v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements
15. Fair Value Measurements
The Company’s financial instruments measured at fair value on a recurring basis are summarized below:
June 30, 2025
(Amounts in thousands)Level 1Level 2Level 3Total
Mortgage loans held for sale, at fair value$— $447,738 $— $447,738 
Derivative assets, at fair value (1)
— — 5,248 5,248 
Total Assets $— $447,738 $5,248 $452,986 
Derivative liabilities, at fair value (1)—included within other liabilities

$— $2,292 $110 $2,402 
Warrants and equity related liabilities, at fair value (2)
$910 $841 $— $1,751 
Total Liabilities $910 $3,133 $110 $4,153 
December 31, 2024
(Amounts in thousands)Level 1Level 2Level 3Total
Mortgage loans held for sale, at fair value$— $399,241 $— $399,241 
Derivative assets, at fair value (1)
— 1,231 1,308 2,539 
Total Assets $— $400,472 $1,308 $401,780 
Derivative liabilities, at fair value (1)—included within other liabilities

$— $— $86 $86 
Warrants and equity related liabilities, at fair value (2)
729 678 — 1,407 
Total Liabilities $729 $678 $86 $1,493 
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(1)As of June 30, 2025, derivative assets represent IRLCs, and liabilities represent both IRLCs and forward sale commitments. As of December 31, 2024, derivative assets represent forward sale commitments and IRLCs, and liabilities represent IRLCs.
(2)Fair value is based on the intrinsic value of the Company’s underlying stock price at each balance sheet date and includes certain assumptions with regard to volatility.
Specific valuation techniques and inputs used in determining the fair value of each significant class of assets and liabilities are as follows:
Mortgage Loans Held for Sale—The Company originates certain LHFS to be sold to loan purchasers and elected to carry these loans at fair value in accordance with ASC 825. The fair value is primarily based on the price obtained for other mortgage loans with similar characteristics. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and receipt of principal payments associated with the relevant LHFS.
Derivative Assets and Liabilities—The Company uses derivatives to manage various financial risks. The fair values of derivative instruments are determined based on quoted prices for similar assets and liabilities, dealer quotes, and internal pricing models that are primarily sensitive to market observable data. The Company utilizes IRLCs and forward sale commitments. The fair value of IRLCs, which are related to mortgage loan commitments, is based on quoted market prices, adjusted by the pull-through factor, and includes the value attributable to the net servicing fee. The Company evaluated the significance and unobservable nature of the pull-through factor and determined that the classification of IRLCs should be Level 3 as of June 30, 2025 and December 31, 2024. Significant changes in the pull-through factor of the IRLCs, in isolation, could result in significant changes in the IRLCs’ fair value measurement. The value of IRLCs also rises and falls with changes in interest rates; for example, entering into interest rate lock commitments at low interest rates followed by an increase in interest rates in the market, will decrease the value of IRLC. The Company had purchases/issuances of approximately $10.8 million and $3.4 million of IRLCs during the three months ended June 30, 2025 and 2024, respectively. The Company had purchases/issuances of approximately $18.8 million and $5.9 million of IRLCs during the six months ended June 30, 2025 and 2024, respectively.
The number of days from the date of the IRLC to expiration of the rate lock commitment outstanding as of June 30, 2025 was approximately 46 days on average. The Company attempts to match the maturity date of the IRLCs with the
forward commitments. Derivatives are presented in the condensed consolidated balance sheets under derivative assets, at fair value and derivative liabilities, at fair value. During the three months ended June 30, 2025, the Company recognized $0.9 million of gains and $0.7 million of losses related to changes in fair value of IRLCs and forward sale commitments, respectively. During the six months ended June 30, 2025, the Company recognized $3.5 million of gains and $3.2 million of losses related to changes in fair value of IRLCs and forward sale commitments, respectively. During the three months ended June 30, 2024, the Company recognized $1.5 million and $4.0 million of gains related to changes in the fair value of IRLCs and forward sale commitments, respectively. During the six months ended June 30, 2024, the Company recognized $1.6 million and $6.4 million of gains related to changes in fair value of IRLCs and forward sale commitments, respectively. Gains and losses related to changes in the fair value of IRLCs and forward sale commitments are included in gain on loans, net within the condensed consolidated statements of operations and comprehensive loss. Unrealized activity related to changes in the fair value of forward sale commitments were $1.3 million of losses and $0.7 million of gains, included in the $0.7 million of losses and $4.0 million of gains, during the three months ended June 30, 2025 and 2024, respectively. Unrealized activity related to changes in the fair value of forward sale commitments were $3.9 million of losses and $4.5 million of gains, included in the $3.2 million of losses and $6.4 million of gains, during the six months ended June 30, 2025 and 2024, respectively. The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows:
(Amounts in thousands)Notional ValueDerivative AssetDerivative Liability
Balance as of June 30, 2025
IRLCs$205,564 $5,248 $110 
Forward commitments$234,000 — 2,292 
Total$5,248 $2,402 
Balance as of December 31, 2024
IRLCs$129,900 $1,308 $86 
Forward commitments$158,000 1,231 — 
Total$2,539 $86 
Warrant and equity related liabilities—The warrant liability consists of Warrants and certain shares issued to Novator Capital Sponsor Ltd. (the “Sponsor”), a related party, that are subject to transfer restrictions contingent on the price of Class A common stock exceeding certain thresholds (the "Sponsor-Locked-Up Shares"). The warrants consist of the Company's publicly traded warrants ("Public Warrants") and private warrants to acquire shares of Aurora that have been converted into warrants to acquire shares of Class A common stock ("Private Warrants," and together with the Public Warrants, the “Warrants”). The Public Warrants trade on the Nasdaq under the ticker symbol “BETRW” and as such is considered a Level 1 input from an active market to derive the value. The Private Warrants and Sponsor-Locked up Shares, although not publicly traded on an active market, use inputs from the publicly traded Public Warrants and the Company’s publicly traded common stock, respectively, and are further calibrated using unobservable inputs representing Level 2 measurements within the fair value hierarchy.
As of June 30, 2025 and December 31, 2024, Level 3 instruments include IRLCs, bifurcated derivative and convertible preferred stock warrants. The following table presents the rollforward of Level 3 IRLCs:
Three Months Ended June 30,Six Months Ended June 30,
(Amounts in thousands)2025202420252024
Balance at beginning of period $3,848 $1,675 $1,222 $1,640 
Change in fair value of IRLCs1,290 1,531 3,916 1,566 
Balance at end of period $5,138 $3,206 $5,138 $3,206 
Counterparty agreements for forward sale commitments contain master netting agreements, which contain a legal right to offset amounts due to and from the same counterparty and can be settled on a net basis. The table below presents gross amounts of recognized assets and liabilities subject to master netting agreements.
(Amounts in thousands)Gross Amount of Recognized AssetsGross Amount of Recognized Liabilities
Net Amounts Presented in the Consolidated Balance Sheet
Offsetting of Forward Commitments - Assets
Balance as of:
June 30, 2025:$— $— $— 
December 31, 2024:$1,249 $(18)$1,231 
Offsetting of Forward Commitments - Liabilities
Balance as of:
June 30, 2025:$— $(2,292)$(2,292)
December 31, 2024:$— $— $— 
Significant Unobservable Inputs—The following table presents quantitative information about the significant unobservable inputs used in the recurring fair value measurements categorized within Level 3 of the fair value hierarchy:
June 30, 2025
(Amounts in dollars, except percentages)RangeWeighted Average
Level 3 Financial Instruments:
IRLCs
Pull-through factor
0.00% - 100.00%
75.4 %
December 31, 2024
(Amounts in dollars, except percentages)RangeWeighted Average
Level 3 Financial Instruments:
IRLCs
Pull-through factor
0.45% - 100.00%
74.8 %
U.S. GAAP requires disclosure of fair value information about financial instruments, whether recognized or not recognized in the condensed consolidated financial statements, for which it is practical to estimate the fair value. In cases where quoted market prices are not available, fair values are based upon the estimation of discount rates to estimated future cash flows using market yields or other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimates of fair value in both inactive and orderly markets. Accordingly, fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments in a current market exchange. The use of market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.
The estimated fair value of the Company’s cash and cash equivalents, restricted cash, warehouse lines of credit, and escrow funds approximates their carrying values as these financial instruments are highly liquid or short-term in nature.
The following table presents the carrying amounts and estimated fair value of financial instruments that are not recorded at fair value on a recurring or non-recurring basis:
June 30, 2025December 31, 2024
(Amounts in thousands)Fair Value LevelCarrying AmountFair ValueCarrying AmountFair Value
Short-term investmentsLevel 1$134,390 $128,083 $53,774 $53,791 
Loans held for investmentLevel 3$423,367 $423,732 $113,144 $113,348 
Convertible NotesLevel 3$— $— $519,749 $371,160 
Senior NotesLevel 3$200,409 $112,550 $— $— 
In determining the fair value of the Senior Notes and loans held for investment, management uses factors that are material to the valuation process, including but not limited to, risks, prospects, and economic and market conditions, among other factors. As a number of assumptions and estimates were involved that are largely unobservable, the Senior Notes and loans held for investment are classified as Level 3 inputs within the fair value hierarchy.