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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 001-39645

GUILD HOLDINGS COMPANY
(Exact Name of Registrant as Specified in its Charter)
_______________
Delaware85-2453154
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
5887 Copley Drive
San Diego, California
92111
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (858) 560-6330
_______________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)
Name of each exchange on which registered
Class A common stock, $0.01 par value per shareGHLDThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
  Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No 
As of May 2, 2024, the registrant had 21,011,358 shares of Class A common stock outstanding and 40,333,019 shares of Class B common stock outstanding.


GUILD HOLDINGS COMPANY
Table of Contents

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Guild Holdings Company, a Delaware corporation, together with its subsidiaries, is referred to in this Quarterly Report on Form 10-Q (this “Quarterly Report”) as “Guild,” “we,” “us,” “our,” and the “Company.” This Quarterly Report contains forward-looking statements that reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
Important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements include, but are not limited to, the following:

A disruption in the secondary home loan market or our ability to sell the loans that we originate could have a detrimental effect on our business.
Macroeconomic and U.S. residential real estate market conditions have and may continue to materially and adversely affect our revenue and results of operations.
Because we are highly dependent on certain U.S. government-sponsored entities and government agencies, we may be adversely impacted by any organizational or pricing changes or changes in our relationship with these entities and agencies.
Changes in prevailing interest rates or U.S. monetary policies have had and may continue to have a detrimental effect on our business.
Our servicing rights are subject to termination with or without cause.
If a significant number of our warehouse lines of credit, on which we are highly dependent, are terminated or reduced, we may be unable to find replacement financing on favorable terms, or at all, which would have a material adverse effect on us.
Our existing and any future indebtedness could adversely affect our ability to operate our business, our financial condition or the results of our operations.
If we do not maintain and improve the technology infrastructure that supports our origination and servicing platform or if we suffer any significant disruption in service on our platform, our ability to serve our clients may be materially and adversely impacted.
Acquisitions and investments have in the past, and may in the future, cause our financial results to differ from our expectations or the expectations of the investment community and we may not be able to achieve anticipated benefits from such acquisitions and investments.
Pressure from existing and new competitors may adversely affect our business, operating results, financial condition and prospects.
Our failure to maintain or grow our historical referral relationships with our referral partners may materially and adversely affect us.
We are required to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances.
A substantial portion of our assets are measured at fair value. From time to time our estimates of their value prove to be inaccurate and we are required to write them down.
The success and growth of our business will depend upon our ability to adapt to and implement technological changes and to develop and market attractive products and services.
Adverse events to our clients could occur, which can result in substantial losses that could adversely affect our financial condition.
Our business could be materially and adversely affected by a cybersecurity breach or other vulnerability involving our computer systems or those of certain third-party service providers.
Operating and growing our business may require additional capital, and if capital is not available to us, our business, operating results, financial condition, and prospects may suffer.
We are subject to certain operational risks, including, but not limited to, employee or customer fraud, the obligation to repurchase sold loans in the event of a documentation error, and data processing system failures and errors.
We are periodically required to repurchase mortgage loans that we have sold or indemnify purchasers of our mortgage loans.
Seasonality may cause fluctuations in our financial results.
If we fail to protect our brand and reputation, our ability to grow our business and increase the volume of mortgages we originate and service may be adversely affected.
We are subject to certain risks associated with investing in real estate and real estate related assets, including risks of loss from adverse weather conditions, man-made or natural disasters, pandemics, terrorist attacks and the effects of climate change.
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If we are unable to attract, integrate and retain qualified personnel, our ability to develop and successfully grow our business could be harmed.
Our risk management strategies may not be fully effective in mitigating our risk exposures in all market environments or against all types of risk.
Changes in, or our failure to comply with, the highly complex legal and regulatory framework applicable to our mortgage loan origination and servicing activities could harm our business, operating results, financial condition, and prospects.
Our failure to comply with fair lending laws and regulations could lead to a wide variety of negative consequences.
Our failure to obtain and maintain the appropriate state licenses would prohibit us from originating or servicing mortgages in those states and adversely affect our operations.
Changes in the guidelines of the GSEs, FHA, VA, USDA, and Ginnie Mae could adversely affect our business.
Material changes to the laws, regulations or practices applicable to reverse mortgage programs operated by FHA and HUD could adversely affect our reverse mortgage business.
Our actual or perceived failure to comply with stringent and evolving legal obligations related to data privacy and security may materially and adversely affect us.
We may from time to time be subject to litigation, which may be extremely costly to defend, could result in substantial judgment or settlement costs and could subject us to other remedies.
We are controlled by McCarthy Capital Mortgage Investors, LLC (“MCMI”), and MCMI’s interests may conflict with our interests and the interests of our other stockholders.
Our directors and executive officers have significant control over our business.
As a “controlled company,” we rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.
We are a holding company and depend upon distributions from GMC to meet our obligations.
Sales of a substantial number of shares of our Class A common stock by our existing stockholders in the public market could cause the price of our Class A common stock to fall.
Our issuance of capital stock in connection with financings, acquisitions, investments, our equity incentive plans or otherwise would dilute all other stockholders.
There is no assurance that we will pay dividends in the future.
Certain provisions in our certificate of incorporation and bylaws and of Delaware law may prevent or delay an acquisition of Guild, which could decrease the trading price of our stock.
The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.
Our quarterly and annual operating results or other operating metrics may fluctuate significantly and may not meet expectations of research analysts, which could cause the trading price of our Class A common stock to decline.
If we fail to maintain effective internal control over financial reporting or disclosure controls and procedures, we may be unable to report our financial results accurately on a timely basis, which would result in the loss of investor confidence, delisting, claims or investigations, and cause the market price of our Class A common stock to decline.
We are also subject to other risks and uncertainties described in our Form 10-K for the year ended December 31, 2023 and our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.
We disclaim any obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law.
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PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
GUILD HOLDINGS COMPANY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
March 31,
2024
December 31,
2023
Assets
Cash and cash equivalents$95,148 $120,260 
Restricted cash6,654 7,121 
Mortgage loans held for sale, at fair value
1,126,159 901,227 
Reverse mortgage loans held for investment, at fair value
348,076 315,912 
Ginnie Mae loans subject to repurchase right653,978 699,622 
Mortgage servicing rights, at fair value
1,216,483 1,161,357 
Advances, net
56,226 64,748 
Property and equipment, net
14,495 13,913 
Right-of-use assets
75,979 65,273 
Goodwill and intangible assets, net
232,881 211,306 
Other assets129,973 115,981 
Total assets$3,956,052 $3,676,720 
Liabilities and stockholders’ equity
Warehouse lines of credit, net
$1,057,957 $833,781 
Home Equity Conversion Mortgage-Backed Securities (“HMBS”) related borrowings
326,804 302,183 
Ginnie Mae loans subject to repurchase right658,018 700,120 
Notes payable185,000 148,766 
Accounts payable and accrued expenses
74,817 63,432 
Operating lease liabilities86,311 75,832 
Deferred tax liabilities234,146 225,021 
Other liabilities
118,849 144,092 
Total liabilities2,741,902 2,493,227 
Commitments and contingencies (Note 15)
Stockholders’ equity
Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued and outstanding
  
Class A common stock, $0.01 par value; 250,000,000 shares authorized; 20,769,067 and 20,786,814 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
208 208 
Class B common stock, $0.01 par value; 100,000,000 shares authorized; 40,333,019 shares issued and outstanding at March 31, 2024 and December 31, 2023
403 403 
Additional paid-in capital49,024 47,158 
Retained earnings1,163,905 1,135,387 
Non-controlling interests610 337 
Total stockholders’ equity1,214,150 1,183,493 
Total liabilities and stockholders’ equity$3,956,052 $3,676,720 
See accompanying notes to condensed consolidated financial statements
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GUILD HOLDINGS COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended
March 31,
20242023
Revenue
Loan origination fees and gain on sale of loans, net$134,060 $92,651 
Gain on reverse mortgage loans held for investment and HMBS-related borrowings, net
3,230  
Loan servicing and other fees65,788 60,087 
Valuation adjustment of mortgage servicing rights20,778 (54,871)
Interest income24,728 18,245 
Interest expense(16,541)(12,262)
Other (expense) income, net
(261)35 
Net revenue231,782 103,885 
Expenses
Salaries, incentive compensation and benefits140,067 111,120 
General and administrative29,211 20,883 
Occupancy, equipment and communication19,815 17,430 
Depreciation and amortization3,754 3,738 
Provision for foreclosure losses392 1,514 
Total expenses193,239 154,685 
Income (loss) before income tax expense (benefit)
38,543 (50,800)
Income tax expense (benefit)
10,143 (13,605)
Net income (loss)
28,400 (37,195)
Net loss attributable to non-controlling interests
(98)(5)
Net income (loss) attributable to Guild
$28,498 $(37,190)
Earnings (loss) per share attributable to Class A and Class B Common Stock:
Basic$0.47 $(0.61)
Diluted$0.46 $(0.61)
Weighted average shares outstanding of Class A and Class B Common Stock:
Basic61,109 60,900 
Diluted62,157 60,900 
See accompanying notes to condensed consolidated financial statements
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GUILD HOLDINGS COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except share amounts)
Class A SharesClass A 
Amount
Class B SharesClass B 
Amount
Additional
Paid-In
Capital
Retained
Earnings
Non-controlling InterestsTotal
Balance at December 31, 202220,583,130 $206 40,333,019 $403 $42,727 $1,205,885 $66 $1,249,287 
Net loss
— — — — — (37,190)(5)(37,195)
Repurchase and retirement of Class A common stock(50,166)(1)— — (567)— — (568)
Stock-based compensation— — — — 1,756 — — 1,756 
Vesting of restricted stock units333 — — — — — — — 
Shares of Class A common stock withheld related to net share settlement
(137)— — — (1)— — (1)
Balance at March 31, 2023
20,533,160 $205 40,333,019 $403 $43,915 $1,168,695 $61 $1,213,279 
Class A SharesClass A 
Amount
Class B SharesClass B 
Amount
Additional
Paid-In
Capital
Retained
Earnings
Non-controlling InterestsTotal
Balance at December 31, 202320,786,814 $208 40,333,019 $403 $47,158 $1,135,387 $337 $1,183,493 
Net income (loss)— — — — — 28,498 (98)28,400 
Repurchase and retirement of Class A common stock(17,747)— — — (251)— — (251)
Stock-based compensation— — — — 2,137 — — 2,137 
Dividend equivalents on unvested restricted stock units forfeited
— — — — (20)20 — — 
Acquisition of non-controlling interests
— — — — — — 371 371 
Balance at March 31, 2024
20,769,067 $208 40,333,019 $403 $49,024 $1,163,905 $610 $1,214,150 
See accompanying notes to condensed consolidated financial statements
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GUILD HOLDINGS COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
March 31,
20242023
Cash flows from operating activities
Net income (loss)
$28,400 $(37,195)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization3,754 3,738 
Valuation adjustment of mortgage servicing rights(20,778)54,871 
Valuation adjustment of mortgage loans held for sale6,408 (7,382)
Valuation adjustment of reverse mortgage loans held for investment and HMBS-related borrowings(3,230) 
Unrealized gain on derivatives
(25,072)(6,052)
Amortization of right-of-use assets5,410 5,471 
Provision for investor reserves520 1,902 
Provision for foreclosure losses392 1,514 
Valuation adjustment of contingent liabilities due to acquisitions, net 1,364 (10)
Gain on sale of mortgage loans excluding fair value of other financial instruments, net(81,092)(50,882)
Deferred income taxes9,125 (13,199)
Stock-based compensation2,137 1,756 
Origination of mortgage servicing rights(34,234)(27,493)
Origination and purchase of mortgage loans held for sale(3,605,155)(2,700,053)
Proceeds on sale of and payments from mortgage loans held for sale3,454,907 2,745,778 
Other1,982 759 
Changes in operating assets and liabilities:
Advances and other assets11,654 13,047 
Accounts payable and accrued expenses11,370 (3,590)
Operating lease liabilities(5,622)(5,822)
Other liabilities(23,683)(6,712)
Net cash used in operating activities(261,443)(29,554)
Cash flows from investing activities
Acquisition of businesses, net of cash acquired(17,710)(2,920)
Origination and purchase of reverse mortgage loans held for investment(30,543) 
Principal payments received on reverse mortgage loans held for investment9,192  
Issuance of notes receivable (11,250)
Purchases of property and equipment, net(592)(1,071)
Other(1,289) 
Net cash used in investing activities(40,942)(15,241)
Cash flows from financing activities
Borrowings on warehouse lines of credit
3,844,707 2,631,998 
Repayments on warehouse lines of credit(3,620,230)(2,582,588)
Proceeds from issuance of reverse mortgage loans and tails accounted for as HMBS-related obligations26,524  
Repayments on HMBS-related obligations(9,486) 
Borrowings on notes payable36,234 30,000 
Repayments on notes payable (26,250)
Net change in related party notes payable (530)
Taxes paid related to net share settlement of equity awards (1)
Repurchases of Class A common stock(251)(568)
Other(692) 
Net cash provided by financing activities276,806 52,061 
(Decrease) increase in cash, cash equivalents and restricted cash(25,579)7,266 
Cash, cash equivalents and restricted cash, beginning of period127,381 146,754 
Cash, cash equivalents and restricted cash, end of period$101,802 $154,020 

See accompanying notes to condensed consolidated financial statements
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GUILD HOLDINGS COMPANY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
Three Months Ended
March 31,
20242023
Supplemental information
Cash paid for interest, net$3,529 $3,002 
Income tax refunds, net of cash paid
$(358)$(2,233)
Supplemental disclosure of non-cash investing activities:
Measurement period adjustment to goodwill$ $760 
Cash, cash equivalents and restricted cash at end of period are comprised of the following:
Cash and cash equivalents$95,148 $147,783 
Restricted cash6,654 6,237 
Total cash, cash equivalents and restricted cash$101,802 $154,020 
See accompanying notes to condensed consolidated financial statements
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GUILD HOLDINGS COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—BUSINESS, BASIS OF PRESENTATION, AND SIGNIFICANT ACCOUNTING POLICIES
Business
Guild Holdings Company, including its consolidated subsidiaries (collectively, “Guild” or the “Company”) originates, sells, and services residential mortgage loans in the United States. The Company operates in two reportable segments, origination and servicing. The Company operates approximately 500 branches with licenses in 49 states and the District of Columbia. The Company originates residential mortgages through retail and correspondent channels.
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 Administration (“FHA”) non-supervised lender. In addition, the Company is an approved issuer with the Government National Mortgage Association (“GNMA” or “Ginnie Mae”), as well as an approved seller and servicer with the Federal National Mortgage Association (“FNMA” or “Fannie Mae”), the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”) and the United States Department of Agriculture Rural Development (“USDA”).
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and in accordance with U.S. generally accepted accounting principles (“GAAP”) applicable to interim financial statements. These unaudited condensed consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results of the interim period. The unaudited condensed consolidated financial statements include the accounts of the Company and all other entities in which it has a controlling financial interest or consolidates as a variable interest entity or joint venture. All significant intercompany accounts and transactions have been eliminated in consolidation. The condensed consolidated balance sheet data as of December 31, 2023 was derived from audited financial statements, but does not include all disclosures required by GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company follows the same accounting policies for preparing quarterly and annual reports.
Reclassifications
Certain reclassifications have been made to the condensed consolidated financial statements to conform to the current year’s presentation.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although management is not currently aware of any factors that would significantly change its estimates and assumptions, actual results could materially differ from those estimates.
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 Condensed Consolidated Balance Sheets. These accounts totaled $795.1 million and $646.5 million at March 31, 2024 and December 31, 2023, respectively.
Recent Accounting Standards
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. For public business entities the update will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the disclosure requirements related to the new standard.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) (“ASU 2023-07”). ASU 2023-07 requires disclosure, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. ASU 2023-07 requires that a public
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entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. The Company is currently evaluating the disclosure requirements related to the new standard.
In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). ASU 2023-05 applies to the formation of a “joint venture” or a “corporate joint venture” and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance does not impact accounting by the venturers. The new guidance is applicable to joint venture entities with a formation date on or after January 1, 2025 on a prospective basis and early adoption is permitted. The Company is currently evaluating the impact of adoption of the new guidance on its financial statements.
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. The three levels of inputs used to measure fair value are as follows:
Level One - Level One inputs are unadjusted, quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level Two - Level Two inputs are observable for that asset or liability, either directly or indirectly, and include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, observable inputs for the asset or liability other than quoted prices and inputs derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified contractual term, the inputs must be observable for substantially the full term of the asset or liability.
Level Three - Level Three inputs are unobservable inputs for the asset or liability that reflect the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, and are developed based on the best information available.
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 March 31, 2024 and
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December 31, 2023, the Company had the following assets and liabilities that are measured at fair value on a recurring basis:
Mortgage Loans Held for Sale (“MLHS”) — 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. 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. We regularly review our critical estimates and assumptions used in the valuation of our MLHS.
Reverse Mortgage Loans Held for Investment — Reverse mortgage loans held for investment are carried at fair value and classified within Level Three of the valuation hierarchy. Fair value is estimated using a present value methodology that discounts estimated projected cash flows over the life of the loan using unobservable inputs which include conditional prepayment rates and discount rates. The conditional prepayment rate assumption is inclusive of voluntary (repayment or payoff) and involuntary (inactive/delinquent status and default) prepayments. The discount rate assumption used is primarily based on an assessment of current market yields on reverse mortgage loan and tail securitizations, expected duration of the asset and current market interest rates. The Company engages a third-party valuation expert to assist in estimating the fair value. See “Note 8—Reverse Mortgage Loans Held for Investment and HMBS-related Borrowings” for additional information on the Company's reverse mortgage loans held for investment.
Mortgage Servicing Rights (“MSRs”) — 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. See “Note 6—Mortgage Servicing Rights” for additional information on the Company's MSRs.
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”) — 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 (or “locked”) prior to funding. The fair value of IRLCs recorded at lock inception 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. 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.
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The Company regularly reviews its critical estimates and assumptions used in the valuation of our IRLCs and forward delivery commitments. See “Note 5—Derivative Financial Instruments” for additional information on derivative instruments.
Notes Receivable — Notes receivable are classified within Level Three of the valuation hierarchy as the Company's valuation includes significant unobservable inputs, including consideration of estimates of future earn-out payments, discount rates and expectations about settlement.
HMBS-Related Borrowings — HMBS-related borrowings are carried at fair value and classified within Level Three of the valuation hierarchy. These borrowings are not actively traded; therefore, quoted market prices are not available. The Company determines fair value using a discounted cash flow model, by discounting the projected payment of principal and interest over the estimated life of the borrowing at a market rate, due to significant unobservable inputs, including conditional prepayment rates and discount rates. The discount rate assumption used is primarily based on an assessment of current market yields for newly issued HMBS, expected duration and current market interest rates. The Company engages a third-party valuation expert to assist in estimating the fair value. See “Note 8—Reverse Mortgage Loans Held for Investment and HMBS-related Borrowings” for additional information on the Company's HMBS-related borrowings.
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. At March 31, 2024 the range of the risk adjusted discount rate was 20.8% - 25.0%, with a weighted average of 22.9% and at December 31, 2023 the risk adjusted discount rate was 25.0%. 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 Condensed Consolidated Statements of Operations.
The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2024:
(in thousands)
Level 1Level 2Level 3Total
Assets:
Mortgage loans held for sale$ $1,126,159 $ $1,126,159 
Reverse mortgage loans held for investment  348,076 348,076 
Mortgage servicing rights  1,216,483 1,216,483 
Derivative assets
Interest rate lock commitments  23,588 23,588 
Forward delivery commitments  142  142 
Notes receivable  11,006 11,006 
Total assets at fair value$ $1,126,301 $1,599,153 $2,725,454 
Liabilities:
HMBS-related borrowings$ $ $326,804 $326,804 
Derivative liabilities
Forward delivery commitments and best efforts sales commitments
 3,918  3,918 
Contingent liabilities due to acquisitions  20,101 20,101 
Total liabilities at fair value$ $3,918 $346,905 $350,823 
13

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2023:
(in thousands)
Level 1Level 2Level 3Total
Assets:
Mortgage loans held for sale$ $901,227 $ $901,227 
Reverse mortgage loans held for investment  315,912 315,912 
Mortgage servicing rights  1,161,357 1,161,357 
Derivative assets
Interest rate lock commitments  14,902 14,902 
Forward delivery commitments 693  693 
Notes receivable  10,627 10,627 
Total assets at fair value$ $901,920 $1,502,798 $2,404,718 
Liabilities:
HMBS-related borrowings$ $ $302,183 $302,183 
Derivative liabilities
Forward delivery commitments and best efforts sales commitments
 16,245  16,245 
Contingent liabilities due to acquisitions  8,720 8,720 
Total liabilities at fair value$ $16,245 $310,903 $327,148 
The table below presents a reconciliation of certain Level Three assets and liabilities measured at fair value on a recurring basis for the three months ended March 31, 2024:
(in thousands)
Interest Rate Lock CommitmentsNotes Receivable
Contingent Liabilities
Balance at December 31, 2023$14,902 $10,627 $8,720 
Net transfers and revaluation losses8,686 — — 
Additions— 149 10,017 
Valuation adjustments— 230 1,364 
Balance at March 31, 2024$23,588 $11,006 $20,101 
The table below presents a reconciliation of certain Level Three assets and liabilities measured at fair value on a recurring basis for the three months ended March 31, 2023:
(in thousands)
Interest Rate Lock CommitmentsNotes Receivable
Contingent Liabilities
Balance at December 31, 2022$1,518 $ $526 
Net transfers and revaluation gains
10,688 — — 
Additions— 11,250 1,702 
Valuation adjustments— — (10)
Balance at March 31, 2023
$12,206 $11,250 $2,218 
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 for the three months ended March 31, 2024 and 2023.
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 March 31, 2024 and December 31, 2023, the Company had the following financial assets measured at fair value on a non-recurring basis:
14

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, Transfers and Servicing, 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 (“UPB”). The Company’s future expected realizable cash flows are the cash payments of the remaining UPB 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' lives.
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a non-recurring basis at March 31, 2024:
(in thousands)
Level 1Level 2Level 3Total
Assets:
Ginnie Mae loans subject to repurchase right$ $653,978 $ $653,978 
Total assets at fair value$ $653,978 $ $653,978 
Liabilities:
Ginnie Mae loans subject to repurchase right$ $658,018 $ $658,018 
Total liabilities at fair value$ $658,018 $ $658,018 
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a non-recurring basis at December 31, 2023:
(in thousands)
Level 1Level 2Level 3Total
Assets:
Ginnie Mae loans subject to repurchase right$ $699,622 $ $699,622 
Total assets at fair value$ $699,622 $ $699,622 
Liabilities:
Ginnie Mae loans subject to repurchase right$ $700,120 $ $700,120 
Total liabilities at fair value$ $700,120 $ $700,120 
Fair Value Option
The Company has elected to measure its MLHS, reverse mortgage loans held for investment, notes receivable and HMBS-related borrowings at fair value. The following is the estimated fair value and UPB of assets and liabilities that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option was elected as the Company believes fair value best reflects their expected future economic performance and to align with the Company’s business and risk management strategies.
(in thousands)
Fair ValuePrincipal
Amount Due
Upon
Maturity
Difference
March 31, 2024
Assets:
Mortgage loans held for sale(1)
$1,126,159 $1,125,664 $495 
Reverse mortgage loans held for investment(2)
348,076 312,481 35,595 
Notes receivable11,006 11,705 (699)
Liabilities:
HMBS-related borrowings$326,804 $315,555 $11,249 
_____________________________
(1)MLHS that were 90 days or more past due had a fair value of $7.8 million and UPB of $10.7 million.
(2)Reverse mortgage loans held for investment that were 90 days or more past due had a fair value of $6.4 million and UPB of $5.9 million.
15

(in thousands)
Fair ValuePrincipal
Amount Due
Upon
Maturity
Difference
December 31, 2023
Assets:
Mortgage loans held for sale(1)
$901,227 $892,816 $8,411 
Reverse mortgage loans held for investment(2)
315,912 290,907 25,005 
Notes receivable10,627 11,556 (929)
Liabilities:
HMBS-related borrowings$302,183 $293,542 $8,641 
_____________________________
(1)MLHS that were 90 days or more past due had a fair value of $7.3 million and UPB of $9.9 million.
(2)Reverse mortgage loans held for investment that were 90 days or more past due had a fair value of $3.4 million and UPB of $3.3 million.
NOTE 3—ACQUISITIONS
2024 Acquisitions
On February 12, 2024, the Company entered into an asset purchase agreement to acquire certain retail lending assets of privately held Utah-based lender Academy Mortgage Corporation (“Academy Mortgage”) for a purchase price of $27.0 million including the estimated fair value of contingent consideration that Academy Mortgage could receive based on the performance of the Academy Mortgage branches. The transaction closed on February 26, 2024. The addition of Academy Mortgage will extend Guild’s market share across its national footprint and will increase the Company’s branches and origination staff. The purchase was financed with a combination of cash and existing borrowings.
In March 2024, the Company, through its subsidiary, acquired a controlling interest in Waterton Insurance Group, LLC, a provider of home insurance solutions.
2023 Acquisitions
In 2023, the Company acquired certain assets of First Centennial Mortgage Corporation (“FCM”), Cherry Creek Mortgage LLC (“CCM”) and Legacy Mortgage, LLC (“Legacy”) for a total fair value consideration of $15.4 million, which consisted of $8.0 million in cash, total fair value of contingent consideration of $6.1 million and an original issuance discount on note receivable of $1.3 million.
The Company does not consider the 2024 or 2023 acquisitions to be material, individually or in the aggregate. The acquisitions were accounted for as business combinations, under which the total purchase price was allocated to the net tangible and intangible assets acquired and liabilities assumed based on their preliminary fair values and the excess was recorded as goodwill. The preliminary fair values are subject to subsequent adjustments during the measurement period, not to exceed one year from the date of acquisition. The goodwill resulting from the purchase price allocation reflects the expected synergistic benefits of expanding the Company's geographic locations and the existing workforce. The acquired goodwill was allocated to the origination segment and is deductible for tax purposes.
The results of the acquisitions have been included in the Company’s condensed consolidated financial statements since the date of the acquisitions and did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. Transaction costs associated with these transactions were not material and were expensed as incurred within general and administrative expenses in the Condensed Consolidated Statements of Operations.
CCM Note Receivable
In March 2023, the Company issued a note receivable to CCM in the amount of $11.3 million in connection with the acquisition of CCM, which closed in April 2023. The Company recognized a discount on the note receivable of approximately $1.3 million on the date the acquisition closed. The note bears interest at a variable rate tied to the Secured Overnight Financing Rate (“SOFR”) plus an applicable margin. Also, pursuant to the acquisition, CCM will be entitled to earn-out payments for four years based on certain performance criteria. The earn-out payments will be first allocated to repay the interest and principal due on the note receivable. The note receivable matures in April 2027. If an earn-out payment is not due to CCM, 50% of the interest payment
16

may be “paid-in-kind,” and thereby added to the principal balance. The Company elected to apply the fair value option to this note receivable to align with the accounting treatment for the contingent consideration liability.
NOTE 4—ADVANCES, NET
Advances, net consisted of the following:
(in thousands)
March 31,
2024
December 31,
2023
Trust advances$39,808 $44,487 
Foreclosure advances
22,244 25,955 
Foreclosure loss reserve
(5,826)(5,694)
Total advances, net$56,226 $64,748 
Management has established a foreclosure reserve for estimated uncollectible balances of the foreclosure and trust advances. The activity of the foreclosure loss reserve was as follows:
Three Months Ended
March 31,
(in thousands)
20242023
Balance — beginning of period$5,694 $8,698 
Provision for foreclosure losses
392 1,514 
Utilization of foreclosure reserve(260)(1,547)
Balance — end of period$5,826 $8,665 
NOTE 5—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 for accounting purposes; therefore, changes in fair value are recognized in current period earnings. Realized and unrealized gains and losses from the Company's non-designated derivative instruments are included in loan origination fees and gain on sale of loans, net in the Condensed Consolidated Statements of Operations.
Changes in the fair value of the Company's derivative financial instruments are as follows:
Three Months Ended
March 31,
(in thousands)
20242023
Unrealized hedging gains
$25,072 $6,052 
Notional and Fair Value
The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows as of March 31, 2024 and December 31, 2023:
Fair Value
(in thousands)
Notional
Value
Derivative
Asset
Derivative
Liability
Balance at March 31, 2024
IRLCs$1,703,364 $23,588 $ 
Forward delivery commitments and best efforts sales commitments$1,780,686 $142 $3,918 
Balance at December 31, 2023
IRLCs$821,865 $14,902 $ 
Forward delivery commitments and best efforts sales commitments$933,850 $693 $16,245 
The Company had an additional $158.7 million and $163.8 million of outstanding forward contracts and mandatory sell commitments, comprised of closed loans with equal and offsetting UPB amounts allocated to them, at March 31, 2024 and December 31, 2023, respectively. The Company also had $285.0 million and $343.0 million in closed hedge instruments not yet settled at March 31, 2024 and December 31, 2023, respectively. See “Note 2—Fair Value Measurements” for fair value disclosure of the derivative instruments.
17

The following table presents the unobservable input assumption used to determine the fair value of IRLCs as of March 31, 2024 and December 31, 2023:
March 31,
2024
December 31,
2023
Unobservable InputRange (Weighted Average)
Loan funding probability (“pull-through”)
0% - 100% (88.0%)
0% - 100% (86.5%)
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, including the right to obtain cash collateral. The Company incurred no credit losses due to nonperformance of any of its counterparties during the three months ended March 31, 2024 and 2023.
The table below represents financial assets and liabilities that are subject to master netting arrangements categorized by financial instrument as of March 31, 2024 and December 31, 2023:
(in thousands)
Gross
Amounts of
Recognized
Assets (Liabilities) in
the Balance
Sheet
Gross
Amounts
Offset in the
Balance
Sheet
Cash Collateral Paid and Offset in the Balance Sheet
Net
Amounts of
Recognized
Assets (Liabilities) in
the Balance
Sheet
March 31, 2024
Forward delivery commitments
$540 $(398)$ $142 
Total assets$540 $(398)$ $142 
Forward delivery commitments and best efforts sales commitments$(5,822)$1,282 $622 $(3,918)
Total liabilities$(5,822)$1,282 $622 $(3,918)
December 31, 2023
Forward delivery commitments$8 $(2,837)$3,522 $693 
Total assets$8 $(2,837)$3,522 $693 
Forward delivery commitments and best efforts sales commitments$(18,105)$148 $1,712 $(16,245)
Total liabilities$(18,105)$148 $1,712 $(16,245)
NOTE 6—MORTGAGE SERVICING RIGHTS
The following table presents the activity of MSRs for the three months ended March 31, 2024 and 2023:
Three Months Ended
March 31,
(in thousands)
20242023
Balance — beginning of period$1,161,357 $1,139,539 
MSRs originated
34,234 27,493 
MSRs purchased
114  
Changes in fair value:
Due to collection/realization of cash flows(12,119)(11,170)
Due to changes in valuation model inputs or assumptions32,897 (43,701)
Balance — end of period$1,216,483 $1,112,161 
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The following table presents the unobservable input assumptions used to determine the fair value of MSRs:
March 31,
2024
December 31,
2023
Unobservable InputRange (Weighted Average)
Discount rate
9.6% - 15.5% (10.9%)
9.6% - 15.5% (10.9%)
Prepayment rate
6.1% - 36.0% (8.0%)
6.4% - 32.0% (8.5%)
Cost to service (per loan)
$71.9 - $657.7 ($96.2)
$72.1 - $366.3 ($96.4)
At March 31, 2024 and December 31, 2023, the MSRs had a weighted average life of approximately 8.2 years and 8.0 years, respectively. See “Note 2 —Fair Value Measurements” for additional information regarding the valuation of MSRs.
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 three months ended March 31, 2024 and 2023:
Three Months Ended
March 31,
(in thousands)
20242023
Servicing fees from servicing portfolio$64,034 $58,980 
Late fees2,056 1,668 
Other ancillary servicing revenue and fees(302)(561)
Total loan servicing and other fees$65,788 $60,087 

At March 31, 2024 and December 31, 2023, the UPB of mortgage loans serviced totaled $86.3 billion and $85.0 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 the FHA or partially guaranteed against loss by the 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, decreases 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 March 31, 2024 and December 31, 2023, respectively:
Prepayment SpeedsDiscount RateCost to Service (per loan)
(in thousands)10% Adverse
Change
20% Adverse
Change
10% Adverse
Change
20% Adverse
Change
10% Adverse
Change
20% Adverse
Change
March 31, 2024
Mortgage servicing rights$(37,007)$(73,615)$(50,026)$(98,014)$(10,790)$(23,250)
December 31, 2023
Mortgage servicing rights$(36,968)$(72,701)$(47,899)$(93,196)$(11,315)$(23,573)
19

NOTE 7—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 these loans upon sale through ownership of servicing rights. A reconciliation of the changes in MLHS to the amounts presented in the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 is set forth below:
Three Months Ended
March 31,
(in thousands)
20242023
Balance — beginning of period$901,227 $845,775 
Origination of mortgage loans held for sale3,605,155 2,700,053 
Proceeds on sale of and payments from mortgage loans held for sale(3,454,907)(2,745,778)
Gain on sale of mortgage loans excluding fair value of other financial instruments, net
81,092 50,882 
Valuation adjustment of mortgage loans held for sale(6,408)7,382 
Balance — end of period$1,126,159 $858,314 
NOTE 8—REVERSE MORTGAGE LOANS HELD FOR INVESTMENT AND HMBS-RELATED BORROWINGS
A reconciliation of the changes in reverse mortgage loans held for investment and HMBS-related borrowings for the period presented is below:
Three Months Ended
March 31, 2024
(in thousands)
Reverse Mortgage Loans Held for Investment
HMBS-Related Borrowings(1)
Balance — beginning of period$315,912 $(302,183)
Originations and purchases30,543 — 
Securitization of home equity conversion mortgages (“HECM”) loans and tails accounted for as a financing (including realized fair value changes)
— (26,524)
Repayments (principal payments received)(9,192)9,486 
Change in fair value recognized in earnings(2)
10,813 (7,583)
Balance — end of period$348,076 $(326,804)
Securitized loans (pledged to HMBS-related borrowings)$333,518 $(326,804)
Unsecuritized loans and tail advances14,558 — 
Total$348,076 $(326,804)
_____________________________
(1)HMBS-related borrowings represent the issuance of pools of HMBS, which are guaranteed by GNMA, to third-party security holders. The Company accounts for the transfers of these advances in the related HECM loans as secured borrowings, retaining the initial HECM loans in the Condensed Consolidated Balance Sheet as reverse mortgage loans held for investment and recording the pooled HMBS as HMBS-related borrowings.
(2)See further breakdown in the table below.
20

Gain on Reverse Mortgage Loans Held for Investment and HMBS-related Borrowings
The following table presents gains (losses) on reverse mortgage loans held for investment and HMBS-related borrowings for the period presented:
Three Months Ended
March 31,
(in thousands)
20242023
Gain on new originations(1)
$1,284 $ 
Gain on tail securitizations(2)
322  
Net interest income23  
Change in fair value of reverse mortgage loans held for investment1,601  
Fair value gain recognized in earnings(3)
$3,230 $ 
_____________________________
(1)Includes the changes in fair value of newly originated loans held for investment in the period from origination through securitization date.
(2)Includes the cash realized gains upon securitization of tails.
(3)See breakdown between loans held for investment and HMBS-related borrowings in the table above.
The following table presents the unobservable input assumptions used to determine the fair value of reverse mortgage loans held for investment and HMBS-related borrowings as of March 31, 2024 and December 31, 2023:
March 31, 2024December 31, 2023
Unobservable InputRange (Weighted Average)
Life in years
0.1 - 9.0 (7.1)
0.1 - 8.9 (7.2)
Discount rate
12.0% - 12.0% (12.0%)
12.0% - 12.0% (12.0%)
Conditional prepayment rate including voluntary and involuntary prepayments
6.5% - 16.4% (8.1%)
6.9% - 11.3% (8.1%)
NOTE 9—GOODWILL AND INTANGIBLE ASSETS, NET
The following table presents the Company's goodwill and intangible assets, net as of March 31, 2024 and December 31, 2023:
(in thousands)
March 31,
2024
December 31,
2023
Goodwill$198,724 $186,181 
Intangible assets, net34,157 25,125 
Goodwill and intangible assets, net$232,881 $211,306 
Goodwill
The changes in the carrying amount of goodwill allocated to the origination segment are presented in the following table:
(in thousands)
Balance at December 31, 2022$176,769 
Acquisitions
8,654 
Purchase accounting adjustments758 
Balance at December 31, 2023186,181 
Acquisitions12,543 
Balance at March 31, 2024$198,724 
21

Intangible Assets, Net
The following table presents the Company's intangible assets, net as of March 31, 2024 and December 31, 2023:
March 31, 2024December 31, 2023
(in thousands)
Gross IntangiblesAccumulated AmortizationNet IntangiblesGross IntangiblesAccumulated AmortizationNet Intangibles
Referral network$53,500 $(19,568)$33,932 $42,300 $(17,625)$24,675 
Non-compete agreements2,700 (2,475)225 2,700 (2,250)450 
 $56,200 $(22,043)$34,157 $45,000 $(19,875)$25,125 
Amortization expense related to intangible assets was $2.2 million and $2.0 million for the three months ended March 31, 2024 and 2023, respectively.
NOTE 10—WAREHOUSE LINES OF CREDIT, NET
Warehouse lines of credit consisted of the following at March 31, 2024 and December 31, 2023. Changes subsequent to March 31, 2024 have been described in the notes referenced with the below table.
(in thousands)
Maturity
March 31,
2024
December 31,
2023
$165 million master repurchase facility agreement(1)
January 2025$144,366 $122,462 
$150 million master repurchase facility agreement(2)
August 2024117,676 99,059 
$300 million master repurchase facility agreement(3)
June 2024224,468 158,412 
$200 million master repurchase facility agreement(4)
May 202479,205 87,252 
$200 million master repurchase facility agreement(5)
September 2024109,497 91,039 
$300 million master repurchase facility agreement(6)
September 2024183,168 134,964 
$50 million master repurchase facility agreement(7)
N/A33,764 30,185 
$75 million master repurchase facility agreement(8)
N/A33,390 34,280 
$200 million master repurchase facility agreement(9)
N/A135,278 78,682 
1,060,812 836,335 
Prepaid commitment fees(2,855)(2,554)
Warehouse lines of credit, net$1,057,957 $833,781 
______________________________
(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, included in restricted cash.
(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, included in restricted cash.
(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. This facility requires a minimum deposit of $300,000, included in restricted cash.
(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)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. Subsequent to March 31, 2024, this line was increased to $200.0 million.
(8)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 five years.
(9)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 7.6% and 7.0% at March 31, 2024 and December 31, 2023, 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 $5.3 million and $8.7 million in its
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warehouse buy down accounts as offsets to certain lines of credit at March 31, 2024 and December 31, 2023, 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, adjusted pre-tax net income and limitations on additional indebtedness, dividends, sale of assets, and decline in the mortgage loan servicing portfolio’s fair value. At March 31, 2024 and December 31, 2023, 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” (“ASAP”). 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 were no outstanding balances as of March 31, 2024 and December 31, 2023.
NOTE 11—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 March 31, 2024 and December 31, 2023, the Company had $46.0 million and $31.0 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 Company has the option to convert the outstanding balance of the revolving note into a term note at its discretion. At March 31, 2024 and December 31, 2023, the Company had $39.0 million balance and $30.0 million 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 March 31, 2024 and December 31, 2023, the Company had $100.0 million and $87.8 million in outstanding borrowings on this credit facility, respectively.
Term Note
The Company had a term note agreement with one of its warehouse banks collateralized by the Company’s FNMA MSRs that had an initial committed amount of $125.0 million and allowed for an increase of the committed amount up to a maximum of $175.0 million. Principal payments of 5% of the outstanding balance were due quarterly, with the remaining principal balance due upon the original maturity date of March 2024. 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 and the term note agreement was terminated concurrently with repayment.
NOTE 12—STOCKHOLDERS' EQUITY
Common Stock
The Company has two classes of common stock: Class A and Class B. The Company's 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 Certificate of Incorporation, the
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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 shares of 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.