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What changed in Walker & Dunlop, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Walker & Dunlop, Inc.'s 2022 and 2023 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 2023 report.

+484 added−451 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in Walker & Dunlop, Inc.'s 2023 10-K

484 paragraphs added · 451 removed · 339 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

74 edited+18 added−11 removed86 unchanged
Biggest changeThe following table summarizes our progress towards these 2025 milestones. ​ ​ ​ ​ ​ ​ ​ Milestone ( in thousands ) ​ 2022 ​ 2025 Milestone Revenues ​ $ 1,258,753 ​ $ 2,000,000 Debt financing volume ​ ​ 43,605,984 ​ ​ 60,000,000 Small balance lending volume ​ ​ 745,686 ​ ​ 5,000,000 Property sales volume ​ ​ 19,732,654 ​ ​ 25,000,000 Servicing portfolio ​ ​ 123,133,855 ​ ​ 160,000,000 Assets under management ​ ​ 16,748,449 ​ ​ 10,000,000 ​ 9 Table of Contents To reach these milestones in 2025, we will focus on the following areas: ● Grow Debt Financing Volume to $65 billion annually, including $5 billion of annual small balance multifamily lending, with a servicing portfolio of $160 billion by continuing to hire and acquire the best mortgage bankers in the industry, leveraging our brand to continue growing our client base, and leveraging proprietary technology to be more insightful and relevant to our clients.
Biggest changeTo reach these milestones in 2025, or some later date, we remain focused on the following areas: ● Grow Debt Financing Volume to $65 billion annually, including $5 billion of annual small balance multifamily lending, with a servicing portfolio of $160 billion by continuing to hire and acquire the best mortgage bankers in the industry, leveraging our brand to continue growing our client base, and leveraging proprietary technology to be more insightful and relevant to our clients.
In addition to identifying potential borrowers and key principals (the individual or individuals directing the activities of the borrowing entity), our correspondents assist us in evaluating loans, including pre-screening the borrowers, key principals, and properties for program eligibility, 5 Table of Contents coordinating due diligence, and generally providing market intelligence.
In addition to identifying potential borrowers and key principals 5 Table of Contents (the individual or individuals directing the activities of the borrowing entity), our correspondents assist us in evaluating loans, including pre-screening the borrowers, key principals, and properties for program eligibility, coordinating due diligence, and generally providing market intelligence.
Our website also includes a corporate governance section which contains our Corporate Governance Guidelines (which includes our Director Responsibilities and Qualifications), Code of Business Conduct and Ethics, Code of Ethics for Principal Executive Officer and Senior Financial Officers, Board of Directors’ Committee Charters for the Audit, Compensation, and Nominating and Corporate Governance Committees, Complaint Procedures for Accounting and Auditing Matters, and the method by which interested parties may contact our Ethics Hotline.
Our website also includes a corporate governance section which contains our Corporate Governance Guidelines (which includes our Director Responsibilities and Qualifications), Code of Business Conduct and Ethics, Code of Ethics for Principal Executive Officer and Senior Financial Officers, Board of Directors’ Committee Charters for the Audit and Risk, Compensation, and Nominating and Corporate Governance Committees, Complaint Procedures for Accounting and Auditing Matters, and the method by which interested parties may contact our Ethics Hotline.
We are not obligated to make advances on the loans we service u nder the Freddie Mac Optigo® program and our bank and life insurance company servicing agreements. ​ Under the HUD program, we are obligated to advance tax and insurance escrow amounts and principal and interest payments on the Ginnie Mae securities until the Ginnie Mae security is fully paid.
We are not obligated to make advances on the loans we service u nder the Freddie Mac Optigo® program and our bank and life insurance company servicing agreements. ​ Under the Ginnie Mae program, we are obligated to advance tax and insurance escrow amounts and principal and interest payments on the Ginnie Mae securities until the Ginnie Mae security is fully paid.
The acquisition of GeoPhy in 2022 has allowed us to begin development of a small balance lending application to enhance our client’s experience and reduce inefficiencies in the underwriting, closing, and servicing processes and enables us to further leverage technology to effectively target potential clients to achieve our goal of $5 billion of annual small-balance multifamily lending.
The acquisition of GeoPhy has allowed us to begin development of a small balance lending application to enhance our client’s experience and reduce inefficiencies in the underwriting, closing, and servicing processes and enables us to further leverage technology to effectively target potential clients to achieve our goal of $5 billion of annual small-balance multifamily lending.
The major other corporate-level functions include our equity-method investments, accounting, information technology, legal, human resources, marketing, internal audit, and various other corporate groups. ​ Our Growth Strategy In 2020, the Company implemented a strategy to reach $2 billion of total annual revenues by the end of 2025 by accomplishing the following milestones: (i) at least $60 billion of annual debt financing volume, (ii) at least $5 billion of annual small balance multifamily debt financing volume, (iii) annual property sales volume of at least $25 billion, (iv) an unpaid principal balance of at least $160 billion in our servicing portfolio, and (v) at least $10 billion of assets under management.
The major other corporate-level functions include our equity-method investments, accounting, information technology, legal, human resources, marketing, internal audit, and various other corporate groups. ​ 9 Table of Contents Our Growth Strategy In 2020, the Company implemented a strategy to reach $2 billion of total annual revenues by the end of 2025 by accomplishing the following milestones: (i) at least $60 billion of annual debt financing volume, (ii) at least $5 billion of annual small balance multifamily debt financing volume, (iii) annual property sales volume of at least $25 billion, (iv) an unpaid principal balance of at least $160 billion in our servicing portfolio, and (v) at least $10 billion of assets under management.
Through these preservation funds, Alliant may receive acquisition and asset management fees and will receive a portion of the capital appreciation upon sale through a promote structure. ​ We advance funds to our joint venture developer partners for generally short durations in connection with our LIHTC operations.
Through these preservation funds, WDAE may receive acquisition and asset management fees and will receive a portion of the capital appreciation upon sale through a promote structure. ​ We advance funds to our joint venture developer partners for generally short durations in connection with our LIHTC operations.
Additionally, Alliant also invests with third-party investors (either in a fund or joint-venture structure) with the goal of preserving affordability on multifamily properties coming out of the LIHTC 15-year compliance period or on which market forces are unlikely to keep the properties affordable.
Additionally, WDAE also invests with third-party investors (either in a fund or joint-venture structure) with the goal of preserving affordability on multifamily properties coming out of the LIHTC 15-year compliance period or on which market forces are unlikely to keep the properties affordable.
Apprise leverages technology and data science to dramatically improve the consistency, transparency, and speed of multifamily property appraisals in the U.S. through our proprietary technology and expertise in the commercial real estate industry. Apprise provides appraisal services to a client list that includes many national commercial real estate lenders.
Apprise leverages technology and data science to dramatically improve the consistency, transparency, and speed of multifamily property appraisals in the U.S. through our proprietary technology and provides appraisal services to a client list that includes many national commercial real estate lenders.
We also offer paid time off for employees to volunteer in their communities, in addition to Company-sponsored volunteer events, and provide a matching fund program where we match employees’ eligible charitable contributions and/or time spent volunteering up to $1,000.
We also offer paid time off for employees to volunteer in their communities, in addition to Company-sponsored volunteer events, and provide a matching fund program where we match employees’ eligible charitable contributions and/or time spent volunteering up to $2,000.
Freddie Mac —We are one of 22 lenders approved as a Freddie Mac lender, where we originate and sell to Freddie Mac multifamily, manufactured housing communities, student housing, affordable housing, seniors housing loans and small balance loans that satisfy Freddie Mac’s underwriting and other eligibility requirements.
Freddie Mac —We are one of 24 lenders approved as a Freddie Mac lender, where we originate and sell to Freddie Mac multifamily, manufactured housing communities, student housing, affordable housing, seniors housing loans, and small balance loans that satisfy Freddie Mac’s underwriting and other eligibility requirements.
Alliant is one of the largest tax credit syndicators and affordable housing developers in the U.S. and provides alternative investment management services focused on the affordable housing sector through LIHTC syndication, development of affordable housing projects through joint ventures, and affordable housing preservation fund management.
WDAE is one of the largest tax credit syndicators and affordable housing developers in the U.S. and provides alternative investment management services focused on the affordable housing sector through LIHTC syndication, development of affordable housing projects through joint ventures, and affordable housing preservation fund management.
Additionally, Alliant earns a syndication fee from the LIHTC funds for the identification, organization, and acquisition of affordable housing projects that generate LIHTCs. ​ We invest, as the managing or non-managing member of joint ventures, with developers of affordable housing projects that generate LIHTCs.
Additionally, WDAE earns a syndication fee from the LIHTC funds for the identification, organization, and acquisition of affordable housing projects that generate LIHTCs. ​ We invest, as the managing or non-managing member of joint ventures, with developers of affordable housing projects that generate LIHTCs.
We also established several environmental, social, and governance targets we aim to achieve by December 31, 2025.
We also established several environmental, social, and governance (“ESG”) targets we aim to achieve by December 31, 2025.
These rules and regulations cover, among other things, sales practices, fee 11 Table of Contents arrangements, disclosures to clients, capital adequacy, use and safekeeping of clients’ funds and securities, recordkeeping and reporting and the qualification and conduct of officers, employees and independent contractors. Broker-dealers are subject to periodic inspection and examination by the SEC and FINRA.
These rules and regulations cover, among other things, sales practices, fee arrangements, disclosures to clients, capital adequacy, use and safekeeping of clients’ funds and securities, recordkeeping and reporting and the qualification and conduct of officers, employees and independent contractors. Broker-dealers are subject to periodic inspection and examination by the SEC and FINRA.
These joint ventures earn developer fees and sale/refinance proceeds from the properties they develop, and we receive the portion of the economic benefits commensurate with Alliant’s ownership percentage in the joint ventures.
These joint ventures earn developer fees and sale/refinance proceeds from the properties they develop, and we receive the portion of the economic benefits commensurate with its ownership percentage in the joint ventures.
In addition, we support the development and advancement of our employees and provide reimbursements for certain professional certifications and higher education. ​ In recognition of the role our employees play as stewards of the “Walker Way,” we have historically granted broad-based restricted stock awards to our employees.
In addition, we support the development and advancement of our employees and provide reimbursements for certain professional certifications and higher education. 13 Table of Contents ​ In recognition of the role our employees play as stewards of the “Walker Way,” we have historically granted broad-based restricted stock awards to our employees.
Details and results of our ongoing ESG efforts are provided in our annual ESG report on our website. See more discussions about our human capital strategy in the “Human Capital Resources” section below . Competition We compete in the commercial real estate services industry.
Details and results of our ongoing 10 Table of Contents ESG efforts are provided in our annual ESG report on our website. See more discussions about our human capital strategy in the “Human Capital Resources” section below . Competition We compete in the commercial real estate services industry.
As mentioned in the “Our Growth Strategy” section above, we have set ambitious quantitative 2025 goals related to DE&I and tied a portion of our Executive Officer’s short-term annual incentive compensation to drive advances toward our longer-term DE&I vision. Additionally, all employees have community standard and diversity, equity, and inclusion goals.
As mentioned in the “Our Growth Strategy” section above, we have set ambitious quantitative 2025 goals related to DE&I and tied a portion of our Named Executive Officer’s short-term annual incentive compensation to drive advances toward our longer-term DE&I vision. Additionally, all employees have community standard DE&I.
We offer various programs to support the well-being of our employees, including flexible working arrangements, a caregiver support program, and a robust wellness program that includes subsidies of up to $150 per month paid to employees for qualifying wellness activities, promoting both physical and mental health. More than half of our employees participate in this program.
We offer various programs to support the well-being of our employees, including a robust wellness program that includes subsidies of up to $150 per month paid to employees for qualifying wellness activities, promoting both physical and mental health. More than half of our employees participate in this program.
Under the Ginnie Mae program, we are obligated to advance the principal and interest payments and guarantee fees until the HUD loan is brought current, fully paid or assigned to HUD. We are eligible to assign a loan to HUD once it is in 7 Table of Contents default for 30 days.
Under the Ginnie Mae program, we are obligated to advance the principal and interest payments and guarantee fees until the HUD loan is brought current, fully paid or assigned to HUD. We are eligible to assign a loan to HUD once it is in default for 30 days.
In December 2020, on the 10-year anniversary of our initial public offering, we granted restricted stock to our employees, excluding senior management. The grant vests ratably over a three-year period, with the final vesting occurring in December 2023. ​ Together with our employees, we continue our journey to be a great place to work.
In December 2020, on the 10-year anniversary of our initial public offering, we granted restricted stock to our employees, excluding senior management. The grant vested ratably over a three-year period, and the final vesting occurred in December 2023. ​ Together with our employees, we continue our journey to be a great place to work.
The following table summarizes our key human capital metrics over the last two years: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, Human Capital Metric: ​ 2022 2021 Overall ​ ​ ​ ​ ​ ​ Voluntary annualized turnover rate ​ ​ 11% ​ ​ 12% Average tenure (years) ​ ​ 3.8 ​ ​ 3.6 Diversity ​ ​ ​ ​ ​ ​ Percent of women employees ​ ​ 36% ​ ​ 36% Percent of women employees in management positions (1) ​ ​ 28% ​ ​ 27% Percent of employees from underrepresented racial/ethnic groups ​ ​ 22% ​ ​ 23% Percent of employees from underrepresented racial/ethnic groups in management positions (1) ​ ​ 13% ​ ​ 14% (1) Defined as Assistant Vice President and above. ​ We are purposeful in our drive to promote an inclusive workplace, where our employees are engaged and can develop within the Company.
The following table summarizes our key human capital metrics over the last two years: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, Human Capital Metric: ​ 2023 2022 Overall ​ ​ ​ ​ ​ ​ Voluntary annualized turnover rate ​ ​ 8% ​ ​ 11% Average tenure (years) ​ ​ 4.7 ​ ​ 3.8 Diversity ​ ​ ​ ​ ​ ​ Percent of women employees ​ ​ 35% ​ ​ 36% Percent of women employees in management positions (1) ​ ​ 28% ​ ​ 28% Percent of employees from underrepresented racial/ethnic groups ​ ​ 22% ​ ​ 22% Percent of employees from underrepresented racial/ethnic groups in management positions (1) ​ ​ 14% ​ ​ 13% (1) Defined as Assistant Vice President and above. ​ We are purposeful in our drive to promote an inclusive workplace, where our employees are engaged and can develop within the Company.
The Interim Program JV assumes full risk of loss while the loans it originates are outstanding, while we assume risk commensurate with our 15% ownership interest. ​ Using a combination of our own capital and warehouse debt financing, we offer interim loans that do not meet the criteria of the Interim Program JV (the “Interim Loan Program”).
The Interim Program JV assumes full risk of loss while the loans it originates are outstanding, while we assume risk commensurate with our 15% ownership interest. 8 Table of Contents Principal Lending and Investing— Using a combination of our own capital and warehouse debt financing, we offer interim loans that do not meet the criteria of the Interim Program JV (the “Interim Loan Program”).
Third-party vendors are engaged for appraisals, engineering reports, environmental reports, flood certification reports, zoning reports, and credit reports. We utilize a list of approved third-party vendors for these reports. Each report is reviewed by our underwriting team for accuracy, quality, and comprehensiveness.
We engage either our Apprise appraisers or third-party vendors are engaged for appraisals and third-party vendors for engineering reports, environmental reports, flood certification reports, zoning reports, and credit reports. We utilize a list of approved third-party vendors for these reports. Each report is reviewed by our underwriting team for accuracy, quality, and comprehensiveness.
Through a joint venture with an affiliate of Blackstone Mortgage Trust, Inc., we offer short-term senior secured debt financing products that provide floating-rate, interest-only loans for terms of generally up to three years to experienced borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent financing (the “Interim Program JV” or the “joint venture”).
Through joint ventures with an affiliate of Blackstone Mortgage Trust, Inc., WDIP also offers short-term senior secured debt financing products that provide floating-rate, interest-only loans for terms of generally up to three years to experienced borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent financing (the “Interim Program JV” or the “joint venture”).
Apprise also provides quarterly and annual valuation services to some of the largest institutional commercial real estate investors in the country. Prior to the GeoPhy acquisition, we and GeoPhy each owned a 50% interest in Apprise, and we accounted for the interest as an equity-method investment.
Apprise also provides quarterly and annual valuation services to some of the largest institutional commercial real estate investors in the country. Prior to the GeoPhy acquisition, we and GeoPhy each owned a 50% interest in Apprise, and we accounted for the interest as an equity-method investment. Subsequent to the GeoPhy acquisition, Apprise is a wholly-owned subsidiary of Walker & Dunlop.
WDIP’s current assets under management (“AUM”) of $1.4 billion primarily consist of four sources: Fund III, Fund IV, Fund V, and Fund VI (collectively, the “Funds”), and separate accounts managed primarily for life insurance companies. AUM for the Funds and for the separate accounts consists of both unfunded commitments and funded investments.
WDIP’s current regulatory assets under management (“AUM”) of $1.5 billion primarily consist of six sources: Fund III, Fund IV, Fund V, Fund VI, and Fund VII (collectively, the “Funds”), and separate accounts managed primarily for life insurance companies. AUM for the Funds and for the separate accounts consists of both unfunded commitments and funded investments.
Requirements of Registered Broker-Dealers Under the Exchange Act and as a member of the Financial Industry Regulatory Authority (“FINRA”), Zelman is required to follow the various rules and regulations applicable to broker-dealers.
Requirements of Registered Broker-Dealers Under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as a member of the Financial Industry Regulatory Authority (“FINRA”), Zelman is required to follow the various rules and regulations applicable to broker-dealers.
We receive a sales commission for brokering the sale of these multifamily assets on behalf of our clients, and we often are able to provide financing to the purchaser of the properties through our Agency or debt brokerage teams. Our property sales services are offered across the United States.
We receive a sales commission for brokering the sale of these multifamily assets on behalf of our clients, and we often are able to provide financing to the purchaser of the properties through our Agency or debt brokerage teams.
Alliant serves as the general partner of these LIHTC funds, and it receives fees, such as asset management fees, and a portion of refinance and disposition 8 Table of Contents proceeds as compensation for its work as the general partner of the fund.
WDAE serves as the general partner of these LIHTC funds, and it receives fees, such as asset management fees, and a portion of refinance and disposition proceeds as compensation for its work as the general partner of the fund.
Zelman is a nationally recognized housing market research and investment banking firm that will enhance the information we provide to our clients and increase our access to high-quality market insight in many areas of the housing market, including construction trends, demographics, housing demand and mortgage finance.
Zelman is a nationally recognized housing market research and investment banking firm that enhances the information we provide to our clients and increases our access to high-quality market insights in many areas of the housing market, including construction trends, demographics, housing demand and mortgage finance.
In addition, the Agencies have the authority under their guidelines to terminate a lender's authority to sell loans to them and service their loans.
In addition, the 11 Table of Contents Agencies have the authority under their guidelines to terminate a lender's authority to sell loans to them and service their loans.
Accordingly, loans originated prior to then may have been subject to modified risk-sharing at much lower levels. Our servicing fees for risk-sharing loans include compensation for the risk-sharing obligations and are larger than the servicing fees we would receive from Fannie Mae for loans with no risk-sharing obligations.
Accordingly, loans originated in the past may have been subject to modified risk-sharing at lower levels. Our servicing fees for risk-sharing loans include compensation for the risk-sharing obligations and are larger than the servicing fees we would receive from Fannie Mae for loans with no risk-sharing obligations. We receive a lower servicing fee for modified risk-sharing than for full risk-sharing.
Our servicing function includes loan servicing and asset management activities, performing or overseeing the following activities: ​ ● carrying out all cashiering functions relating to the loan, including providing monthly billing statements to the borrower and collecting and applying payments on the loan; ● administering reserve and escrow funds for repairs, tenant improvements, taxes, and insurance; ● obtaining and analyzing financial statements of the borrower and performing periodic property inspections; ● preparing and providing periodic reports and remittances to the GSEs, investors, master servicers, or other designated persons; ● administering lien filings; and ● performing other tasks and obligations that are delegated to us.
Our servicing function includes loan servicing and asset management activities, performing or overseeing the following activities: ​ ● carrying out all cashiering functions relating to the loan, including providing monthly billing statements to the borrower and collecting and applying payments on the loan; ● administering reserve and escrow funds for repairs, tenant improvements, taxes, and insurance; ● obtaining and analyzing financial statements of the borrower and performing periodic property inspections; ● preparing and providing periodic reports and remittances to the GSEs, investors, master servicers, or other designated persons; ● administering lien filings; and ● performing other tasks and obligations that are delegated to us. 7 Table of Contents Life insurance companies, whose loans we may service, may perform some or all of the activities identified in the list above.
We believe our people, brand, and technology provide us with a competitive advantage, as evidenced by new loans to us representing 62% of refinancing volumes and 24% of total transaction volumes coming from new customers for the year ended December 31, 2022. We are one of the largest lenders to multifamily operators in the country.
We believe our people, brand, and technology provide us with a competitive advantage, as evidenced by 69% of refinancing volumes coming from new loans to us and 22% of total transaction volumes coming from new customers for the year ended December 31, 2023. We are one of the largest service providers to multifamily operators in the country.
Some of these shorter-term loans are closed and retained on our balance sheet through our Interim Loan Program (as defined below in Principal Lending and Investing ).
In the past, some of these shorter-term loans were closed and retained on our balance sheet through our Interim Loan Program (as defined below in Investment Management and Principal Lending and Investing ).
We believe this keeps the focus on both our culture and commitment to meeting employees’ personal and health needs front and center. ​ Total Rewards ​ To attract and retain the very best talent in the industry, we are committed to providing a total compensation and benefits package that is highly competitive.
We believe our holistic wellness approach keeps the focus on both our culture and commitment to meeting employees’ personal and health needs front and center. ​ Total Rewards ​ To attract and retain the very best talent in the industry, we seek to provide a total compensation and benefits package that is highly competitive.
We also may request modified risk-sharing at the time of origination on loans below $300 million, which reduces our potential risk-sharing losses from the levels described above, if we do not believe that we are being fully compensated for the risks of the transaction. The full risk-sharing limit prior to June 30, 2021 was less than $300 million.
We also may request modified risk-sharing at the time of origination on loans below $300 million, which reduces our potential risk-sharing losses from the levels described above, if we do not believe that we are being fully compensated for the risks of the transaction. The full risk-sharing limit has varied over time.
The primary services within CM are described below. ​ 4 Table of Contents Agency Lending ​ Fannie Mae —We are one of 24 approved lenders that participate in Fannie Mae’s DUS program for multifamily, manufactured housing communities, student housing, affordable housing, and certain seniors housing properties.
The primary services within CM are described below. ​ 4 Table of Contents Agency Lending ​ Fannie Mae —We are one of 25 approved lenders that participate in Fannie Mae’s Delegated Underwriting and Servicing (“DUS”) program for multifamily, manufactured housing communities, student housing, affordable housing, small balance loans, and certain seniors housing properties.
Additionally, we are included in the Bloomberg Gender Equality Index (“GEI”) for the second time, the level and quality of our disclosures surrounding gender equality earned us inclusion again for 2023. Through our diversity, equity, and inclusion program we sponsor employee resource groups (“ERGs”) including, but not limited to the following: Black, Latino/a, LGBTQIA+, AAPI, Military/Veterans, and Caregivers.
Additionally, we are included in the Bloomberg Gender Equality Index, the level and quality of our disclosures surrounding gender equality earned us inclusion for a second time in 2023. Through our DE&I program we sponsor employee resource groups (“ERGs”) including, but not limited to the following: Women, Black/African American, Latino/a/o/e/x, LGBTQIA+, AAPI, Military/Veterans, Neurodiversity, and Caregivers.
We conduct the majority of our operations through Walker & Dunlop, LLC, our operating company. ​ Segments ​ In the first quarter of 2022, as a result of the Company’s growth and recent acquisitions, our executive leadership team, which functions as our chief operating decision making body, began making decisions and assessing performance based on the following three reportable segments: (i) Capital Markets (“CM”), (ii) Servicing & Asset Management (“SAM”), and (iii) Corporate.
We conduct the majority of our operations through Walker & Dunlop, LLC, our operating company. ​ Segments ​ Our executive leadership team, which functions as our chief operating decision making body, makes decisions and assesses performance based on the following three reportable segments: (i) Capital Markets (“CM”), (ii) Servicing & Asset Management (“SAM”), and (iii) Corporate.
Our ERGs provide our employees with community, fostering education, awareness, support, and advocacy. ​ 12 Table of Contents Health and Safety ​ We are committed to the health, safety, and wellness of our employees.
Our ERGs provide our employees with community, fostering education, awareness, support, and advocacy. ​ Health and Safety ​ We promote the health, safety, and wellness of our employees.
We earn net warehouse interest income from loans held for sale while they are outstanding equal to the difference between the note rate on the loan and the cost of borrowing of the warehouse facility. ​ Our loan commitments and loans held for sale are currently not exposed to unhedged interest rate risk during the loan commitment, closing, and delivery process.
We earn net warehouse interest income from loans held for sale while they are outstanding equal to the difference between the note rate on the loan and the cost of borrowing of the warehouse facility.
With more than 200 bankers and brokers on our platform and access to a significant and diverse amount of financing deal flow, we also will focus on raising third-party capital to grow WDIP’s business to meet the diverse capital needs of our clients. ● Remain a leader in Environmental, Social, and Governance (“ESG”) efforts by increasing the percentage of women and minorities within the ranks of our top earners and senior management, remaining carbon neutral while reducing our emissions intensity, and donating 1% of our annual income from operations to charitable organizations.
We will continue to scale our AUM through WDIP and WDAE with a specific focus on raising third-party capital to grow those businesses to meet the diverse capital needs of our clients. ● Remain a leader in Environmental, Social, and Governance (“ESG”) efforts by increasing the percentage of women and minorities within the ranks of our top earners and senior management, remaining carbon neutral while reducing our emissions intensity, and donating 1% of our annual income from operations to charitable organizations.
Subsequent to the GeoPhy acquisition, Apprise is a wholly-owned subsidiary of Walker & Dunlop. ​ Servicing & Asset Management ​ Servicing & Asset Management focuses on servicing and asset-managing the portfolio of loans we originate and sell to the Agencies, brokering to certain life insurance companies, originating loans through our principal lending and investing activities, and managing third-party capital invested in tax credit equity funds focused on the affordable housing sector and other commercial real estate.
These hiring and technology efforts have resulted in a substantial increase in our market share of the overall multifamily appraisal market. ​ Servicing & Asset Management ​ Servicing & Asset Management focuses on servicing and asset-managing the portfolio of loans we originate and sell to the Agencies, brokering to certain life insurance companies, originating loans through our principal lending and investing activities, and managing third-party capital invested in tax credit equity funds focused on the affordable housing sector and other commercial real estate.
We will continue to seek to grow our AUM, including in other areas of commercial real estate, as we are routinely asked by our clients to help them in providing market insights, raising more complex capital solutions, and undertaking platform valuations.
Although we have already achieved this goal, we will continue to seek to grow our AUM, including in other areas of commercial real estate, as we are routinely asked by our clients to help them raise more complex capital solutions.
Continued growth of our property sales team will provide greater exposure to multifamily clients and markets across the country and help achieve our $25 billion property sales goal by 2025, while also increasing our opportunities to finance the properties for which we broker a sale. ● Establish Investment Banking Capabilities with a goal to reach $10 billion in assets under management by building on our existing capabilities and developing new capabilities to meet more of our client’s needs.
We continue to compete for market share, leverage our prior acquisitions and recruiting of property sales brokerage professionals to continue developing new product offerings and enter new markets to help achieve our $25 billion property sales goal by 2025, while also increasing our opportunities to finance the properties for which we broker a sale. ● Establish Investment Management Capabilities with a goal to reach $10 billion in assets under management by building on our existing capabilities and developing new capabilities to meet more of our client’s needs.
We take a people-first approach to culture, providing competitive pay and benefits, working to deliver an experience that ensures all of our employees are provided with opportunities for support, growth, and advancement throughout their tenure.
We take a people-first approach to culture, working to deliver a trust-based experience that is designed to provide all of our employees with opportunities for support, growth, and advancement throughout their tenure, while being appreciated as individuals and rewarded with competitive pay and benefits.
We receive a lower servicing fee for modified risk-sharing than for full risk-sharing. For brokered loans we also service, we collect ongoing servicing fees while those loans remain in our servicing portfolio.
For brokered loans we also service, we collect ongoing servicing fees while those loans remain in our servicing portfolio.
In the event of a default on a HUD-insured loan, we can elect to assign the loan to HUD and file a mortgage insurance claim. HUD will reimburse approximately 99% of any losses of principal and interest on the loan, and Ginnie Mae will reimburse substantially all of the remaining losses.
In the event of a default on a HUD-insured loan, we can elect to assign the loan to HUD and file a mortgage insurance claim.
Correspondent Network —In addition to our originators, as of December 31, 2022, we had correspondent agreements with 23 independently owned loan originating companies across the country with which we have relationships for Agency loan originations. This network of correspondents helps us extend our geographic reach into new and/or smaller markets on a cost-effective basis.
Correspondent Network —In addition to our originators, as of December 31, 2023, we had correspondent agreements with 23 independently owned loan originating companies across the country with which we have relationships for Agency loan originations.
We may be obligated to repurchase loans that are originated for the Agencies’ programs if certain representations and warranties that we provide in connection with such originations are breached. We have never been required to repurchase a loan.
We regularly review our correspondent network to ensure they are meeting our requirements, including ethical standards. We may be obligated to repurchase loans that are originated for the Agencies’ programs if certain representations and warranties that we provide in connection with such originations are breached.
In 2022, we increased our focus on mental health through numerous employee-focused campaigns and additional training for our entire human resources function. All of our offices are open, and we support two days per week work-from-home, with the ability to exercise more flexibility.
In 2023, we continued our focus on mental health through numerous employee-focused campaigns and additional training for our people managers. Our flexible working arrangements support employees working two days per week from home, with the ability to exercise more flexibility regarding in-office days and work schedules.
We are a leader in commercial real estate technology through development and acquisition of technology resources that (i) provide innovative solutions and a better experience for our customers and (ii) allow us to drive efficiencies across our internal processes. ​ On February 28, 2022, we acquired GeoPhy B.V. (“GeoPhy”), a leading commercial real estate technology company based in the Netherlands.
We are a leader in commercial real estate technology through development and acquisition of technology resources that (i) provide innovative solutions and a better experience for our customers, (ii) allow us to drive efficiencies across our internal processes, and (iii) allow us to accelerate the growth of our small-balance lending business and our appraisal platform, Apprise. ​ Walker & Dunlop, Inc. is a holding company.
In 2022, we were recognized in Fortune Magazine’s Great Place to Work’s® Best Workplaces in Financial Services & Insurance for the seventh time, with 94% of our survey respondents having said: “Taking everything into account, I would say this is a great place to work.” ​ Talent We are committed to recruiting, developing and retaining a diverse workforce.
As of December 31, 2023, we have been recognized in Fortune Magazine’s Great Place to Work’s® Best Workplaces in Financial Services & Insurance seven times, with 93% of our survey respondents having said: “Taking everything into account, I would say this is a great place to work.” ​ ​ 12 Table of Contents Talent We aim to recruit, develop, and retain a diverse workforce.
These financing solutions are then funded directly by the lender, and we receive an origination fee from our customer for our services. ​ Property Sales ​ We offer property sales brokerage services to owners and developers of multifamily properties that are seeking to sell these properties through our subsidiary Walker & Dunlop Investment Sales, LLC (“WDIS”).
On occasion, we service the loans after they are originated by the lender. ​ Property Sales ​ Through our subsidiary Walker & Dunlop Investment Sales, LLC (“WDIS”), we offer property sales brokerage services across the United States to owners and developers of multifamily properties that are seeking to sell these properties.
Competitors in this fragmented but highly competitive industry include but are not limited to: Boston Financial Investment Management, L.P., Raymond James & Associates, Inc., Enterprise Community Partners, Inc., The Richman Group Affordable Housing Corporation, National Equity Fund, Inc., and PNC Real Estate. 10 Table of Contents We compete on the basis of quality of service, the ability to provide useful insights to our borrowers, speed of execution, relationships, loan structure, terms, pricing, and breadth of product offerings.
Through our subsidiary, WDAE, we are the eighth largest LIHTC syndicator in the country. Competitors in this fragmented but highly competitive industry include but are not limited to: Boston Financial Investment Management, L.P., Raymond James & Associates, Inc., Enterprise Community Partners, Inc., The Richman Group Affordable Housing Corporation, National Equity Fund, Inc., and PNC Real Estate.
As discussed above in Capital Markets – Agency Lending, we have risk-sharing obligations on substantially all loans we originate under the Fannie Mae DUS program.
In certain cases, we may bring the loan current through a modification or partial mortgage insurance claim rather than assigning it to HUD. As discussed above in Capital Markets – Agency Lending, we have risk-sharing obligations on substantially all loans we originate under the Fannie Mae DUS program.
Unfunded commitments are highest during the fundraising and investment phases. WDIP receives management fees based on both unfunded commitments and funded investments.
Unfunded commitments are highest during the fundraising and investment phases. WDIP receives management fees based on both unfunded commitments and funded investments. Additionally, with respect to the Funds, WDIP receives a percentage of the return above the fund return hurdle rate specified in the fund agreements.
We continue to increase our market share in the multifamily financing market, with an 8.3% share in 2022.
We continue to defend our market share in the multifamily financing market, with a 7.5% share in 2023.
In 2022, we began implementing the DE&I action plan resulting from COQUAL and Management Leadership for Tomorrow’s (“MLT”) Black Equity at Work audits we conducted in 2021. We developed a Hispanic Equity action plan as part of MLT's inaugural Hispanic Equity at Work Certification.
In 2023, we continued executing on the DE&I action plan resulting from COQUAL and Management Leadership for Tomorrow’s (“MLT”) Black Equity at Work audits we conducted in 2021. For the second year, we were awarded MLT’s Bronze certification for our continued progress toward Black Equity at Work and once again achieved MLT’s Hispanic Equity at Work plan approval.
Life insurance companies, whose loans we may service, may perform some or all of the activities identified in the list above. We outsource some of our servicing activities to third parties. Our Fannie Mae, Freddie Mac, and HUD servicing arrangements generally provide for prepayment protection in the event of a voluntary prepayment.
We outsource some of our servicing activities to third parties. Our Fannie Mae servicing arrangements generally provide for prepayment protection in the event of a voluntary prepayment. For loans serviced outside of Fannie Mae, we typically do not have similar prepayment protections.
NOTE 7 of the consolidated financial statements contains additional information related to the GeoPhy acquisition ​ Debt Brokerage ​ Our mortgage bankers who focus on debt brokerage are engaged by borrowers to work with life insurance companies, banks, and a variety of other institutional lenders to find the most appropriate debt and/or equity solution for the borrowers’ needs.
To further this strategy, in 2022, we acquired a Netherlands-based company called GeoPhy to support our small-balance lending platform with data analytics and to further advance our technology development capabilities in this area. ​ Debt Brokerage ​ Our mortgage bankers who focus on debt brokerage are engaged by borrowers to work with life insurance companies, banks, and various other institutional lenders to find the most appropriate debt and/or equity solution for the borrowers’ needs.
To further support our growth strategy, we acquired an investment sales brokerage company during the third quarter of 2022, which expands our investment sales service offerings to include land sales. ​ Housing Market Research and Real Estate Investment Banking Services ​ We own a 75% interest in a subsidiary doing business as Zelman & Associates (“Zelman”), which we acquired in the third quarter of 2021.
Our geographical reach now covers many major markets in the United States, and our service offerings now include sales of land, student, senior housing, and affordable properties. ​ 6 Table of Contents Housing Market Research and Real Estate Investment Banking Services ​ We own a 75% interest in a subsidiary doing business as Zelman & Associates (“Zelman”).
The integration of Alliant creates several synergies for debt financing volumes, which include access to Alliant’s clients and relationships in the affordable housing space, which we expect will lead to additional opportunities to provide affordable debt financing. ● Grow Property Sales Volume to $25 billion annually by leveraging the strengths of our current team, growing volumes within our current markets and continuing to build out our brand and footprint nationally by hiring brokers in new geographic markets and brokers who specialize in different multifamily product types.
During the past two years, we maintained a large number of bankers and brokers focused on debt financing transactions across the United States to stand ready to capture additional market share as macroeconomic conditions begin to stabilize. ● Grow Property Sales Volume to $25 billion annually by leveraging the strengths of our current team, growing volumes within our current markets and continuing to build out our brand and footprint nationally by hiring brokers in new geographic markets and brokers who specialize in different multifamily product types.
Additionally, with respect to the Funds, WDIP receives a percentage of the return above the fund return hurdle rate specified in the fund agreements. ​ Corporate ​ The Corporate segment consists primarily of our treasury operations and other corporate-level activities. Our treasury operations include monitoring and managing our liquidity and funding requirements, including our corporate debt.
Lastly, we require a letter of intent giving us the exclusive right to invest in the LIHTC investment. Corporate ​ The Corporate segment consists primarily of our treasury operations and other corporate-level activities. Our treasury operations include monitoring and managing our liquidity and funding requirements, including our corporate debt.
Other Commercial Real Estate— Through our subsidiary, Walker & Dunlop Investment Partners (“WDIP”), we function as the operator of a private commercial real estate investment adviser focused on the management of debt, preferred equity, and other equity investments in middle-market commercial real estate funds.
The servicing fees we typically earn on brokered loan transactions are substantially lower than the servicing fees we earn on Agency loans. ​ Investment Management and Principal Lending and Investing Investment Management— Through our subsidiary, WDIP, we serve as a private commercial real estate investment advisor focused on the management of debt, preferred equity, and mezzanine equity investments in middle-market commercial real estate funds.
The ultimate goal of the Interim Loan Program is to provide permanent Agency financing on these transitional properties. ​ Affordable Housing and Other Commercial Real Estate-related Investment Management Services ​ Affordable Housing —We provide affordable housing investment management services through our subsidiary, Alliant Capital, Ltd. and its affiliates (“Alliant”).
The ultimate goal of the Interim Loan Program is to provide permanent Agency financing on these transitional properties.
Zelman generates revenues through the sale of its housing market research data and 6 Table of Contents related publications to banks, investment banks and other financial institutions, and through its offering of real estate-related investment banking and advisory services. ​ Appraisal and Valuation Services ​ We offer multifamily appraisal and valuation services though our subsidiary, Apprise by Walker & Dunlop (“Apprise”) .
Zelman generates revenues through the sale of its housing market research data and related publications to banks, investment banks and other financial institutions. Zelman is also a leading independent investment bank providing comprehensive M&A advisory services and capital markets solutions to our clients within the housing and commercial real estate sectors.
Human Capital Resources ​ As of December 31, 2022, we had a total of 1,451 employees, an 11% increase from the prior year, including 27 new bankers and brokers. This growth was primarily due to the expansion of our business, our recruiting efforts, and the GeoPhy acquisition in 2022.
Human Capital Resources ​ As of December 31, 2023, we had a total of 1,326 employees, a 9% decrease from the prior year, including a net reduction of five bankers and brokers.
MLT approved our Hispanic Equity at Work plan and awarded us a Bronze Certification for our progress toward the Black Equity at Work plan we adopted in 2021. Both are milestones on the journey to make comprehensive progress through rigorous, sustained action, ongoing data-driven improvement, and accountability.
Both are milestones on the journey to make comprehensive progress through rigorous, sustained action, ongoing data-driven improvement, and accountability. In 2023, we continued our commitment to making the Company a great place to work by providing greater transparency into compensation practices, providing more talent management resources for managers and creating improved opportunities for recognition and information sharing.
We added 18 property sales brokers in 2022, and as of December 31, 2022, had 79 property sales brokers in various regions throughout the United States.
We have added property sales brokers over the past several years, and as of December 31, 2023, have 74 property sales brokers in various regions throughout the United States. We believe the multifamily investment sales market will recover as valuation spreads between buyers and sellers tighten, and market and economic conditions stabilize over the coming years.
Our market-leading position in debt financing and the national reach of our property sales platform gives us access to substantial amounts of local and macro data. We believe access to this insightful data, along with our relationships with various organizations in the capital markets and developments in our technology platforms will help meet these client needs.
Our market-leading position in debt financing and the national reach of our property sales platform gives us access to substantial amounts of potential debt, equity, and affordable transactions that are the types of investments our AUM is targeted to address.
Removed
We plan to use GeoPhy’s data analytics and technology development capabilities to further enhance our technology investments and efficiencies, with a specific focus on accelerating the growth of our small-balance lending business and our appraisal and valuation platform, Apprise. ​ Walker & Dunlop, Inc. is a holding company.
Added
This network of correspondents helps us extend our geographic reach into new and/or smaller markets on a cost-effective basis; however, we do not source a material proportion of our total originations from correspondents.
Removed
To further this strategy, during the first quarter of 2022, we acquired GeoPhy to support our small-balance lending platform with data analytics and to further advance our technology development capabilities in this area.
Added
Our cost of borrowing frequently can exceed the note rate on the loan, resulting in a net interest expense. ​ Our loan commitments and loans held for sale are currently not exposed to unhedged interest rate risk during the loan commitment, closing, and delivery process.
Removed
For loans serviced outside of Fannie Mae and Freddie Mac, we typically do not have similar prepayment protections.
Added
These financing solutions are then underwritten and funded directly by the lender, and we receive an origination fee from our customer for our services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Relating to Regulatory Matters If we fail to comply with the numerous government regulations and program requirements of the Agencies, we may lose our approved lender status with these entities and fail to gain additional approvals or licenses for our business.
Biggest changeThere can be no assurance that our deposits in excess of FDIC insurance limits will be backstopped by the U.S. government, or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, or government institutions, or by acquisition in the event of a failure or liquidity crisis. ​ Risks Relating to Regulatory Matters If we fail to comply with the numerous government regulations and program requirements of the Agencies, we may lose our approved lender status with these entities and fail to gain additional approvals or licenses for our business.
Although these cyberattacks have not resulted in material financial impacts or disruptions to our business, given the accelerating scope, sophistication, and frequency of cyberattacks, there can be no assurance that the incidents we have experienced or any future incident will not materially impact our security, operations and financial results.
Although these cyberattacks have not resulted in material financial impacts or disruptions to our business, given the accelerating scope, sophistication, and frequency of cyberattacks, there can be no assurance that the cybersecurity incidents we have experienced or any future incident will not materially impact our security, operations and financial results.
Our failure to comply with these requirements could lead to, among other 19 Table of Contents things, the loss of a license as an approved Agency lender, the inability to gain additional approvals or licenses, the termination of contractual rights without compensation, demands for indemnification or loan repurchases, class action lawsuits and administrative enforcement actions.
Our failure to comply with these requirements could lead to, among other 20 Table of Contents things, the loss of a license as an approved Agency lender, the inability to gain additional approvals or licenses, the termination of contractual rights without compensation, demands for indemnification or loan repurchases, class action lawsuits and administrative enforcement actions.
As of December 31, 2022, we had $3.9 billion of committed and uncommitted loan funding available through five commercial banks and $1.5 billion of uncommitted funding available through Fannie Mae’s As Soon As Pooled (“ASAP”) program. Additionally, consistent with industry practice, our existing loan warehouse facilities have terms of one year, and therefore require annual renewal.
As of December 31, 2023, we had $3.9 billion of committed and uncommitted loan funding available through five commercial banks and $1.5 billion of uncommitted funding available through Fannie Mae’s As Soon As Pooled (“ASAP”) program. Additionally, consistent with industry practice, our existing loan warehouse facilities have terms of one year, and therefore require annual renewal.
(iv) Investments in LIHTC tax credit equity We acquire interests in tax credit property partnerships for sale to LIHTC investment funds and, at any point in time, the aggregate amount of funds advanced can be material. Recovery of these investments is subject to our ability to attract investors to new investment funds.
(iii) Investments in LIHTC equity funds We acquire interests in tax credit property partnerships for sale to LIHTC investment funds and, at any point in time, the aggregate amount of funds advanced can be material. Recovery of these investments is subject to our ability to attract investors to new investment funds.
(iii) Loans to our LIHTC joint venture partners To provide capital support the partners in our LIHTC joint ventures, who are the developers of LIHTC properties, we provide loans to these partners. The funds from these loans are used to prepare a property for development and ultimately to be syndicated into a LIHTC fund.
(ii) Loans to our LIHTC joint venture partners To provide capital support to the partners in our LIHTC joint ventures, who are the developers of LIHTC properties, we provide loans to these partners. The funds from these loans are used to prepare a property for development and ultimately to be syndicated into a LIHTC fund.
Any impairment of goodwill as a result of such analysis would result in a non-cash charge against earnings, which charge could materially adversely affect our reported results of operations, stockholders’ equity, and our stock price. ​ * * * 22 Table of Contents Any factor described in this filing or in any of our other SEC filings could by itself, or together with other factors, adversely affect our financial results and condition.
Any impairment of goodwill as a result of such analysis would result in a non-cash charge against earnings, which charge could materially adversely affect our reported results of operations, stockholders’ equity, and our stock price. ​ * * * Any factor described in this filing or in any of our other SEC filings could by itself, or together with other factors, adversely affect our financial results and condition.
(i) Interim Loan Program Under the Interim Loan Program, we offer short-term, floating-rate loans to borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent financing. Such a borrower often has identified a transitional asset that has been under-managed and/or is located in a recovering market.
(iv) Interim Loan JV and Interim Loan Program Under the Interim Loan JV and Interim Loan Program, we offer short-term, floating-rate loans to borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent financing. Such a borrower often has identified a transitional asset that has been under-managed and/or is located in a recovering market.
Our ability to recover on a claim against any party would also be dependent, in part, upon the financial condition and liquidity of such party. There can be no assurance that we, 16 Table of Contents our employees or third parties will not make mistakes that would subject us to repurchase or indemnification obligations.
Our ability to recover on a claim against any party would also be dependent, in part, upon the financial condition and liquidity of such party. There can be no assurance that we, our employees or third parties will not make mistakes that would subject us to repurchase or indemnification obligations.
Under Maryland law generally, a director is required to perform his or her duties in good faith, in a manner he or she reasonably believes to be in the best interests of the Company and with the care that an ordinarily prudent person in a like position would use under similar 21 Table of Contents circumstances.
Under Maryland law generally, a director is required to perform his or her duties in good faith, in a manner he or she reasonably believes to be in the best interests of the Company and with the care that an ordinarily prudent person in a like position would use under similar circumstances.
Refer to our quarterly reports on Form 10-Q filed with the SEC in 2023 for material changes to the above discussion of risk factors. Item 1B. Unresolved Staff Comments. None.
Refer to our quarterly reports on Form 10-Q filed with the SEC in 2024 for material changes to the above discussion of risk factors. Item 1B. Unresolved Staff Comments. None.
Changes in fiscal, monetary, and budgetary policies and the operating status of the U.S. government are beyond our control, are difficult to predict, and could materially and adversely affect us. During periods of limited or no U.S. government operations, our ability to originate HUD loans may be severely constrained.
Changes in fiscal, monetary, and budgetary policies and the operating status of the U.S. government are beyond our control, are difficult to predict, and could materially and adversely affect us. During periods of limited or no U.S. 14 Table of Contents government operations, our ability to originate HUD loans may be severely constrained.
In addition, Fannie Mae can double or triple our risk-sharing obligations if the loan does not meet specific underwriting criteria or if the loan defaults within 12 months of its sale to Fannie Mae. Fannie Mae also requires us to maintain collateral, which may include pledged securities, for our risk-sharing obligations.
In addition, Fannie Mae can double or triple our risk-sharing obligations if the loan does not meet specific underwriting criteria or if the loan defaults within 12 months of its sale to Fannie Mae. Fannie Mae also requires us to maintain collateral, which may include pledged securities, for our risk- 15 Table of Contents sharing obligations.
A failed project could result in financial and liquidity exposure to us for the completion of the project or the disposition of the project at a loss. ​ Noncompliance with various legal requirements by the affordable housing partnerships could impair our investors’ right to LIHTCs and have a negative impact on our business.
A failed project could result in financial and liquidity exposure to us for the completion of the project or the disposition of the project at a loss. ​ 19 Table of Contents Noncompliance with various legal requirements by the affordable housing partnerships could impair our investors’ right to LIHTCs and have a negative impact on our business.
The conservatorships have no specified termination dates and there continues to be significant uncertainty regarding the future of the GSEs, including how long they will continue to exist in their current forms, the extent of their roles in the housing markets and whether or in what form they may exist following conservatorship.
The conservatorships have no specified termination dates and there continues to be discussions regarding the future form of the GSEs, including how long they will continue to exist in their current forms, the extent of their roles in the housing markets and whether or in what form they may exist following conservatorship.
The 13 Table of Contents realization of any of the following risks could materially and adversely affect our business, prospects, financial condition, results of operations, and the market price and liquidity of our common stock, which could cause you to lose all or a significant part of your investment in our common stock.
The realization of any of the following risks could materially and adversely affect our business, prospects, financial condition, results of operations, and the market price and liquidity of our common stock, which could cause you to lose all or a significant part of your investment in our common stock.
If the LIHTC provisions are repealed or adversely modified, the results of operations of our Affordable Housing Investment Management Services would be materially adversely affected. ​ Our role as a sponsor of investment funds and co-developer of affordable properties exposes us to risks of loss.
If the LIHTC provisions are repealed or adversely modified, the results of operations of our Affordable Housing Real Estate Services would be materially adversely affected. ​ Our role as a sponsor of investment funds and co-developer of affordable properties exposes us to risks of loss.
Although the LIHTC programs are a permanent part of the Tax Code and have historically enjoyed broad political support, Congress could repeal or modify the LIHTC provisions at any time or modify the tax laws so that the value of LIHTC benefits is reduced.
Although the LIHTC programs are a permanent part of the U.S. federal tax code and have historically enjoyed broad political support, Congress could repeal or modify the LIHTC provisions at any time or modify the tax laws so that the value of LIHTC benefits is reduced.
Additionally, as our business continues to expand, we may need additional warehouse funding capacity for loans we originate. There can be no assurance that, in the future, we will be able to obtain additional warehouse funding capacity on favorable terms, on a timely basis, or at all.
Additionally, as our 16 Table of Contents business continues to expand, we may need additional warehouse funding capacity for loans we originate. There can be no assurance that, in the future, we will be able to obtain additional warehouse funding capacity on favorable terms, on a timely basis, or at all.
There can be no assurance that such fees will continue to remain at such levels or that such levels will be sufficient if delinquencies occur. 15 Table of Contents Servicing fees for loans placed with institutional investors are negotiated with each institutional investor pursuant to agreements that we have with them.
There can be no assurance that such fees will continue to remain at such levels or that such levels will be sufficient if delinquencies occur. Servicing fees for loans placed with institutional investors are negotiated with each institutional investor pursuant to agreements that we have with them.
For example, the European Union adopted the General Data Protection Regulation (“GDPR”), which became effective on May 25, 2018, and the State of California adopted the California Consumer Privacy Act of 2018 (“CCPA”).
For example, the European Union adopted the General Data Protection Regulation (“GDPR”), which became effective on May 25, 2018, and the State of California adopted the California Consumer Privacy Act of 2018 (“CCPA”) and the California Privacy Rights Act of 2020 (“CPRA”).
For example, we are generally required to provide, among others, the following representations and warranties: we are authorized to do business and to sell or assign the loan; the loan conforms to the requirements of the Agencies and certain laws and regulations; the underlying mortgage represents a valid lien on the property and there are no other liens on the property; the loan documents are valid and enforceable; taxes, assessments, insurance premiums, rents and similar other payments have been paid or escrowed; the property is insured, conforms to zoning laws and remains intact; and we do not know of any issues regarding the loan that are reasonably expected to cause the loan to be delinquent or unacceptable for investment or adversely affect its value.
For example, we are generally required to provide, among others, the following representations and warranties: we are authorized to do business and to sell or assign the loan; the loan conforms to the requirements of the Agencies and certain laws and regulations; the underlying mortgage represents a valid lien on the property and there are no other liens on the property; the loan documents are valid and enforceable; taxes, assessments, insurance premiums, rents and similar other payments have been paid or escrowed; the property is insured, conforms to zoning laws and remains intact; there is not any act or omission of which we, in the exercise of reasonable diligence should have been aware; and we do not know of any issues regarding the loan that are reasonably expected to cause the loan to be delinquent or unacceptable for investment or adversely affect its value.
In addition to the annual impairment evaluation, we evaluate at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing which indicate that it is more likely than not an impairment loss has occurred.
In addition to the annual impairment evaluation, we evaluate at least quarterly whether events or circumstances have occurred in the period subsequent to the annual impairment testing which indicate that it is 23 Table of Contents more likely than not an impairment loss has occurred.
We, and our service providers, are regularly subject to and expect to continue to experience cyberattacks that are increasingly sophisticated, that are often designed to evade detection, and/or that seek to damage or disrupt our network, as well as those of our service providers, and other information systems.
We, and our service providers, are regularly subject to and expect to continue to experience cyberattacks that are increasingly sophisticated (including using artificial intelligence), that are often designed to evade detection, and/or that seek to damage or disrupt our network, as well as those of our service providers, and other information systems.
Certain of these cyberattacks have resulted in unauthorized access by third parties to information that we receive, maintain and store in the course of our business.
Certain of these cyberattacks, including phishing attacks, have resulted in unauthorized access by third parties to information that we receive, maintain and store in the course of our business.
Any significant repurchase or indemnification obligations imposed on us could have a material adverse effect on us. We have made various investments that are funded with corporate capital. These investments may involve a greater risk of loss than our traditional real estate lending activities.
A significant amount of repurchase or indemnification obligations imposed on us could have a material adverse effect on us and increase our liquidity needs. We have made various investments that are funded with corporate capital. These investments may involve a greater risk of loss than our traditional real estate lending activities.
Carrying loans for longer periods of time on our balance sheet exposes us to greater risks of loss than we currently face for loans that are pre-sold or placed with investors, including, without limitation, 100% exposure for defaults and impairment charges, which may adversely affect our profitability.
Carrying loans for longer periods of time on our balance sheet exposes us to greater risks of loss than we currently face for loans that are pre-sold or placed with investors, including, without limitation, 100% exposure for defaults and impairment charges, which may adversely affect our profitability. We have contractual obligations that will require significant uses of capital.
As of December 31, 2022, we had pledged securities of $157.3 million as collateral against future losses related to $54.2 billion of loans outstanding that are subject to risk-sharing obligations, as more fully described under “Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources,” which we refer to as our “at-risk balance.” Fannie Mae collateral requirements may change in the future.
As of December 31, 2023, we had pledged securities of $184.1 million as collateral against future losses related to $58.8 billion of loans outstanding that are subject to risk-sharing obligations, as more fully described under “Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources,” which we refer to as our “at-risk balance.” Fannie Mae collateral requirements may change in the future.
Business “Our Business—Affordable Housing and Other Commercial Real Estate-related Investment Management Services,” our affordable housing investment management service derives revenue from the syndication of partnership interests in properties eligible for low-income housing tax credits, or LIHTCs.
Business “Our Business—Affordable Housing Real Estate Services,” our affordable housing real estate service derives revenue from the syndication of partnership interests in properties eligible for low-income housing tax credits, or LIHTCs.
Moreover, other factors may adversely affect the multifamily sector, including general business, economic and market conditions, fluctuations in the real estate and debt capital markets, changes in government fiscal and monetary policies, regulations and other laws, rules and regulations governing real estate, zoning or taxes, changes in interest rate levels, the potential liability under environmental and other laws, and other unforeseen events.
Moreover, other factors may adversely affect the multifamily sector, including general business, economic and market conditions, including rising interest rates or a period of elevated interest rates, inflation, political and geographical instability, fluctuations in the real estate and debt capital markets, changes in government fiscal and monetary policies, regulations and other laws, rules and regulations governing real estate, zoning or taxes, changes in interest rate levels, the potential liability under environmental and other laws, and other unforeseen events.
Any or all of these factors could negatively impact the multifamily sector and, as a result, reduce the demand for our products and services. Any such reduction could materially and adversely affect us. The loss of our key management could result in a material adverse effect on our business and results of operations.
Any or all of these factors could negatively impact the multifamily sector and, as a result, reduce the demand for our products and services. Any such reduction could materially and adversely affect us. 18 Table of Contents The loss of our Chairman and Chief Executive Officer could result in a material adverse effect on our business and results of operations.
As of December 31, 2022, our allowance for risk-sharing as a percentage of the at-risk balance was 0.08%, or $44.1 million, and reflects our current estimate of our future expected payouts under our risk-sharing obligations. Over the past 10 years, we have settled $22.0 million of risk-sharing losses, or 1.2 basis points of the average at-risk balance.
As of December 31, 2023, our allowance for risk-sharing as a percentage of the at-risk balance was 0.05%, or $31.6 million, and reflects our current estimate of our future expected payouts under our risk-sharing obligations. Over the past 10 years, we have settled $15.3 million of risk-sharing losses, or 0.6 basis points of the average at-risk balance.
As a result, our board of directors may establish a class or series of common or preferred stock with preferences, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the rights of holders of our common stock or that could delay, defer, or prevent a transaction or a change in control of the Company that might involve a premium price for shares of our common stock or otherwise be in the best interests of our stockholders.
As a result, our board of directors may establish a class or series of common or preferred stock with preferences, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the rights of holders of our common stock or that could delay, defer, or prevent a transaction or a change in control of the Company that might involve a premium price for shares of our common stock or otherwise be in the best interests of our stockholders. 22 Table of Contents Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit our stockholders’ recourse in the event actions are taken that are not in our stockholders’ best interests.
In November 2022, the FHFA updated the GSEs’ loan origination caps to $75.0 billion for the four-quarter period beginning January 1, 2023 and ending December 31, 2023. The new caps apply to all multifamily business with no exclusions. The FHFA also directed that at least 50.0% of the GSEs’ multifamily business be mission-driven, affordable housing.
In November 2023, the FHFA updated the GSEs’ loan origination caps to $70.0 billion for the four-quarter period beginning January 1, 2024 and ending December 31, 2024. The new caps apply to all multifamily business with limited exclusions. The FHFA also maintained the 50.0% target for the GSEs’ multifamily business to be mission-driven, affordable housing.
We do not know whether the favorable conditions that have enabled our past growth through acquisitions and strategic investments will continue. The identification of suitable acquisition candidates and new ventures can be difficult, time consuming and costly, and we may not be able to successfully complete identified acquisitions or investments in new ventures on favorable terms, or at all.
The identification of suitable acquisition candidates and new ventures can be difficult, time consuming and costly, and we may not be able to successfully complete identified acquisitions or investments in new ventures on favorable terms, or at all.
We cannot predict the prospects for the enactment, timing or content of legislative proposals regarding the future status of the GSEs. 14 Table of Contents We are subject to risk of loss in connection with defaults on loans, including loans sold under the Fannie Mae DUS program, and could experience significant servicing advance obligations in connection with Fannie Mae and HUD loans we originate, that could materially and adversely affect our results of operations and liquidity.
We are subject to risk of loss in connection with defaults on loans, including loans sold under the Fannie Mae DUS program, and could experience significant servicing advance obligations in connection with Fannie Mae and HUD loans we originate, that could materially and adversely affect our results of operations and liquidity.
Our future success depends to a significant extent on the continued services of our senior management, particularly William Walker, our Chairman and Chief Executive Officer. The loss of the services of any of these individuals could have a material adverse effect on our business and results of operations.
Our future success depends to a significant extent on the continued services of William Walker, our Chairman and Chief Executive Officer. The loss of the services of our Chairman and Chief Executive Officer could have a material adverse effect on our business and results of operations. We maintain “key person” life insurance on Mr.
A decline in the results of our operations, an inability to access capital markets, or an increase in the cost of capital may materially affect our operations.
Our ability to fund these uses of capital is dependent on both our results of operations and our ability to access capital markets. A decline in the results of our operations, an inability to access capital markets, or an increase in the cost of capital may materially affect our operations.
Both the GDPR and the CCPA impose additional obligations on companies regarding the handling of personal data and provide certain individual privacy rights to persons whose data is stored.
The GDPR, CCPA, and CPRA, among others, impose additional obligations on companies regarding the handling of personal data, provide certain individual privacy rights to persons whose data is stored and create new audit requirements for higher risk data.
In addition, future acquisitions or new investments could result in significantly dilutive issuances of equity securities or the incurrence of substantial debt, contingent liabilities, or expenses or other charges, which could also materially and adversely affect us. 18 Table of Contents Our future success depends, in part, on our ability to expand or modify our business in response to changing client demands and competitive pressures.
In addition, future acquisitions or new investments could result in significantly dilutive issuances of equity securities or the incurrence of substantial debt, contingent liabilities, or expenses or other charges, which could also materially and adversely affect us.
As of December 31, 2022, there were two loans with an aggregate unpaid principal balance of $37.0 million and an aggregate collateral-based reserve of $4.4 million that had defaulted and are awaiting ultimate disposition.
As of December 31, 2023, three at-risk loans were in default with an aggregate unpaid principal balance of $27.2 million and an aggregate collateral-based reserve of $2.8 million that had defaulted and are awaiting ultimate disposition.
Any negative trends in such real estate conditions may reduce demand for our products and services and, as a result, adversely affect our results of operations.
Accordingly, the success of our business is closely tied to the overall success of the multifamily real estate market. Various changes in real estate conditions may impact the multifamily sector. Any negative trends in such real estate conditions may reduce demand for our products and services and, as a result, adversely affect our results of operations.
While we have designed our controls and processes to operate in a remote working environment, there is a heightened risk such controls and processes may not detect or prevent unauthorized access to our information systems. 20 Table of Contents In addition, we need to comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the United States, Europe and elsewhere.
While we have designed our controls and processes to operate in a remote working environment, there is a heightened risk such 21 Table of Contents controls and processes may not detect or prevent unauthorized access to our information systems.
We expect Congress to continue considering housing finance reform in the future, including conducting hearings and considering legislation that could alter the housing finance system.
We expect Congress to continue considering housing finance reform in the future, including conducting hearings and considering legislation that could alter the housing finance system. We cannot predict the prospects for the enactment, timing or content of legislative proposals regarding the future status of the GSEs.
Additionally, expansion of our business may place significant demands on our administrative, operational, and financial resources, and the acquired businesses or new ventures may not perform as we expect them to or become profitable. We intend to pursue continued growth by acquiring or starting complementary businesses, but we cannot guarantee such efforts will be successful or profitable.
If we do not successfully identify, complete and integrate such acquisitions or investments, our growth may be limited. Additionally, expansion of our business may place significant demands on our administrative, operational, and financial resources, and the acquired businesses or new ventures may not perform as we expect them to or become profitable.
We are also an investor in various venture capital funds with a specific focus on identifying and investing in property technology and financial technology companies with a predominant focus on the housing and commercial real estate sectors.
Below we discuss the risks associated with these investments. (i) Joint ventures and other equity method investments We make investments in various joint ventures, including investments in various venture capital funds with a specific focus on identifying and investing in property technology and financial technology companies with a predominant focus on the housing and commercial real estate sectors.
In some circumstances, we may determine to do so through the acquisition of complementary businesses or investments in new ventures rather than through internal growth. There is a risk of unfavorable changes to, or elimination of governmental programs that could limit the product offerings of our affordable housing investment management services. As discussed above under Part I, Item 1.
There is a risk of unfavorable changes to, or elimination of governmental programs that could limit the product offerings of our affordable housing real estate services. As discussed above under Part I, Item 1.
We use corporate capital to make investments in (i) loans under the Interim Loan Program, (ii) joint ventures and other equity method investments, (iii) loans to our LIHTC joint venture partners and (iv) investments in LIHTC tax credit equity. Below we discuss the risks associated with these investments.
We use corporate capital to make investments in (i) joint ventures and other equity method investments, (ii) loans to our LIHTC joint venture development partners, (iii) investments in LIHTC equity funds, (iv) co-investments in funds managed by our registered investment advisor, and (v) loans made by the Interim Loan JV or through the Interim Loan Program.
We intend to drive a significant portion of our future growth through additional strategic acquisitions or investments in new ventures and new lines of business. If we do not successfully identify, complete and integrate such acquisitions or investments, our growth may be limited.
Walker, and the insurance proceeds from such insurance may be insufficient to cover the cost associated with recruiting a new Chief Executive Officer. We intend to drive a significant portion of our future growth through additional strategic acquisitions or investments in new ventures and new lines of business.
If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management and/or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the interim loan, and we bear the risk that we may not recover some or all of the loan balance.
We bear the risk that we may not recover some or all of the loan balance if (i) the borrower does not receive sufficient return on the asset to satisfy the interim loan or (ii) the borrower is unable to obtain permanent financing.
These loans are generally short-term and repaid with proceeds from construction loans or permanent loans from third-party sources or proceeds from the sale to LIHTC funds. We face risk that these loans to our joint venture partners may not be repaid if loans from third parties cannot be obtained or the property is not sold to a LIHTC fund.
We face risk that these loans to our joint venture partners may 17 Table of Contents not be repaid if the cash flow from operations is not sufficient to repay the loans, loans from third parties cannot be obtained, the equity in the property is not sold to a LIHTC fund, or the value of the equity in the underlying property is sufficient.
To fund these cash flow obligations, we typically use cash generated from our operations and, when necessary, from funds raised in the capital markets.
To fund these cash flow obligations, we typically use cash generated from our operations and, when necessary, from funds raised in the capital markets. A significant decline in our operational performance, an inability to access capital markets for funding, or a sharp rise in our cost of capital could adversely affect our ability to meet these future obligations.
We provide commercial real estate financial products and services primarily to developers and owners of multifamily properties. Accordingly, the success of our business is closely tied to the overall success of the multifamily real estate market. Various changes in real estate conditions may impact the multifamily sector.
We are dependent upon the success of the multifamily real estate sector and conditions that negatively impact the multifamily sector may reduce demand for our products and services and materially and adversely affect us. We provide commercial real estate financial products and services primarily to developers and owners of multifamily properties.
Removed
In addition, borrowers usually use the proceeds of a long-term mortgage loan to repay an interim loan. We may therefore be dependent on a borrower’s ability to obtain permanent financing to repay our interim loan, which could depend on market conditions and other factors.
Added
These loans are generally short-term and repaid with proceeds from the operation of the properties, construction loans or permanent loans from third-party sources or proceeds from the sale of equity to LIHTC funds.
Removed
Further, interim loans may be relatively less liquid than loans against stabilized properties due to their short life, their potential unsuitability for securitization, any unstabilized nature of the underlying real estate and the difficulty of recovery in the event of a borrower’s default.
Added
Additionally, interim loans may be relatively less liquid due to the nature of the underlying property, which may make them unsuitable for securitization and may be difficult to fully recover the loan amount from sale proceeds.
Removed
This lack of liquidity may significantly impede our ability to respond to adverse changes in the performance of loans in the Interim Program and may adversely affect the fair value of such loans and the proceeds from their disposition.
Added
We intend to pursue continued growth by acquiring or starting complementary businesses, but we cannot guarantee such efforts will be successful or profitable. We do not know whether the favorable conditions that have enabled our past growth through acquisitions and strategic investments will continue.
Removed
(ii) Joint ventures and other equity method investments We make investments in various joint ventures, including with select developers of LIHTC properties and as part of the Interim Program JV.
Added
Our future success depends, in part, on our ability to expand or modify our business in response to changing client demands and competitive pressures. In some circumstances, we may determine to do so through the acquisition of complementary businesses or investments in new ventures rather than through internal growth .
Removed
We have contractual obligations that will require significant uses of capital. Our ability to fund these uses of capital is dependent on both our results of operations and our ability to access capital markets.
Added
The failure of banks or other major financial institutions, or sustained financial market illiquidity, could adversely affect our and our clients’ businesses and results of operations. ​ The failure of certain financial institutions may increase the possibility of a sustained deterioration of financial market liquidity.
Removed
A significant decline in our operational performance, an inability to access capital markets for funding, or a sharp rise in our cost of capital could adversely affect our ability to meet these future obligations. 17 Table of Contents We are dependent upon the success of the multifamily real estate sector and conditions that negatively impact the multifamily sector may reduce demand for our products and services and materially and adversely affect us.
Added
The failure of a bank (or banks) with which we and/or our clients have a commercial relationship could adversely affect, among other things, our and/or our clients’ ability to pursue key initiatives, including by affecting our ability to borrow from financial institutions on favorable terms.
Removed
We maintain a robust succession planning process for all of our senior management and regularly update our Board on such developments. In addition, we maintain “key person” life insurance only on Mr. Walker, and the insurance proceeds from such insurance may be insufficient to cover the cost associated with recruiting a new Chief Executive Officer.
Added
In the event our client has a commercial relationship with a bank that has failed or is otherwise distressed, such client may experience delays or other issues in meeting certain debt service, other funding or credit support obligations or consummating transactions with us.
Removed
Additionally, most of our employees work remotely and will continue to do so for the foreseeable future.
Added
Additionally, if a client has a commercial relationship with a bank that has failed or is otherwise distressed, the client or sponsor may experience issues receiving financial assistance to support their operations or consummate transactions, to the detriment of their business, financial condition and/or results of operations, which, in turn, may have a material adverse effect on our business, results of operations, liquidity, or financial condition. ​ We maintain cash deposits in excess of federally insured limits.
Removed
Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit our stockholders’ recourse in the event actions are taken that are not in our stockholders’ best interests.
Added
Adverse developments affecting systematically important financial institutions, including bank failures, could adversely affect our liquidity and financial performance. ​ We maintain substantially all of our cash and cash equivalents in domestic cash deposits in systematically important financial institutions, which are Federal Deposit Insurance Corporation (“FDIC”) insured banks, and certain of our cash deposits exceed FDIC insurance limits.
Added
Market conditions can impact the viability of these institutions, and bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to liquidity constraints.
Added
The failure of a bank, or other adverse conditions in the financial or credit markets impacting financial institutions at which we maintain balances, could adversely impact our liquidity and financial performance.
Added
Additionally, most of our employees work remotely or in a hybrid arrangement and will continue to do so for the foreseeable future. Remote and hybrid working arrangements at our Company (and at many third-party providers) increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks.
Added
There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls, or procedures, will be fully implemented, complied with or effective in protecting our information technology systems and confidential information.
Added
In addition, we need to comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the United States, Europe and elsewhere.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn February 2023, our Board of Directors authorized the repurchase of up to $75.0 million of shares of our common stock over a 12-month period beginning on February 23, 2023. ​ 24 Table of Contents The following table provides information regarding common stock repurchases for the quarter and year ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate ​ ​ ​ ​ ​ ​ ​ ​ Shares Purchased as ​ Dollar Value ​ ​ ​ Total Number ​ Average ​ Part of Publicly ​ of Shares that May ​ ​ of Shares Price Paid Announced Plans Yet Be Purchased Under ​ Period ​ Purchased ​ per Share ​ or Programs ​ the Plans or Programs ​ 1st Quarter ​ 195,431 ​ $ 138.28 ​ — ​ ​ ​ ​ 2nd Quarter ​ 119,303 ​ $ 103.09 ​ 109,052 ​ ​ ​ ​ 3rd Quarter ​ 13,899 ​ $ 103.31 ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1-31, 2022 ​ 3,093 ​ $ 83.73 ​ — ​ $ 63,901,743 ​ November 1-30, 2022 ​ 51 ​ ​ 90.04 ​ — ​ ​ 63,901,743 ​ December 1-31, 2022 ​ 16,249 ​ ​ 80.89 ​ — ​ ​ 63,901,743 ​ 4th Quarter 19,393 ​ $ 81.36 ​ — ​ $ 63,901,743 ​ Total 348,026 ​ ​ ​ ​ 109,052 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities Authorized for Issuance Under Equity Compensation Plans For information regarding securities authorized for issuance under our employee share-based compensation plans, see Part III, Item 12.
Biggest changeIn February 2024, our Board of Directors authorized the repurchase of up to $75.0 million of shares of our common stock over a 12-month period beginning on February 23, 2024. ​ 26 Table of Contents The following table provides information regarding common stock repurchases for the quarter and year ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate ​ ​ ​ ​ ​ ​ ​ ​ Shares Purchased as ​ Dollar Value ​ ​ ​ Total Number ​ Average ​ Part of Publicly ​ of Shares that May ​ ​ of Shares Price Paid Announced Plans Yet Be Purchased Under ​ Period ​ Purchased ​ per Share ​ or Programs ​ the Plans or Programs ​ 1st Quarter ​ 184,824 ​ $ 92.60 ​ — ​ ​ ​ ​ 2nd Quarter ​ 9,142 ​ $ 72.37 ​ — ​ ​ ​ ​ 3rd Quarter ​ 10,000 ​ $ 87.09 ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ October 1-31, 2023 ​ 2,252 ​ $ 74.24 ​ — ​ $ 75,000,000 ​ November 1-30, 2023 ​ 52 ​ ​ 65.35 ​ — ​ ​ 75,000,000 ​ December 1-31, 2023 ​ 14,711 ​ ​ 96.00 ​ — ​ ​ 75,000,000 ​ 4th Quarter 17,015 ​ $ 93.03 ​ — ​ $ 75,000,000 ​ Total 220,981 ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Securities Authorized for Issuance Under Equity Compensation Plans For information regarding securities authorized for issuance under our employee share-based compensation plans, see Part III, Item 12.
Stock Performance Graph The following chart graphs our performance in the form of a cumulative five-year total return to holders of our common stock since December 31, 2017 in comparison to the Standard and Poor’s (“S&P”) 500 and the S&P 600 Small Cap Financials Index for that same five-year period.
Stock Performance Graph The following chart graphs our performance in the form of a cumulative five-year total return to holders of our common stock since December 31, 2018 in comparison to the Standard and Poor’s (“S&P”) 500 and the S&P 600 Small Cap Financials Index for that same five-year period.
Our stock price performance shown in the following graph is not indicative of future performance or relative performance in comparison to the indices. ​ 23 Table of Contents ​ Issuer Purchases of Equity Securities ​ Under the 2020 Equity Incentive Plan, subject to the Company’s approval, grantees have the option of electing to satisfy minimum tax withholding obligations at the time of vesting or exercise by allowing the Company to withhold and purchase the shares of stock otherwise issuable to the grantee.
Our stock price performance shown in the following graph is not indicative of future performance or relative performance in comparison to the indices. ​ Issuer Purchases of Equity Securities ​ Under the 2020 Equity Incentive Plan, subject to the Company’s approval, grantees have the option of electing to satisfy minimum tax withholding obligations at the time of vesting or exercise by allowing the Company to withhold and purchase the shares of stock otherwise issuable to the grantee.
While the dividend level remains a decision of our Board of Directors, it is subject to these direct and indirect restrictions, and will continue to be evaluated in the context of future business performance. We currently believe that we can support future comparable quarterly dividend payments, barring significant unforeseen events.
While the dividend level remains a decision of our Board of Directors, it is subject to these direct 25 Table of Contents and indirect restrictions, and will continue to be evaluated in the context of future business performance. We currently believe that we can support future comparable quarterly dividend payments, barring significant unforeseen events.
The comparison below assumes $100 was invested on December 31, 2017 in our common stock and in each of the indices shown and assumes that all dividends were reinvested.
The comparison below assumes $100 was invested on December 31, 2018 in our common stock and in each of the indices shown and assumes that all dividends were reinvested.
As of the close of business on January 31, 2023, there were 24 stockholders of record. We believe that the number of beneficial holders is much greater. Dividend Policy During 2022, our Board of Directors declared, and we paid, four quarterly dividends totaling $2.40 per share.
As of the close of business on January 31, 2024, there were 23 stockholders of record. We believe that the number of beneficial holders is much greater. Dividend Policy During 2023, our Board of Directors declared, and we paid, four quarterly dividends totaling $2.52 per share.
For the quarter and year ended December 31, 2022, we purchased 19 thousand shares and 348 thousand shares, respectively, to satisfy grantee tax withholding obligations on share-vesting events. We announced a share repurchase program in the first quarter of 2022.
For the quarter and year ended December 31, 2023, we purchased 17 thousand shares and 221 thousand shares, respectively, to satisfy grantee tax withholding obligations on share-vesting events . We announced a share repurchase program in the first quarter of 2023.
In February 2023, our Board of Directors declared a dividend for the first quarter of 2023 of $0.63 per share, a 5% increase over the dividend declared for the fourth quarter of 2022. We expect to make regular quarterly dividend payments for the foreseeable future.
In February 2024, our Board of Directors declared a dividend for the first quarter of 2024 of $0.65 per share, a 3% increase over the dividend declared for the fourth quarter of 2023. We expect to make regular quarterly dividend payments for the foreseeable future.
The repurchase program authorized by our Board of Directors permits us to repurchase up to $75.0 million of shares of our common stock over a 12-month period ending February 12, 2023. We purchased 109 thousand shares under this share repurchase program. The Company had $63.9 million of authorized share repurchase capacity remaining as of December 31, 2022.
The repurchase program authorized by our Board of Directors permits us to repurchase up to $75.0 million of shares of our common stock over a 12-month period ending February 22, 2024. We did not purchase any shares under this share repurchase program during 2023. The Company had $75 million of authorized share repurchase capacity remaining as of December 31, 2023.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. ​ [Reserved] ​ 25 Item 7. ​ Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk 52 Item 8. ​ Financial Statements and Supplementary Data 54
Biggest changeItem 6. ​ [Reserved] ​ 27 Item 7. ​ Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk 57 Item 8. ​ Financial Statements and Supplementary Data 58

Item 7. Management's Discussion & Analysis

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

191 edited+111 added−86 removed77 unchanged
Biggest changeAdjusted EBITDA is reconciled to net income as follows: ADJUSTED FINANCIAL METRIC RECONCILIATION TO GAAP CONSOLIDATED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended ​ ​ ​ December 31, ​ (in thousands) 2022 2021 Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA ​ ​ ​ ​ ​ ​ ​ Walker & Dunlop Net Income ​ $ 213,820 ​ $ 265,762 ​ Income tax expense ​ 56,034 ​ 86,428 ​ Interest expense on corporate debt ​ 34,233 ​ 7,981 ​ Amortization and depreciation ​ 235,031 ​ 210,284 ​ Provision (benefit) for credit losses ​ (11,978) ​ (13,287) ​ Net write-offs ​ (4,631) ​ — ​ Share-based compensation expense ​ 33,987 ​ 36,582 ​ Gain from revaluation of previously held equity-method investment ​ ​ (39,641) ​ ​ — ​ Write-off of unamortized issuance costs from corporate debt retirement ​ ​ — ​ ​ 2,673 ​ Fair value of expected net cash flows from servicing, net ​ (191,760) ​ (287,145) ​ Adjusted EBITDA ​ $ 325,095 ​ $ 309,278 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 36 Table of Contents Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following table presents a period-to-period comparison of the components of our adjusted EBITDA for the years ended December 31, 2022 and 2021: ADJUSTED EBITDA –2022 COMPARED TO 2021 CONSOLIDATED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended ​ ​ ​ ​ ​ ​ December 31, ​ Dollar ​ Percentage (dollars in thousands) 2022 2021 Change Change Loan origination and debt brokerage fees, net $ 348,007 ​ $ 446,014 ​ $ (98,007) ​ (22) % Servicing fees 300,191 ​ 278,466 ​ 21,725 ​ 8 ​ Property sales broker fees ​ 120,582 ​ ​ 119,981 ​ ​ 601 ​ 1 ​ Investment management fees ​ 71,931 ​ ​ 25,637 ​ ​ 46,294 ​ 181 ​ Net warehouse interest income 15,777 ​ 22,108 ​ (6,331) ​ (29) ​ Escrow earnings and other interest income 52,830 ​ 8,150 ​ 44,680 ​ 548 ​ Other revenues 122,923 ​ 71,809 ​ 51,114 ​ 71 ​ Personnel (573,379) ​ (566,905) ​ (6,474) ​ 1 ​ Net write-offs (4,631) ​ — ​ (4,631) ​ N/A ​ Other operating expenses (129,136) ​ (95,982) ​ (33,154) ​ 35 ​ Adjusted EBITDA $ 325,095 ​ $ 309,278 ​ $ 15,817 ​ 5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The decrease in origination fees was primarily related to decreases in both the earnings rate on our debt financing volumes and the overall debt financing volumes year over year.
Biggest changeFor the year ended December 31, 2022, there was no goodwill impairment. ​ Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table presents a year-over-year comparison of the components of our adjusted EBITDA for the year ended December 31, 2023 and 2022: ADJUSTED EBITDA–2023 COMPARED TO 2022 CONSOLIDATED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended ​ ​ ​ ​ ​ ​ December 31, ​ Dollar ​ Percentage (dollars in thousands) 2023 2022 Change Change Loan origination and debt brokerage fees, net $ 234,409 ​ $ 348,007 ​ $ (113,598) ​ (33) % Servicing fees 311,914 ​ 300,191 ​ 11,723 ​ 4 ​ Property sales broker fees ​ 53,966 ​ ​ 120,582 ​ ​ (66,616) ​ (55) ​ Investment management fees ​ 45,381 ​ ​ 71,931 ​ ​ (26,550) ​ (37) ​ Net warehouse interest income (expense) (5,633) ​ 15,777 ​ (21,410) ​ (136) ​ Placement fees and other interest income 154,520 ​ 52,830 ​ 101,690 ​ 192 ​ Other revenues 122,152 ​ 122,923 ​ (771) ​ (1) ​ Personnel (486,448) ​ (573,379) ​ 86,931 ​ (15) ​ Net write-offs (1) (8,041) ​ (4,631) ​ (3,410) ​ 74 ​ Other operating expenses (122,097) ​ (129,136) ​ 7,039 ​ (5) ​ Adjusted EBITDA $ 300,123 ​ $ 325,095 ​ $ (24,972) ​ (8) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) The net write-off for the year ended December 31, 2023 includes the $6.0 million write-off of a collateral-based reserve related to a loan held for investment. ​ The decrease in origination fees was primarily related to a significant decrease in the overall debt financing volumes year over year.
Amortization and depreciation also includes the amortization of intangible assets, principally related to the amortization, asset management fee contracts, research subscription contracts, intellectual property, and other intangible assets recognized in connection with acquisitions.
Amortization and depreciation also includes the amortization of intangible assets, principally related to the amortization of asset management fee contracts, research subscription contracts, intellectual property, and other intangible assets recognized in connection with acquisitions.
Our segment level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided above in our Consolidated Results of Operations—Non-GAAP Financial Measure.
Our segment level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided above in our Consolidated Results of Operations—Non-GAAP Financial Measure.
Our segment level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided above in our Consolidated Results of Operations—Non-GAAP Financial Measure.
Our segment level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided above in our Consolidated Results of Operations—Non-GAAP Financial Measure.
Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity. Non-GAAP Financial Measure A reconciliation of adjusted EBITDA for our Corporate segment is presented below.
Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity. ​ ​ Non-GAAP Financial Measure A reconciliation of adjusted EBITDA for our SAM segment is presented below.
The segment results below are intended to present each of the reportable segments on a stand-alone basis. ​ Capital Markets Our Capital Markets segment provides a comprehensive range of commercial real estate finance products to our customers, including Agency lending, debt brokerage, property sales, and appraisal and valuation services.
The segment results below are intended to present each of the reportable segments on a stand-alone basis. ​ Capital Markets Our CM segment provides a comprehensive range of commercial real estate finance products to our customers, including Agency lending, debt brokerage, property sales, and appraisal and valuation services.
Accordingly, loans originated in those prior years were subject to risk-sharing at much lower levels. Our servicing fees for risk-sharing loans include compensation for the risk-sharing obligations and are larger than the servicing fees we receive from Fannie Mae for loans with no risk-sharing obligations.
Accordingly, loans originated in those prior years were subject to risk-sharing at lower levels. Our servicing fees for risk-sharing loans include compensation for the risk-sharing obligations and are larger than the servicing fees we receive from Fannie Mae for loans with no risk-sharing obligations.
Except as described in the following paragraph, the maximum amount of risk-sharing obligations we absorb at the time of default is generally 20% of the origination unpaid principal balance (“UPB”) of the loan. 51 Table of Contents ​ ​ ​ ​ Risk-Sharing Losses Percentage Absorbed by Us ​ First 5% of UPB at the time of loss settlement ​ 100% ​ Next 20% of UPB at the time of loss settlement ​ 25% ​ Losses above 25% of UPB at the time of loss settlement ​ 10% ​ Maximum loss 20% of origination UPB ​ Fannie Mae can double or triple our risk-sharing obligation if the loan does not meet specific underwriting criteria or if a loan defaults within 12 months of its sale to Fannie Mae.
Except as described in 55 Table of Contents the following paragraph, the maximum amount of risk-sharing obligations we absorb at the time of default is generally 20% of the origination unpaid principal balance (“UPB”) of the loan. ​ ​ ​ ​ Risk-Sharing Losses Percentage Absorbed by Us ​ First 5% of UPB at the time of loss settlement ​ 100% ​ Next 20% of UPB at the time of loss settlement ​ 25% ​ Losses above 25% of UPB at the time of loss settlement ​ 10% ​ Maximum loss 20% of origination UPB ​ Fannie Mae can double or triple our risk-sharing obligation if the loan does not meet specific underwriting criteria or if a loan defaults within 12 months of its sale to Fannie Mae.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . The following discussion should be read in conjunction with the historical financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. The following discussion contains, in addition to historical information, forward-looking statements that include risks and uncertainties.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . The following discussion should be read in conjunction with the historical financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K (“10-K”). The following discussion contains, in addition to historical information, forward-looking statements that include risks and uncertainties.
WDIP, a wholly owned subsidiary of the Company, is part of our strategy to grow and diversify the Company by growing our investment management platform.
Investment Management Services WDIP, a wholly owned subsidiary of the Company, is part of our strategy to grow and diversify the Company by growing our investment management platform.
The fair value at loan sale (“MSR”) is based on estimates of expected net cash flows associated with the servicing rights and takes into consideration an estimate of loan prepayment. Initially, 27 Table of Contents the fair value amount is included as a component of the derivative asset fair value at the loan commitment date.
The fair value at loan sale (“MSR”) is based on estimates of expected net cash flows associated with the servicing rights and takes into consideration an estimate of loan prepayment. Initially, 29 Table of Contents the fair value amount is included as a component of the derivative asset fair value at the loan commitment date.
Liquidity and Capital Resources Uses of Liquidity, Cash and Cash Equivalents Our significant recurring cash flow requirements consist of liquidity to (i) fund loans held for sale; (ii) fund loans held for investment under the Interim Loan Program; (iii) pay cash dividends; (iv) fund our portion of the equity necessary for the operations of the Interim Program JV, and other equity-method investments; (v) fund investments in properties to be syndicated to LIHTC investment funds that we will asset-manage; (vi) make payments related to earnouts from acquisitions, (vii) meet working capital needs to support our day-to-day operations, including debt service payments, joint venture development partnership contributions, servicing advances and payments for salaries, commissions, and income taxes, and (viii) meet working capital to satisfy collateral requirements for our Fannie Mae DUS risk-sharing obligations and to meet the operational liquidity requirements of Fannie Mae, Freddie Mac, HUD, Ginnie Mae, and our warehouse facility lenders. ​ Fannie Mae has established benchmark standards for capital adequacy and reserves the right to terminate our servicing authority for all or some of the portfolio if, at any time, it determines that our financial condition is not adequate to support our obligations under the DUS agreement.
Liquidity and Capital Resources Uses of Liquidity, Cash and Cash Equivalents Our significant recurring cash flow requirements consist of liquidity to (i) fund loans held for sale; (ii) pay cash dividends; (iii) fund our portion of the equity necessary to support equity-method investments; (iv) fund investments in properties to be syndicated to LIHTC investment funds that we will asset-manage; (v) make payments related to earnouts from acquisitions, (vi) meet working capital needs to support our day-to-day operations, including debt service payments, joint venture development partnership contributions, advances for servicing, loan repurchases, and payments for salaries, commissions, and income taxes, and (vii) meet working capital to satisfy collateral requirements for our Fannie Mae DUS risk-sharing obligations and to meet the operational liquidity requirements of Fannie Mae, Freddie Mac, HUD, Ginnie Mae, and our warehouse facility lenders. ​ Fannie Mae has established benchmark standards for capital adequacy and reserves the right to terminate our servicing authority for all or some of the portfolio if, at any time, it determines that our financial condition is not adequate to support our obligations under the DUS agreement.
Our annual results have fluctuated in the past and are expected to fluctuate in the future, reflecting the interest-rate environment, the volume of transactions, business acquisitions, regulatory actions, and general economic conditions. Discussions of our results of operations and comparisons between 2021 and 2020 can be found in “Item 7.
Our annual results have fluctuated in the past and are expected to fluctuate in the future, reflecting the interest-rate environment, the volume of transactions, business acquisitions, regulatory actions, and general economic conditions. Discussions of our results of operations and comparisons between 2022 and 2021 can be found in “Item 7.
Except for the effects of the Tax Cuts and Jobs Act of 2017 (“Tax Reform”), our combined statutory tax rate has historically not varied significantly as the only material difference in the calculation of the combined statutory tax rate from year to year is the apportionment of our taxable income amongst the various states where we are subject to taxation since our foreign operations are (i) immaterial and (ii) taxed 33 Table of Contents at a rate similar to our blended federal and state tax rate.
Except for the effects of the Tax Cuts and Jobs Act of 2017 (“Tax Reform”), our combined statutory tax rate has historically not varied significantly as the only material difference in the calculation of the combined statutory tax rate from year to year is the apportionment of our taxable income amongst the various states where we are subject to taxation since our foreign operations are (i) immaterial and (ii) taxed at a rate similar to our blended federal and state tax rate.
Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity. ​ Non-GAAP Financial Measure ​ A reconciliation of adjusted EBITDA for our Capital Markets segment is presented below.
Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity. 45 Table of Contents Non-GAAP Financial Measure ​ A reconciliation of adjusted EBITDA for our Capital Markets segment is presented below.
We are one of the leading commercial real estate services and finance companies in the United States, with a primary focus on multifamily lending and property sales, commercial real estate debt brokerage, and affordable housing investment management.
We are one of the leading commercial real estate services and finance companies in the United States, with a primary focus on multifamily lending and property sales, commercial real estate debt brokerage, and investment management services.
WDIP is a registered investment adviser and general partner of private commercial real estate investment funds focused on the management of debt, preferred equity, and mezzanine equity investments through private middle-market commercial real estate funds and separately managed accounts.
WDIP is a registered investment advisor and general partner of private commercial real estate investment funds focused on the management of debt, preferred equity, and mezzanine equity investments through private middle-market commercial real estate funds and separately managed accounts.
We continue to approach the affordable housing space with a combined LIHTC syndication and affordable housing service offering that we believe will generate significant financing, property sales, and syndication opportunities.
We continue to approach the affordable housing space with a combined LIHTC syndication and affordable housing service offering that we believe will generate significant long-term financing, property sales, and syndication opportunities.
Consolidated Results of Operations The following is a discussion of the comparison of our results of operations for the years ended December 31, 2022 and 2021. The financial results are not necessarily indicative of future results.
Consolidated Results of Operations The following is a discussion of the comparison of our results of operations for the years ended December 31, 2023 and 2022. The financial results are not necessarily indicative of future results.
The Company’s long-established relationships with the Agencies and institutional investors enable our Capital Markets segment to offer a broad range of loan products and services to the Company’s customers, including first mortgage, second trust, supplemental, construction, mezzanine, preferred equity, and small-balance loans.
The Company’s long-established relationships with the Agencies and institutional investors enable our CM segment to offer a broad range of loan products and services to the Company’s customers, including first mortgage, second trust, supplemental, construction, mezzanine, preferred equity, and small-balance loans.
Notes Payable We have a senior secured credit agreement (the “Credit Agreement”) that provides for a $600 million term loan (the “Term Loan”) that bears interest at Adjusted Term SOFR (“SOFR”) plus 225 basis points with a floor of 50 basis points and has a stated maturity date of December 16, 2028 (or, if earlier, the date of acceleration of the Term Loan pursuant to the term of the Credit Agreement).
Notes Payable We have a senior secured credit agreement (the “Credit Agreement”) that provides for a $600 million term loan (the “Term Loan”) that bears interest at Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus 225 basis points with a floor of 50 basis points and has a stated maturity date of December 16, 2028 (or, if earlier, the date of acceleration of the Term Loan pursuant to the term of the Credit Agreement).
For example, 31 Table of Contents we earn syndication fees based on new funds we are able to syndicate for investors and asset management fees based on performance of the underlying LIHTC properties and dispositions of these properties. Strong demand for LIHTC properties typically results in opportunities for syndication of LIHTC funds and high prices for dispositions.
For example, we earn syndication fees based on new funds we are able to syndicate for investors and asset management fees based on performance of the underlying LIHTC properties and dispositions of these properties. Strong demand for LIHTC properties typically results in opportunities for syndication of LIHTC funds and high prices for dispositions.
Absent additional significant legislative changes to statutory tax rates (particularly the federal tax rate), we expect low deviation from the 2022 combined statutory tax rate for future years.
Absent additional significant legislative changes to statutory tax rates (particularly the federal tax rate), we expect low deviation from the 2023 combined statutory tax rate for future years.
Financial Condition Cash Flows from Operating Activities Our cash flows from operations are generated from loan sales, servicing fees, escrow earnings, net warehouse interest income, property sales broker fees, investment management fees, research subscription fees, investment banking advisory fees, and other income, net of loan origination and operating costs.
Financial Condition Cash Flows from Operating Activities Our cash flows from operations are generated from loan sales, servicing fees, placement fees, net warehouse interest income, property sales broker fees, investment management fees, research subscription fees, investment banking advisory fees, and other income, net of loan origination and operating costs.
Additionally, we have invested $648.3 million in acquisitions, $300.0 million of which was financed by an increase in our Term Loan (as defined below). On occasion, we may use cash to fully fund some loans held for investment or loans held for sale instead of using our warehouse lines.
Additionally, we have invested $577.2 million in acquisitions, $300.0 million of which was financed by an increase in our Term Loan (as defined below). On occasion, we may use cash to fully fund some loans held for investment or loans held for sale instead of using our warehouse lines.
NOTE 2 of the consolidated financial statements provides additional details of the accounting for AMF revenues. 32 Table of Contents Net Warehouse Interest Income— We earn warehouse interest income net of warehouse interest expense. Warehouse interest income is the interest earned from loans held for sale and loans held for investment.
NOTE 2 of the consolidated financial statements provides additional details of the accounting for AMF revenues. Net Warehouse Interest Income (Expense)— We earn warehouse interest income net of warehouse interest expense. Warehouse interest income is the interest earned from loans held for sale and loans held for investment.
We continually seek opportunities to complete additional acquisitions if we believe the economics are favorable. ​ In February 2022, our Board of Directors approved a stock repurchase program that permitted the repurchase of up to $75.0 million of shares of our common stock over a 12-month period beginning February 13, 2022.
We continually seek opportunities to complete additional acquisitions if we believe the economics are favorable. ​ In February 2023, our Board of Directors approved a stock repurchase program that permitted the repurchase of up to $75.0 million of shares of our common stock over a 12-month period beginning February 23, 2023.
We earn fee income on property-level escrow deposits in our servicing portfolio, generally based on a fixed or variable placement fee negotiated with the financial institutions that hold the escrow deposits. Escrow earnings reflect the placement fees net of interest paid to the borrower, if required.
We earn fee income on property-level escrow deposits held on behalf of borrowers in our servicing portfolio, generally based on a fixed or variable placement fee negotiated with the financial institutions that hold the escrow deposits. Placement fees reflect the fees net of interest paid to the borrower, if required.
Our actual results may differ materially from those expressed or contemplated in those forward-looking statements as a result of certain factors, including those set forth under the headings “Forward-Looking Statements” and “Risk Factors” elsewhere in this Annual Report on Form 10-K.
Our actual results may differ materially from those expressed or contemplated in those forward-looking statements as a result of certain factors, including those set forth under the headings “Forward-Looking Statements” and “Risk Factors” elsewhere in this 10-K.
For example, an increase in loan origination volume for our two highest-margin products, Fannie Mae and HUD loans, without a change in total loan origination volume would increase our overall profitability, while a decrease in the loan origination volume of these two products without a change in total loan origination volume would decrease our overall profitability, all else equal. ● The Affordable Housing Market.
For example, an increase in loan origination volume for our two highest-margin products, Fannie Mae and HUD loans, without a change in total loan origination volume would increase our overall profitability, while a decrease in the loan origination volume of these two products without a change in total loan origination volume would decrease our overall profitability, all else being equal. 34 Table of Contents ● The Affordable Housing Market.
A specific reserve is recorded when it is probable that a risk-sharing loan will foreclose or has foreclosed, and a reserve for estimated credit losses and a guaranty obligation are recorded for all other risk-sharing loans.
A collateral-based reserve is recorded when it is probable that a risk-sharing loan will foreclose or has foreclosed, and a reserve for estimated credit losses and a guaranty obligation are recorded for all other risk-sharing loans.
There were no other accounting pronouncements issued during 2022 that have the potential to impact our consolidated financial statements.
There were no other accounting pronouncements issued during 2023 that have the potential to impact our consolidated financial statements.
Servicing fees set at the time an investor agrees to purchase the loan are generally paid monthly for the duration of the loan and are based on the unpaid principal balance of the loan. Our Fannie Mae and Freddie Mac servicing arrangements generally provide for prepayment to us in the event of a voluntary prepayment.
Servicing fees set at the time an investor agrees to purchase the loan are generally paid monthly for the duration of the loan and are based on the unpaid principal balance of the loan. Our Fannie Mae servicing arrangements generally provide for prepayment protection in the event of a voluntary prepayment.
We retain servicing rights on substantially all the loans we originate and sell and generate revenues from the fees we receive for servicing the loans, from the interest income on escrow deposits held on behalf of borrowers, and from other ancillary fees.
We retain servicing rights on substantially all the loans we originate and sell and generate revenues from the fees we receive for servicing the loans, from the placement fees on escrow deposits held on behalf of borrowers, and from other ancillary fees.
On January 12, 2023, we entered into a lender joinder agreement and amendment to the Credit Agreement that provided for an incremental term loan (“Incremental Term Loan”) with a principal amount of $200.0 million, and modified the ratio thresholds related to mandatory prepayments, and allow for incurrence of additional types of indebtedness.
On January 12, 2023, we entered into a lender joinder agreement and amendment to the Credit Agreement that provided for an incremental term loan (“Incremental Term Loan”) with a principal amount of $200.0 million, modified the ratio thresholds related to mandatory prepayments, and included a provision that allows additional types of indebtedness.
For the years presented in the Consolidated Statements of Income, the amortization of intangible assets relates primarily to intangible assets associated with our acquisitions in 2021 and 2022. Provision (Benefit) for Credit Losses. The provision (benefit) for credit losses consists of two components: the provision associated with our risk-sharing loans and the provision associated with our loans held for investment.
For the years presented in the Consolidated Statements of Income, the amortization of intangible assets relates primarily to intangible assets associated with our acquisitions in 2021 and 2022. Provision (Benefit) for Credit Losses. The provision (benefit) for credit losses consists primarily of the provision associated with our risk-sharing loans.
Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity. ​ ​ Non-GAAP Financial Measure A reconciliation of adjusted EBITDA for our Servicing & Asset Management segment is presented below.
Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity. 51 Table of Contents Non-GAAP Financial Measure A reconciliation of adjusted EBITDA for our Corporate segment is presented below.
In February 2023, our Board of Directors approved a stock repurchase program that permits the repurchase of up to $75.0 million shares of our common stock over a 12-month period beginning February 23, 2023. ​ We have contractual obligations to make future cash payments on lease agreements on our various offices of $79.6 million as of December 31, 2022.
In February 2024, our Board of Directors approved a stock repurchase program that permits the repurchase of up to $75.0 million shares of our common stock over a 12-month period beginning February 23, 2024. ​ We have contractual obligations to make future cash payments on lease agreements on our various offices of $101.4 million as of December 31, 2023.
We have not experienced significant changes in the runoff rate since we implemented CECL in 2020. The weighted-average annual loss rate is calculated using a 10-year look-back period, utilizing the average portfolio balance and settled losses for each year.
We have not experienced significant changes in the runoff rate since we implemented CECL in 2020. 30 Table of Contents The weighted-average annual loss rate is currently calculated using a 10-year look-back period, utilizing the average portfolio balance and settled losses for each year.
We believe the level of Allowance for Risk-Sharing Obligation is appropriate based on our expectations of future market conditions; however, changes in one or more of the judgments or assumptions used above could have a significant impact on the estimate. Contingent Consideration Liabilities.
We believe the level of Allowance for Risk-Sharing Obligation is appropriate based on our expectations of future market conditions; however, changes in one or more of the judgments or assumptions used above could have a significant impact on the reserve.
This fair value represents management’s best estimate of the discounted cash payments that will be made in the future for all of our contingent consideration arrangements. The maximum remaining undiscounted earnout payments as of December 31, 2022 was $319 million.
This fair value represents management’s best estimate of the discounted cash payments that will be made in the future for all of our contingent consideration arrangements. The maximum remaining undiscounted earnout payments as of December 31, 2023 was $292.9 million.
Any potential loss from a catastrophic change in the property condition while the loan is held for sale using warehouse facility financing is mitigated through property insurance equal to replacement cost. We are also protected contractually from an investor’s failure to purchase the loan.
The deposit is returned to the borrower only once the loan is closed. Any potential loss from a catastrophic change in the property condition while the loan is held for sale using warehouse facility financing is mitigated through property insurance equal to replacement cost. We are also protected contractually from an investor’s failure to purchase the loan.
Fannie Mae recently announced that we ranked as its largest DUS lender in 2022, by loan deliveries, for the fourth consecutive year, and Freddie Mac recently announced that we ranked as its 3rd largest Freddie Mac lender in 2022, by loan deliveries.
Fannie Mae recently announced that we ranked as its largest DUS lender in 2023, by loan deliveries, for the fifth consecutive year, and Freddie Mac recently announced that we ranked as its 3rd largest Freddie Mac lender in 2023, by loan deliveries.
The discount rates used throughout the periods presented for all MSRs were between 8-14% during 2022 and 2021 and 10-15% during 2020 and varied based on the loan type. The life of the underlying loan is estimated giving consideration to the prepayment provisions in the loan and assumptions about loan behaviors around those provisions.
The discount rates used throughout the periods presented for all MSRs were between 8-14% and varied based on the loan type. The life of the underlying loan is estimated giving consideration to the prepayment provisions in the loan and assumptions about loan behaviors around those provisions.
As of December 31, 2022, we did not fully fund any such loans.
As of December 31, 2023, we did not fully fund any such loans.
Changes to the aforementioned inputs impact the estimate; for example, in the fourth quarter of 2022, we recorded a net $13.5 million reduction to the fair value of our contingent consideration liabilities based primarily on revised management forecasts of the financial performance of the entities over the remaining earnout period. ​ The aggregate fair value of our contingent consideration liabilities as of December 31, 2022 was $200.3 million.
Changes to the aforementioned inputs impact the estimate; for example, in the fourth quarter of 2022, we recorded a net $13.5 million reduction to the fair value of our contingent consideration liabilities based primarily on revised management forecasts of the financial performance of the entities over the remaining earnout period.
Changes in our discount rate assumptions may materially impact the fair value of the MSRs (NOTE 3 of the consolidated financial statements details the portfolio-level impact of a change in the discount rate). Allowance for Risk-Sharing Obligations.
Changes in our discount rate assumptions on existing and outstanding MSRs may materially impact the fair value of the MSRs disclosure (NOTE 3 of the consolidated financial statements details the portfolio-level impact of a change in the discount rate). Allowance for Risk-Sharing Obligations.
For more information on adjusted EBITDA, refer to the section below titled “Non-GAAP Financial Measure.” ​ 34 Table of Contents Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following table presents a period-to-period comparison of our financial results for the years ended December 31, 2022 and 2021.
For more information on adjusted EBITDA, refer to the section below titled “Non-GAAP Financial Measure.” 37 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table presents a year-over-year comparison of our financial results for the years ended December 31, 2023 and 2022.
Warehouse interest income and expense are earned or incurred on loans held for investment after a loan is closed and before a loan is repaid. Escrow Earnings and Other Interest Income.
Warehouse interest income and expense are earned or incurred on loans held for investment after a loan is closed and before a loan is repaid. Placement Fees and Other Interest Income.
We originate, sell, and service a range of multifamily and other commercial real estate financing products to owners and developers of commercial real estate across the country, provide multifamily property sales brokerage and appraisal services in various regions throughout the United States, and engage in commercial real estate and affordable housing investment management activities.
We originate, sell, and service a range of multifamily and other commercial real estate financing products to owners and developers of commercial real estate across the country, provide multifamily property sales brokerage and appraisal services in various regions throughout the United States, and engage in commercial real estate and investment management services focused on debt and equity investments on commercial real estate assets and equity investments in affordable housing.
The total principal balance for such debt is $1.2 billion as of December 31, 2022, of which $538.1 million will be repaid with the proceeds from the sale of loans held for sale and the repayments of loans held for investment. NOTE 6 in the consolidated financial statements contains additional details related to these future debt payments.
The total principal balance for such debt was $1.4 billion as of December 31, 2023, of which $596.4 million will be repaid with the proceeds from the sale of loans held for sale and the repayments of loans held for investment. NOTE 6 in the consolidated financial statements contains additional details related to these future debt payments.
Upon acquisition, the Company is required to estimate the fair value of the earnout and include that fair value measurement as a component of the total consideration paid in the calculation of goodwill.
If the milestone is achieved, the acquiree is paid the additional consideration. Upon acquisition, the Company is required to estimate the fair value of the earnout and include that fair value measurement as a component of the total consideration paid in the calculation of goodwill.
Other revenues are comprised of fees for processing loan assumptions, prepayment fee income, application fees, property sales broker fees, appraisal revenues, income from equity-method investments, asset management fees, certain revenues from LIHTC operations, and other miscellaneous revenues related to our operations. Costs and Expenses Personnel.
Other revenues are comprised of fees for processing loan assumptions, prepayment fee income, application fees, appraisal revenues, income from equity-method investments, syndication, and certain other revenues from our LIHTC operations, and other miscellaneous revenues related to our operations. Costs and Expenses Personnel.
Our property sales services are offered in various regions throughout the United States. We have added several property sales brokerage teams over the past few years and continue to seek to add other property sales brokers, with the goal of continuing to expand the depth and number of regions covered by our brokerage services.
We have added several property sales brokerage teams over the past few years and continue to seek to add other property sales brokers, with the goal of continuing to expand the depth and number of regions covered by our brokerage services.
Also included with escrow earnings and other interest income are interest earnings from our cash and cash equivalents and interest income earned on our pledged securities. Other Revenues.
Also included with placement fees and other interest income are interest earnings from our cash and cash equivalents and interest income earned on our pledged securities and other investments. Other Revenues.
As of December 31, 2022, the outstanding principal balance of the Term Loan was $594.0 million, and the effective interest rate was 6.55%. The note payable and the warehouse facilities are senior obligations of the Company. We were in compliance with all covenants related to the Credit Agreement.
As of December 31, 2023, the outstanding principal balance of the Term Loan was $588.0 million, and the effective interest rate was 7.63%. The note payable and the warehouse facilities are senior obligations of the Company. We were in compliance with all covenants related to the Credit Agreement.
We originate and sell multifamily loans through the programs of Fannie Mae, Freddie Mac, Ginnie Mae, and HUD, with which we have licenses and long-established relationships. We retain servicing rights and asset management responsibilities on nearly all loans that we originate for the Agencies’ programs.
Multifamily Lending, Commercial Real Estate Brokerage Services and Property Sales We originate and sell multifamily loans through the programs of Fannie Mae, Freddie Mac, Ginnie Mae, and HUD, with which we have licenses and long-established relationships. We retain servicing rights and asset management responsibilities on nearly all loans that we originate for the Agencies’ programs.
Additionally, with respect to Fund III, Fund IV, Fund V and Fund VI, WDIP receives a percentage of the profits above the fund expenses and preferred return specified in the fund offering agreements. Through Alliant, we are the 6 th largest tax credit syndicator in the U.S., and an affordable housing developer.
Additionally, with respect to Fund III, Fund IV, Fund V, Fund VI, and Fund VII, WDIP receives a percentage of the profits above the fund expenses and preferred return specified in the fund offering agreements. Through WDAE, we are the 8 th largest tax credit syndicator in the U.S., and an affordable housing developer through various joint venture partnerships.
Accordingly, we currently do not hedge our servicing portfolio for prepayment risk. Any prepayment fees received are included in Other revenues . HUD has the right to terminate our current servicing engagements for cause. In addition to termination for cause, Fannie Mae and Freddie Mac may terminate our servicing engagements without cause by paying a termination fee.
Any prepayment fees received are included in Other revenues . HUD has the right to terminate our current servicing engagements for cause. In addition to termination for cause, Fannie Mae and Freddie Mac may terminate our servicing engagements without cause by paying a termination fee.
Due to the relatively few transactions in the multifamily MSR market and the lack of significant changes in assumptions by market participants, we have experienced limited volatility in the assumptions historically, including the assumption that most significantly impacts the estimate: the discount rate. We do not expect to see significant volatility in the assumptions for the foreseeable future.
Due to the relatively few transactions in the multifamily MSR market and the lack of significant changes in assumptions by market participants, we have observed limited variation or change in the assumptions historically and do not expect to observe significant changes in the foreseeable future, including the assumption that most significantly impacts the estimate: the discount rate.
For example, in the first quarter of 2022, loss data from earlier periods in the look-back period fell off and were replaced with more recent loss data, resulting in the weighted-average annual loss rate changing from 1.8 basis points to 1.2 basis points.
For example, in the first quarter of 2023, loss data from earlier periods in the look-back period with significantly higher losses fell off and were replaced with more recent loss data, resulting in the weighted-average historical annual loss rate changing from 1.2 basis points to 0.6 basis points.
The estimated net cash flows from servicing, which includes assumptions for discount rate, escrow earnings, prepayment speed, and servicing costs, are discounted at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan.
The estimated net cash flows from servicing, which includes assumptions for discount rate, earnings on escrow accounts (placement fees), prepayment speeds, and servicing costs, are discounted using a discounted cash flow model at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan.
Our servicing fees on loans we originate provide a stable revenue stream. They are based on contractual terms, are earned over the life of the loan, and are generally not subject to significant prepayment risk. Our Fannie Mae and Freddie Mac servicing agreements provide for prepayment fees in the event of a voluntary prepayment.
They are based on contractual terms, are earned over the life of the loan, and are generally not subject to significant prepayment risk. Our Fannie Mae and Freddie Mac servicing agreements generally provide for prepayment fees in the event of a voluntary prepayment. Accordingly, we currently do not hedge our servicing portfolio for prepayment risk.
AUM disclosed in this Annual Report on Form 10-K may differ from regulatory assets under management disclosed on WDIP’s Form ADV. WDIP typically receives management fees based on limited partner capital commitments, unfunded investment commitments, and funded investments.
Unfunded commitments are highest during the fund raising and investment phases. AUM disclosed in this 10-K may differ from regulatory assets under management disclosed on WDIP’s Form ADV. WDIP typically receives management fees based on limited partner capital commitments, unfunded investment commitments, and funded investments.
Our servicing portfolio includes $59.2 billion of loans serviced for Fannie Mae and $37.8 billion for Freddie Mac, making us the 1 st and 4 th largest servicer of Fannie Mae and Freddie Mac multifamily loans in the nation, respectively, according to the Survey.
Our servicing portfolio includes $63.7 billion of loans serviced for Fannie Mae and $39.3 billion for Freddie Mac, making us the 1 st and 7 th largest servicer of Fannie Mae and Freddie Mac multifamily loans in the nation, respectively, according to the Survey.
Goodwill represents the excess of cost over the identifiable net assets of businesses acquired. Goodwill is assigned to the reporting unit to which the acquisition relates. Goodwill is recognized as an asset and is reviewed for impairment annually on October 1.
As of December 31, 2023 and 2022, goodwill was $901.7 million and $959.7 million, respectively. Goodwill represents the excess of cost over the identifiable net assets of businesses acquired. Goodwill is assigned to the reporting unit to which the acquisition relates. Goodwill is recognized as an asset and is reviewed for impairment annually on October 1.
Over the past couple of years, the loss rate used in the forecast period has been updated to reflect our expectations of the economic conditions over the coming year in relation to the historical period.
We revert to the historical loss rate over a one-year period on a straight-line basis. Over the past couple of years, the loss rate used in the forecast period has been updated to reflect our expectations of the economic conditions over the coming year in relation to the historical period.
The maximum exposure is not representative of the actual loss we would incur. Fannie Mae DUS risk-sharing obligations are based on a tiered formula and represent substantially all of our risk-sharing activities. The risk-sharing tiers and the amount of the risk-sharing obligations we absorb under full risk-sharing are provided below.
Fannie Mae DUS risk-sharing obligations are based on a tiered formula and represent substantially all of our risk-sharing activities. The risk-sharing tiers and the amount of the risk-sharing obligations we absorb under full risk-sharing are provided below.
The servicing cost assumption has had a de minimus impact on the estimate historically. We record an individual MSR asset (or liability) for each loan at loan sale. The assumptions used to estimate the fair value of capitalized MSRs are developed internally and are periodically compared to assumptions used by other market participants.
We record an individual MSR asset (or liability) for each loan at loan sale. The assumptions used to estimate the fair value of capitalized MSRs are developed internally and are periodically compared to assumptions used by other market participants.
Both of these actions by the Federal Reserve have resulted in a significant increase in medium to long-term mortgage interest rates, which form the basis of most of our lending.
The actions of the Federal Reserve resulted in an increase in medium to long-term mortgage interest rates, which form the basis of most of our lending.
WDIP’s current AUM of $1.4 billion primarily consist of four sources: Fund III, Fund IV, Fund V, and Fund VI (collectively, the “Funds”), and separate accounts managed for life insurance companies. AUM for the Funds and for the separate accounts consists of both unfunded commitments and funded investments. Unfunded commitments are highest during the fund raising and investment phases.
WDIP’s current AUM of $1.5 billion primarily consist of six sources: Fund III, Fund IV, Fund V, Fund VI, and Fund VII (collectively, the “Funds”), and separate accounts managed for life insurance companies. AUM for the Funds and for the separate accounts consists of both unfunded commitments and funded investments.
Under the provisions of the DUS agreement, we must also maintain a certain level of liquid assets referred to as the operational and unrestricted portions of the required reserves each year.
Under the provisions of the DUS agreement, we must also maintain a certain level of liquid assets referred to as the operational and 53 Table of Contents unrestricted portions of the required reserves each year. We satisfied these requirements as of December 31, 2023.
For the year ended December 31, 2021, includes $860.0 million from the Interim Program JV, $537.1 million from the Interim Loan Program, and $46.4 million from WDIP separate accounts. (4) This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section below titled “Non-GAAP Financial Measure”.
For the year ended December 31, 2022, includes $86.3 million from the Interim Program JV, $117.1 million from the Interim Loan Program and $135.7 million from WDIP separate accounts. (5) This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section below titled “Non-GAAP Financial Measure”.
We are in compliance with the December 31, 2022 collateral requirements as outlined above. As of December 31, 2022, reserve requirements for the December 31, 2022 DUS loan portfolio will require us to fund $79.6 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at-risk portfolio.
As of December 31, 2023, reserve requirements for the December 31, 2023 DUS loan portfolio will require us to fund $77.1 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at-risk portfolio.
Alliant is part of our strategy to grow our investment management platform and to strengthen our position in the affordable housing space. Alliant manages $14.5 billion of affordable AUM and has an established tax syndication and affordable housing development platform from which we earn investment management, syndication, and other LIHTC related fees.
WDAE is part of our strategy to grow our investment management platform and to strengthen our position in the affordable housing debt, equity, and property sales sector. WDAE manages $15.1 billion of affordable AUM and has an established tax syndication and affordable housing development platform from which we earn investment management, syndication, and other LIHTC related fees.
Our cash flows from investing activities also include the funding and repayment of loans held for investment, contributions to and distributions from joint ventures, purchases of equity-method investments, and the purchase of available-for-sale (“AFS”) securities pledged to Fannie Mae.
Our cash flows from investing activities also include the funding and repayment of loans held for investment, contributions to and distributions from joint ventures, purchases of equity-method investments, and the purchase of available-for-sale (“AFS”) securities pledged to Fannie Mae. ​ Cash Flows from Financing Activities We use our warehouse loan facilities and, when necessary, our corporate cash to fund loan closings, both for loans held for sale and loans held for investment.
These conditions can result in lower property transaction volumes and loan originations, as well as an increased level of servicer advances and losses from our Fannie Mae DUS risk-sharing obligations and our interim lending program. ​ ● The Level of Losses from Fannie Mae Risk-Sharing Obligations.
These conditions can result in lower property transaction volumes and loan originations, as well as an increased level of servicer advances and losses from our Fannie Mae DUS risk-sharing obligations. ​ ● The Level of Losses from Fannie Mae Risk-Sharing Obligations. Under the Fannie Mae DUS program, we share risk of loss on most loans we sell to Fannie Mae.
Fannie Mae requires collateral for Tier 2 loans of 75 basis points, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. Collateral held in the form of money market funds holding U.S. Treasuries is discounted 5%, and Agency MBS are discounted 4% for purposes of calculating compliance with the collateral requirements.
Fannie Mae requires collateral for Tier 2 loans of 75 basis points, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. Collateral held in the form of money market funds holding U.S.
The following tables provide additional information that helps explain changes in origination fees and MSR income period over period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ Debt Financing Volume by Product Type ​ 2022 ​ ​ 2021 ​ Fannie Mae ​ 23 % ​ 20 % Freddie Mac ​ 15 ​ ​ 13 ​ Ginnie Mae - HUD ​ 3 ​ ​ 5 ​ Brokered ​ 59 ​ ​ 62 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ ​ Percentage ​ Mortgage Banking Details (basis points) 2022 ​ 2021 ​ Change ​ Change ​ Origination Fee Rate (1) ​ 80 ​ ​ 93 ​ ​ (13) ​ (14) ​ Agency MSR Rate (2) ​ 110 ​ ​ 161 ​ ​ (51) ​ (32) ​ (1) Origination fees as a percentage of total debt financing volume.
The following tables provide additional information that helps explain changes in origination fees and MSR income year over year: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ Debt Financing Volume by Product Type ​ 2023 ​ ​ 2022 ​ Fannie Mae ​ 29 % ​ 23 % Freddie Mac ​ 19 ​ ​ 15 ​ Ginnie Mae - HUD ​ 3 ​ ​ 3 ​ Brokered ​ 49 ​ ​ 59 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ Basis Point ​ Percentage ​ Mortgage Banking Details (basis points) 2023 ​ 2022 ​ Change ​ Change ​ Origination Fee Rate (1) ​ 97 ​ ​ 80 ​ ​ 17 ​ 21 ​ MSR Rate (2) ​ 59 ​ ​ 44 ​ ​ 15 ​ 34 ​ Agency MSR Rate (2) ​ 116 ​ ​ 110 ​ ​ 6 ​ 5 ​ (1) Origination fees as a percentage of total debt financing volume.
The calculated CECL reserve for the Company’s $54.0 billion at-risk Fannie Mae servicing portfolio as of December 31, 2022 was $39.7 million compared to $52.3 million as of December 31, 2021.
The calculated CECL reserve for the Company’s $58.5 billion at-risk Fannie Mae servicing portfolio as of December 31, 2023 was $31.6 million compared to $39.7 million as of December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+2 added−6 removed2 unchanged
Biggest changeThe Alliant note payable is fixed-rate debt; therefore, there is no impact to our earnings related to this debt when interest rates change. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ Change in annual income from operations due to: (in thousands) 2022 2021 ​ 100 basis point increase in SOFR or 30-day LIBOR ​ $ (5,940) ​ $ (3,300) ​ 100 basis point decrease in SOFR or 30-day LIBOR (2) ​ 5,940 ​ — ​ (1) The decrease as of December 31, 2021 is limited to EFFR in cases where the 100 basis point decrease resulted in a negative effective interest rate.
Biggest changeThe Alliant note payable as of December 31, 2022 was fixed-rate note; therefore, there was no impact to our earnings related to this debt when interest rates change as of December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ Change in annual income from operations due to: (in thousands) 2023 2022 ​ 100 basis point increase in SOFR ​ $ (7,865) ​ $ (5,940) ​ 100 basis point decrease in SOFR ​ 7,865 ​ 5,940 ​ ​ Market Value Risk The fair value of our MSRs is subject to market-value risk.
The following table shows the impact on our annual net warehouse interest income due to a 100-basis point increase and decrease in LIBOR or SOFR, based on our warehouse borrowings outstanding at each period end.
The following table shows the impact on our annual net warehouse interest income due to a 100-basis point increase and decrease in SOFR, based on our warehouse borrowings outstanding at each period end.
Some of our assets and liabilities are subject to changes in interest rates. Earnings from escrows generally track the effective Federal Funds Rate (“EFFR”). The EFFR was 433 basis points and seven basis points as of December 31, 2022 and 2021, respectively.
Some of our assets and liabilities are subject to changes in interest rates. Earnings from escrows generally track the effective Federal Funds Rate (“EFFR”). The EFFR was 533 basis points and 433 basis points as of December 31, 2023 and 2022, respectively.
A 100-basis point increase or decrease in the weighted average discount rate would decrease or increase, respectively, the fair value of our MSRs by approximately $43.4 million as of December 31, 2022 compared to $38.4 million as of December 31, 2021.
A 100-basis point increase or decrease in the weighted average discount rate would decrease or increase, respectively, the fair value of our MSRs by approximately $44.0 million as of December 31, 2023 compared to $43.4 million as of December 31, 2022.
The following table shows the impact on our annual escrow earnings due to a 100-basis point increase and decrease in EFFR based on our escrow balances 52 Table of Contents outstanding at each period end.
The following table shows the impact on our annual placement fees due to a 100-basis point increase and decrease in EFFR based on our escrow balances outstanding at each period end.
The following table shows the impact on our annual earnings due to a 100-basis point increase and decrease in SOFR as of December 31, 2022 and 2021, based on our current and previous notes payable balance outstanding at each period end.
In January 2023, our Corporate Debt increased by $200 million. The following table shows the impact on our annual earnings due to a 100-basis point increase and decrease in SOFR as of December 31, 2023 and 2022, based on our current and previous notes payable balance outstanding at each period end.
As of December 31, 2022, 90% of the servicing fees are protected from the risk of prepayment through prepayment provisions compared to 89% as of December 31, 2021; given this significant level of prepayment protection, we do not hedge our servicing portfolio for prepayment risk.
As of 57 Table of Contents December 31, 2023 and December 31, 2022, 90% of the servicing fees are protected from the risk of prepayment through prepayment provisions; given this significant level of prepayment protection, we do not hedge our servicing portfolio for prepayment risk.
A portion of these changes in earnings as a result of a 100-basis point increase in the EFFR would be delayed several months due to the negotiated nature of some of our escrow arrangements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ Change in annual escrow earnings due to: (in thousands) 2022 2021 100 basis point increase in EFFR ​ $ 26,933 ​ $ 37,249 ​ 100 basis point decrease in EFFR (1) ​ (26,933) ​ (3,662) ​ The borrowing cost of our warehouse facilities used to fund loans held for sale, loans held for investment, and investments in tax credit equity is based on LIBOR or SOFR.
A portion of these changes in earnings as a result of a 100-basis point increase in the EFFR would be delayed several months due to the negotiated nature of some of our escrow arrangements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ Change in annual placement fee revenue due to: (in thousands) 2023 2022 100 basis point increase in EFFR ​ $ 26,827 ​ $ 26,933 ​ 100 basis point decrease in EFFR ​ (26,827) ​ (26,933) ​ The borrowing cost of our warehouse facilities used to fund loans held for sale is based on SOFR.
The changes shown below do not reflect an increase or decrease in the interest rate earned on our loans held for sale. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ Change in annual net warehouse interest income due to: (in thousands) 2022 2021 ​ 100 basis point increase in SOFR or 30-day LIBOR ​ $ (3,986) ​ $ (16,062) ​ 100 basis point decrease in SOFR or 30-day LIBOR (2) ​ 3,986 ​ 573 ​ Our Term Loan bears interest at SOFR plus 225 basis points with a SOFR floor of 50 basis points as of December 31, 2022.
The changes shown below do not reflect an increase or decrease in the interest rate earned on our loans held for sale. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ Change in annual net warehouse interest income due to: (in thousands) 2023 2022 ​ 100 basis point increase in SOFR ​ $ (5,851) ​ $ (3,986) ​ 100 basis point decrease in SOFR ​ 5,851 ​ 3,986 ​ Our Corporate Debt is based on Adjusted Term SOFR as of December 31, 2023.
The base SOFR was 430 basis points as of December 31, 2022. 30-day LIBOR as of December 31, 2021 was 10 basis points. The interest income on our loans held for investment is based on LIBOR or SOFR.
The base SOFR was 538 basis points and 430 basis points as of December 31, 2023 and 2022, respectively. The interest income on our loans held for investment is based on SOFR. The SOFR reset date for loans held for investment is the same date as the SOFR reset date for the corresponding warehouse facility.
London Interbank Offered Rate (“LIBOR”) Transition ​ In the first quarter of 2021, the United Kingdom’s Financial Conduct Authority, the regulator for the administration of LIBOR, announced specific dates for its intention to stop publishing LIBOR rates, including the 30-day LIBOR (our primary reference rate) which is scheduled for June 30, 2023.
London Interbank Offered Rate (“LIBOR”) Transition ​ On June 30, 2023, the United Kingdom’s Financial Conduct Authority, the regulator for the administration of LIBOR, stopped publishing LIBOR rates, including the 30-day LIBOR (previously our primary reference rate). All of our legacy GSE LIBOR-based loans transitioned to SOFR effective July 1, 2023, after providing formal notice to all impacted borrowers.
Removed
The LIBOR or SOFR reset date for loans held for investment is the same date as the LIBOR or SOFR reset date for the corresponding warehouse facility.
Added
Our Fannie Mae and Freddie Mac loans include economic deterrents that reduce the risk of loan prepayment prior to the expiration of the prepayment protection period, including prepayment premiums, loan defeasance, or yield maintenance fees. These prepayment protections generally extend the duration of a loan compared to a loan without similar protections.
Removed
(2) The decrease as of December 31, 2021 is limited to 30-day LIBOR or SOFR as of December 31, 2021, as they were less than 100 basis points, or the interest rate floor, if applicable. ​ Market Value Risk The fair value of our MSRs is subject to market-value risk.
Added
All of our debt agreements with our warehouse facilities have transitioned to SOFR as of June 30, 202 3.
Removed
Our Fannie Mae and Freddie Mac servicing engagements provide for prepayment fees in the event of a voluntary prepayment prior to the expiration of the prepayment protection period. Our servicing contracts with institutional investors and HUD do not require them to provide us with prepayment fees.
Removed
It is expected that legacy LIBOR-based loans will transition to Secured Overnight Financing Rate (“SOFR”) on or before June 30, 2023. With respect to the loans we underwrite and service, we have been working closely with the GSEs on this matter through our participation on subcommittees and advisory councils.
Removed
We continue to monitor our LIBOR exposure, review legal contracts and assess fallback language impacts, engage with our clients and other stakeholders, and monitor developments associated with LIBOR alternatives.
Removed
We have also updated our debt agreements with warehouse facility providers to include fallback language governing the transition and have already transitioned our Term Loan and all but one of our warehouse facilities to SOFR. 53 Table of Contents

Other WD 10-K year-over-year comparisons