v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair value is the price that would be received if an asset were sold or the price that would be paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. Required disclosures include classification of fair value measurements within a three-level hierarchy (Level 1, Level 2 and Level 3). Classification of a fair value measurement within the hierarchy is dependent on the classification and significance of the inputs used to determine the fair value measurement. Observable inputs are those that are observed, implied from, or corroborated with externally available market information. Unobservable inputs represent the Company’s estimates of market participants’ assumptions.

There have been no significant changes to the valuation techniques and inputs used by the Company in estimating fair values of Level 2 and Level 3 assets and liabilities as disclosed in the 2025 Form 10-K, with the exception of the following:

Investment securities — Investment securities includes: (1) trading debt securities that are recorded at fair value using observable market prices for similar securities or identical securities that are traded in less active markets, which are classified as Level 2 and (2) available for sale debt securities that are recorded at fair value using an internal valuation model that calculates the present value of estimated net future cash flows utilizing unobservable inputs, which are classified as Level 3. The Company has elected the fair value option for the Level 3 available for sale debt securities and accordingly recognizes the changes in fair value for all investment securities within the Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

Non-mortgage loan servicing rights: The fair value of non-mortgage loan servicing rights is determined using an internal valuation model that calculates the present value of the estimated net future cash flows. The discounted cash flow model includes estimates of prepayment speeds, cost to service, delinquencies, ancillary revenues, and other assumptions. These assets are classified as Level 3.
Assets and Liabilities Measured at Fair Value on a Recurring Basis

The table below shows a summary of financial statement items that are measured at estimated fair value on a recurring basis, including assets measured under the fair value option. There were no material transfers of assets or liabilities recorded at fair value on a recurring basis between Levels 1, 2 or 3 during the six months ended June 30, 2026 or the year ended December 31, 2025.
Level 1Level 2Level 3Total
Balance at June 30, 2026
Assets:
Mortgage loans held for sale (1)
$— $15,250 $298 $15,548 
Derivative assets:
IRLCs
— — 345 345 
LPCs
— — 5 5 
Forward commitments— 100 — 100 
Treasury futures
— 40 — 40 
MSRs— — 18,905 18,905 
Other assets:
Investment securities— 53 66 119 
Equity investments
— — 6 6 
Non-mortgage loans held for sale— — 485 485 
Assets of the consolidated CFE— — 103 103 
Non-mortgage loans servicing rights
— — 18 18 
Total assets$— $15,443 $20,231 $35,674 
Liabilities:
Derivative liabilities:
LPCs
$— $— $3 $3 
Forward commitments
— 81 — 81 
Treasury futures
— 1 — 1 
Other liabilities:
Liabilities of the consolidated CFE — — 70 70 
Excess spread financing
— — 322 322 
MSRs financing liability
— — 16 16 
Total liabilities$— $82 $411 $493 
Level 1Level 2Level 3Total
Balance at December 31, 2025
Assets:
Cash and cash equivalents:
Money market funds$47 $— $— $47 
Mortgage loans held for sale (1)
— 15,221 250 15,471 
Derivative assets:
IRLCs— — 294 294 
LPCs
— — 4 4 
Forward commitments— 62 — 62 
MSRs— — 19,442 19,442 
Other assets:
Investment securities— 43 — 43 
Equity investments
— — 6 6 
Non-mortgage loans held for sale— — 411 411 
Assets of the consolidated CFE— — 152 152 
Total assets$47 $15,326 $20,559 $35,932 
Liabilities:
Derivative liabilities:
LPCs
$— $— $1 $1 
Forward commitments
— 98 — 98 
Treasury futures
— 46 — 46 
Other liabilities:
Liabilities of the consolidated CFE— — 120 120 
Excess spread financing
— — 337 337 
MSRs financing liability
— — 11 11 
Total liabilities$— $144 $469 $613 
(1)    As of June 30, 2026 and December 31, 2025, $198 and $167 of UPB of the Level 3 MLHFS were 90 days or more delinquent and were considered in non-accrual status, respectively. The fair value of these Level 3 mortgage loans held for sale was $158 and $137 as of June 30, 2026 and December 31, 2025, respectively.
The following table presents the quantitative information for significant unobservable inputs used in the fair value measurements of material recurring Level 3 fair value financial instruments as of:
June 30, 2026December 31, 2025
Unobservable InputRangeWeighted AverageRangeWeighted Average
Mortgage loans held for sale
Model pricing
67.9% - 102.1%
79.2 %
71.7% - 104.0%
83.1 %
IRLCs
Pull-through probability
0.0% - 100.0%
71.8 %
0.0% - 100.0%
71.7 %
Value of servicing (reflected as a % of pull-through adjusted UPB)
0.0% - 4.1%
1.4 %
0.0% - 2.9%
1.3 %
MSRs (1)
OAS (2)
7.3% - 11.3%
8.4 %
7.3% - 11.3%
8.3 %
Prepayment speeds
9.4% - 12.1%
10.2 %
9.6% - 13.4%
10.7 %
Cost to service per loan (3)
$42 - $113
$61 
$42 - $113
$59 
Non-mortgage loans held for sale
Discount rate
7.0% - 9.3%
7.3 %
7.0% - 9.3%
7.0 %
Annual default rate
5.9% - 63.0%
7.9 %
4.0% - 29.3%
9.0 %
Assets and Liabilities of the consolidated CFE
Discount rate
7.0% - 7.0%
7.0 %
7.0% - 7.0%
7.0 %
Annual default rate
5.9% - 45.7%
7.9 %
6.9% - 25.9%
8.9 %
Excess-spread financing (1)
OAS (2)
7.0% - 12.3%
8.8 %
7.0% - 12.3%
8.8 %
Prepayment speeds
7.4% - 8.2%
7.8 %
6.6% - 8.4%
7.7 %
Average life (4)
6.4 years6.5 years
(1)    The inputs are weighted by investor.
(2)    OAS represents incremental spread above a risk-free rate (one-month SOFR), which is an observable input.
(3)    Presented in whole dollar amounts.
(4)    This is for informational purposes only.
The table below presents a reconciliation of material Level 3 assets and liabilities measured at fair value on a recurring basis for the three and six months ended June 30, 2026 and 2025. MSRs are also classified as a Level 3 asset measured at fair value on a recurring basis and its reconciliation is found in Note 4, Mortgage Servicing Rights and Related Liabilities. The Company had immaterial equity investments, non-mortgage loans servicing rights, MSRs financing liability, investment securities and LPCs assets and liabilities as of June 30, 2026 and 2025.
Mortgage
Loans
Held for Sale		IRLCsNon-Mortgage Loans
Held for Sale		Assets of the consolidated CFELiabilities of the consolidated CFEExcess-spread financing
Balance at March 31, 2026$264 $361 $411 $126 $94 $328 
Transfers in (1)
117 — 524 — — — 
Transfers out/principal reductions (1)
(68)— (449)(20)(24)(14)
Total (losses) gains included in Net income (loss) for assets held at the end of the reporting period(15)(16)(1)(3)— 8 
Balance at June 30, 2026$298 $345 $485 $103 $70 $322 
Balance at March 31, 2025$236 $283 $343 $148 $119 $— 
Transfers in (1)
184 — 176 99 80 — 
Transfers out/principal reductions (1)
(152)— (47)(29)(17)— 
Total (losses) gains included in Net income (loss) for assets held at the end of the reporting period(16)21 (3)(3)— — 
Balance at June 30, 2025$252 $304 $469 $215 $182 $— 
Balance at December 31, 2025
$250 $294 $411 $152 $120 $337 
Transfers in (1)
258 — 977 — — — 
Transfers out/principal reductions (1)
(175)— (901)(42)(50)(27)
Total (losses) gains included in Net income (loss) for assets held at the end of the reporting period(35)51 (2)(7)— 12 
Balance at June 30, 2026$298 $345 $485 $103 $70 $322 
Balance at December 31, 2024
$242 $103 $262 $112 $93 $— 
Transfers in (1)
298 — 298 156 125 — 
Transfers out/principal reductions (1)
(269)— (86)(49)(36)— 
Total (losses) gains included in Net income (loss) for assets held at the end of the reporting period(19)201 (5)(4)— — 
Balance at June 30, 2025$252 $304 $469 $215 $182 $— 
(1)    Transfers in represent loans repurchased from investors or loans originated for which an active market currently does not exist. Transfers out primarily represent loans sold or transferred to third parties and loans paid in full.
Fair Value Option

The following is the estimated fair value and UPB of MLHFS, non-mortgage loans held for sale and assets of the consolidated CFE that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected for these assets as the Company believes fair value best reflects their expected future economic performance:
Fair ValueUPB
Difference (1)
Balance at June 30, 2026
Mortgage loans held for sale$15,548 $15,230 $318 
Non-mortgage loans held for sale485 474 11 
Assets of the consolidated CFE103 101 2 
Balance at December 31, 2025
Mortgage loans held for sale$15,471 $15,061 $410 
Non-mortgage loans held for sale411 406 5 
Assets of the consolidated CFE152 152 — 
(1)    Represents the amount of gains/losses due to changes in fair value of items accounted for using the fair value option. These are included in Gain on sale of loans, net for Mortgage loans held for sale and Other income for Non-mortgage loans held for sale and Assets of the consolidated CFE on the Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

Fair Value of Financial Instruments Not Carried at Fair Value

Disclosures of the fair value of certain financial instruments are required when it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.

The following table presents the carrying amounts and estimated fair value of financial liabilities that are not recorded at fair value on a recurring or nonrecurring basis. This table excludes Cash and cash equivalents, Restricted cash, Advance receivables, net, Loans subject to repurchase right from Ginnie Mae and Secured financing as these financial instruments are highly liquid or short-term in nature and as a result, their carrying amounts approximate fair value:
June 30, 2026December 31, 2025
Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Total Senior Notes, net$10,772 $10,764 $10,423 $10,502 
The fair value of Senior Notes was calculated using the observable bond price at June 30, 2026 and December 31, 2025, respectively. The Senior Notes are classified as Level 2 in the fair value hierarchy and are recorded in Unsecured financing, net in the Company's Condensed Consolidated Balance Sheets.