Certain information included in this Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q that address activities, events, conditions or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business and these statements are not guarantees of future performance. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “strategy,” “future,” “opportunity,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. Some of these risks are identified and discussed under Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016. These risk factors will be important to consider in determining future results and should be reviewed in their entirety. These forward-looking statements are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that the events, results or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and we do not undertake to update any forward-looking statement, except as required by law.

As used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, (i) the terms “Company,” “we,” “us,” or “our” refer to WMIH Corp. (formerly WMI Holdings Corp.) and its subsidiaries on a consolidated basis; (ii) “WMIH” refers only to WMIH Corp., without regard to its subsidiaries; (iii) “WMIHC” refers only to WMI Holdings Corp., without regard to its subsidiaries; (iv) “WMMRC” means WM Mortgage Reinsurance Company, Inc. (a wholly-owned subsidiary of WMIH); and (v) “WMIIC” means WMI Investment Corp. (a wholly-owned subsidiary of WMIH).

All of these factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for our management to predict all such factors or to assess the effect of each such new factor on our business. Although we believe that the ~~Company experienced an “ownership change” (generally defined~~assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and any of these statements included herein may prove to be inaccurate. Given the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a ~~greater than 50% change (by value) in our equity ownership over a three-year period) on March 19, 2012, and our ability to use our pre-change of control NOLs and~~representation by us or any other pre-change tax attributes against our post-change income was limited. The Section 382 limitation is applied annually so as to limit the use of our pre-change NOLs to an amount that generally equals the value of our stock immediately before the ownership change multiplied by a designated federal long-term tax-exempt rate. Due to applicable limitations under Section 382 and a reduction of tax attributes due to cancellation of indebtedness, a portion of these NOLs were limited and will expire unused. We believeperson that the ~~total available~~results or conditions described in such statements, or our objectives and ~~utilizable NOL carry-forward at December 31, 2016 was approximately $6.0 billion. At September 30, 2017, there was no limitation on the use~~plans will be achieved. Please refer to Risk Factors and Management’s Discussion and Analysis of ~~these NOLs. These NOLs will begin to expire~~Financial Condition and Results of Operations, included in ~~2031. The Company’s ability to utilize the NOLs or realize any benefits related to the NOLs is subject to a number of risks. (See Part I-Item 1A. Risk Factors~~this report and in our Annual Report on Form 10-K for the year ended December 31, ~~2016).~~

The Company accounts for uncertain tax positions in accordance with the income tax accounting guidance. The Company has analyzed filing positions in the federal and state jurisdictions where it is required to file tax returns, as well as the open tax years in these jurisdictions. Tax years 2011 to present are subject to examination by the Internal Revenue Service. The Company believes that its federal income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain federal income tax positions have been recorded. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for federal income taxes. The Company did not incur any federal income tax related interest income, interest expense or penalties for the nine months ended September 30, 2017 or for the year ended December 31, 2016.

~~Note 6: Service Agreements and Related Party Transactions~~

WMMRC has engaged a Hawaii-based service provider, Marsh Management Services, Inc., to provide accounting and related management services for its operations. In exchange for performing these services, WMMRC pays such service provider a management fee.

WMIH entered into an Investment Management Agreement and an Administrative Services Agreement with WMMRC on March 19, 2012. Each of these agreements was approved by WMMRC’s primary regulator, the Insurance Division of the State of Hawaii. Total amounts incurred under these agreements totaled $1.0 million and $1.0 million for the nine months ended September 30, 2017 and 2016, respectively. The expense and related income eliminate on consolidation. These agreements are described below.

Under the terms of such Investment Management Agreement, WMIH receives from WMMRC a fee equal to the product of (x) the ending dollar amount of assets under management during the calendar month in question and (y) .002 divided by 12. WMIH is responsible for investing the funds of WMMRC based on applicable investment criteria and subject to rules and regulations to which WMMRC is subject.

Under the terms of such Administrative Services Agreement, WMIH receives from WMMRC a fee of $110 thousand per month. WMIH is responsible for providing administrative services to support, among other things, supervision, governance, financial administration and reporting, risk management and claims management as may be necessary, together with such other general or specific administrative services that may be reasonably required or requested by WMMRC in the ordinary course of its business.

On March 22, 2012, WMIH and the WMI Liquidating Trust (the “Trust”) entered into a Transition Services Agreement (the “TSA”). Pursuant to the TSA, the Trust makes available certain services and employees. The TSA provides the Company with basic infrastructure and support services to facilitate the Company’s operations. The TSA, as amended, extends the term of the agreement through January 31, 2019, with automatic renewals thereafter for successive additional three-month terms, subject to non-renewal at the end of any additional term upon written notice by either party at least 30 days prior to the expiration of the additional term.

In connection with implementing the Company’s Seventh Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code (as modified, the “Plan”), certain holders of specified “Allowed Claims” had the right to elect to receive such holder’s “Pro Rata Share of the Common Stock Allotment.” Essentially, the Plan defines the “Pro Rata Share of the Common Stock Allotment” as a pro rata share of ten million (10,000,000) shares of WMIH’s common stock (i.e. five percent (5%)) issued and outstanding on the Effective Date. Holders exercising the foregoing election did so in lieu of receiving (i) 50% of such holder’s interest in and to certain litigation proceeds that could be realized by the Trust on account of certain claims and causes of action asserted by the Trust as contemplated by the Plan (“Litigation Proceeds”), and (ii) some or all of the Runoff Notes to which such holder may be entitled (if such holder elected to receive Runoff Notes in accordance with the terms of the Plan).

If a holder exercised the election described above and, as a result of such election, received shares of WMIH’s common stock, then such holder’s share of Runoff Notes to which the election was effective (i.e., One Dollar ($1.00) of original principal amount of Runoff Notes for each share of WMIH’s common stock) were not issued. In addition, as a result of making the aforementioned election, such holders conveyed to WMIH, and WMIH retained an economic interest in Litigation Proceeds, if any, recovered by the Trust in connection with certain litigation brought by the Trust as contemplated by the Plan. Distributions, if any, to WMIH on account of the foregoing will be effected in accordance with the Plan and the court order confirming the Plan.

On or about October 14, 2014, the Trust filed a lawsuit in King County Superior Court in the State of Washington against 16 former directors and officers of WMI (the “D&O Litigation”). The Trust’s complaint alleged, among other things, that the defendants named therein breached their fiduciary duties to WMI and committed corporate waste and fraud by squandering WMI’s financial resources. In connection with the settlement of the D&O Litigation, during the year ended December 31, 2015, among the Trust, certain former directors and officers of WMI and certain insurance carriers that underwrote director and officer liability insurance policies for the benefit of WMI and its affiliates (including such former directors and officers), such insurance carriers agreed to pay the Trust $37.0 million, of which $3.0 million would be placed into a segregated reserve account (the “RSA Reserve”) to be administered by a third party pursuant to the terms of a Reserve Settlement Agreement (the “RSA”).

During the years ended December 31, 2016 and 2015, WMIH had other income of $123 thousand and $7.8 million, respectively, as a result of its receipt of net Litigation Proceeds related to the D&O Litigation. As of September 30, 2017, $1.5 million remained in the RSA Reserve. Under the RSA, funds are released from the RSA Reserve to the Trust if and when certain designated conditions are satisfied. If and when these funds are released to the Trust, and to the extent WMIH is entitled to receive such funds in accordance with the Plan, it is anticipated the Trust will make payments to WMIH in an amount equal to WMIH’s share of Litigation Proceeds as provided under the Plan. Due to the contingent nature of future distributions from the RSA Reserve, there can be no assurance that WMIH will receive any distributions from the remaining balance in the RSA Reserve in the future. During the nine months ended September 30, 2017, WMIH has recorded income from Litigation Proceeds of $123 thousand. As of September 30, 2017, WMIH has not received any Litigation Proceeds, other than as described above.

In preparation for the offering of the Series B Preferred Stock, WMIH engaged KKR Capital Markets LLC (“KCM”), an affiliate of KKR & Co. L.P., to act as a joint book-running manager for the Series B Preferred Stock offering. KCM also acted as an initial purchaser of the Series B Preferred Stock. During the year ended December 31, 2015, as a result of satisfying a post-closing covenant to reincorporate in the State of Delaware within 180 days following the closing of the Series B Preferred Stock offering, we paid $8.25 million to KCM. Upon consummation of a “Qualified Acquisition” (as such term is defined in Article VI of the Certificate of Incorporation), we will pay KCM an additional fee (the “KCM Deferred Fee”) of $8.25 million. We have recorded the KCM Deferred Fee in “other liabilities” on our condensed consolidated balance sheet and this amount was included in “accrued fees relating to Series B Preferred Stock issuance” on our condensed consolidated statements of cash flows.

~~Note 7: Notes Payable~~

On the Effective Date, WMIH issued $110.0 million aggregate principal amount of its 13% Senior First Lien Notes due 2030 (the “First Lien Notes”) under an indenture, dated as of March 19, 2012 (the “First Lien Indenture”), between WMIH and Wilmington Trust, National Association, as Trustee. Additionally, WMIH issued $20.0 million aggregate principal amount of its 13% Senior Second Lien Notes due 2030 (the “Second Lien Notes” and, together with the First Lien Notes, the “Runoff Notes”) under an indenture, dated as of March 19, 2012 (the “Second Lien Indenture” and, together with the First Lien Indenture, the “Indentures”), between WMIH and Law Debenture Trust Company of New York, as Trustee. On January 5, 2017, The Law Debenture Trust Company of New York notified WMIH that it had completed the transfer of substantially all of its corporate trust business to Delaware Trust Company, and that Delaware Trust Company had become the successor trustee under the Second Lien Indenture. The Runoff Notes were scheduled to mature on March 19, 2030 and pay interest quarterly.

The Runoff Notes were secured by, and had a specified priority in right of payment in, a securities or deposit account into which WMIH was required to deposit distributions it received of Runoff Proceeds (as defined in the Indentures) (the “Collateral Account”). WMIH agreed to cause WMMRC, while the Runoff Notes were outstanding, to deposit all distributions, dividends or other receipts in respect of Runoff Proceeds Distributions (as defined in the Indentures) on the date paid to WMIH in the Collateral Account established in accordance with the terms of the Indentures. On any interest payment date, payments were made from the Collateral Account and from any other Runoff Proceeds Distributions in the priority set forth in the Indentures. In connection with certain interest payments due and payable in respect of the First and Second Lien Notes, WMIH elected, consistent with the terms of the Indentures, to issue payment-in-kind notes in lieu of making such interest payments in cash when no cash was available.

~~As of April 15, 2015, the First Lien Notes were fully redeemed by the Company, and on April 27, 2015, the First Lien Indenture was satisfied and discharged.~~

Second Lien Note principal outstanding totaled zero and approximately $18.8 million as of September 30, 2017 and December 31, 2016, respectively. Approximately $18.8 million of Second Lien Note principal was paid during the nine months ended September 30, 2017, and $2.9 million of Second Lien Note principal was paid during the year ended December 31, 2016. Interest on Second Lien Notes paid in cash totaled approximately $2.0 million during each of the nine months ended September 30, 2017 and 2016. ~~As of September 29, 2017, the Second Lien Notes were fully redeemed by the Company, and on October 2, 2017, the Second Lien Indenture was satisfied and discharged.~~ As a result of the satisfaction and discharge of the Second Lien Indenture the Collateral Account was subsequently closed and remaining funds transferred to cash and cash equivalents to be used for general corporate purposes. For more information see Note 14: Subsequent Events.

~~Note 8: Financing Arrangements~~

As of September 30, 2017, the Company had no debt financing arrangements in place. As of December 31, 2016, the Company had no debt financing arrangements in place other than the Second Lien Notes which are described in Note 7: Notes Payable.

~~Note 9: Capital Stock and Derivative Instruments~~

On the Effective Date, all shares of common and preferred equity securities previously issued by WMI were cancelled and extinguished. As of the Effective Date, and pursuant to WMIHC’s Amended and Restated Articles of Incorporation (the “Articles”), WMIHC was authorized to issue up to 500,000,000 shares of common stock and up to 5,000,000 shares of blank check preferred stock, in one or more series, each with a par value of $0.00001 per share. 200,000,000 shares of common stock were issued by WMIHC pursuant to the Plan and in reliance on Section 1145 of the United States Bankruptcy Code on the Effective Date.

On the Reincorporation Date all shares of common and preferred equity securities previously issued by WMIHC automatically were converted into one share of the substantially similar common stock, Series A Preferred Stock or Series B Preferred Stock, as applicable, of WMIH. At the same time, each outstanding option, right or warrant to acquire shares of WMIH’s common stock was converted into an option, right or warrant to acquire an equal number of shares of WMIH’s common stock under the same terms and conditions as the original options, rights or warrants. As of the Reincorporation Date, and pursuant to the Certificate of Incorporation, WMIH is authorized to issue up to 3,500,000,000 shares of common stock and up to 10,000,000 shares of blank check preferred stock, in one or more series, each with a par value of $0.00001 per share.

All of the terms of the agreements described below and attributed to WMIH are also attributable to WMIHC relative to the various agreements and instruments prior to the Reincorporation Date. The references to WMIH are based on the date this Form 10-Q has been filed. The references would have been to WMIHC prior to the Reincorporation Date.

On January 30, 2014, WMIH entered into (i) an investment agreement, dated as of January 30, 2014 (the “Investment Agreement”), with KKR Fund Holdings L.P. (“KKR Fund”) and, for limited purposes, KKR Management Holdings L.P., and (ii) an investor rights agreement, dated as of January 30, 2014 (the “Investor Rights Agreement”), with KKR Fund. On January 30, 2014, pursuant to the Investment Agreement, WMIH issued 1,000,000 shares of its Series A Preferred Stock having the terms, rights, obligations and preferences contained in the Articles of Amendment of WMIH dated January 30, 2014 for a purchase price equal to $11.1 million and has issued to KKR Fund warrants to purchase, in the aggregate, 61.4 million shares of WMIH’s common stock, 30.7 million of which have an exercise price of $1.32 per share and 30.7 million of which have an exercise price of $1.43 per share (together, the “Warrants”).

The Series A Preferred Stock has rights substantially similar to those associated with WMIH’s common stock, with the exception of a liquidation preference, conversion rights and customary anti-dilution protections. The Series A Preferred Stock has a liquidation preference equal to the greater of (i) $10.00 per one million shares of Series A Preferred Stock plus declared but unpaid dividends on such shares and (ii) the amount that the holder would be entitled to in a relevant transaction had the Series A Preferred Stock been converted to common stock of WMIH. The Series A Preferred Stock is convertible at a conversion price of $1.10 per share into shares of common stock of WMIH either at the option of the holder or automatically upon transfer by KKR Fund to a non-affiliated party. As a result of the calculation of a beneficial conversion feature as required by ASC topic 470 - Debt a preferred deemed dividend of $9.5 million was recorded in conjunction with the issuance of the Series A Preferred Stock. This preferred deemed dividend resulted in an increase to our accumulated deficit, and an increase in additional paid in capital. Further, KKR Fund, as the holder of the Series A Preferred Stock and the Warrants, has received other rights pursuant to the Investor Rights Agreement as described below.

The Warrants have a five-year term from the date of issuance and are subject to customary structural adjustment provisions for stock splits, combinations, recapitalizations and other similar transactions. KKR Fund’s rights as a holder of the Series A Preferred Stock and the Warrants, and the rights of any subsequent holder that is an affiliate of KKR Fund (together with KKR Fund, the “Series A Holders”) are governed by the Investor Rights Agreement.

In accordance with the Investor Rights Agreement, except for the issuance of WMIH’s common stock in respect of the Warrants and the Series A Preferred Stock, KKR Fund and its affiliates shall not purchase or acquire any equity securities of WMIH or its subsidiaries without WMIH’s prior written consent, subject to certain exceptions.

The Investor Rights Agreement also provides the Series A Holders with registration rights, including three long form demand registration rights, unlimited short form demand registration rights and customary piggyback registration rights with respect to WMIH’s common stock (and WMIH’s common stock underlying the Series A Preferred Stock and the Warrants), subject to certain minimum thresholds, customary blackout periods and lockups of 180 days. On July 1, 2015, WMIH filed a shelf registration statement (the “Initial Registration Statement”) covering resales of Series B Preferred Stock and WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock. On November 23, 2015, WMIH amended the Initial Registration Statement to cover WMIH’s common stock issuable upon conversion of the Series A Preferred Stock and shares of WMIH’s common stock issuable upon exercise of warrants issued in connection with the issuance of our Series A Preferred Stock currently outstanding (as amended, the “Registration Statement”). The Registration Statement was declared effective under the Securities Act on November 25, 2015.

For as long as the Series A Holders beneficially own any shares of common stock of WMIH or Series A Preferred Stock or any of the Warrants, WMIH has agreed to provide customary Rule 144A information rights, to provide the Series A Holders with regular audited and unaudited financial statements and to allow the Series A Holders or their representatives to inspect WMIH’s books and records.

The foregoing description of (i) the Investor Rights Agreement is qualified in its entirety by reference to the Investor Rights Agreement, which was filed with the SEC as Exhibit 4.2 on Form 8-K on January 31, 2014, and incorporated by reference, (ii) the Warrants are qualified in their entirety by reference to the Form of Tranche A Warrant and Form of Tranche B Warrant, which were filed with the SEC as Exhibits 4.3 and 4.4, respectively, on Form 8-K on January 31, 2014, and incorporated by reference, (iii) the Series A Preferred Stock is qualified in its entirety by reference to the Articles of Amendment of WMIH dated January 30, 2014, which were filed with the SEC as Exhibit 4.5 on Form 8-K on January 31, 2014, and incorporated by reference, the Form of Series A Convertible Preferred Stock Certificate, which was filed with the SEC as Exhibit 4.6 on Form 8-K on January 31, 2014, and incorporated by reference, and the Certificate of Incorporation, which was filed with the SEC as Exhibit 3.1 on Form 8-K12G3 on May 13, 2015, and incorporated by reference, and (iv) the Investment Agreement is qualified in its entirety by reference to the Investment Agreement, which was filed with the SEC as Exhibit 10.1 on Form 8-K on January 31, 2014, and incorporated by reference.

On January 5, 2015, WMIH, in connection with an offering of 600,000 shares of its Series B Preferred Stock, filed with the Secretary of State of Washington Articles of Amendment of Articles of Incorporation (the “Articles of Amendment”) containing the Designation of Rights and Preferences of the 3% Series B Convertible Preferred Stock (the “Certificate of Designation”) creating the Series B Preferred Stock and designating the rights and preferences of the Series B Preferred Stock.

The foregoing descriptions of the Articles of Amendment and the Certificate of Designation are qualified in their entirety by the provisions of the Articles of Amendment and the Certificate of Designation, filed as Exhibits 3.1 and 4.1 to a Form 8-K on January 5, 2015, respectively, and incorporated by reference herein~~, and the Certificate of Incorporation, which was filed with the SEC as Exhibit 3.1 on Form 8-K12G3 on May 13, 2015, and incorporated by reference~~.

On January 5, 2015, in connection with the offering and pursuant to that certain Purchase Agreement, dated December 19, 2014 (the “Purchase Agreement”), by and among WMIH, Citigroup Global Markets Inc. (“Citi”) and KCM (KCM and Citi together, the “Initial Purchasers”), WMIH entered into a Registration Rights Agreement with the Initial Purchasers (the “Registration Rights Agreement”), pursuant to which WMIH has agreed that, subject to certain conditions, WMIH will use its reasonable efforts to (i) file a shelf registration statement covering resales of WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock no later than six months after January 5, 2015 (the “Issue Date”); (ii) file a shelf registration statement covering resales of the Series B Preferred Stock no later than one year after the Issue Date; and (iii) cause each of these shelf registration statements to be declared effective under the Securities Act. On July 1, 2015, WMIH filed the Initial Registration Statement covering resales of Series B Preferred Stock and shares of WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock. On November 23, 2015, WMIH amended the Initial Registration Statement to cover WMIH’s common stock issuable upon conversion of the Series A Preferred Stock and shares of WMIH’s common stock issuable upon exercise of warrants issued in connection with the issuance of our Series A Preferred Stock currently outstanding. ~~The Registration Statement was declared effective under the Securities Act on November 25, 2015.~~

The foregoing description of the Registration Rights Agreement is qualified in its entirety by the provisions of the Registration Rights Agreement, filed on Form 8-K on January 5, 2015, as Exhibit 10.1 and incorporated by reference herein.

On January 5, 2015, in connection with the offering and pursuant to the Purchase Agreement, WMIH entered into an Escrow Agreement (the “Escrow Agreement”) with Citibank, N.A., as Escrow Agent (the “Escrow Agent”), pursuant to which WMIH caused to be deposited with the Escrow Agent the amount of $598.5 million, representing the proceeds of the offering of Series B Preferred Stock less offering fees payable on the Issue Date but before payment of other offering fees and expenses (including fees contingent upon future events). These net proceeds have been, and will be, released from escrow from time to time to WMIH as instructed by WMIH in amounts necessary to (i) pay certain fees related to the offering that may become payable to the Initial Purchasers, (ii) finance WMIH’s efforts to explore and/or fund, in whole or in part, acquisitions, whether completed or not, including reasonable attorney fees and expenses related thereto, accounting expenses, due diligence and financial advisor fees and expenses, (iii) pay certain amounts that may become payable to the holders of the Series B Preferred Stock upon the occurrence of certain put events, (iv) pay certain amounts that would become payable to the holders of the Series B Preferred Stock upon a mandatory redemption of the Series B Preferred Stock, and (v) pay certain expenses related to the offering. The entire net proceeds will be released from escrow as instructed by WMIH upon consummation of a Qualified Acquisition (as defined in Article VI of the Certificate of Incorporation). If a Qualified Acquisition is not consummated by January 5, 2018, and no Acquisitions (as defined in Article VI of the Certificate of Incorporation) have been consummated such that all of the Series B Preferred Stock remains outstanding and has not been converted to WMIH’s common stock, the outstanding Series B Preferred Stock becomes redeemable. The aggregate redemption costs, assuming all 600,000 shares remain outstanding, of all of the Series B Preferred Stock is $600.0 million, plus accrued and unpaid dividends, if any, whether or not declared. As of September 30, 2017 and December 31, 2016, the balance remaining in the escrow account totaled approximately $577.2 million and $572.9 million, respectively. The foregoing description of the Escrow Agreement is qualified in its entirety by the provisions of the Escrow Agreement, filed on Form 8-K on January 5, 2015, as Exhibit 10.2 and incorporated by reference herein.

If the Series B Preferred Stock is redeemed or determined likely to be redeemed, the Company would be required to record a charge to earnings of approximately $97.8 million to accrete the value of the Series B Preferred Stock to the $600 million redemption value. The Company continues to pursue its business strategy of consummating an acquisition, and to explore potential financing and refinancing alternatives, and as of September 30, 2017, the Company has determined that recording for accretion to the Series B Preferred Stock’s redemption value is not required.

The Series B Preferred Stock are hybrid financial instruments that blend characteristics of both equity and debt securities. The terms of the Series B Preferred Stock provide for either redemption of the principal and interest for cash at maturity or in the event of certain predetermined circumstances (“Forward Component”) or mandatory conversion into WMIH’s common stock (“Embedded Conversion Feature” or “ECF”). The Series B Preferred Stock also embody contingent equity-linked share price protections on the ECF in the form of a variable conversion price based on a 20 trading day average of volume weighted-average price. Upon any conversion of Series B Preferred Stock in accordance with its terms, the Series B Preferred Stock shall convert based on the outstanding principal and accrued interest, subject to a floor of $1.75 per share of WMIH’s common stock and a maximum of $2.25 per share. As a result, the Company determined that the Series B Preferred Stock contain certain embedded derivative features. Management’s evaluation resulted in the conclusion that the compound derivative financial instrument required bifurcation and separately accounted for the embedded conversion feature option as a derivative. A derivative liability results primarily when the Company average stock price (as defined in the Certificate of Incorporation) exceeds the conversion price, including the ceiling conversion price of $2.25, as defined by the Certificate of Incorporation. A derivative asset results primarily when the Company’s average stock price is less than the conversion price, including the floor price of $1.75. The aggregate fair value of the embedded conversion feature was a liability of $66.2 million on the date of issuance of the Series B Preferred Stock. At September 30, 2017, September 30, 2016 and December 31, 2016, the fair value of the embedded conversion feature was an asset of $111.9 million, a liability of $58.3 million and an asset of $80.7 million, respectively. Any change in the fair value of the embedded conversion feature will constitute other income or expense, as the case may be, in the applicable reporting period. Upon conversion or redemption of the Series B Preferred Stock, any asset or liability related to the embedded conversion feature would be eliminated. During the year ended December 31, 2016, the fair value of the embedded conversion feature changed by $201.5 million and this change is included as other income in the condensed consolidated statement of operations for the year ended December 31, 2016. During the three and nine months ended September 30, 2017, the fair value of the derivative asset increased by $38.6 million and $31.2 million, respectively. During the three and nine months ended September 30, 2016, the fair value of the derivative liability increased by $16.2 million and decreased by $62.6 million, respectively. The change in fair value is included as other income or expense, as the case may be, in the condensed consolidated statement of operations for the respective periods.

On June 1, 2017 and on June 1, 2016, WMIH issued restricted stock grants to members of the Board totaling $0.4 million and $0.5 million, respectively, of aggregate fair value. The restricted shares noted above vest over a three-year period.

On May 15, 2015, WMIH issued restricted stock grants to our Chief Executive Officer, William C. Gallagher, and our Chief Operating Officer, Thomas L. Fairfield, in conjunction with employment agreements totaling $9.8 million of aggregate fair value (the “Exec Grants”) based on the $2.76 trading price of WMIH shares at the close of business on the date issued. ~~WMIH may be required to issue additional shares if the conversion price applicable to the Series B Preferred Stock is less than $2.25 per share.~~ ~~The Exec Grants~~ will vest in full and will be recognized as compensation expense upon the consummation of a Qualified Acquisition, subject to the executives continued employment with the Company until such time. The foregoing description of the restricted stock agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Gallagher Restricted Stock Agreement and the Fairfield Restricted Stock Agreement (the “Executive Agreements”), which were filed as Exhibit 10.3 and Exhibit 10.5, respectively, of Form 8-K12G3 filed on May 13, 2015 and incorporated herein by reference. The fair market value of the Exec Grants as of September 30, 2017 approximates $4.3 million as a result of the terms of the Executive Agreements which would result in additional share issuances if the value is below $2.25 per share limited to a maximum of shares based on a minimum conversion price of $1.75 per share. The stock price was $0.95 per share at the close of the market on September 30, 2017 and if the Exec Grants had vested then the minimum conversion price of $1.75 per share would have been utilized, therefore, a total of 1,015,874 additional shares (the “Exec Additional Shares”) would have been required to be issued, 507,937 additional shares each to both Mr. Gallagher and Mr. Fairfield.

~~The unamortized value related to the unvested restricted share grants totals $5.0 million and $7.7 million at September 30, 2017 and December 31, 2016, respectively.~~

The unamortized value of $5.0 million at September 30, 2017, if all are ultimately vested, would be amortized according to the following schedule. The fair value of the Exec Grants will vest and be recognized on the date of the consummation of a Qualified Acquisition. Additionally, any Exec Additional Shares required to be issued, would be issued and immediately vest on the date of the consummation of a Qualified Acquisition.

Amortization Schedule
(in thousands)

September 30, 2017 unamortized dollar value

4th quarter 2017

$
103

1st quarter 2018

98

2nd quarter 2018

71

3rd quarter 2018

71

4th quarter 2018

71

1st quarter 2019

66

2nd quarter 2019

36

3rd quarter 2019

36

4th quarter 2019

36

1st quarter 2020

31

Unamortized fair-value - subject to vesting schedule

619

Unamortized fair-value - event dependent

4,343

Total unamortized dollar value

4,962

Equity-based compensation totaled $0.4 million and $0.5 million for the nine months ended September 30, 2017 and September 30, 2016, respectively. The restricted stock awards were issued at the fair market value determined to be the trading price at the close of business on the respective date the awards were granted.

~~A summary of WMIH’s restricted stock award activity for the nine months ended September 30, 2017 and year ended December 31, 2016 is presented below:~~

Number of restricted stock awards outstanding

Weighted-average grant date fair value

Aggregate fair value
(in thousands)

Outstanding—January 1, 2016

6,168,035

2.1230

13,095

Restricted stock awards granted during 2016

212,765

2.3500

500

Restricted stock awards released or forfeited during 2016

—

—

—

Outstanding—December 31, 2016

6,380,800

$
2.1306

$
13,595

Restricted stock awards granted during 2017

333,332

1.2000

400

Restricted stock awards released or forfeited during 2017

—

—

—

Outstanding—September 30, 2017

6,714,132

$
2.0844

$
13,995

WMIH has issued the total number of shares subject to the restricted stock grants, however, until vested they are subject to repurchase. Shares subject to repurchase totaled 4,053,640 on September 30, 2017 and 4,039,591 on December 31, 2016. The Exec Grants vest upon future events, and are not time specific, and for this reason we have used 1st quarter 2018 as the vesting date in the following table as this date corresponds with the Series B Preferred Stock potential redemption date. The shares subject to repurchase at September 30, 2017 will vest, assuming circumstances remain unchanged, according to the following schedule:

~~Vesting schedule of shares subject to repurchase~~	~~September 30, 2017 unvested shares~~
~~4th quarter 2017~~		—
~~1st quarter 2018~~		~~3,774,684~~
~~2nd quarter 2018~~		—
~~3rd quarter 2018~~		—
~~4th quarter 2018~~		—
~~1st quarter 2019~~		~~167,848~~
~~2nd quarter 2019~~		—
~~3rd quarter 2019~~		—
~~4th quarter 2019~~		—
~~1st quarter 2020~~		~~111,108~~
~~Total unvested shares~~		~~4,053,640~~

Pursuant to a restricted stock agreement, WMIH has the right, but not the obligation, to repurchase any unvested (but issued) shares of common stock subject to the restricted stock agreement at $0.0001 per share upon the termination of service in the case of a director, or in the case of the Exec Grants, on January 5, 2018 if the Series B Preferred Stock are redeemed or as a result of certain circumstances as defined by the terms of the Exec Grants.

~~A summary of WMIH’s restricted shares issued and subject to repurchase as of September 30, 2017 and December 31, 2016 is presented below:~~

~~Vesting schedule of shares subject to repurchase~~	~~Unvested shares~~
~~Shares subject to repurchase—January 1, 2016~~		~~4,197,396~~
~~Shares issued subject to vesting during 2016~~		~~212,765~~
~~Unvested shares repurchased during 2016~~		—
~~Shares vested during 2016~~		~~(370,570~~	)
~~Shares subject to repurchase—December 31, 2016~~		~~4,039,591~~
~~Shares issued subject to vesting during 2017~~		~~333,332~~
~~Unvested shares repurchased during 2017~~		—
~~Shares vested during 2017~~		~~(319,283~~	)
~~Shares subject to repurchase—September 30, 2017~~		~~4,053,640~~

On June 1, 2017 and June 1, 2016, WMIH issued 333,332 and 212,765 restricted stock grants, respectively, to members of the Board totaling $0.4 million and $0.5 million, respectively, of aggregate fair value. The share price was determined based on the closing sales price of $1.20 and $2.35 on the respective dates of the awards.

As of September 30, 2017 and December 31, 2016, 206,714,132 and 206,380,800, respectively, of WMIH’s common stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 1,000,000 shares of the Series A Preferred Stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 600,000 shares of the Series B Preferred Stock were issued and outstanding. As of September 30, 2017 and December 31, 2016, 61,400,000 warrants to purchase WMIH’s common stock were issued and outstanding.

~~See Note 12: Net Income Per Common Share~~2022 for further information on ~~shares used for EPS calculations.~~

~~Note 10: Pending Litigation~~

Asthese and other risk factors affecting us.

Table of ~~September 30, 2017, the Company was not a party to, or aware of, any pending legal proceedings or investigations requiring disclosure at this time.~~

Contents~~Note 11: Restriction on Distribution of Net Assets from Subsidiary~~

WMMRC has net assets totaling $17.7 million and $33.8 million as of September 30, 2017 and December 31, 2016, respectively. These net assets are not immediately available for distribution to WMIH due to restrictions imposed by trust agreements, and the requirement that the Insurance Division of the State of Hawaii must approve dividends from WMMRC. Prior to ~~September 29, 2017, when the Second Lien Notes were fully redeemed by the Company and October 2, 2017 when the Second Lien Indenture was satisfied and discharged~~, distributions from WMMRC to WMIH were further restricted by the terms of the Runoff Notes and Indentures described in Note 7: Notes Payable. As more fully described in Note 14: Subsequent Events, a distribution from WMMRC to WMIH of up to $10.7 million was approved by the Insurance Division of the State of Hawaii on September 13, 2017.

~~Note 12: Net Income (Loss) Per Common Share~~

In calculating earnings per share, the Company follows the two-class method, which distinguishes between the classes of securities based on the proportionate participation rights of each security type in the Company's undistributed income. The Series A Preferred Stock and the Series B Preferred Stock are treated as one class for purposes of applying the two-class method, because they have substantially equal rights and share equally on an as converted basis with respect to income available to WMIH common stockholders.

Basic net income per WMIH share attributable to common stockholders is computed by dividing net income attributable to WMIH’s common stockholders by the weighted-average number of common shares outstanding for the period after subtracting the weighted-average of any unvested restricted shares outstanding, as these shares are subject to repurchase. Basic net income attributable to common stockholders is computed by deducting preferred dividends and the basic calculation of undistributed earnings attributable to participating securities from net income.

Diluted net income per WMIH share is computed by dividing net income attributable to WMIH’s common stockholders for the period by the weighted-average number of common shares outstanding after subtracting the weighted-average of any incremental unvested restricted shares outstanding and adding any potentially dilutive common equivalent shares outstanding during the period, if dilutive. Potentially dilutive common equivalent shares are comprised of the incremental common shares issuable upon the exercise of warrants for WMIH’s common stock and the potential conversion of preferred shares to common shares and the dilutive effect of unvested restricted stock. Diluted net income attributable to common stockholders is computed by deducting preferred dividends and the diluted calculation of undistributed earnings attributable to participating securities from net income.

The dilutive effect of outstanding warrants and restricted stock subject to repurchase is reflected in diluted earnings per share by application of the treasury stock method. There would be no dilutive effects from any equity instruments for periods presented reflecting a net loss, therefore diluted net loss per share would be the same as basic net loss for periods that reflect a net loss attributable to common stockholders. Certain unvested restricted shares and convertible preferred stock are excluded from the calculation of diluted earnings per share until the non-market based contingency occurs.

~~The following table presents the calculation of basic net (loss) income per share~~ ~~for periods presented:~~

~~(in thousands, except per share data):~~

Three months
ended
September 30, 2017

Three months
ended
September 30, 2016

Nine months
ended
September 30, 2017

Nine months
ended
September 30, 2016

Numerator for basic net income (loss) per share:

Net income (loss)
$
38,411

$
(16,645
)

$
34,876

$
61,314

Less: Series B preferred stock dividends

(4,500
)

(4,500
)

(13,500
)

(13,500
)
Less: undistributed earnings attributed to participating securities (basic calculation)

(21,541
)

—

(13,581
)

(27,625
)
Basic net income (loss) attributable to common stockholders
$
12,370

$
(21,145
)

$
7,795

$
20,189

Denominator for basic net income (loss) per share:

Weighted-average shares outstanding

206,714,132

206,380,800

206,529,762

206,261,993

Weighted-average unvested restricted shares outstanding

(4,053,640
)

(4,039,591
)

(3,956,447
)

(4,014,718
)
Denominator for basic net income (loss) per share

202,660,492

202,341,209

202,573,315

202,247,275

Basic net income (loss) per share attributable to common stockholders
$
0.06

$
(0.10
)

$
0.04

$
0.10

~~The following table presents the calculation of diluted net (loss) income per share~~ ~~for periods presented:~~

~~(in thousands, except per share data):~~

Three months
ended
September 30, 2017

Three months
ended
September 30, 2016

Nine months
ended
September 30, 2017

Nine months
ended
September 30, 2016

Numerator for diluted net income (loss) per share:

Net income (loss)
$
38,411

$
(16,645
)

$
34,876

$
61,314

Less: Series B preferred stock dividends

(4,500
)

(4,500
)

(13,500
)

(13,500
)
Less: undistributed earnings attributed to participating securities (diluted calculation)

(21,541
)

—

(13,581
)

(26,241
)
Diluted net income (loss) attributable to common stockholders
$
12,370

$
(21,145
)

$
7,795

$
21,573

Denominator for diluted net income (loss) per share:

Weighted-average shares outstanding

206,714,132

206,380,800

206,529,762

206,261,993

Weighted-average unvested restricted shares outstanding

(4,053,640
)

(4,039,591
)

(3,956,447
)

(4,014,718
)
Effect of dilutive potential shares

10,065,629

—

10,065,629

35,327,739

Denominator for diluted net income (loss) per share

212,726,121

202,341,209

212,638,944

237,575,014

Diluted net income (loss) per share attributable to common stockholders
$
0.06

$
(0.10
)

$
0.04

$
0.09

The following table summarizes shares subject to exercise or vesting conditions as more fully described in Note 9: Capital Stock and Derivative Instruments. These shares could potentially be dilutive in future periods if we realize net income attributable to common and participating stockholders and the contingent or unvested stock is converted to WMIH common stock. The cash payment of $84.4 million, which would be received upon exercise of the warrants, has not been considered as an offset to the dilutive shares under warrants outstanding below.

Potential dilution to common stock

Minimum shares

Maximum shares

Restricted shares subject to vesting

4,053,640

4,053,640

Series A Preferred Stock

10,065,629

10,065,629

Warrants outstanding

61,400,000

61,400,000

Dilutive shares to be issued if Series B Preferred Stock conversion is below $2.25

—

1,015,872

Series B Preferred Stock

266,666,667

342,857,143

Potential dilutive shares if converted to common stock

342,185,936

419,392,284

~~Note 13:~~ ~~Fair Value Measurement~~

We use a fair-value approach to value certain assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. We use a fair value hierarchy, which distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

•	~~Level 1 — Inputs to the valuation methodology are quoted prices for identical assets or liabilities traded in active markets;~~

•	Level 2 — Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market corroborated inputs; and

•	~~Level 3 — Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the inputs that market participants would use.~~

Determining which category an asset or liability falls within the fair value accounting guidance hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter. Assets and liabilities measured at fair value on a recurring basis are summarized as follows:

~~The financial instrument that is measured at fair value on a recurring basis is summarized as follows as of September 30, 2017:~~

(in thousands)

Assets

Level 1

Level 2

Level 3

September 30, 2017

Derivative embedded conversion feature

$
—

$
—

$
111,877

$
111,877

~~The financial instrument that is measured at fair value on a recurring basis is summarized as follows as of December 31, 2016:~~

(in thousands)

Assets

Level 1

Level 2

Level 3

December 31, 2016

Derivative embedded conversion feature

$
—

$
—

$
80,651

$
80,651

~~The following table shows the change in Level 3 assets and liabilities measured at fair value on a recurring basis for the year ended December 31, 2016 and the nine months ended September 30, 2017:~~

Derivative asset (liability) embedded conversion feature
(in thousands)

Balance, January 1, 2016

$
(120,848
)
Unrealized gain on change in fair value

201,499

Balance, December 31, 2016

80,651

Unrealized gain on change in fair value

31,226

Balance, September 30, 2017

$
111,877

On January 5, 2015, WMIH raised $600.0 million of capital (less transaction costs) through the issuance of 600,000 shares of Series B Preferred Stock. The shares carry a liquidation preference of $1,000 per share, equal to the purchase price, and a mandatory redemption right three years from issuance date at a price equal to the purchase price, plus accrued dividends at 3% per annum.

~~The proceeds from the issuance of the Series B Preferred Stock are to be used to pursue strategic acquisitions. If one or more~~ acquisitions are made on or prior to January 5, 2018 (or such later time as may be permitted pursuant to the terms governing the Series B Preferred Stock), then some or all of such Series B Preferred Stock shall be mandatorily converted into common stock of ~~WMIH at a conversion price that is the lesser of:~~

~~$2.25 per share of WMIH common stock; and~~

~~ii)~~

the arithmetic average of daily volume weighted-average prices of WMIH’s common stock during the 20 trading day period ending on the trading day immediately preceding the public announcement by WMIH of its entry into a definitive agreement for such acquisition, subject to a floor of $1.75 per share of WMIH common stock.

The mandatory conversion feature of the Series B Preferred Stock is subject to fair value accounting and, in connection therewith, since the time of issuance, the Company has used a binomial lattice option model to determine fair value of the Series B Preferred Stock. The fair value of the Series B Preferred Stock embedded conversion feature is revalued each balance sheet date utilizing the binomial lattice option model. The fair value computations are reported in the condensed consolidated statement of operations as unrealized gain or (loss) on change in fair value of derivative embedded conversion feature, respectively.

Such binomial lattice option model utilizes several inputs to determine such fair value. Such inputs include WMIH’s common stock price as of each reporting date, as well as variable assumptions including, but not limited to, volatility of our stock price, the risk free interest rate, the probability that the Company consummates a Qualified Acquisition and the time of completing any such Qualified Acquisition.

As of September 30, 2017 the following variable assumptions were included in the binomial option model: expected stock price volatility over the term of the convertible preferred securities was estimated at 60%, as compared to 40% as of December 31, 2016; the risk-free interest rate was estimated at 1.1% as compared to 0.6% as of December 31, 2016; the probability of the Company consummating a Qualified Acquisition was estimated at 50% as compared with 90% as of December 31, 2016; and the anticipated timing of the Company consummating a Qualified Acquisition was estimated at 6 months from both September 30, 2017 and December 31, 2016.

The foregoing assumptions were adopted by the Company’s management in order to determine the market value of the embedded conversion feature applicable to the Series B Preferred Stock. Such assumptions necessarily involved and continue to involve the exercise of management’s judgement, as well as the judgement of the third party the Company uses in connection with the embedded derivative valuation process and for no other purpose. Such assumptions are monitored and adjusted from time to time. As assumptions and circumstances change, results may differ and past assumptions and valuations are not indicative of future assumptions or results.

Our reported net income attributable to common and participating stockholders (“Year to Date Net Income” or “Year to Date Net Loss”) was approximately $21.4 million for the nine months ended September 30, 2017. The change to our net income attributable to common and participating stockholders resulting from the calculation of the fair value of the embedded conversion feature is analyzed at the end of each reporting period to assess the impact of a 10% change to the various inputs and the result of each change to Year to Date Net Income is highlighted in the following scenarios. If the closing stock price of our common stock had been 10% lower, our Year to Date Net Income would have been approximately $17.7 million higher ($39.1 million). If the closing stock price of our common stock had been 10% higher, our Year to Date Net Income would have been approximately $17.6 million less ($3.8 million). If our volatility assumption on September 30, 2017 had been 10% lower, our Year to Date Net Income would have been approximately $3.0 million higher ($24.4 million). If our volatility assumption had been 10% higher, our Year to Date Net Income would have been approximately $3.3 million less ($18.1 million). If our probability of a transaction occurring assumption on September 30, 2017 had been 10% lower, our Year to Date Net Income would have been approximately $22.4 million less resulting in Year to Date Net Loss of $1.0 million. If our probability of a transaction occurring assumption had been 10% higher, our Year to Date Net Income would have been approximately $22.4 million higher ($43.8 million).

~~Note 14: Subsequent Events~~

On October 23, 2017, the reinsurance agreement with Radian was commuted and the related trust assets were released to WMMRC. On September 13, 2017, the Insurance Division of the State of Hawaii approved this commutation.

On September 13, 2017, the Insurance Division of the State of Hawaii approved a transfer of up to $10.7 million from funds which were held in trust at WMMRC as of September 30, 2017. As of the date of the filing of this Form 10-Q, these funds have not been transferred to WMIH; however, they are no longer held in trust and are available for general corporate purposes.

~~On October 2, 2017, the Second Lien Indenture was satisfied and discharged.~~ ~~As a result of the satisfaction and discharge of the Second Lien Indenture the~~ ~~Collateral~~ ~~Account was subsequently closed and remaining funds transferred to cash and cash equivalents to be used for general corporate purposes. For more information see Note 7: Notes Payable.~~

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~The following~~

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with ~~our~~the accompanying unaudited condensed consolidated financial statements and ~~the related notes, included~~ in ~~Item 1 of Part I of this Quarterly Report on Form 10-Q. The following is a discussion and analysis of~~conjunction with our results of operations for the three and nine months ended September 30, 2017 and 2016 and financial condition as of September 30, 2017 and December 31, 2016 (dollars in thousands, except share and per share data and as otherwise indicated).

References as used herein, unless the context requires otherwise, to (i) the “Company,” “we,” “us,” or “our” refer to WMIH Corp. (formerly WMI Holdings Corp.) and its subsidiaries on a consolidated basis; (ii) “WMIH” refers only to WMIH Corp., without regard to its subsidiaries; (iii) “WMIHC” refers only to WMI Holdings Corp., without regard to its subsidiaries; (iv) “WMMRC” refers to WM Mortgage Reinsurance Company, Inc. (a wholly-owned subsidiary of WMIH); and (v) “WMIIC” refers to WMI Investment Corp. (a wholly-owned subsidiary of WMIH).

~~FORWARD-LOOKING STATEMENTS AND INFORMATION~~

This quarterly report includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact included in this report that address activities, events, conditions or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business and these statements are not guarantees of future performance. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may include the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “strategy,” “future,” “opportunity,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. Such forward-looking statements involve risks and uncertainties that may cause actual events, results or performance to differ materially from those indicated by such statements. These risks are identified and discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016 under Risk Factors~~2022. The following discussion contains, in ~~Part I, Item 1A. These risk factors will be important~~addition to ~~consider in determining future results and should be reviewed in their entirety. These~~the historical information, forward-looking statements that include risks, assumptions and uncertainties that could cause actual results to differ materially from those anticipated by such statements.

Dollar amounts are ~~expressed~~reported in ~~good faith~~millions, except per share data and ~~we believe there is~~other key metrics, unless otherwise noted.

We have provided a ~~reasonable basis for them. However, there can be no assurance~~glossary of terms, which defines certain industry-specific and other terms that are used herein, at the ~~events, results or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as~~end of the ~~date they~~MD&A section.


Overview

We are ~~made,~~a leading servicer of residential mortgage loans. Our purpose is to keep the dream of homeownership alive, and we do ~~not undertake~~this as a servicer by helping mortgage borrowers manage what is typically their largest financial asset, and by helping our investors maximize the returns from their portfolios of residential mortgages. We have a track record of significant growth, having expanded our servicing portfolio from $10 billion in 2009 to ~~update any forward-looking statement, except as required by law. Therefore, you should not rely on these statements being current~~$937 billion as of ~~any time~~September 30, 2023. We believe this track record reflects our strong operating capabilities, which include a low-cost servicing platform, strong loss mitigation skills, a commitment to compliance, a customer-centric culture, a demonstrated ability to retain customers, growing origination capabilities, and significant investment in technology.

Our strategy is to position the Company for sustainable long-term growth, drive improved efficiency and profitability, and generate a return on tangible equity of 12% or higher. Key strategic priorities include the following:

•Strengthen our balance sheet by building capital and liquidity, and managing interest rate and other ~~than~~forms of risk;

•Improve efficiency by driving continuous improvement in unit costs for our Servicing and Originations segments, as well as by taking corporate actions to eliminate costs throughout the ~~time at which this document was filed with~~organization;

•Grow our servicing portfolio to $1 trillion in UPB by acquiring new customers and retaining existing customers;

•Achieve and sustain a refinance recapture rate of 60%;

•Delight our customers and keep Mr. Cooper a great place for our team members to work;

•Reinvent the ~~Securities and Exchange Commission.~~

~~OVERVIEW~~

~~Our Business Strategy and Operating Environment~~

WMIH Corp. (“WMIH”) is a corporation duly organized and existing under the laws of the State of Delaware. On May 11, 2015, WMIH merged with its parent corporation, WMI Holdings Corp., a Washington corporation (“WMIHC”), with WMIHcustomer experience by acting as the ~~surviving corporation~~customer’s advocate and by harnessing technology to deliver digital solutions that are personalized and friction-less;

•Sustain the talent of our people and the culture of our organization; and

•Maintain strong relationships with agencies, investors, regulators, and other counterparties and a strong reputation for compliance and customer service.

Anticipated Trends

In the third quarter of 2023, our Servicing segment generated income before income tax expense of $361, and our servicing portfolio grew to $937 billion, bringing us very close to our $1 trillion UPB target. We anticipate achieving this target early next year, as we expect MSR bulk purchases and boarding of subservicing customers in the ~~merger (the “Merger”). The Merger occurred as part~~fourth quarter of ~~the reincorporation of WMIHC from the State of Washington to the State of Delaware effective May 11, 2015 (the “Reincorporation Date”).~~

~~WMIH, formerly known as WMIHC~~2023 and ~~Washington Mutual, Inc. (“WMI”), is the direct parent of WM Mortgage Reinsurance Company, Inc. (~~“~~WMMRC”) and WMI Investment Corp. (~~“WMIIC”), which has no assets or liabilities. Since emergence from bankruptcy on March 19, 2012 (the “Effective Date”), we have had limited operations other than WMMRC’s legacy reinsurance business, which is being operated in runoff mode.early 2024. We continue to ~~operate WMMRC’s business in runoff mode~~expect a favorable market for acquisitions and bulk purchases due to macro-economic conditions. Overall, we expect our ~~primary strategic objective is~~Servicing segment to ~~consummate one or more~~continue generating strong earnings over time as our servicing portfolio grows with acquisitions and bulk purchases.

In the third quarter of ~~an operating business, either through a merger, purchase, business combination or other form~~2023, our Originations segment generated income before income tax expense of ~~acquisition, and grow our business.~~

~~We continue to seek, identify and evaluate acquisition opportunities~~$29 on funded volume of ~~varying sizes across an array of industries for~~$3,412. With mortgage rates above 7% at the purpose of facilitating an acquisition by WMIH of one or more operating businesses. Our management team meets regularly with our Board of Directors (the “Board” or “Board of Directors”), the Finance Committeeend of the ~~Board (the “Finance Committee”)~~third quarter of 2023, and considering the seasonality of Originations, which is weakest during the fourth quarter due to the day count shortened by the holidays, we expect the Originations segment to operate at lower levels of profitability in the fourth quarter of 2023 and early next year.

Table of Contents

While the recent inflation rate increase appears to have subsided, the inflation rate remains relatively high. Inflationary pressures may limit a borrower’s disposable income, which can decrease a borrowers’ ability to enter into mortgage transactions. Inflationary pressures may also increase our operating costs. However, historically changes in interest rates have a greater impact on our financial results than changes in inflation. While interest rates are greatly influenced by changes in the inflation rate, they do not necessarily change at the same rate or extent as the inflation rate.

Results of Operations


Table 1. Consolidated Operations


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		Change		2023		2022		Change
Revenues - operational(1)	$	511	$	386	$	125	$	1,325	$	1,284	$	41
Revenues - mark-to-market	63		124		(61)		65		877		(812)
Total revenues	574		510		64		1,390		2,161		(771)
Total expenses	301		316		(15)		840		982		(142)
Total other income (expense), net	79		(41)		120		35		45		(10)
Income before income tax expense	352		153		199		585		1,224		(639)
Less: Income tax expense	77		40		37		131		302		(171)
Net income	$	275	$	113	$	162	$	454	$	922	$	(468)

(1)Revenues - operational consists of total revenues, excluding mark-to-market.

Income before income tax expense increased during the three months ended September 30, 2023 as compared to 2022 primarily due to an increase in total revenues and the ~~Corporate Strategy~~change in total other income (expense), net. Revenues increased in 2023 primarily due to an increase in operational revenues in our Servicing segment largely driven by bulk MSR purchases and ~~Development Committee~~acquisitions in 2023, and a gain from the sale of loans that were acquired in connection with the collapse of a securitization trust due to over-collateralization. The change in other income (expense), net in 2023 as compared to 2022 was primarily due to a preliminary bargain purchase gain of $96 recorded in 2023 upon completion of the ~~Board (the “CS&D Committee”), as the case may be,~~Home Point Transaction, partially offset by a loss of $35 related to ~~discuss and evaluate potential acquisition targets. During~~fair value changes in certain equity investments.

Income before tax expense decreased during the nine months ended September 30, ~~2017~~2023 as compared to 2022 primarily due to a decrease in total revenues, partially offset by lower total expenses. The decrease in revenue in 2023 was primarily attributable to lower favorable MTM adjustment as the increase in mortgage rates was greater in 2022 compared to 2023. The MTM adjustment was partially offset by the increase in operational revenue in our Servicing segment driven by a larger servicing UPB portfolio in 2023, partially offset by decreased origination revenues due to lower origination volumes. The decrease in total expenses during the three and nine months ended September 30, 2023, was primarily driven by lower salaries, wages and benefits in our Originations segment due to lower headcount in both the direct-to-consumer and correspondent channels as a result of reducing headcount commensurate with lower origination volumes in 2022.

The effective tax rate during the three months ended September 30, 2023, was 21.7% as compared to 26.4% in 2022, and the ~~year~~effective tax rate during the nine months ended ~~December 31, 2016,~~September 30, 2023 was 22.3% as compared to 24.7% in 2022. The changes in effective rate are primarily attributable to the ~~Finance Committee,~~impact of quarterly discrete tax items relative to income before taxes for the ~~CS&D Committee~~respective period, including the excess tax benefit from stock-based compensation.

Table of Contents

Segment Results

Our operations are conducted through two segments: Servicing and Originations.

•The Servicing segment performs operational activities on behalf of investors or owners of the underlying mortgages and mortgage servicing rights, including collecting and disbursing borrower payments, investor reporting, customer service, modifying loans where appropriate to help borrowers stay current, and when necessary performing collections, foreclosures, and the ~~Board~~sale of ~~Directors met formally~~REO.

•The Originations segment originates residential mortgage loans through our direct-to-consumer channel, which provides refinance options for our existing customers, and ~~informally numerous times~~through our correspondent channel, which purchases or originates loans from mortgage bankers.

Refer to ~~assess various opportunities. We have focused primarily on acquisition targets~~Note 17, Segment Information, in the ~~financial~~Notes to the Condensed Consolidated Financial Statements for a summary of segment results.

Servicing Segment

The Servicing segment’s strategy is to generate income by growing the portfolio and maximizing the servicing margin. We believe several competitive strengths have been critical to our long-term growth as a servicer and subservicer, including our low-cost platform that creates operating leverage, our skill in mitigating losses for investors and clients, our commitment to strong customer service, industry leading compliance management, our history of successfully boarding new loans, and the ability to retain existing customers by offering attractive purchase and refinance options. We believe that our operational capabilities are reflected in our strong servicer ratings and recent agency recognition.

Table 2. Servicer Ratings

Fitch(1)

Moody’s(2)

S&P(3)

Rating date

August 2022

May 2023

June 2022

Residential

RPS2

SQ2-

Above Average

Master Servicer

RMS2+

SQ2+

Above Average

Special Servicer

RSS2

SQ2-

Above Average

Subprime Servicer

RPS2

SQ2-

Above Average

Rushmore Special(4)

RSS1-

SQ3+

Above Average

(1)Fitch Rating Scale of 1 (Highest Performance) to 5 (Low/No Proficiency)

(2)Moody’s Rating Scale of SQ1 (Strong Ability/Stability) to SQ5 (Weak Ability/Stability)

(3)S&P Rating Scale of Strong to Weak

(4)During the second quarter of 2023, the Company acquired Rushmore Loan Management Services, LLC, in connection with the Roosevelt Transaction, which is a residential mortgage servicer with services ~~industry, including targets~~that focuses on special servicing.

Table of Contents

The following tables set forth the results of operations for the Servicing segment:

Table 3. Servicing Segment Results of Operations


	Three Months Ended September 30,
	2023				2022				Change
	Amt			bps(1)	Amt			bps(1)	Amt			bps
Revenues
Operational	$	561		25	$	377		18	$	184		7
Amortization, net of accretion	(160)			(7)	(169)			(8)	9			1
Mark-to-market adjustments - Servicing	63			3	124			6	(61)			(3)
Total revenues	464			21	332			16	132			5
Expenses
Salaries, wages and benefits	87			4	82			4	5			—
General and administrative
Servicing support fees	29			1	21			1	8			—
Corporate and other general and administrative expenses	52			3	29			2	23			1
Foreclosure and other liquidation related expenses (recoveries), net	—			—	9			—	(9)			—
Depreciation and amortization	4			—	6			—	(2)			—
Total general and administrative expenses	85			4	65			3	20			1
Total expenses	172			8	147			7	25			1
Other income (expense)
Interest income	157			7	71			3	86			4

Advance interest expense	(13)			(1)	(8)			—	(5)			(1)
Other interest expense	(75)			(3)	(45)			(2)	(30)			(1)
Interest expense	(88)			(4)	(53)			(2)	(35)			(2)
Total other income, net	69			3	18			1	51			2
Income before income tax expense	$	361		16	$	203		10	$	158		6

Weighted average cost - advance and MSR facilities	8.2		%		5.1		%		3.1		%
Weighted average cost - excess spread financing	8.7		%		8.7		%		—		%

(1)Calculated basis points (“bps”) are as follows: Annualized dollar amount/Total average UPB X 10000.

Table of Contents


Table 3.1 Servicing - Revenues


	Three Months Ended September 30,
	2023			2022			Change
	Amt		bps(1)	Amt		bps(1)	Amt		bps
MSR Operational Revenue
Base servicing fees	$	382	17	$	311	15	$	71	2
Modification fees	6		—	2		—	4		—

Late payment fees	17		—	15		1	2		(1)
Other ancillary revenues	82		4	(4)		—	86		4
Total MSR operational revenue	487		21	324		16	163		5
Subservicing-related revenue	92		4	71		3	21		1
Total servicing fee revenue	579		25	395		19	184		6
MSR financing liability costs	(7)		—	(4)		—	(3)		—
Excess spread payments and portfolio runoff	(11)		—	(14)		(1)	3		1
Total operational revenue	561		25	377		18	184		7
Amortization, Net of Accretion
MSR amortization	(171)		(7)	(183)		(9)	12		2
Excess spread accretion	11		—	14		1	(3)		(1)
Total amortization, net of accretion	(160)		(7)	(169)		(8)	9		1
Mark-to-Market Adjustments - Servicing
MSR MTM	270		12	239		12	31		—
Loss on MSR hedging activities	(192)		(9)	(100)		(5)	(92)		(4)
Loss on MSR sales	(3)		—	(2)		—	(1)		—
Reclassifications(2)	(8)		—	(10)		(1)	2		1
Excess spread / MSR financing MTM	(4)		—	(3)		—	(1)		—
Total mark-to-market adjustments - Servicing	63		3	124		6	(61)		(3)
Total revenues - Servicing	$	464	21	$	332	16	$	132	5

(1)Calculated basis points (“bps”) are as follows: Annualized dollar amount/Total average UPB X 10000.

(2)Reclassifications include the impact of negative modeled cash flows which have been transferred to reserves on advances and other receivables. The negative modeled cash flows relate to advances and other receivables associated with ~~consumer finance, commercial finance, specialty finance, leasing~~inactive and ~~insurance operations. We also may review potential targets~~liquidated loans that are no longer part of the MSR portfolio.

Servicing Segment Revenues

The following provides the changes in revenues for the Servicing segment:

Servicing- MSR Operational revenue increased during the three months ended September 30, 2023, as compared to 2022 primarily due to an increase in base servicing fees as a result of a larger average servicing UPB portfolio in 2023 and an increase in other ~~industries, such~~ancillary revenues driven by $67 gain on the sale of mortgage loans that were acquired in connection with the collapse of a securitization trust due to over-collateralization.

MSR amortization decreased during the three months ended September 30, 2023, as ~~information technology, industrials, business services, healthcare~~compared to 2022, primarily due to lower prepayments driven by higher mortgage rates in 2023, partially offset by a higher average MSR UPB.

MSR MTM increased during the three months ended September 30, 2023, compared to 2022, primarily driven by the positive impact of the newly acquired MSRs and less volatility in key assumptions in the valuation model. Loss on MSR hedging activities increased during the three months ended September 30, 2023, compared to 2022, primarily due to larger average servicing portfolio and higher hedge coverage ratio in 2023.

Subservicing - Subservicing fees increased during the three months ended September 30, 2023, as compared to 2022, primarily due to fees related to the deboarding of a subservicing client in third quarter of 2023 as well as the specialty portfolio acquired as part of the Rushmore Transaction during the second quarter of 2023, which was fully operational for the entire third quarter of 2023.

Table of Contents

Servicing Segment Expenses

Total expenses increased during the three months ended September 30, 2023 as compared to 2022, primarily driven by an increase in corporate and other ~~sectors.~~

~~On January 5, 2015,~~ ~~we announced that WMIH had~~ ~~completed~~general and administrative expenses and servicing support fees, partially offset by a change in foreclosure and other liquidation related expenses (recoveries), net. The increase in both corporate and other general and administrative expenses and servicing support fees were primarily due to growth in our MSR servicing portfolio and an ~~offering (the “Series B Preferred Stock Financing”)~~increase in allocated cost in 2023 primarily due to a higher percentage of ~~600,000 shares of its 3% Series B Convertible Preferred Stock, par value $0.00001, liquidation preference $1,000 per share (the “Series B Preferred Stock”)~~total headcount in the ~~amount~~Servicing segment following the workforce reduction in the Originations segment in 2022. The change in foreclosure and other liquidation related expenses (recoveries), net, was primarily driven by non-operating expense accruals and increases in reserves for advances and settlements in 2022.

Servicing Segment Other Income, net

Total other income, net increased during the three months ended September 30, 2023 as compared to 2022, primarily due to higher interest income attributable to higher interest rates, partially offset by higher interest expense from MSR and advance financing.


Table 4. Servicing Segment Results of Operations


	Nine Months Ended September 30,
	2023				2022				Change
	Amt			bps(1)	Amt			bps(1)	Amt			bps
Revenues
Operational	$	1,410		22	$	1,136		19	$	274		3
Amortization, net of accretion	(412)			(7)	(570)			(10)	158			3
Mark-to-market adjustments - Servicing	65			1	877			15	(812)			(14)
Total revenues	1,063			16	1,443			24	(380)			(8)
Expenses
Salaries, wages and benefits	252			4	241			4	11			—
General and administrative
Servicing support fees	66			1	56			1	10			—
Corporate and other general and administrative expenses	138			2	86			2	52			—
Foreclosure and other liquidation related expenses, net	19			—	13			—	6			—
Depreciation and amortization	9			—	16			—	(7)			—
Total general and administrative expenses	232			3	171			3	61			—
Total expenses	484			7	412			7	72			—
Other income (expense)
Interest income	343			5	125			2	218			3

Advance interest expense	(41)			—	(22)			—	(19)			—
Other interest expense	(183)			(3)	(146)			(2)	(37)			(1)
Interest expense	(224)			(3)	(168)			(2)	(56)			(1)
Total other income (expense), net	119			2	(43)			—	162			2
Income before income tax expense	$	698		11	$	988		17	$	(290)		(6)

Weighted average cost - advance and MSR facilities	7.8		%		3.9		%		3.9		%
Weighted average cost - excess spread financing	8.7		%		8.8		%		(0.1)		%

(1)Calculated basis points (“bps”) are as follows: Annualized dollar amount/Total average UPB X 10000.

Table of aContents~~ggregate gross proceeds equal to $600 million. Net proceeds~~


Table 4.1 Servicing - Revenues


	Nine Months Ended September 30,
	2023			2022			Change
	Amt		bps(1)	Amt		bps(1)	Amt		bps
MSR Operational Revenue
Base servicing fees	$	1,054	16	$	907	15	$	147	1
Modification fees	14		—	11		—	3		—

Late payment fees	49		1	45		1	4		—
Other ancillary revenues	107		2	53		1	54		1
Total MSR operational revenue	1,224		19	1,016		17	208		2
Subservicing-related revenue	240		3	208		3	32		—
Total servicing fee revenue	1,464		22	1,224		20	240		2
MSR financing liability costs	(22)		—	(14)		—	(8)		—
Excess spread payments and portfolio runoff	(32)		—	(74)		(1)	42		1
Total operational revenue	1,410		22	1,136		19	274		3
Amortization, Net of Accretion
MSR amortization	(444)		(7)	(644)		(11)	200		4
Excess spread accretion	32		—	74		1	(42)		(1)
Total amortization, net of accretion	(412)		(7)	(570)		(10)	158		3
Mark-to-Market Adjustments - Servicing
MSR MTM	304		5	1,363		23	(1,059)		(18)
Loss on MSR hedging activities	(244)		(4)	(329)		(6)	85		2
Gain (loss) on MSR sales	29		—	(1)		—	30		—
Reclassifications(2)	(26)		—	(22)		—	(4)		—
Excess spread / MSR financing MTM	2		—	(134)		(2)	136		2
Total mark-to-market adjustments - Servicing	65		1	877		15	(812)		(14)
Total revenues - Servicing	$	1,063	16	$	1,443	24	$	(380)	(8)

(1)Calculated basis points (“bps”) are as follows: Annualized dollar amount/Total average UPB X 10000.

(2)Reclassifications include the impact of ~~$598.5 million were deposited into an escrow account and~~negative modeled cash flows which have been transferred to reserves on advances and ~~will~~other receivables. The negative modeled cash flows relate to advances and other receivables associated with inactive and liquidated loans that are no longer part of the MSR portfolio.

Servicing Segment Revenues

The following provides the changes in revenues for the Servicing segment:

Servicing- MSR Operational revenue increased during the nine months ended September 30, 2023, as compared to 2022 primarily due to an increase in base servicing fees as a result of a larger average servicing UPB portfolio in 2023 and increase in other ancillary revenues as a result of $67 gain from the sale of mortgage loans that were acquired in connection with the collapse of a securitization trust due to over-collateralization.

MSR amortization decreased during the nine months ended September 30, 2023, as compared to 2022, primarily due to lower prepayments driven by higher mortgage rates in 2023, partially offset by a higher average MSR UPB.

MSR MTM and Loss on MSR hedging activities decreased during the nine months ended September 30, 2023, compared to 2022, as the increase in mortgage rates was greater in 2022 compared to 2023, partially offset by an increase in hedge coverage ratio.

Subservicing - Subservicing fees increased during the nine months ended September 30, 2023, as compared to 2022, primarily due to the specialty UPB portfolio acquired as part of the Rushmore Transaction during the second quarter of 2023, which was fully operational for the entire third quarter of 2023.

Table of Contents

Servicing Segment Expenses

Total expenses increased during the nine months ended September 30, 2023 as compared to 2022, primarily driven by an increase in corporate and other general and administrative expenses and salaries, wages, and benefits. The increase in corporate and other general and administrative expenses was primarily due to growth in our MSR servicing portfolio and an increase in allocated cost in 2023 primarily due to a higher percentage of total headcount in Servicing following the workforce reduction in the Originations segment in 2022. The increase in salaries, wages and benefits was primarily driven by higher headcount due to growth of our MSR servicing portfolio.

Servicing Segment Other Income (Expenses), net

Total other income (expenses), net changed during the nine months ended September 30, 2023 as compared to 2022, primarily due to higher interest income attributable to higher interest rates, partially offset by higher interest expense from MSR and advance financing.

Table 5. Servicing Portfolio - Unpaid Principal Balances


					Three Months Ended September 30,				Nine Months Ended September 30,
					2023		2022		2023		2022
Average UPB
MSRs					$	500,825	$	394,703	$	449,602	$	376,551
Subservicing and other(1)					396,673		428,423		418,942		412,925
Total average UPB					$	897,498	$	823,126	$	868,544	$	789,476

	September 30, 2023						September 30, 2022
	UPB		Carrying Amount		bps		UPB		Carrying Amount		bps
MSRs
Agency	$	501,315	$	8,193	163		$	363,637	$	6,068	167
Non-agency	27,009		311		115		31,769		340		107
Total MSRs	528,324		8,504		161		395,406		6,408		162

Subservicing and other(1)
Agency	360,565		N/A				434,396		N/A
Non-agency	48,365		N/A				23,884		N/A
Total subservicing and other	408,930		N/A				458,280		N/A

Total ending balance	$	937,254	$	8,504			$	853,686	$	6,408

MSRs UPB Encumbrance									September 30, 2023		September 30, 2022
MSRs - unencumbered									$	451,567	$	309,301
MSRs - encumbered(2)									76,757		86,105
MSRs UPB									$	528,324	$	395,406

(1)Subservicing and other includes (i) loans we service for others, (ii) residential mortgage loans originated but have yet to be ~~released~~sold, and (iii) agency REO balances for which we own the mortgage servicing rights.

(2)Encumbered MSRs consist of residential mortgage loans included within our excess spread financing transactions and MSR financing liability.

Table of Contents

The following tables provide a rollforward of our MSR and subservicing and other portfolio UPB:


Table 6. Servicing and Subservicing and Other Portfolio UPB Rollforward


	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	MSR		Subservicing and Other		Total		MSR		Subservicing and Other		Total
Balance - beginning of period	$	459,476	$	422,522	$	881,998	$	397,387	$	406,231	$	803,618
Additions:
Originations	3,419		—		3,419		5,727		—		5,727
Acquisitions / Increase in subservicing(1)	98,563		19,494		118,057		6,098		65,419		71,517
Deductions:
Dispositions / Decrease in subservicing(2)	(22,184)		(26,029)		(48,213)		(671)		(2,595)		(3,266)
Principal reductions and other	(4,469)		(2,838)		(7,307)		(4,374)		(3,046)		(7,420)
Voluntary reductions(3)	(6,100)		(4,017)		(10,117)		(8,666)		(7,723)		(16,389)
Involuntary reductions(4)	(353)		(202)		(555)		(100)		(6)		(106)
Net changes in loans serviced by others	(28)		—		(28)		5		—		5
Balance - end of period	$	528,324	$	408,930	$	937,254	$	395,406	$	458,280	$	853,686

(1)Amount for Subservicing and Other UPB includes transfers from ~~escrow~~MSR for MSRs sold with subservicing rights retained.

(2)Amount for MSR UPB includes transfers to usSubservicing and other for MSRs sold with subservicing rights retained.

(3)Voluntary reductions are related to loan payoffs by customers.

(4)Involuntary reductions refer to loan chargeoffs.


Table 6.1 Servicing and Subservicing and Other Portfolio UPB Rollforward


	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	MSR		Subservicing and Other		Total		MSR		Subservicing and Other		Total
Balance - beginning of period	$	411,382	$	459,053	$	870,435	$	339,208	$	370,520	$	709,728
Additions:
Originations	9,946		—		9,946		24,131		—		24,131
Acquisitions / Increase in subservicing(1)	160,756		89,558		250,314		98,414		159,643		258,057
Deductions:
Dispositions / Decrease in subservicing(2)	(23,789)		(116,362)		(140,151)		(20,723)		(28,801)		(49,524)
Principal reductions and other	(12,740)		(10,116)		(22,856)		(11,760)		(9,934)		(21,694)
Voluntary reductions(3)	(16,057)		(12,592)		(28,649)		(33,390)		(33,103)		(66,493)
Involuntary reductions(4)	(1,071)		(611)		(1,682)		(317)		(45)		(362)
Net changes in loans serviced by others	(103)		—		(103)		(157)		—		(157)
Balance - end of period	$	528,324	$	408,930	$	937,254	$	395,406	$	458,280	$	853,686

(1)Amount for Subservicing and Other UPB includes transfers from ~~time~~MSR for MSRs sold with subservicing rights retained.

(2)Amount for MSR UPB includes transfers to ~~time~~Subservicing and other for MSRs sold with subservicing rights retained.

(3)Voluntary reductions are related to loan payoffs by customers.

(4)Involuntary reductions refer to loan chargeoffs.

Table of Contents

The table below summarizes the overall performance of the servicing and subservicing portfolio:


Table 7. Key Performance Metrics - Servicing and Subservicing Portfolio


					September 30, 2023			September 30, 2022
Loan count					4,288,683			4,086,628
Average loan amount(1)					$	218,561		$	208,815
Average coupon - agency					3.8		%	3.6		%
Average coupon - non-agency					4.9		%	4.4		%
60+ delinquent (% of loans)(2)					1.9		%	2.5		%
90+ delinquent (% of loans)(2)					1.6		%	2.2		%
120+ delinquent (% of loans)(2)					1.5		%	2.0		%

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023			2022
Total prepayment speed (12-month constant prepayment rate)	5.3	%	8.3	%	5.0		%	11.3		%

(1)Average loan amount is presented in ~~amounts needed to finance our efforts to explore and~~ ~~fund, in whole or in part, certain acquisitions, whether completed or not, including reasonable attorney fees and expenses, accounting expenses, due diligence and financial advisor fees and expenses. For further information~~whole dollar amounts.

(2)Loan delinquency is based on the ~~Series B Preferred Stock Financing~~current contractual due date of the loan. In the case of a completed loan modification, delinquency is based on the modified due date of the loan. Loan delinquency includes loans in forbearance.

Delinquency is an assumption in determining the mark-to-market adjustment and is a key indicator of MSR portfolio performance. Delinquent loans contribute to lower MSR values due to higher costs to service and increased carrying costs of advances.


Table 8. MSRs Loan Modifications and Workout Units


	Three Months Ended September 30,			Nine Months Ended September 30,
	2023	2022	Change	2023	2022	Change
Modifications(1)	7,127	6,786	341	18,315	37,102	(18,787)
Workouts(2)	14,332	9,719	4,613	36,348	37,622	(1,274)
Total modifications and workout units	21,459	16,505	4,954	54,663	74,724	(20,061)

(1)Modifications consist of agency programs designed to adjust the terms of the loan (e.g., ~~see Note 9: Capital Stock~~reduced interest rates).

(2)Workouts consist of other loss mitigation options designed to assist borrowers and ~~Derivative Instruments,~~keep them in their homes, but do not adjust the terms of the loan.

Both modifications and workouts during the three months ended September 30, 2023 increased compared to 2022, primarily due to the ~~condensed consolidated financial statements~~extension of the COVID-19 Recovery Loss Mitigation Options, which expanded the options to include additional eligible borrowers and resulted in ~~Item 1~~an increase in modifications and workouts. Total modifications during the nine months ended September 30, 2023 decreased compared to 2022 primarily due to a decrease in modifications related to loans impacted by the COVID-19 pandemic. Total workouts during the nine months ended September 30, 2023 decreased compared to 2022 primarily due to a decrease in customers who were exiting forbearance plans, as there were fewer customers in forbearance.

Table of ~~Part I~~Contents

Servicing Portfolio and Liabilities

The following table sets forth the activities of ~~this Quarterly Report on Form 10-Q.~~

~~WMIH continues~~MSRs:

Table 9. MSRs - Fair Value Rollforward


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Fair value - beginning of period	$	7,149	$	6,151	$	6,654	$	4,223
Additions:
Servicing retained from mortgage loans sold	86		120		219		481
Purchases and acquisitions of servicing rights	1,435		79		2,305		1,256
Dispositions:
Sales of servicing assets and excess yield	(275)		(4)		(555)		(293)
Changes in fair value:
Due to changes in valuation inputs or assumptions used in the valuation model (MSR MTM):
Agency	255		234		310		1,348
Non-agency	15		5		(6)		15
Changes in valuation due to amortization:
Scheduled principal payments	(64)		(43)		(174)		(132)
Prepayments
Voluntary prepayments
Agency	(97)		(131)		(245)		(475)
Non-agency	(4)		(8)		(9)		(33)
Involuntary prepayments
Agency	(5)		(1)		(15)		(4)
Non-agency	(1)		—		(1)		—
Other changes(1)	10		6		21		22
Fair value - end of period	$	8,504	$	6,408	$	8,504	$	6,408

(1)Amounts primarily represent negative fair values reclassified from the MSR asset to evaluate acquisition opportunities and work with our strategic partner, an affiliate of KKR & CO. L.P. (together with its affiliates, “KKR”), to identify, consider and evaluate potential mergers, acquisitions, business combinationsreserves as underlying loans are removed from the MSR and other ~~strategic opportunities. As~~reclassification adjustments.

See Note 4, Mortgage Servicing Rights and Related Liabilities and Note 14, Fair Value Measurements, in the Notes to the Condensed Consolidated Financial Statements, for additional information regarding the range of assumptions and sensitivities related to the fair value measurement of MSRs as of September 30, ~~2017,~~2023 and ~~through~~December 31, 2022.

Excess Spread Financing

As further disclosed in Note 4, Mortgage Servicing Rights and Related Liabilities,in the date of the filing of this Form 10-Q, we had not entered into definitive documentation relating to an acquisition or consummated an acquisition. If we have not entered into definitive documentation relating to an Acquisition (as defined below), or consummated a Qualified Acquisition (as defined below), on or prior to January 5, 2018, we will be required to redeem all of the outstanding Series B Preferred Stock on January 5, 2018 (the “Series B Redemption Date”). A “Qualified Acquisition” means an Acquisition (as defined below) that, taken together, with prior Acquisitions (if any), collectively utilizes aggregate net proceeds of the Series B Preferred Stock Financing of $450 million. “Acquisition” means any acquisition by the Company (or any of its direct or indirect wholly-owned subsidiaries), in a single transaction or a series of transactions, whether by purchase, merger or otherwise, of all or substantially all of the assets of, or equity interests in, or a business line, unit or division of, any person.

Assuming all 600,000 shares are outstanding on the Series B Redemption Date, the aggregate redemption cost will be $600.0 million, plus accrued and unpaid dividends, if any, whether or not declared. If, priorNotes to the ~~Series B Redemption Date, we publicly announce that~~Condensed Consolidated Financial Statements, we have entered into sale and assignment agreements treated as financing arrangements whereby the acquirer has the right to receive a ~~definitive agreement~~specified percentage of the excess cash flow generated from an MSR.

The servicing fees associated with an MSR can be segregated into (i) a base servicing fee and (ii) an excess servicing fee. The base servicing fee, along with ancillary income and other revenues, is designed to cover costs incurred to service the specified pool plus a reasonable margin. The remaining servicing fee is considered excess. We have utilized these types of arrangements historically as a method for ~~an Acquisition,~~efficiently financing acquired MSRs and the ~~Series B Redemption Date will be extended~~purchase of loans, however we have not done so in recent years due to the ~~earlier to occur~~availability of ~~(i) July 5, 2018, and (ii) the day immediately following (x) the date such definitive agreement is terminated or (y) the date such Acquisition is closed. The consummation~~lower cost sources of ~~an Acquisition would result in the mandatory conversion~~funding.

Table of ~~some or all of the Series B Preferred Stock into common stock in accordance with provisions set forth in Article VI of the Certificate of Incorporation.~~

While we remain focused on identifying an Acquisition and executing definitive documentation relating to or consummating an Acquisition on or prior to the Series B Redemption Date we can provide no assurance that we will be able to do so and, if so, on what terms. In the event weContents

Excess spread financings are required to redeem the Series B Preferred Stock, our available cash, absent a new financing, will be substantially depleted and our ability to (i) utilize our net operating loss (“NOL”) carry-forward, (ii) access significant alternative uses of capital and (iii) to continue business operations would likely be significantly and adversely impaired.

As previously disclosed, the Finance Committee is authorized, among other things, (i) to review the long-term financial structure, objectives and policies of the Company, and to make recommendations to the Board regarding such structure, objectives and policies, if appropriate, (ii) to evaluate the financing requirements of the Company and management’s proposed financing and refinancing plans and to recommend to the Board those actions, authorizations, filings and applications necessary and appropriate to enable management to execute such plans and (iii) to consider and make recommendations to the Board regarding the terms, timing, amount and other material factors (e.g., potential dilution of existing shareholdersrecorded at fair value, and the impact of ~~any financing or restructuring~~fair value adjustments on future revenues and capital resources varies primarily due to prepayment speeds and option-adjusted spread levels. See Note 4, Mortgage Servicing Rights and Related Liabilities and Note 14, Fair Value Measurements, in the ~~Company’s tax attributes under Section 382~~Notes to the Condensed Consolidated Financial Statements, for additional information regarding the range of ~~the Code),~~assumptions and sensitivities related to the ~~possible restructuring or amendment~~measurement of the ~~Company’s outstanding equity securities, issuance~~excess spread financing liability as of September 30, 2023 and December 31, 2022.

In June 2022, the Company entered into an assignment agreement to repurchase excess spread liabilities for a total purchase price of $277.

The following table sets forth the change in the excess spread financing:

Table 10. Excess Spread Financing - Rollforward


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Fair value - beginning of period	$	459	$	532	$	509	$	768
Additions:
New financings	—		—		—		—
Deductions:
Repayments	(1)		(1)		(5)		(293)
Settlements	(18)		(19)		(54)		(80)
Changes in fair value:
Agency	7		4		(1)		109
Non-agency	(1)		3		(3)		15
Fair value - end of period	$	446	$	519	$	446	$	519

Originations Segment

The strategy of our Originations segment is to originate or acquire new ~~equity securities~~MSRs for our servicing portfolio at a more attractive cost than purchasing MSRs in bulk transactions and to retain our existing customers by providing them with attractive refinance and purchase options. The Originations segment plays a strategically important role because its profitability is typically counter cyclical to that of the Servicing segment. Furthermore, by originating or acquiring MSRs at a more attractive cost than would be the case in bulk MSR acquisitions, the Originations segment improves our overall profitability and cash flow. Our Originations segment is one way that we help underserved consumers access the financial markets. In the nine months ended September 30, 2023, our total originations included loans for 7,296 customers with low FICOs (<660), 8,245 customers with income below the U.S. median household income, 9,705 first-time homebuyers, and 2,417 veterans. During this time period, we originated a total of 11,173 Ginnie Mae loans, which are designed for first-time homebuyers and low- and moderate-income borrowers, comprising $3 billion in total proceeds. Once these loans are originated, the underserved borrowers become our servicing customers.

The Originations segment includes two channels:

•Our direct-to-consumer (“DTC”) lending channel relies on our call centers, website and mobile apps, specially trained teams of licensed mortgage originators, predictive analytics and modeling utilizing proprietary data from our servicing portfolio to reach our existing customers who may benefit from a new mortgage. Depending on borrower eligibility, we will refinance existing loans into conventional, government or ~~more private or public transactions, redemption~~non-agency products. Through lead campaigns and direct marketing, the direct-to-consumer channel seeks to convert leads into loans and ultimately MSRs in a cost-efficient manner.

•Our correspondent lending channel facilitates the acquisition of ~~outstanding securities, or~~MSRs through purchasing newly originated residential mortgage loans that have been underwritten to investor guidelines. This includes both conventional and government-insured loans that qualify for inclusion in securitizations that are guaranteed by the GSEs. Our correspondent lending channel enables us to replenish servicing portfolio run-off typically at a better rate of return than traditional bulk acquisitions.

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The following tables set forth the results of operations for the Originations segment:


Table 11. Originations Segment Results of Operations


	Three Months Ended September 30,									Nine Months Ended September 30,
	2023			2022			Change			2023			2022			Change
Revenues
Service related, net - Originations(1)	$	18		$	20		$	(2)		$	45		$	86		$	(41)
Net gain on mortgage loans held for sale
Net (loss) gain on loans originated and sold(2)	(8)			22			(30)			16			151			(135)
Capitalized servicing rights(3)	78			114			(36)			204			425			(221)
Total net gain on mortgage loans held for sale	70			136			(66)			220			576			(356)
Total revenues	88			156			(68)			265			662			(397)
Expenses
Salaries, wages and benefits	37			68			(31)			107			275			(168)
General and administrative
Loan origination expenses	7			15			(8)			23			50			(27)
Corporate and other general administrative expenses	7			12			(5)			24			43			(19)
Marketing and professional service fees	5			11			(6)			13			28			(15)
Depreciation and amortization	2			5			(3)			6			14			(8)
Total general and administrative	21			43			(22)			66			135			(69)
Total expenses	58			111			(53)			173			410			(237)
Other income (expenses)
Interest income	10			12			(2)			26			44			(18)
Interest expense	(11)			(11)			—			(28)			(33)			5

Total other (expenses) income, net	(1)			1			(2)			(2)			11			(13)
Income before income tax expense	$	29		$	46		$	(17)		$	90		$	263		$	(173)

Weighted average note rate - mortgage loans held for sale	6.8		%	5.1		%	1.7		%	6.4		%	4.0		%	2.4		%
Weighted average cost of funds - warehouse facilities (excluding facility fees)	6.9		%	4.2		%	2.7		%	6.6		%	2.9		%	3.7		%

(1)Service related, net - Originations refers to fees collected from customers for originated loans and from other ~~transactions related to~~lenders for loans purchased through the ~~Company’s outstanding securities, capital structure or fundraising to meet~~correspondent channel, and includes loan application, underwriting and other similar fees.

(2)Net gain on loans originated and sold (excluding capitalized servicing rights) represents the ~~Company’s future liquidity~~unrealized and ~~capital resources needs, in each case~~realized gains and losses from the origination, purchase, and sale of loans as well as the ~~Finance Committee deems appropriate.~~

Inunrealized and realized gains and losses from related derivative instruments. Gains from the origination and sale of loans are affected by the volume and margin of our originations activity which can vary based upon mortgage interest rates.

(3)Capitalized servicing rights represent the fair value attributed to mortgage servicing rights at the time in which they are retained in connection with the ~~foregoing,~~sale of loans during the period.

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Table 12. Originations - Key Metrics


	Three Months Ended September 30,									Nine Months Ended September 30,
	2023			2022			Change			2023			2022			Change
Key Metrics
Consumer direct lock pull through adjusted volume(1)	$	1,578		$	3,179		$	(1,601)		$	4,627		$	13,409		$	(8,782)
Other locked pull through adjusted volume(1)	1,730			2,097			(367)			5,545			8,684			(3,139)
Total pull through adjusted lock volume	$	3,308		$	5,276		$	(1,968)		$	10,172		$	22,093		$	(11,921)
Funded volume(2)	$	3,412		$	5,741		$	(2,329)		$	9,973		$	25,081		$	(15,108)
Volume of loans sold	$	3,984		$	6,387		$	(2,403)		$	10,776		$	29,477		$	(18,701)
Recapture percentage(3)	24.2%			28.4%			(4.2)%			24.4%			32.9%			(8.5)%
Refinance recapture percentage(4)	82.7%			79.6%			3.1%			77.9%			56.2%			21.7%
Purchase as a percentage of funded volume	54.0%			42.3%			11.7%			55.9%			31.6%			24.3%
Value of capitalized servicing on retained settlements	225 bps			221 bps			4 bps			222 bps			188 bps			34 bps

Originations Margin
Revenue	$	88		$	156		$	(68)		$	265		$	662		$	(397)
Pull through adjusted lock volume	$	3,308		$	5,276		$	(1,968)		$	10,172		$	22,093		$	(11,921)
Revenue as a percentage of pull through adjusted lock volume(5)	2.66		%	2.96		%	(0.30)		%	2.61		%	3.00		%	(0.39)		%

Expenses(6)	$	59		$	110		$	(51)		$	175		$	399		$	(224)
Funded volume	$	3,412		$	5,741		$	(2,329)		$	9,973		$	25,081		$	(15,108)
Expenses as a percentage of funded volume(7)	1.73		%	1.92%			(0.19)		%	1.75		%	1.59%			0.16		%

Originations Margin	0.93		%	1.04		%	(0.11)		%	0.86		%	1.41		%	(0.55)		%

(1)Pull through adjusted volume represents the expected funding from locks taken during the period.

(2)Funded volume for the period may include pull through adjusted lock volume from prior periods.

(3)Recapture percentage includes new loan originations for both purchase and refinance transactions where borrower retention and/or property retention occur as ~~has previously been disclosed,~~a result of a loan payoff from our servicing portfolio. Excludes loans we are contractually unable to solicit.

(4)Refinance recapture percentage includes new loan originations for refinance transactions where borrower retention and property retention occurs as a result of a loan payoff from our servicing portfolio. Excludes loans we are contractually unable to solicit.

(5)Calculated on pull-through adjusted lock volume as revenue is recognized at the ~~Finance Committee has retained financial advisors to help the Company assess its overall capital structure~~time of loan lock.

(6)Expenses include total expenses and ~~liquidity requirements and to develop potential financing alternatives. As part of these efforts,~~total other income (expenses), net.

(7)Calculated on funded volume as expenses are incurred based on closing of the ~~date of this report,~~loan.

Originations Segment Revenues

Total revenues decreased during the ~~Finance Committee~~three and ~~its advisers are engaged~~nine months ended September 30, 2023 compared to 2022 primarily driven by lower originations volume in ~~discussions relating to, among other things,~~2023 that resulted in a possible restructuring or amendment of the Series B Preferred Stock. We can provide no assurance we will be able to restructure, amend or refinance the Series B Preferred Stock and, if so, on what terms.

With respect to our current operations, the Company currently operates a single business through its subsidiary, WMMRC, whose sole activity is the reinsurance of mortgage insurance policies. WMMRC has been operateddecrease in runoff mode since September 26, 2008. Since that date, WMMRC has not underwritten any new policies (and by extension any new risk). WMMRC, through predecessor companies, began reinsuring risks in 1997 and continued reinsuring risks through September 25, 2008.

All of WMMRC’s reinsurance agreements are on an excess of loss basis, except for a reinsurance treaty with Genworth Mortgage Insurance Corporation during 2008, which is reinsured on a 50% quota share basis. Pursuant to the excess of loss reinsurance treaties, WMMRC reinsures a second loss layer which ranges from 5% to 10% of the risk in force in excess of the primary mortgage insurer’s first loss percentages which range from 4% to 5%. Each calendar year, or book year, is treated separately from other years when calculating losses. In return for accepting a portion of the risk, WMMRC receives, net of ceding commission, a percentage of the premium that ranges from 25% to 40%.

WMMRC previously commuted three reinsurance agreements, one each, in 2009, 2012 and 2014, respectively, and the related trust assets were distributed in accordance with the commutation agreements. On October 23, 2017, the reinsurance agreement with Radian was commuted and the related trust assets were released to WMMRC. On September 13, 2017, the Insurance Division of the State of Hawaii approved this commutationcapitalized servicing rights and a ~~distribution~~decline in net gain on loans originated and sold.

Table of up to $10.7 million to WMIH. As of the date of the filing of this Form 10-Q, this distribution has not yet been completed. For more information see Note 14: Subsequent Events to the condensed consolidated financial statements ~~in Item 1 of Part I of this Quarterly Report on Form 10-Q~~. We also may seek opportunities to extract excess capital through commutation of one or more of WMMRC’s remaining reinsurance agreements or otherwise, with a view toward accelerating the distribution of trust assets in excess of the amounts needed to pay claims.

Beginning in 2006, the U.S. housing market and related credit markets experienced a multi-year downturn. During that period, housing prices declined materially, credit guidelines tightened, delays in mortgage servicing and foreclosure activities occurred, and deterioration in the credit performance of mortgage loans occurred. In addition, the macro-economic environment during that period demonstrated limited economic growth, stubbornly high unemployment, and limited median wage gains. Beginning in 2012, home prices began to rise again. The current outlook for the housing market is optimistic with low interest rates, steady employment growth, increased household formation rates and less restrictive credit conditions. Nevertheless, WMMRC’s operating environment remains somewhat uncertain as much of its results over the next two years will be directly affected by the inventory of pending defaulted mortgages at its ceding companies arising primarily from mortgages originated in calendar years 2007 and 2008. However, its financial exposure to that environment has been materially reduced as the remaining net aggregate risk exposure has decreased due to the runoff nature of its operations.

~~Our Financial Information~~

~~The financial information in this Quarterly Report on Form 10-Q has been derived from our condensed consolidated financial statements.~~

~~Critical Accounting Policies~~

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), which requires management to make estimates and assumptions that affect reported and disclosed amounts of assets and liabilities and the reported amounts of revenues andContents

Originations Segment Expenses

Total expenses during the ~~reporting period. We believe that~~three and nine months ended September 30, 2023 decreased when compared to 2022 primarily due to a decline in salaries, wages and benefits expense, and loan origination expenses. Salaries, wages and benefits expense declined in 2023 primarily due to decreased headcount and lower originations volumes in both the ~~critical accounting policies set forth~~direct-to-consumer and correspondent channels. Loan origination expenses declined in ~~the accompanying condensed consolidated financial statements describe the more significant judgments and estimates used~~2023 primarily due to cost reduction initiatives in ~~the preparation of our condensed consolidated financial statements. These accounting policies pertain~~connection with decreased origination volumes.

Originations Segment Other (Expenses) Income, Net

Interest income relates primarily to premium revenues and risk transfer, valuation of investments, loss and loss adjustment expense reserves, our values under fresh start accounting, the resulting loss contract reserve and the valuation of the derivative instrument relating to the embedded conversion feature of the Series B Preferred Stock. If actual events differ significantly from the underlying judgments or estimates used by management in the application of these accounting policies, there could be a material effect on our results of operations and financial condition.

Recently issued accounting standards and their impact on the Company have been presented under “New Accounting Pronouncements” in Note 2: Significant Accounting Policies to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

~~Segments~~

The Company manages its business on the basis of one operating segment, mortgage reinsurance, in accordance with GAAP. Within the mortgage reinsurance segment, our current risks arise solely from the reinsurance of mortgage insurance policies that were placed on certain residential mortgage loans prior to the bankruptcy of WMI. The majority of these policies were required by mortgage lenders as a stipulation to approve the mortgage loans. The mortgage insurance policies protect the beneficiaries of the policy from all or a portion of default-related losses.

~~Overview of Revenues and Expenses~~

~~Because WMIH has no current significant operations of its own, its cash flow~~held for sale. Interest expense is ~~derived almost entirely from earnings on its investment portfolio, and payments it receives from, and dividends paid by, WMMRC. All dividends received by WMIH from~~

~~WMMRC that constituted Runoff Proceeds, historically, were required to be distributed to holders of WMIH’s Second Lien Notes in accordance~~associated with the ~~terms of~~warehouse facilities utilized to finance newly originated loans. There were no material changes for other (expenses) income, net, during the ~~Second Lien Indenture~~three months ended September 30, 2023 as ~~described below in this Item 2 under “Notes Payable.”~~ ~~As of September 29, 2017, the Second Lien Notes were fully redeemed by the Company and the Second Lien Indenture was satisfied and discharged, therefore future distributions from WMMRC~~compared to ~~WMIH will be available for general corporate purposes.~~

~~WMMRC’s revenues consist primarily of the following:~~

~~net premiums earned on reinsurance contracts;~~

~~positive changes~~2022. Due to ~~(and corresponding releases from) loss reserves; and~~

~~net investment~~decreased originations volume, both interest income and interest expense declined, partially offset by higher interest rates, resulting in immaterial changes for total other (expenses) income, net, ~~gains (losses) on WMMRC’s investment portfolio.~~

~~WMMRC’s expenses consist primarily of~~during the ~~following:~~

~~underwriting expenses; and~~

nine months ended September 30, 2023 as compared to 2022.

~~general and administrative expenses.~~

Originations Margin

~~Results of Operations~~

The Originations Margin for the three and nine months ended September 30, ~~2017~~2023 decreased as compared to 2022 primarily due to lower revenue as a percentage of pull through adjusted lock volume driven by lower margins from a shift in channel mix from higher margin direct-to-consumer to lower margin correspondent and ~~September 30, 2016~~

~~For~~decline in total revenues as a result of lower originations volume from both the ~~three~~direct-to-consumer and ~~nine~~correspondent channels. Direct-to-consumer channel mix was 48% and 60% for the three months ended September 30, ~~2017, we reported a net operating loss of $0.3 million~~2023, and ~~net operating income of $3.5 million, respectively. This compares to net operating losses of $0.4 million~~2022, and ~~$1.3 million for the three~~45% and ~~nine months ended September 30, 2016, respectively. The components that gave rise to a net operating loss for the three months and net operating income~~61% for the nine months ended September 30, ~~2017~~2023 and ~~net~~2022, respectively.

Corporate/Other

Corporate/Other includes the results of Xome’s operations, the Company’s unallocated overhead expenses (which include the costs of executive management and other corporate functions that are not directly attributable to our operating ~~losses for the three~~segments), changes in equity investments and nine months ended September 30, 2016 are summarized in the tables below under the Net Income (Loss) section. The most significant variances between the comparative three month periods ended September 30, 2017 and September 30, 2016 include (i) increased revenue of approximately $1.0 million, (ii) an increase in general and administrative expense of $0.8 million, (iii) a minimal change in interest expense ~~of $0.1 million, (iv) a net decrease in underwriting expense of $0.2 million and (v) a reduction of~~on our unsecured senior notes. In addition, Corporate/Other includes eliminations related to intersegment hedge fair value changes.

The following table set forth the ~~loss contract reserve of $0.2 million~~selected financial results for Corporate/Other:


Table 13. Corporate/Other Selected Financial Results


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		Change		2023		2022		Change
Corporate/Other - Operations
Total revenues	$	22	$	22	$	—	$	62	$	56	$	6
Total expenses	71		58		13		183		160		23
Interest expense	47		40		7		126		120		6
Other income (expense), net	58		(20)		78		44		197		(153)

Key Metrics
Average exchange inventory under management	27,384		21,680		5,704		26,658		18,435		8,223

Total revenues remained consistent during the three months ended September 30, ~~2017 versus a reduction of $0.5 million~~2023 as compared to 2022. Total revenues increased during the ~~same period~~nine months ended September 30, 2023 as compared to 2022 primarily due to increased revenue from Xome driven by greater sales volume in ~~2016. The loss contract reserve decrease,~~connection with exchange inventory growth.

Total expenses increased during the three and nine months ended September 30, ~~2017, is attributed~~2023 primarily due to changes in the expected timing of assets being released from trust accounts held at WMMRC which are discounted to present value. When assets are expected to be released from trust earlier than anticipated, a smaller present value discount is applied to the loss contract reserve, thus reducing the reserve. For more information see Note 14: Subsequent Events to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. The most significant variances between the comparative nine month periods ended September 30, 2017 and September 30, 2016 include (i) an increase in ~~revenue~~allocated costs in 2023, driven by higher percentage of ~~approximately $1.7 million, (ii) an increase~~total headcount in ~~general and administrative expense of $1.0 million (iii) a~~Corporate/Other in 2023 following the workforce reduction in ~~interest expense of $0.2 million, (iv) a net decrease~~the Originations segment in underwriting expense of $0.6 million and (v) a reduction of the loss contract reserve of $5.6 million during the nine months ended September 30, 2017 versus a reduction of $2.3 million during the same period in 2016.

For the three months ended September 30, 2017, we reported net income attributable to common and participating stockholders of $33.9 million compared to a net loss attributable to common and participating stockholders of $21.1 million for the three months ended September 30, 2016. This $55.0 million reduction in net loss attributable to common and participating stockholders, when comparing the three months ended September 30, 2017 to the three months ended September 30, 2016, is primarily the result of the change in fair value of an embedded derivative. This embedded derivative was recorded as a result of the variable conversion feature in our Series B Preferred Stock and the change in fair value is reflected on our condensed consolidated statements of operations as the other income or expense item, “c~~hange in fair value of derivative - embedded conversion feature”~~ which resulted in $38.6 million of other income for the three months ended September 30, 2017, compared to other expense of $16.2 million for the three months ended September 30, 2016. This item is solely attributable to a change in fair value of the derivative–embedded conversion feature and is a non-cash item. Fluctuations in the price of WMIH’s common stock directly impact the fair value of the derivative instrument. The fair value of this derivative instrument is analyzed each period and should not be relied upon to produce changes of this magnitude on an on-going basis as it could also result in a non-cash expense or benefit in future periods. The fair value of the embedded conversion feature will become equity upon conversion of the Series B Preferred Stock, or be reduced to zero upon redemption of the Series B Preferred Stock, as the case may be. For additional details on the derivative–embedded conversion feature, see Note 9: Capital Stock and Derivative Instruments and Note 13: Fair Value Measurement to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition to this change, several other items had a favorable impact on earnings for the three months ended September 30, 2017, including net revenues and decreased interest expense. Our revenues increased primarily due to improved earnings on our investment portfolio including the restricted cash equivalents. 2022.

Interest expense decreased as a result of the reduction in our Runoff Note balances discussed further below. The loss contract reserve decreased by $0.2 million in the three months ended September 30, 2017, as compared to $0.5 million in the three months ended September 30, 2016, resulting in a positive improvement to operating income. Underwriting expenses were lower on a comparative basis, primarily due to smaller increases in premium deficiency reserves in the three months ended September 30, 2017 as compared to increases in premium deficiency reserves during the three months ended September 30, 2016 as further described below in this Item 2 of Part I, under “Losses or Benefits Incurred and Losses and Loss Adjustment Expenses.”

For the nine months ended September 30, 2017, we reported net income attributable to common and participating stockholders of $21.4 million compared to net income attributable to common and participating stockholders of $47.8 million for the nine months ended September 30, 2016. This $26.4 million decline in net income attributable to common and participating stockholders, when comparing the nine months ended September 30, 2017 to the nine months ended September 30, 2016, is primarily the result of the change in fair value of an embedded derivative. This embedded derivative was recorded as a result of the variable conversion feature in our Series B Preferred Stock and the change in fair value is reflected on our condensed consolidated statements of operations as the other income or expense item “c~~hange in fair value of derivative embedded conversion feature”~~ which resulted in $31.2 million of other income for the nine months ended September 30, 2017, compared to other income of $62.6 million for the nine months ended September 30, 2016. This item is solely attributable to a change in fair value of the derivative embedded conversion feature, which is further described above. In addition to this change, the other large variance was the positive impact from the loss contract reserve decreasing by $5.6 million for the nine months ended September 30, 2017, as compared to $2.3 million in the same period in 2016.

The total revenue for the three and nine months ended September 30, 2017 was $2.3 million and $5.9 million, respectively, compared to revenue of $1.3 million and $4.2 million, respectively, for the three and nine months ended September 30, 2016. The increase in revenue is attributable to improved earnings on our investment portfolio including the restricted cash equivalents, however, WMMRC continues to experience decreasing premium revenue due to operating in runoff mode. In addition, because WMMRC is operating in runoff mode, we expect premiums-earned revenue to continue to decrease, as no new business is being undertaken.

Underwriting expenses (defined as losses and loss adjustment expenses and ceding commission expenses) decreased by $0.2 million to a $0.1 million expense for the three months ended September 30, 2017 compared to an expense of $0.3 million for the three months ended September 30, 2016. Underwriting expenses decreased by $0.6 million to a $0.3 million expense for the nine months ended September 30, 2017 compared to an expense of $0.9 million for the nine months ended September 30, 2016. This decrease was primarily the result of the $0.5 million and $1.0 million additional premium deficiency reserves which were recordedincreased during the three and nine months ended September 30, ~~2016, respectively,~~2023 as compared to ~~a minimal~~2022 primarily due to the senior note assumed from the acquisition of Home Point.

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The change ~~and a $0.2 million increase~~in other income (expense), net, in the ~~premium deficiency reserve during~~three months ended September 30, 2023 as compared to 2022 was primarily due to a preliminary bargain purchase gain of $96 recorded in the ~~three and~~third quarter of 2023 upon completion of the Home Point Transaction, partially offset by a loss of $35 related to fair value changes in certain equity investments. The change in other income (expense), net, in the nine months ended September 30, ~~2017, respectively. These changes in expense are related~~2023 as compared to the operation of WMMRC in runoff mode and the corresponding decrease in revenues and the change in premium deficiency reserves as further described below in this Item 2 of Part I under “Losses or Benefits Incurred and Losses and Loss Adjustment Expenses.” As more fully described in Note 2: Significant Accounting Policies to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q,2022 was primarily due to a gain of $223 that was recorded in the ~~current condition~~first quarter of 2022 upon completion of the ~~mortgage insurance market, WMMRC has recorded reserves based~~Sagent Transaction.

Liquidity and Capital Resources

We measure liquidity by unrestricted cash and availability of collateralized borrowing capacity on ~~ceded case reserves~~our MSR and ~~incurred but not recorded (“IBNR”) loss levels established~~other debt facilities. We held cash and ~~reported by the primary mortgage guaranty carriers as~~cash equivalents on hand of ~~each reporting period. Management believes that its estimate of aggregate liability for unpaid losses and loss adjustment expenses~~$553 as of September 30, ~~2017 represents its best estimate, based upon the available data, of the amount necessary to cover the current cost of losses.~~

~~As of September 30, 2017, the loss contract reserve was analyzed and determined to have a value of zero~~2023 compared to ~~$5.6 million at~~$527 as of December 31, ~~2016. The value of~~2022. During the ~~loss contract reserve decreased by $0.2 million and $5.6 million, respectively, during the three and~~ nine months ended September 30, ~~2017~~2023, we generated net cash of $772 from operating activities and ~~decreased by $0.5~~bought back 4.3 million shares of our outstanding common stock for a total cost of $204 as part of our stock repurchase program. We have sufficient borrowing capacity to support our operations. As of September 30, 2023, total available borrowing capacity for advance, warehouse, and ~~$2.3 million during~~MSR facilities was $11,451, of which $2,119 was collateralized and immediately available to draw. During the ~~three and~~ nine months ended September 30, ~~2016, respectively. Consequently, there was a related reduction~~2023, we increased capacity on our MSR facilities by $2,600.

There have been no significant changes to our sources and uses of ~~expenses due to the change~~cash as disclosed in ~~value of the loss contract reserve~~our Annual Reports on Form 10-K for the ~~three and nine months~~year ended ~~September 30, 2017.~~ December 31, 2022.

Cash Flows

The loss contract reserve was established at a value of $63.1 million on March 19, 2012 as a result of our reorganization. The loss contract reserve decrease during the three and nine months ended September 30, 2017 is attributed primarilytable below presents cash flows information:

Table 14. Cash Flows


	Nine Months Ended September 30,
	2023		2022		Change
Net cash attributable to:
Operating activities	$	772	$	3,144	$	(2,372)
Investing activities	(1,088)		(987)		(101)
Financing activities	318		(2,520)		2,838
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	2	$	(363)	$	365

Operating activities

Cash generated from operating activities decreased to changes in the expected timing of assets being released from trust accounts held at WMMRC. For more information see Note 14: Subsequent Events to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

For the three and nine months ended September 30, 2017, our investment portfolio reported net investment income of $1.9 million and $4.8 million, respectively, as compared to net investment income of $0.5 million and $1.7 million, respectively, for the three and nine months ended September 30, 2016. The increase in investment income is primarily the result of higher short term interest rates during 2017 compared to 2016. The components of the investment income are more fully described below in this Item 2 of Part I, under “Net Investment Income.”

~~General and Administrative Expenses~~

For the three and nine months ended September 30, 2017 our general and administrative expenses totaled $2.1 million and $5.9 million, respectively, compared to $1.4 million and $4.9 million for the three and nine months ended September 30, 2016. General and administrative expenses primarily increased due to expenses related to assistance with transaction sourcing and debt and equity restructuring activities.

~~Interest Expense~~

For the three and nine months ended September 30, 2017, we incurred $0.6 million and $1.8 million, respectively, of interest expense on the Second Lien Notes, which is further described below in this Item 2 of Part I, under “Notes Payable.” This compares to $0.6 million and $2.0 million of interest expense, all of which related to the Second Lien Notes, which was incurred during the three and nine months ended September 30, 2016, respectively. The interest related to Second Lien Notes decreased primarily due to the reduction of Second Lien Note principal balances by $18.8 million$772 during the nine months ended September 30, ~~2017 and~~2023 from $3,144 in 2022. The decrease was primarily due to a decline of $4,235 in cash generated from originations net sales activities driven by ~~$2.9 million~~higher mortgage rates, partially offset by a decrease of $1,920 in cash used for the repurchase of loan assets out of Ginnie Mae securitizations.

Investing activities

Cash used in investing activities increased to $1,088 during the year ended December 31, 2016. Because sufficient Runoff Proceeds have not always been available to pay accrued interest on the Runoff Notes, a portion of our obligation to pay interest on the Runoff Notes has been satisfied using the “pay-in-kind” or “PIK” feature available under the Indentures. The accrued interest is converted to PIK Notes at the next payment date if there is not sufficient cash available to satisfy the required interest payment. For the nine months ended September 30, ~~2017~~2023 from $987 in 2022. The increase was primarily due to cash used of $522 for acquisitions of business in 2023 related to the Roosevelt Transaction and ~~2016, no PIK Notes were issued~~Home Point Transaction, partially offset by a decrease of $184 in ~~satisfaction~~cash used for the purchase of ~~our obligation to pay interest~~mortgage servicing rights in 2023 and an increase of $276 in cash generated from the proceeds on ~~the Second Lien Notes. For~~sale of mortgage servicing rights in 2023.

Financing activities

Our financing activities generated cash of $318 during the nine months ended September 30, ~~2017 and September 30, 2016, respectively, $2.0 million and $2.0 million,~~2023 compared to cash used of ~~interest~~$2,520 in 2022. The change was ~~paid~~primarily due to a net borrowing of $617 in ~~cash.~~

~~Unrealized Gain (Loss) on Change in Fair Value of Derivative~~

The fair value of the derivative embedded conversion feature is revalued each reportable balance sheet date with the decrease or increase in fair value being reported in the consolidated statements of operations as unrealized gain or (loss) on change in fair value of derivative embedded conversion feature, respectively. The primary factors affecting the fair value of the embedded conversion feature are the probability of occurrence and timing of a Qualified Acquisition, our stock price and our stock price volatility. During the three and nine months ended September 30, 2017, the fair value of the asset increased by $38.6 million and $31.2 million, respectively, and unrealized income was recorded. During the three and nine months ended September 30, 2016, the fair value of the liability increased by $16.2 million and decreased by $62.6 million, respectively, resulting in the recognition of a respective unrealized loss and gain.

~~Net Income (Loss)~~

~~The net operating (loss) income for the three and nine months ended September 30, 2017 totaled an operating loss of $0.3 million and operating income of $3.5 million, respectively,~~2023 compared to net ~~operating losses~~repayment of ~~$0.4 million~~$1,933 in 2022 on our advance, warehouse and ~~$1.3 million, respectively, for the three~~MSR facilities.

Capital Resources

Capital Structure and ~~nine months ended September 30, 2016.~~

~~For the three~~Debt

We require access to external financing resources from time to time depending on our cash requirements, assessments of current and ~~nine months ended September 30, 2017, we reported net income attributable to common~~anticipated market conditions and participating stockholders of $33.9 million and $21.4 million, respectively. This result compares to net loss attributable to common and participating stockholders of $21.1 million and net income attributable to common and participating stockholders $47.8 million, for the three and nine months ended September 30, 2016, respectively.

The primary factors impacting the change in net operating (loss) income and the change in net income (loss) attributable to common and participating stockholders for the three and nine months ended September 30, 2017 compared to the results for the three and nine months ended September 30, 2016, are summarized in the tables below.

Three months ended September 30, 2017 versus three months ended September 30, 2016 summary of change in net operating (loss) income and net income (loss) attributable to common and participating stockholders (in thousands):

Three months
ended
September 30, 2017

Three months
ended
September 30, 2016

Percentage change favorable
(unfavorable)

Dollar value change
favorable
(unfavorable)

Net revenues
$
2,287

$
1,284

78
%

$
1,003

Underwriting expense (net)

92

258

64
%

166

General and administrative expenses

2,117

1,357

(56
%)

(760
)
Loss contract reserve reduction

(210
)

(565
)

(63
%)

(355
)
Interest expense

579

636

9
%

57

Net operating (loss)

(291
)

(402
)

28
%

111

Other income

123

—

N/A

123

Unrealized gain (loss) on change in value of derivative embedded conversion feature

38,579

(16,243
)

338
%

54,822

Redeemable convertible series B preferred stock dividends

(4,500
)

(4,500
)

0
%

—

Net income (loss) attributable to common and participating stockholders
$
33,911

$
(21,145
)

260
%

$
55,056

Nine months ended September 30, 2017 versus nine months ended September 30, 2016 summary of change in net operating (loss) and net income attributable to common and participating stockholders (in thousands):

Nine months
ended
September 30, 2017

Nine months
ended
September 30, 2016

Percentage change favorable
(unfavorable)

Dollar value change
favorable
(unfavorable)

Net revenues
$
5,929

$
4,173

42
%

$
1,756

Underwriting expenses (net)

344

936

63
%

592

General and administrative expenses

5,915

4,878

(21
%)

(1,037
)
Loss contract reserve reduction

(5,645
)

(2,362
)

139
%

3,283

Interest expense

1,788

1,994

10
%

206

Net operating income (loss)

3,527

(1,273
)

377
%

4,800

Other income

123

—

N/A

123

Unrealized gain on change in fair value of derivative liability - embedded conversion feature

31,226

62,587

(50
%)

(31,361
)
Redeemable convertible series B preferred stock dividends

(13,500
)

(13,500
)

0
%

—

Net income attributable to common and participating stockholders
$
21,376

$
47,814

(55
%)

$
(26,438
)

~~Comprehensive Income~~

~~The Company has no comprehensive income other than the net income disclosed in the condensed consolidated statement of operations.~~

~~Premiums Earned~~

The majority of WMMRC’s reinsurance contracts require premiums to be written and earned monthly. In a few cases, the premiums earned reflect the pro rata inclusion into income of premiums written over the life of the reinsurance contracts. Details of premiums earned are provided in the following table:

Three months
ended
September 30, 2017

Three months
ended
September 30, 2016

Nine months
ended
September 30, 2017

Nine months
ended
September 30, 2016

Premiums assumed
$
342

$
739

$
866

$
1,963

Change in unearned premiums

2

47

237

463

Premiums earned
$
344

$
786

$
1,103

$
2,426

For the three and nine months ended September 30, 2017, premiums earned totaled $0.3 million and $1.1 million, respectively, a decrease of $0.5 million and $1.3 million, respectively, when compared to premiums earned of $0.8 million and $2.4 million, respectively, for the three and nine months ended September 30, 2016. The Company’s premiums earned are expected to continue to decrease due to WMMRC operating in runoff mode.

~~Losses or Benefits Incurred and Losses and Loss Adjustment Expenses~~

Losses incurred include losses paid and changes in loss reserves, including reserves for IBNR losses, premium deficiency reserves net of actual and estimated loss recoverable amounts. Details of net losses or benefits incurred for the three and nine months ended September 30, 2017 and September 30, 2016, respectively, are provided in the following table:

Three months
ended
September 30, 2017

Three months
ended
September 30, 2016

Nine months
ended
September 30, 2017

Nine months
ended
September 30, 2016

Losses and loss adjustment expense
$
48

$
183

$
207

$
702

~~We establish reserves for each contract based on estimates of the ultimate~~after-tax cost of ~~all losses~~capital. If needed, we believe additional capital could be raised through a combination of issuances of equity, corporate indebtedness, asset-backed acquisition financing and/or cash from operations. Our access to capital markets can be impacted by factors outside our control, including ~~losses incurred but not reported. These estimated~~economic conditions.

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Financial Covenants

Our credit facilities contain various financial covenants, which primarily relate to required tangible net worth amounts, liquidity reserves, leverage requirements, and profitability requirements, which are ~~based on reports received from ceding companies, industry data and historical experience~~measured at our primary operating subsidiary, Nationstar Mortgage LLC, as well as Rushmore Loan Management Services, LLC, which was acquired during the third quarter of 2023 in connection with the Roosevelt Transaction. As of September 30, 2023, we were in compliance with our required financial covenants.

Seller/Servicer Financial Requirements

We are also subject to net worth, liquidity and capital ratio requirements established by the Federal Housing Finance Agency (“FHFA”) for Fannie Mae and Freddie Mac (“Enterprises”) Seller/Servicers, and Ginnie Mae for single family issuers, as summarized below. These requirements apply to our operating subsidiaries, Nationstar Mortgage LLC, and Rushmore Loan Management Services, LLC.

Minimum Net Worth

•FHFA - a net worth base of $2.5 plus a dollar amount equal to or exceeding the sum of (i) 25 basis points of the sellers/servicer’s residential first lien mortgage servicing UPB, serviced for the Enterprises, plus (ii) 25 basis points of non-agency serviced UPB, plus (iii) 35 basis points of the sellers/servicer’s residential first lien mortgage servicing UPB serviced for Ginnie Mae.

•Ginnie Mae - a net worth equal to the sum of $2.5, plus (i) 35 basis points of the issuer’s total effective Ginnie Mae single-family outstanding obligations, plus (ii) 25 basis points of the issuer’s total Enterprises single family outstanding servicing portfolio balance, plus (iii) 25 basis points of the issuer’s total non-agency single family servicing portfolio.

Minimum Liquidity

•FHFA - a base Liquidity of eligible assets equal to or exceeding:

◦7 basis points of sellers/servicer’s residential first lien mortgage servicing UPB serviced for the Enterprises, if the seller/servicer remits (or an Enterprise draws) interest or principal, or both, as scheduled, regardless of whether principal or interest has been collected from the borrower, plus

◦3.5 basis points of the sellers/servicer’s residential first lien mortgage servicing UPB serviced for the Enterprises, if the seller/servicer remits (or an Enterprise draws) the interest and principal only as actually collected from the borrower, plus

◦3.5 basis points of the seller/servicer’s non-agency servicing UPB, plus

◦10 basis points of the seller/servicer’s residential first lien mortgage servicing UPB serviced for Ginnie Mae.

◦In addition, an origination liquidity equal to or exceeding 50 basis points of the sum of the following (effective December 31, 2023):

i.Residential first lien mortgages held for sale, at lower of cost or market

ii.Residential first lien mortgages held for sale, at fair value, plus

iii.UPB of interest rate lock commitments after fallout adjustments

◦Supplemental liquidity at all time equal to or exceeding the sum of (effective December 31, 2023):

i.2 basis points of the sellers/servicer’s residential mortgage servicing UPB serviced for the Enterprises, plus

ii.5 basis points of the sellers/servicer’s residential mortgage servicing UPB serviced for Ginnie Mae

•Ginnie Mae – the greater of $1 or the sum of:

◦10 basis points of the issuer’s outstanding Ginnie Mae single-family servicing UPB, plus

◦3.5 basis points of the issuer’s outstanding Enterprises single family servicing UPB, if the issuer remits (or the Enterprise draws) the principal and interest only as actually collected from the borrower, plus

◦7 basis points of the Issuer’s outstanding Enterprises single-family servicing UPB, if the issuer remits (or the Enterprise draws) the principal or interest, or both, as scheduled, regardless of whether principal or interest has been collected from the borrower, plus

◦3.5 basis points of the issuer’s outstanding non-agency single-family servicing UPB.

•Ginnie Mae - issuers that originated more than $1 billion in UPB of any residential first mortgage in the recent four-quarter period must have liquid assets equal to the greater of at least $1 or the sum of the points listed immediately above, plus (effective December 31, 2023):

◦50 basis points of loans held for sale, plus

◦50 basis points of the issuer’s UPB of IRLCs after fallout adjustments

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Minimum Capital Ratio

•FHFA and Ginnie Mae - a ratio of Tangible Net Worth to Total Assets greater than 6%.

Secured Debt to Gross Tangible Asset Ratio

•Ginnie Mae - a secured debt to gross tangible asset ratios no greater than 60%.

As of September 30, 2023, Nationstar Mortgage, LLC and Rushmore Loan Management Services, LLC were in compliance with our seller/servicer financial requirements for FHFA and Ginnie Mae.

In 2022, the FHFA and Ginnie Mae revised its Seller/Servicers and single-family issuers minimum financial eligibility requirements. All revisions are effective in 2023 or 2024, as summarized below. The Company is currently evaluating the impact of the revised requirements and does not anticipate the revised requirements to have significant impact on its ability to meet financial eligibility requirements.

Financial Reporting Requirements (effective December 31, 2023)

•FHFA – must obtain an assessment of the seller/servicer’s performance and creditworthiness by a qualified, independent third party on an annual basis and meet the following criteria:

◦One primary servicer rating or master servicer rating, as applicable for large non-depository institutions that have greater than or equal to $50 billion in servicing UPB, and

◦One primary servicer rating or master servicer rating, as applicable, and one third party long-term senior unsecured debt rating or long-term corporate family rating, for large non-depository institutions that have greater than $100 billion in servicing UPB, and

◦One primary servicer rating or master servicer rating, as applicable, and issued by two rating agencies, each of which must issue either a third party long-term unsecured debt rating or long-term corporate family rating for large non-depository institutions that have greater than or equal to $150 billion in servicing UPB.

Capital Requirements (effective December 31, 2024)

•Ginnie Mae – a Risk-based Capital Ratio (“RBCR”) of at least 6%. RBCR is adjusted net worth less excess MSRs divided by total risked-based assets

Since our Ginnie Mae single-family servicing portfolio for Nationstar Mortgage LLC exceeds $75 billion in UPB, we are also required to obtain an external primary servicer rating and issuer credit ratings from two different rating agencies and receive a minimum rating of a B or its equivalent. We met this requirement for all financial periods presented.

In addition, Fannie Mae or Freddie Mac may require capital ratios in excess of stated requirements. Refer to Note 15, Capital Requirements, in the Notes to the Condensed Consolidated Financial Statements for additional information.

Table 15. Debt


	September 30, 2023		December 31, 2022
Advance facilities principal amount	$	548	$	669
Warehouse facilities principal amount	817		817
MSR facilities principal amount	2,195		1,410
Unsecured senior notes principal amount	3,200		2,700

Advance Facilities

As part of our normal course of business, we borrow money to fund servicing advances. Our servicing agreements require that we advance our own ~~actuarial estimates. Quarterly,~~funds to meet contractual principal and interest payments for certain investors, and to pay taxes, insurance, foreclosure costs and various other items that are required to preserve the assets being serviced. Delinquency rates and prepayment speeds affect the size of servicing advance balances, and we ~~review these estimates~~exercise our ability to stop advancing principal and interest where the pooling and servicing agreements permit, where the advance is deemed to be non-recoverable from future proceeds. These servicing requirements affect our liquidity. We rely upon several counterparties to provide us with financing facilities to fund a portion of our servicing advances. As of September 30, 2023, we had a total borrowing capacity of $925, of which we could borrow an additional $377.

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Warehouse and MSR Facilities

Loan origination activities generally require short-term liquidity in excess of amounts generated by our operations. The loans we originate are financed through several warehouse lines on a ~~contract by contract basis~~short-term basis. We typically hold the loans for approximately 30 days and ~~adjust~~then sell or place the ~~estimates~~loans in government securitizations in order to repay the borrowings under the warehouse lines. Our ability to fund current operations depends upon our ability to secure these types of short-term financings on acceptable terms and to renew or replace the financings as ~~we deem necessary based on updated information~~they expire. Our MSR facilities provide financing for our servicing portfolio and ~~our internal actuarial estimates.~~

~~For the three and nine months ended~~investments. As of September 30, ~~2017,~~2023, we had a total borrowing capacity of $5,226 and $5,300 for warehouse and MSR facilities, of which we could borrow an additional $4,409 and $3,105, respectively.

Unsecured Senior Notes

In 2020 and 2021, we completed offerings of unsecured senior notes with maturity dates ranging from 2027 to 2031. In connection with the ~~loss ratios were 14% and 19%~~Home Point transaction in the third quarter of 2023, we assumed an unsecured senior note with a maturity date in 2026. We pay interest semi-annually to the holders of these notes at interest rates ranging from 5.000% to 6.000%. For more information regarding our indebtedness, see Note 10, Indebtedness, ~~respectively, compared~~in the Notes to ~~loss ratios~~the Condensed Consolidated Financial Statements.

Contractual Obligations

As of ~~23% and 29%, respectively, for the three and nine months ended~~ September 30, ~~2016. The loss or benefit ratio is calculated by dividing incurred benefit or losses for~~2023, no material changes to our outstanding contractual obligations were made from the ~~period by earned premiums. The ratio provides a measure of underwriting profit or loss. Loss reinsurance contracts (which represent the significant majority of~~amounts previously disclosed in our loss exposure) are generally structured with limits set on the aggregate amount of losses that can be incurred over the life of such contract. Upon reaching such limits, no additional losses may be realized under the terms of the contract. Nevertheless, even when applicable contract limits are reached, revenues from premiums collected continue to be ceded for the remaining life of the contract. Beginning in 2013, a majority of WMMRC’s reinsurance arrangements for the 2006 through 2008 book years reached their respective loss limits. As a result, WMMRC does not expect to incur any additional losses for those book years; however, WMMRC may continue to realize revenues from those book years, to the extent premiums are ceded therefrom.

~~The components of the liability for losses and loss adjustment reserves are as follows at September 30, 2017 and December 31, 2016, respectively:~~

September 30, 2017

December 31, 2016

Case-basis reserves
$
174

$
553

IBNR reserves

1

—

Premium deficiency reserves

530

258

Total losses and loss adjustment reserves
$
705

$
811

~~Losses and loss adjustment reserve activity are as follows for the periods ended September 30, 2017 and December 31, 2016, respectively:~~

Nine months ended
September 30, 2017

Year ended
December 31, 2016

Balance at beginning of period
$
811

$
5,063

Incurred (released) - prior periods

207

(669
)
Paid or terminated - prior periods

(313
)

(3,583
)
Total losses and loss adjustment reserves
$
705

$
811

~~Net Investment Income~~

The increase in investment income during the three and nine months ended September 30, 2017 compared to the same periods in 2016 is primarily the result of higher short term interest rates during 2017 as compared to 2016. A summary of our net investment income for the periods ended September 30, 2017 and 2016, respectively, is as follows:

Three months
ended
September 30, 2017

Three months
ended
September 30, 2016

Nine months
ended
September 30, 2017

Nine months
ended
September 30, 2016

Investment income:

Amortization of premium or discount on fixed-maturity securities
$
(32
)

$
(74
)

$
(108
)

$
(247
)
Investment income on fixed-maturity securities

72

233

403

792

Interest income on cash and cash equivalents

1,895

405

4,527

1,100

Realized net (loss) gain from sale of investments

(36
)

18

(63
)

19

Unrealized gain (loss) on trading securities held at period end

44

(84
)

67

83

Net investment income
$
1,943

$
498

$
4,826

$
1,747

~~Federal Income Taxes~~

The Company has no current tax expense or liability due as a result of its tax loss position for periods ended September 30, 2017, September 30, 2016 and December 31, 2016. More detailed information regarding the Company’s tax position including NOL carry-forwards is provided in Note 6: Income Taxes to the consolidated financial statements in Item 8 of the Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022.

Critical Accounting Policies and Estimates

Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and ~~in Note 5: Income Taxes~~other subjective assessments. In particular, we have identified the following policies that, due to the judgment, estimates and assumptions inherent in those policies, are critical to an understanding of our condensed consolidated financial statements. These policies relate to fair value measurements, particularly those determined to be Level 3 as discussed in Note 14, Fair Value Measurements, in the Notes to the Condensed Consolidated Financial Statements and valuation and realization of deferred tax assets. We believe that the judgment, estimates and assumptions used in the preparation of our condensed consolidated financial statements are appropriate given the factual circumstances at the time. However, given the sensitivity of these critical accounting policies on our condensed consolidated financial statements, the use of other judgments, estimates and assumptions could result in ~~Part I, Item 1~~material differences in our results of ~~this Quarterly Report~~operations or financial condition. Fair value measurements considered to be Level 3 representing estimated values based on ~~Form 10-Q.~~

The Company files a consolidated federal income tax return. Pursuant to a tax sharing agreement, WMMRC’s federal income tax liability is calculated on a separate return basis determined by applying 35% to taxable income, in accordance with the provisions of the Internal Revenue Code (the “Code”) that apply to mortgage insurance companies. WMIH, as WMMRC’s parent, pays federal income taxes on behalf of WMMRC and settles the federal income tax obligation on a current basis in accordance with the tax sharing agreement. WMMRC made no tax payments to WMIH during the periods ended September 30, 2017 and December 31, 2016 associated with the Company’s tax liability from the current or preceding periods.

~~Deferred federal income taxes arise from temporary differences between~~significant unobservable inputs primarily include (i) the valuation of ~~assets~~MSRs, and ~~liabilities as determined for financial reporting purposes~~(ii) the valuation of excess spread financing. For further information on our critical accounting policies and ~~income tax purposes. Temporary differences principally relate~~estimates, please refer to ~~discounting of loss reserves, recognition of unearned premiums, changes in value of loss contract reserves and embedded derivatives, net operating losses and unrealized gains and losses~~the Company’s Annual Reports on ~~investments.~~

We believe WMIH experienced an ownership change under Section 382 of the Code in connection with its bankruptcy plan becoming effective. Prior to emergence from bankruptcy, WMI abandoned the stock of Washington Mutual Bank, thereby generating a worthless stock deduction of approximately $8.37 billion, which gave rise to a NOL carry-forwardForm 10-K for the year ended December 31, ~~2012. We believe that the total available~~2022. There have been no material changes to our critical accounting policies and ~~utilizable NOL carry-forward at~~estimates since December 31, ~~2016~~2022.

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Other Matters

Recent Accounting Developments

Below lists recently issued accounting pronouncements applicable to us but not yet adopted.

Accounting Standards Update 2020-04, 2021-01 and 2022-06, collectively implemented as Accounting Standards Codification Topic 848 (“ASC 848”), Reference Rate Reform provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contract modifications, hedge accounting and other transactions affected by the transitioning away from reference rates that are expected to be discontinued, such as interbank offered rates and the London Inter-Bank Offered Rate (“LIBOR”). If LIBOR ceases to exist or if the methods of calculating LIBOR change from current methods for any reasons, interest rates on our floating rate loans, obligation derivatives, and other financial instruments tied to LIBOR rates, may be affected and need renegotiation with its lenders. In January 2021, ASU 2021-01 was ~~approximately $6.0 billion and at September 30, 2017 we believe~~issued to clarify that ~~there~~all derivative instruments affected by changes to the interest rates used for discounting, margining alignment due to reference rate reform are in scope of ASC 848. In December 2022, ASU 2022-06 was ~~no limit under Section 382~~issued to defer the sunset date of ~~the Code on the use of these NOLs. As of September 30, 2017 and~~Topic 848 from December 31, ~~2016,~~2022 to December 31, 2024. The guidance was effective upon issuance and may be applied prospectively to contract modifications, existing hedging relationships and other impacted transactions through December 31, 2024. The guidance in ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. At present, the Company ~~recorded a valuation allowance equal~~has limited exposure to ~~100% of the net deferred federal income tax asset due to uncertainty regarding the Company’s ability to realize these benefits in the future.~~

~~On November 2, 2017, the Ways and Means Committee of the U.S. House of Representatives introduced a bill containing various amendments~~LIBOR based index rates. Due to the Internal Revenue Code, including, among other things changes to corporate income tax rates and certain provisions governing NOLs. There can be no assurance that the bill will be approved in its current form or at all and the final form of any tax legislation that is enacted could contain provisions that adversely affect the utility or potential valueshort-term maturities of the Company’s ~~NOLs.~~

~~Investments~~

~~General~~

~~We hold investments at both WMIH~~advance, warehouse and ~~WMMRC~~MSR facilities, substantially all the Company’s facilities have matured and ~~the two portfolios consist entirely of fixed income~~transitioned away from LIBOR to alternative reference rates in 2022 when renewed. In addition, our derivative financial instruments ~~excluding funds in overnight money market funds, totaling $10.4 million and $76.8 million as of September 30, 2017 and December 31, 2016, respectively.~~are not tied to LIBOR rates. The Company ~~held $577.2 million and $572.9 million of restricted cash from the Series B Preferred Stock Financing in its escrow account at September 30, 2017 and December 31, 2016, respectively.~~

The value of the consolidated Company’s total cash and investments decreased during the nine months ended September 30, 2017. Cash and investments, which excludes restricted cash of $577.2 million and $573.3 million at September 30, 2017 and December 31, 2016, respectively, totaled $42.8 million and $81.5 million at September 30, 2017 and December 31, 2016, respectively. The primary factors that contributed to this decrease in investments were (i) the payment of a total of $13.5 million in Series B Preferred Stock cash dividends during the nine months ended September 30, 2017; and (ii) the redemption in full of the $18.8 million of Second Lien Notes which were outstanding at December 31, 2016, and the payment of related interest of approximately $2.0 million.

We work with investment broker dealers and, in the case of WMMRC, collateral trustees, in determining whether a market for a financial instrument is active or inactive. We regularly obtain indicative pricing from market makers and from multiple dealers and compare the level of pricing variances as a way to observe market liquidity for certain investment securities. We also obtain trade history and live market quotations from publicly quoted sources, such as Bloomberg, for trade volume and frequency observation. While we obtain market pricing information from broker dealers, the ultimate fair value of our investments is based on portfolio statements provided by financial institutions that hold our accounts.

During the nine months ended September 30, 2017 and the year ended December 31, 2016, we transferred $0.9 million and $11.0 million, respectively, of corporate securities that mature within 12 months from Level 2 to Level 1, due to improved liquidity in capital markets for those securities. Please refer to Note 4: Investment Securities to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, for additional information regarding our investment securities.

~~WMIH~~

WMIH’s investments are valued at fair value and any unrealized gains or losses are reflected in net investment income in the condensed consolidated statements of income. At September 30, 2017 and at December 31, 2016, WMIH had zero and $45.0 million, respectively, of investments in obligations of U.S. government sponsored enterprises, all of which will mature within the respective next 12 months. WMIH also had $25.0 million and $2.1 million in cash and cash equivalents at September 30, 2017 and December 31, 2016, respectively.

~~WMMRC~~

WMMRC’s investments are valued at fair value and any unrealized gains or losses are reflected in net investment income in the condensed consolidated statements of operations. At September 30, 2017, approximately 89% of WMMRC’s cash and investments were held in four trusts for the benefit of primary mortgage insurers with whom WMMRC established agreements to reinsure private mortgage insurance risk. The total portfolio, excluding funds in overnight money market instruments, was valued at approximately $10.4 million and $31.9 million at September 30, 2017 and December 31, 2016, respectively. At September 30, 2017, approximately 90% of the portfolio consisted of securities that will mature within the next 12 months and the remainder of the securities will mature between one and two years from September 30, 2017. WMMRC also had $7.3 million in cash and cash equivalents at September 30, 2017.

~~Liquidity and Capital Resources~~

~~General~~

WMIH is organized as a holding company and has limited operations of its own. With respect to its own operations, WMIH’s continuing cash needs are limited to the payment of general and administrative expenses, costs related to possible acquisitions, dividends on the Series B Preferred Stock and, prior to the redemption thereof, principal and interest payments on the Second Lien Notes described below in this Item 2 of Part I, under “Notes Payable.” ~~As of September 29, 2017, the Second Lien Notes were fully redeemed by the Company and, as of October 2, 2017, the Second Lien Indenture was satisfied and discharged.~~

Our significant business operations are conducted through our wholly-owned reinsurance subsidiary, WMMRC, which formerly underwrote risks associated with our mortgage reinsurance programs, but has been operated in runoff and has not written any new business since September 26, 2008. There are restrictions on WMMRC’s ability to pay dividends which are described in more detail below. WMIH does not ~~currently~~ expect ~~to pay dividends on its common shares.~~

WMMRC may seek opportunities to commute one or more of its remaining reinsurance agreements, with a view toward accelerating the distribution of trust assets in excess of the amount needed to pay claims. Any such distributions would be available for general corporate purposes. ~~There can be no assurance that any such commutations will be consummated, or if so, on what terms.~~

~~In regard to the Series B Preferred Stock, we are required (if~~ASU 2020-04 and ~~when declared by our Board and until the Series B Preferred Stock is converted, redeemed or repurchased)~~ASU 2021-01 to pay cumulative regular dividends out of funds legally available therefor at an annual rate of 3% per share of the liquidation preference of $1,000 per share of Series B Preferred Stock. WMIH has declared and paid $13.5 million, $13.5 million and $18.0 million of dividends on its Series B Preferred Stock during the nine months ended September 30, 2017 and 2016 and the year ended December 31, 2016, respectively, and has accrued an additional $0.7 million of dividends based on the 3% interest rate during each of the periods ended September 30, 2017 and 2016 and the year ended December 31, 2016, respectively.

The repayment of $18.8 million of Second Lien Notes and the $13.5 million in dividends on our Series B Preferred Stock were our largest uses of cash during the nine months ended September 30, 2017. The Second Lien Notes have been paid in full, however, the dividend obligation is likely to continue to be a significant financial obligation of the Company until we either consummate a Qualified Acquisition or redeem or repurchase the Series B Preferred Stock.

Unless we consummate a Qualified Acquisition, or enter into a definitive agreement to consummate an Acquisition (or the Series B Redemption Date is extended in accordance with the terms of the Series B Preferred Stock), we will be required to redeem the Series B Preferred Stock on the Series B Redemption Date. Consummation of an Acquisition would cause the conversion into common stock of shares of Series B Preferred Stock having an aggregate liquidation preference equal to the cash proceeds utilized in the Acquisition (unless the Acquisition is a Qualified Acquisition, in which case all of the Series B Preferred Stock would be converted into common stock). The redemption of the Series B Preferred Stock would substantially deplete our available cash for acquisitions and business operations; could have a material ~~adverse effect~~impact on our financial condition; and could adversely impact our ability to continue business operations. While we continue to work diligently to identify and consummate an Acquisition, there can be no assurance that we will consummate, or enter into a definitive agreement to consummate, an Acquisition prior to the Series B Redemption Date.

In connection with the foregoing, and because we are mindful of the adverse consequences that could result upon a redemption of the Series B Preferred Stock, our Finance Committee and management have been working with financial advisors in an effort to amend and extend the terms of the Series B Preferred Stock. We can provide no assurance we will be able to restructure, amend or refinance the Series B Preferred Stock and, if so, on what terms. For additional information regarding the foregoing, please see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Our Business Strategy and Operating Environment”.

~~Liquidity Management~~

The objective of liquidity management is to ensure the Company has the continuing ability to maintain cash flows that are adequate to fund operations and meet obligations and other commitments on a timely and cost-effective basis. The Company establishes and maintains liquidity guidelines for WMIH as well as for WMMRC, its principal operating subsidiary. Funds held by WMMRC are not available to WMIH to satisfy its liquidity needs. Any dividend or payment by WMMRC to WMIH must be approved by the Insurance Division of the State of Hawaii. In light of the restrictions on dividends applicable to WMMRC, WMIH’s principal sources of liquidity are its unrestricted investments, investment income derived from these investments and fees paid to WMIH by WMMRC with respect to services provided pursuant to the two services agreements approved by the Insurance Division of the State of Hawaii. Additionally, WMIH also has approximately $577.2 million of restricted cash held in escrow, which was received by WMIH in connection with the Series B Preferred Stock Financing. Because of the runoff nature of WMMRC’s business, as discussed above, all cash available to WMMRC is primarily used to pay reinsurance losses and loss adjustment expenses, ceding commissions, dividends to WMIH to pay interest and principal obligations on the Runoff Notes (prior to the full redemption which occurred on September 29, 2017), and general and administrative expenses.

The Company monitors operating activities, forecasts liquidity needs and adjusts composition of investment securities in order to address liquidity needs. The Company currently has negative monthly cash flows primarily due to loss expenses at WMMRC, general and administrative costs and dividend payments on the Series B Preferred Stock. As a result, the Company maintains a very high quality and short duration investment portfolio in order to match its liability profile at both levels of the consolidated organization.

WMMRC has net assets totaling $17.7 million and $33.8 million as of September 30, 2017 and December 31, 2016, respectively. These net assets are not immediately available for distribution to WMIH due to restrictions imposed by the trust arrangements referenced above, and the requirement that the Insurance Division of the State of Hawaii must approve dividends from WMMRC. Distributions from WMMRC to WMIH were, prior to full redemption on September 29, 2017, further restricted by the terms of the Runoff Notes described in Note 7: Notes Payable to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q. Additionally, as more fully described in Note 14: Subsequent Events to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, a distribution from WMMRC to WMIH of up to $10.7 million was approved by the Insurance Division of the State of Hawaii on September 13, 2017.

~~Capital Structure and Management~~

WMIH’s capital structure consists of stockholders’ equity, Series B Preferred Stock proceeds held in escrow which is classified as mezzanine and no term debt as of September 30, 2017. We issued term debt of $130.0 million represented by the Runoff Notes on the Effective Date. The First Lien Notes were redeemed in their entirety on April 15, 2015 and the First Lien Indenture was satisfied and discharged on April 27, 2015. The Second Lien Notes were redeemed in their entirety on September 29, 2017 and the Second Lien Indenture was satisfied and discharged on October 2, 2017

On the Effective Date, all shares of common and preferred equity securities previously issued by WMI were cancelled and extinguished. Prior to reincorporation, WMIH was authorized to issue up to 500,000,000 shares of common stock and up to 5,000,000 shares of preferred stock, each with a par value of $0.00001 per share. Upon reincorporation in Delaware, which is more fully described in Note 1: The Company and its Subsidiaries to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, and pursuant to WMIH’s Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”), WMIH is authorized to issue up to 3,500,000,000 shares of common stock and up to 10,000,000 shares of preferred stock, each with a par value of $0.00001 per share. As of September 30, 2017, 206,714,132 shares of WMIH’s common stock were issued and outstanding, and 1,600,000 shares of its preferred stock were issued and outstanding.

On January 30, 2014, pursuant to an Investment Agreement, WMIH issued 1,000,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) for a purchase price of $11.1 million and warrants to purchase 61,400,000 shares of WMIH’s common stock, 30,700,000 of which have an exercise price of $1.32 per share and 30,700,000 of which have an exercise price of $1.43 per share. The Series A Preferred Stock has rights substantially similar to those associated with WMIH’s common stock, with the exception of a liquidation preference, conversion rights and customary anti-dilution protections. The Series A Preferred Stock has a liquidation preference equal to the greater of (i) $10.00 per one million shares of Series A Preferred Stock plus declared but unpaid dividends on such shares and (ii) the amount that the holder would be entitled to in a relevant transaction had the Series A Preferred Stock been converted to common stock of WMIH. The Series A Preferred Stock is convertible at a conversion price of $1.10 per share into shares of common stock of WMIH, either at the option of the holder or automatically upon transfer by KKR Fund Holdings L.P. (“KKR Fund”) to a non-affiliated party. As a result of the calculation of a beneficial conversion feature as required by Accounting Standards Codification 470, a preferred deemed dividend of $9.5 million was recorded in conjunction with the issuance of the Series A Preferred Stock. This preferred deemed dividend resulted in an increase to our accumulated deficit and an increase in additional paid in capital. Further, KKR Fund, as the holder of the Series A Preferred Stock and the warrants, has received other rights pursuant to the Investor Rights Agreement as more fully de~~scribed in~~ ~~Note 9: Capital Stock and Derivative Instruments to~~ our condensed consolidated financial ~~statements in Part I, Item 1~~statements.

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GLOSSARY OF TERMS

This Glossary of Terms defines some of the terms that are used throughout this ~~Quarterly Report on Form 10-Q.~~

~~On January 5, 2015, WMIH announced~~report and does not represent a complete list of all defined terms used.

Advance Facility. A secured financing facility to fund advance receivables which is backed by a pool of mortgage servicing advance receivables made by a servicer to a certain pool of mortgage loans.

Agency. Government entities guaranteeing the mortgage investors that ~~it had completed~~ the ~~Series B Preferred Stock Financing and issued 600,000 shares of Series B Preferred Stock for aggregate gross proceeds of $600.0 million, pursuant to~~ the Purchase Agreement with Citigroup Global Markets Inc. and KKR Capital Markets LLC (together the “Initial Purchasers”). In connection with the Series B Preferred Stock Financing, WMIH entered into an Escrow Agreement (the “Escrow Agreement”) with Citibank, N.A., as Escrow Agent, pursuant to which WMIH caused to be deposited with the Escrow Agent theprincipal amount of ~~$598.5 million representing~~ the net proceeds of the Series B Preferred Stock Financing less offering fees payable on January 5, 2015 but before payment of other offering fees and expenses (including fees contingent upon future events). These net proceedsloan will be ~~released~~repaid; the Federal Housing Administration, the Department of Veterans Affairs, the US Department of Agriculture and Ginnie Mae (and collectively, the “Agencies”)

Agency Conforming Loan. A mortgage loan that meets all requirements (loan type, maximum amount, LTV ratio and credit quality) for purchase by Fannie Mae, Freddie Mac, or insured by the FHA, USDA or guaranteed by the VA or sold into Ginnie Mae.

Asset-Backed Securities (“ABS”). A financial security whose income payments and value is derived from ~~escrow from time to time to WMIH as instructed~~and collateralized (or “backed”) by ~~WMIH~~a specified pool of underlying receivables or other financial assets.

Bulk acquisitions or purchases. MSR portfolio acquired on non-retained basis through an open market bidding process.

Base Servicing Fee. The servicing fee retained by the servicer, expressed in ~~amounts necessary to, among other things, explore and/or fund,~~basis points, in ~~whole or~~an excess MSR arrangement in ~~part, acquisitions, whether completed or not. The entire net proceeds will be released from escrow as instructed by WMIH as needed to consummate~~exchange for the provision of servicing functions on a ~~Qualified Acquisition.~~

~~In connection with~~portfolio of mortgage loans, after which the ~~Series B Preferred Stock Financing, WMIH filed with~~servicer and the ~~Secretary of State of Washington Articles of Amendment of Articles of Incorporation (the “Articles of Amendment”) containing~~co-investment partner share the ~~Certificate of Designation creating the Series B Preferred Stock and designating the rights and preferences of the Series B Preferred Stock.~~ Holders of shares of the Series B Preferred Stock are entitled to receive, when, as and if declared, cumulative regular dividends at an annual rate of 3% per share of the liquidation preference of $1,000 per share of Series B Preferred Stock, payable in cash. On each date that WMIH closes any Acquisition, outstanding shares of Series B Preferred Stock having an aggregate liquidation preference equal to the net proceeds of the offering utilized in such Acquisition (as defined below),excess fees on a pro rata ~~basis,~~basis.

Client. Owner of the underlying mortgage servicing rights on behalf of whom we service loans.

Conventional Mortgage Loans. A mortgage loan that is not guaranteed or insured by the FHA, the VA or any other government agency. Although a conventional loan is not insured or guaranteed by the government, it can still follow the guidelines of GSEs and be sold to the GSEs.

Correspondent lender, lending channel or relationship. A correspondent lender is a lender that funds loans in their own name and then sells them off to larger mortgage lenders. A correspondent lender underwrites the loans to the standards of an investor and provides the funds at close.

Customer. Residential mortgage borrower.

Delinquent Loan. A mortgage loan that is 30 or more days past due from its contractual due date.

Department of Veterans Affairs (“VA”). The VA is a cabinet-level department of the U.S. federal government, which guarantees certain home loans for qualified borrowers eligible for securitization with GNMA.

Direct-to-consumer originations (“DTC”). A type of mortgage loan origination pursuant to which a lender markets refinancing and purchase money mortgage loans directly to selected consumers through telephone call centers, the Internet or other means.

Excess Servicing Fees. In an excess MSR arrangement, the servicing fee cash flows on a portfolio of mortgage loans after payment of the base servicing fee.

Excess Spread. MSRs with a third-party co-investment partner where the servicer receives a base servicing fee and the servicer and co-investment partner share the excess servicing fees. This co-investment strategy reduces the required upfront capital from the servicer when purchasing or investing in MSRs.

Excess Yield. The remaining servicing fees above the minimum servicing fee (“GSE Base Servicing Fee”), as defined by the agencies, whereby the rights to the excess fees are separated, securitized by the GSE’s and sold, while we retain the obligation to service the loan and therefore continue to receive the GSE Base Servicing Fee.

Exchange inventory. Consists of Xome’s residential real estate inventory ranging from pre-foreclosure to bank-owned properties.

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Federal National Mortgage Association (“Fannie Mae” or “FNMA”). FNMA was federally chartered by the U.S. Congress in 1938 to support liquidity, stability, and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold. Fannie Mae buys mortgage loans from lenders and resells them as mortgage-backed securities in the secondary mortgage market.

Federal Housing Administration (“FHA”). The FHA is a U.S. federal government agency within the Department of Housing and Urban Development (HUD). It provides mortgage insurance on loans made by FHA-approved lenders in compliance with FHA guidelines throughout the United States.

Federal Housing Finance Agency (“FHFA”). A U.S. federal government agency that is the regulator and conservator of Fannie Mae and Freddie Mac and the regulator of the 12 Federal Home Loan Banks.

Federal Home Loan Mortgage Corporation (“Freddie Mac” or “FHLMC”). Freddie Mac was chartered by Congress in 1970 to stabilize the nation’s residential mortgage markets and expand opportunities for homeownership and affordable rental housing. Freddie Mac participates in the secondary mortgage market by purchasing mortgage loans and mortgage-related securities for investment and by issuing guaranteed mortgage-related securities.

Forbearance.An agreement between the mortgage servicer or lender and borrower for a temporary postponement of mortgage payments. It is a form of repayment relief granted by the lender or creditor in lieu of forcing a property into foreclosure.

Government National Mortgage Association (“Ginnie Mae” or “GNMA”). GNMA is a self-financing, wholly owned U.S. Government corporation within HUD. Ginnie Mae guarantees the timely payment of principal and interest on MBS backed by federally insured or guaranteed loans - mainly loans insured by the FHA or guaranteed by the VA. Ginnie Mae securities are the only MBS to carry the full faith and credit guarantee of the U.S. federal government.

Government-Sponsored Enterprise (“GSE”). Certain entities established by the U.S. Congress to provide liquidity, stability and affordability in residential housing. These agencies are Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.

Interest Rate Lock Commitments (“IRLC”). Agreements under which the interest rate and the maximum amount of the mortgage loan are set prior to funding the mortgage loan.

Investors. Our investors include agency investors and non-agency investors. Agency investors primarily consist of Government National Mortgage Association (“Ginnie Mae” or “GNMA”) and the GSEs, Federal National Mortgage Association (“Fannie Mae” or “FNMA”) and Federal Home Loan Mortgage Corp (“Freddie Mac” or “FHLMC”). Non-agency investors consist of investors in private-label securitizations.

Loan Modification. Temporary or permanent modifications to loan terms with the borrower, including the interest rate, amortization period and term of the borrower’s original mortgage loan. Loan modifications are usually made to loans that are in default, or in imminent danger of defaulting.

Loan-to-Value Ratio (“LTV”). The unpaid principal balance of a mortgage loan as a percentage of the total appraised or market value of the property that secures the loan. An LTV over 100% indicates that the UPB of the mortgage loan exceeds the value of the property.

Lock period. A set of periods of time that a lender will ~~automatically convert into shares~~guarantee a specific rate is set prior to funding the mortgage loan.

Loss Mitigation. The range of ~~WMIH’s common stock.~~servicing activities provided by a servicer in an attempt to minimize the losses suffered by the owner of a defaulted mortgage loan. Loss mitigation techniques include short-sales, deed-in-lieu of foreclosures and loan modifications, among other options.

Mortgage-Backed Securities (“MBS”). A type of asset-backed security that is secured by a group of mortgage loans.

Mortgage Servicing Right (“MSRs”). The right and obligation to service a loan or pool of loans and to receive a servicing fee as well as certain ancillary income. MSRs may be bought and sold, resulting in the transfer of loan servicing obligations. MSRs are designated as such when the benefits of servicing the loans are expected to adequately compensate the servicer for performing the servicing.

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MSR Facility. A line of credit backed by mortgage servicing rights that is used for financing purposes. In addition, on the date WMIH closes a Qualified Acquisition, all outstanding shares of Series B Preferred Stock will automatically convert into shares of WMIH’s common stock. Each date that WMIH closes an Acquisition (including a Qualified Acquisition) willcertain cases, these lines may be a ~~“Mandatory Conversion Date.” Unless the Series B Preferred Stock has been previously repurchased~~sub-limit of another warehouse facility or alternatively exist on a stand-alone basis. These facilities allow for same or next day draws at the ~~option~~request of ~~a holder~~ ~~upon~~ the ~~occurrence~~borrower.

Non-Conforming Loan. A mortgage loan that does not meet the standards of ~~certain put events~~eligibility for purchase or mandatorily converted, WMIH will redeem all outstanding shares of Series B Preferred Stock, if any, on the Series B Redemption Date, which is the third anniversary of January 5, 2015 (or January 5, 2018)securitization by Fannie Mae, Freddie Mac or Ginnie Mae.

Option adjusted spread (“OAS”). The ~~reincorporation of WMIH from the State of Washington~~incremental spread added to the ~~State of Delaware resulted~~risk-free rate to reflect embedded (prepayment) optionality and other risk inherent in the ~~increase~~MSRs or excess spread financing used to discount future cash flows for fair value purposes.

Originations. The process through which a lender provides a mortgage loan to a borrower.

Prepayment Speed. The rate at which voluntary mortgage prepayments occur or are projected to occur. The statistic is calculated on an annualized basis and expressed as a percentage of the ~~size~~outstanding principal balance.

Primary Servicer. The servicer that owns the right to service a mortgage loan or pool of ~~its Board~~mortgage loans. This differs from a subservicer, which has a contractual agreement with the primary servicer to service a mortgage loan or pool of ~~Directors~~mortgage loans in exchange for a subservicing fee based upon portfolio volume and characteristics.

Prime Mortgage Loan. Generally, a high-quality mortgage loan that meets the underwriting standards set by Fannie Mae or Freddie Mac and is eligible for purchase or securitization in the secondary mortgage market. Prime Mortgage loans generally have lower default risk and are made to borrowers with excellent credit records and a monthly income at least three to four times greater than their monthly housing expenses (mortgage payments plus taxes and other debt payments) as well as significant other assets. Mortgages not classified as prime mortgage loans are generally called either sub-prime or Alt-A.

Private Label Securitizations. Securitizations that do not meet the criteria set by Fannie Mae, Freddie Mac or Ginnie Mae.

Pull through adjusted lock volume. Represents the expected funding from ~~7 to up to 11 members and increased WMIH’s authorized number of shares of common stock in an amount sufficient to permit~~locks taken during the ~~conversion of all shares of Series B Preferred Stock (collectively, the “Reincorporation”~~period.

Real Estate Owned (”REO”).

The foregoing transactions pertaining to the Series A Preferred Stock and Series B Preferred Stock are more fully described in Note 9: Capital Stock and Derivative Instruments to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

~~WMIH may, subject to market conditions, determine to incur additional indebtedness or raise additional equity capital in connection with undertaking one or more acquisitions.~~

While WMIH is not subject to regulatory capital requirements, WMMRC is required to comply with various solvency and liquidity requirements pursuant to the insurance laws of the State of Hawaii. WMMRC is required to maintain minimum capital and surplus requirements of an amount established under applicable Hawaii law and deemed appropriateProperty acquired by the Insurance Division of the State of Hawaii. As of September 30, 2017, management believes that WMMRC is compliant with applicable statutory solvency, liquidity and minimum capital and surplus requirements. The payment of dividends by WMMRC is subject to statutory restrictions imposed by Hawaii insurance laws and regulations and requires approval from the Insurance Division of the State of Hawaii. In addition, the Second Lien Indenture, prior to the discharge and release on September 29, 2017, imposed restrictions on WMMRC business activities. During the nine months ended September 30, 2017 and the year ended December 31, 2016, WMMRC paid $16.0 million and $5.7 million, respectively, in dividends to WMIH.

~~On the Effective Date, WMI and WMIIC (together, the “Debtors”) (and now the~~ ~~WMI Liquidating Trust (the “Trust”)~~servicer on behalf of the ~~Debtors) continued~~owner of a mortgage loan or pool of mortgage loans, usually through foreclosure or a deed-in-lieu of foreclosure on a defaulted loan. The servicer or a third-party real estate management firm is responsible for selling the REO. Net proceeds of the sale are returned to ~~dispute whether~~ the ~~interests~~owner of ~~certain former~~the related loan or loans. In most cases, the sale of REO does not generate enough to pay off the balance of the loan underlying the REO, causing a loss to the owner of the related mortgage loan.

Recapture. Voluntarily prepaid loans that are expected to be refinanced by the related servicer.

Refinancing. The process of working with existing borrowers to refinance their mortgage loans. By refinancing loans for borrowers we currently service, we retain the servicing rights, thereby extending the longevity of the servicing cash flows.

Servicing. The performance of contractually specified administrative functions with respect to a mortgage loan or pool of mortgage loans. Duties of a servicer typically include, among other things, collecting monthly payments, maintaining escrow accounts, providing periodic monthly statements to the borrower and monthly reports to the loan owners or their agents, managing insurance, monitoring delinquencies, executing foreclosures (as necessary), and remitting fees to guarantors, trustees and service providers. A servicer is generally compensated with a specific fee outlined in the contract established prior to the commencement of the servicing activities.

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Servicing Advances. In the course of servicing loans, servicers are required to make advances that are reimbursable from collections on the related mortgage loan or pool of loans. There are typically three types of servicing advances: P&I Advances, T&I Advances and Corporate Advances.

(i) P&I Advances cover scheduled payments of principal and interest that have not been timely paid by borrowers. P&I Advances serve to facilitate the cash flows paid to holders of ~~“Equity Interests”~~securities issued by the residential MBS trust. The servicer is not the insurer or ~~“Claims” (in each case as those terms are defined~~guarantor of the MBS and thus has the right to cease the advancing of P&I, when the servicer deems the next advance nonrecoverable.

(ii) T&I Advances pay specified expenses associated with the preservation of a mortgaged property or the liquidation of defaulted mortgage loans, including but not limited to property taxes, insurance premiums or other property-related expenses that have not been timely paid by borrowers in order for the lien holder to maintain its interest in the ~~Company’s Seventh Amended Joint Plan~~property.

(iii) Corporate Advances pay costs, fees and expenses incurred in foreclosing upon, preserving defaulted loans and selling REO, including attorneys’ and other professional fees and expenses incurred in connection with foreclosure and liquidation or other legal proceedings arising in the course of ~~Affiliated Debtors Pursuant to Chapter 11 of~~servicing the ~~United States Bankruptcy Code (as modified, the “Plan”)) against the Debtors should be allowed. As a result, pursuant~~defaulted mortgage loans.

Servicing Advances are reimbursed to the Plan, on the Effective Date, a “Disputed Equity Escrow” (as defined in the Plan) was created for the benefit of each holder of a “Disputed Equity Interest” (as defined in the Plan). Such Disputed Equity Escrow was created to hold shares of WMIH’s common stock (as well as any dividends, gains or income attributable in respect of such common stock) allocable, on a pro rata basis, to each holder of such a Disputed Equity Interestservicer if and when ~~such Disputed Equity Interest becomes an “Allowed Equity Interest” (as such term~~the borrower makes a payment on the underlying mortgage loan at the time the loan is ~~defined~~modified or upon liquidation of the underlying mortgage loan but are primarily the responsibility of the investor/owner of the loan. The types of servicing advances that a servicer must make are set forth in its servicing agreement with the ~~Plan). All such Equity Interests~~owner of the mortgage loan or pool of mortgage loans. In some instances, a servicer is allowed to cease Servicing Advances, if those advances will ~~constitute Disputed Equity Interests pursuant~~not be recoverable from the property securing the loan.

Subservicing. Subservicing is the process of outsourcing the duties of the primary servicer to a third-party servicer. The third-party servicer performs the servicing responsibilities for a fee and is typically not responsible for making servicing advances, which are subsequently reimbursed by the primary servicer. The primary servicer is contractually liable to the ~~Plan until such time, or from time to time, as each Disputed Equity Interest has been compromised and settled or allowed or disallowed by a final order~~owner of the ~~bankruptcy court.~~

~~The liquidating trustee~~loans for the activities of the ~~Trust, William Kosturos (the “Liquidating Trustee”~~subservicer.

Unpaid Principal Balance (“UPB”), acts as escrow agent with respect to the Disputed Equity Escrow. As of December 31, 2016, 1,546,294 shares of WMIH’s common stock were held in the Disputed Equity Escrow. Until such time as all of WMIH’s common stock has been distributed from the Disputed Equity Escrow in accordance with the Plan (e.g., as a result of all “Disputed Equity Claims” (as such term is defined in the Plan) becoming Allowed Equity Interests or all Disputed Equity Claims being disallowed), the Liquidating Trustee is vested with the authority to exercise voting or consent rights with respect to such stock; provided, however, that the Liquidating Trustee is obligated to vote or consent, as the case may be, as to such stock in the same proportion as all other holders of WMIH’s common stock have voted or consented, in each case on an issue-by-issue basis. . The Trust has no right to or entitlement in any shares of WMIH’s common stock held in the Disputed Equity Escrow. Additionally, WMIH does not have any right to, or interest in, any shares of its common stock held by the Disputed Equity Escrow.

~~Notes Payable~~

~~On the Effective Date, WMIH issued $110.0 million aggregate principal~~ amount of ~~its 13% Senior First Lien Notes due 2030 (the “First Lien Notes”) under an Indenture, dated as~~principal outstanding on a mortgage loan or a pool of March 19, 2012 (the “First Lien Indenture”), between WMIH and Wilmington Trust, National Association, as Trustee. In addition, WMIH issued $20.0 million aggregate principal amount of its 13% Senior Second Lien Notes due 2030 (the “Second Lien Notes” and,mortgage loans. UPB is used together with the ~~First Lien Notes,~~servicing fees and ancillary incomes as a means of estimating the ~~“Runoff Notes”) under an Indenture, dated as~~future revenue stream for a servicer.

U.S. Department of ~~March 19, 2012 (the “Second Lien Indenture” and, together with~~Agriculture (“USDA”). The USDA is a cabinet-level department of the ~~First Lien Indenture,~~U.S. federal government, which guarantees certain home loans for qualified borrowers.

Warehouse Facility. A type of line of credit facility used to temporarily finance mortgage loan originations to be sold in the ~~“Indentures”), between WMIH and Law Debenture Trust Company of New York, as Trustee.~~ ~~On January 5, 2017, we were notified by The Law Debenture Company of New York that it had completed~~secondary market. Pursuant to a warehouse facility, a loan originator typically agrees to transfer to a counterparty certain mortgage loans against the transfer of ~~substantially all of its corporate trust business~~funds by the counterpart, with a simultaneous agreement by the counterpart to ~~Delaware Trust Company, and that Delaware Trust Company had become~~transfer the ~~successor trustee under the Second Lien Indenture. The First Lien Notes were redeemed in their entirety on April 15, 2015, and the First Lien Indenture was satisfied and discharged on April 27, 2015.~~ ~~The Second Lien Notes~~ ~~were redeemed in their entirety on September 29, 2017, and the Second Lien Indenture was satisfied and discharged on October 2, 2017.~~

~~Contractual Obligations, Commitments and Contingencies~~

WMMRC has engaged a Hawaii-based service provider, Marsh Management Services Inc., to provide accounting and related management services for its operations. In exchange for performing these services, WMMRC pays such service provider a management fee.

~~On March 19, 2012, WMIH entered into an Investment Management Agreement with WMMRC. Under the terms of this agreement, WMIH receives a fee from WMMRC equal~~loans back to the ~~product~~originator at a date certain, or on demand, against the transfer of ~~(x) the ending dollar amount of assets under management during the calendar month in question and (y) .002 divided by 12. WMIH is responsible for investing the~~ funds of WMMRC based on applicable investment criteria and subject to rules and regulations to which WMMRC is subject. The Investment Management Agreement has been approved by the Insurance Division of the State of Hawaii.

On March 19, 2012, WMIH entered into an Administrative Services Agreement with WMMRC. Under the terms of this agreement, WMIH receives from WMMRC a fee of $110 thousand per month. WMIH is responsible for providing administrative services to support, among other things, supervision, governance, financial administration and reporting, risk management and claims management as may be necessary, together with such other general or specific administrative services that may be reasonably required or requested by WMMRC in the ordinary course of its business. The Administrative Services Agreement has been approved by the Insurance Division of the State of Hawaii.

Total amounts incurred under the Investment Management Agreement and Administrative Services Agreement totaled $1.0 million and $1.0 million for the nine months ended September 30, 2017 and 2016, respectively. The expense and related income eliminate on consolidation.

On March 22, 2012, WMIH and the WMI Liquidating Trust (the “Trust”) entered into a Transition Services Agreement (the “TSA”). Pursuant to the TSA, the Trust makes available certain services and employees to the Company. The TSA provided the Company with office space (prior to the Company entering into its own lease) for its current employees and continues to provide basic infrastructure and support services to facilitate the Company’s operations. The TSA as amended, extends the term of the agreement through January 31, 2018, with automatic renewals thereafter for successive additional three-month terms, subject to non-renewal at the end of any additional term upon written notice by either party at least 30 days prior to the expiration of the additional term.

In connection with implementing the Plan, certain holders of specified “Allowed Claims” had the right to elect to receive such holder’s “Pro Rata Share of the Common Stock Allotment.” Essentially, the Plan defines the “Pro Rata Share of the Common Stock Allotment” as a pro rata share of ten million (10,000,000) shares of WMIH’s common stock (i.e. five percent (5%)) issued and outstanding on the Effective Date. Holders exercising the foregoing election did so in lieu of receiving (i) 50% of such holder’s interest in and to certain litigation proceeds that could be realized by the Trust on account of certain claims and causes of action asserted by the Trust as contemplated by the Plan (“Litigation Proceeds”), and (ii) some or all of the Runoff Notes to which such holder may be entitled (if such holder elected to receive Runoff Notes in accordance with the terms of the Plan).

On or about October 14, 2014, the Trust filed a lawsuit in King County Superior Court in the State of Washington against 16 former directors and officers of WMI (the “D&O Litigation”). The Trust’s complaint alleged, among other things, that the defendants named therein breached their fiduciary duties to WMI and committed corporate waste and fraud by squandering WMI’s financial resources. In connection with the settlement of the D&O Litigation, during the year ended December 31, 2015, among the Trust, certain former directors and officers of WMI and certain insurance carriers that underwrote director and officer liability insurance policies for the benefit of WMI and its affiliates (including such former directors and officers), such insurance carriers agreed to pay the Trust $37.0 million, of which $3.0 million was placed into a segregated reserve account (the “RSA Reserve”) to be administered by a third party pursuant to the terms of a Reserve Settlement Agreement (the “RSA”).

During the year ended December 31, 2016 and 2015, WMIH had other income of $123 thousand and $7.8 million, respectively, as a result of its receipt of its share of net Litigation Proceeds related to the D&O Litigation. As of September 30, 2017, $1.5 million remained in the RSA Reserve. Under the RSA, funds are released from the RSA Reserve to the Trust if and when certain designated conditions are satisfied. If and when these funds are released to the Trust, and to the extent WMIH is entitled to receive such funds in accordance with the Plan, it is anticipated the Trust will make payments to WMIH in an amount equal to WMIH’s shareoriginator.

Table of Litigation Proceeds as provided under the Plan. Due to the contingent nature of future distributions from the RSA Reserve, there can be no assurance that WMIH will receive any distributions from the remaining balance in the RSA Reserve in the future. During the nine months ended September 30, 2017, WMIH has recorded income from Litigation Proceeds of $123 thousand. As of September 30, 2017, WMIH had not received any Litigation Proceeds, other than as described above.

As a member of the Litigation Subcommittee of the Trust, Mr. Willingham, who serves as a WMIH Board member and Chairman of the WMIH Audit Committee, participates in overseeing the prosecution of recovery claims by the Trust.

As a result of the Company’s reorganization in bankruptcy, an intangible asset was identified related to reinsurance contracts which were held by WMMRC. The contracts were evaluated to determine whether the value attributable to such contracts was either above market or in a loss contract position. After taking such evaluation into consideration, a loss contract reserve totaling $63.1 million was recorded on the Effective Date. The reserve will be evaluated at each reporting date for changes to its value. As of September 30, 2017 and December 31, 2016, the loss contract reserve was analyzed and determined to have a value of zero and $5.6 million, respectively. The value of this reserve decreased by $5.6 million during the nine months ended September 30, 2017 and decreased by $2.3 million during the nine months ended September 30, 2016. The value of this reserve has been reduced to zero, primarily due to the extraction of cash proceeds from WMMRC occurring earlier than initially projected and the elimination of the higher cost of capital associated with the Runoff Notes which have now been paid in their entirety. For additional information see Note 2: Significant Accounting Policies in Item 1 of Part I of this Quarterly Report on Form 10-Q.

ContentsAs of January 30, 2014, pursuant to the terms and conditions of the Investment Agreement, WMIH sold to KKR Fund 1,000,000 shares of Series A Preferred Stock, having the terms, rights, obligations and preferences contained in the Certificate of Incorporation, for a purchase price equal to $11.1 million and issued to KKR Fund warrants to purchase, in the aggregate, 61.4 million shares of WMIH’s common stock, 30.7 million of which have an exercise price of $1.32 per share and 30.7 million of which have an exercise price of $1.43 per share (together, the “Warrants”). KKR Fund’s rights as a holder of the Series A Preferred Stock and the Warrants, and the rights of any subsequent holder that is an affiliate of KKR Fund (together with KKR Fund, the “Holders”) are governed by the Investor Rights Agreement. The Investor Rights Agreement provides the Holders with registration rights, including three long form demand registration rights, unlimited short form demand registration rights and customary piggyback registration rights with respect to WMIH’s common stock (and WMIH’s common stock underlying the Series A Preferred Stock and the Warrants), subject to certain minimum thresholds, customary blackout periods and lockups of 180 days. On July 1, 2015, WMIH filed a shelf registration statement (the “Initial Registration Statement”) covering resales of Series B Preferred Stock and WMIH’s common stock issuable upon mandatory conversion of the Series B Preferred Stock. On November 23, 2015, WMIH amended the Initial Registration Statement to cover WMIH’s common stock issuable upon conversion of the Series A Preferred Stock and shares of WMIH’s common stock issuable upon exercise of warrants issued in connection with the issuance of our Series A Preferred Stock currently outstanding (as amended, the “Registration Statement”). The Registration Statement was declared effective under the Securities Act on November 25, 2015. Moreover, for as long as the Holders beneficially own any shares of common stock of WMIH or Series A Preferred Stock or any of the Warrants, WMIH has agreed to provide customary Rule 144A information rights, to provide the Holders with regular audited and unaudited financial statements and to allow the Holders or their representatives to inspect WMIH’s books and records. For further information on the Investment Agreement and the Investor Rights Agreement, see Note 8: Financing Arrangements and Note 9: Capital Stock and Derivative Instruments, to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

In conjunction with the Series B Preferred Stock Financing, the Company is contractually committed to make certain fee payments if future events occur. These fees are recorded and presented on our condensed consolidated balance sheets as other liabilities. At September 30, 2017, the total balance of $13.8 million of other liabilities is comprised of $12.3 million of accrued fees relating to the Series B Preferred Stock Financing, an accrual for professional fees currently payable of approximately $0.8 million, $0.7 million of accrued dividends relating to the Series B Preferred Stock and several small accruals for recurring business expenses.

~~Off-Balance Sheet Financing Arrangements~~

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk.~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

~~We are principally exposed~~

Refer to ~~three types~~the discussion included in Part II, Item 7A of ~~market risk:~~

~~interest rate risk;~~

~~credit risk; and~~

~~liquidity risk.~~

~~There have been no material changes to our market risks as disclosed in~~ our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2022. There have been no material changes in the types of market risks faced by us since December 31, 2022, except that we have increased the target hedge ratio on our MSR hedge position from 25% of the net duration risk in our MSR portfolio at year-end 2022 to a target of 75% as of September 30, 2023, with the goal of mitigating the risk to capital and tangible book value in a declining interest rate environment.

Sensitivity Analysis

We assess our market risk based on changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact on fair values based on hypothetical changes (increases and decreases) in interest rates.

We use a duration-based model in determining the impact of interest rate shifts on our loan portfolio, certain other interest-bearing liabilities measured at fair value and interest rate derivatives portfolios. The primary assumption used in these models is that an increase or decrease in the benchmark interest rate produces a parallel shift in the yield curve across all maturities.

We utilize a discounted cash flow analysis to determine the fair value of MSRs and the impact of parallel interest rate shifts on MSRs. The discounted cash flow model incorporates prepayment speeds, OAS, costs to service, delinquencies, ancillary revenues, recapture rates and other assumptions that management believes are consistent with the assumptions that other similar market participants use in valuing the MSRs. The key assumptions to determine fair value include prepayment speed, OAS and cost to service. However, this analysis ignores the impact of interest rate changes on certain material variables, such as the benefit or detriment on the value of future loan originations, non-parallel shifts in the spread relationships between MBS, swaps and U.S. Treasury rates and changes in primary and secondary mortgage market spreads. For mortgage loans, IRLCs, forward delivery commitments on MBS and treasury futures, we rely on a model in determining the impact of interest rate shifts. In addition, the primary assumption used for IRLCs, is the borrower’s propensity to close their mortgage loans under the commitment.

Our total market risk is influenced by a wide variety of factors including market volatility and the liquidity of the markets. There are certain limitations inherent in the sensitivity analysis presented, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.

We used September 30, 2023 market rates on our instruments to perform the sensitivity analysis. The estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume instantaneous, parallel shifts in interest rate yield curves. These sensitivities are hypothetical and presented for illustrative purposes only. Changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in fair value may not be linear.

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The following table summarizes the estimated change in the fair value of our assets and liabilities sensitive to interest rates as of September 30, 2023 given hypothetical instantaneous parallel shifts in the yield curve. Actual results could differ materially.

Table 16. Change in Fair Value


	September 30, 2023
	Down 25 bps		Up 25 bps
Increase (decrease) in assets
Mortgage servicing rights at fair value	$	(72)	$	64
Mortgage loans held for sale at fair value	4		(4)
Derivative financial instruments:
Interest rate lock commitments	5		(5)
Forward MBS trades	(8)		12

Total change in assets	(71)		67
Increase (decrease) in liabilities
Mortgage servicing rights financing at fair value	(2)		1
Excess spread financing at fair value	(2)		2
Derivative financial instruments:
Interest rate lock commitments	(2)		3
Forward MBS trades	(12)		15
Treasury futures	(44)		43
Total change in liabilities	(62)		64
Total, net change	$	(9)	$	3

~~Item 4.~~

~~Controls and Procedures.~~

Item 4.Controls and Procedures

Evaluation of ~~disclosure controls~~Disclosure Controls and ~~procedures.~~

Procedures

Our management, ~~has evaluated, under the supervision and~~ with the participation of our Chief Executive Officer and ~~Interim~~ Chief Financial Officer, evaluated the effectiveness of ~~the~~our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of ~~the Company~~1934, as amended (“Exchange Act”), as of September 30, ~~2017.~~ 2023.

Based on ~~that~~this evaluation, our Chief Executive Officer and ~~Interim~~ Chief Financial Officer ~~have~~ concluded that, as of September 30, ~~2017, the~~2023, our disclosure controls and procedures ~~(as defined~~are effective. Disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in ~~Rules 13a-15(e) and 15d-15(e)~~reports that we file or submit under the Exchange ~~Act) were effective in ensuring that information required to be disclosed by the Company in reports the Company files or submits under the Exchange Act:~~

~~(1)~~Act is recorded, processed, summarized, and reported within the time periods specified in the ~~Securities and Exchange Commission~~SEC’s rules and forms, and

~~(2)~~ that such information is accumulated and communicated to ~~the Company’s~~our management, including ~~the Company’s principal executive~~our Chief Executive Officer and ~~principal financial officers, or persons performing similar functions,~~Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control ~~Over~~over Financial Reporting

~~There was~~

During the three months ended September 30, 2023, no ~~change~~changes in ~~the Company’s~~our internal control over financial reporting ~~(as~~occurred that ~~term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during its most recent fiscal quarter that has~~have materially affected, or isare reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

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PART ~~II—~~II – OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings.~~

Item 1.Legal Proceedings

The Company and its subsidiaries are routinely and currently involved in a number of ~~September 30, 2017,~~legal proceedings, including, but not limited to, judicial, arbitration, regulatory and governmental proceedings related to matters that arise in connection with the ~~Company was~~conduct of the Company’s business. While it is not ~~a party~~possible to ~~or aware~~predict the outcome of any ~~pending legal proceedings~~of these matters, based on the Company’s assessment of the facts and circumstances, it does not believe any of these matters, individually or ~~investigations requiring disclosure at~~in the aggregate, will have a material adverse effect on the financial position, results of operations or cash flows of the Company. See Note 16, Commitments and Contingencies, of the Notes to the Condensed Consolidated Financial Statements within Part I, Item 1. Financial Statements, of this ~~time.~~

Form 10-Q.

~~Item 1A.~~

~~Risk Factors.~~

Item 1A.Risk Factors

~~In addition~~

There have been no material changes or additions to the ~~information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the~~risk factors ~~discussed in “Part I-Item 1A. Risk~~previously disclosed under “Risk Factors” included in our Annual Report on Form 10-K filed for the year ended December 31, ~~2016. There~~2022.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

In October 2022, our Board of Directors authorized a new repurchase plan of $200 million of our outstanding common stock. In July 2023, our Board of Directors authorized an additional $200 million of our outstanding common stock. As of September 30, 2023, $209 million of common stock remain available for repurchase. During the three months ended September 30, 2023, we repurchased shares of our common stock at a total cost of $58 million under our share repurchase program. The number and average price of shares purchased are set forth in the table below:


Period	(a) Total Number of Shares (or Units) Purchased (in thousands)	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (in thousands)	(d) Maximum Number (or Appropriate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Program (in millions)
July 2023	219	$	55.99	219	$	255
August 2023	425	$	57.13	425	$	231
September 2023	395	$	54.33	395	$	209
Total	1,039			1,039

Item 3. Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

Employment and Transition Agreement with Chris Marshall

On October 24, 2023, Chris Marshall, our Vice Chairman and President, announced his intention to retire from the Company effective December 31, 2024 (the “Retirement Date”). In connection with his retirement, on October 24, 2023, we entered into an Employment and Transition Agreement (the “Transition Agreement”) with Mr. Marshall to detail his employment terms until his retirement and provide for an orderly and smooth transition of his role and responsibilities.

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Pursuant to the Transition Agreement, until his Retirement Date, Mr. Marshall shall continue to (i) receive his current base salary of $750,000 on an annualized basis, (ii) participate in the Company’s Executive Management Incentive Plan (“EMIP”), its annual cash incentive plan, pursuant to the terms of such plan, (iii) be eligible to be granted annual equity awards, consistent with current grant practices, plans and applicable award agreement(s), with an allocation of no less than sixty percent (60%) of such awards for the Fiscal Years 2023 and 2024 to be time-based and the remainder of such awards for the Fiscal Years 2023 and 2024 to be performance-based. Notwithstanding the foregoing, the Transition Agreement provides that at least fifty percent (50%) of Mr. Marshall’s total compensation earned under the EMIP and his equity awards, as described above, shall be paid in cash. Under the Transition Agreement, Mr. Marshall will continue to be eligible for his current paid time off and entitled to participate in the Company’s health benefit plans.

Pursuant to the Transition Agreement, if Mr. Marshall’s employment with the Company is terminated due to his death, disability or voluntary resignation, he (or his estate) is entitled to receive his accrued payments and benefits to which he is entitled (the “Accrued Obligations”). If the Company terminates Mr. Marshall’s employment for Cause (as defined in his offer letter with the Company (the “Offer Letter”)) Mr. Marshall is entitled to receive his Accrued Obligations but not any annual bonus payment. Under the Transition Agreement, if the Company terminates Mr. Marshall’s employment other than for Cause or Mr. Marshall terminates his employment for Good Reason (as defined in his Offer Letter) then he shall be entitled to (i) his Accrued Obligations and (ii) the “Severance” payments and benefits described in his Offer Letter, contingent upon Mr. Marshall executing and not revoking a release of claims in a form provided by the Company.

The Transition Agreement provides that in the event Mr. Marshall remains continuously employed with the Company through his Retirement Date, he will be considered to have retired under the terms of all outstanding equity awards, irrespective of whether such award contemplates retirement, and will be (i) fully vested in all time-based awards, and (ii) eligible for full vesting of all performance-based awards, based on actual performance. Additionally, after his Retirement Date, or earlier if mutually agreed upon by the parties, Mr. Marshall and the Company intend to negotiate a consulting agreement for Mr. Marshall’s provision of consulting services to the Company and/or its subsidiaries, and to further promote a successful transition of Mr. Marshall’s responsibilities. Subject to further negotiation, the parties have agreed that the consulting agreement is intended to have a term of at least four (4) months and the Company intends to pay to Mr. Marshall a monthly fee of $62,500 per month, plus reimbursement for business and travel expenses required to perform such services.

In exchange for the Company extending to Mr. Marshall the opportunity to vest in his equity awards and providing the other benefits described above, Mr. Marshall agreed in the Transition Agreement extend the length of his post-employment non-competition, non-solicitation and non-hire restrictive covenants running in favor of the Company from 12 months to 24 months, respectively. In addition, the Transition Agreement contains broad confidentiality, inventions and intellectual property, and post-employment cooperation covenants in favor of the Company.

The foregoing summary of the Transition Agreement is qualified in its entirety by reference to the text of the Transition Agreement, which is being filed as Exhibit 10.2 to this report and is incorporated in this report by reference.

Employment and Retention Agreement with Jay Bray & Value-Driver Retention and Performance Award

On October 24, 2023 (the “Effective Date”), we entered into an Employment & Retention Agreement (the “Retention Agreement”) with Jay Bray, our Chairman and CEO, to facilitate the retention of our CEO over the next five years. The term of the Retention Agreement is from the Effective Date through the fifth year following the Effective Date.

The Retention Agreement provides for Mr. Bray’s (i) current base salary of $1,000,000 on an annualized basis, which is subject to review and adjustment, (ii) continued participation in the Company’s EMIP at a target annual incentive opportunity for the 2024 fiscal year at $2,500,000, (iii) continued eligibility to be granted long-term incentive opportunity awards with a target long-term incentive opportunity award for the 2024 fiscal year at $7,250,000. Mr. Bray’s target total compensation, which consists of his base salary, annual incentive opportunity and long-term incentive opportunity, as described above, is set $10,750,000, provided, however, this target total compensation may be subject to review and adjustment by the Company at any time it deems necessary to remain competitive with industry.

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Additionally, the Retention Agreement provides for a Value-Driver Retention and Performance Award on the terms set forth in the grant agreement. In general, the Value-Driver Retention and Performance Award has a target award opportunity of $15,000,000 and is comprised (i) 40% in time-vested restricted stock units, 50% of which will vest on December 31, 2026 and 50% will vest on December 31, 2028, provided that Mr. Bray is still employ as CEO and/or Chairman on the applicable vesting dates and (ii) 60% in performance-based restricted stock units, 50% of which are generally eligible to vest following a three-year performance period and 50% of which are generally eligible to vest following a five-year performance period. The award agreement provides that one-half of the performance-based restricted stock units shall be earned based on the Company’s achievement of Book Value goals set above the standard long-term award targets and the other half of the performance-based restricted stock units are earned based on the Company’s Total Shareholder Return set above the standard long-term award targets. To earn any performance-based restricted stock units, the Company must achieve a positive Total Shareholder Return at the end of the applicable performance period. The Value-Driver Retention and Performance Award does not contain any retirement provisions. In the event of Mr. Bray’s termination due to death or disability, he (or his estate) will retain all restricted stock units and would be eligible to vest in a pro-rata number of performance-based restricted stock units, contingent on actual performance. Absent such circumstances, Mr. Bray will forfeit all unvested restricted stock units and performance-based restricted stock units upon any other termination of employment, whether voluntary or involuntary, for cause or without cause.

Under the Retention Agreement, if Mr. Bray’s employment with the Company is terminated due to his death, disability or voluntary resignation, he (or his estate) is entitled to receive his accrued payments and benefits to which he is entitled (the “Accrued Obligations”). If the Company terminates Mr. Bray’s employment other than for Cause (as defined in the Retention Agreement) or if Mr. Bray terminates his employment for Good Reason (as defined in the Retention Agreement), Mr. Bray is entitled to (i) the Accrued Obligations, (ii) if not previously paid prior to his termination date, his annual cash bonus under the EMIP for the fiscal year prior to the fiscal year in which the termination occurs, (iii) an amount equal to twenty-four (24) months’ worth of his base salary paid in installments over two years, (iv), an amount equal to (A) the greater of (1) the target annual incentive opportunity under the EMIP for the fiscal year in which the termination occurs or (2) the actual annual incentive payment earned for the immediately preceding fiscal year, plus (B) his target annual incentive opportunity for the fiscal year in which the termination without Cause or resignation for Good Reason occurred, payable in a single cash lump sum payment, and (v) a single cash lump sum payment for COBRA benefits for a period of eighteen (18) months. Additionally, the Retention Agreement provides that if Mr. Bray’s employment is terminated other than for Cause or Mr. Bray terminates his employment for Good Reason, such termination shall be considered a “Retirement” for purposes of any outstanding equity awards to the extent the equity award contains a retirement provision. Notwithstanding anything to the contrary contained in the Company’s 2019 Omnibus Incentive Plan (or any successor or replacement plan thereto) or any award agreement granted thereunder other than the Value-Driver Retention and Performance Award, the Retention Agreement provides that Mr. Bray will be considered to have retired under the terms of all outstanding equity awards, irrespective of whether such award contemplates retirement and shall be (1) fully vested in all time-based awards, and (2) eligible for full vesting of all performance-based awards, based on actual performance.

In exchange for the severance protections described above, the Retention Agreement contains a broad array of restrictive covenants in favor of the Company to which Mr. Bray was not previously subject. In particular, the Retention Agreement provides for a non-competition covenant covering Mr. Bray’s employment with the Company and for twenty-four months (24) following his termination of employment for any reason (the “Restricted Period”). Likewise, Mr. Bray is barred from soliciting any of the Company’s customers and prevented from hiring Company employees during his employment and the post-employment Restricted Period. In addition, the Retention Agreement protects the Company’s confidential information, and contains robust inventions and intellectual property covenants running in favor of the Company. Finally, Mr. Bray has agreed that he will provide the Company with any post-employment support and cooperation it should need or require following his departure.

The foregoing summaries of the Retention Agreement and the Value-Driver Retention and Performance Award are qualified in their entirety by reference to the text of the Retention Agreement, which is being filed as Exhibit 10.3 to this report and is incorporated in this report by reference, and the Form of Value-Driver Retention and Performance Award, which is being filed as Exhibit 10.4 to this report and is incorporated in this report by reference.

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Item 6.Exhibits


		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed or Furnished Herewith

4.1	Indenture relating to Nationstar Mortgage Holdings Inc.’s (as successor-in-interest to Home Point Capital Inc.) 5.000% Senior Notes due 2026, dated as of January 19, 2021, by and among Nationstar Mortgage Holdings Inc. (as successor-in-interest to Home Point Capital Inc.), the guarantors party thereto and U.S. Bank Trust Company, National Association (as successor-in-interest to U.S. Bank National Association), as trustee	8-K	001-14667	4.1	08/01/2023
4.2	First Supplemental Indenture relating to Nationstar Mortgage Holdings Inc.’s (as successor-in-interest to Home Point Capital Inc.) 5.000% Senior Notes due 2026, dated as of January 19, 2021, by and among Nationstar Mortgage Holdings Inc. (as successor-in-interest to Home Point Capital Inc.), the guarantors party thereto and U.S. Bank Trust Company, National Association (as successor-in-interest to U.S. Bank National Association), as trustee	8-K	001-14667	4.2	08/01/2023
4.3	First Supplemental Indenture relating to Nationstar Mortgage Holdings Inc.’s 6.000% Senior Notes due 2027, dated as of January 16, 2020, among Nationstar Mortgage Holdings Inc. as issuer, Mr. Cooper Group Inc. as parent guarantor, the guarantors thereto and Computershare Trust Company, N.A. (f/k/a Wells Fargo Bank, National Association), as trustee	8-K	001-14667	4.3	08/01/2023
4.4	First Supplemental Indenture relating to Nationstar Mortgage Holdings Inc.’s 5.500% Senior Notes due 2028, dated as of August 6, 2020, among Nationstar Mortgage Holdings Inc. as issuer, Mr. Cooper Group Inc. as parent guarantor, the guarantors thereto and Computershare Trust Company, N.A. (f/k/a Wells Fargo Bank, National Association), as trustee	8-K	001-14667	4.4	08/01/2023
4.5	First Supplemental Indenture relating to Nationstar Mortgage Holdings Inc.’s 5.125% Senior Notes due 2030, dated as of December 4, 2020, among Nationstar Mortgage Holdings Inc. as issuer, Mr. Cooper Group Inc. as parent guarantor, the guarantors thereto and Computershare Trust Company, N.A. (f/k/a Wells Fargo Bank, National Association), as trustee	8-K	001-14667	4.5	08/01/2023
4.6	First Supplemental Indenture relating to Nationstar Mortgage Holdings Inc.’s 5.750% Senior Notes due 2031, dated as of November 4, 2021, among Nationstar Mortgage Holdings Inc. as issuer, Mr. Cooper Group Inc. as parent guarantor, the guarantors thereto and Computershare Trust Company, N.A. as trustee	8-K	001-14667	4.6	08/01/2023

Table of Contents

Incorporated by Reference

Exhibit
Number

Description

Form

File No.

Exhibit

Filing Date

Filed or Furnished Herewith

10.1

Amendment Number Two, dated August 11, 2023 to Second Amended and Restated Loan and Security Agreement, dated as of April 3, 2023, between Nationstar Mortgage LLC, as borrower and Citibank, N.A. as lender

10.2**

Employment and Transition Agreement, effective as of October 24, 2023, by and between the Company and Christopher Marshall

10.3**

Employment and Retention Agreement, effective as of October 24, 2023, by and between the Company and Jesse K. Bray

10.4**

Form of Value-Driver Retention and Performance Award Agreement and Grant Notice (Bray)

31.1

Certification by Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification by Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101.)

+ The schedules and other attachments referenced in this exhibit have been ~~no material changes~~omitted in ~~our risk factors from those disclosed in such Annual Report.~~

accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or attachment will be furnished supplementary to the Securities and Exchange Commission upon request.

** Management, contract, compensatory plan or arrangement.

~~Item 6.~~

~~Exhibits.~~

~~The following exhibits are filed or incorporated by reference as part~~

Table of ~~this Quarterly Report on Form 10-Q.~~

Contents

Incorporated by reference

Exhibit
Number

Exhibit Description
Form

Exhibit

Filing Date

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation of WMIH Corp.

8-K12G3

3.1

5/13/15

��

3.2

Amended and Restated Bylaws of WMIH Corp.

8-K12G3

3.2

5/13/15

12.1

Statement Regarding Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends

X

31.1

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

X

31.2

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

X

32.1

Certifications of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

X

101.INS

XBRL Instance Document.

X

101.SCH

XBRL Taxonomy Extension Schema Document.

X

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

X

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

X

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

X

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

X

SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	~~WMIH CORP.~~
		~~(Registrant)~~ MR. COOPER GROUP INC.
~~Dated: November 9, 2017~~		~~By:~~	~~/s/ William C. Gallagher~~
October 25, 2023		~~Name:~~	~~William C. Gallagher~~ /s/ Jay Bray
Date		~~Title:~~	Jay Bray Chief Executive Officer (Principal Executive Officer)
~~Dated: November 9, 2017~~		~~By:~~	~~/s/ Timothy F. Jaeger~~
October 25, 2023		~~Name:~~	~~Timothy F. Jaeger~~ /s/ Kurt Johnson
Date		~~Title:~~	~~Interim~~Kurt Johnson Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer)

~~Delaware~~	~~91-1653725~~
Delaware		91-1653725
(State or other jurisdiction of ~~incorporation)~~ incorporation or organization)		(~~IRS~~I.R.S. Employer Identification No.)
~~800 FIFTH AVENUE, SUITE 4100~~ ~~SEATTLE, WASHINGTON~~			~~98104~~
8950 Cypress Waters Blvd, Coppell, TX		75019
(Address of principal executive offices)		(Zip Code)

(469) 549-2000
Registrant’s telephone number, including area code


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value per share	COOP	The Nasdaq Stock Market

~~Common Stock $0.00001 par value~~		~~206,714,132~~
~~(Class)~~						~~(Outstanding at November 1, 2017)~~

	September 30, 2017		December 31, 2016 ⁽¹⁾
ASSETS:
Investments held in trust:
Fixed-maturity securities	$	9,022	$	29,206
Cash equivalents held in trust		6,804		2,176
Total investments held in trust		15,826		31,382
Cash and cash equivalents		25,542		2,491
Fixed-maturity securities		1,400		47,625
Restricted cash		577,220		573,347
Derivative asset - embedded conversion feature		111,877		80,651
Accrued investment income		109		187
Other assets		764		507
Total assets	$	732,738	$	736,190
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Liabilities:
Notes payable - principal	$	—	$	18,774
Notes payable - interest		—		203
Losses and loss adjustment reserves		705		811
Losses payable		29		53
Unearned premiums		33		270
Accrued ceding commissions		57		22
Loss contract reserve		—		5,645
Other liabilities		13,774		14,063
Total liabilities		14,598		39,841
Commitments and contingencies
Redeemable convertible series B preferred stock, $0.00001 par value; 600,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016; aggregate liquidation preference of $600,000,000 as of September 30, 2017 and December 31, 2016		502,213		502,213
Stockholders’ equity:
Convertible series A preferred stock, $0.00001 par value; 1,000,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016; aggregate liquidation preference of $10 as of September 30, 2017 and December 31, 2016		—		—
Common stock, $0.00001 par value; 3,500,000,000 authorized; 206,714,132 and 206,380,800 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		2		2
Additional paid-in capital		108,830		108,415
Retained earnings		107,095		85,719
Total stockholders’ equity		215,927		194,136
Total liabilities, redeemable convertible preferred stock and stockholders’ equity	$	732,738	$	736,190


	September 30, 2023		December 31, 2022
	(unaudited)
Assets
Cash and cash equivalents	$	553	$	527
Restricted cash	151		175
Mortgage servicing rights at fair value	8,504		6,654
Advances and other receivables, net of reserves of $164 and $137, respectively	758		1,019
Mortgage loans held for sale at fair value	893		893
Property and equipment, net of accumulated depreciation of $136 and $122, respectively	59		65
Deferred tax assets, net	499		703
Other assets	2,010		2,740
Total assets	$	13,427	$	12,776

Liabilities and Stockholders’ Equity
Unsecured senior notes, net	$	3,147	$	2,673
Advance, warehouse and MSR facilities, net	3,545		2,885
Payables and other liabilities	1,964		2,633
MSR related liabilities - nonrecourse at fair value	467		528
Total liabilities	9,123		8,719
Commitments and contingencies (Note 16)
Common stock at $0.01 par value - 300 million shares authorized, 93.2 million shares issued	1		1
Additional paid-in-capital	1,081		1,104
Retained earnings	4,256		3,802
Treasury shares at cost - 27.4 million and 24.0 million shares, respectively	(1,034)		(850)
Total stockholders’ equity	4,304		4,057
Total liabilities and stockholders’ equity	$	13,427	$	12,776

☒
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Page
PART I –		FINANCIAL INFORMATION
Item 1.		Financial Statements	3
		Condensed Consolidated Balance Sheets as of September 30, 2023 (unaudited) and December 31, 2022	3
		Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2023 and 2022	4
		Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the Three and Nine Months Ended September 30, 2023 and 2022	6
		Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2023 and 2022	7
		Notes to Condensed Consolidated Financial Statements (unaudited).		3 8
		1. Nature of Business and Basis of Presentation	8
		2. Acquisitions	9
		3. Dispositions	9
		4. Mortgage Servicing Rights and Related Liabilities	10
		5. Advances and Other Receivables	13
		6. Mortgage Loans Held for Sale	15
		7. Loans Subject to Repurchase from Ginnie Mae	16
		8. Goodwill and Intangible Assets	16
		9. Derivative Financial Instruments	16
		10. Indebtedness	18
		1 1 . Securitizations and Financings	20
		1 2 . Earnings Per Share	21
		1 3 . Income Taxes	21
		1 4 . Fair Value Measurements	21
		1 5 . Capital Requirements	26
		1 6 . Commitments and Contingencies	27
		1 7 . Segment Information	27
Item 2. ~~Management’s~~		Management's Discussion and Analysis of Financial Condition and Results of Operations		29 31
Item 3.		Quantitative and Qualitative Disclosures about Market Risk		45 55
Item 4.		Controls and ~~Procedures.~~Procedures		45 56

PART II –		OTHER INFORMATION
Item 1.		Legal Proceedings		46 57
Item 1A.		Risk Factors.		46 57
Item ~~6. Exhibits~~. 2.		Unregistered Sales of Equity Securities and Use of Proceeds	47 57
~~SIGNATURES~~ Item 3.		Defaults Upon Senior Securities	48 57
Item 4.		Mine Safety Disclosures	57
Item 5.		Other Information	57
Item 6.		Exhibits	60

	Three months ended September 30, 2017			Three months ended September 30, 2016			Nine months ended September 30, 2017			Nine months ended September 30, 2016
Revenues:
Premiums earned	$	344		$	786		$	1,103		$	2,426
Net investment income		1,943			498			4,826			1,747
Total revenues		2,287			1,284			5,929			4,173
Operating expenses:
Losses and loss adjustment expense		48			183			207			702
Ceding commission expense		44			75			137			234
General and administrative expense		2,117			1,357			5,915			4,878
Loss contract reserve reduction		(210	)		(565	)		(5,645	)		(2,362	)
Interest expense		579			636			1,788			1,994
Total operating expenses		2,578			1,686			2,402			5,446
Net operating (loss) income		(291	)		(402	)		3,527			(1,273	)
Other (income) expense:
Other (income)		(123	)		—			(123	)		—
Unrealized (gain) loss on change in fair value of derivative embedded conversion feature		(38,579	)		16,243			(31,226	)		(62,587	)
Total other (income) expense		(38,702	)		16,243			(31,349	)		(62,587	)
Income (loss) before income taxes		38,411			(16,645	)		34,876			61,314
Income tax expense (benefit)		—			—			—			—
Net income (loss)		38,411			(16,645	)		34,876			61,314
Redeemable convertible series B preferred stock dividends		(4,500	)		(4,500	)		(13,500	)		(13,500	)
Net income (loss) attributable to common and participating stockholders	$	33,911		$	(21,145	)	$	21,376		$	47,814
Basic net income (loss) per share attributable to common stockholders (Note 12)	$	0.06		$	(0.10	)	$	0.04		$	0.10
Shares used in computing basic net income (loss) per share		202,660,492			202,341,209			202,573,315			202,247,275
Diluted net income (loss) per share attributable to common stockholders (Note 12)	$	0.06		$	(0.10	)	$	0.04		$	0.09
Shares used in computing diluted net income (loss) per share		212,726,121			202,341,209			212,638,944			237,575,014

	Series B Redeemable Convertible Preferred Stock				Series A Convertible Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Shares		Amount		Additional paid-in capital		(Accumulated deficit) retained earnings			Total stockholders’ equity
Balance at January 1, 2016		600,000		502,213		1,000,000		—		206,168,035		2		107,757		(97,981	)		9,778
Net income		—		—		—		—		—		—		—		201,700			201,700
Redeemable convertible series B preferred stock dividends		—		—		—		—		—		—		—		(18,000	)		(18,000	)
Issuance of common stock under restricted stock compensation arrangement		—		—		—		—		212,765		—		—		—			—
Equity-based compensation		—		—		—		—		—		—		658		—			658
Balance at December 31, 2016		600,000		502,213		1,000,000		—		206,380,800		2		108,415		85,719			194,136
Net income		—		—		—		—		—		—		—		34,876			34,876
Redeemable convertible series B preferred stock dividends		—		—		—		—		—		—		—		(13,500	)		(13,500	)
Issuance of common stock under restricted stock compensation arrangement		—		—		—		—		333,332		—		—		—			—
Equity-based compensation		—		—		—		—		—		—		415		—			415
Balance at September 30, 2017		600,000	$	502,213		1,000,000	$	—		206,714,132	$	2	$	108,830	$	107,095		$	215,927


	Common Stock
		Shares (in thousands)	Amount		Additional Paid-in Capital		Retained Earnings		Treasury Share Amount		Total Mr. Cooper Stockholders’ Equity		Non-controlling Interests		Total Stockholders’ Equity
Balance at June 30, 2022		71,651	$	1	$	1,094	$	3,688	$	(747)	$	4,036	$	1	$	4,037
Shares issued / (surrendered) under incentive compensation plan		42	—		(2)		—		1		(1)		—		(1)
Share-based compensation		—	—		7		—		—		7		—		7
Dividends paid to noncontrolling interests		—	—		—		—		—		—		(1)		(1)
Repurchase of common stock		(1,136)	—		—		—		(50)		(50)		—		(50)

Net income		—	—		—		113		—		113		—		113
Balance at September 30, 2022		70,557	$	1	$	1,099	$	3,801	$	(796)	$	4,105	$	—	$	4,105

Balance at June 30, 2023		66,848	$	1	$	1,074	$	3,981	$	(977)	$	4,079	$	—	$	4,079
Shares issued / (surrendered) under incentive compensation plan		25	—		(1)		—		1		—		—		—
Share-based compensation		—	—		8		—		—		8		—		8

Repurchase of common stock		(1,039)	—		—		—		(58)		(58)		—		(58)


Net income		—	—		—		275		—		275		—		275
Balance at September 30, 2023		65,834	$	1	$	1,081	$	4,256	$	(1,034)	$	4,304	$	—	$	4,304

	Nine months ended September 30, 2017			Nine months ended September 30, 2016
Cash flows from operating activities:
Net income	$	34,876		$	61,314
Adjustments to reconcile net income to net cash (used in) operating activities:
Amortization of premium or discount on fixed maturity securities		108			247
Net realized loss (gain) on sale of investments		63			(19	)
Unrealized (gain) on trading securities		(67	)		(83	)
Unrealized (gain) on derivative embedded conversion feature		(31,226	)		(62,587	)
Equity-based compensation		415			484
Changes in assets and liabilities:
Accrued investment income		78			(18	)
Other assets		(257	)		(270	)
Cash equivalents held in trust		(4,628	)		1,358
Restricted cash		(3,873	)		(1,476	)
Losses and loss adjustment reserves		(106	)		(2,733	)
Losses payable		(24	)		(395	)
Unearned premiums		(237	)		(463	)
Accrued ceding commission expense		35			(8	)
Accrued interest on notes payable		(203	)		(24	)
Loss contract reserve		(5,645	)		(2,362	)
Other liabilities		(289	)		(626	)
Total adjustments		(45,856	)		(68,975	)
Net cash used in operating activities		(10,980	)		(7,661	)
Cash flows from investing activities:
Purchase of investments		(19,973	)		(130,469	)
Proceeds from sales and maturities of investments		86,278			146,920
Net cash provided by investing activities		66,305			16,451
Cash flows from financing activities:
Redeemable convertible series B preferred stock dividends		(13,500	)		(13,500	)
Notes payable – principal repayments		(18,774	)		(2,185	)
Net cash used in financing activities		(32,274	)		(15,685	)
Increase (decrease) in cash and cash equivalents		23,051			(6,895	)
Cash and cash equivalents, beginning of period		2,491			9,924
Cash and cash equivalents, end of period	$	25,542		$	3,029
Supplementary disclosure of cash flow information:
Cash paid during the period:
Interest	$	1,991		$	2,008


MSRs and Related Liabilities	September 30, 2023		December 31, 2022
MSRs - fair value	$	8,504	$	6,654

Excess spread financing at fair value	$	446	$	509
Mortgage servicing rights financing at fair value	21		19
MSR related liabilities - nonrecourse at fair value	$	467	$	528


	September 30, 2023				December 31, 2022
MSRs - UPB and Fair Value Breakdown by Investor Pools	UPB		Fair Value		UPB		Fair Value
Agency	$	501,315	$	8,193	$	380,502	$	6,322
Non-agency	27,009		311		30,880		332
Total	$	528,324	$	8,504	$	411,382	$	6,654


	Option Adjusted Spread(1)				Total Prepayment Speeds				Cost to Service per Loan
MSRs - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change		10% Adverse Change		20% Adverse Change
September 30, 2023
Mortgage servicing rights	$	(341)	$	(655)	$	(179)	$	(348)	$	(80)	$	(159)

	Discount Rate				Total Prepayment Speeds				Cost to Service per Loan
MSRs - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change		10% Adverse Change		20% Adverse Change
December 31, 2022
Mortgage servicing rights	$	(266)	$	(511)	$	(136)	$	(264)	$	(61)	$	(122)


	Option Adjusted Spread(1)				Prepayment Speeds
Excess Spread Financing - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change
September 30, 2023
Excess spread financing	$	15	$	32	$	9	$	17

	Discount Rate				Prepayment Speeds
Excess Spread Financing - Hypothetical Sensitivities	100 bps Adverse Change		200 bps Adverse Change		10% Adverse Change		20% Adverse Change
December 31, 2022
Excess spread financing	$	19	$	40	$	11	$	22


	Three Months Ended September 30,				Nine Months Ended September 30,
Revenues - Service Related, net	2023		2022		2023		2022
Contractually specified servicing fees(1)	$	440	$	371	$	1,231	$	1,076
Other service-related income(1)	25		22		58		94
Incentive and modification income(1)	18		4		32		22
Servicing late fees(1)	24		19		68		57
Mark-to-market adjustments - Servicing
MSR MTM	270		239		304		1,363
Loss on MSR hedging activities	(192)		(100)		(244)		(329)
(Loss) gain on MSR sales	(3)		(2)		29		(1)
Reclassifications(2)	(8)		(10)		(26)		(22)
Excess spread / MSR financing MTM	(4)		(3)		2		(134)
Total mark-to-market adjustments - Servicing	63		124		65		877
Amortization, net of accretion
MSR amortization	(171)		(183)		(444)		(644)
Excess spread accretion	11		14		32		74
Total amortization, net of accretion	(160)		(169)		(412)		(570)
Originations service fees(3)	18		20		45		86
Corporate/Xome related service fees	22		22		62		56
Other(4)	(18)		(18)		(54)		(88)
Total revenues - Service Related, net	$	432	$	395	$	1,095	$	1,610


Advances and Other Receivables, Net	September 30, 2023		December 31, 2022
Servicing advances, net of $12 purchase discount	$	813	$	1,053
Receivables from agencies, investors and prior servicers, net of $7 purchase discount	109		103
Reserves	(164)		(137)
Total advances and other receivables, net	$	758	$	1,019


	Three Months Ended September 30,				Nine Months Ended September 30,
Reserves for Advances and Other Receivables	2023		2022		2023		2022
Balance - beginning of period	$	156	$	150	$	137	$	167
Provision	8		10		26		22
Reclassifications(1)	11		9		27		31
Write-offs	(11)		(26)		(26)		(77)
Balance - end of period	$	164	$	143	$	164	$	143


Mortgage Loans Held for Sale	September 30, 2023		December 31, 2022
Mortgage loans held for sale – UPB	$	932	$	921
Mark-to-market adjustment(1)	(39)		(28)
Total mortgage loans held for sale	$	893	$	893

	September 30, 2017		December 31, 2016
Case-basis reserves	$	174	$	553
IBNR reserves		1		—
Premium deficiency reserves		530		258
Total losses and loss adjustment reserves	$	705	$	811


		September 30, 2023				Nine Months Ended September 30, 2023
Derivative Financial Instruments	Expiration Dates	Outstanding Notional		Fair Value		Gains/(Losses)
Assets
Mortgage loans held for sale
Loan sale commitments	2023	$	304	$	6	$	(4)
Derivative financial instruments
IRLCs	2023	$	813	$	22	$	—
LPCs	2023	121		1		—
Forward MBS trades	2023	1,383		13		74
Treasury futures	2023	5		—		—
Total derivative financial instruments - assets		$	2,322	$	36	$	74
Liabilities
Derivative financial instruments
IRLCs	2023	$	40	$	—	$	—
LPCs	2023	288		2		—
Forward MBS trades	2023	1,249		28		(97)
Treasury futures	2023	2,353		65		(196)
Total derivative financial instruments - liabilities		$	3,930	$	95	$	(293)


					September 30, 2023				December 31, 2022
	Maturity Date	Collateral	Capacity Amount		Outstanding		Collateral Pledged		Outstanding		Collateral Pledged
Advance Facilities
$350 advance facility	October 2024	Servicing advance receivables	$	350	$	129	$	166	$	150	$	189
$250 advance facility(1)	November 2024	Servicing advance receivables	250		207		284		308		410
$250 advance facility	January 2024	Servicing advance receivables	250		177		200		171		209
$75 advance facility	December 2023	Servicing advance receivables	75		35		52		40		45
Advance facilities principal amount					548		702		669		853

Warehouse Facilities
$1,500 warehouse facility	June 2024	Mortgage loans or MBS	1,500		162		163		206		272
$750 warehouse facility	June 2024	Mortgage loans or MBS	750		115		150		135		133
$750 warehouse facility	October 2024	Mortgage loans or MBS	750		124		130		202		209
$500 warehouse facility	June 2024	Mortgage loans or MBS	500		39		44		76		80
$500 warehouse facility(2)	August 2024	Mortgage loans or MBS	500		88		90		31		32
$300 warehouse facility	November 2023	Mortgage loans or MBS	300		137		141		115		117
$250 warehouse facility(3)	September 2025	Mortgage loans or MBS	250		14		16		14		17
$200 warehouse facility	December 2024	Mortgage loans or MBS	200		48		50		18		21
$200 warehouse facility	January 2024	Mortgage loans or MBS	200		45		70		—		—
$100 warehouse facility	April 2024	Mortgage loans or MBS	100		40		51		19		28
$100 warehouse facility	April 2024	Mortgage loans or MBS	100		—		—		—		—
$75 warehouse facility	December 2023	Mortgage loans or MBS	75		5		5		1		1
$1 warehouse facility	December 2023	Mortgage loans or MBS	1		—		—		—		—
Warehouse facilities principal amount					817		910		817		910

MSR Facilities
$1,500 warehouse facility(1)	November 2024	MSR	1,500		250		2,303		260		2,284
$1,500 warehouse facility	April 2025	MSR	1,500		900		1,324		380		927
$750 warehouse facility(3)	September 2025	MSR	750		325		1,391		380		1,482
$500 warehouse facility	June 2025	MSR	500		255		705		365		732
$500 warehouse facility	April 2025	MSR	500		210		396		—		—
$500 warehouse facility	June 2025	MSR	500		225		434		—		—
$50 warehouse facility	November 2024	MSR	50		30		67		25		74
MSR facilities principal amount					2,195		6,620		1,410		5,499

Advance, warehouse and MSR facilities principal amount					3,560		8,232		2,896		7,262
Unamortized debt issuance costs					(15)				(11)
Advance, warehouse and MSR facilities, net					$	3,545			$	2,885


	Nine months ended September 30, 2017			Year ended December 31, 2016
Balance at beginning of period	$	811		$	5,063
Incurred (released) - prior periods		207			(669	)
Paid or terminated - prior periods		(313	)		(3,583	)
Total losses and loss adjustment reserves	$	705		$	811

	September 30, 2017
Class of securities:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government treasury securities	$	250	$	—	$	—		$	250
Obligations of U.S. government sponsored enterprises		2,749		—		(7	)		2,742
Corporate debt securities		3,683		—		(2	)		3,681
Foreign corporate debt securities		3,750		—		(1	)		3,749
Total fixed-maturity securities		10,432		—		(10	)		10,422
Less total unrestricted fixed-maturity securities		1,402		—		(2	)		1,400
Total fixed-maturity securities held in trust	$	9,030	$	—	$	(8	)	$	9,022


Year Ending December 31,	Amount
2023 through 2025	$	—
2026	500
2027	600
Thereafter	2,100
Total unsecured senior notes principal amount	$	3,200

	Amortized Cost		Estimated Fair Value
Maturity in:
2017	$	6,750	$	6,749
2018		3,682		3,673
Total fixed-maturity securities	$	10,432	$	10,422

	September 30, 2017
	Level 1		Level 2		Level 3		Total
Class of securities:
U.S. government treasury securities	$	250	$	—	$	—	$	250
Obligations of U.S. government sponsored enterprises		1,497		1,245		—		2,742
Corporate debt securities		3,151		530		—		3,681
Foreign corporate debt securities		3,749		—		—		3,749
Total fixed-maturity securities		8,647		1,775		—		10,422
Money market funds		32,007		—		—		32,007
Total	$	40,654	$	1,775	$	—	$	42,429


	September 30, 2023		December 31, 2022
Consolidated Transactions with VIEs	Transfers Accounted for as Secured Borrowings		Transfers Accounted for as Secured Borrowings
Assets
Restricted cash	$	92	$	78
Advances and other receivables, net	366		398
Total assets	$	458	$	476

Liabilities
Advance facilities, net(1)	$	306	$	321
Payables and other liabilities	1		1
Total liabilities	$	307	$	322


Unconsolidated Securitization Trusts	September 30, 2023		December 31, 2022
Total collateral balances - UPB	$	901	$	976
Total certificate balances	$	876	$	949


Principal Amount of Transferred Loans 60 Days or More Past Due	September 30, 2023		December 31, 2022
Unconsolidated securitization trusts	$	93	$	119


	January 1, 2017 to September 30, 2017				January 1, 2016 to December 31, 2016
	Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1			Transfers from Level 1 to Level 2		Transfers from Level 2 to Level 1
Class of securities:
Corporate debt securities	$	—	$	901		$	—	$	5,737
Foreign corporate debt securities		—		—			—		5,295
Total transfers	$	—	$	901		$	—	$	11,032


	Three Months Ended September 30,				Nine Months Ended September 30,
Computation of Earnings Per Share	2023		2022		2023		2022
Net income	$	275	$	113	$	454	$	922

Weighted average shares of common stock outstanding (in thousands):
Basic	66,424		71,175		67,719		72,569
Dilutive effect of stock awards	1,244		1,703		1,319		1,988
Diluted	67,668		72,878		69,038		74,557

Earnings per common share
Basic	$	4.14	$	1.59	$	6.70	$	12.71
Diluted	$	4.06	$	1.55	$	6.58	$	12.37


	September 30, 2023
			Recurring Fair Value Measurements
Fair Value - Recurring Basis	Total Fair Value		Level 1		Level 2		Level 3
Assets
Mortgage loans held for sale	$	893	$	—	$	792	$	101
Mortgage servicing rights	8,504		—		—		8,504
Equity investments	9		1		—		8
Derivative financial instruments
IRLCs	22		—		—		22
LPCs	1		—		—		1
Forward MBS trades	13		—		13		—

Liabilities
Derivative financial instruments
LPCs	2		—		—		2
Forward MBS trades	28		—		28		—
Treasury futures	65		—		65		—
Mortgage servicing rights financing	21		—		—		21
Excess spread financing	446		—		—		446


	September 30, 2023									December 31, 2022
	Range						Weighted Average			Range						Weighted Average
Level 3 Inputs	Min			Max						Min			Max
MSRs(1)
Option adjusted spread(2)	6.9		%	12.3		%	8.0		%	N/A			N/A			N/A
Discount rate	N/A			N/A			N/A			10.4		%	13.7		%	11.4		%
Prepayment speed	6.1		%	9.8		%	7.0		%	6.3		%	12.2		%	7.2		%
Cost to service per loan(3)	$	56		$	151		$	80		$	54		$	155		$	80
Average life(4)							8.2 years									8.1 years

Mortgage loans held for sale
Market pricing	45.0		%	99.5		%	88.3		%	37.3		%	114.7		%	77.4		%

IRLCs
Value of servicing (reflected as a percentage of loan commitment)	0.8		%	4.6		%	1.9		%	(0.6)		%	3.9		%	2.3		%

Excess spread financing(1)
Option adjusted spread(2)	7.0		%	12.3		%	8.8		%	N/A			N/A			N/A
Discount rate	N/A			N/A			N/A			10.0		%	13.8		%	11.3		%
Prepayment speed	7.5		%	10.5		%	8.5		%	6.9		%	13.3		%	9.2		%
Average life(4)							6.7 years									6.6 years

Mortgage servicing rights financing
Advance financing and counterparty fee rates	6.5		%	8.8		%	7.7		%	5.2		%	8.6		%	7.1		%
Annual advance recovery rates	12.6		%	15.4		%	13.5		%	15.9		%	20.6		%	17.3		%