration paid by the holder converting such shares and, accordingly, there was no cash or other consideration received by the Company. The shares of Class A common stock issued by the Company in such conversions are exempt from registration pursuant to Section 3(a)(9) of the Securities Act.
Each share of the Company’s Class D common stock may be converted into one fully paid and non-assessable share of Class A common stock at any time at the option of the holder of such share of Class D common stock.
Each share of the Company’s Class D common stock could be converted into one fully paid and non-assessable share of Class A common stock at any time at the option of the holder of such share of Class D common stock.
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. As of March 10, 2025, there were 0 stockholders of record of our Class B common stock.
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. As of March 10, 2026, there were 25 stockholders of record of our Class B common stock.
Our Class B common stock, Class C common stock, and Class D common stock are neither listed nor traded. Holders As of March 10, 2025, there were 44 stockholders of record of our Class A common stock.
Our Class B common stock, Class C common stock, and Class D common stock are neither listed nor traded. Holders As of March 10, 2026, there were 40 stockholders of record of our Class A common stock.
On October 1, 2024, we issued to stockholders 1,941,162 shares of Class A common stock upon the conversion of the same number of shares of our Class C common stock and corresponding Holdco Units held by such stockholders.
On October 1, 2025, we issued to stockholders 4,870,033 shares of Class A common stock upon the conversion of the same number of shares of our Class C common stock and corresponding Holdco Units held by such stockholders.
On November 1, 2024, we issued to stockholders 5,093,434 shares of Class A common stock upon the conversion of the same number of shares of our Class C common stock and corresponding Holdco Units held by such stockholders.
On November 1, 2025, we issued to stockholders 2,000,000 shares of Class A common stock upon the conversion of the same number of shares of our Class C common stock and corresponding Holdco Units held by such stockholders.
As of March 10, 2025, there were 47 stockholders of record of our Class C common stock. As of March 10, 2025, there were 4 stockholders of record of our Class D common stock.
As of March 10, 2026, there were 0 stockholders of record of our Class C common stock. As of March 10, 2026, there were 0 stockholders of record of our Class D common stock.
On December 1, 2024, we issued to stockholders 115,623 shares of Class A common stock upon the conversion of the same number of shares of our Class C common stock and corresponding Holdco Units held by such stockholders Issuer Purchases of Equity Securities None. Item 6. [RESERVED]
On December 1, 2025, we issued to stockholders 2,300,000 shares of Class A common stock upon the conversion of the same number of shares of our Class C common stock and corresponding Holdco Units held by such stockholders.
Added
On February 11, 2026, pursuant to the Company’s Amended and Restated Certificate of Incorporation dated February 11, 2021, each outstanding share of the Company’s Class C common stock was converted into one share of Class B common stock, and each outstanding share of Class D common stock was converted into one share of Class A common stock.
Added
All outstanding Class C and Class D shares converted automatically and without further action on the part of the Company or any holder of Class C or Class D common stock. As of February 11, 2026, immediately following the conversion, there were 228,569,593 shares of Class A common stock outstanding, and 106,207,433 shares of Class B common stock outstanding.
Added
There are no shares of Class C or Class D common stock outstanding. Issuer Purchases of Equity Securities None. Item 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

86 edited+19 added−9 removed55 unchanged
Biggest changeThe $14.4 million or 8.3% increase in other interest expense was the result of the $5.7 million loss on debt extinguishment of the 2025 Senior Notes compared to a $1.7 million gain on debt extinguishment in the prior year, $5.4 million increase related to other secured financings as a result of the loan securitization completed in th e second quarter of 2024, $4.6 million increase primarily related to the amortized discount of $5.6 million on the outstanding 2027 Senior Notes and a higher interest rate on outstanding Senior Notes, and $1.4 million increase related to Term Notes, offset by $4.4 million decrease related to secured credit facilities. 58 Table of Contents Balance Sheet Highlights December 31, 2024 Compared to December 31, 2023 December 31, Change $ Change % (Dollars in thousands) 2024 2023 ASSETS Cash and cash equivalents $ 421,576 $ 660,707 $ (239,131) (36.2) % Restricted cash 105,645 85,149 20,496 24.1 Loans held for sale, at fair value 2,603,735 2,132,880 470,855 22.1 Loans held for investment, at fair value 116,627 — 116,627 N/A Derivative assets, at fair value 44,389 93,574 (49,185) (52.6) Servicing rights, at fair value 1,633,661 1,999,763 (366,102) (18.3) Trading securities, at fair value 87,466 92,901 (5,435) (5.9) Property and equipment, net 61,079 70,809 (9,730) (13.7) Operating lease right-of-use assets 20,432 29,433 (9,001) (30.6) Loans eligible for repurchase 995,398 711,371 284,027 39.9 Investments in joint ventures 18,113 20,363 (2,250) (11.0) Other assets 235,907 254,098 (18,191) (7.2) Total assets 6,344,028 6,151,048 192,980 3.1 LIABILITIES AND EQUITY Warehouse and other lines of credit 2,377,127 1,947,057 430,070 22.1 Accounts payable, accrued expenses and other liabilities 379,439 379,971 (532) (0.1) Derivative liabilities, at fair value 25,060 84,962 (59,902) (70.5) Liability for loans eligible for repurchase 995,398 711,371 284,027 39.9 Operating lease liability 33,190 49,192 (16,002) (32.5) Debt obligations, net 2,027,203 2,274,011 (246,808) (10.9) Total equity 506,611 704,484 (197,873) (28.1) Total liabilities and equity $ 6,344,028 $ 6,151,048 $ 192,980 3.1 Cash and Cash Equivalents.
Biggest changeThe $13.3 million or 7.1% decrease in other interest expense was the result of a $17.9 million decrease in interest expense related to a decrease in MSR facilities, partially offset by a $2.4 million increase related to the GMSR 2025-GT1, GMSR 2025-GT2, and FAMSR 2025-FT1 Term Notes issued during the year and a $2.3 million increase due to a full year of expense related to the MMCA 2024-SD1 loan securitization completed in th e second quarter of 2024. 57 T a b l e o f C o n t e n t s Balance Sheet Highlights December 31, 2025 Compared to December 31, 2024 December 31, Change $ Change % (Dollars in thousands) 2025 2024 ASSETS Cash and cash equivalents $ 337,232 $ 421,576 $ (84,344) (20.0) % Restricted cash 63,790 105,645 (41,855) (39.6) Loans held for sale, at fair value 3,165,542 2,603,735 561,807 21.6 Loans held for investment, at fair value 109,821 116,627 (6,806) (5.8) Derivative assets, at fair value 42,365 44,389 (2,024) (4.6) Servicing rights, at fair value 1,658,223 1,633,661 24,562 1.5 Trading securities, at fair value 85,640 87,466 (1,826) (2.1) Property and equipment, net 61,929 61,079 850 1.4 Operating lease right-of-use assets 23,877 20,432 3,445 16.9 Loans eligible for repurchase 1,074,386 995,398 78,988 7.9 Investments in joint ventures 18,251 18,113 138 0.8 Other assets 216,880 235,907 (19,027) (8.1) Total assets 6,857,936 6,344,028 513,908 8.1 LIABILITIES AND EQUITY Warehouse and other lines of credit 2,902,539 2,377,127 525,412 22.1 Accounts payable, accrued expenses and other liabilities 349,350 379,439 (30,089) (7.9) Derivative liabilities, at fair value 10,718 25,060 (14,342) (57.2) Liability for loans eligible for repurchase 1,074,386 995,398 78,988 7.9 Operating lease liability 34,630 33,190 1,440 4.3 Debt obligations, net 2,100,303 2,027,203 73,100 3.6 Total liabilities 6,471,926 5,837,417 634,509 10.9 Total equity 386,010 506,611 (120,601) (23.8) Total liabilities and equity $ 6,857,936 $ 6,344,028 $ 513,908 8.1 Cash and Cash Equivalents.
Revenues Net Interest (Expense) Income. Net interest (expense) income includes interest income earned on LHFS, offset by interest expense incurred on amounts borrowed under warehouse lines for loan financing as well as warehouse line commitment fees. These commitment fees are amortized on a straight-line basis over the duration of the warehouse line agreement.
Revenues Net Interest Income (Expense). Net interest income (expense) includes interest income earned on LHFS, offset by interest expense incurred on amounts borrowed under warehouse lines for loan financing as well as warehouse line commitment fees. These commitment fees are amortized on a straight-line basis over the duration of the warehouse line agreement.
Change in fair value of servicing rights, net includes (i) fair value gains or losses net of Hedging Instrument gains or losses; (ii) fallout and decay, which includes principal amortization and prepayments; and (iii) realized gains or losses on the sales of servicing rights.
Change in Fair Value of Servicing Rights, Net . Change in fair value of servicing rights, net includes (i) fair value gains or losses net of Hedging Instrument gains or losses; (ii) fallout and decay, which includes principal amortization and prepayments; and (iii) realized gains or losses on the sales of servicing rights.
Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation.
Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation.
Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation.
Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation.
Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation.
Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation.
Because of these limitations, Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Weighted Average Shares Outstanding, and Adjusted EBITDA (LBITDA) are not intended as alternatives to total revenue, net income (loss), net income (loss) attributable to the Company, or Diluted Earnings (Loss) Per Share or as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations.
Because of these limitations, Adjusted Total Revenue, Adjusted Net Loss, Adjusted Diluted Weighted Average Shares Outstanding, and Adjusted EBITDA are not intended as alternatives to total revenue, net income (loss), net income (loss) attributable to the Company, or Diluted Earnings (Loss) Per Share or as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations.
Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense)”, as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA (LBITDA).
Adjusted EBITDA includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense)”, as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA.
(3) Amount represents the fair value of servicing rights, net of servicing liabilities, which are included in accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets. (4) Excludes other Non-Agency.
(3) Amount represents the fair value of servicing rights, net of servicing liabilities, which are included in accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets. (4) Excludes Non-Agency products.
FHFA also requires an annual capital and liquidity plan effective March 31, 2024 and Ginnie Mae has implemented a risk-based capital requirement effective December 31, 2024. As of December 31, 2024, we were in compliance with these financial requirements. Warehouse and Other Lines of Credit We primarily finance mortgage loans through borrowings under our warehouse and other lines of credit.
FHFA also requires an annual capital and liquidity plan effective March 31, 2024 and Ginnie Mae implemented a risk-based capital requirement effective December 31, 2024. As of December 31, 2025, we were in compliance with these financial requirements. Warehouse and Other Lines of Credit We primarily finance mortgage loans through borrowings under our warehouse and other lines of credit.
Financial Statements and Supplementary Data.” At December 31, 2024, the most critical of these significant accounting policies were policies related to the fair value of loans held for sale, servicing rights, and derivative financial instruments. As of the date of this report, there have been no significant changes to the Company's critical accounting policies or estimates.
Financial Statements and Supplementary Data.” At December 31, 2025, the most critical of these significant accounting policies were policies related to the fair value of loans held for sale, servicing rights, and derivative financial instruments. As of the date of this report, there have been no significant changes to the Company's critical accounting policies or estimates.
The results of operations described below are not necessarily indicative of the results to be expected for any future periods. This discussion includes forward-looking information that involves risks and assumptions which could cause actual results to differ materially from management’s expectations.
The results of operations described below are not necessarily indicative of the results to be expected for any future periods. This discussion includes forward-looking information that involves risks and assumptions which could cause actual results or outcomes to differ materially from management’s expectations.
Off-Balance Sheet Arrangements As of December 31, 2024, we were party to mortgage loan participation purchase and sale agreements, pursuant to which we have access to uncommitted facilities that provide liquidity for recently sold MBS up to the MBS settlement date.
Off-Balance Sheet Arrangements As of December 31, 2025, we were party to mortgage loan participation purchase and sale agreements, pursuant to which we have access to uncommitted facilities that provide liquidity for recently sold MBS up to the MBS settlement date.
When a loan is sold, the difference between proceeds received and the UPB is included in “Premium or discount from loan sales.” Additionally, “Discount points, rebates, and lender paid costs” are recognized at closing of the loan.
When a loan is sold, the difference between proceeds received and the UPB is included in “Premium from loan sales.” Additionally, “Discount points, rebates, and lender paid costs” are recognized at closing of the loan.
(4) Represents expenses directly related to the Cybersecurity Incident, net of insurance recoveries during fiscal 2024, including costs to investigate and remediate the Cybersecurity Incident, the costs of customer notifications and identity protection, professional fees including legal expenses, litigation settlement costs, and commission guarantees. (5) Represents lease impairment on corporate and retail locations. 66 Table of Contents
(4) Represents expenses directly related to the Cybersecurity Incident, net of insurance recoveries during fiscal 2024, including costs to investigate and remediate the Cybersecurity Incident, the costs of customer notifications and identity protection, professional fees including legal expenses, litigation settlement costs, and commission guarantees. (5) Represents lease impairment on corporate and retail locations.
Moreover, there may be reduced demand from investors to acquire our mortgage loans in the secondary market, further impacting our liquidity. Approximately 67% of the mortgage loans that we originated during the year ended December 31, 2024 were sold in the secondary mortgage market either directly to Fannie Mae and Freddie Mac or securitized into MBS guaranteed by Ginnie Mae.
Moreover, there may be reduced demand from investors to acquire our mortgage loans in the secondary market, further impacting our liquidity. Approximately 63% of the mortgage loans that we originated during the year ended December 31, 2025 were sold in the secondary mortgage market either directly to Fannie Mae and Freddie Mac or securitized into MBS guaranteed by Ginnie Mae.
In a declining interest rate environment, borrowers tend to refinance their mortgage loans, which increases prepayment speed and causes expected mortgage loan servicing revenues to decrease, which reduces the average life of our servicing portfolio and decreases the value of our servicing rights.
In a declining interest rate environment, borrowers tend to refinance their mortgage loans, which increases prepayment speeds and causes expected mortgage loan servicing revenues to decrease. This reduces the average life of our servicing portfolio and decreases the value of our servicing rights.
When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in 63 Table of Contents conditions and assumptions. Refer to “Item 7A.
When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. Refer to “Item 7A.
Our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization or agreements of our subsidiaries, including agreements governing our indebtedness.
Our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization or agreements of our subsidiaries, including agreements governing our indebtedness. Future agreements may also limit our ability to pay dividends.
We compensate for these limitations by using Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Weighted Average Shares Outstanding, and Adjusted EBITDA 64 Table of Contents (LBITDA) along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below for a reconciliation of these non-GAAP measures to their most comparable U.S.
We compensate for these limitations by using Adjusted Total Revenue, Adjusted Net Loss, Adjusted Diluted Weighted Average Shares Outstanding, and Adjusted EBITDA along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below for a reconciliation of these non-GAAP measures to their most comparable U.S. GAAP measures.
These non-GAAP measures include our Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Weighted Average Shares Outstanding, and Adjusted EBITDA (LBITDA).
These non-GAAP measures include our Adjusted Total Revenue, Adjusted Net Loss Adjusted Diluted Weighted Average Shares Outstanding, and Adjusted EBITDA.
Some of these limitations are: • They do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments; • Adjusted EBITDA (LBITDA) does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt; • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Total Revenue, Adjusted Net Income (Loss), and Adjusted EBITDA (LBITDA) do not reflect any cash requirement for such replacements or improvements; and • They are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.
Some of these limitations are: • They do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments; 63 T a b l e o f C o n t e n t s • Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt; • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Total Revenue, Adjusted Net Loss, and Adjusted EBITDA do not reflect any cash requirement for such replacements or improvements; and • They are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.
The increase between periods was due to the increase in Ginnie Mae serviced loans that were 90 days or more delinquent at December 31, 2024, and was also attributable to the increase in our Ginnie Mae servicing portfolio. Servicing Rights, at Fair Value.
The increase between periods was due to the increase in loans that were 90 days or more delinquent at December 31, 2025, and was also attributable to the increase in our servicing portfolio. Servicing Rights, at Fair Value.
We do not recognize these transfers as sales for accounting purposes. During the year ended December 31, 2024, our loans remained on warehouse lines for an average of 19 days. Our warehouse facilities are generally short-term borrowings with maturities of one year and our securitization facility has a two year term.
We do not recognize these transfers as sales for accounting purposes. During the year ended December 31, 2025, our loans remained on warehouse lines for an average of 19 days. Our warehouse facilities are generally short-term borrowings with maturities of one year and our securitization facilities have two and three year terms.
Our primary sources of liquidity have been as follows: (i) funds obtained from our warehouse and other lines of credit; (ii) proceeds from debt obligations; (iii) proceeds received from the sale and securitization of loans; (iv) proceeds from the sale of servicing rights; (v) loan fees from the origination of loans; (vi) servicing fees; (vii) title and escrow fees from settlement services; (viii) real estate referral fees; and (ix) interest income from LHFS.
Our primary sources of liquidity have been as follows: (i) funds obtained from our warehouse and other lines of credit; (ii) proceeds from debt obligations; (iii) proceeds received from the sale and securitization of loans; (iv) proceeds from the sale 59 T a b l e o f C o n t e n t s of servicing rights; (v) loan fees from the origination of loans; (vi) servicing fees; (vii) title and escrow fees from settlement services; (viii) real estate referral fees; and (ix) interest income from LHFS.
Although these financial covenants limit the amount of indebtedness that we may incur and affect our liquidity through minimum cash reserve requirements, we believe that these covenants currently provide us with sufficient flexibility to operate our business and obtain the financing necessary to achieve that purpose.
As of December 31, 2025, we were in full compliance with all financial covenants. Although these financial covenants limit the amount of indebtedness that we may incur and affect our liquidity through minimum cash reserve requirements, we believe that these covenants currently provide us with sufficient flexibility to operate our business and obtain the financing necessary to achieve that purpose.
Our warehouse line providers require us to make a capital investment, or “haircut,” upon financing the loan, which is generally based on product types and the market value of the loans. The haircuts are normally recovered from sales proceeds.
When we draw on our warehouse and securitization facilities we must pledge eligible loan collateral. Our warehouse line providers require us to make a capital investment, or “haircut,” upon financing the loan, which is generally based on product types and the market value of the loans. The haircuts are normally recovered from sales proceeds.
As of December 31, 2024, unrestricted cash and cash equivalents were $421.6 million and committed and uncommitted available capacity under our warehouse and other lines of credit was $1.2 billion.
As of December 31, 2025, unrestricted cash and cash equivalents were $337.2 million and committed and uncommitted available capacity under our warehouse and other lines of credit was $1.3 billion.
Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with GAAP, which requires us to make judgments, estimates and assumptions that affect: (i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent assets and liabilities at the end of each reporting period; and (iii) the reported amounts of revenues and expenses during each reporting period.
Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with GAAP, which requires us to make judgments, estimates and assumptions that affect: (i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent 62 T a b l e o f C o n t e n t s assets and liabilities at the end of each reporting period; and (iii) the reported amounts of revenues and expenses during each reporting period.
Other secured financings as of December 31, 2024 consisted of securitization debt of $97.8 million, net of $7.8 million in discount and $1.2 million in deferred financing costs and related to the securitization of a pool of residential mortgage loans held by a VIE.
Other secured financings as of December 31, 2025 consisted of securitization debt of $88.0 million, net of $5.1 million in discount and $0.8 million in deferred financing costs and related to the securitization of a pool of residential mortgage loans held by a VIE.
Gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by loan origination volume during period. 54 Table of Contents Pull through weighted gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by the pull through weighted rate lock volume.
Pull through weighted gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by the pull through weighted rate lock volume.
A comparative discussion of results for 2023 compared to 2022 is provided in the "Results of Operations" section within the Company’s Annual Report of loanDepot, Inc. on Form 10-K for the year ended December 31, 2023.
A comparative discussion of results for 2024 compared to 2023 is provided in the “Results of Operations” section within the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Reconciliation of Total Revenue to Adjusted Total Revenue (Dollars in thousands) (Unaudited): Year Ended December 31, 2024 2023 2022 Total net revenue $ 1,060,235 $ 974,022 $ 1,255,796 Valuation changes in servicing rights, net of hedging gains and losses (1) 44,675 33,226 (51,418) Adjusted total revenue $ 1,104,910 $ 1,007,248 $ 1,204,378 (1) Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights.
Reconciliation of Total Revenue to Adjusted Total Revenue (Dollars in thousands) (Unaudited): Year Ended December 31, 2025 2024 2023 Total net revenue $ 1,189,741 $ 1,060,235 $ 974,022 Valuation changes in servicing rights, net of hedging gains and losses (1) 22,045 44,675 33,226 Adjusted total revenue $ 1,211,786 $ 1,104,910 $ 1,007,248 (1) Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights.
Our primary sources of revenue are derived from the origination of conventional and government mortgage loans, servicing conventional and government mortgage loans, and providing ancillary services. Residential Real Estate Market The residential real estate market and associated mortgage loan origination volumes are influenced by economic factors such as interest rates, housing prices, and unemployment rates.
Our primary sources of revenue are derived from the origination of conventional and government mortgage loans, servicing conventional and government mortgage loans, and providing ancillary services. 51 T a b l e o f C o n t e n t s Residential Real Estate Market The residential real estate market and associated mortgage loan origination volumes are influenced by economic factors such as interest rates, housing prices, and unemployment rates.
As of December 31, 2024, we had a total of $15.6 million in restricted cash posted as collateral with our warehouse and securitization facilities, of which $4.8 million was the minimum requirement. Debt Obligations 61 Table of Contents MSR facilities and Term Notes provide financing for our servicing portfolio investments.
As of December 31, 2025, we had a total of $9.9 million in restricted cash posted as collateral with our warehouse and securitization facilities, of which $3.3 million was the minimum requirement. Debt Obligations MSR facilities and Term Notes provide financing for our servicing portfolio investments.
The increase in total net revenues was partially offset by a $50.8 million increase in total expenses, including personnel, direct origination, servicing, and other interest expense. Total originations were $24.5 billion for the year ended December 31, 2024, compared to $22.7 billion for the year ended December 31, 2023, representing an increase of $1.8 billion or 8.0%.
The increase in total net revenues was partially offset by a $7.2 million increase in total expenses, including increases in personnel, marketing and advertising expense, and servicing expense. Total originations were $26.5 billion for the year ended December 31, 2025, compared to $24.5 billion for the year ended December 31, 2024, representing an increase of $2.0 billion or 8.1%.
The size of servicing advance balances is influenced by delinquency rates and prepayment speeds. As of December 31, 2024, the outstanding balance on our servicing advance facilities was $72.5 million secured by servicing advance receivables totaling $76.5 million.
The size of servicing advance balances is influenced by delinquency rates and prepayment speeds. As of December 31, 2025, the outstanding balance on our servicing advance facilities was $77.6 million secured by servicing advance receivables totaling $99.4 million.
Reconciliation of Net Loss to Adjusted Net Loss (Dollars in thousands) (Unaudited): Year Ended December 31, 2024 2023 2022 Net loss attributable to loanDepot, Inc. $ (98,331) $ (110,142) $ (273,020) Net loss from the pro forma conversion of Class C common stock to Class A common stock (1) (103,820) (125,370) (337,365) Net loss (202,151) (235,512) (610,385) Adjustments to the benefit for income taxes (2) 26,131 32,872 92,337 Tax-effected net loss from the pro forma conversion of Class C common shares to Class A common stock (176,020) (202,640) (518,048) Valuation changes in servicing rights, net of hedging gains and losses (3) 44,675 33,226 (51,418) Stock-based compensation expense 24,919 21,993 20,583 Restructuring charges (4) 7,199 11,811 25,126 Cybersecurity incident (5) 24,628 — — Loss (gain) on extinguishment of debt 5,680 (1,690) (10,528) Loss on disposal of fixed assets 8 1,430 12,594 Goodwill impairment — — 40,736 Other impairment (6) 511 925 17,500 Tax effect of adjustments (7) (26,423) (16,696) (2,617) Adjusted net loss $ (94,823) $ (151,641) $ (466,072) (1) Reflects net loss to Class A common stock and Class D common stock from the pro forma exchange of Class C common stock.
Reconciliation of Net Loss to Adjusted Net Loss (Dollars in thousands) (Unaudited): Year Ended December 31, 2025 2024 2023 Net loss attributable to loanDepot, Inc. $ (62,646) $ (98,331) $ (110,142) Net loss from the pro forma conversion of Class C common stock to Class A common stock (1) (44,884) (103,820) (125,370) Net loss (107,530) (202,151) (235,512) Adjustments to the benefit for income taxes (2) 11,598 26,131 32,872 Tax-effected net loss from the pro forma conversion of Class C common shares to Class A common stock (95,932) (176,020) (202,640) Valuation changes in servicing rights, net of hedging gains and losses (3) 22,045 44,675 33,226 Stock-based compensation expense 12,223 24,919 21,993 Restructuring charges (4) 5,049 7,199 11,811 Cybersecurity incident (5) 1,776 24,628 — Loss (gain) on extinguishment of debt — 5,680 (1,690) Loss on disposal of fixed assets 30 8 1,430 Other impairment (6) 5 511 925 Tax effect of adjustments (7) (10,837) (26,423) (16,696) Adjusted net loss $ (65,641) $ (94,823) $ (151,641) (1) Reflects net loss to Class A common stock and Class D common stock from the pro forma exchange of Class C common stock.
Refer to Note 5 - Servicing Rights, at Fair Value. (3) Reflects employee severance expense and professional services associated with restructuring efforts subsequent to the announcement of Vision 2025 in July 2022.
Refer to Note 5 - Servicing Rights, at Fair Value. 65 T a b l e o f C o n t e n t s (3) Reflects employee severance expense and professional services associated with restructuring efforts subsequent to the announcement of Vision 2025 in July 2022.
As of December 31, 2024 there were outstanding securities financing facilities of $82.5 million, secured by trading securities with a fair value of $87.5 million. Servicing advance facilities provide financing for our servicing agreements.
As of December 31, 2025 there were outstanding securities financing facilities of $79.2 million secured by trading securities with a fair value of $85.6 million. Servicing advance facilities provide financing for our servicing agreements.
Reconciliation of Net Loss to Adjusted EBITDA (LBITDA) (Dollars in thousands) (Unaudited): Year Ended December 31, 2024 2023 2022 Net loss $ (202,151) $ (235,512) $ (610,385) Interest expense — non-funding debt (1) 188,550 174,103 124,060 Income tax benefit (40,698) (42,796) (79,592) Depreciation and amortization 36,108 41,261 42,195 Valuation changes in servicing rights, net of hedging gains and losses (2) 44,675 33,226 (51,418) Stock compensation expense 24,919 21,993 20,583 Restructuring charges (3) 7,199 11,811 25,126 Cybersecurity incident (4) 24,628 — — Loss on disposal of fixed assets 8 1,430 12,594 Goodwill impairment — — 17,500 Other impairment (5) 511 925 40,736 Adjusted EBITDA (LBITDA) $ 83,749 $ 6,441 $ (458,601) (1) Represents other interest expense, which includes gain on extinguishment of debt and amortization of debt issuance costs and debt discount, in the Company’s consolidated statement of operations.
Reconciliation of Net Loss to Adjusted EBITDA (Dollars in thousands) (Unaudited): Year Ended December 31, 2025 2024 2023 Net loss $ (107,530) $ (202,151) $ (235,512) Interest expense — non-funding debt (1) 175,213 188,550 174,103 Income tax benefit (13,001) (40,698) (42,796) Depreciation and amortization 26,221 36,108 41,261 Valuation changes in servicing rights, net of hedging gains and losses (2) 22,045 44,675 33,226 Stock compensation expense 12,223 24,919 21,993 Restructuring charges (3) 5,049 7,199 11,811 Cybersecurity incident (4) 1,776 24,628 — Loss on disposal of fixed assets 30 8 1,430 Other impairment (5) 5 511 925 Adjusted EBITDA $ 122,031 $ 83,749 $ 6,441 (1) Represents other interest expense, which includes gain on extinguishment of debt and amortization of debt issuance costs and debt discount, in the Company’s consolidated statement of operations.
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding (Unaudited) Year Ended December 31, 2024 2023 2022 Share Data: Diluted weighted average shares of Class A common stock and Class D common stock outstanding 185,641,675 174,906,063 156,030,350 Assumed pro forma conversion of Class C common stock to Class A common stock (1) 140,148,860 147,789,060 163,541,101 Adjusted diluted weighted average shares outstanding 325,790,535 322,695,123 319,571,451 (1) Reflects the assumed pro forma exchange and conversion of Class C common stock.
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding (Unaudited) Year Ended December 31, 2025 2024 2023 Share Data: Diluted weighted average shares of Class A common stock and Class D common stock outstanding 211,021,121 185,641,675 174,906,063 Assumed pro forma conversion of Class C common stock to Class A common stock (1) 119,701,749 140,148,860 147,789,060 Adjusted diluted weighted average shares outstanding 330,722,870 325,790,535 322,695,123 (1) Reflects the assumed pro forma exchange and conversion of Class C common stock.
As of December 31, 2024, our Ginnie Mae MSR facility had an outstanding balance of $193.8 million in variable funding notes and $200.0 million in Term Notes, secured by Ginnie Mae MSRs totaling $625.7 million. Securities financing facilities provide financing for the retained interest securities associated with our securitizations.
As of December 31, 2025, our MSR facility secured by Ginnie Mae had an outstanding balance of $93.4 million in variable funding notes and $346.9 million in Term Notes, secured by Ginnie Mae MSRs totaling $661.5 million. Securities financing facilities provide financing for the retained interest securities associated with our securitizations.
The decrease is primarily attributable to an increase in total net revenues of $86.2 million due to a 42 basis point increase in pull-through weighted gain on sale margin and a 6.4% increase in pull-through weighted lock volume that resulted in a $117.6 million increase in gain on origination and sale of loans.
The decrease is primarily attributable to an increase in total net revenues of $129.5 million due to a 13.8% increase in pull-through weighted lock volume that resulted in a $100.3 million increase in gain on origination and sale of loans, and a 19 basis point increase in pull-through weighted gain on sale margin.
(5) Amounts represent the fair value of servicing rights, net, divided by the weighted average annualized servicing fee. 55 Table of Contents Results of Operations Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table sets forth our consolidated financial statement data for 2024 compared to 2023 .
(5) Amounts represent the fair value of servicing rights, net, divided by the weighted average annualized servicing fee. 54 T a b l e o f C o n t e n t s Results of Operations Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table sets forth our consolidated financial statement data for 2025 compared to 2024 .
Loans eligible for repurchase were $995.4 million as of December 31, 2024, as compared to $711.4 million as of December 31, 2023, representing an increase of $284.0 million or 39.9%.
Loans eligible for repurchase were $1.1 billion as of December 31, 2025, as compared to $995.4 million as of December 31, 2024, representing an increase of $79.0 million or 7.9%.
This was partially offset by stock-based compensation of $24.9 million. Liquidity and Capital Resources Liquidity Our liquidity reflects our ability to meet current and potential cash requirements. We forecast the need to have adequate liquid funds available to operate and grow our business.
Liquidity and Capital Resources Liquidity Our liquidity reflects our ability to meet current and potential cash requirements. We forecast the need to have adequate liquid funds available to operate and grow our business.
This is somewhat offset by purchase loan originations sourced from our joint ventures which typically experience their highest level of activity during November and December as home builders focus on completing and selling homes prior to year- 53 Table of Contents end.
This is somewhat offset by purchase loan originations sourced from our joint ventures which typically experience their highest level of activity during November and December as home builders focus on completing and selling homes prior to year-end. Seasonality has less of an impact on mortgage loan refinancing volumes, which are primarily driven by fluctuations in mortgage loan interest rates.
Seller/Servicer Financial Requirements As a seller and servicer, we are subject to minimum net worth, liquidity, and other financial requirements. In 2022, both FHFA and Ginnie Mae revised these requirements.
Seller/Servicer Financial Requirements As a seller and servicer, we are subject to minimum net worth, liquidity, and other financial requirements.
Servicing Expense. The increase of $9.7 million or 35.0% in servicing expense reflects an increase in default and loss mitigation expense associated with an increase in delinquencies and average age of loans serviced, partially offset by a decrease in our servicing portfolio. Other Interest Expense.
Servicing Expense. The increase of $5.8 million or 15.4% in servicing expense reflects an increase in default and loss mitigation expense associated with an increase in delinquencies and average age of loans serviced and an increase in our servicing portfolio. Other Interest Expense.
Other income includes our pro rata share of the net earnings from joint ventures and fee income from title, escrow, and settlement services for mortgage loan transactions performed by LDSS, fair value gains or losses on trading securities, interest income on cash deposits and interest income and fair value gains or losses from loans held for investment. 57 Table of Contents The decrease of $2.6 million, or 3.6%, in other income between periods was attributable to a $5.4 million decrease in income from joint ventures, $3.5 million decrease in trading securities fair value gains, and a decrease in bank interest income of $2.4 million, partially offset by $5.5 million in income related to loans held for investment and a $3.2 million increase in title and escrow fees.
Other income includes our pro rata share of the net earnings from joint ventures and fee income from title, escrow, and settlement services for mortgage loan transactions performed by LDSS, fair value gains or losses on trading securities, interest income on cash deposits and interest income and fair value gains or losses from loans held for investment.
Refer to Note 5 - Servicing Rights, at Fair Value. 65 Table of Contents (4) Reflects employee severance expense and professional services associated with restructuring efforts subsequent to the announcement of Vision 2025 in July 2022.
Refer to Note 5 - Servicing Rights, at Fair Value. (4) Reflects employee severance expense and professional services associated with restructuring efforts.
Year Ended December 31, 2024 2023 2022 Statutory U.S. federal income tax rate 21.00 % 21.00 % 21.00 % State and local income taxes (net of federal benefit) 4.17 5.22 6.37 Effective income tax rate 25.17 % 26.22 % 27.37 % (3) Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights, and gains (losses) from the sale of MSRs.
Adjustments to the benefit for income taxes reflect the income tax rates below, and the pro forma assumption that loanDepot, Inc. owns 100% of LD Holdings. 64 T a b l e o f C o n t e n t s Year Ended December 31, 2025 2024 2023 Statutory U.S. federal income tax rate 21.00 % 21.00 % 21.00 % State and local income taxes (net of federal benefit) 4.84 4.17 5.22 Effective income tax rate 25.84 % 25.17 % 26.22 % (3) Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights, and gains (losses) from the sale of MSRs.
However, rising interest rates during periods of inflationary pressures can make real assets, including real estate, an attractive investment. Demand for real estate may result in ongoing support for purchase mortgages and home price appreciation creating borrower equity that could result in opportunities for cash-out refinancings or home equity lines of credit.
Demand for real estate may result in ongoing support for purchase mortgages and home price appreciation creating borrower equity that could result in opportunities for cash-out refinancings, home equity lines of credit, or closed end seconds.
We also sell loans to many private investors. As of December 31, 2024, we maintained revolving lines of credit with nine counterparties providing warehouse and other securitization facilities with a total borrowing capacity of $3.7 billion, of which $951.0 million was committed.
We also sell loans to other non-Agency investors. As of December 31, 2025, we maintained revolving lines of credit with eleven counterparties, including two loan funding facilities with GSEs, providing warehouse and other securitization facilities with a total borrowing capacity of $4.2 billion, of which $1.3 billion was committed.
At this time, we currently believe that our cash on hand, as well as the sources of liquidity described above, will be sufficient to maintain our current operations and fund our loan originations capital commitments for the next twelve months. 60 Table of Contents However, we will continue to review our liquidity needs in light of current and anticipated mortgage market conditions and we are taking various steps to align our cost structure with current and expected mortgage origination volumes.
At this time, we currently believe that our cash on hand, as well as the sources of liquidity described above, will be sufficient to maintain our current operations and fund our loan originations capital commitments for the next twelve months.
Year Ended December 31, (Dollars in thousands) 2024 2023 2022 IRLCs $ 32,541,852 $ 32,155,455 $ 68,553,340 IRLCs (units) 110,528 105,143 211,647 Pull-through weighted lock volume $ 22,854,729 $ 21,475,262 $ 45,164,915 Pull-through weighted gain on sale margin 3.17 % 2.75 % 1.94 % Loan originations by purpose: Purchase $ 16,197,535 $ 16,474,927 $ 29,333,525 Refinance 8,298,965 6,196,804 24,444,931 Total loan originations $ 24,496,500 $ 22,671,731 $ 53,778,456 Gain on sale margin 2.96 % 2.60 % 1.63 % Loan originations (units) 84,328 76,847 161,496 Licensed loan officers 1,728 1,573 1,902 Loans sold: Servicing-retained $ 15,238,250 $ 15,222,156 $ 38,461,896 Servicing-released 8,771,900 7,918,029 20,855,416 Total loans sold (1) $ 24,010,150 $ 23,140,185 $ 59,317,312 Loans sold (units) 82,672 77,372 175,633 Servicing metrics Total servicing portfolio (unpaid principal balance) $ 115,971,984 $ 145,090,199 $ 141,170,931 Total servicing portfolio (units) 417,875 496,894 471,022 60+ days delinquent ($) (2) $ 1,826,105 $ 1,392,606 $ 1,421,722 60+ days delinquent (%) 1.57 % 0.96 % 1.01 % Servicing rights at fair value, net (3) $ 1,615,510 $ 1,985,718 $ 2,025,136 Weighted average servicing fee (4) 0.30 % 0.29 % 0.30 % Multiple (4)(5) 4.9x 5.0x 5.2x (1) Original principal balance (2) The UPB of loans that are 60 or more days past due as of the dates presented, according to the contractual due date, or are in foreclosure.
We believe that the net additions to our portfolio and number of units are indicators of the growth of our mortgage loans serviced and our servicing income, but may be offset by sales of servicing rights. 53 T a b l e o f C o n t e n t s Year Ended December 31, (Dollars in thousands) 2025 2024 2023 IRLCs $ 35,660,447 $ 32,541,852 $ 32,155,455 IRLCs (units) 130,287 110,528 105,143 Pull-through weighted lock volume $ 26,014,540 $ 22,854,729 $ 21,475,262 Pull-through weighted gain on sale margin 3.36 % 3.17 % 2.75 % Loan originations by purpose: Purchase $ 15,201,308 $ 16,197,535 $ 16,474,927 Refinance 11,282,238 8,298,965 6,196,804 Total loan originations $ 26,483,546 $ 24,496,500 $ 22,671,731 Loan originations (units) 95,653 84,328 76,847 Gain on sale margin 3.30 % 2.96 % 2.60 % Licensed loan officers 1,599 1,728 1,573 Headcount 4,506 4,675 4,250 Loans sold: Servicing-retained $ 17,166,067 $ 15,238,250 $ 15,222,156 Servicing-released 9,132,804 8,771,900 7,918,029 Total loans sold (1) $ 26,298,871 $ 24,010,150 $ 23,140,185 Loans sold (units) 97,081 82,672 77,372 Servicing metrics Total servicing portfolio (unpaid principal balance) $ 119,096,243 $ 115,971,984 $ 145,090,199 Total servicing portfolio (units) 448,261 417,875 496,894 60+ days delinquent ($) (2) $ 1,909,082 $ 1,826,105 $ 1,392,606 60+ days delinquent (%) 1.60 % 1.57 % 0.96 % Servicing rights at fair value, net (3) $ 1,637,706 $ 1,615,510 $ 1,985,718 Weighted average servicing fee (4) 0.30 % 0.30 % 0.29 % Multiple (4)(5) 4.8x 4.9x 5.0x (1) Original principal balance (2) The UPB of loans that are 60 or more days past due as of the dates presented, according to the contractual due date, or are in foreclosure.
Recovery of loan losses also from improved credit performance and reduced repurchase exposure. Origination Income, Net . Origination income, net, reflects the fees that we earn, net of lender credits we pay, from originating loans. Origination income includes loan origination fees, processing fees, underwriting fees, and other fees collected from the borrower at the time of funding.
Origination Income, Net . Origination income, net, reflects the fees that we earn, net of lender credits we pay, from originating loans. Origination income includes loan origination fees, processing fees, underwriting fees, and other fees collected from the borrower at the time of funding. Lender credits typically include rebates or concessions to borrowers for certain loan origination costs.
Expenses Personnel Expense. Personnel expense includes salaries, commissions, incentive compensation, benefits, and other employee costs. The $27.5 million or 4.8% increase in personnel expense included volume-related increases in commissions of $28.2 million. A decrease of $0.7 million to salaries & benefits primarily related to a decrease in severance expenses offset by an increase in salary expense related to headcount.
Expenses Personnel Expense. Personnel expense includes salaries, commissions, incentive compensation, benefits, and other employee costs. The increase of $41.0 million or 6.8% is primarily due to a $31.8 million volume-related increase in commissions and a $12.5 million increase in salaries and benefits due to an increase in average headcount. Marketing and Advertising Expense.
Restricted cash was $105.6 million as of December 31, 2024 compared to $85.1 million as of December 31, 2023 representing an increase of $20.5 million or 24.1%. The increase was primarily the result of increases in cash collateral associated with derivative activities. Loans Held for Sale, at Fair Value.
Restricted Cash. Restricted cash was $63.8 million as of December 31, 2025 compared to $105.6 million as of December 31, 2024 representing a decrease of $41.9 million or 39.6%. The decrease was primarily the result of decreases in cash collateral associated with derivative activities, warehouse lines, and debt obligations. Loans Held for Sale, at Fair Value.
The decrease of $11.1 million, or 2.3%, in servicing income between periods was the result of a decrease in servicing fee collections due to a decrease of $15.8 billion in the average UPB of our servicing portfolio as a result of bulk sales completed during the second quarter of 2024. Change in Fair Value of Servicing Rights, Net .
The decrease of $44.5 million or 9.2% in servicing income between periods was the result of a decrease in servicing fee collections and reduced ancillary income due to a decrease of $9.5 billion in the average UPB of our servicing portfolio as a result of bulk sales completed during the prior year.
The $366.1 million, or 18.3%, decrease comprised a $514.8 million reduction from the bulk sale of servicing rights associated with $31.9 billion in UPB and $163.0 million from principal amortization and prepayments, partially offset by $252.1 million of capitalized servicing rights from servicing-retained loan sales and $59.5 million increase in fair value. Warehouse and Other Lines of Credit.
The $24.6 million or 1.5% increase was comprised of $271.4 million of capitalized servicing rights from servicing-retained loan sales, partially offset by $175.9 million from principal amortization and prepayments, $37.4 million decrease in fair value, and $36.3 million reduction from sales of servicing rights associated with $389.1 million in UPB. Other Assets.
Equity . The decrease of $197.9 million, or 28.1%, was primarily attributed to a net loss of $202.2 million, an increase to additional paid in capital of $15.8 million, primarily related to the TRA liability and deferred taxes, and the repurchase of treasury shares at cost of $3.8 million to net settle and withhold tax on vested RSUs.
The decrease of $120.6 million, or 23.8%, was primarily attributed to a net loss of $107.5 million, a decrease in additional paid in capital of $20.0 million, primarily related to conversion-related adjustments to the TRA liability, the repurchase of treasury shares at cost of $9.3 million to net settle and withhold tax on vested RSUs and exercised options, and distributions for taxes on behalf of shareholders of $1.9 million, partially offset by stock-based compensation of $12.2 million and an increase of $5.9 million related to the issuance of common stock through the exercise of stock options.
Seasonality has less of an impact on mortgage loan refinancing volumes, which are primarily driven by fluctuations in mortgage loan interest rates. Increases in interest rates may affect affordability and the ability for potential home buyers to qualify for a mortgage loan. As interest rates increase, rate and term refinancings become less attractive to consumers.
Increases in interest rates may affect affordability and the ability for potential home buyers to qualify for a mortgage loan. As interest rates increase, rate and term refinancings become less attractive to consumers. However, rising interest rates during periods of inflationary pressures can make real assets, including real estate, an attractive investment.
Our approach relies on selected online lead aggregators, alongside search engine optimization, pay-per-click advertising, banner advertising, and organic content generation to cultivate organic online leads. Marketing and advertising expenses remained relatively unchanged with a $0.2 million or 0.2% decrease which reflects cost savings affecting lead aggregators and a decrease in market refinance volume. Direct Origination Expense.
With elevated interest rates, we adapted our marketing strategy to target increased purchase and cash-out refinance volume. Our approach relies on selected online lead aggregators, alongside search engine optimization, pay-per-click advertising, banner advertising, and organic content generation to cultivate organic online leads. Marketing and advertising expenses increased $14.0 million or 10.6% which primarily reflects an increase in aggregate lead generation.
During the second quarter of 2024, we repurchased $478.0 million of 2025 Senior Notes in exchange for $340.6 million of 2027 Senior Notes and cash of $185.0 million which resulted in a $5.7 million loss on extinguishment of debt. Debt obligations are further discussed in Note 13- Debt Obligations of the Notes to Consolidated Financial Statements contained in Item 8.
During the year ended December 31, 2024, we repurchased $478.0 million of 2025 Senior Notes in exchange for $340.6 million of 2027 Senior Notes and cash of $185.0 million resulting in a loss on extinguishment of debt of $5.7 million. In November 2025, the remaining principal balance of $19.8 million on the 2025 Senior Notes was redeemed.
Gain on origination and sale of loans, net was comprised of the following components: Year Ended December 31, Change $ Change % (Dollars in thousands) 2024 2023 Premium (discount) from loan sales $ 66,489 $ (135,943) $ 202,432 148.9 % Fair value of servicing rights additions 252,076 277,387 (25,311) (9.1) Fair value (losses) gains on IRLC and LHFS (49,302) 89,290 (138,592) (155.2) Fair value gains (losses) from Hedging Instruments 35,778 (4,149) 39,927 962.3 Discount points, rebates and lender paid costs 330,689 306,115 24,574 8.0 Recovery (provision) for loan loss obligation for loans sold 6,348 (8,179) 14,527 177.6 Total gain on origination and sale of loans, net $ 642,078 $ 524,521 $ 117,557 22.4 Gain on origination and sale of loans, net includes several key components.
Gain on origination and sale of loans, net was comprised of the following components: Year Ended December 31, Change $ Change % (Dollars in thousands) 2025 2024 Premium from loan sales $ 137,808 $ 66,489 $ 71,319 107.3 % Fair value of servicing rights additions 271,439 252,076 19,363 7.7 Fair value gains (losses) on IRLC and LHFS 45,173 (49,302) 94,475 191.6 Fair value (losses) gains from Hedging Instruments (70,793) 35,778 (106,571) (297.9) Discount points, rebates and lender paid costs 367,493 330,689 36,804 11.1 (Provision) recovery for loan loss obligation for loans sold (8,734) 6,348 (15,082) (237.6) Total gain on origination and sale of loans, net $ 742,386 $ 642,078 $ 100,308 15.6 Gain on origination and sale of loans, net includes several key components.
We may recover previously recorded provision for loan loss obligations when previous loss estimates need to be lowered for changes in estimated frequency and severity. The $117.6 million or 22.4% increase in gain on origination and sale of loans, net was primarily driven by higher gain on sale margin and increased volumes.
We may recover previously recorded provision for loan loss obligations when previous loss estimates need to be lowered for changes in estimated frequency and severity.
Warehouse and other lines of credit are further discussed in Note 12- Warehouse and Other Lines of Credit of the Notes to Consolidated Financial Statements contained in Item 8. When we draw on our warehouse and securitization facilities we must pledge eligible loan collateral.
As of December 31, 2025, we had $2.9 billion in outstanding borrowings and $1.3 billion in additional availability under our facilities. Warehouse and other lines of credit are further discussed in Note 12- Warehouse and Other Lines of Credit of the Notes to Consolidated Financial Statements contained in Item 8.
As of December 31, 2024, MSR facilities secured by Fannie Mae and Freddie Mac MSRs had an outstanding balance of $568.5 million, secured by MSRs totaling $922.2 million.
As of December 31, 2025, our MSR facility secured by Freddie Mac had an outstanding balance of $312.4 million , secured by Freddie Mac MSRs totaling $482.1 million.
Consolidated VIEs are further discussed in Note 8 - Variable Interest Entities of the Notes to Consolidated Financial Statements contained in Item 8. Unsecured debt obligations as of December 31, 2024 consisted of Senior Notes totaling $812.1 million net of $9.0 million of deferred financing costs.
Consolidated VIEs are further discussed in Note 8 - Variable Interest Entities of the Notes to Consolidated Financial Statements contained in Item 8.
Year Ended December 31, Change $ Change % (Dollars in thousands) 2024 2023 REVENUES: Net interest (expense) income $ (843) $ 3,118 $ (3,961) (127.0) % Gain on origination and sale of loans, net 642,078 524,521 117,557 22.4 Origination income, net 82,290 65,209 17,081 26.2 Servicing fee income 481,699 492,811 (11,112) (2.3) Change in fair value of servicing rights, net (215,138) (184,417) (30,721) (16.7) Other income 70,149 72,780 (2,631) (3.6) Total net revenues 1,060,235 974,022 86,213 8.9 EXPENSES: Personnel expense 600,483 573,010 27,473 4.8 Marketing and advertising expense 132,671 132,880 (209) (0.2) Direct origination expense 84,234 67,141 17,093 25.5 General and administrative expense 204,231 212,732 (8,501) (4.0) Occupancy expense 19,434 23,516 (4,082) (17.4) Depreciation and amortization 36,108 41,261 (5,153) (12.5) Servicing expense 37,373 27,687 9,686 35.0 Other interest expense 188,550 174,103 14,447 8.3 Total expenses 1,303,084 1,252,330 50,754 4.1 Loss before income taxes (242,849) (278,308) 35,459 12.7 Income tax benefit (40,698) (42,796) 2,098 4.9 Net loss (202,151) (235,512) 33,361 14.2 Net loss attributable to noncontrolling interests (103,820) (125,370) 21,550 17.2 Net loss attributable to loanDepot, Inc. $ (98,331) $ (110,142) $ 11,811 10.7 Net loss of $202.2 million for 2024 reflects a decrease of $33.4 million compared to net loss of $235.5 million for 2023.
Year Ended December 31, Change $ Change % (Dollars in thousands) 2025 2024 REVENUES: Net interest income (expense) $ 10,275 $ (843) $ 11,118 NM Gain on origination and sale of loans, net 742,386 642,078 100,308 15.6 Origination income, net 131,719 82,290 49,429 60.1 Servicing fee income 437,202 481,699 (44,497) (9.2) Change in fair value of servicing rights, net (198,533) (215,138) 16,605 7.7 Other income 66,692 70,149 (3,457) (4.9) Total net revenues 1,189,741 1,060,235 129,506 12.2 EXPENSES: Personnel expense 641,518 600,483 41,035 6.8 Marketing and advertising expense 146,688 132,671 14,017 10.6 Direct origination expense 83,540 84,234 (694) (0.8) General and administrative expense 177,084 204,231 (27,147) (13.3) Occupancy expense 16,876 19,434 (2,558) (13.2) Depreciation and amortization 26,221 36,108 (9,887) (27.4) Servicing expense 43,132 37,373 5,759 15.4 Other interest expense 175,213 188,550 (13,337) (7.1) Total expenses 1,310,272 1,303,084 7,188 0.6 Loss before income taxes (120,531) (242,849) 122,318 50.4 Income tax benefit (13,001) (40,698) 27,697 68.1 Net loss (107,530) (202,151) 94,621 46.8 Net loss attributable to noncontrolling interests (44,884) (103,820) 58,936 56.8 Net loss attributable to loanDepot, Inc. $ (62,646) $ (98,331) $ 35,685 36.3 Net loss of $107.5 million for 2025 reflects a decrease of $94.6 million compared to a net loss of $202.2 million for 2024.
Dividends and Distributions As part of our balance sheet and capital management strategies, we suspended our regular quarterly dividend effective March 31, 2022 and for the foreseeable future.
Debt obligations are further discussed in Note 13- Debt Obligations of the Notes to Consolidated Financial Statements contained in Item 8. 61 T a b l e o f C o n t e n t s Dividends and Distributions As part of our balance sheet and capital management strategies, we suspended our regular quarterly dividend effective March 31, 2022 and for the foreseeable future.
The decrease in net interest income was predominately driven by higher cost of funds on warehouse lines as interest rates on debt were higher 56 Table of Contents during the year ended December 31, 2024 and an increase of $215.8 million in the average balance of warehouse lines, partially offset by a higher yield on LHFS and $137.6 million increase in the average balance of LHFS.
The increase in net interest income was predominately driven by a $250.7 million increase in the average balance of LHFS and 55 T a b l e o f C o n t e n t s lower cost of funds on warehouse lines as short-term interest rates were lower for the year ended December 31, 2025, offset by an increase in loans financed on warehouse lines resulting in a $241.4 million increase in the average balance of warehouse lines and a lower yield on LHFS.
The $8.5 million or 4.0% decrease in general and administrative expense included a $19.6 million reduction in loss contingency expense, a $4.9 million decrease in office and equipment expenses related to software subscriptions, a $1.8 million decrease in lease impairment and loss on disposal and a $1.2 million decrease in repairs and maintenance related to the consolidation and reduction of office leases and associated expenses, offset by Cybersecurity related costs of $18.8 million.
The $27.1 million or 13.3% decrease in general and administrative expense included a $17.3 million decrease in costs related to the Cybersecurity Incident in the prior year and an $18.7 million decrease in professional and consulting fees primarily related to a decrease in legal fees and a $5.0 million insurance settlement for the reimbursement of legal fees, partially offset by a $5.6 million increase in loss contingency expense due to recoveries in the prior year and a $2.8 million increase in office and equipment expenses related to software subscriptions.
Debt Obligations, net. The decrease of $246.8 million, or 10.9%, included a decrease in MSR facilities of $218.4 million and a decrease in Senior Notes related to the debt exchange of $177.2 million, partially offset by an increase of $97.8 million in other secured financings due to the loan securitization and an increase of $44.6 million in servicing advance facilities.
The increase of $73.1 million, or 3.6%, is due to an increase of $344.9 million related to new issuances of Term Notes and an increase of $5.1 million in servicing advance facilities, partially offset by a $258.8 million decrease in MSR facilities, a $19.8 million repayment of the 2025 Senior Notes, and a net decrease of $7.1 million in other secured financings related to principal payments, and amortization of deferred financing costs and debt discount.
Our $3.7 billion of capacity as of December 31, 2024 was comprised of $3.4 billion with maturities staggered through November 2025 and a $300.0 million securitization facility that matures in September 2026. As of December 31, 2024, we had $2.4 billion in outstanding borrowings and $1.2 billion in additional availability under our facilities.
Our $4.2 billion of capacity as of December 31, 2025 was comprised of $3.9 60 T a b l e o f C o n t e n t s billion with staggered maturities within one year and a $300.0 million securitization facility that matures in April 2028.
Financial Covenants Our lenders require us to comply with various financial covenants including tangible net worth, liquidity, leverage ratios and profitability. As of December 31, 2024, we were in full compliance with all financial covenants.
However, we will continue to review our liquidity needs in light of current and anticipated mortgage market conditions and we are taking various steps to align our cost structure with current and expected mortgage origination volumes. Financial Covenants Our lenders require us to comply with various financial covenants including tangible net worth, liquidity, leverage ratios and profitability.
The $470.9 million or 22.1% increase reflects $24.1 billion in loan originations and $666.3 million in repurchases, partially offset by $23.9 billion in loan sales, $218.7 million in principal payments and a $122.5 million transfer of loans to loan held for investment. Loans Held for Investment, at Fair Value.
The $561.8 million or 21.6% increase reflects $25.9 billion in loan 58 T a b l e o f C o n t e n t s originations, $963.4 million in repurchases, and $30.4 million in fair value gains, partially offset by $26.3 billion in loan sales and $64.0 million in principal payments. Loans Held for Investment, at Fair Value.
Loans held for investment, at fair value of $116.6 million are the residential mortgage loans securitized in the second quarter of 2024. The securitization transaction did not qualify for sale treatment and 59 Table of Contents was recorded as a secured borrowing. As a result, the loans held for investment and corresponding securitization debt remain on the consolidated balance sheets.
Loans held for investment, at fair value are the residential mortgage loans securitized in the second quarter of 2024 and recorded on the balance sheet as a secured borrowing. The decrease of $6.8 million or 5.8% reflect $11.3 million of principal payments, partially offset by $4.4 million of fair value gain. Loans Eligible for Repurchase.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe following tables summarize the estimated change in fair value of our financial assets and liabilities measured at fair value as of December 31, 2024, given hypothetical parallel shifts in interest rates: 68 Table of Contents December 31, 2024 Down 25 bps Up 25 bps Change in fair value (%): LHFS 0.6 % (0.6) % LHFI 1.4 (1.4) Servicing rights, net (1.2) 1.2 IRLCs, net 35.0 (40.5) Net derivative (liabilities) assets, excluding IRLCs (27.0) 84.6 Total change in fair value 0.1 % (0.1) % 69 Table of Contents
Biggest changeThe following tables summarize the estimated change in fair value of our financial assets and liabilities measured at fair value as of December 31, 2025, given hypothetical parallel shifts in interest rates: 67 T a b l e o f C o n t e n t s December 31, 2025 Down 25 bps Up 25 bps Change in fair value (%): LHFS 0.5 % (0.6) % LHFI 0.9 (1.6) Servicing rights, net (1.5) 1.4 IRLCs, net 31.8 (38.7) Net derivative (liabilities) assets, excluding IRLCs (36.4) 128.9 Total change in fair value — % (0.1) % 68 Table of Contents
We used December 31, 2024 market rates on our instruments to perform the sensitivity analysis on our financial assets and liabilities measured at fair value. The interest rate sensitivity analysis assumes instantaneous, parallel shifts in interest rate yield curves. These sensitivities are hypothetical and presented for illustrative purposes only.
We used December 31, 2025 market rates on our instruments to perform the sensitivity analysis on our financial assets and liabilities measured at fair value. The interest rate sensitivity analysis assumes instantaneous, parallel shifts in interest rate yield curves. These sensitivities are hypothetical and presented for illustrative purposes only.
During the year ended December 31, 2024 and 2023, we incurred no losses due to nonperformance by any of our counterparties. Prepayment Risk Prepayment risk is affected by interest rates (and their inherent risk) and borrowers’ actions relative to their underlying loans.
During the year ended December 31, 2025 and 2024, we incurred no losses due to nonperformance by any of our counterparties. Prepayment Risk Prepayment risk is affected by interest rates (and their inherent risk) and borrowers’ actions relative to their underlying loans.
The average term for outstanding interest rate lock commitments at December 31, 2024 was 41 days; and our average holding period of the loan from funding to sale was 33 days for the year ended December 31, 2024. We manage the interest rate risk associated with our outstanding IRLCs, LHFS, and servicing rights by entering into Hedging Instruments.
The average term for outstanding interest rate lock commitments at December 31, 2025 was 34 days; and our average holding period of the loan from funding to sale was 33 days for the year ended December 31, 2025. We manage the interest rate risk associated with our outstanding IRLCs, LHFS, and servicing rights by entering into Hedging Instruments.
Credit risk is influenced by general economic factors including interest rates, housing prices, and unemployment rates which could impact the borrowers’ ability to make payments on their loans, While our contracts vary, we provide representations and warranties to purchasers and insurers of the mortgage loans sold that typically are in place for the life of the loan.
Credit risk is influenced by general economic factors including interest rates, housing prices, and unemployment rates which could impact the borrowers’ ability to make payments on their loans, 66 T a b l e o f C o n t e n t s While our contracts vary, we provide representations and warranties to purchasers and insurers of the mortgage loans sold that typically are in place for the life of the loan.
The level of the liability for losses from representations and warranties is difficult to estimate and requires considerable management judgment. The level of loan repurchase losses is dependent on economic factors, trends in property values, investor repurchase demand strategies, and other external conditions, including interest rates, that may change over the lives of the underlying loans.
The level of loan repurchase losses is dependent on economic factors, trends in property values, investor repurchase demand strategies, and other external conditions, including interest rates, that may change over the lives of the underlying loans.
The representations and warranties require adherence to applicable origination and underwriting guidelines (including those of Fannie Mae, Freddie Mac, and Ginnie Mae), including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local law. 67 Table of Contents We record a provision for losses relating to such representations and warranties as part of our loan sale transactions.
The representations and warranties require adherence to applicable origination and underwriting guidelines or requirements (including those of Fannie Mae, Freddie Mac, and Ginnie Mae), including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local law.
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We record a provision for losses relating to such representations and warranties as part of our loan sale transactions. The level of the liability for losses from representations and warranties is difficult to estimate and requires considerable management judgment.

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