Ms. Tonya Aldave
October 9, 2020
Page 2
The Company recognizes, however, that certain of its peers (see, e.g., Rocket Companies, Inc.’s Registration Statement on Form S-1 declared effective by the Commission on August 5, 2020; Mr. Cooper Group Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Commission on February 28, 2020 and PennyMac Financial Services, Inc.’s Exhibit 99.2 to its Current Report on Form 8-K furnished to the Commission on February 10, 2020) present gain-on-sale margin or originations margin using a pull-through adjusted lock volume (sometimes referred to as “net rate lock volume” or “fall-out adjusted lock”) as the denominator for the calculation. Pull-through adjusted lock volume includes the unpaid principal amount of loans subject to IRLCs multiplied by a “pull-through rate” (i.e., the estimated percentage of IRLCs that will result in a closed mortgage loan under the original terms of the related agreements). The Company estimates the pull-through rate based on changes in pricing and actual borrower behavior using a historical analysis of loan closing data and “fallout” data with respect to the number of commitments that have historically remained unexercised. The fair value of the Company’s IRLCs are adjusted for the pull-through rate. To enhance comparability with its peers, the Company has revised pages 17, 18, 75, 76, 82, 83, and 90 of Amendment No. 1 to supplementally disclose both its pull-through adjusted lock volume and its gain-on-sale margin using its pull-through adjusted lock volume as the denominator for the calculation.
Non-GAAP Financial Measures, page 74
| 2. | We note you present Non-GAAP indicators for the twelve months ended June 30, 2020. Please tell us the following: |
| • | Why you included this new information in the amendment; |
Response: The Company respectfully notes that Adjusted Net Income and Adjusted Return on Equity for the twelve months ended June 30, 2020 are included in the charts on page 113 of Amendment No. 1. In light of the inclusion of these indicators in the charts, the Company has included reconciliation tables for such indicators in the amendment. In response to the Staff’s comment, pages 26 and 78 of Amendment No. 1 have been revised to exclude Adjusted EBITDA for the twelve months ended June 30, 2020 from the non-GAAP reconciliation tables because Adjusted EBITDA for the twelve months ended June 30, 2020 is not included in any other section of Amendment No. 1.
| • | Why you did not include comparable results for the twelve months ended June 30, 2019; and |
Response: In response to the Staff’s comment, pages 26, 78, 112 and 113 of Amendment No. 1 have been revised to include comparable results for the twelve months ended June 30, 2019.
| • | How this information is useful for investors considering you already include Non-GAAP information for the year ended December 31, 2019 and the six months ended June 30, 2020. |
Response: The Company respectfully advises the Staff that Adjusted Net Income and Adjusted Return on Equity for the twelve months ended June 30, 2020 are included in the charts on page 113 of Amendment No. 1 that show net income and return on equity on an annual basis for the year ended December 31, 2008 through the year ended December 31, 2019 and Adjusted Net Income and Adjusted Return on Equity on an annual basis for the year ended December 31, 2019. The Company believes that including Adjusted Net Income and Adjusted Return on Equity for the twelve months ended June 30, 2020 in those charts is useful for investors because that information provides the most current twelve-month-period data that is available for comparison against the historical annual metrics provided in the charts.