Quarterly report pursuant to Section 13 or 15(d)

NOTES PAYABLE

v3.23.3
NOTES PAYABLE
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
NOTES PAYABLE WAREHOUSE LINES OF CREDIT
Warehouse lines of credit consisted of the following at September 30, 2023 and December 31, 2022. Changes subsequent to September 30, 2023 have been described in the notes referenced with the below table.
Maturity as of September 30,
2023		 September 30, 2023 December 31, 2022
$345 million master repurchase facility agreement(1)
January 2024 $ 107,912  $ 47,565 
$150 million master repurchase facility agreement(2)
August 2024 113,126  10,848 
$300 million master repurchase facility agreement(3)
June 2024 173,377  189,512 
$200 million master repurchase facility agreement(4)
May 2024 84,020  110,605 
$200 million master repurchase facility agreement(5)
November 2023 82,721  16,131 
$300 million master repurchase facility agreement(6)
September 2024 128,197  81,353 
$100 million master repurchase facility agreement(7)
N/A —  56,237 
$50 million master repurchase facility agreement(8)
N/A 30,851  — 
$75 million master repurchase facility agreement(9)
March 2025 35,041  40,096 
$200 million master repurchase facility agreement(10)
N/A 86,906  162,454 
842,151  714,801 
Prepaid commitment fees (3,029) (1,650)
Net warehouse lines of credit $ 839,122  $ 713,151 
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(1)The variable interest rate is calculated using a base rate tied to SOFR.
(2)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This line of credit requires a minimum deposit of $750,000.
(3)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This facility requires a minimum deposit of $1.5 million.
(4)The variable interest rate is calculated using a base rate plus SOFR, with a floor of 0.375% plus the applicable interest rate margin.
(5)The variable interest rate is calculated using a base rate tied to SOFR 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 SOFR with a floor of 0.50%, plus the applicable interest rate margin.
(7)This facility matured in July 2023 and was not renewed.
(8)The variable interest rate is calculated using a base rate tied to SOFR, plus the applicable interest rate margin. This facility’s maturity date is 30 days from written notice by either the financial institution or the Company.
(9)The interest rate on this facility is 3.375%. This facility is used for GNMA delinquent buyouts. Each buyout represents a separate transaction that can remain on the facility for up to four years.
(10)This facility agreement is due on demand and the variable interest rate is calculated using a base rate tied to SOFR with a floor of 0.75%.
The weighted average interest rate for warehouse lines of credit was 6.98% and 3.31% at September 30, 2023 and December 31, 2022, 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 had cash balances of $9.2 million and $50.7 million in its warehouse buy down accounts as offsets to certain lines of credit at September 30, 2023 and December 31, 2022, 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 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 September 30, 2023 and December 31, 2022, the Company believes it 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”. The Company can elect to assign FNMA Mortgage Backed Security ("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 September 30, 2023 and December 31, 2022.
NOTES PAYABLE
Revolving Notes:
The Company has an agreement for a revolving note from one of its warehouse banks, which it can draw upon as needed. The agreement currently expires in August 2027. 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 SOFR rate plus the applicable margin, with a SOFR floor of 0.5%. 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 facility. The revolving note has a committed amount of $135.0 million and the agreement allows for the Company to increase the committed amount up to a maximum of $200.0 million. The Company has the option to convert the outstanding balance of the revolving note into a term note at its discretion. At September 30, 2023 and December 31, 2022, the Company had $31.0 million balance and $20.0 million, respectively, in outstanding borrowings on this credit facility.
The Company has an agreement for a revolving note of up to $100.0 million from one of its warehouse banks, which it can draw upon as needed. The agreement currently expires in September 2024. 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 SOFR rate plus the applicable margin, with a floor of 0.50%. The revolving note also had an unused facility fee on the average unused balance, which was also paid quarterly. The unused facility fee was waived if the average outstanding balance exceeded 35% of the available combined warehouse and MSR facility. In September 2023 the revolving note was amended to remove the unused facility fee. The lender has the option to convert the outstanding balance of the revolving note into a term note at its discretion. At September 30, 2023 and December 31, 2022, the Company had $30.0 million and no balance, respectively, in outstanding borrowings on this credit facility.
In September 2023, the Company entered into a new revolving note agreement, which it can draw upon as needed. The agreement currently expires in September 2028. Borrowings on the revolving note are collateralized by the Company’s FNMA MSRs. Monthly interest on the outstanding balance is calculated using a base rate tied to the SOFR rate plus the applicable margin, with a SOFR floor of 2.0%. The revolving note has a committed amount of $250.0 million and the agreement allows for the Company to increase the committed amount up to a maximum of $400.0 million. At September 30, 2023, the Company had $87.8 million in outstanding borrowings on this credit facility.
Term Note:
The Company had a term note agreement with one of its warehouse banks collateralized by the Company’s FNMA MSRs. The term note had a committed amount of $125.0 million and the agreement allowed for the Company to increase the committed amount up to a maximum of $175.0 million. The Company could draw on the committed amount through March 2022 and the note had a maturity date of March 2024. Interest on the principal was paid monthly and was 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 March 31, 2022 were due quarterly beginning April 15, 2022, with the remaining principal balance due upon maturity. The term note also had an unused facility fee on the average unused balance, which was also paid quarterly. In September 2023, the Company paid in full the $87.5 million remaining balance due on the term note with funds borrowed under a new revolving note agreement with a different lender (see section above describing the new revolving note agreement). At September 30, 2023 and December 31, 2022, the Company had no outstanding balance and $106.3 million, respectively, on this facility.