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| DEBT | NOTE 6—DEBT Warehouse Facilities As of March 31, 2025, to provide financing to borrowers under the Agencies’ programs, the Company had committed and uncommitted warehouse lines of credit in the amount of $3.8 billion with certain national banks and a $1.5 billion uncommitted facility with Fannie Mae (collectively, the “Agency Warehouse Facilities”). In support of these Agency Warehouse Facilities, the Company has pledged substantially all of its loans held for sale under the Company’s approved programs. The Company’s ability to originate mortgage loans for sale depends upon its ability to secure and maintain these types of short-term financings on acceptable terms. The interest rate for all the Company’s warehouse facilities is based on Adjusted Term Secured Overnight Financing rate. The maximum amount and outstanding borrowings under Agency Warehouse Facilities as of March 31, 2025 follows:
During the first quarter of 2025, the maturity date of Agency Warehouse Facility #2 was extended to April 10, 2026. No other material modifications have been made to the Agency Warehouse Facilities during the year. Notes Payable As of December 31, 2024, the Company’s notes payable consisted of a senior secured credit agreement (as amended from time to time; the “Credit Agreement”) that provided for an $800.0 million borrowing pursuant to that certain Credit Agreement, dated as of December 16, 2021 (as amended from time to time, the “Term Loan”). In March 2025, the Company completed its offering of $400.0 million aggregate principal amount of senior unsecured notes due 2033 (the “Senior Notes”). The Senior Notes were issued pursuant to an indenture, dated as of March 14, 2025 (the “Indenture”). The Senior Notes bear interest at a fixed rate of 6.625% per annum, accruing from March 14, 2025. Interest is payable semiannually in arrears on April 1 and October 1 of each year, commencing on October 1, 2025. The Senior Notes mature on April 1, 2033. The Senior Notes are guaranteed on a senior unsecured basis by the subsidiary guarantors. As discussed in NOTE 8, the Company entered into an interest rate swap agreement to convert the fixed interest rate to a floating interest rate based on SOFR. The Company used $328.5 million of the proceeds from the Senior Notes to paydown its obligations under the Term Loan. In connection with the paydown, the Company wrote-off a pro-rata portion of the unamortized debt issuance costs associated with the Term Loan, resulting in $4.2 million of expense included within Other operating expenses in the Condensed Consolidated Statements of Income.
After the paydown of a portion of the Term Loan, the Company, amended the credit agreement (the “Restated Credit Agreement”) related to the remaining $450.0 million balance of the Term Loan (the “Restated Term Loan”) and added a $50.0 million revolving credit facility (“Revolving Credit Facility”). The Restated Credit Agreement amends and restates the Credit Agreement governing the Company’s Term Loan, including reducing the rate of interest to plus a spread of 200 basis points. Following the first full fiscal quarter ending after the closing date, the applicable interest margin of the Restated Term Loan will be subject to a 25 basis points step down if the Company’s total leverage ratio is equal to or less than 2.00 to 1.00. At any time, the Company may also elect to request the establishment of one or more incremental term loan facilities and/or one or more incremental revolving credit facilities (any such additional loan, an “Incremental Loan”) in an aggregate principal amount for all such Incremental Loans not to exceed the sum of (i) the greater of $325 million and 100% of Consolidated Adjusted EBITDA (as defined in the Restated Credit Agreement) as of the most recent test period under the Restated Credit Agreement ending on or immediately prior to such date plus (ii) the maximum amount of secured indebtedness that could be incurred at such time that would not cause the Consolidated Net Secured Leverage Ratio (as defined in the Restated Credit Agreement) to exceed 3.00 to 1.00, subject to certain conditions and receipt of commitments by existing or additional lenders. The Company is required to repay the aggregate outstanding principal amount of the Restated Term Loan in consecutive quarterly installments equal to 0.25% of the aggregate principal amount of the loan (subject to certain adjustments for prepayments of the loan) on the last business day of each of March, June, September and December, commencing on June 30, 2025. The final principal installment of the Restated Term Loan is required to be paid in full on March 14, 2032 (or, if earlier, the date of acceleration of the loan pursuant to the terms of the Restated Credit Agreement) and will be in an amount equal to the aggregate outstanding principal of the Restated Term Loan on such date (together with all accrued interest thereon). The final outstanding principal amount of the Revolving Credit Loans (as defined in the Restated Credit Agreement) is required to be paid in full on March 14, 2028, together with all accrued but unpaid interest thereon (or, if earlier, the date of acceleration of the Revolving Credit Loans pursuant to the terms of the Restated Credit Agreement).
The warehouse facilities and notes payable are subject to various financial covenants. The Company is in compliance with all of these financial covenants as of March 31, 2025. |
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