Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 18, 2021 | Jun. 30, 2020 | |
Document Information [Line Items] | |||
Entity Registrant Name | GUILD HOLDINGS COMPANY | ||
Entity Central Index Key | 0001821160 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Public Float | $ 0 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 85-2453154 | ||
Entity File Number | 001-39645 | ||
Entity Address, Address Line One | 5887 Copley Drive | ||
Entity Address, City or Town | San Diego | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92111 | ||
City Area Code | 858 | ||
Local Phone Number | 560-6330 | ||
Title of 12(b) Security | Class A common stock, $0.01 par value per share | ||
Trading Symbol | GHLD | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
ICFR Auditor Attestation Flag | false | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, relating to the registrant’s Annual Meeting of Stockholders to be held on May 6, 2021, are incorporated herein by reference for purposes of Items 10, 11, 12, 13 and 14 of Part III of this Annual Report on Form 10-K. The definitive proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year ended December 31, 2020. | ||
Class A Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 19,666,981 | ||
Class B Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 40,333,019 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 334,623 | $ 101,735 |
Restricted cash | 5,010 | 5,000 |
Mortgage loans held for sale | 2,368,777 | 1,504,842 |
Ginnie Mae loans subject to repurchase right | 1,275,842 | 404,344 |
Accounts and interest receivable | 43,390 | 34,611 |
Derivative asset | 130,338 | 19,922 |
Mortgage servicing rights, net | 446,998 | 418,402 |
Goodwill | 62,834 | 62,834 |
Other assets | 150,275 | 55,723 |
Total assets | 4,818,087 | 2,607,413 |
Liabilities and Stockholders’ Equity | ||
Warehouse lines of credit | 2,143,443 | 1,303,187 |
Notes payable | 145,750 | 218,000 |
Ginnie Mae loans subject to repurchase right | 1,277,026 | 412,490 |
Accounts payable and accrued expenses | 41,074 | 35,338 |
Accrued compensation and benefits | 106,313 | 45,297 |
Investor reserves | 14,535 | 16,521 |
Income taxes payable | 19,454 | |
Due to parent company | 12,427 | |
Contingent liabilities due to acquisitions | 18,094 | 8,073 |
Derivative liability | 38,270 | 4,863 |
Operating lease liabilities | 94,891 | |
Note due to related party | 4,639 | 6,606 |
Deferred compensation plan | 89,236 | 52,302 |
Deferred tax liability | 89,370 | 86,278 |
Total liabilities | 4,082,095 | 2,201,382 |
Commitments and contingencies (Note 17) | ||
Stockholders’ Equity | ||
Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued and outstanding | ||
Common stock | 93 | |
Additional paid-in capital | 18,035 | 21,992 |
Retained earnings | 717,357 | 383,946 |
Total stockholders’ equity | 735,992 | 406,031 |
Total Liabilities and Stockholders’ Equity | 4,818,087 | $ 2,607,413 |
Class A Common Stock | ||
Stockholders’ Equity | ||
Common stock | 197 | |
Total stockholders’ equity | 197 | |
Class B Common Stock | ||
Stockholders’ Equity | ||
Common stock | 403 | |
Total stockholders’ equity | $ 403 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares, issued | 0 | 0 |
Preferred stock, shares, outstanding | 0 | 0 |
Common stock, par value | $ 100 | |
Common stock, shares authorized | 2,000 | |
Common stock, shares, issued | 928 | |
Common stock, shares, outstanding | 928 | |
Class A Common Stock | ||
Common stock, par value | $ 0.01 | |
Common stock, shares authorized | 250,000,000 | |
Common stock, shares, issued | 19,666,981 | |
Common stock, shares, outstanding | 19,666,981 | |
Class B Common Stock | ||
Common stock, par value | $ 0.01 | |
Common stock, shares authorized | 100,000,000 | |
Common stock, shares, issued | 40,333,019 | |
Common stock, shares, outstanding | 40,333,019 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | ||
Loan origination fees and gain on sale of loans, net | $ 1,759,871,000 | $ 820,814,000 |
Loan servicing and other fees | 160,237,000 | 142,705,000 |
Valuation adjustment of mortgage servicing rights | (296,307,000) | (255,219,000) |
Interest income | 57,649,000 | 58,787,000 |
Interest expense | (60,168,000) | (55,391,000) |
Other income, net | 765,000 | 1,193,000 |
Net revenue | 1,622,047,000 | 712,889,000 |
Expenses | ||
Salaries, incentive compensation and benefits | 953,758,000 | 578,170,000 |
General and administrative | 101,948,000 | 63,983,000 |
Occupancy, equipment and communication | 57,070,000 | 53,678,000 |
Depreciation and amortization | 7,501,000 | 7,333,000 |
Provision for foreclosure losses | 7,700,000 | 3,895,000 |
Total expenses | 1,127,977,000 | 707,059,000 |
Income before income tax expense | 494,070,000 | 5,830,000 |
Income tax expense | 123,493,000 | 253,000 |
Net income | $ 370,577,000 | $ 5,577,000 |
Weighted average shares outstanding of Class A and Class B Common Stock: | ||
Basic | 60,000 | |
Diluted | 60,056 | |
Class A and Class B Common Stock | ||
Expenses | ||
Net income | $ 370,577,000 | |
Net income per share attributable to Class A and Class B Common Stock: | ||
Basic | $ 6.18 | |
Diluted | $ 6.17 | |
Weighted average shares outstanding of Class A and Class B Common Stock: | ||
Basic | 60,000,000 | |
Diluted | 60,056,000 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY - USD ($) $ in Thousands | Total | Class A Common Stock | Class B Common Stock | Common Stock | Additional Paid-In Capital | Retained Earnings |
Balance at Dec. 31, 2018 | $ 440,941 | $ 94 | $ 22,317 | $ 418,530 | ||
Balance, Shares at Dec. 31, 2018 | 942 | |||||
Common stock dividends | (32,500) | (32,500) | ||||
Stock repurchase | (7,987) | $ (1) | (325) | (7,661) | ||
Stock repurchase, Shares | (14) | |||||
Net income | 5,577 | 5,577 | ||||
Balance at Dec. 31, 2019 | $ 406,031 | $ 93 | 21,992 | 383,946 | ||
Balance, Shares at Dec. 31, 2019 | 928 | 928 | ||||
Common stock dividends | $ (37,166) | (37,166) | ||||
Effect of reorganization transactions | $ (93) | 93 | ||||
Effect of reorganization transactions, Shares | (928) | |||||
Issuance of common stock | $ 148 | $ 452 | (600) | |||
Issuance of common stock, Shares | 14,766,709 | 45,233,291 | ||||
Conversion of Class B common stock | $ 49 | $ (49) | ||||
Conversion of Class B common stock, Shares | 4,900,272 | (4,900,272) | ||||
Offering costs | (4,495) | (4,495) | ||||
Stock-based compensation | 1,045 | 1,045 | ||||
Net income | 370,577 | 370,577 | ||||
Balance at Dec. 31, 2020 | $ 735,992 | $ 197 | $ 403 | $ 18,035 | $ 717,357 | |
Balance, Shares at Dec. 31, 2020 | 19,666,981 | 40,333,019 | 0 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY (Parenthetical) - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Statement Of Stockholders Equity [Abstract] | ||
Common stock dividends per share | $ 40,050 | $ 35,010 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | ||
Net income | $ 370,577 | $ 5,577 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation and amortization | 7,501 | 7,333 |
Valuation adjustment of mortgage servicing rights | 296,307 | 255,219 |
Valuation adjustment of mortgage loans held for sale | (56,083) | (5,061) |
Unrealized gain on derivatives | (77,009) | (12,675) |
Amortization of right-of-use assets | 18,599 | |
Provision for investor reserves | 7,091 | 10,203 |
Provision for foreclosure losses | 7,700 | 3,895 |
Valuation adjustment of contingent liabilities due to acquisitions | 31,705 | 7,920 |
Gain on sale of mortgage loans excluding fair value of other financial instruments, net | (1,323,482) | (638,902) |
Deferred income taxes | 3,092 | (25,976) |
Other | 146 | 281 |
Benefit from investor reserves | (9,077) | (7,994) |
Foreclosure loss reserve | (3,167) | (3,910) |
Stock-based compensation | 1,045 | |
Changes in operating assets and liabilities: | ||
Origination of mortgage loans held for sale | (35,238,696) | (21,749,675) |
Proceeds on sale of and payments from mortgage loans held for sale | 35,754,326 | 21,854,967 |
Accounts and interest receivable | (13,312) | (6,656) |
Other assets | (11,563) | 11,791 |
Mortgage servicing rights | (324,903) | (154,201) |
Accounts payable and accrued expenses | 7,845 | 7,533 |
Accrued compensation and benefits | 61,016 | 15,307 |
Income taxes | 20,469 | |
Contingent liability payments | (15,348) | (1,437) |
Operating lease liabilities | (17,358) | |
Deferred compensation plan liability | 34,044 | (785) |
Proceeds from real estate owned conveyed to HUD | 1,648 | 5,140 |
Purchase and advances of real estate owned | (1,154) | (2,601) |
Net cash used in operating activities | (468,041) | (424,707) |
Cash flows from investing activities | ||
Proceeds from the sale of property & equipment | 35 | 71 |
Purchase of property and equipment | (8,233) | (3,705) |
Payment made on behalf of affiliate | (9,827) | (1,037) |
Acquisitions | (8,817) | |
Net cash used in investing activities | (18,025) | (13,488) |
Cash flows from financing activities | ||
Borrowings on warehouse lines of credit | 34,429,145 | 21,195,017 |
Repayments on warehouse lines of credit | (33,587,967) | (20,731,564) |
Borrowings on MSR notes payable | 67,000 | 87,250 |
Repayments on MSR notes payable | (139,250) | (29,250) |
Contingent liability payments | (6,336) | (5,251) |
Net change in notes payable | (1,967) | 6,460 |
Repurchase of stock | (7,987) | |
Payment of offering costs | (4,495) | |
Dividends paid | (37,166) | (32,500) |
Net cash provided by financing activities | 718,964 | 482,175 |
Increase in cash, cash equivalents and restricted cash | 232,898 | 43,980 |
Cash, cash equivalents and restricted cash, beginning of year | 106,735 | 62,755 |
Cash, cash equivalents and restricted cash, end of year | 339,633 | 106,735 |
Supplemental information | ||
Net cash paid for interest | 46,082 | 40,248 |
Net cash paid for taxes | $ 49,508 | 13,731 |
Net assets acquired due to acquisition | $ 10,552 |
Business, Basis of Presentation
Business, Basis of Presentation, and Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Business, Basis of Presentation, and Accounting Policies | NOTE 1 - BUSINESS, BASIS OF PRESENTATION, AND ACCOUNTING POLICIES Organization Guild Holdings Company (the “Company”, and together with its consolidated subsidiaries, “Guild”, “we”, “us”, “our”) was incorporated in Delaware on August 11, 2020 for the purpose of facilitating an initial public offering (“IPO”) of its Class A common stock and other related transactions in order to carry on the business of Guild Mortgage Company LLC (“GMC”) and its wholly owned subsidiaries. GMC was incorporated in California on August 10, 1960 and in October of 2020 was converted to a California limited liability company. The Company originates, sells, and services residential mortgage loans. The Company operates approximately 200 branches with licenses in 48 states. The Company’s residential mortgage originations are generated in 45 states from two channels of business; retail and correspondent. For the year ended December 31, 2020 the channel production was as follows: retail 97.4% and correspondent 2.6%. For the year ended December 31, 2019, the channel production was as follows: retail 96.5%, and correspondent 3.5%. The Company is certified with the United States Department of Housing and Urban Development (“HUD”) and the Department of Veterans Affairs (“VA”) and operates as a Federal Housing Association (“FHA”) non-supervised lender. In addition, the Company is an approved issuer with Government National Mortgage Association (“GNMA”), as well as an approved seller and servicer with Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and the United States Department of Agriculture Rural Development (“USDA”). Properties securing the mortgage loans in the Company’s servicing portfolio are geographically dispersed throughout the United States; however, at December 31, 2020, approximately 15.1% of such properties were located in California, 11.4% were located in Washington, and 10.1% were located in Texas. At December 31, 2019, approximately 16.0% of such properties were located in California, 12.1% were located in Washington, and 9.7% were located in Texas. Similarly, loan production in California, Washington and Oregon represented 18.2%, 15.5%, and 9.9%, respectively, of the Company’s total loan production in 2020. For the year ended December 31, 2019, California, Washington and Oregon represented 16.9%, 16.5%, and 9.2%, respectively, of the Company’s total loan production. IPO and Reorganization In October 2020 the Company underwent a reorganization in connection with its initial public offering (the “Offering” or “IPO”). Prior to the completion of the Offering, GMC’s former parent entity, Guild Investors, LLC, contributed 100% of the shares GMC to Guild Holdings Company (“Holdings”) and GMC was converted to a California limited liability company. As a result, Holdings is the sole member of GMC. On October 21, 2020 Guild Holdings Company completed the IPO of 6,500,000 shares of Class A common stock, $0.01 par value, at an offering price of $15.00 per share. Guild Holdings Company is a publicly traded company whose Class A common stock is traded on the New York Stock Exchange under the ticker symbol “GHLD”. As a result of the IPO and the reorganization: Guild Holdings Company is the sole management member of GMC, which owns a direct interest in its subsidiaries. Guild Holdings Company is a holding company which has no material assets, other than its ownership of GMC, and its indirect interest in the subsidiaries of GMC and has no independent means of generating revenue or cash flow. 1,440,334 shares of Guild Holdings Company’s Class A common stock were reserved for equity-based awards. 45,233,291 shares of Class B common stock were issued to McCarthy Capital Mortgage Investors at the completion of the Offering. The Class B common stock has a par value of $0.01 per share and 10 votes per share. Following the IPO, 4,900,272 shares of Class B common stock were converted into Class A common stock. The public stockholders own 6,500,000 shares of Class A common stock, which represent 1.5% of the combined voting power of Guild Holdings Company. Principles of Consolidation The Company has one wholly owned subsidiary, GMC, which through its direct subsidiaries, conducts the Company’s mortgage banking operations. GMC owns Guild Administration Corp., Mission Village Insurance Agency, Guild Insurance, LLC and Guild Financial Express, Inc. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. In March 2020, the World Health Organization (“WHO”) declared the outbreak of a novel coronavirus ( “ COVID-19 ” ) as a pandemic, which continues to spread throughout the United States. The Company remains fully functional in both its origination and servicing operations. While the pandemic could cause certain branches to temporarily close, most of the significant job functions can be performed remotely. The Company has taken steps to ensure business can continue as necessary should branches be forced to temporarily close. The Company continues to monitor guidance published by the WHO, Centers for Disease Control and Prevention, local and federal government agencies and the Mortgage Bankers Association and is in continual communication with its investors regarding the developments in the mortgage industry. Revenue Recognition Loan origination fees and gain on sale of loans, net — loan origination fees and gain on sale of loans, net includes all components related to the origination and sale of mortgage loans, including (1) net gain on sale of loans, which represents the premium the Company receives in excess of the loan principal amount and certain fees charged by investors upon sale of loans into the secondary market, (2) loan origination fees (credits), points and certain costs, (3) provision for or benefit from investor reserves, (4) the change in fair value of interest rate locks and loans held for sale, (5) the gain or loss on forward commitments hedging loans held for sale and interest rate lock commitments (“IRLCs”), and (6) the fair value of originated mortgage servicing rights (“MSRs”). An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of a pull-through factor. Subsequent changes in the fair value of IRLCs and mortgage loans held for sale are recognized in current period earnings. When the mortgage loan is sold into the secondary market, any difference between the proceeds received and the current fair value of the loan is recognized in current period earnings. Included in gain on sale of loans, net is the fair value of originated MSRs, which represents the estimated fair value of MSRs related to loans which we have sold and retained the right to service. See and , for more information related to fair value measurements of mortgage loans held for sale, the gain/(loss) on changes in the fair value of MSRs and the gain/(loss) on changes in the fair value of IRLCs, respectively. At December 31, 2020 and 2019, loan origination fees and gain on sale of loans were net of direct expenses of $266,451 and $175,338, respectively Loan servicing and other fees — Loan servicing fees represent fees earned for servicing loans for various investors. The servicing fees are based on a contractual percentage of the outstanding principal balance and recognized into revenue as the related mortgage payments are received. Loan servicing expenses are charged to operations as incurred. Valuation adjustment of mortgage servicing rights — In accordance with Accounting Standards Codification (“ASC”) 860-50, the Company records MSRs as an asset, at fair value. The change in fair value is recorded within the Consolidated Statements of Income on a monthly basis. See , for information related to the gain/(loss) on changes in the fair value of MSRs. Interest income — interest income includes interest earned on mortgage loans held for sale Interest expense — interest expense includes interest paid to the Company’s loan funding facilities and MSR facilities. Cash, Cash Equivalents and Restricted Cash For cash flow purposes, the Company considers cash and temporary investments with original maturities of three months or less, to be cash and cash equivalents. The Company typically maintains cash in financial institutions in excess of Federal Deposit Insurance Corporation limits. The Company evaluates the creditworthiness of these financial institutions in determining the risk associated with these cash balances. The Company maintains cash balances that are restricted under the terms of its warehouse lines of credit. The following table summarizes the Company’s cash, cash equivalents and restricted cash at December 31, 2020 and 2019: 2020 2019 Cash and cash equivalents $ 334,623 $ 101,735 Restricted cash 5,010 5,000 Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows $ 339,633 $ 106,735 Mortgage Loans Held for Sale The Company measures newly originated prime residential Mortgage Loans Held for Sale (“MLHS”) at fair value in accordance with ASC 825, Financial Instruments The Company estimates fair value by evaluating a variety of market indicators, including recent trades and outstanding commitments, calculated on an individual loan basis and aggregated (see Note 2 — Fair Value Measurements Loans are considered sold when the Company surrenders control over the financial assets. Control is considered to have been surrendered when the transferred assets have been isolated from the Company, beyond the reach of the Company and its creditors; the purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through an agreement that both entitles and obligates the Company to repurchase or redeem the transferred assets before their maturity. The Company typically considers the above criteria to have been met upon acceptance and receipt of sales proceeds from the purchaser. Ginnie Mae Loans Subject to Repurchase Right In accordance with ASC 860-50, Transfers and Servicing — Servicing Assets and Liabilities Mortgage Servicing Rights Mortgage servicing rights are recognized as assets in the Consolidated Balance Sheet when loans are sold, and the associated servicing rights are retained. The Company maintains one class of MSR asset and has elected the fair value option. To determine the fair value of the servicing right when created, the Company uses a valuation model that calculates the present value of future cash flows. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, including estimates of contractual service fees, ancillary income and late fees, the cost of servicing, the discount rate, float value, the inflation rate, estimated prepayment speeds, and default rates. Derivative Instruments The Company enters into IRLCs, forward commitments to sell mortgage loans and to be announced trades which are considered derivative financial instruments. These items are accounted for as free-standing derivatives and are included in the Consolidated Balance Sheets at fair value. The Company treats all of its derivative instruments as economic hedges; therefore, none of its derivative instruments qualify for designation as accounting hedges. The Company enters into IRLCs to originate residential mortgage loans at specified interest rates and within a specified period of time, with customers who have applied for a loan and meet certain credit and underwriting criteria. IRLCs on mortgage loans in process that have not closed, but are intended to be sold, are considered to be derivatives and changes in fair value are recorded in the Consolidated Statements of Income as part of Loan Origination Fees and Gain on Sale of Loans, net. Fair value is based upon changes in the fair value of the underlying mortgages, estimated to be realizable upon sale into the secondary market, net of estimated incentive compensation expenses. Fair value estimates also consider loan commitments not expected to be exercised by customers for unforeseen reasons, commonly referred to as fallout. IRLCs and uncommitted mortgage loans held for sale expose the Company to the risk that the value of the mortgage loans held and mortgage loans underlying the commitments may decline due to increases in mortgage interest rates during the life of the commitments. To protect against this risk the Company enters into derivative loan instruments such as forward loan sales commitments, mandatory delivery commitments, options and futures contracts. Management expects the changes in the fair value of these derivatives to have a negative correlation to the changes in fair value of the derivative loan commitments and loans held for sale, thereby reducing earnings volatility. The changes in fair value are recorded in the Consolidated Statements of Income as part of Loan Origination Fees and Gain on Sale of Loans, net. The Company considers various factors and strategies in determining the portion of the mortgage pipeline and loans held for sale it wants to economically hedge. Forward commitments include To-Be-Announced (“TBA”) mortgage-backed securities that have been aggregated at the counterparty level for presentation and disclosure purposes. Counterparty agreements contain a legal right to offset amounts due to and from the same counterparty under legally enforceable master netting agreements to settle with the same counterparty, on a net basis, as well as the right to obtain cash collateral. Forward commitments also include commitments to sell loans to counterparties and to purchase loans from counterparties at determined prices. See Notes 2 and 6 Property and Equipment Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset, usually three years. Leasehold improvements are amortized using the straight-line method over the shorter of the term of the related lease or the estimated useful life. The Company recognizes internal-use software within property and equipment which consists of both internal and external costs incurred in the development, testing and implementation directly related to the new software. The internal-use software is amortized over a three-year Acquisitions When making an acquisition, the Company recognizes separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values under ASC 805, Business Combinations Accounting for business combinations requires the Company’s management to make estimates and assumptions, especially at the acquisition date with respect to mortgage servicing rights and contingent considerations. Although the Company believes the assumptions and estimates it has made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Goodwill Goodwill is recorded at fair value and is tested for potential impairment at least annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company’s goodwill is allocated by reporting unit and is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. Qualitative factors include, among other things, macroeconomic conditions, industry and market considerations, financial performance of the respective reporting unit and other relevant entity- and reporting-unit specific considerations. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than the carrying amount, or if significant adverse changes in our future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. The fair value of goodwill is determined by assigning the fair value of the reporting unit to all the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination. If the fair value is less than the carrying value, the amount of impairment expense is equal to the difference between the reporting unit’s fair value and the reporting unit’s carrying value. See Note 10 – Goodwill Contingent Liabilities due to Acquisitions The Company may be required to pay future consideration to the former shareholders of acquired companies, depending upon the terms of the applicable purchase agreement, which is contingent upon the achievement of certain financial and operating targets. The Company determines the fair value for its contingent consideration obligations using an income approach whereby the Company forecasts the cash outflows related to the earn-outs, which are based on a percentage of net income specified in the purchase agreements. The Company then discounts these expected payment amounts to calculate the fair value as of the valuation date. The Company’s management evaluates the underlying projections used in determining fair value each period and makes updates to these underlying projections when there have been significant changes in management’s expectations of the future business performance. The principal significant unobservable input used in the valuations of the Company’s contingent consideration obligations is a risk-adjusted discount rate. Whereas management’s underlying projections adjust for market penetration and other economic expectations, the discount rate is risk-adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), upfront payments, and credit risk. An increase in the discount rate will result in a decrease in the fair value of contingent consideration. Conversely, a decrease in the discount rate will result in an increase in the fair value of contingent consideration. At each reporting date, or whenever there are significant changes in underlying key assumptions, a review of these assumptions is performed and the contingent consideration liability is updated to its estimated fair value. If there are no significant changes in the assumptions, the quarterly determination of the fair value of contingent consideration reflects the implied interest for the passage of time. Changes in the estimated fair value of the contingent consideration obligations may result from changes in the terms of the contingent payments, changes in discount periods and rates and changes in probability assumptions with respect to the timing and likelihood of achieving the certain financial targets. Actual progress toward achieving the financial targets for the remaining measurement periods may be different than the Company’s expectations of future performance. The change in the estimated fair value of contingent consideration is included in general and administrative expense in the Consolidated Statements of Income. Real Estate Owned There are two types of REO properties held by the Company. The first is considered a traditional REO where the Company owns, markets, and sells the property. At the time of foreclosure, other real estate owned is recorded at the asset’s fair value less selling costs, which becomes the property’s new basis. After foreclosure, these assets are carried at the lower of their new cost basis or fair value less selling costs. Costs incurred in maintaining foreclosed real estate and subsequent write-downs to reflect declines in the fair value of the property are expensed as incurred. At December 31, 2020 and 2019, the Company had $0.2 million and $0.9 million, respectively, of traditional REOs. The second type is foreclosed real estate securing GNMA loans in process of conveyance to HUD but insured by FHA, where the Company is the controller of the deed for a period of time. For GNMA loans, the property becomes REO if not sold to a third party at its foreclosure sale. Both principal and debenture rate interest for government insured loans secured by the foreclosed real estate are collectible because the loans are insured by FHA. This is valued at the UPB of the loan, which is considered to be fair value, as HUD reimburses the Company for the UPB plus debenture rate interest and fees. The Company reserves for unreimbursed interest in excess of the debenture rate and fees as part of the foreclosure loss reserve. The total REO property that will be conveyed to HUD was valued at $1.2 million and $8.1 million at December 31, 2020 and 2019, respectively. Investor Reserves The Company has exposure to potential mortgage loan repurchases and indemnifications in its capacity as a loan originator and servicer. The estimation of the liability for probable losses related to the repurchase and indemnification obligation considers an estimate of probable future repurchase or indemnification obligations from breaches of representations and warranties. The liability related to specific non-performing loans is based on a loan-level analysis considering the current collateral value, estimated sales proceeds and selling costs. The liability related to probable future repurchase or indemnification obligations is segregated by year of origination and considers the amount of unresolved repurchase and indemnification requests, as well as an estimate of future repurchase demands. Future repurchase demands are estimated based upon recent and historical repurchase and indemnification experience, as well as the success rate in appealing repurchase requests and an estimated loss severity, based on current loss rates for similar loans. The Company also has exposure to early payment defaults (“EPD”) and/or early payoff fees (“EPO”). When the Company sells a loan to an investor and the loan either pays off or goes into default within a certain timeframe, the Company could be exposed to EPD and/or EPO fees in accordance with each investor’s contract. The Company reserves for these fees by estimating early payment defaults and fees based on prior loan activity and current loan origination volume. Foreclosure Loss Reserve and Provision for Foreclosure Losses The Company has exposure for losses associated with government loans in foreclosure related to nonrefundable interest and foreclosure servicing costs. The Company maintains a reserve for government loans currently in foreclosure based on historical loss experience. The Company also accrues for any additional known losses above the current loss per loan; for example, losses due to servicer delays. Advertising Advertising is expensed as incurred and amounted to $11.9 million and $11.8 million for the years ended December 31, 2020 and 2019, respectively, and is included within general and administrative expenses in the Consolidated Statements of Income. Stock-Based Compensation Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The fair value of restricted stock units (“RSUs”) is based on the value of the Company’s common stock on the date of grant. Stock-based compensation is included in salaries, incentive compensation and benefits. See Note 16 for additional information. Earnings Per Share The Company determines earnings per share in accordance with the authoritative guidance in ASC Topic 260, Earnings Per Share Offering Costs The Company complies with the requirements of SEC Staff Accounting Bulletin Topic 5A — “Expenses of Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to our IPO and were charged to stockholders’ equity upon the completion. Accordingly, offering costs totaling $4.5 million were charged to stockholders’ equity. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more-likely than-not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and records penalties as a component of income taxes. Escrow and Fiduciary Funds As a loan servicer, the Company maintains segregated bank accounts in trust for investors and escrow balances for mortgagors, which are excluded from the Company’s Consolidated Balance Sheets. These accounts totaled $1.7 billion and $1.0 billion at December 31, 2020 and 2019, respectively. Risks and Uncertainties In the normal course of business, companies in the mortgage banking industry encounter certain economic, liquidity, and regulatory risks. Economic risk includes interest rate risk and credit risk. Interest rate risk The Company’s mortgage loans held for sale, commitments to originate loans, and mortgage servicing rights are subject to interest rate risk. For mortgage loans held for sale and commitments to originate loans, to the extent that a rising interest rate environment exists, the Company may experience a decrease in loan production and decreases in value, which may negatively impact the Company’s operations. To mitigate this risk the Company uses hedging strategies designed to ensure any fluctuations in rates would not have a material impact on the Company’s financial position. For the Company’s mortgage servicing rights, to the extent that a declining interest rate environment exists, the Company may experience decreases in the fair value of the portfolio, which may negatively impact the Company’s financial position. For the years ended December 31, 2020 and 2019, the Company experienced a material decline in the valuation of its MSR portfolio due to a significant decline in interest rates. Since the Company also has a large origination platform the Company was able to mitigate this risk by recapturing a significant portion of the runoff through refinances. Credit risk Credit risk is the risk of default that may result from borrowers’ inability or unwillingness to make contractually required payments during the period in which loans are being held for sale. The Company considers credit risk associated with these loans to be insignificant as it holds the loans for a short period of time, typically less than a month, and historically the Company has not experienced any material losses due to credit risk on loans held for sale. The Company sells loans to investors without recourse. As such, the investors have assumed the risk of loss or default by the borrower. However, the Company is usually required by these investors to make certain standard representations and warranties relating to credit information, loan documentation and collateral. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase the loans or indemnify these investors for any losses from borrower defaults, defects in the collateral or errors made in the credit decision. The Company is also subject to counterparty credit risk in the event of contractual nonperformance by its trading counterparties to its various over-the-counter derivative financial instruments. The Company manages this credit risk by selecting only counterparties that it believes to be financially strong, spreading the credit risk among many such counterparties, placing contractual limits on the amount of unsecured credit extended to any single counterparty, and entering into netting agreements with the counterparties as appropriate. The master netting agreements contain a legal right to offset amounts due to and from the same counterparty. Derivative assets in the Consolidated Balance Sheets represent derivative contracts in a gain position net of loss positions with the same counterparty and, therefore, also represent the Company’s maximum counterparty credit risk. The Company incurred no credit losses due to nonperformance of any of its counterparties during the years ended December 31, 2020 and 2019. Liquidity risk The Company encounters liquidity risk as the business requires substantial cash to support its operating activities. As a result, the Company is dependent on its lines of credit, and other financing facilities in order to finance its continued operations. If the Company’s principal lenders decided to terminate or not to renew these credit facilities with the Company, the loss of borrowing capacity could have an adverse impact on the Company’s financial statements unless the Company found a suitable alternative source. To mitigate this risk, the Company has multiple financing facilities with different lenders and varied maturity dates. Historically, the Company has not had a line of credit involuntarily terminated by a lender. Regulatory risk The Company is subject to extensive and comprehensive regulation under federal, state and local laws in the United States. These laws and regulations significantly affect the way in which the Company does business and can restrict the scope of the Company’s existing business and limit the Company’s ability to expand product offerings or pursue acquisitions, or can make costs to service or originate loans higher, which could impact financial results. The Company continually monitors its regulatory environment for any changes that could have a significant impact on operations. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842), which has been subsequently amended by ASUs 2018-01, 2018-10, 2018-11, 2018-20, 2019-01 and 2019-10. This guidance amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It will require companies to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. Effective December 31, 2020, we lost our emerging growth company (“EGC”) status which accelerated the adoption of Topic 842. On January 1, 2020, the Company adopted ASU 2016-02. The Company adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The most significant impact was the recognition of right-of-use assets and lease liabilities for operating leases. See Note 9 In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326). Accounting Standards Issued but Not Yet Adopted Prior to December 31, 2020, as an EGC, we elected to use the extended transition period provided by the Jumpstart Our Business Startups Act for the implementation of new or revise |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 2 - FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are prioritized within a three-level fair value hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The categorization of assets and liabilities measured at fair value within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. • Level One • Level Two • Level Three The Company updates the valuation of each instrument recorded at fair value on a monthly or quarterly basis, evaluating all available observable information which may include current market prices or bids, recent trade activity, changes in the levels of market activity and benchmarking of industry data. The assessment also includes consideration of identifying the valuation approach that would be used currently by market participants. If it is determined that a change in valuation technique or its application is appropriate, or if there are other changes in availability of observable data or market activity, the current methodology will be analyzed to determine if a transfer between levels of the valuation hierarchy is appropriate. Such reclassifications are reported as transfers into or out of a level as of the beginning of the quarter that the change occurs. Fair value is based on quoted market prices, when available. If quoted prices are not available, fair value is estimated based upon other observable inputs. Unobservable inputs are used when observable inputs are not available and are based upon judgments and assumptions, which are the Company’s assessment of the assumptions market participants would use in pricing the asset or liability. These inputs may include assumptions about risk, counterparty credit quality, the Company’s creditworthiness and liquidity and are developed based on the best information available. When a determination is made to classify an asset or liability within Level Three of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement of the asset or liability. The fair value of assets and liabilities classified within Level Three of the valuation hierarchy also typically includes observable factors and the realized or unrealized gain or loss recorded from the valuation of these instruments would also include amounts determined by observable factors. Recurring Fair Value Measurements The Company’s fair value measurements are evaluated within the fair value hierarchy, based on the nature of the inputs used to determine the fair value at the measurement date. At December 31, 2020 and 2019, the Company had the following assets and liabilities that are measured at fair value on a recurring basis: Trading Securities — Trading securities are classified within Level One of the valuation hierarchy. Valuation is based upon quoted prices for identical instruments traded in active markets. Level One trading securities include securities traded on active exchange markets, such as the New York Stock Exchange. Trading securities are included within prepaid expenses and other assets in the Consolidated Balance Sheets. Derivative Instruments — Derivative instruments are classified within Level Two and Level Three of the valuation hierarchy, and include the following: Interest Rate Lock Commitments : IRLCs are classified within Level Three of the valuation hierarchy. IRLCs represent an agreement to extend credit to a mortgage loan applicant, or an agreement to purchase a loan from a third-party originator, whereby the interest rate on the loan is set prior to funding. The fair value of IRLCs is based upon the estimated fair value of the underlying mortgage loan, including the expected net future cash flows related to servicing the mortgage loan, net of estimated incentive compensation expenses, and adjusted for: (i) estimated costs to complete and originate the loan and (ii) an adjustment to reflect the estimated percentage of IRLCs that will result in a closed mortgage loan under the original terms of the agreement (pull-through rate). The pull-through rate is considered a significant unobservable input and is estimated based on changes in pricing and actual borrower behavior using a historical analysis of loan closing and fallout data. The average pull-through rate used to calculate the fair value of IRLCs as of December 31, 2020 and 2019, was 87.8% and 89.4%, respectively. On a quarterly basis, actual loan pull-through rates are compared to the modeled estimates to confirm the assumptions are reflective of current trends. Generally, a change in interest rates is accompanied by a directionally opposite change in the assumption used for the pull-through percentage, and the impact to fair value of a change in pull-through would be partially offset by the related change in price. Forward Delivery Commitments : Forward delivery commitments are classified within Level Two of the valuation hierarchy. Forward delivery commitments fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market. The fair value of forward delivery commitments is primarily based upon the current agency mortgage-backed security market to-be-announced pricing specific to the loan program, delivery coupon and delivery date of the trade. Best efforts sales commitments are also entered into for certain loans at the time the borrower commitment is made. These best-efforts sales commitments are valued using the committed price to the counterparty against the current market price of the IRLC or mortgage loan held for sale. Option contracts are a type of forward commitment that represents the rights to buy or sell mortgage-backed securities at specified prices in the future. Their value is based upon the underlying current to-be-announced pricing of the agency mortgage-backed security market, and market-based volatility. See Note 6 Mortgage Loans Held for Sale — MLHS are carried at fair value. The fair value of MLHS is based on secondary market pricing for loans with similar characteristics, and as such, is classified as a Level Two measurement. For Level Two MLHS, fair value is estimated through a market approach by using either: (i) the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to servicing rights and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted for credit risk and other individual loan characteristics. The agency mortgage-backed security market is a highly liquid and active secondary market for conforming conventional loans whereby quoted prices exist for securities at the pass-through level and are published on a regular basis. The Company has the ability to access this market and it is the market into which conforming mortgage loans are typically sold. Mortgage Servicing Rights — MSRs are classified within Level Three of the valuation hierarchy due to the use of significant unobservable inputs and the lack of an active market for such assets. The fair value of MSRs is estimated based upon projections of expected future cash flows considering prepayment estimates, the Company’s historical prepayment rates, portfolio characteristics, interest rates based on interest rate yield curves, implied volatility, costs to service and other economic factors. The Company obtains valuations from an independent third party on a monthly basis, and records an adjustment based on this third-party valuation. Contingent Liabilities due to acquisitions — Contingent liabilities represent future obligations of the Company to make payments to the former owners of its acquired companies. The Company determines the fair value of its contingent liabilities using a discounted cash flow approach whereby the Company forecasts the cash outflows related to the future payments, which are based on a percentage of net income specified in the purchase agreements. The Company then discounts these expected payment amounts to calculate the present value, or fair value, as of the valuation date. The Company’s management evaluates the underlying projections used in determining fair value each period and makes updates to these underlying projections. The Company uses a risk-adjusted discount rate to value the contingent liabilities which is considered a significant unobservable input, and as such, the liabilities are classified as a Level Three measurement. Management’s underlying projections adjust for market penetration and other economic expectations, and the discount rate is risk-adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), upfront payments, and credit risk. An increase in the discount rate will result in a decrease in the fair value of the contingent liabilities. Conversely, a decrease in the discount rate will result in an increase in the fair value of the contingent liabilities. For each of the years ended December 31, 2020 and 2019, the range of the risk adjusted discount rate was 8.0% - 20.0%, with a median of 15.0%. Adjustments to the fair value of the contingent liabilities (other than payments) are recorded as a gain or loss and are included within general and administrative expenses in the Consolidated Statements of Income. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020: Description Level 1 Level 2 Level 3 Total Assets: Trading securities $ 78 $ — $ — $ 78 Derivative Interest rate lock commitments — — 130,338 130,338 Mortgage loans held for sale — 2,368,777 — 2,368,777 Mortgage servicing rights — — 446,998 446,998 Total assets at fair value $ 78 $ 2,368,777 $ 577,336 $ 2,946,191 Liabilities: Derivative Forward delivery commitments $ — $ 38,270 $ — $ 38,270 Contingent liabilities due to acquisitions — — 18,094 18,094 Total liabilities at fair value $ — $ 38,270 $ 18,094 $ 56,364 The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2019: Description Level 1 Level 2 Level 3 Total Assets: Trading securities $ 93 $ — $ — $ 93 Derivative Interest rate lock commitments — — 19,922 19,922 Mortgage loans held for sale — 1,504,842 — 1,504,842 Mortgage servicing rights — — 418,402 418,402 Total assets at fair value $ 93 $ 1,504,842 $ 438,324 $ 1,943,259 Liabilities: Derivative Forward delivery commitments $ — $ 4,863 $ — $ 4,863 Contingent liabilities due to acquisitions — — 8,073 8,073 Total liabilities at fair value $ — $ 4,863 $ 8,073 $ 12,936 The table below presents a reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended: IRLCs Contingent Liabilities Balance at December 31, 2018 $ 12,541 $ 5,106 Net transfers and revaluation gains 7,381 — Payments — (6,688 ) Additions — 1,735 Valuation adjustments — 7,920 Balance at December 31, 2019 $ 19,922 $ 8,073 Net transfers and revaluation gains 110,416 — Payments — (21,684 ) Valuation adjustments — 31,705 Balance at December 31, 2020 $ 130,338 $ 18,094 Changes in the availability of observable inputs may result in reclassifications of certain assets or liabilities. Such reclassifications are reported as transfers in or out of Level Three as of the beginning of the period that the change occurs. There were no transfers between fair value levels during the years ended December 31, 2020 and 2019. Non-Recurring Fair Value Measurements Certain assets and liabilities that are not typically measured at fair value on a recurring basis may be subject to fair value measurement requirements under certain circumstances. These adjustments to fair value usually result from write-downs of individual assets. At December 31, 2020 and 2019, the Company had the following financial assets measured at fair value on a nonrecurring basis: Ginnie Mae Loans subject to Repurchase Right — GNMA securitization programs allow servicers to buy back individual delinquent mortgage loans from the securitized loan pool once certain conditions are met. If a borrower makes no payment for three consecutive months, the servicer has the option to repurchase the delinquent loan for an amount equal to 100% of the loan’s remaining principal balance. Under ASC 860, this buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. The Company records these assets and liabilities at their fair value, which is determined to be the remaining unpaid principal balance. The Company’s future expected realizable cash flows are the cash payments of the remaining unpaid principal balance whether paid by the borrower or reimbursed through a claim filed with HUD. The Company considers the fair value of these assets and liabilities to fall into the Level Two bucket in the valuation hierarchy due to the assets and liabilities having specified contractual terms and the inputs are observable for substantially the full term of the assets and liabilities life. The following table summarizes the Company’s financial assets measured at fair value on a nonrecurring basis at December 31, 2020: Description Level 1 Level 2 Level 3 Total Assets: Ginnie Mae loans subject to repurchase right $ — $ 1,275,842 $ — $ 1,275,842 Total assets at fair value $ — $ 1,275,842 $ — $ 1,275,842 Liabilities: Ginnie Mae loans subject to repurchase right $ — $ 1,277,026 $ — $ 1,277,026 Total liabilities at fair value $ — $ 1,277,026 $ — $ 1,277,026 The following table summarizes the Company’s financial assets measured at fair value on a nonrecurring basis at December 31, 2019: Description Level 1 Level 2 Level 3 Total Assets: Ginnie Mae loans subject to repurchase right $ — $ 404,344 $ — $ 404,344 Total assets at fair value $ — $ 404,344 $ — $ 404,344 Liabilities: Ginnie Mae loans subject to repurchase right $ — $ 412,490 $ — $ 412,490 Total liabilities at fair value $ — $ 412,490 $ — $ 412,490 Fair Value Option The following is the estimated fair value and unpaid principal balance of MLHS that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected for MLHS as the Company believes fair value best reflects their expected future economic performance: Fair Value Principal Amount Due Upon Maturity Difference (1) Balance at December 31, 2020 $ 2,368,777 $ 2,293,895 $ 74,882 Balance at December 31, 2019 $ 1,504,842 $ 1,485,460 $ 19,382 (1) Represents the amount of gains included in loan origination fees and gain on sale of loans, net due to changes in fair value of items accounted for using the fair value option. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2020 | |
Vitek Real Estate Industries Group, Inc. | |
Business Acquisition [Line Items] | |
Acquisitions | NOTE 3 - ACQUISITIONS During 2019, the Company completed the acquisition of Vitek Real Estate Industries Group, Inc. (“Vitek”) through an Asset Purchase Agreement. On December 6, 2018, the Company announced a definitive agreement pursuant to which it would acquire certain assets of Vitek. Vitek was a mortgage loan originator with an experienced team of loan officers and an established presence in Northern California. This strategic acquisition expanded Guild’s presence in this region and added experienced loan officers to Guild’s sales force. The transaction closed on April 30, 2019. The acquisition has been accounted for under the acquisition method of accounting pursuant to ASC 805, Business Combinations Total cash consideration for the acquisition was approximately $ 10.5 Total Goodwill $ 2,135 Mortgage servicing rights 7,568 Fixed assets 862 Other assets 27 Accounts payable and accrued liabilities (40 ) Net assets acquired $ 10,552 Total Cash payments $ 8,817 Contingent consideration 1,735 Total purchase price $ 10,552 The following table presents the results of operations of Vitek that are included in the Company’s Consolidated Statements of Income from the acquisition date of April 30, 2019 through December 31, 2019. Revenues $ 11,105 Expenses 8,039 Net income $ 3,066 There have been no adjustments to the purchase price allocation during the measurement period. See Note 1, Business, Basis |
Accounts and Interest Receivabl
Accounts and Interest Receivable | 12 Months Ended |
Dec. 31, 2020 | |
Accounts And Interest Receivable [Abstract] | |
Accounts and Interest Receivable | NOTE 4 - ACCOUNTS AND INTEREST RECEIVABLE Accounts and interest receivable consisted of the following at December 31, 2020 and 2019: 2020 2019 Trust advances $ 36,241 $ 17,622 Foreclosure advances, net 2,894 7,348 Receivables related to loan sales 2,707 5,771 Other 1,548 3,870 Total accounts and interest receivable $ 43,390 $ 34,611 Management has established a foreclosure reserve for estimated uncollectable balances of the foreclosure and trust advances. Management believes that substantially all other accounts and interest receivable amounts are collectible and, accordingly, no allowance for doubtful accounts is necessary. The activity of the foreclosure loss reserve was as follows for the years ended December 31, 2020 and 2019: 2020 2019 Balance — beginning of year $ 7,869 $ 7,884 Utilization of foreclosure reserve (3,167 ) (3,910 ) Provision charged to operations 7,700 3,895 Balance — end of year $ 12,402 $ 7,869 |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2020 | |
Other Assets [Abstract] | |
Other Assets | NOTE 5 - OTHER ASSETS Other assets consisted of the following at December 31, 2020 and 2019: 2020 2019 Prepaid expenses $ 16,652 $ 11,274 Company owned life insurance 29,910 21,908 Property and equipment, net 14,773 9,835 Right-of-use assets 87,508 — Income tax receivable — 1,015 Due from affiliates — 2,600 Real estate owned 1,354 8,998 Trading securities 78 93 Total other assets $ 150,275 $ 55,723 Property and equipment consisted of the following at December 31, 2020 and 2019: 2020 2019 Computer equipment $ 22,946 $ 22,546 Furniture and equipment 18,301 16,404 Leasehold improvements 12,307 5,395 Internal-use software in production 1,716 1,155 Internal-use software 5,639 3,476 Property and equipment, gross 60,909 48,976 Accumulated depreciation (46,136 ) (39,141 ) Property and equipment, net $ 14,773 $ 9,835 Depreciation and amortization expense for fixed assets was $7.5 million and $7.3 million for the years ending December 31, 2020 and 2019, respectively. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | NOTE 6 - DERIVATIVE FINANCIAL INSTRUMENTS The Company uses forward commitments in hedging the interest rate risk exposure on its fixed and adjustable rate commitments. The Company’s derivative instruments are not designated as hedging instruments; therefore, changes in fair value are recorded in current period earnings. Hedging gains and losses are included in loan origination fees and gain on sale of loans, net in the Consolidated Statements of Income. Net unrealized hedging gains were as follows December 31, 2020 and 2019: 2020 2019 Unrealized hedging gains $ 77,009 $ 12,675 Notional and Fair Value The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows at December 31, 2020 and 2019: Fair Value Notional Value Derivative Asset Derivative Liability Balance at December 31, 2020 IRLCs $ 5,151,179 $ 130,338 $ — Forward commitments $ 5,480,491 $ — $ 38,270 Balance at December 31, 2019 IRLCs $ 1,524,540 $ 19,922 $ — Forward commitments $ 1,961,733 $ — $ 4,863 The Company had an additional $895.2 million and $427.7 million of outstanding forward contracts and mandatory sell commitments, comprised of closed loans with equal and offsetting UPB amounts allocated to them, at December 31, 2020 and 2019, respectively. The Company also had $908.0 million and $376.5 million in closed hedge instruments not yet settled at December 31, 2020 and 2019, respectively. See Note 2 The following table presents the quantitative information about IRLCs and the fair value measurements as of December 31, 2020 and 2019: 2020 2019 Unobservable Input Range (Weighted Average) Loan funding probability (“pull-through”) 0% -100% (87.8%) 0% - 100% (89.4%) Counterparty agreements for forward commitments contain master netting agreements. The master netting agreements contain a legal right to offset amounts due to and from the same counterparty. The Company incurred no credit losses due to nonperformance of any of its counterparties during the years ended December 31, 2020 and 2019. The table below represents financial liabilities that are subject to master netting arrangements or similar agreements categorized by financial instrument, together with corresponding financial instruments and corresponding collateral received or pledged. Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Recognized Liabilities in the Balance Sheet December 31, 2020 Forward delivery commitments $ (54,419 ) $ 4,825 $ (49,594 ) Best efforts sales commitments (3,656 ) — (3,656 ) Margin calls 14,980 — 14,980 Total liabilities $ (43,095 ) $ 4,825 $ (38,270 ) December 31, 2019 Forward delivery commitments $ (5,487 ) $ 2,552 $ (2,935 ) Best efforts sales commitments (1,928 ) — (1,928 ) Total liabilities $ (7,415 ) $ 2,552 $ (4,863 ) |
Mortgage Servicing Rights
Mortgage Servicing Rights | 12 Months Ended |
Dec. 31, 2020 | |
Transfers And Servicing [Abstract] | |
Mortgage Servicing Rights | NOTE 7 - MORTGAGE SERVICING RIGHTS The activity of mortgage servicing rights was as follows for the years ended December 31, 2020 and 2019: 2020 2019 Balance — beginning of year $ 418,402 $ 511,852 MSRs originated and acquired through acquisitions 324,903 161,769 Changes in fair value: Due to collection/realization of cash flows (124,742 ) (83,821 ) Due to changes in valuation model inputs or assumptions (171,565 ) (171,398 ) Balance — end of year $ 446,998 $ 418,402 The following table presents the weighted average discount rate, prepayment speed and cost to service assumptions used to determine the fair value of MSRs as of December 31, 2020 and 2019: 2020 2019 Unobservable Input Range (Weighted Average) Discount rate 9.2% - 15.5% (10.0%) 9.2% - 15.5% (10.2%) Prepayment rate 10.0% - 38.8% (18.2%) 8.9% - 30.0% (17.3%) Cost to service (per loan) $71.0 - $409.4 ($92.5) $70.8 - $521.4 ($97.5) At December 31, 2020 and 2019, the MSRs had a weighted average life of approximately 5.1 years and 4.9 years, respectively. See Note 2 Actual revenue generated from servicing activities included contractually specified servicing fees, as well as late fees and other ancillary servicing revenue, which were recorded within loan servicing and other fees as follows for the years ended December 31, 2020 and 2019: 2020 2019 Servicing fees from servicing portfolio $ 155,362 $ 138,201 Late fees 5,229 5,967 Other ancillary servicing revenue (354 ) (1,463 ) Total loan servicing and other fees $ 160,237 $ 142,705 At December 31, 2020 and 2019, the unpaid principal balance of mortgage loans serviced totaled $60.8 billion and $50.6 billion, respectively. Conforming conventional loans serviced by the Company are sold to FNMA or FHLMC programs on a nonrecourse basis, whereby foreclosure losses are generally the responsibility of FNMA and FHLMC and not the Company. Similarly, certain loans serviced by the Company are secured through GNMA programs, whereby the Company is insured against loss by FHA or partially guaranteed against loss by VA. The key assumptions used to estimate the fair value of MSRs are prepayment speeds, the discount rate and costs to service. Increases in prepayment speeds generally have an adverse effect on the value of MSRs as the underlying loans prepay faster. In a declining interest rate environment, the fair value of MSRs generally decreases as prepayments increase and therefore, the estimated life of the MSRs and related cash flows decrease. Decreases in prepayment speeds generally have a positive effect on the value of MSRs as the underlying loans prepay less frequently. In a rising interest rate environment, the fair value of MSRs generally increases as prepayments decrease and therefore, the estimated life of the MSRs and related cash flows increase. Increases in the discount rate generally have an adverse effect on the value of the MSRs. The discount rate is risk adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), premium for market liquidity, and credit risk. A higher discount rate would indicate higher uncertainty of the future cash flows. Conversely decreases in the discount rate generally have a positive effect on the value of the MSRs. Increases in the costs to service generally have an adverse effect on the value of the MSRs as an increase in costs to service would reduce the Company’s future net cash inflows from servicing a loan. Conversely deceases in the costs to service generally have a positive effect on the value of the MSRs. MSR uncertainties are hypothetical and do not always have a direct correlation with each assumption. Changes in one assumption may result in changes to another assumption, which might magnify or counteract the uncertainties. The following table illustrates the impact of adverse changes on the prepayment speeds, discount rate and cost to service at two different data points at December 31, 2020 and 2019, respectively: Prepayment Speeds Discount Rate Cost to Service (per loan) 10% Adverse Change 20% Adverse Change 10% Adverse Change 20% Adverse Change 10% Adverse Change 20% Adverse Change December 31, 2020 Mortgage servicing rights $ (36,117 ) $ (66,419 ) $ (18,638 ) $ (32,312 ) $ (10,334 ) $ (16,700 ) December 31, 2019 Mortgage servicing rights $ (31,329 ) $ (49,031 ) $ (23,682 ) $ (35,701 ) $ (16,679 ) $ (22,543 ) |
Mortgage Loans Held for Sale
Mortgage Loans Held for Sale | 12 Months Ended |
Dec. 31, 2020 | |
Mortgage Loans Held For Sale [Abstract] | |
Mortgage Loans Held for Sale | NOTE 8 - MORTGAGE LOANS HELD FOR SALE The Company sells substantially all of its originated mortgage loans into the secondary market. The Company may retain the right to service some of these loans upon sale through ownership of servicing rights. A reconciliation of the changes in mortgage loans held for sale to the amounts presented in the Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 is set forth below: 2020 2019 Balance at the beginning of period $ 1,504,842 $ 966,171 Origination of mortgage loans held for sale 35,238,696 21,749,675 Proceeds on sale of payments from mortgage loans held for sale (35,754,326 ) (21,854,967 ) Gain on sale of mortgage loans excluding fair value of other financial instruments, net 1,323,482 638,902 Valuation adjustment of mortgage loans held for sale 56,083 5,061 Balance at the end of period $ 2,368,777 $ 1,504,842 At December 31, 2020, mortgage loans held for sale included unpaid principal balances of the underlying loans of $2.3 billion and had a fair value of $2.4 billion. At December 31, 2019, mortgage loans held for sale included unpaid principal balances of the underlying loans of $1.5 billion and had a fair value of $1.5 billion. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | NOTE 9 - LEASES On January 1, 2020, we adopted Topic 842. Results for reporting periods beginning January 1, 2020 are presented in accordance with Topic 842, while prior period amounts are reported in accordance with Topic 840 – Leases The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. The Company also considers whether its service arrangements include the right to control the use of an asset. The Company leases office space under operating lease agreements that have initial terms ranging from 1 to 12 years. Some leases include one or more options to exercise renewal terms, generally at our sole discretion, that can extend the lease term. Certain leases contain rights to terminate whereby those termination options are held by either the Company, the lessor, or both parties. These options to extend or terminate a lease are included in the lease term only when it is reasonably certain that the Company will exercise that option. The Company’s leases generally do not contain any material restrictive covenants. A number of practical expedients and policy elections are available under the new guidance to reduce the burden of adoption and ongoing compliance with Topic 842. The Company elected the “package of practical expedients”, which permitted the Company to retain lease classification and initial direct costs for any identified leases that exist prior to adoption of Topic 842. Under this transition guidance, the Company also has not reassessed whether any existing contracts at January 1, 2020 are or contain leases and has carried forward its initial determination under legacy lease guidance. The Company has not elected to adopt the “hindsight” practical expedient, and therefore will measure the ROU asset and lease liability using the remaining portion of the lease term at adoption on January 1, 2020. The Company made an accounting policy election available under the new lease standard to not recognize lease assets and lease liabilities for leases with a term of 12 months or less. For all other leases, the initial measurement of the ROU asset and lease liability is based on the present value of future lease payments over the lease term at the commencement date of the lease (or January 1, 2020 for existing leases upon the adoption of Topic 842). Lease payments may include fixed rent escalation clauses or payments that depend on an index or a rate (such as the consumer price index) measured using the index or applicable rate at lease commencement. Subsequent changes in the index or rate and any other variable payments, such as market-rate base rent adjustments, are recognized as variable lease expense in the period incurred. Payments for terminating a lease are included in lease payments only when it is probable they will be incurred. To determine the present value of lease payments, the Company uses its incremental borrowing rate, as the leases generally do not have a readily determinable implicit discount rate. The Company applies judgement in assessing factors such as Company-specific credit risk, lease term, nature and quality of the underlying collateral and the economic environment in determining the lease-specific incremental borrowing rate. The ROU assets also adjusted for any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by lease incentives. The Company’s leases generally include a non-lease component representing additional services transferred to the Company, such as common area maintenance for real estate. The Company has made an accounting policy election to account for lease and non-lease components in its contacts as a single lease component for all asset classes. The non-lease components are usually variable in nature and recorded in variable lease expense in the period incurred. All leases recognized in our Consolidated Balance Sheet as of December 31, 2020 are classified as operating leases, which include leases related to the asset classes reflected in the table below. ROU assets are included in Other assets in our Consolidated Balance Sheet: Right-of-Use Assets Lease Liability Office leases $ 87,063 $ 94,410 Equipment 445 481 Total $ 87,508 $ 94,891 We recognize lease expense on a straight-line basis excluding short-term and variable lease payments which are recognized as incurred. Short-term lease cost represents payments for leases with a lease term of twelve months or less, excluding leases with a term of one month or less. The following table summarizes the components of our gross operating lease costs incurred during the year ended December 31, 2020: (in thousands) Amount Operating lease cost $ 25,806 Short-term lease cost 1,974 Variable lease cost 3,105 Total lease cost $ 30,885 Rent expense amounted to $29.6 million for the year ended December 31, 2019 and is included within occupancy, equipment and communication expense in the Consolidated Statement of Income. Our weighted-average lease term and discount rate used are as follows: December 31, 2020 Weighted-average lease term (years) 6.7 Weighted-average discount rate 3.8 % The following table summarizes supplemental cash flow information related to operating leases: 2020 Cash paid for operating leases $ 24,565 Right-of-use assets obtained in exchange for new operating lease obligations $ 33,401 Minimum future commitments by year for our long-term operating leases as of December 31, 2020 are presented in the table below. Such commitments are reflected at undiscounted values and are reconciled to the discounted present value recognized in the balance sheet as follows: Amount 2021 $ 20,194 2022 19,484 2023 15,088 2024 11,002 2025 7,857 Thereafter 35,195 Total future minimum lease payments $ 108,820 Less: imputed interest (13,929 ) Total lease liabilities $ 94,891 Future minimum rental payments under the noncancelable operating leases are as follows at December 31, 2019: 2020 $ 26,620 2021 22,282 2022 17,541 2023 13,360 2024 9,625 Thereafter 34,467 $ 123,895 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill | NOTE 10 - GOODWILL A summary of the activity in goodwill is presented below for the years ended December 31, 2020 and 2019: Balance at December 31, 2018 $ 60,699 2019 Acquisitions (Note 3) 2,135 Balance at December 31, 2019 $ 62,834 Balance at December 31, 2020 $ 62,834 The Company conducted its annual goodwill impairment test during the fourth quarter of 2020 and determined that goodwill was not impaired. No impairment charge was recorded in 2 019. |
Investor Reserves
Investor Reserves | 12 Months Ended |
Dec. 31, 2020 | |
Investor Reserves [Abstract] | |
Investor Reserves | NOTE 11 - INVESTOR RESERVES The Company’s estimate of the investor reserves consider the current macro-economic environment and recent repurchase trends; however, if the Company experiences a prolonged period of higher repurchase and indemnification activity, then the realized losses from loan repurchases and indemnifications may ultimately be in excess of the liability. The maximum exposure under the Company’s representations and warranties would be the outstanding principal balance and any premium received on all loans ever sold by the Company, less any loans that have already been paid in full by the mortgagee, that have defaulted without a breach of representations and warranties, that have been indemnified via settlement or make-whole, or that have been repurchased. Additionally, the Company may receive relief of certain representations and warranty obligations on loans sold to FNMA or FHLMC on or after January 1, 2013 if FNMA or FHLMC satisfactorily concludes a quality control loan file review or if the borrower meets certain acceptable payment history requirements within 12 or 36 months after the loan is sold to FNMA or FHLMC. The activity of the investor reserves was as follows for the years ended December 31, 2020 and 2019: 2020 2019 Balance — beginning of year $ 16,521 $ 14,312 Benefit from investor reserves (9,077 ) (7,994 ) Provision for investor reserves charged to operations 7,091 10,203 Balance — end of year $ 14,535 $ 16,521 |
Warehouse Lines of Credit
Warehouse Lines of Credit | 12 Months Ended |
Dec. 31, 2020 | |
Line Of Credit Facility [Abstract] | |
Warehouse Lines of Credit | NOTE 12 - WAREHOUSE LINES OF CREDIT Warehouse lines of credit consisted of the following at December 31, 2020 and 2019. Changes subsequent to December 31, 2020 have been described in the notes referenced with the below table. Maturity as of December 31, 2020 2020 2019 $800 million master repurchase facility agreement (1) January 2021 $ 442,593 $ 456,225 $250 million master repurchase facility agreement (2) September 2021 148,011 80,965 $700 million master repurchase facility agreement (3) February 2021 541,074 282,579 $200 million master repurchase facility agreement (4) May 2021 187,214 136,699 $300 million master repurchase facility agreement (5) September 2021 232,272 148,149 $500 million master repurchase facility agreement (6) July 2021 464,355 190,221 $200 million master repurchase facility agreement (7) April 2021 104,880 — $75 million master repurchase facility agreement (8) March 2024 25,185 9,569 2,145,584 1,304,407 Prepaid commitment fees (2,141 ) (1,220 ) Net warehouse lines of credit $ 2,143,443 $ 1,303,187 (1) The variable interest rate is calculated using a base rate tied to LIBOR, the Eurodollar, or an alternative base rate with a floor of 0.75%, plus the applicable interest rate margin. In July 2020, the borrowing capacity on this facility increased to $800.0 million. Subsequent to December 31, 2020, this facility was amended with a maturity date of 30 days from written notice by either the financial institution or the Company. (2) The variable interest rate is calculated using a base rate tied to LIBOR, plus the applicable interest rate margin. This line of credit requires a minimum deposit of $1.25 million. (3) The variable interest rate is calculated using a base rate tied to LIBOR, plus the applicable interest rate margin. This line of credit was amended subsequent to December 31, 2020 with a maturity date of February 2022 and was reduced to $500 million and decreased the required minimum deposit to $2.5 million. (4) The variable interest rate is calculated using a base rate plus LIBOR, with a floor of 1.525% plus the applicable interest rate margin. This line of credit requires a minimum deposit of $750,000. (5) The variable interest rate is calculated using a base rate tied to LIBOR with a floor of 0.40%, plus the applicable interest rate margin. (6) The variable interest rate is calculated using a base rate tied to LIBOR with a floor of 0.75%, plus the applicable interest rate margin. (7) The variable interest rate is calculated using a base rate tied to LIBOR with a floor of 1.75 %, plus the applicable interest rate margin. (8) The interest rate on this facility is 3.375%. This facility was opened in 2019 and is used for GNMA delinquent buyouts. Each buyout represents a separate transaction that can remain on the facility for up to 4 years. Subsequent to December 31, 2020, the Company entered into a master purchase agreement with a new lender. The facility size is $250.0 million with an interest rate that is tied to LIBOR plus the applicable interest rate margin. The maturity date of the facility is January 2022. The weighted average interest rate for warehouse lines of credit was 2.52% and 4.04% at December 31, 2020 and 2019, respectively. All warehouse lines of credit are collateralized by underlying mortgages and related documents. Existing balances on warehouse lines are repaid through the sale proceeds from the collateralized loans held for sale. The Company intends to renew existing warehouse lines prior to expiration. If those lines are not renewed or replaced, that could have a negative impact on the Company’s ability to continue funding new loans. The Company had cash balances of $15.6 million and $68.2 million in its warehouse buy down accounts as offsets to certain lines of credit at December 31, 2020 and 2019, respectively. The agreements governing the Company’s warehouse lines of credit contain covenants that include certain financial requirements, including maintenance of maximum adjusted leverage ratio, minimum net worth, minimum tangible net worth, minimum current ratio, minimum liquidity, positive quarterly income and limitations on additional indebtedness, dividends, sale of assets, and decline in the mortgage loan servicing portfolio’s fair value. At December 31, 2020 and 2019, management believes the Company was in compliance with all debt covenants. The Company has an optional short-term financing agreement between FNMA and the lender described as “As Soon As Pooled” (ASAP). The Company can elect to assign FNMA MBS trades to FNMA in advance of settlement and enter into a financing transaction and revenue related to the assignment is deferred until the final pool settlement date. The Company determines utilization based on warehouse availability and cash needs. There was no outstanding balance as of December 31, 2020 and 2019. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 13 - NOTES PAYABLE Revolving Notes: In January 2014, the Company entered into an agreement for a revolving note from one of its warehouse banks, which it can draw upon as needed and has renewed on an annual basis. Borrowings on the revolving note are collateralized by the Company’s GNMA MSRs. Monthly interest on the outstanding balance is calculated using a base rate tied to the LIBOR rate plus the applicable margin, with a floor of 4.50%. The revolving note also has an unused facility fee on the average unused balance, which is also paid quarterly. The unused facility fee is waived if the average outstanding balance exceeds 70% of the available facility. In June 2020, the Company amended and restated the agreement and the revolving note was increased to a maximum committed amount of $135.0 million. The agreement also allows for the Company to increase the committed amount up to $200.0 million. The revolving note is currently scheduled to expire in June 2022. The Company has the option to convert the outstanding balance of the revolving note into a term note at its discretion. At December 31, 2020 and 2019, the Company had $45.0 million and $90.0 million, respectively, in outstanding borrowings on this credit facility. In July 2017, the Company entered into an agreement for a revolving note of up to $25.0 million from one of its warehouse banks, which it can draw upon as needed and has renewed on an annual basis. In July 2018, the Company amended the agreement to increase the revolving note up to $50.0 million. In July 2020, the Company amended the agreement by extending the expiration date to July 2021 and increasing the revolving note up to $65.0 million. Borrowings on the revolving note are collateralized by the Company’s FHLMC MSRs. Monthly interest on the outstanding balance is calculated using a base rate tied to the LIBOR rate with a floor of 0.75% plus the applicable margin. The revolving note also has an unused facility fee on the average unused balance, which is also paid quarterly. The unused facility fee is waived if the average outstanding balance exceeds 50% of the available combined warehouse and MSR facility. The lender has the option to convert the outstanding balance of the revolving note into a term note at its discretion. At December 31, 2020 and 2019, the Company had $20.0 million and $50.0 million, respectively, in outstanding borrowings on this credit facility. Term Note: In January 2014, the Company entered into a term note agreement with one of its warehouse banks collateralized by the Company’s FNMA MSRs. In September 2019, the term note was amended and restated, at which time there was an outstanding amount of $78.0 million. The outstanding amount of $78.0 million was rolled into a new term note with a commitment of $100.0 million. The note allows for the committed amount to be increased to a maximum of $150.0 million. The Company could draw on the committed amount through September 2020 and the note matures on September 30, 2022. Interest on the principal is paid monthly and is based upon a margin plus the highest of the (i) Prime Rate, (ii) Federal Funds Rate plus 0.5%, or (iii) the Eurodollar Base Rate plus 1.0%. Principal payments of 5% of the outstanding balance as of September 30, 2020 were due quarterly beginning October 1, 2020, with the remaining principal balance due upon maturity. The term note also has an unused facility fee equal to 0.375% of the average daily unadvanced amount, which is the difference between the committed amount and the amount outstanding. This fee is paid quarterly. At December 31, 2020 and 2019, the Company had an outstanding balance of $80.8 million and $78.0 million, respectively, on this facility. The minimum calendar year payments of the Company’s term note as of December 31, 2020 are as follows: 2021 $ 17,000 2022 63,750 Total $ 80,750 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 14 - INCOME TAXES On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted and signed into law, and GAAP requires recognition of the tax effects of new legislation during the reporting period that includes the enactment date. The CARES Act introduced a number of tax law changes which are generally taxpayer favorable. In December 2020 the Taxpayer Certainty and Disaster Tax Relief Act was signed into law. No material changes in our effective income tax rates resulted from the either Act. The Company continues to examine additional impacts that the CARES Act may have on the business, and other operations impacted by COVID-19. The effects and ultimate results of our evaluation, if any, could result in temporary book-to-tax timing differences (i.e., no effective tax rate impact) for income tax purposes. The components of income tax expense were as follows for the years ended December 31, 2020 and 2019: 2020 2019 Current tax expense: Federal $ 98,187 $ 21,252 State 22,214 4,977 $ 120,401 $ 26,229 Deferred tax expense (benefit): Federal $ 2,190 $ (19,952 ) State 902 (6,024 ) 3,092 (25,976 ) Income tax expense $ 123,493 $ 253 The following table presents a reconciliation of the recorded income tax expense of continuing operations to the amount of taxes computed by applying the applicable statutory federal income tax rate of 21.0% to income from continuing operations before income taxes, as of December 31, 2020 and 2019, respectively: 2020 2019 Amount Percent Amount Percent Income tax expense at federal statutory rate $ 103,755 21.0 % $ 1,225 21.0 % State income taxes, net of federal tax benefit 19,904 4.0 % 267 4.6 % Nondeductible deferred compensation 7,115 1.4 % — — % Permanent items 1,887 0.4 % (863 ) (14.8 )% Federal and state tax credits, net of federal tax benefit (536 ) (0.1 )% (386 ) (6.6 )% Deferred compensation adjustment (8,834 ) (1.8 )% — — % Other, net 202 0.0 % 10 0.1 % $ 123,493 25.0 % $ 253 4.3 % The tax effects of significant temporary differences which gave rise to the Company’s deferred tax assets and liabilities are as follows at December 31, 2020 and 2019: 2020 2019 Deferred tax assets: Mortgage loans held for sale $ 7,955 $ 6,969 Intangible assets 7,494 1,130 Accrued compensation and benefits 3,705 2,060 Deferred compensation 13,277 1,464 Lease liability 23,440 — Other accrued liabilities 1,240 916 Total deferred tax assets $ 57,111 $ 12,539 Deferred tax liabilities: Mortgage servicing rights $ (98,660 ) $ (94,094 ) Trading securities (19 ) (23 ) Derivatives (22,743 ) (3,518 ) Right-of-use assets (23,127 ) — Property and equipment (1,932 ) (1,182 ) Total deferred tax liabilities (146,481 ) (98,817 ) Net deferred tax liabilities $ (89,370 ) $ (86,278 ) In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities including the impact of available carryback and carryforward periods and projected future taxable income. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. There are no valuation allowances on deferred tax assets as of December 31, 2020 or 2019. At December 31, 2020 the Company had no federal or state net operating loss carryforwards or tax credit carryforwards. The Company records interest related to unrecognized tax benefits in interest expense and records penalties as a component of income taxes. There are no unrecognized tax benefits as of December 31, 2020 or 2019, and there were no changes in unrecognized tax benefits during the year. The Company is required to analyze all open years, as defined by the statutes of limitations, for all major jurisdictions, which includes federal and state jurisdictions. The Company is no longer subject to federal examinations prior to 2017 tax year or for state examinations prior to 2015 tax year. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE 15 - EARNINGS PER SHARE Prior to the IPO, the Guild Mortgage Company LLC membership structure included several different types of LLC interests including ownership interests and profits interests. The Company analyzed the calculation of earnings per unit for periods prior to the IPO using the two-class method and determined that it resulted in values that would not be meaningful to the user of these consolidated financial statements. Therefore, earnings per share information has not been presented for periods prior to October 22, 2020. The basic and diluted earnings per share represent only the period from October 22, 2020 to December 31, 2020. Basic earnings per share is computed based on the weighted average number of shares of Class A and Class B shares outstanding during the period using the two-class method. Diluted earnings per share is computed based on the weighted average number of shares plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include restricted stock units for Class A common stock. The following table sets forth the components of basic and diluted earnings per share for the year ended December 31, 2020: 2020 Net income available for Class A and Class B Common Stock $ 370,577 Weighted-average shares outstanding, Class A Common Stock 19,387 Weighted-average shares outstanding, Class B Common Stock 40,613 Weighted-average shares outstanding - basic 60,000 Add dilutive effects of non-vested shares of restricted stock - Class A 56 Weighted-average shares outstanding - diluted 60,056 Basic earnings per share: Class A and Class B Common Stock $ 6.18 Diluted earnings per share: Class A and Class B Common Stock $ 6.17 No shares were excluded from the calculation of earnings per share as a result of being anti-dilutive. Capital Stock The Company has two classes of common stock: Class A and Class B. Class A common stock is traded on the New York Stock Exchange under the symbol “GHLD.” There is no public market for the Company’s Class B common stock. However, under the terms of the Company’s Articles of Incorporation, the holder of Class B common stock may convert any portion or all of the holder’s shares of Class B common stock into an equal number of shares of Class A common stock at any time. The holders of the Class A common stock and Class B common stock are entitled to dividends when and if declared by the Company’s Board of Directors out of legally available funds. Any stock dividend must be paid in shares of Class A common stock with respect to Class A common stock and in shares of Class B common stock with respect to Class B common stock. The voting powers, preferences and relative rights of Class A common stock and Class B common stock are identical in all respects, except that the holders of Class A common stock have one vote per share and the holders of Class B common stock have ten votes per share. Restricted Stock Units The Company issues RSUs, which represent the right to receive, upon vesting, one share of the Company’s common stock. The number of potentially dilutive shares related to RSUs is based on the number of shares, if any, that would be issuable at the end of the respective reporting period, assuming that date was the end of the vesting period. |
Stock-Based Compensation and Em
Stock-Based Compensation and Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation and Employee Benefit Plans | NOTE 16 - STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS Incentive Plan In October 2020, the Company’s stockholders approved the 2020 Omnibus Incentive Plan (the “2020 Plan”), which is administered by the Compensation Committee of the Board of Directors. The 2020 Plan reserves for issuance a total of 5.5 million shares of common stock to our officers, directors, employees or consultants eligible to receive awards under the 2020 Plan. The 2020 Plan provides for the granting of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards or a combination of the foregoing, to employees, directors or consultants, provided that only employees may be granted incentive stock options. As of December 31, 2020, there were approximately 4.1 million shares of common stock available to be granted under the 2020 Plan. The 2020 Plan will terminate ten years after its adoption, unless terminated earlier by the Company’s Board of Directors. Restricted Stock Units RSUs were granted to employees and directors in connection with the IPO in October 2020. The RSUs granted to employees vest ratably over two to four years and the RSUs granted to directors vest on the first anniversary of the grant. The following table shows a summary of the unvested restricted stock under the 2020 Plan as of December 31, 2020 as well as activity during the year: Weighted Average Number of Shares Grant Date Fair Value Restricted stock awards, unvested, January 1, 2020 — $ — Granted 1,440,334 15.00 Vested — — Forfeited — — Restricted stock awards, unvested, December 31, 2020 1,440,334 $ 15.00 Compensation costs recognized for these restricted stock grants were approximately $1.0 million for the year ended December 31, 2020. As of December 31, 2020, there was approximately $20.6 million of unrecognized compensation costs related to these restricted stock grants which we expect to recognize over the next 3.7 years. Defined Contribution Plan The Company has a 401(k) profit sharing plan covering substantially all employees. Employees may contribute amounts subject to certain Internal Revenue Service and plan limitations. The Company may make discretionary matching and nonelective contributions. For the years ended December 31, 2020 and 2019, the Company contributed $7.6 million and $5.9 million, respectively, for 401(k) contributions and related administrative expenses. Deferred Compensation Plan The Company has a deferred compensation plan for executives which was frozen effective December 31, 2007. Distribution of a participant’s vested balance is payable in a single lump sum upon death or disability; termination of employment; retirement after attaining age 65 (55 for participants who had an account balance in the plan as of May 1, 2001); or upon termination of the plan. In 2017, the Company commenced a Non-Qualified Deferred Compensation Plan for certain highly compensated executives and employees that allows the participants to defer a portion of their earnings. Distribution of a participant’s vested balance is payable in a single lump sum upon death or disability; termination of employment; retirement; or upon termination of the plan. Guild Equity Appreciation Rights Plan In 2013, the Company established the Guild Equity Appreciation Rights (“GEARs”) Plan for certain executives that compensates participants with GEARs that, if vested, will ultimately be settled in cash on the final vesting date. The awards have a five-year five-year In 2017, the Company established a new GEARs Plan for certain executives compensated with GEARs that will ultimately be settled in cash at maturity. Maturity is the earlier of (i) a change of control; (ii) the participant’s retirement; (iii) the participant’s death; (iv) the determination that the participant has suffered a disability; or (v) the involuntary termination of the participant’s employment with the Company and its subsidiaries without cause. The awards vest immediately, and compensation related to these GEARs awards is recognized over the participant’s service period based on the change in the fair value of the award. For the year ended December 31, 2020, the Company recognized $2.6 million as expense, and for the year ended December 31, 2019, the Company recognized $0.1 million as income for both GEARs plans, which is included within salaries, incentive compensation and benefits in the Consolidated Statements of Income. In connection with the Company’s IPO, the GEARs Plans were terminated and frozen. The remaining liability under these plans is $3.5 million and recorded in accrued compensation and benefits in the Consolidated Balance Sheet. This will be paid to the participants twelve months after the IPO date of October 21, 2020. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 17 - COMMITMENTS AND CONTINGENCIES Commitments to Extend Credit The Company enters into interest rate lock commitments with customers who have applied for residential mortgage loans and meet certain credit and underwriting criteria. These commitments expose the Company to market risk if interest rates change and the loan is not economically hedged or committed to an investor. The Company is also exposed to credit loss if the loan is originated and not sold to an investor and the customer does not perform. The collateral upon extension of credit typically consists of a first deed of trust in the mortgagor’s residential property. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon. Total commitments to originate loans at December 31, 2020 and 2019 were approximately $5.2 billion and $1.5 billion, respectively. The Company manages the interest rate price risk associated with its outstanding interest rate lock commitments and loans held for sale by entering into derivative loan instruments such as forward loan sales commitments, mandatory delivery commitments, options and futures contracts. Total commitments related to these derivatives at December 31, 2020 and 2019 were approximately $5.5 billion and $2.0 billion, respectively. Legal The Company is involved in various lawsuits arising in the ordinary course of business. While the ultimate results of these lawsuits cannot be predicted with certainty, management does not expect that these matters will have a material adverse effect on the consolidated financial position or results of operations of the Company. U.S. ex rel. Dougherty v. Guild Mortgage Company, No. 16-cv-02909 (S.D. Cal.) On May 18, 2016, the U.S. Department of Justice (“DOJ”), on behalf of HUD (together, the “government”), filed a Complaint-in-Intervention (“Intervention Complaint”) in a pending qui tam On August 10, 2016, the Company filed motions to dismiss the government’s Intervention Complaint and the Relator’s Third Amended Complaint. In March 2018, the Court stayed the case pending the Ninth Circuit’s determination of the appeal in Rose v Stephens Institute (No. 17-15111). On August 24, 2018, the ruling in the Rose case was issued and the Court lifted its self-imposed stay. On March 4, 2019, the government filed an amended complaint which Guild responded to on March 22, 2019 reasserting that the claims were without merit. Guild’s motion to dismiss was denied by the court in September 2019. Discovery began in December 2019. On October 20, 2020, a settlement agreement with respect to this lawsuit was executed and, pursuant to the terms of the settlement agreement, the Company made a cash payment in the aggregate amount of $24.9 million to the government. In March 2021, we received $1.9 million from our insurance provider related to this settlement agreement. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 18 - RELATED PARTY TRANSACTIONS In November 2014, one of GMC’s executives retired. Other executives of GMC had the option and executed their right to purchase the retiring executive’s units in Guild Management, LLC, an indirect parent company of GMC prior to the IPO. The purchase was funded by GMC and, in return, GMC received a note receivable from Guild Management, LLC for approximately $2.5 million. The note was paid in full prior to the IPO. In April 2017, Guild Investors, LLC, GMC’s former parent prior to the IPO, sold units to Guild Management III, LLC for $2.3 million in consideration, of which $1.2 million was advanced by GMC in exchange for notes receivable from Guild Management III’s members. These members fully paid back the notes and accrued interest during 2019. On January 1, 2019, one of GMC’s executives retired, which triggered a repurchase of the executive’s membership interest in Guild Management, LLC, and a one-time payout of $2.0 million of deferred compensation. GMC’s former parent, Guild Investors, LLC, sold 13.7038 shares of GMC to the executive in exchange for the executive’s membership interest in Guild Management, LLC. The executive in turn sold the shares back to GMC in exchange for a promissory note of $8.0 million, which is payable over 16 quarters. During 2020 and 2019, the Company made payments of $2.1 million and $1.6 million, respectively, to the executive, and $4.6 million remained unpaid as of December 31, 2020. |
Minimum Net Worth Requirements
Minimum Net Worth Requirements | 12 Months Ended |
Dec. 31, 2020 | |
Mortgage Banking [Abstract] | |
Minimum Net Worth Requirements | NOTE 19 - MINIMUM NET WORTH REQUIREMENTS Certain secondary market investors and state regulators require the Company to maintain minimum net worth and capital requirements. To the extent that these requirements are not met, secondary market investors and/or the state regulators may utilize a range of remedies including sanctions, and/or suspension or termination of selling and servicing agreements, which may prohibit the Company from originating, securitizing or servicing these specific types of mortgage loans. The Company is subject to the following minimum net worth, minimum capital ratio and minimum liquidity requirements established by the Federal Housing Finance Agency for Fannie Mae and Freddie Mac Seller/Servicers, and Ginnie Mae for single family issuers. Minimum Net Worth The minimum net worth requirement for Fannie Mae and Freddie Mac is defined as follows: • Base of $2,500 plus 25 basis points of outstanding UPB for total loans serviced. • Adjusted/Tangible Net Worth comprises of total equity less goodwill, intangible assets, affiliate receivables and certain pledged assets. The minimum net worth requirement for Ginnie Mae is defined as follows: • Base of $2,500 plus 35 basis points of the issuer’s total single-family effective outstanding obligations. • Adjusted/Tangible Net Worth comprises of total equity less goodwill, intangible assets, affiliate receivables and certain pledged assets. Minimum Capital Ratio • For Fannie Mae, Freddie Mac and Ginnie Mae the Company is also required to hold a ratio of Adjusted/Tangible Net Worth to Total Assets greater than 6%. Minimum Liquidity The minimum liquidity requirement for Fannie Mae and Freddie Mac is defined as follows: • 3.5 basis points of total Agency servicing. • Incremental 200 basis points of total nonperforming Agency, measured as 90 plus day delinquencies, servicing in excess of 6% of the total Agency servicing UPB. • Allowable assets for liquidity may include: cash and cash equivalents (unrestricted); available for sale or held for trading investment grade securities (e.g., Agency MBS, Obligations of GSEs, US Treasury Obligations); and unused/available portion of committed servicing advance lines. The minimum liquidity requirement for Ginnie Mae is defined as follows: • Maintain liquid assets equal to the greater of $1,000 or 10 basis points of our outstanding single-family MBS. The most restrictive of the minimum net worth and capital requirements require the Company to maintain a minimum adjusted net worth balance of $78,064 and $73,118 as of December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, the Company was in compliance with this requirement. |
Additional Non-Cash Disclosures
Additional Non-Cash Disclosures | 12 Months Ended |
Dec. 31, 2020 | |
Noncash Investing And Financing Items [Abstract] | |
Additional Non-Cash Disclosures | NOTE 20 - ADDITIONAL NON-CASH DISCLOSURES For the years ended December 31, 2020 and 2019, the Company had the following non-cash transactions that are not included in the Consolidated Statements of Cash Flows. 2020 2019 GNMA inventory obtained due to delinquent status of GNMA serviced loans $ 1,073,852 $ 290,945 GNMA inventory removed from delinquent status (137,843 ) (116,138 ) GNMA real estate owned resolved through finalized foreclosure sale (conveyed to HUD) (7,984 ) (11,440 ) Reduction in GNMA inventory due to loan removal from pool (63,489 ) (83,895 ) Net increase of GNMA payable due to receipt or resolution of GNMA inventory and GNMA real estate owned $ 864,536 $ 79,472 GNMA real estate owned obtained through foreclosure sale of GNMA serviced loans $ 1,022 $ 7,617 |
Segments
Segments | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segments | NOTE 21 - SEGMENTS ASC 280, Segment Reporting Origination — The Company operates its loan origination business in approximately forty-eight states. Its licensed sales professionals and support staff cultivate deep relationships with referral partners and clients and provide a customized approach to the loan transaction whether it is a purchase or refinance. The origination segment is primarily responsible for loan origination, acquisition and sale activities. Servicing — The Company services loans out of its corporate office in San Diego, California. Properties of the loans serviced by the Company are disbursed throughout the United States and as of December 31, 2020 the Company serviced at least one loan in forty-eight different states. The servicing segment provides a steady stream of cash flow to support the origination segment and more importantly it allows for the Company to build long standing client relationships that drive repeat and referral business back to the origination segment to recapture the client’s next mortgage transaction. The servicing segment is primarily responsible for the servicing activities of all loans in the Company’s servicing portfolio which includes, but is not limited to, collection and remittance of loan payments, managing borrower’s impound accounts for taxes and insurance, loan payoffs, loss mitigation and foreclosure activities. The Company does not allocate assets to its reportable segments as they are not included in the review performed by the Chief Operating Decision Maker for purposes of assessing segment performance and allocating resources. The balance sheet is managed on a consolidated basis and is not used in the context of segment reporting. The Company also does not allocate certain corporate expenses, which are represented by All Other in the tables below. The following table presents the financial performance and results by segment for the year ended December 31, 2020: Origination Servicing Total Segments All Other Total Revenue Loan origination fees and gain on sale of loans, net $ 1,753,517 $ 6,354 $ 1,759,871 $ — $ 1,759,871 Loan servicing and other fees — 160,237 160,237 — 160,237 Valuation adjustment of mortgage servicing rights — (296,307 ) (296,307 ) — (296,307 ) Interest income (expense) 13,993 (8,068 ) 5,925 (8,444 ) (2,519 ) Other income, net 25 133 158 607 765 Net revenue 1,767,535 (137,651 ) 1,629,884 (7,837 ) 1,622,047 Expenses Salaries, incentive compensation and benefits 864,322 25,075 889,397 64,361 953,758 General and administrative 84,999 9,270 94,269 7,679 101,948 Occupancy, equipment and communication 48,233 3,524 51,757 5,313 57,070 Depreciation and amortization 4,644 777 5,421 2,080 7,501 Provision for foreclosure losses — 7,700 7,700 — 7,700 Income tax expense — — — 123,493 123,493 Net income (loss) $ 765,337 $ (183,997 ) $ 581,340 $ (210,763 ) $ 370,577 The following table presents the financial performance and results by segment for the year ended December 31, 2019: Origination Servicing Total Segments All Other Total Revenue Loan origination fees and gain on sale of loans, net $ 817,293 $ 3,521 $ 820,814 $ — $ 820,814 Loan servicing and other fees — 142,705 142,705 — 142,705 Valuation adjustment of mortgage servicing rights — (255,219 ) (255,219 ) — (255,219 ) Interest income (expense) 9,702 2,674 12,376 (8,980 ) 3,396 Other income, net 38 — 38 1,155 1,193 Net revenue 827,033 (106,319 ) 720,714 (7,825 ) 712,889 Expenses Salaries, incentive compensation and benefits 548,056 15,538 563,594 14,576 578,170 General and administrative 43,028 10,307 53,335 10,648 63,983 Occupancy, equipment and communication 48,115 2,078 50,193 3,485 53,678 Depreciation and amortization 6,417 326 6,743 590 7,333 Provision for foreclosure losses — 3,895 3,895 — 3,895 Income tax expense — — — 253 253 Net income (loss) $ 181,417 $ (138,463 ) 42,954 $ (37,377 ) $ 5,577 |
Business, Basis of Presentati_2
Business, Basis of Presentation, and Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Organization | Organization Guild Holdings Company (the “Company”, and together with its consolidated subsidiaries, “Guild”, “we”, “us”, “our”) was incorporated in Delaware on August 11, 2020 for the purpose of facilitating an initial public offering (“IPO”) of its Class A common stock and other related transactions in order to carry on the business of Guild Mortgage Company LLC (“GMC”) and its wholly owned subsidiaries. GMC was incorporated in California on August 10, 1960 and in October of 2020 was converted to a California limited liability company. The Company originates, sells, and services residential mortgage loans. The Company operates approximately 200 branches with licenses in 48 states. The Company’s residential mortgage originations are generated in 45 states from two channels of business; retail and correspondent. For the year ended December 31, 2020 the channel production was as follows: retail 97.4% and correspondent 2.6%. For the year ended December 31, 2019, the channel production was as follows: retail 96.5%, and correspondent 3.5%. The Company is certified with the United States Department of Housing and Urban Development (“HUD”) and the Department of Veterans Affairs (“VA”) and operates as a Federal Housing Association (“FHA”) non-supervised lender. In addition, the Company is an approved issuer with Government National Mortgage Association (“GNMA”), as well as an approved seller and servicer with Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and the United States Department of Agriculture Rural Development (“USDA”). Properties securing the mortgage loans in the Company’s servicing portfolio are geographically dispersed throughout the United States; however, at December 31, 2020, approximately 15.1% of such properties were located in California, 11.4% were located in Washington, and 10.1% were located in Texas. At December 31, 2019, approximately 16.0% of such properties were located in California, 12.1% were located in Washington, and 9.7% were located in Texas. Similarly, loan production in California, Washington and Oregon represented 18.2%, 15.5%, and 9.9%, respectively, of the Company’s total loan production in 2020. For the year ended December 31, 2019, California, Washington and Oregon represented 16.9%, 16.5%, and 9.2%, respectively, of the Company’s total loan production. |
IPO and Reorganization | IPO and Reorganization In October 2020 the Company underwent a reorganization in connection with its initial public offering (the “Offering” or “IPO”). Prior to the completion of the Offering, GMC’s former parent entity, Guild Investors, LLC, contributed 100% of the shares GMC to Guild Holdings Company (“Holdings”) and GMC was converted to a California limited liability company. As a result, Holdings is the sole member of GMC. On October 21, 2020 Guild Holdings Company completed the IPO of 6,500,000 shares of Class A common stock, $0.01 par value, at an offering price of $15.00 per share. Guild Holdings Company is a publicly traded company whose Class A common stock is traded on the New York Stock Exchange under the ticker symbol “GHLD”. As a result of the IPO and the reorganization: Guild Holdings Company is the sole management member of GMC, which owns a direct interest in its subsidiaries. Guild Holdings Company is a holding company which has no material assets, other than its ownership of GMC, and its indirect interest in the subsidiaries of GMC and has no independent means of generating revenue or cash flow. 1,440,334 shares of Guild Holdings Company’s Class A common stock were reserved for equity-based awards. 45,233,291 shares of Class B common stock were issued to McCarthy Capital Mortgage Investors at the completion of the Offering. The Class B common stock has a par value of $0.01 per share and 10 votes per share. Following the IPO, 4,900,272 shares of Class B common stock were converted into Class A common stock. The public stockholders own 6,500,000 shares of Class A common stock, which represent 1.5% of the combined voting power of Guild Holdings Company. |
Principles of Consolidation | Principles of Consolidation The Company has one wholly owned subsidiary, GMC, which through its direct subsidiaries, conducts the Company’s mortgage banking operations. GMC owns Guild Administration Corp., Mission Village Insurance Agency, Guild Insurance, LLC and Guild Financial Express, Inc. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. In March 2020, the World Health Organization (“WHO”) declared the outbreak of a novel coronavirus ( “ COVID-19 ” ) as a pandemic, which continues to spread throughout the United States. The Company remains fully functional in both its origination and servicing operations. While the pandemic could cause certain branches to temporarily close, most of the significant job functions can be performed remotely. The Company has taken steps to ensure business can continue as necessary should branches be forced to temporarily close. The Company continues to monitor guidance published by the WHO, Centers for Disease Control and Prevention, local and federal government agencies and the Mortgage Bankers Association and is in continual communication with its investors regarding the developments in the mortgage industry. |
Revenue Recognition | Revenue Recognition Loan origination fees and gain on sale of loans, net — loan origination fees and gain on sale of loans, net includes all components related to the origination and sale of mortgage loans, including (1) net gain on sale of loans, which represents the premium the Company receives in excess of the loan principal amount and certain fees charged by investors upon sale of loans into the secondary market, (2) loan origination fees (credits), points and certain costs, (3) provision for or benefit from investor reserves, (4) the change in fair value of interest rate locks and loans held for sale, (5) the gain or loss on forward commitments hedging loans held for sale and interest rate lock commitments (“IRLCs”), and (6) the fair value of originated mortgage servicing rights (“MSRs”). An estimate of the gain on sale of loans, net is recognized at the time an IRLC is issued, net of a pull-through factor. Subsequent changes in the fair value of IRLCs and mortgage loans held for sale are recognized in current period earnings. When the mortgage loan is sold into the secondary market, any difference between the proceeds received and the current fair value of the loan is recognized in current period earnings. Included in gain on sale of loans, net is the fair value of originated MSRs, which represents the estimated fair value of MSRs related to loans which we have sold and retained the right to service. See and , for more information related to fair value measurements of mortgage loans held for sale, the gain/(loss) on changes in the fair value of MSRs and the gain/(loss) on changes in the fair value of IRLCs, respectively. At December 31, 2020 and 2019, loan origination fees and gain on sale of loans were net of direct expenses of $266,451 and $175,338, respectively Loan servicing and other fees — Loan servicing fees represent fees earned for servicing loans for various investors. The servicing fees are based on a contractual percentage of the outstanding principal balance and recognized into revenue as the related mortgage payments are received. Loan servicing expenses are charged to operations as incurred. Valuation adjustment of mortgage servicing rights — In accordance with Accounting Standards Codification (“ASC”) 860-50, the Company records MSRs as an asset, at fair value. The change in fair value is recorded within the Consolidated Statements of Income on a monthly basis. See , for information related to the gain/(loss) on changes in the fair value of MSRs. Interest income — interest income includes interest earned on mortgage loans held for sale Interest expense — interest expense includes interest paid to the Company’s loan funding facilities and MSR facilities. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash For cash flow purposes, the Company considers cash and temporary investments with original maturities of three months or less, to be cash and cash equivalents. The Company typically maintains cash in financial institutions in excess of Federal Deposit Insurance Corporation limits. The Company evaluates the creditworthiness of these financial institutions in determining the risk associated with these cash balances. The Company maintains cash balances that are restricted under the terms of its warehouse lines of credit. The following table summarizes the Company’s cash, cash equivalents and restricted cash at December 31, 2020 and 2019: 2020 2019 Cash and cash equivalents $ 334,623 $ 101,735 Restricted cash 5,010 5,000 Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows $ 339,633 $ 106,735 |
Mortgage Loans Held for Sale | Mortgage Loans Held for Sale The Company measures newly originated prime residential Mortgage Loans Held for Sale (“MLHS”) at fair value in accordance with ASC 825, Financial Instruments The Company estimates fair value by evaluating a variety of market indicators, including recent trades and outstanding commitments, calculated on an individual loan basis and aggregated (see Note 2 — Fair Value Measurements Loans are considered sold when the Company surrenders control over the financial assets. Control is considered to have been surrendered when the transferred assets have been isolated from the Company, beyond the reach of the Company and its creditors; the purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets; and the Company does not maintain effective control over the transferred assets through an agreement that both entitles and obligates the Company to repurchase or redeem the transferred assets before their maturity. The Company typically considers the above criteria to have been met upon acceptance and receipt of sales proceeds from the purchaser. |
Ginnie Mae Loans Subject to Repurchase Right | Ginnie Mae Loans Subject to Repurchase Right In accordance with ASC 860-50, Transfers and Servicing — Servicing Assets and Liabilities |
Mortgage Servicing Rights | Mortgage Servicing Rights Mortgage servicing rights are recognized as assets in the Consolidated Balance Sheet when loans are sold, and the associated servicing rights are retained. The Company maintains one class of MSR asset and has elected the fair value option. To determine the fair value of the servicing right when created, the Company uses a valuation model that calculates the present value of future cash flows. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, including estimates of contractual service fees, ancillary income and late fees, the cost of servicing, the discount rate, float value, the inflation rate, estimated prepayment speeds, and default rates. |
Derivative Instruments | Derivative Instruments The Company enters into IRLCs, forward commitments to sell mortgage loans and to be announced trades which are considered derivative financial instruments. These items are accounted for as free-standing derivatives and are included in the Consolidated Balance Sheets at fair value. The Company treats all of its derivative instruments as economic hedges; therefore, none of its derivative instruments qualify for designation as accounting hedges. The Company enters into IRLCs to originate residential mortgage loans at specified interest rates and within a specified period of time, with customers who have applied for a loan and meet certain credit and underwriting criteria. IRLCs on mortgage loans in process that have not closed, but are intended to be sold, are considered to be derivatives and changes in fair value are recorded in the Consolidated Statements of Income as part of Loan Origination Fees and Gain on Sale of Loans, net. Fair value is based upon changes in the fair value of the underlying mortgages, estimated to be realizable upon sale into the secondary market, net of estimated incentive compensation expenses. Fair value estimates also consider loan commitments not expected to be exercised by customers for unforeseen reasons, commonly referred to as fallout. IRLCs and uncommitted mortgage loans held for sale expose the Company to the risk that the value of the mortgage loans held and mortgage loans underlying the commitments may decline due to increases in mortgage interest rates during the life of the commitments. To protect against this risk the Company enters into derivative loan instruments such as forward loan sales commitments, mandatory delivery commitments, options and futures contracts. Management expects the changes in the fair value of these derivatives to have a negative correlation to the changes in fair value of the derivative loan commitments and loans held for sale, thereby reducing earnings volatility. The changes in fair value are recorded in the Consolidated Statements of Income as part of Loan Origination Fees and Gain on Sale of Loans, net. The Company considers various factors and strategies in determining the portion of the mortgage pipeline and loans held for sale it wants to economically hedge. Forward commitments include To-Be-Announced (“TBA”) mortgage-backed securities that have been aggregated at the counterparty level for presentation and disclosure purposes. Counterparty agreements contain a legal right to offset amounts due to and from the same counterparty under legally enforceable master netting agreements to settle with the same counterparty, on a net basis, as well as the right to obtain cash collateral. Forward commitments also include commitments to sell loans to counterparties and to purchase loans from counterparties at determined prices. See Notes 2 and 6 |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost and depreciated using the straight-line method over the estimated useful life of the asset, usually three years. Leasehold improvements are amortized using the straight-line method over the shorter of the term of the related lease or the estimated useful life. The Company recognizes internal-use software within property and equipment which consists of both internal and external costs incurred in the development, testing and implementation directly related to the new software. The internal-use software is amortized over a three-year |
Acquisitions | Acquisitions When making an acquisition, the Company recognizes separately from goodwill the assets acquired and the liabilities assumed at their acquisition date fair values under ASC 805, Business Combinations Accounting for business combinations requires the Company’s management to make estimates and assumptions, especially at the acquisition date with respect to mortgage servicing rights and contingent considerations. Although the Company believes the assumptions and estimates it has made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. |
Goodwill | Goodwill Goodwill is recorded at fair value and is tested for potential impairment at least annually, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company’s goodwill is allocated by reporting unit and is evaluated for impairment by first performing a qualitative assessment to determine whether a quantitative goodwill test is necessary. Qualitative factors include, among other things, macroeconomic conditions, industry and market considerations, financial performance of the respective reporting unit and other relevant entity- and reporting-unit specific considerations. If it is determined, based on qualitative factors, that the fair value of the reporting unit may be more likely than not less than the carrying amount, or if significant adverse changes in our future financial performance occur that could materially impact fair value, a quantitative goodwill impairment test would be required. The fair value of goodwill is determined by assigning the fair value of the reporting unit to all the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination. If the fair value is less than the carrying value, the amount of impairment expense is equal to the difference between the reporting unit’s fair value and the reporting unit’s carrying value. See Note 10 – Goodwill |
Contingent Liabilities due to Acquisitions | Contingent Liabilities due to Acquisitions The Company may be required to pay future consideration to the former shareholders of acquired companies, depending upon the terms of the applicable purchase agreement, which is contingent upon the achievement of certain financial and operating targets. The Company determines the fair value for its contingent consideration obligations using an income approach whereby the Company forecasts the cash outflows related to the earn-outs, which are based on a percentage of net income specified in the purchase agreements. The Company then discounts these expected payment amounts to calculate the fair value as of the valuation date. The Company’s management evaluates the underlying projections used in determining fair value each period and makes updates to these underlying projections when there have been significant changes in management’s expectations of the future business performance. The principal significant unobservable input used in the valuations of the Company’s contingent consideration obligations is a risk-adjusted discount rate. Whereas management’s underlying projections adjust for market penetration and other economic expectations, the discount rate is risk-adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), upfront payments, and credit risk. An increase in the discount rate will result in a decrease in the fair value of contingent consideration. Conversely, a decrease in the discount rate will result in an increase in the fair value of contingent consideration. At each reporting date, or whenever there are significant changes in underlying key assumptions, a review of these assumptions is performed and the contingent consideration liability is updated to its estimated fair value. If there are no significant changes in the assumptions, the quarterly determination of the fair value of contingent consideration reflects the implied interest for the passage of time. Changes in the estimated fair value of the contingent consideration obligations may result from changes in the terms of the contingent payments, changes in discount periods and rates and changes in probability assumptions with respect to the timing and likelihood of achieving the certain financial targets. Actual progress toward achieving the financial targets for the remaining measurement periods may be different than the Company’s expectations of future performance. The change in the estimated fair value of contingent consideration is included in general and administrative expense in the Consolidated Statements of Income. |
Real Estate Owned | Real Estate Owned There are two types of REO properties held by the Company. The first is considered a traditional REO where the Company owns, markets, and sells the property. At the time of foreclosure, other real estate owned is recorded at the asset’s fair value less selling costs, which becomes the property’s new basis. After foreclosure, these assets are carried at the lower of their new cost basis or fair value less selling costs. Costs incurred in maintaining foreclosed real estate and subsequent write-downs to reflect declines in the fair value of the property are expensed as incurred. At December 31, 2020 and 2019, the Company had $0.2 million and $0.9 million, respectively, of traditional REOs. The second type is foreclosed real estate securing GNMA loans in process of conveyance to HUD but insured by FHA, where the Company is the controller of the deed for a period of time. For GNMA loans, the property becomes REO if not sold to a third party at its foreclosure sale. Both principal and debenture rate interest for government insured loans secured by the foreclosed real estate are collectible because the loans are insured by FHA. This is valued at the UPB of the loan, which is considered to be fair value, as HUD reimburses the Company for the UPB plus debenture rate interest and fees. The Company reserves for unreimbursed interest in excess of the debenture rate and fees as part of the foreclosure loss reserve. The total REO property that will be conveyed to HUD was valued at $1.2 million and $8.1 million at December 31, 2020 and 2019, respectively. |
Investor Reserves | Investor Reserves The Company has exposure to potential mortgage loan repurchases and indemnifications in its capacity as a loan originator and servicer. The estimation of the liability for probable losses related to the repurchase and indemnification obligation considers an estimate of probable future repurchase or indemnification obligations from breaches of representations and warranties. The liability related to specific non-performing loans is based on a loan-level analysis considering the current collateral value, estimated sales proceeds and selling costs. The liability related to probable future repurchase or indemnification obligations is segregated by year of origination and considers the amount of unresolved repurchase and indemnification requests, as well as an estimate of future repurchase demands. Future repurchase demands are estimated based upon recent and historical repurchase and indemnification experience, as well as the success rate in appealing repurchase requests and an estimated loss severity, based on current loss rates for similar loans. The Company also has exposure to early payment defaults (“EPD”) and/or early payoff fees (“EPO”). When the Company sells a loan to an investor and the loan either pays off or goes into default within a certain timeframe, the Company could be exposed to EPD and/or EPO fees in accordance with each investor’s contract. The Company reserves for these fees by estimating early payment defaults and fees based on prior loan activity and current loan origination volume. |
Foreclosure Loss Reserve and Provision for Foreclosure Losses | Foreclosure Loss Reserve and Provision for Foreclosure Losses The Company has exposure for losses associated with government loans in foreclosure related to nonrefundable interest and foreclosure servicing costs. The Company maintains a reserve for government loans currently in foreclosure based on historical loss experience. The Company also accrues for any additional known losses above the current loss per loan; for example, losses due to servicer delays. |
Advertising | Advertising Advertising is expensed as incurred and amounted to $11.9 million and $11.8 million for the years ended December 31, 2020 and 2019, respectively, and is included within general and administrative expenses in the Consolidated Statements of Income. |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The fair value of restricted stock units (“RSUs”) is based on the value of the Company’s common stock on the date of grant. Stock-based compensation is included in salaries, incentive compensation and benefits. See Note 16 for additional information. |
Earnings Per Share | Earnings Per Share The Company determines earnings per share in accordance with the authoritative guidance in ASC Topic 260, Earnings Per Share |
Offering Costs | Offering Costs The Company complies with the requirements of SEC Staff Accounting Bulletin Topic 5A — “Expenses of Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to our IPO and were charged to stockholders’ equity upon the completion. Accordingly, offering costs totaling $4.5 million were charged to stockholders’ equity. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more-likely than-not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and records penalties as a component of income taxes. |
Escrow and Fiduciary Funds | Escrow and Fiduciary Funds As a loan servicer, the Company maintains segregated bank accounts in trust for investors and escrow balances for mortgagors, which are excluded from the Company’s Consolidated Balance Sheets. These accounts totaled $1.7 billion and $1.0 billion at December 31, 2020 and 2019, respectively. |
Risks and Uncertainties | Risks and Uncertainties In the normal course of business, companies in the mortgage banking industry encounter certain economic, liquidity, and regulatory risks. Economic risk includes interest rate risk and credit risk. Interest rate risk The Company’s mortgage loans held for sale, commitments to originate loans, and mortgage servicing rights are subject to interest rate risk. For mortgage loans held for sale and commitments to originate loans, to the extent that a rising interest rate environment exists, the Company may experience a decrease in loan production and decreases in value, which may negatively impact the Company’s operations. To mitigate this risk the Company uses hedging strategies designed to ensure any fluctuations in rates would not have a material impact on the Company’s financial position. For the Company’s mortgage servicing rights, to the extent that a declining interest rate environment exists, the Company may experience decreases in the fair value of the portfolio, which may negatively impact the Company’s financial position. For the years ended December 31, 2020 and 2019, the Company experienced a material decline in the valuation of its MSR portfolio due to a significant decline in interest rates. Since the Company also has a large origination platform the Company was able to mitigate this risk by recapturing a significant portion of the runoff through refinances. Credit risk Credit risk is the risk of default that may result from borrowers’ inability or unwillingness to make contractually required payments during the period in which loans are being held for sale. The Company considers credit risk associated with these loans to be insignificant as it holds the loans for a short period of time, typically less than a month, and historically the Company has not experienced any material losses due to credit risk on loans held for sale. The Company sells loans to investors without recourse. As such, the investors have assumed the risk of loss or default by the borrower. However, the Company is usually required by these investors to make certain standard representations and warranties relating to credit information, loan documentation and collateral. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase the loans or indemnify these investors for any losses from borrower defaults, defects in the collateral or errors made in the credit decision. The Company is also subject to counterparty credit risk in the event of contractual nonperformance by its trading counterparties to its various over-the-counter derivative financial instruments. The Company manages this credit risk by selecting only counterparties that it believes to be financially strong, spreading the credit risk among many such counterparties, placing contractual limits on the amount of unsecured credit extended to any single counterparty, and entering into netting agreements with the counterparties as appropriate. The master netting agreements contain a legal right to offset amounts due to and from the same counterparty. Derivative assets in the Consolidated Balance Sheets represent derivative contracts in a gain position net of loss positions with the same counterparty and, therefore, also represent the Company’s maximum counterparty credit risk. The Company incurred no credit losses due to nonperformance of any of its counterparties during the years ended December 31, 2020 and 2019. Liquidity risk The Company encounters liquidity risk as the business requires substantial cash to support its operating activities. As a result, the Company is dependent on its lines of credit, and other financing facilities in order to finance its continued operations. If the Company’s principal lenders decided to terminate or not to renew these credit facilities with the Company, the loss of borrowing capacity could have an adverse impact on the Company’s financial statements unless the Company found a suitable alternative source. To mitigate this risk, the Company has multiple financing facilities with different lenders and varied maturity dates. Historically, the Company has not had a line of credit involuntarily terminated by a lender. Regulatory risk The Company is subject to extensive and comprehensive regulation under federal, state and local laws in the United States. These laws and regulations significantly affect the way in which the Company does business and can restrict the scope of the Company’s existing business and limit the Company’s ability to expand product offerings or pursue acquisitions, or can make costs to service or originate loans higher, which could impact financial results. The Company continually monitors its regulatory environment for any changes that could have a significant impact on operations. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842), which has been subsequently amended by ASUs 2018-01, 2018-10, 2018-11, 2018-20, 2019-01 and 2019-10. This guidance amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It will require companies to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. Effective December 31, 2020, we lost our emerging growth company (“EGC”) status which accelerated the adoption of Topic 842. On January 1, 2020, the Company adopted ASU 2016-02. The Company adopted the new guidance using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. The most significant impact was the recognition of right-of-use assets and lease liabilities for operating leases. See Note 9 In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326). Accounting Standards Issued but Not Yet Adopted Prior to December 31, 2020, as an EGC, we elected to use the extended transition period provided by the Jumpstart Our Business Startups Act for the implementation of new or revised accounting standards. Effective December 31, 2020, we lost our EGC status. The adoption dates discussed below reflect adoption dates based on our revised filing status as a smaller reporting company. In August 2018, the FASB issued ASU 2018-15 , Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 35-40) In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the benefits of) reference rate reform on financial reporting. The amendments in ASU 2020-04 are elective and apply to all entities, subject to meeting certain criteria, that have contract, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity 1, 2024 , and interim periods within those fiscal years. Early adoption is permitted. The Company is currently in the process of evaluating the impact of the adoption of the new guidance on its financial statements. |
Fair Value Measurements | Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Inputs used to measure fair value are prioritized within a three-level fair value hierarchy. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The categorization of assets and liabilities measured at fair value within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. • Level One • Level Two • Level Three The Company updates the valuation of each instrument recorded at fair value on a monthly or quarterly basis, evaluating all available observable information which may include current market prices or bids, recent trade activity, changes in the levels of market activity and benchmarking of industry data. The assessment also includes consideration of identifying the valuation approach that would be used currently by market participants. If it is determined that a change in valuation technique or its application is appropriate, or if there are other changes in availability of observable data or market activity, the current methodology will be analyzed to determine if a transfer between levels of the valuation hierarchy is appropriate. Such reclassifications are reported as transfers into or out of a level as of the beginning of the quarter that the change occurs. Fair value is based on quoted market prices, when available. If quoted prices are not available, fair value is estimated based upon other observable inputs. Unobservable inputs are used when observable inputs are not available and are based upon judgments and assumptions, which are the Company’s assessment of the assumptions market participants would use in pricing the asset or liability. These inputs may include assumptions about risk, counterparty credit quality, the Company’s creditworthiness and liquidity and are developed based on the best information available. When a determination is made to classify an asset or liability within Level Three of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement of the asset or liability. The fair value of assets and liabilities classified within Level Three of the valuation hierarchy also typically includes observable factors and the realized or unrealized gain or loss recorded from the valuation of these instruments would also include amounts determined by observable factors. Recurring Fair Value Measurements The Company’s fair value measurements are evaluated within the fair value hierarchy, based on the nature of the inputs used to determine the fair value at the measurement date. At December 31, 2020 and 2019, the Company had the following assets and liabilities that are measured at fair value on a recurring basis: Trading Securities — Trading securities are classified within Level One of the valuation hierarchy. Valuation is based upon quoted prices for identical instruments traded in active markets. Level One trading securities include securities traded on active exchange markets, such as the New York Stock Exchange. Trading securities are included within prepaid expenses and other assets in the Consolidated Balance Sheets. Derivative Instruments — Derivative instruments are classified within Level Two and Level Three of the valuation hierarchy, and include the following: Interest Rate Lock Commitments : IRLCs are classified within Level Three of the valuation hierarchy. IRLCs represent an agreement to extend credit to a mortgage loan applicant, or an agreement to purchase a loan from a third-party originator, whereby the interest rate on the loan is set prior to funding. The fair value of IRLCs is based upon the estimated fair value of the underlying mortgage loan, including the expected net future cash flows related to servicing the mortgage loan, net of estimated incentive compensation expenses, and adjusted for: (i) estimated costs to complete and originate the loan and (ii) an adjustment to reflect the estimated percentage of IRLCs that will result in a closed mortgage loan under the original terms of the agreement (pull-through rate). The pull-through rate is considered a significant unobservable input and is estimated based on changes in pricing and actual borrower behavior using a historical analysis of loan closing and fallout data. The average pull-through rate used to calculate the fair value of IRLCs as of December 31, 2020 and 2019, was 87.8% and 89.4%, respectively. On a quarterly basis, actual loan pull-through rates are compared to the modeled estimates to confirm the assumptions are reflective of current trends. Generally, a change in interest rates is accompanied by a directionally opposite change in the assumption used for the pull-through percentage, and the impact to fair value of a change in pull-through would be partially offset by the related change in price. Forward Delivery Commitments : Forward delivery commitments are classified within Level Two of the valuation hierarchy. Forward delivery commitments fix the forward sales price that will be realized upon the sale of mortgage loans into the secondary market. The fair value of forward delivery commitments is primarily based upon the current agency mortgage-backed security market to-be-announced pricing specific to the loan program, delivery coupon and delivery date of the trade. Best efforts sales commitments are also entered into for certain loans at the time the borrower commitment is made. These best-efforts sales commitments are valued using the committed price to the counterparty against the current market price of the IRLC or mortgage loan held for sale. Option contracts are a type of forward commitment that represents the rights to buy or sell mortgage-backed securities at specified prices in the future. Their value is based upon the underlying current to-be-announced pricing of the agency mortgage-backed security market, and market-based volatility. See Note 6 Mortgage Loans Held for Sale — MLHS are carried at fair value. The fair value of MLHS is based on secondary market pricing for loans with similar characteristics, and as such, is classified as a Level Two measurement. For Level Two MLHS, fair value is estimated through a market approach by using either: (i) the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value of a whole mortgage loan, including the value attributable to servicing rights and credit risk, (ii) current commitments to purchase loans or (iii) recent observable market trades for similar loans, adjusted for credit risk and other individual loan characteristics. The agency mortgage-backed security market is a highly liquid and active secondary market for conforming conventional loans whereby quoted prices exist for securities at the pass-through level and are published on a regular basis. The Company has the ability to access this market and it is the market into which conforming mortgage loans are typically sold. Mortgage Servicing Rights — MSRs are classified within Level Three of the valuation hierarchy due to the use of significant unobservable inputs and the lack of an active market for such assets. The fair value of MSRs is estimated based upon projections of expected future cash flows considering prepayment estimates, the Company’s historical prepayment rates, portfolio characteristics, interest rates based on interest rate yield curves, implied volatility, costs to service and other economic factors. The Company obtains valuations from an independent third party on a monthly basis, and records an adjustment based on this third-party valuation. Contingent Liabilities due to acquisitions — Contingent liabilities represent future obligations of the Company to make payments to the former owners of its acquired companies. The Company determines the fair value of its contingent liabilities using a discounted cash flow approach whereby the Company forecasts the cash outflows related to the future payments, which are based on a percentage of net income specified in the purchase agreements. The Company then discounts these expected payment amounts to calculate the present value, or fair value, as of the valuation date. The Company’s management evaluates the underlying projections used in determining fair value each period and makes updates to these underlying projections. The Company uses a risk-adjusted discount rate to value the contingent liabilities which is considered a significant unobservable input, and as such, the liabilities are classified as a Level Three measurement. Management’s underlying projections adjust for market penetration and other economic expectations, and the discount rate is risk-adjusted for key factors such as uncertainty in the mortgage banking industry due to its reliance on external influences (interest rates, regulatory changes, etc.), upfront payments, and credit risk. An increase in the discount rate will result in a decrease in the fair value of the contingent liabilities. Conversely, a decrease in the discount rate will result in an increase in the fair value of the contingent liabilities. For each of the years ended December 31, 2020 and 2019, the range of the risk adjusted discount rate was 8.0% - 20.0%, with a median of 15.0%. Adjustments to the fair value of the contingent liabilities (other than payments) are recorded as a gain or loss and are included within general and administrative expenses in the Consolidated Statements of Income. The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020: Description Level 1 Level 2 Level 3 Total Assets: Trading securities $ 78 $ — $ — $ 78 Derivative Interest rate lock commitments — — 130,338 130,338 Mortgage loans held for sale — 2,368,777 — 2,368,777 Mortgage servicing rights — — 446,998 446,998 Total assets at fair value $ 78 $ 2,368,777 $ 577,336 $ 2,946,191 Liabilities: Derivative Forward delivery commitments $ — $ 38,270 $ — $ 38,270 Contingent liabilities due to acquisitions — — 18,094 18,094 Total liabilities at fair value $ — $ 38,270 $ 18,094 $ 56,364 The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2019: Description Level 1 Level 2 Level 3 Total Assets: Trading securities $ 93 $ — $ — $ 93 Derivative Interest rate lock commitments — — 19,922 19,922 Mortgage loans held for sale — 1,504,842 — 1,504,842 Mortgage servicing rights — — 418,402 418,402 Total assets at fair value $ 93 $ 1,504,842 $ 438,324 $ 1,943,259 Liabilities: Derivative Forward delivery commitments $ — $ 4,863 $ — $ 4,863 Contingent liabilities due to acquisitions — — 8,073 8,073 Total liabilities at fair value $ — $ 4,863 $ 8,073 $ 12,936 The table below presents a reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended: IRLCs Contingent Liabilities Balance at December 31, 2018 $ 12,541 $ 5,106 Net transfers and revaluation gains 7,381 — Payments — (6,688 ) Additions — 1,735 Valuation adjustments — 7,920 Balance at December 31, 2019 $ 19,922 $ 8,073 Net transfers and revaluation gains 110,416 — Payments — (21,684 ) Valuation adjustments — 31,705 Balance at December 31, 2020 $ 130,338 $ 18,094 Changes in the availability of observable inputs may result in reclassifications of certain assets or liabilities. Such reclassifications are reported as transfers in or out of Level Three as of the beginning of the period that the change occurs. There were no transfers between fair value levels during the years ended December 31, 2020 and 2019. Non-Recurring Fair Value Measurements Certain assets and liabilities that are not typically measured at fair value on a recurring basis may be subject to fair value measurement requirements under certain circumstances. These adjustments to fair value usually result from write-downs of individual assets. At December 31, 2020 and 2019, the Company had the following financial assets measured at fair value on a nonrecurring basis: Ginnie Mae Loans subject to Repurchase Right — GNMA securitization programs allow servicers to buy back individual delinquent mortgage loans from the securitized loan pool once certain conditions are met. If a borrower makes no payment for three consecutive months, the servicer has the option to repurchase the delinquent loan for an amount equal to 100% of the loan’s remaining principal balance. Under ASC 860, this buy-back option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. The Company records these assets and liabilities at their fair value, which is determined to be the remaining unpaid principal balance. The Company’s future expected realizable cash flows are the cash payments of the remaining unpaid principal balance whether paid by the borrower or reimbursed through a claim filed with HUD. The Company considers the fair value of these assets and liabilities to fall into the Level Two bucket in the valuation hierarchy due to the assets and liabilities having specified contractual terms and the inputs are observable for substantially the full term of the assets and liabilities life. The following table summarizes the Company’s financial assets measured at fair value on a nonrecurring basis at December 31, 2020: Description Level 1 Level 2 Level 3 Total Assets: Ginnie Mae loans subject to repurchase right $ — $ 1,275,842 $ — $ 1,275,842 Total assets at fair value $ — $ 1,275,842 $ — $ 1,275,842 Liabilities: Ginnie Mae loans subject to repurchase right $ — $ 1,277,026 $ — $ 1,277,026 Total liabilities at fair value $ — $ 1,277,026 $ — $ 1,277,026 The following table summarizes the Company’s financial assets measured at fair value on a nonrecurring basis at December 31, 2019: Description Level 1 Level 2 Level 3 Total Assets: Ginnie Mae loans subject to repurchase right $ — $ 404,344 $ — $ 404,344 Total assets at fair value $ — $ 404,344 $ — $ 404,344 Liabilities: Ginnie Mae loans subject to repurchase right $ — $ 412,490 $ — $ 412,490 Total liabilities at fair value $ — $ 412,490 $ — $ 412,490 Fair Value Option The following is the estimated fair value and unpaid principal balance of MLHS that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected for MLHS as the Company believes fair value best reflects their expected future economic performance: Fair Value Principal Amount Due Upon Maturity Difference (1) Balance at December 31, 2020 $ 2,368,777 $ 2,293,895 $ 74,882 Balance at December 31, 2019 $ 1,504,842 $ 1,485,460 $ 19,382 (1) Represents the amount of gains included in loan origination fees and gain on sale of loans, net due to changes in fair value of items accounted for using the fair value option. |
Business, Basis of Presentati_3
Business, Basis of Presentation, and Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Cash,Cash Equivalents and Restricted Cash | The following table summarizes the Company’s cash, cash equivalents and restricted cash at December 31, 2020 and 2019: 2020 2019 Cash and cash equivalents $ 334,623 $ 101,735 Restricted cash 5,010 5,000 Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows $ 339,633 $ 106,735 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020: Description Level 1 Level 2 Level 3 Total Assets: Trading securities $ 78 $ — $ — $ 78 Derivative Interest rate lock commitments — — 130,338 130,338 Mortgage loans held for sale — 2,368,777 — 2,368,777 Mortgage servicing rights — — 446,998 446,998 Total assets at fair value $ 78 $ 2,368,777 $ 577,336 $ 2,946,191 Liabilities: Derivative Forward delivery commitments $ — $ 38,270 $ — $ 38,270 Contingent liabilities due to acquisitions — — 18,094 18,094 Total liabilities at fair value $ — $ 38,270 $ 18,094 $ 56,364 The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2019: Description Level 1 Level 2 Level 3 Total Assets: Trading securities $ 93 $ — $ — $ 93 Derivative Interest rate lock commitments — — 19,922 19,922 Mortgage loans held for sale — 1,504,842 — 1,504,842 Mortgage servicing rights — — 418,402 418,402 Total assets at fair value $ 93 $ 1,504,842 $ 438,324 $ 1,943,259 Liabilities: Derivative Forward delivery commitments $ — $ 4,863 $ — $ 4,863 Contingent liabilities due to acquisitions — — 8,073 8,073 Total liabilities at fair value $ — $ 4,863 $ 8,073 $ 12,936 |
Summary of Reconciliation of Level 3 Assets and Liabilities Measured at Fair Value on Recurring Basis | The table below presents a reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended: IRLCs Contingent Liabilities Balance at December 31, 2018 $ 12,541 $ 5,106 Net transfers and revaluation gains 7,381 — Payments — (6,688 ) Additions — 1,735 Valuation adjustments — 7,920 Balance at December 31, 2019 $ 19,922 $ 8,073 Net transfers and revaluation gains 110,416 — Payments — (21,684 ) Valuation adjustments — 31,705 Balance at December 31, 2020 $ 130,338 $ 18,094 |
Summary of Financial Assets Measured at Fair Value on Nonrecurring Basis | The following table summarizes the Company’s financial assets measured at fair value on a nonrecurring basis at December 31, 2020: Description Level 1 Level 2 Level 3 Total Assets: Ginnie Mae loans subject to repurchase right $ — $ 1,275,842 $ — $ 1,275,842 Total assets at fair value $ — $ 1,275,842 $ — $ 1,275,842 Liabilities: Ginnie Mae loans subject to repurchase right $ — $ 1,277,026 $ — $ 1,277,026 Total liabilities at fair value $ — $ 1,277,026 $ — $ 1,277,026 The following table summarizes the Company’s financial assets measured at fair value on a nonrecurring basis at December 31, 2019: Description Level 1 Level 2 Level 3 Total Assets: Ginnie Mae loans subject to repurchase right $ — $ 404,344 $ — $ 404,344 Total assets at fair value $ — $ 404,344 $ — $ 404,344 Liabilities: Ginnie Mae loans subject to repurchase right $ — $ 412,490 $ — $ 412,490 Total liabilities at fair value $ — $ 412,490 $ — $ 412,490 |
Summary of Fair Value Option for Mortgage Loans Held For Sale | The following is the estimated fair value and unpaid principal balance of MLHS that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected for MLHS as the Company believes fair value best reflects their expected future economic performance: Fair Value Principal Amount Due Upon Maturity Difference (1) Balance at December 31, 2020 $ 2,368,777 $ 2,293,895 $ 74,882 Balance at December 31, 2019 $ 1,504,842 $ 1,485,460 $ 19,382 (1) Represents the amount of gains included in loan origination fees and gain on sale of loans, net due to changes in fair value of items accounted for using the fair value option. |
Acquisitions (Tables)
Acquisitions (Tables) - Vitek Real Estate Industries Group, Inc. | 12 Months Ended |
Dec. 31, 2020 | |
Business Acquisition [Line Items] | |
Schedule of Purchase Price Allocation Reflect Final Determination of Fair Value of Assets Acquired and Liabilities Assumed | Total Goodwill $ 2,135 Mortgage servicing rights 7,568 Fixed assets 862 Other assets 27 Accounts payable and accrued liabilities (40 ) Net assets acquired $ 10,552 Total Cash payments $ 8,817 Contingent consideration 1,735 Total purchase price $ 10,552 |
Schedule of Results of Operations Included in Consolidated Statements of Income from Acquisition Date | The following table presents the results of operations of Vitek that are included in the Company’s Consolidated Statements of Income from the acquisition date of April 30, 2019 through December 31, 2019. Revenues $ 11,105 Expenses 8,039 Net income $ 3,066 |
Accounts and Interest Receiva_2
Accounts and Interest Receivable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounts And Interest Receivable [Abstract] | |
Schedule of Accounts and Interest Receivable | Accounts and interest receivable consisted of the following at December 31, 2020 and 2019: 2020 2019 Trust advances $ 36,241 $ 17,622 Foreclosure advances, net 2,894 7,348 Receivables related to loan sales 2,707 5,771 Other 1,548 3,870 Total accounts and interest receivable $ 43,390 $ 34,611 |
Schedule of Activity of the Foreclosure Loss Reserve | The activity of the foreclosure loss reserve was as follows for the years ended December 31, 2020 and 2019: 2020 2019 Balance — beginning of year $ 7,869 $ 7,884 Utilization of foreclosure reserve (3,167 ) (3,910 ) Provision charged to operations 7,700 3,895 Balance — end of year $ 12,402 $ 7,869 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Other Assets [Abstract] | |
Summary of Other Assets | Other assets consisted of the following at December 31, 2020 and 2019: 2020 2019 Prepaid expenses $ 16,652 $ 11,274 Company owned life insurance 29,910 21,908 Property and equipment, net 14,773 9,835 Right-of-use assets 87,508 — Income tax receivable — 1,015 Due from affiliates — 2,600 Real estate owned 1,354 8,998 Trading securities 78 93 Total other assets $ 150,275 $ 55,723 |
Summary of Property and Equipment | Property and equipment consisted of the following at December 31, 2020 and 2019: 2020 2019 Computer equipment $ 22,946 $ 22,546 Furniture and equipment 18,301 16,404 Leasehold improvements 12,307 5,395 Internal-use software in production 1,716 1,155 Internal-use software 5,639 3,476 Property and equipment, gross 60,909 48,976 Accumulated depreciation (46,136 ) (39,141 ) Property and equipment, net $ 14,773 $ 9,835 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Schedule of Net Unrealized Hedging Gains | Net unrealized hedging gains were as follows December 31, 2020 and 2019: 2020 2019 Unrealized hedging gains $ 77,009 $ 12,675 |
Schedule of Notional and Fair Value of Derivative Financial Instruments Not Designated as Hedging Instruments | The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows at December 31, 2020 and 2019: Fair Value Notional Value Derivative Asset Derivative Liability Balance at December 31, 2020 IRLCs $ 5,151,179 $ 130,338 $ — Forward commitments $ 5,480,491 $ — $ 38,270 Balance at December 31, 2019 IRLCs $ 1,524,540 $ 19,922 $ — Forward commitments $ 1,961,733 $ — $ 4,863 |
Schedule of Quantitative Information About IRLCs and Fair Value Measurements | The following table presents the quantitative information about IRLCs and the fair value measurements as of December 31, 2020 and 2019: 2020 2019 Unobservable Input Range (Weighted Average) Loan funding probability (“pull-through”) 0% -100% (87.8%) 0% - 100% (89.4%) |
Schedule of Financial Liabilities are Subject to Master Netting Arrangements or Similar Agreements Categorized by Financial Instrument | The table below represents financial liabilities that are subject to master netting arrangements or similar agreements categorized by financial instrument, together with corresponding financial instruments and corresponding collateral received or pledged. Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Recognized Liabilities in the Balance Sheet December 31, 2020 Forward delivery commitments $ (54,419 ) $ 4,825 $ (49,594 ) Best efforts sales commitments (3,656 ) — (3,656 ) Margin calls 14,980 — 14,980 Total liabilities $ (43,095 ) $ 4,825 $ (38,270 ) December 31, 2019 Forward delivery commitments $ (5,487 ) $ 2,552 $ (2,935 ) Best efforts sales commitments (1,928 ) — (1,928 ) Total liabilities $ (7,415 ) $ 2,552 $ (4,863 ) |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Transfers And Servicing [Abstract] | |
Summary of Activity of Mortgage Servicing Rights | The activity of mortgage servicing rights was as follows for the years ended December 31, 2020 and 2019: 2020 2019 Balance — beginning of year $ 418,402 $ 511,852 MSRs originated and acquired through acquisitions 324,903 161,769 Changes in fair value: Due to collection/realization of cash flows (124,742 ) (83,821 ) Due to changes in valuation model inputs or assumptions (171,565 ) (171,398 ) Balance — end of year $ 446,998 $ 418,402 |
Summary of Weighted Average Discount Rate, Prepayment Speed and Cost to Service Assumptions Used to Determine Fair Value of MSRs | The following table presents the weighted average discount rate, prepayment speed and cost to service assumptions used to determine the fair value of MSRs as of December 31, 2020 and 2019: 2020 2019 Unobservable Input Range (Weighted Average) Discount rate 9.2% - 15.5% (10.0%) 9.2% - 15.5% (10.2%) Prepayment rate 10.0% - 38.8% (18.2%) 8.9% - 30.0% (17.3%) Cost to service (per loan) $71.0 - $409.4 ($92.5) $70.8 - $521.4 ($97.5) |
Summary of Actual Revenue Generated from Servicing Activities | Actual revenue generated from servicing activities included contractually specified servicing fees, as well as late fees and other ancillary servicing revenue, which were recorded within loan servicing and other fees as follows for the years ended December 31, 2020 and 2019: 2020 2019 Servicing fees from servicing portfolio $ 155,362 $ 138,201 Late fees 5,229 5,967 Other ancillary servicing revenue (354 ) (1,463 ) Total loan servicing and other fees $ 160,237 $ 142,705 |
Summary of Impact of Adverse Changes on Prepayment Speeds, Discount Rate and Cost to Service at Two Different Data Points | The following table illustrates the impact of adverse changes on the prepayment speeds, discount rate and cost to service at two different data points at December 31, 2020 and 2019, respectively: Prepayment Speeds Discount Rate Cost to Service (per loan) 10% Adverse Change 20% Adverse Change 10% Adverse Change 20% Adverse Change 10% Adverse Change 20% Adverse Change December 31, 2020 Mortgage servicing rights $ (36,117 ) $ (66,419 ) $ (18,638 ) $ (32,312 ) $ (10,334 ) $ (16,700 ) December 31, 2019 Mortgage servicing rights $ (31,329 ) $ (49,031 ) $ (23,682 ) $ (35,701 ) $ (16,679 ) $ (22,543 ) |
Mortgage Loans Held for Sale (T
Mortgage Loans Held for Sale (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Mortgage Loans Held For Sale [Abstract] | |
Summary of Reconciliation of Changes in Mortgage Loans Held for Sale to Amounts Presented in Condensed Consolidated Statements of Cash Flows | A reconciliation of the changes in mortgage loans held for sale to the amounts presented in the Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 is set forth below: 2020 2019 Balance at the beginning of period $ 1,504,842 $ 966,171 Origination of mortgage loans held for sale 35,238,696 21,749,675 Proceeds on sale of payments from mortgage loans held for sale (35,754,326 ) (21,854,967 ) Gain on sale of mortgage loans excluding fair value of other financial instruments, net 1,323,482 638,902 Valuation adjustment of mortgage loans held for sale 56,083 5,061 Balance at the end of period $ 2,368,777 $ 1,504,842 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Schedule of Lease-related Assets and Liabilities | All leases recognized in our Consolidated Balance Sheet as of December 31, 2020 are classified as operating leases, which include leases related to the asset classes reflected in the table below. ROU assets are included in Other assets in our Consolidated Balance Sheet: Right-of-Use Assets Lease Liability Office leases $ 87,063 $ 94,410 Equipment 445 481 Total $ 87,508 $ 94,891 |
Summary of Components of Gross Operating Lease Costs | The following table summarizes the components of our gross operating lease costs incurred during the year ended December 31, 2020: (in thousands) Amount Operating lease cost $ 25,806 Short-term lease cost 1,974 Variable lease cost 3,105 Total lease cost $ 30,885 |
Summary of Weighted-average Lease Term and Discount Rate Used | Our weighted-average lease term and discount rate used are as follows: December 31, 2020 Weighted-average lease term (years) 6.7 Weighted-average discount rate 3.8 % |
Summary of Supplemental Cash Flow Information Related to Operating Leases | The following table summarizes supplemental cash flow information related to operating leases: 2020 Cash paid for operating leases $ 24,565 Right-of-use assets obtained in exchange for new operating lease obligations $ 33,401 |
Schedule of Minimum Future Commitments or Rental Payments Under Operating Leases | Minimum future commitments by year for our long-term operating leases as of December 31, 2020 are presented in the table below. Such commitments are reflected at undiscounted values and are reconciled to the discounted present value recognized in the balance sheet as follows: Amount 2021 $ 20,194 2022 19,484 2023 15,088 2024 11,002 2025 7,857 Thereafter 35,195 Total future minimum lease payments $ 108,820 Less: imputed interest (13,929 ) Total lease liabilities $ 94,891 |
Schedule of Future Minimum Rental Payments Under Noncancelable Operating Leases | Future minimum rental payments under the noncancelable operating leases are as follows at December 31, 2019: 2020 $ 26,620 2021 22,282 2022 17,541 2023 13,360 2024 9,625 Thereafter 34,467 $ 123,895 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Activity in Goodwill | A summary of the activity in goodwill is presented below for the years ended December 31, 2020 and 2019: Balance at December 31, 2018 $ 60,699 2019 Acquisitions (Note 3) 2,135 Balance at December 31, 2019 $ 62,834 Balance at December 31, 2020 $ 62,834 |
Investor Reserves (Tables)
Investor Reserves (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investor Reserves [Abstract] | |
Schedule of Activity of Investor Reserves | The activity of the investor reserves was as follows for the years ended December 31, 2020 and 2019: 2020 2019 Balance — beginning of year $ 16,521 $ 14,312 Benefit from investor reserves (9,077 ) (7,994 ) Provision for investor reserves charged to operations 7,091 10,203 Balance — end of year $ 14,535 $ 16,521 |
Warehouse Lines of Credit (Tabl
Warehouse Lines of Credit (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Line Of Credit Facility [Abstract] | |
Summary of Warehouse Lines of Credit | Warehouse lines of credit consisted of the following at December 31, 2020 and 2019. Changes subsequent to December 31, 2020 have been described in the notes referenced with the below table. Maturity as of December 31, 2020 2020 2019 $800 million master repurchase facility agreement (1) January 2021 $ 442,593 $ 456,225 $250 million master repurchase facility agreement (2) September 2021 148,011 80,965 $700 million master repurchase facility agreement (3) February 2021 541,074 282,579 $200 million master repurchase facility agreement (4) May 2021 187,214 136,699 $300 million master repurchase facility agreement (5) September 2021 232,272 148,149 $500 million master repurchase facility agreement (6) July 2021 464,355 190,221 $200 million master repurchase facility agreement (7) April 2021 104,880 — $75 million master repurchase facility agreement (8) March 2024 25,185 9,569 2,145,584 1,304,407 Prepaid commitment fees (2,141 ) (1,220 ) Net warehouse lines of credit $ 2,143,443 $ 1,303,187 (1) The variable interest rate is calculated using a base rate tied to LIBOR, the Eurodollar, or an alternative base rate with a floor of 0.75%, plus the applicable interest rate margin. In July 2020, the borrowing capacity on this facility increased to $800.0 million. Subsequent to December 31, 2020, this facility was amended with a maturity date of 30 days from written notice by either the financial institution or the Company. (2) The variable interest rate is calculated using a base rate tied to LIBOR, plus the applicable interest rate margin. This line of credit requires a minimum deposit of $1.25 million. (3) The variable interest rate is calculated using a base rate tied to LIBOR, plus the applicable interest rate margin. This line of credit was amended subsequent to December 31, 2020 with a maturity date of February 2022 and was reduced to $500 million and decreased the required minimum deposit to $2.5 million. (4) The variable interest rate is calculated using a base rate plus LIBOR, with a floor of 1.525% plus the applicable interest rate margin. This line of credit requires a minimum deposit of $750,000. (5) The variable interest rate is calculated using a base rate tied to LIBOR with a floor of 0.40%, plus the applicable interest rate margin. (6) The variable interest rate is calculated using a base rate tied to LIBOR with a floor of 0.75%, plus the applicable interest rate margin. (7) The variable interest rate is calculated using a base rate tied to LIBOR with a floor of 1.75 %, plus the applicable interest rate margin. (8) The interest rate on this facility is 3.375%. This facility was opened in 2019 and is used for GNMA delinquent buyouts. Each buyout represents a separate transaction that can remain on the facility for up to 4 years. |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Minimum Calendar Year Payments of Term Note | The minimum calendar year payments of the Company’s term note as of December 31, 2020 are as follows: 2021 $ 17,000 2022 63,750 Total $ 80,750 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | The components of income tax expense were as follows for the years ended December 31, 2020 and 2019: 2020 2019 Current tax expense: Federal $ 98,187 $ 21,252 State 22,214 4,977 $ 120,401 $ 26,229 Deferred tax expense (benefit): Federal $ 2,190 $ (19,952 ) State 902 (6,024 ) 3,092 (25,976 ) Income tax expense $ 123,493 $ 253 |
Schedule of Reconciliation of Recorded Income Tax Expense of Continuing Operations | The following table presents a reconciliation of the recorded income tax expense of continuing operations to the amount of taxes computed by applying the applicable statutory federal income tax rate of 21.0% to income from continuing operations before income taxes, as of December 31, 2020 and 2019, respectively: 2020 2019 Amount Percent Amount Percent Income tax expense at federal statutory rate $ 103,755 21.0 % $ 1,225 21.0 % State income taxes, net of federal tax benefit 19,904 4.0 % 267 4.6 % Nondeductible deferred compensation 7,115 1.4 % — — % Permanent items 1,887 0.4 % (863 ) (14.8 )% Federal and state tax credits, net of federal tax benefit (536 ) (0.1 )% (386 ) (6.6 )% Deferred compensation adjustment (8,834 ) (1.8 )% — — % Other, net 202 0.0 % 10 0.1 % $ 123,493 25.0 % $ 253 4.3 % |
Schedule of Tax Effects of Significant Temporary Differences to Deferred Tax Assets and Liabilities | The tax effects of significant temporary differences which gave rise to the Company’s deferred tax assets and liabilities are as follows at December 31, 2020 and 2019: 2020 2019 Deferred tax assets: Mortgage loans held for sale $ 7,955 $ 6,969 Intangible assets 7,494 1,130 Accrued compensation and benefits 3,705 2,060 Deferred compensation 13,277 1,464 Lease liability 23,440 — Other accrued liabilities 1,240 916 Total deferred tax assets $ 57,111 $ 12,539 Deferred tax liabilities: Mortgage servicing rights $ (98,660 ) $ (94,094 ) Trading securities (19 ) (23 ) Derivatives (22,743 ) (3,518 ) Right-of-use assets (23,127 ) — Property and equipment (1,932 ) (1,182 ) Total deferred tax liabilities (146,481 ) (98,817 ) Net deferred tax liabilities $ (89,370 ) $ (86,278 ) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted Earnings Per Share | The following table sets forth the components of basic and diluted earnings per share for the year ended December 31, 2020: 2020 Net income available for Class A and Class B Common Stock $ 370,577 Weighted-average shares outstanding, Class A Common Stock 19,387 Weighted-average shares outstanding, Class B Common Stock 40,613 Weighted-average shares outstanding - basic 60,000 Add dilutive effects of non-vested shares of restricted stock - Class A 56 Weighted-average shares outstanding - diluted 60,056 Basic earnings per share: Class A and Class B Common Stock $ 6.18 Diluted earnings per share: Class A and Class B Common Stock $ 6.17 |
Stock-Based Compensation and _2
Stock-Based Compensation and Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Unvested Restricted Stock | The following table shows a summary of the unvested restricted stock under the 2020 Plan as of December 31, 2020 as well as activity during the year: Weighted Average Number of Shares Grant Date Fair Value Restricted stock awards, unvested, January 1, 2020 — $ — Granted 1,440,334 15.00 Vested — — Forfeited — — Restricted stock awards, unvested, December 31, 2020 1,440,334 $ 15.00 |
Additional Non-Cash Disclosur_2
Additional Non-Cash Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Noncash Investing And Financing Items [Abstract] | |
Schedule of Non-cash Transactions Not Included in Consolidated Statements of Cash Flows | For the years ended December 31, 2020 and 2019, the Company had the following non-cash transactions that are not included in the Consolidated Statements of Cash Flows. 2020 2019 GNMA inventory obtained due to delinquent status of GNMA serviced loans $ 1,073,852 $ 290,945 GNMA inventory removed from delinquent status (137,843 ) (116,138 ) GNMA real estate owned resolved through finalized foreclosure sale (conveyed to HUD) (7,984 ) (11,440 ) Reduction in GNMA inventory due to loan removal from pool (63,489 ) (83,895 ) Net increase of GNMA payable due to receipt or resolution of GNMA inventory and GNMA real estate owned $ 864,536 $ 79,472 GNMA real estate owned obtained through foreclosure sale of GNMA serviced loans $ 1,022 $ 7,617 |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Summary of Financial Performance and Results by Segment | The following table presents the financial performance and results by segment for the year ended December 31, 2020: Origination Servicing Total Segments All Other Total Revenue Loan origination fees and gain on sale of loans, net $ 1,753,517 $ 6,354 $ 1,759,871 $ — $ 1,759,871 Loan servicing and other fees — 160,237 160,237 — 160,237 Valuation adjustment of mortgage servicing rights — (296,307 ) (296,307 ) — (296,307 ) Interest income (expense) 13,993 (8,068 ) 5,925 (8,444 ) (2,519 ) Other income, net 25 133 158 607 765 Net revenue 1,767,535 (137,651 ) 1,629,884 (7,837 ) 1,622,047 Expenses Salaries, incentive compensation and benefits 864,322 25,075 889,397 64,361 953,758 General and administrative 84,999 9,270 94,269 7,679 101,948 Occupancy, equipment and communication 48,233 3,524 51,757 5,313 57,070 Depreciation and amortization 4,644 777 5,421 2,080 7,501 Provision for foreclosure losses — 7,700 7,700 — 7,700 Income tax expense — — — 123,493 123,493 Net income (loss) $ 765,337 $ (183,997 ) $ 581,340 $ (210,763 ) $ 370,577 The following table presents the financial performance and results by segment for the year ended December 31, 2019: Origination Servicing Total Segments All Other Total Revenue Loan origination fees and gain on sale of loans, net $ 817,293 $ 3,521 $ 820,814 $ — $ 820,814 Loan servicing and other fees — 142,705 142,705 — 142,705 Valuation adjustment of mortgage servicing rights — (255,219 ) (255,219 ) — (255,219 ) Interest income (expense) 9,702 2,674 12,376 (8,980 ) 3,396 Other income, net 38 — 38 1,155 1,193 Net revenue 827,033 (106,319 ) 720,714 (7,825 ) 712,889 Expenses Salaries, incentive compensation and benefits 548,056 15,538 563,594 14,576 578,170 General and administrative 43,028 10,307 53,335 10,648 63,983 Occupancy, equipment and communication 48,115 2,078 50,193 3,485 53,678 Depreciation and amortization 6,417 326 6,743 590 7,333 Provision for foreclosure losses — 3,895 3,895 — 3,895 Income tax expense — — — 253 253 Net income (loss) $ 181,417 $ (138,463 ) 42,954 $ (37,377 ) $ 5,577 |
Business, Basis of Presentati_4
Business, Basis of Presentation, and Accounting Policies - Additional Information (Details) | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2020 | Dec. 31, 2020USD ($)BranchStateChannelSubsidiaryProperty$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Oct. 21, 2020$ / sharesshares | |
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Number of branches | Branch | 200 | |||
Number of states | State | 48 | |||
Channels of business | Channel | 2 | |||
Common stock, shares, issued | 928 | |||
Common stock, par value | $ / shares | $ 100 | |||
Number of wholly owned subsidiaries | Subsidiary | 1 | |||
Direct expenses related to loan origination fees and gain on sale of loans | $ | $ 266,451,000 | $ 175,338,000 | ||
Property and equipment, Estimated useful life | three years | |||
Number of real estate properties | Property | 2 | |||
Real estate owned | $ | $ 200,000 | 900,000 | ||
Real estate owned, insured by FHA | $ | 1,200,000 | 8,100,000 | ||
Advertising expense | $ | 11,900,000 | 11,800,000 | ||
Offering costs | $ | 4,495,000 | |||
Total account balance for trust for investors and escrow balances for mortgagors | $ | 1,700,000,000 | 1,000,000,000 | ||
Credit losses due to nonperformance of counterparties | $ | $ 0 | $ 0 | ||
Software | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Estimated useful lives | 3 years | |||
Class A Common Stock | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Common stock, shares, issued | 19,666,981 | |||
Common stock, par value | $ / shares | $ 0.01 | |||
Common stock, voting rights | one vote per share | |||
Conversion of Class B common stock, Shares | 4,900,272 | |||
Class B Common Stock | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Common stock, shares, issued | 40,333,019 | |||
Common stock, par value | $ / shares | $ 0.01 | |||
Common stock, voting rights | ten votes per share | |||
Conversion of Class B common stock, Shares | (4,900,272) | |||
IPO and Reorganization | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Percentage of ownership after transaction | 100.00% | |||
IPO and Reorganization | Class A Common Stock | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Common stock, shares, issued | 6,500,000 | 6,500,000 | ||
Common stock, par value | $ / shares | $ 0.01 | |||
Sale of stock, price per share | $ / shares | $ 15 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,440,334 | |||
Percentage of combined voting power | 1.50% | |||
IPO and Reorganization | Class A Common Stock | McCarthy Capital Mortgage Investors, LLC | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Conversion of Class B common stock, Shares | 4,900,272 | |||
IPO and Reorganization | Class B Common Stock | McCarthy Capital Mortgage Investors, LLC | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Common stock, shares, issued | 45,233,291 | |||
Common stock, par value | $ / shares | $ 0.01 | |||
Common stock, voting rights | 10 votes per share | |||
IPO | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Offering costs | $ | $ 4,500,000 | |||
California | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Percentage of properties securing mortgage loans in servicing portfolio | 15.10% | 16.00% | ||
Percentage of loan production | 18.20% | 16.90% | ||
Washington | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Percentage of properties securing mortgage loans in servicing portfolio | 11.40% | 12.10% | ||
Percentage of loan production | 15.50% | 16.50% | ||
Texas | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Percentage of properties securing mortgage loans in servicing portfolio | 10.10% | 9.70% | ||
Oregon | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Percentage of loan production | 9.90% | 9.20% | ||
Licenses | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Number of states | State | 48 | |||
Residential Mortgage Originations | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Number of states | State | 45 | |||
Retail | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Channel production percentage | 97.40% | 96.50% | ||
Correspondent | ||||
Business Basis Of Presentation And Accounting Policies [Line Items] | ||||
Channel production percentage | 2.60% | 3.50% |
Business, Basis of Presentati_5
Business, Basis of Presentation, and Accounting Policies - Summary of Cash,Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 334,623 | $ 101,735 | |
Restricted cash | 5,010 | 5,000 | |
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows | $ 339,633 | $ 106,735 | $ 62,755 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Ginnie Mae loans subject to repurchase right description | If a borrower makes no payment for three consecutive months, the servicer has the option to repurchase the delinquent loan for an amount equal to 100% of the loan’s remaining principal balance | |
Ginnie Mae | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Percent of remaining principal balance of delinquent loan repurchase option | 100.00% | |
Recurring Fair Value Measurements | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Average pull-through rate used to calculate fair value of IRLCs | 87.80% | 89.40% |
Minimum | Discount Rate | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range of risk adjusted discount rate | 8 | 8 |
Maximum | Discount Rate | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range of risk adjusted discount rate | 20 | 20 |
Median | Discount Rate | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Range of risk adjusted discount rate | 15 | 15 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Assets: | |||
Trading securities | $ 78 | $ 93 | |
Derivative | |||
Mortgage loans held for sale | 2,368,777 | 1,504,842 | $ 966,171 |
Mortgage servicing rights | 446,998 | 418,402 | |
Derivative | |||
Contingent liabilities due to acquisitions | 18,094 | 8,073 | |
Recurring Fair Value Measurements | |||
Assets: | |||
Trading securities | 78 | 93 | |
Derivative | |||
Interest rate lock commitments | 130,338 | 19,922 | |
Mortgage loans held for sale | 2,368,777 | 1,504,842 | |
Mortgage servicing rights | 446,998 | 418,402 | |
Total assets at fair value | 2,946,191 | 1,943,259 | |
Derivative | |||
Forward delivery commitments | 38,270 | 4,863 | |
Contingent liabilities due to acquisitions | 18,094 | 8,073 | |
Total liabilities at fair value | 56,364 | 12,936 | |
Recurring Fair Value Measurements | Level 1 | |||
Assets: | |||
Trading securities | 78 | 93 | |
Derivative | |||
Total assets at fair value | 78 | 93 | |
Recurring Fair Value Measurements | Level 2 | |||
Derivative | |||
Mortgage loans held for sale | 2,368,777 | 1,504,842 | |
Total assets at fair value | 2,368,777 | 1,504,842 | |
Derivative | |||
Forward delivery commitments | 38,270 | 4,863 | |
Total liabilities at fair value | 38,270 | 4,863 | |
Recurring Fair Value Measurements | Level 3 | |||
Derivative | |||
Interest rate lock commitments | 130,338 | 19,922 | |
Mortgage servicing rights | 446,998 | 418,402 | |
Total assets at fair value | 577,336 | 438,324 | |
Derivative | |||
Contingent liabilities due to acquisitions | 18,094 | 8,073 | |
Total liabilities at fair value | $ 18,094 | $ 8,073 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Reconciliation of Level 3 Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Level 3 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
IRLCs | ||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | ||
Beginning balance | $ 19,922 | $ 12,541 |
Net transfers and revaluation gains | 110,416 | 7,381 |
Ending balance | 130,338 | 19,922 |
Contingent Liabilities | ||
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items] | ||
Beginning balance | 8,073 | 5,106 |
Payments | (21,684) | (6,688) |
Additions | 1,735 | |
Valuation adjustments | 31,705 | 7,920 |
Ending balance | $ 18,094 | $ 8,073 |
Fair Value Measurements - Sum_3
Fair Value Measurements - Summary of Financial Assets Measured at Fair Value on Nonrecurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Liabilities: | ||
Ginnie Mae loans subject to repurchase right | $ 1,277,026 | $ 412,490 |
Non-Recurring Fair Value Measurements | ||
Assets: | ||
Total assets at fair value | 1,275,842 | 404,344 |
Liabilities: | ||
Ginnie Mae loans subject to repurchase right | 1,277,026 | 412,490 |
Non-Recurring Fair Value Measurements | Ginnie Mae | ||
Assets: | ||
Total assets at fair value | 1,275,842 | 404,344 |
Liabilities: | ||
Ginnie Mae loans subject to repurchase right | 1,277,026 | 412,490 |
Non-Recurring Fair Value Measurements | Level 2 | ||
Assets: | ||
Total assets at fair value | 1,275,842 | 404,344 |
Liabilities: | ||
Ginnie Mae loans subject to repurchase right | 1,277,026 | 412,490 |
Non-Recurring Fair Value Measurements | Level 2 | Ginnie Mae | ||
Assets: | ||
Total assets at fair value | 1,275,842 | 404,344 |
Liabilities: | ||
Ginnie Mae loans subject to repurchase right | $ 1,277,026 | $ 412,490 |
Fair Value Measurements - Sum_4
Fair Value Measurements - Summary of Fair Value Option for Mortgage Loans Held for Sale (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |||
Mortgage loans held for sale, at fair value | $ 2,368,777 | $ 1,504,842 | $ 966,171 |
Mortgage loans held for sale, principal amount due upon maturity | 2,293,895 | 1,485,460 | |
Difference | $ 74,882 | $ 19,382 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - Vitek Real Estate Industries Group, Inc. | Apr. 30, 2019USD ($) |
Business Acquisition [Line Items] | |
Business acquisition, consideration transferred | $ 10,552,000 |
Business acquisition, goodwill, expected tax deductible amount | 400,000 |
Business acquisition, transaction costs | 200,000 |
Purchase price allocation adjustments | $ 0 |
Acquisitions - Schedule of Purc
Acquisitions - Schedule of Purchase Price Allocation Reflect Final Determination of Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Apr. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 62,834 | $ 62,834 | $ 60,699 | |
Contingent liabilities due to acquisitions | $ 18,094 | $ 8,073 | ||
Vitek Real Estate Industries Group, Inc. | ||||
Business Acquisition [Line Items] | ||||
Goodwill | $ 2,135 | |||
Mortgage servicing rights | 7,568 | |||
Fixed assets | 862 | |||
Other assets | 27 | |||
Accounts payable and accrued liabilities | (40) | |||
Net assets acquired | 10,552 | |||
Cash payments | 8,817 | |||
Contingent liabilities due to acquisitions | 1,735 | |||
Business acquisition, consideration transferred | $ 10,552 |
Acquisitions - Schedule of Resu
Acquisitions - Schedule of Results of Operations Included in Consolidated Statements of Income from Acquisition Date (Details) - Vitek Real Estate Industries Group, Inc. $ in Thousands | 8 Months Ended |
Dec. 31, 2019USD ($) | |
Business Acquisition [Line Items] | |
Revenues | $ 11,105 |
Expenses | 8,039 |
Net income | $ 3,066 |
Accounts and Interest Receiva_3
Accounts and Interest Receivable - Schedule of Accounts and Interest Receivable (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Accounts Notes And Loans Receivable Classified [Abstract] | ||
Trust advances | $ 36,241 | $ 17,622 |
Foreclosure advances, net | 2,894 | 7,348 |
Receivables related to loan sales | 2,707 | 5,771 |
Other | 1,548 | 3,870 |
Total accounts and interest receivable | $ 43,390 | $ 34,611 |
Accounts and Interest Receiva_4
Accounts and Interest Receivable - Schedule of Activity of the Foreclosure Loss Reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Foreclosure Loss Reserve [Abstract] | ||
Balance — beginning of year | $ 7,869 | $ 7,884 |
Foreclosure loss reserve | (3,167) | (3,910) |
Provision charged to operations | 7,700 | 3,895 |
Balance — end of year | $ 12,402 | $ 7,869 |
Other Assets - Summary of Other
Other Assets - Summary of Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Other Assets [Abstract] | ||
Prepaid expenses | $ 16,652 | $ 11,274 |
Company owned life insurance | 29,910 | 21,908 |
Property and equipment, net | 14,773 | 9,835 |
Right-of-use assets | 87,508 | |
Income tax receivable | 1,015 | |
Due from affiliates | 2,600 | |
Real estate owned | 1,354 | 8,998 |
Trading securities | 78 | 93 |
Total other assets | $ 150,275 | $ 55,723 |
Other Assets - Summary of Prope
Other Assets - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 60,909 | $ 48,976 |
Accumulated depreciation | (46,136) | (39,141) |
Property and equipment, net | 14,773 | 9,835 |
Computer Equipment | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | 22,946 | 22,546 |
Furniture and Equipment | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | 18,301 | 16,404 |
Leasehold Improvements | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | 12,307 | 5,395 |
Internal-use Software in Production | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,716 | 1,155 |
Internal-use Software | ||
Property Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 5,639 | $ 3,476 |
Other Assets - Additional Infor
Other Assets - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property Plant And Equipment [Abstract] | ||
Depreciation and amortization | $ 7,501 | $ 7,333 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Schedule of Net Unrealized Hedging Gains (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative Instruments Gain Loss [Line Items] | ||
Unrealized hedging gains | $ 77,009 | $ 12,675 |
Not Designated as Hedging Instruments | Loan Origination Fees and Gain on Sale of Loans, Net | Interest Rate Risk | ||
Derivative Instruments Gain Loss [Line Items] | ||
Unrealized hedging gains | $ 77,009 | $ 12,675 |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Notional and Fair Value of Derivative Financial Instruments Not Designated as Hedging Instruments (Details) - Not Designated as Hedging Instruments - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
IRLCs | ||
Derivative [Line Items] | ||
Notional Value | $ 5,151,179 | $ 1,524,540 |
Derivative Asset | 130,338 | 19,922 |
Forward Commitments | ||
Derivative [Line Items] | ||
Notional Value | 5,480,491 | 1,961,733 |
Derivative Liability | $ 38,270 | $ 4,863 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Additional Information (Details) - Not Designated as Hedging Instruments - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative [Line Items] | ||
Outstanding forward contracts and mandatory sell commitments | $ 895,200 | $ 427,700 |
Closed hedge instruments not yet settled | 908,000 | 376,500 |
Credit losses due to nonperformance of counterparties | $ 0 | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Schedule of Quantitative Information About IRLCs and Fair Value Measurements (Details) - IRLCs | Dec. 31, 2020 | Dec. 31, 2019 |
Minimum | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Average pull-through rate used to calculate fair value of IRLCs | 0.00% | 0.00% |
Maximum | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Average pull-through rate used to calculate fair value of IRLCs | 100.00% | 100.00% |
Weighted Average | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items] | ||
Average pull-through rate used to calculate fair value of IRLCs | 87.80% | 89.40% |
Derivative Financial Instrume_7
Derivative Financial Instruments - Schedule of Financial Liabilities are Subject to Master Netting Arrangements or Similar Agreements Categorized by Financial Instrument (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Derivative Fair Value [Line Items] | ||
Net Amounts of Recognized Liabilities in the Balance Sheet | $ 38,270 | $ 4,863 |
Derivative Financial Instruments, Liabilities | ||
Derivative Fair Value [Line Items] | ||
Gross Amounts of Recognized Liabilities | (43,095) | (7,415) |
Gross Amounts Offset in the Balance Sheet | 4,825 | 2,552 |
Net Amounts of Recognized Liabilities in the Balance Sheet | (38,270) | (4,863) |
Forward Delivery Commitments | Derivative Financial Instruments, Liabilities | ||
Derivative Fair Value [Line Items] | ||
Gross Amounts of Recognized Liabilities | (54,419) | (5,487) |
Gross Amounts Offset in the Balance Sheet | 4,825 | 2,552 |
Net Amounts of Recognized Liabilities in the Balance Sheet | (49,594) | (2,935) |
Best Efforts Sales Commitments | Derivative Financial Instruments, Liabilities | ||
Derivative Fair Value [Line Items] | ||
Gross Amounts of Recognized Liabilities | (3,656) | (1,928) |
Net Amounts of Recognized Liabilities in the Balance Sheet | (3,656) | $ (1,928) |
Margin Calls | Derivative Financial Instruments, Liabilities | ||
Derivative Fair Value [Line Items] | ||
Gross Amounts of Recognized Liabilities | 14,980 | |
Net Amounts of Recognized Liabilities in the Balance Sheet | $ 14,980 |
Mortgage Servicing Rights - Sum
Mortgage Servicing Rights - Summary of Activity of Mortgage Servicing Rights (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Servicing Asset [Abstract] | ||
Balance — beginning of year | $ 418,402 | $ 511,852 |
MSRs originated and acquired through acquisitions | 324,903 | 161,769 |
Changes in fair value: | ||
Due to collection/realization of cash flows | (124,742) | (83,821) |
Due to changes in valuation model inputs or assumptions | (171,565) | (171,398) |
Balance — end of year | $ 446,998 | $ 418,402 |
Mortgage Servicing Rights - S_2
Mortgage Servicing Rights - Summary of the Weighted Average Discount Rate, Prepayment Speed and Cost to Service Assumptions Used to Determine the Fair Value of MSRs (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Minimum | ||
Assumption For Fair Value As Of Balance Sheet Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items] | ||
Discount rate | 9.20% | 9.20% |
Prepayment rate | 10.00% | 8.90% |
Cost to service (per loan) | 71.0 | 70.8 |
Maximum | ||
Assumption For Fair Value As Of Balance Sheet Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items] | ||
Discount rate | 15.50% | 15.50% |
Prepayment rate | 38.80% | 30.00% |
Cost to service (per loan) | 409.4 | 521.4 |
Weighted Average | ||
Assumption For Fair Value As Of Balance Sheet Date Of Interests Continued To Be Held By Transferor Servicing Assets Or Liabilities [Line Items] | ||
Discount rate | 10.00% | 10.20% |
Prepayment rate | 18.20% | 17.30% |
Cost to service (per loan) | 92.5 | 97.5 |
Mortgage Servicing Rights - Add
Mortgage Servicing Rights - Additional Information (Details) - USD ($) $ in Billions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Transfers And Servicing [Abstract] | ||
Mortgage servicing right weighted average life | 5 years 1 month 6 days | 4 years 10 months 24 days |
Principal Amount Outstanding on Loans Securitized or Asset-backed Financing Arrangement | $ 60.8 | $ 50.6 |
Mortgage Servicing Rights - S_3
Mortgage Servicing Rights - Summary of Actual Revenue Generated from Servicing Activities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Contractually Specified Servicing Fee Late Fee And Ancillary Fee Earned In Exchange For Servicing Financial Asset [Abstract] | ||
Servicing fees from servicing portfolio | $ 155,362 | $ 138,201 |
Late fees | 5,229 | 5,967 |
Other ancillary servicing revenue | (354) | (1,463) |
Total loan servicing and other fees | $ 160,237 | $ 142,705 |
Mortgage Servicing Rights - S_4
Mortgage Servicing Rights - Summary of Impact of Adverse Changes on Prepayment Speeds, Discount Rate and Cost to Service at Two Different Data Points (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Transfers And Servicing Of Financial Assets [Abstract] | ||
Mortgage servicing rights, Prepayment Speeds 10% Adverse Change | $ (36,117) | $ (31,329) |
Mortgage servicing rights, Prepayment Speeds 20% Adverse Change | (66,419) | (49,031) |
Mortgage servicing rights, Discount Rates 10% Adverse Change | (18,638) | (23,682) |
Mortgage servicing rights, Discount Rates 20% Adverse Change | (32,312) | (35,701) |
Mortgage servicing rights, Cost to Service (per loan) 10% Adverse Change | (10,334) | (16,679) |
Mortgage servicing rights, Cost to Service (per loan) 20% Adverse Change | $ (16,700) | $ (22,543) |
Mortgage Loans Held for Sale -
Mortgage Loans Held for Sale - Summary of Reconciliation of Changes in Mortgage Loans Held for Sale to Amounts Presented in Condensed Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Increase Decrease In Mortgage Loans Held For Sale [Abstract] | ||
Balance at the beginning of period | $ 1,504,842 | $ 966,171 |
Origination of mortgage loans held for sale | 35,238,696 | 21,749,675 |
Proceeds on sale of payments from mortgage loans held for sale | (35,754,326) | (21,854,967) |
Gain on sale of mortgage loans excluding fair value of other financial instruments, net | 1,323,482 | 638,902 |
Valuation adjustment of mortgage loans held for sale | 56,083 | 5,061 |
Balance at the end of period | $ 2,368,777 | $ 1,504,842 |
Mortgage Loans Held for Sale _2
Mortgage Loans Held for Sale - Additional Information (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Increase Decrease In Mortgage Loans Held For Sale [Abstract] | |||
Mortgage loans held for sale unpaid principal balances of underlying loans | $ 2,300,000 | $ 1,500,000 | |
Mortgage loans held for sale, at fair value | $ 2,368,777 | $ 1,504,842 | $ 966,171 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2020 | |
Leases [Line Items] | |||
Right-of-use assets | $ 87,508,000 | ||
Operating lease liabilities | $ 94,891,000 | ||
Lessee, operating lease, option to extend | Some leases include one or more options to exercise renewal terms, generally at our sole discretion, that can extend the lease term. | ||
Lessee, operating lease, option to terminate | Certain leases contain rights to terminate whereby those termination options are held by either the Company, the lessor, or both parties. | ||
Occupancy, Equipment and Communication Expense | |||
Leases [Line Items] | |||
Rent expense | $ 29,600,000 | ||
Minimum | |||
Leases [Line Items] | |||
Operating lease, Term | 1 year | ||
Maximum | |||
Leases [Line Items] | |||
Operating lease, Term | 12 years | ||
Topic 842 | |||
Leases [Line Items] | |||
Right-of-use assets | $ 72,700,000 | ||
Operating lease liabilities | 78,300,000 | ||
Finance lease, liability | $ 0 |
Leases - Schedule of Lease-rela
Leases - Schedule of Lease-related Assets and Liabilities (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Leases [Line Items] | |
Right-of-use assets | $ 87,508 |
Operating lease liabilities | 94,891 |
Office leases | |
Leases [Line Items] | |
Right-of-use assets | 87,063 |
Operating lease liabilities | 94,410 |
Equipment | |
Leases [Line Items] | |
Right-of-use assets | 445 |
Operating lease liabilities | $ 481 |
Leases - Summary of Components
Leases - Summary of Components of Gross Operating Lease Costs (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Lease Cost [Abstract] | |
Operating lease cost | $ 25,806 |
Short-term lease cost | 1,974 |
Variable lease cost | 3,105 |
Total lease cost | $ 30,885 |
Leases - Summary of Weighted-av
Leases - Summary of Weighted-average Lease Term and Discount Rate Used (Details) | Dec. 31, 2020 |
Leases [Abstract] | |
Weighted-average lease term (years) | 6 years 8 months 12 days |
Weighted-average discount rate | 3.80% |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Cash Flow Information Related to Operating Leases (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Cash Flow Operating Activities Lessee [Abstract] | |
Cash paid for operating leases | $ 24,565 |
Right-of-use assets obtained in exchange for new operating lease obligations | $ 33,401 |
Leases - Summary of Future Comm
Leases - Summary of Future Commitments by Year for Long-term Operating Leases (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Operating Lease Liabilities Payments Due [Abstract] | |
2021 | $ 20,194 |
2022 | 19,484 |
2023 | 15,088 |
2024 | 11,002 |
2025 | 7,857 |
Thereafter | 35,195 |
Total future minimum lease payments | 108,820 |
Less: imputed interest | (13,929) |
Operating lease liabilities | $ 94,891 |
Leases - Schedule of Future Min
Leases - Schedule of Future Minimum Rental Payments Under Noncancelable Operating Leases (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Operating Leases Future Minimum Payments Due [Abstract] | |
2020 | $ 26,620 |
2021 | 22,282 |
2022 | 17,541 |
2023 | 13,360 |
2024 | 9,625 |
Thereafter | 34,467 |
Total future minimum lease payments | $ 123,895 |
Goodwill - Summary of Activity
Goodwill - Summary of Activity in Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
Goodwill, Balance | $ 62,834 | $ 62,834 | $ 60,699 |
2019 Acquisitions (Note 3) | $ 2,135 |
Goodwill - Additional Informati
Goodwill - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Impairment charge | $ 0 | $ 0 |
Investor Reserves - Schedule of
Investor Reserves - Schedule of Activity of Investor Reserves (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Investor Reserves [Abstract] | ||
Balance — beginning of year | $ 16,521 | $ 14,312 |
Benefit from investor reserves | (9,077) | (7,994) |
Provision for investor reserves | 7,091 | 10,203 |
Balance — end of year | $ 14,535 | $ 16,521 |
Warehouse Lines of Credit - Sum
Warehouse Lines of Credit - Summary of Warehouse Lines of Credit (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | $ 2,143,443 | $ 1,303,187 |
Warehouse Lines of Credit | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | 2,145,584 | 1,304,407 |
Prepaid commitment fees | (2,141) | (1,220) |
Warehouse lines of credit | 2,143,443 | 1,303,187 |
Warehouse Lines of Credit | 800 Million Master Repurchase Facility Agreement Maturity on January 2021 | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | 442,593 | 456,225 |
Warehouse Lines of Credit | 250 Million Master Repurchase Facility Agreement Maturity on September 2021 | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | 148,011 | 80,965 |
Warehouse Lines of Credit | 700 Million Master Repurchase Facility Agreement Maturity on February 2021 | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | 541,074 | 282,579 |
Warehouse Lines of Credit | 200 Million Master Repurchase Facility Agreement Maturity on May 2021 | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | 187,214 | 136,699 |
Warehouse Lines of Credit | 300 Million Master Repurchase Facility Agreement Maturity on September 2021 | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | 232,272 | 148,149 |
Warehouse Lines of Credit | 500 Million Master Repurchase Facility Agreement Maturity on July 2021 | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | 464,355 | 190,221 |
Warehouse Lines of Credit | 200 Million Master Repurchase Facility Agreement Maturity on April 2021 | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | 104,880 | |
Warehouse Lines of Credit | 75 Million Master Repurchase Facility Agreement Maturity on March 2024 | ||
Warehouse Lines of Credit [Line Items] | ||
Warehouse lines of credit | $ 25,185 | $ 9,569 |
Warehouse Lines of Credit - S_2
Warehouse Lines of Credit - Summary of Warehouse Lines of Credit (Parenthetical) (Details) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
800 Million Master Repurchase Facility Agreement Maturity on January 2021 | |
Warehouse Lines of Credit [Line Items] | |
Borrowing capacity | $ 800,000,000 |
Line of credit facility maturity date description | 30 days from written notice by either the financial institution or the Company. |
800 Million Master Repurchase Facility Agreement Maturity on January 2021 | Interest Rate Floor | |
Warehouse Lines of Credit [Line Items] | |
Line of credit, floor interest rate | 0.75% |
250 Million Master Repurchase Facility Agreement Maturity on September 2021 | |
Warehouse Lines of Credit [Line Items] | |
Minimum deposit required for line of credit | $ 1,250,000 |
700 Million Master Repurchase Facility Agreement Maturity on February 2021 | |
Warehouse Lines of Credit [Line Items] | |
Borrowing capacity | 500,000 |
Minimum deposit required for line of credit | 2,500,000 |
200 Million Master Repurchase Facility Agreement Maturity on May 2021 | |
Warehouse Lines of Credit [Line Items] | |
Minimum deposit required for line of credit | $ 750,000 |
200 Million Master Repurchase Facility Agreement Maturity on May 2021 | Interest Rate Floor | |
Warehouse Lines of Credit [Line Items] | |
Line of credit, floor interest rate | 1.525% |
300 Million Master Repurchase Facility Agreement Maturity on September 2021 | Interest Rate Floor | |
Warehouse Lines of Credit [Line Items] | |
Line of credit, floor interest rate | 0.40% |
500 Million Master Repurchase Facility Agreement Maturity on July 2021 | Interest Rate Floor | |
Warehouse Lines of Credit [Line Items] | |
Line of credit, floor interest rate | 0.75% |
200 Million Master Repurchase Facility Agreement Maturity on April 2021 | Interest Rate Floor | |
Warehouse Lines of Credit [Line Items] | |
Line of credit, floor interest rate | 1.75% |
75 Million Master Repurchase Facility Agreement Maturity on March 2024 | |
Warehouse Lines of Credit [Line Items] | |
Maximum term of buyout transactions on facility | 4 years |
Warehouse Lines of Credit - Add
Warehouse Lines of Credit - Additional Information (Details) - Warehouse Lines of Credit - USD ($) | Jan. 01, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Warehouse Lines of Credit [Line Items] | |||
Weighted average interest rate | 2.52% | 4.04% | |
Cash balances | $ 15,600,000 | $ 68,200,000 | |
Master Purchase Agreement | New Lender | Subsequent Event | |||
Warehouse Lines of Credit [Line Items] | |||
Purchase agreement amount | $ 250,000,000 |
Notes Payable - Additional Info
Notes Payable - Additional Information (Details) - USD ($) | 1 Months Ended | ||||||||
Jul. 31, 2020 | Sep. 30, 2019 | Jan. 31, 2014 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Jul. 31, 2018 | Jul. 31, 2017 | |
Term Note | |||||||||
Debt Instrument [Line Items] | |||||||||
Unused facility fee percentage | 0.375% | ||||||||
Line of credit facility, maximum borrowing capacity | $ 150,000,000 | ||||||||
Maximum amount of committed to increase | $ 78,000,000 | ||||||||
Long-term Line of Credit | $ 80,800,000 | $ 78,000,000 | |||||||
Debt instrument maturity date | Sep. 30, 2022 | ||||||||
Debt Instrument, Periodic Payment, Principal, Percentage of Outstanding Balance | 5.00% | ||||||||
New Term Note | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum amount of committed to increase | $ 100,000,000 | ||||||||
Federal Funds Rate | Term Note | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument variable rate | 0.50% | ||||||||
Eurodollar Base Rate | Term Note | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument variable rate | 1.00% | ||||||||
Government National Mortgage Association | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Unused facility fee percentage | 70.00% | ||||||||
Line of credit facility, maximum borrowing capacity | $ 135,000,000 | ||||||||
Maximum amount of committed to increase | $ 200,000,000 | ||||||||
Long-term Line of Credit | 45,000,000 | 90,000,000 | |||||||
Government National Mortgage Association | LIBOR | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit, floor interest rate | 4.50% | ||||||||
Federal Home Loan Mortgage Corporation | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Unused facility fee percentage | 50.00% | ||||||||
Line of credit facility, maximum borrowing capacity | $ 65,000,000 | $ 50,000,000 | $ 25,000,000 | ||||||
Long-term Line of Credit | $ 20,000,000 | $ 50,000,000 | |||||||
Federal Home Loan Mortgage Corporation | LIBOR | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit, floor interest rate | 0.75% |
Notes Payable - Summary of Mini
Notes Payable - Summary of Minimum Calendar Year Payments of Term Note (Details) - Term Note $ in Thousands | Dec. 31, 2020USD ($) |
Debt Instrument [Line Items] | |
2021 | $ 17,000 |
2022 | 63,750 |
Total | $ 80,750 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Current tax expense: | ||
Federal | $ 98,187 | $ 21,252 |
State | 22,214 | 4,977 |
Current tax expense | 120,401 | 26,229 |
Deferred tax expense (benefit): | ||
Federal | 2,190 | (19,952) |
State | 902 | (6,024) |
Deferred tax expense (benefit) | 3,092 | (25,976) |
Income tax expense | $ 123,493 | $ 253 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Line Items] | ||
Statutory federal income tax rate | 21.00% | 21.00% |
Deferred tax assets, valuation allowance | $ 0 | $ 0 |
Unrecognized tax benefits | 0 | $ 0 |
Changes in unrecognized tax benefits | 0 | |
Federal | ||
Income Tax Disclosure [Line Items] | ||
Net operating loss carryforwards | 0 | |
Tax credit carryforwards | 0 | |
State | ||
Income Tax Disclosure [Line Items] | ||
Net operating loss carryforwards | 0 | |
Tax credit carryforwards | $ 0 |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Recorded Income Tax Expense of Continuing Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Expense Benefit And Effective Income Tax Rate Continuing Operations Income Tax Reconciliation [Abstract] | ||
Income tax expense at federal statutory rate | $ 103,755 | $ 1,225 |
State income taxes, net of federal tax benefit | 19,904 | 267 |
Nondeductible deferred compensation | 7,115 | |
Permanent items | 1,887 | (863) |
Federal and state tax credits, net of federal tax benefit | (536) | (386) |
Deferred compensation adjustment | (8,834) | |
Other, net | 202 | 10 |
Income tax expense | $ 123,493 | $ 253 |
Statutory federal income tax rate | 21.00% | 21.00% |
State income taxes, net of federal tax benefit | 4.00% | 4.60% |
Nondeductible deferred compensation | 1.40% | |
Permanent items | 0.40% | (14.80%) |
Federal and state tax credits, net of federal tax benefit | (0.10%) | (6.60%) |
Deferred compensation adjustment | (1.80%) | |
Other, net | 0.00% | 0.10% |
Income tax expense | 25.00% | 4.30% |
Income Taxes - Schedule of Tax
Income Taxes - Schedule of Tax Effects of Significant Temporary Differences to Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Mortgage loans held for sale | $ 7,955 | $ 6,969 |
Intangible assets | 7,494 | 1,130 |
Accrued compensation and benefits | 3,705 | 2,060 |
Deferred compensation | 13,277 | 1,464 |
Lease liability | 23,440 | |
Other accrued liabilities | 1,240 | 916 |
Total deferred tax assets | 57,111 | 12,539 |
Deferred tax liabilities: | ||
Mortgage servicing rights | (98,660) | (94,094) |
Trading securities | (19) | (23) |
Derivatives | (22,743) | (3,518) |
Right-of-use assets | (23,127) | |
Property and equipment | (1,932) | (1,182) |
Total deferred tax liabilities | (146,481) | (98,817) |
Net deferred tax liabilities | $ (89,370) | $ (86,278) |
Earnings Per Share - Components
Earnings Per Share - Components of Basic and Diluted Earnings Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share Basic [Line Items] | ||
Net income available for Common Stock | $ 370,577,000 | $ 5,577,000 |
Weighted-average shares outstanding - basic | 60,000 | |
Weighted-average shares outstanding - diluted | 60,056 | |
Class A and Class B Common Stock | ||
Earnings Per Share Basic [Line Items] | ||
Net income available for Common Stock | $ 370,577,000 | |
Weighted-average shares outstanding - basic | 60,000,000 | |
Weighted-average shares outstanding - diluted | 60,056,000 | |
Basic earnings per share: | ||
Basic earnings per share | $ 6.18 | |
Diluted earnings per share: | ||
Diluted earnings per share | $ 6.17 | |
Class A Common Stock | ||
Earnings Per Share Basic [Line Items] | ||
Weighted-average shares outstanding - basic | 19,387 | |
Add dilutive effects of non-vested shares of restricted stock | 56 | |
Class B Common Stock | ||
Earnings Per Share Basic [Line Items] | ||
Weighted-average shares outstanding - basic | 40,613 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2020shares | |
Earnings Per Share Basic [Line Items] | |
Number of shares excluded from calculation of earnings per share | 0 |
Restricted Stock Units | |
Earnings Per Share Basic [Line Items] | |
Right to receive common stock, upon vesting | 1 |
Class A Common Stock | |
Earnings Per Share Basic [Line Items] | |
Common stock, voting rights | one vote per share |
Class B Common Stock | |
Earnings Per Share Basic [Line Items] | |
Common stock, voting rights | ten votes per share |
Stock-Based Compensation and _3
Stock-Based Compensation and Employee Benefit Plans - Additional Information (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Oct. 31, 2020 | |
Stock Based Compensation And Employee Benefit Plans [Line Items] | |||
Deferred compensation plan, description | The Company has a deferred compensation plan for executives which was frozen effective December 31, 2007. Distribution of a participant’s vested balance is payable in a single lump sum upon death or disability; termination of employment; retirement after attaining age 65 (55 for participants who had an account balance in the plan as of May 1, 2001); or upon termination of the plan. | ||
401(K) Profit Sharing Plan | |||
Stock Based Compensation And Employee Benefit Plans [Line Items] | |||
Company contribution | $ 7.6 | $ 5.9 | |
Restricted Stock Units | |||
Stock Based Compensation And Employee Benefit Plans [Line Items] | |||
Compensation costs recognized | 1 | ||
Unrecognized compensation costs | $ 20.6 | ||
Restricted stock grants expected to recognition period | 3 years 8 months 12 days | ||
Restricted Stock Units | Minimum | |||
Stock Based Compensation And Employee Benefit Plans [Line Items] | |||
Vesting period | 2 years | ||
Restricted Stock Units | Maximum | |||
Stock Based Compensation And Employee Benefit Plans [Line Items] | |||
Vesting period | 4 years | ||
Guild Equity Appreciation Rights Plan (“GEARs”) | |||
Stock Based Compensation And Employee Benefit Plans [Line Items] | |||
Vesting period | 5 years | ||
Guild Equity Appreciation Rights Plan (“GEARs”) | Accrued Compensation and Benefits | |||
Stock Based Compensation And Employee Benefit Plans [Line Items] | |||
Remaining liability | $ 3.5 | ||
Guild Equity Appreciation Rights Plan (“GEARs”) | Salaries, Incentive Compensation and Benefits | |||
Stock Based Compensation And Employee Benefit Plans [Line Items] | |||
Expense (income) | $ 2.6 | $ (0.1) | |
2020 Omnibus Incentive Plan | |||
Stock Based Compensation And Employee Benefit Plans [Line Items] | |||
Reserves for issuance of shares of common stock | 5.5 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 4.1 | ||
Period after which plan terminates | 10 years |
Stock-Based Compensation and _4
Stock-Based Compensation and Employee Benefit Plans - Summary of Unvested Restricted Stock (Details) | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Compensation Related Costs [Abstract] | |
Restricted stock awards, unvested, Number of Shares, Granted | shares | 1,440,334 |
Restricted stock awards, unvested, Number of Shares, Ending balance | shares | 1,440,334 |
Restricted stock awards, unvested, Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 15 |
Restricted stock awards, unvested, Weighted Average Grant Date Fair Value, Ending balance | $ / shares | $ 15 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions | Oct. 20, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies [Line Items] | ||||
Total commitments to originate loans | $ 5,200 | $ 1,500 | ||
Total commitments related to derivatives | $ 5,500 | $ 2,000 | ||
Settlement agreement, date | October 20, 2020 | |||
Litigation settlement amount | $ 24.9 | |||
Litigation settlement amount received | $ 1.9 | |||
U.S. Department of Housing and Urban Development (HUD) | ||||
Commitments and Contingencies [Line Items] | ||||
Complaint filing date | May 18, 2016 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Apr. 30, 2017 | Dec. 31, 2020 | Dec. 31, 2019 | Nov. 30, 2014 |
Guild Management, LLC | |||||
Related Party Transaction [Line Items] | |||||
Note receivable | $ 2.5 | ||||
Guild Management III, LLC | |||||
Related Party Transaction [Line Items] | |||||
Consideration | $ 2.3 | ||||
Consideration received in advance | $ 1.2 | ||||
Executive | |||||
Related Party Transaction [Line Items] | |||||
One-time payment | $ 2 | ||||
Payments to related party | $ 2.1 | $ 1.6 | |||
Unpaid payment to related party | $ 4.6 | ||||
Guild Mortgage Company, LLC | |||||
Related Party Transaction [Line Items] | |||||
Number of shares sold | 13.7038 | ||||
Promissory note | $ 8 | ||||
Payment, description | payable over 16 quarters |
Minimum Net Worth Requirements
Minimum Net Worth Requirements - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Fannie Mae and Freddie Mac | ||
Compliance With Regulatory Capital Requirements For Mortgage Companies [Line Items] | ||
Net worth | $ 2,500,000 | |
Liquidity spread of UPB serviced | 0.25% | |
Ratio of tangible net worth to total assets | 6.00% | |
Liquidity spread of servicing | 0.035% | |
Additional liquidity spread of UPB in excess of 6% | 2.00% | |
Fannie Mae and Freddie Mac | Minimum | ||
Compliance With Regulatory Capital Requirements For Mortgage Companies [Line Items] | ||
Mortgage servicing portfolio delinquency period | 90 days | |
Ginnie Mae | ||
Compliance With Regulatory Capital Requirements For Mortgage Companies [Line Items] | ||
Net worth | $ 2,500,000 | |
Liquidity spread of UPB serviced | 0.35% | |
Minimum liquid assets required to be maintained | $ 1,000,000 | |
Liquidity spread of servicing | 0.10% | |
Fannie Mae and Freddie Mac, and Ginnie Mae | ||
Compliance With Regulatory Capital Requirements For Mortgage Companies [Line Items] | ||
Minimum adjusted net worth balance required | $ 78,064,000 | $ 73,118,000 |
Fannie Mae and Freddie Mac, and Ginnie Mae | Minimum | ||
Compliance With Regulatory Capital Requirements For Mortgage Companies [Line Items] | ||
Ratio of tangible net worth to total assets | 6.00% |
Additional Non-Cash Disclosur_3
Additional Non-Cash Disclosures - Schedule of Non-cash Transactions Not Included in Consolidated Statements of Cash Flows (Details) - Ginnie Mae - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Noncash Investing And Financing Items [Line Items] | ||
GNMA inventory obtained due to delinquent status of GNMA serviced loans | $ 1,073,852 | $ 290,945 |
GNMA inventory removed from delinquent status | (137,843) | (116,138) |
GNMA real estate owned resolved through finalized foreclosure sale (conveyed to HUD) | (7,984) | (11,440) |
Reduction in GNMA inventory due to loan removal from pool | (63,489) | (83,895) |
Net increase of GNMA payable due to receipt or resolution of GNMA inventory and GNMA real estate owned | 864,536 | 79,472 |
GNMA real estate owned obtained through foreclosure sale of GNMA serviced loans | $ 1,022 | $ 7,617 |
Segments - Additional Informati
Segments - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2020StateSegmentLoan | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | Segment | 2 |
Number of states in which entity operates | State | 48 |
Minimum | |
Segment Reporting Information [Line Items] | |
Number of loans serviced | Loan | 1 |
Segments - Summary of Financial
Segments - Summary of Financial Performance and Results by Segment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue | ||
Loan origination fees and gain on sale of loans, net | $ 1,759,871 | $ 820,814 |
Loan servicing and other fees | 160,237 | 142,705 |
Valuation adjustment of mortgage servicing rights | (296,307) | (255,219) |
Interest income (expense) | (2,519) | 3,396 |
Other income, net | 765 | 1,193 |
Net revenue | 1,622,047 | 712,889 |
Expenses | ||
Salaries, incentive compensation and benefits | 953,758 | 578,170 |
General and administrative | 101,948 | 63,983 |
Occupancy, equipment and communication | 57,070 | 53,678 |
Depreciation and amortization | 7,501 | 7,333 |
Provision for foreclosure losses | 7,700 | 3,895 |
Income tax expense | 123,493 | 253 |
Net income | 370,577 | 5,577 |
Reportable Segments | ||
Revenue | ||
Loan origination fees and gain on sale of loans, net | 1,759,871 | 820,814 |
Loan servicing and other fees | 160,237 | 142,705 |
Valuation adjustment of mortgage servicing rights | (296,307) | (255,219) |
Interest income (expense) | 5,925 | 12,376 |
Other income, net | 158 | 38 |
Net revenue | 1,629,884 | 720,714 |
Expenses | ||
Salaries, incentive compensation and benefits | 889,397 | 563,594 |
General and administrative | 94,269 | 53,335 |
Occupancy, equipment and communication | 51,757 | 50,193 |
Depreciation and amortization | 5,421 | 6,743 |
Provision for foreclosure losses | 7,700 | 3,895 |
Net income | 581,340 | 42,954 |
Reportable Segments | Origination | ||
Revenue | ||
Loan origination fees and gain on sale of loans, net | 1,753,517 | 817,293 |
Interest income (expense) | 13,993 | 9,702 |
Other income, net | 25 | 38 |
Net revenue | 1,767,535 | 827,033 |
Expenses | ||
Salaries, incentive compensation and benefits | 864,322 | 548,056 |
General and administrative | 84,999 | 43,028 |
Occupancy, equipment and communication | 48,233 | 48,115 |
Depreciation and amortization | 4,644 | 6,417 |
Net income | 765,337 | 181,417 |
Reportable Segments | Servicing | ||
Revenue | ||
Loan origination fees and gain on sale of loans, net | 6,354 | 3,521 |
Loan servicing and other fees | 160,237 | 142,705 |
Valuation adjustment of mortgage servicing rights | (296,307) | (255,219) |
Interest income (expense) | (8,068) | 2,674 |
Other income, net | 133 | |
Net revenue | (137,651) | (106,319) |
Expenses | ||
Salaries, incentive compensation and benefits | 25,075 | 15,538 |
General and administrative | 9,270 | 10,307 |
Occupancy, equipment and communication | 3,524 | 2,078 |
Depreciation and amortization | 777 | 326 |
Provision for foreclosure losses | 7,700 | 3,895 |
Net income | (183,997) | (138,463) |
All Other | ||
Revenue | ||
Interest income (expense) | (8,444) | (8,980) |
Other income, net | 607 | 1,155 |
Net revenue | (7,837) | (7,825) |
Expenses | ||
Salaries, incentive compensation and benefits | 64,361 | 14,576 |
General and administrative | 7,679 | 10,648 |
Occupancy, equipment and communication | 5,313 | 3,485 |
Depreciation and amortization | 2,080 | 590 |
Income tax expense | 123,493 | 253 |
Net income | $ (210,763) | $ (37,377) |