Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 26, 2016 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Current Reporting Status | Yes | |
Entity Registrant Name | Walker & Dunlop, Inc. | |
Entity Central Index Key | 1,497,770 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 30,804,028 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Cash and cash equivalents | $ 83,887 | $ 136,988 |
Restricted cash | 14,370 | 5,306 |
Pledged securities, at fair value | 81,933 | 72,190 |
Loans held for sale, at fair value | 1,299,028 | 2,499,111 |
Loans held for investment, net | 261,915 | 231,493 |
Servicing fees and other receivables, net | 28,316 | 23,844 |
Derivative assets | 33,796 | 11,678 |
Mortgage servicing rights | 496,678 | 412,348 |
Goodwill and other intangible assets | 91,340 | 91,488 |
Other assets | 39,854 | 30,545 |
Total assets | 2,431,117 | 3,514,991 |
Liabilities | ||
Accounts payable and other liabilities | 202,533 | 169,109 |
Performance deposits from borrowers | 13,885 | 5,112 |
Derivative liabilities | 2,918 | 1,333 |
Guaranty obligation, net of accumulated amortization | 30,938 | 27,570 |
Allowance for risk-sharing obligations | 3,400 | 5,586 |
Warehouse notes payable | 1,440,425 | 2,649,470 |
Note payable | 164,238 | 164,462 |
Total liabilities | 1,858,337 | 3,022,642 |
Equity | ||
Preferred shares, 50,000 authorized, none issued. | ||
Common stock, $0.01 par value. Authorized 200,000; issued and outstanding 29,375 shares at September 30, 2016 and 29,466 shares at December 31, 2015 | 294 | 295 |
Additional paid-in capital | 223,603 | 215,575 |
Retained earnings | 344,241 | 272,030 |
Total stockholders' equity | 568,138 | 487,900 |
Noncontrolling interests | 4,642 | 4,449 |
Total equity | 572,780 | 492,349 |
Commitments and contingencies (Note 9) | ||
Total liabilities and equity | $ 2,431,117 | $ 3,514,991 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Condensed Consolidated Balance Sheets | ||
Preferred shares, authorized | 50,000 | 50,000 |
Preferred shares, issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 200,000 | 200,000 |
Common stock, issued | 29,375 | 29,466 |
Common stock, outstanding | 29,375 | 29,466 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenues | ||||
Gains from mortgage banking activities | $ 100,630 | $ 70,810 | $ 249,406 | $ 213,480 |
Servicing fees | 37,134 | 29,328 | 101,554 | 84,227 |
Net warehouse interest income | 5,614 | 6,860 | 15,925 | 17,824 |
Escrow earnings and other interest income | 2,630 | 1,166 | 6,225 | 3,123 |
Other | 8,778 | 12,622 | 23,775 | 28,179 |
Total revenues | 154,786 | 120,786 | 396,885 | 346,833 |
Expenses | ||||
Personnel | 64,377 | 49,328 | 154,365 | 135,366 |
Amortization and depreciation | 29,244 | 25,644 | 80,824 | 73,788 |
Provision for credit losses | 283 | 94 | 166 | 576 |
Interest expense on corporate debt | 2,485 | 2,484 | 7,419 | 7,433 |
Other operating expenses | 9,685 | 9,790 | 29,511 | 28,176 |
Total expenses | 106,074 | 87,340 | 272,285 | 245,339 |
Income from operations | 48,712 | 33,446 | 124,600 | 101,494 |
Income tax expense | 18,851 | 12,735 | 47,295 | 39,179 |
Net income before noncontrolling interests | 29,861 | 20,711 | 77,305 | 62,315 |
Less: net income from noncontrolling interests | 233 | 460 | 198 | 598 |
Walker & Dunlop net income | $ 29,628 | $ 20,251 | $ 77,107 | $ 61,717 |
Basic earnings per share | $ 1.01 | $ 0.69 | $ 2.62 | $ 2.06 |
Diluted earnings per share | $ 0.96 | $ 0.66 | $ 2.51 | $ 1.99 |
Basic weighted average shares outstanding | 29,374 | 29,165 | 29,417 | 29,904 |
Diluted weighted average shares outstanding | 30,793 | 30,460 | 30,743 | 31,045 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities | ||
Net income before noncontrolling interests | $ 77,305 | $ 62,315 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Gains attributable to the fair value of future servicing rights, net of guaranty obligation | (127,724) | (97,491) |
Change in the fair value of premiums and origination fees | (17,728) | 2,650 |
Amortization and depreciation | 80,824 | 73,788 |
Provision for credit losses | 166 | 576 |
Other operating activities, net | 1,253,069 | (32,619) |
Net cash provided by (used in) operating activities | 1,265,912 | 9,219 |
Cash flows from investing activities | ||
Capital expenditures | (1,821) | (1,281) |
Net cash paid to increase ownership interest in a previously held equity method investment | (1,058) | |
Acquisitions, net of cash received | (12,767) | |
Purchase of mortgage servicing rights | (42,705) | |
Originations of loans held for investment | (218,958) | (144,950) |
Principal collected on loans held for investment | 187,820 | 22,920 |
Net cash provided by (used in) investing activities | (76,722) | (136,078) |
Cash flows from financing activities | ||
Borrowings (repayments) of warehouse notes payable, net | (1,239,677) | 28,976 |
Borrowings of interim warehouse notes payable | 148,478 | 110,829 |
Repayments of interim warehouse notes payable | (138,898) | (17,190) |
Repayments of note payable | (829) | (4,543) |
Proceeds from issuance of common stock | 3,439 | 5,677 |
Repurchase of common stock | (12,374) | (50,062) |
Debt issuance costs | (2,425) | (850) |
Distributions to noncontrolling interests | (5) | |
Tax benefit from vesting of equity awards | 831 | |
Net cash provided by (used in) financing activities | (1,242,291) | 73,668 |
Net increase (decrease) in cash and cash equivalents | (53,101) | (53,191) |
Cash and cash equivalents at beginning of period | 136,988 | 113,354 |
Cash and cash equivalents at end of period | 83,887 | 60,163 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid to third parties for interest | 28,592 | 24,813 |
Cash paid for income taxes | $ 23,061 | $ 27,038 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Organization and Basis of Presentation | NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION These financial statements represent the condensed consolidated financial position and results of operations of Walker & Dunlop, Inc. and its subsidiaries. Unless the context otherwise requires, references to “we,” “us,” “our,” “Walker & Dunlop” and the “Company” mean the Walker & Dunlop consolidated companies. The statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Because the accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP, they should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (“2015 Form 10-K”). In the opinion of management, all adjustments (consisting only of normal recurring accruals except as otherwise noted herein) considered necessary for a fair presentation of the results for the Company in the interim periods presented have been included. Results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 or thereafter. Walker & Dunlop, Inc. is a holding company and conducts substantially all of its operations through Walker & Dunlop, LLC, the operating company. Walker & Dunlop is one of the leading commercial real estate finance companies in the United States. The Company originates, sells, and services a range of multifamily and other commercial real estate financing products and provides multifamily investment sales brokerage services. The Company originates and sells loans pursuant to the programs of the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac,” and together with Fannie Mae, the “GSEs”), the Government National Mortgage Association (“Ginnie Mae”), and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, “HUD”). The Company also offers a proprietary loan program offering interim loans (the “Interim Program”) and, until it was terminated in the fourth quarter of 2016, a program offering loans for a commercial mortgage backed securities (“CMBS”) execution (the “CMBS Program”). Prior to 2016, the Company executed the CMBS Program through a partnership in which the Company owned a noncontrolling interest. The Company accounted for its investment in the partnership under the equity method of accounting. Effective January 1, 2016, the Company’s partner exited the CMBS Program, and the Company increased its ownership percentage to 100%. As the CMBS Program is now wholly owned, the Company began to consolidate the activities, financial results, and balances of the CMBS Program beginning in the first quarter of 2016, primarily impacting loans held for sale, warehouse notes payable, and gains from mortgage banking activities. The Company terminated the CMBS Program in the fourth quarter of 2016 and is in the process of winding down its operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of Significant Accounting Policies | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation —The condensed consolidated financial statements include the accounts of Walker & Dunlop, Inc., its wholly owned subsidiaries, and its majority owned subsidiaries. All intercompany transactions have been eliminated in consolidation. When the Company has significant influence over operating and financial decisions for an entity but does not own a majority of the voting interests, the Company accounts for the investment using the equity method of accounting. Subsequent Events —The Company has evaluated the effects of all events that have occurred subsequent to September 30, 2016. There have been no material events that would require recognition in the condensed consolidated financial statements. The Company has made certain disclosures in the notes to the condensed consolidated financial statements of events that have occurred subsequent to September 30, 2016. No other material subsequent events have occurred that would require disclosure. Use of Estimates —The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including guaranty obligations, allowance for risk-sharing obligations, allowance for loan losses, capitalized mortgage servicing rights, derivative instruments, and the disclosure of contingent assets and liabilities. Actual results may vary from these estimates. Comprehensive Income —For the three and nine months ended September 30, 2016 and 2015, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying condensed consolidated financial statements. Loans Held for Investment, net — Loans held for investment are multifamily loans originated by the Company through the Interim Program for properties that currently do not qualify for permanent GSE or HUD financing. These loans have terms of up to three years. The loans are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs, and net of any allowance for loan losses. Interest income is accrued based on the actual coupon rate, adjusted for the amortization of net deferred fees and costs, and is recognized as revenue when earned and deemed collectible. All loans held for investment are multifamily loans with similar risk characteristics. As of September 30, 2016, Loans held for investment, net consisted of $264.5 million of unpaid principal balance less $ 2.1 million of net unamortized deferred fees and costs and $0.5 million of allowance for loan losses. As of December 31, 2015, Loans held for investment, net consisted of $233.4 million of unpaid principal balance less $1.1 million of net unamortized deferred fees and costs and $0.8 million of allowance for loan losses. The allowance for loan losses is the Company’s estimate of credit losses inherent in the interim loan portfolio at the balance sheet date. The Company has established a process to determine the appropriateness of the allowance for loan losses that assesses the losses inherent in the portfolio. That process includes assessing the credit quality of each of the loans held for investment by monitoring the financial condition of the borrower and the financial trends of the underlying property. The allowance levels are influenced by the outstanding portfolio balance, delinquency status, historic loss experience, and other conditions influencing loss expectations, such as economic conditions. The allowance for loan losses is estimated collectively for loans with similar characteristics and for which there is no evidence of impairment. The allowances for loan losses recorded as of September 30, 2016 and December 31, 2015 were based on the Company’s collective assessment of the portfolio. Loans held for investment are placed on non-accrual status when full and timely collection of interest or principal is not probable. Loans held for investment are considered past due when contractually required principal or interest payments have not been made on the due dates and are charged off when the loan is considered uncollectible. The Company evaluates all loans held for investment for impairment. A loan is considered impaired when the Company believes that the facts and circumstances of the loan suggest that the Company will not be able to collect all contractually due principal and interest. Delinquency status and property financial condition are key components of the Company’s consideration of impairment status. None of the loans held for investment was delinquent, impaired, or on non-accrual status as of September 30, 2016 or December 31, 2015. Additionally, we have not experienced any delinquencies related to these loans or charged off any loan held for investment since the inception of the Interim Program in 2012. Provision for Credit Losses— The Company records the income statement impact of the changes in the allowance for loan losses and the allowance for risk-sharing obligations within Provision for credit losses in the Condensed Consolidated Statements of Income. Note 5 contains additional discussion related to the allowance for risk-sharing obligations. Provision for credit losses consisted of the following activity for the three and nine months ended September 30, 2016 and 2015: For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Provision (benefit) for loan losses $ $ $ $ Provision for risk-sharing obligations — Provision for credit losses $ $ $ $ Net Warehouse Interest Income— The Company presents warehouse interest income net of warehouse interest expense. Warehouse interest income is the interest earned from loans held for sale and loans held for investment. Substantially all loans that are held for sale are financed with matched borrowings under our warehouse facilities incurred to fund a specific loan held for sale. A portion of all loans that are held for investment is financed with matched borrowings under our warehouse facilities. The portion of loans held for investment not funded with matched borrowings is financed with the Company’s own cash. Warehouse interest expense is incurred on borrowings used to fund loans solely while they are held for sale or for investment. Warehouse interest income and expense are earned or incurred on loans held for sale after a loan is closed and before a loan is sold. Warehouse interest income and expense are earned or incurred on loans held for investment after a loan is closed and before a loan is repaid. Included in Net warehouse interest income for the three and nine months ended September 30, 2016 and 2015 are the following components: For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Warehouse interest income - loans held for sale $ $ $ $ Warehouse interest expense - loans held for sale Net warehouse interest income - loans held for sale $ $ $ $ Warehouse interest income - loans held for investment $ $ $ $ Warehouse interest expense - loans held for investment Net warehouse interest income - loans held for investment $ $ $ $ Total net warehouse interest income $ $ $ $ Recently Announced Accounting Pronouncement s —The following table presents the accounting pronouncements that the Financial Accounting Standards Board (“FASB”) has issued and that have the potential to impact the Company but have not yet been adopted by the Company. Standard Issue Date Description Effective Date Expected Financial Statement Impact Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Q2 2016 ASU 2016-13 ("the Standard") represents a significant change to the incurred loss model currently used to account for credit losses. The Standard requires an entity to estimate the credit losses expected over the life of the credit exposure upon initial recognition of that exposure. The expected credit losses consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. Exposures with similar risk characteristics are required to be grouped together when estimating expected credit losses. The initial estimate and subsequent changes to the estimated credit losses are required to be reported in current earnings in the income statement and through an allowance in the balance sheet. ASU 2016-13 is applicable to financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures. The Standard will modify the way the Company estimates its allowance for risk-sharing obligations and its allowance for loan losses. January 1, 2020 The Company is still in the process of determining the significance of the impact the Standard will have on its financial statements and the timing of when it will adopt the Standard. ASU 2016-02, Leases (Topic 842) Q1 2016 ASU 2016-02 represents a significant reform to the accounting for leases. Lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The ROU asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs. Lessees generally recognize lease expense for these leases on a straight-line basis, which is similar to what they do today. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. January 1, 2019 The Company is still in the process of determining the significance of the impact ASU 2016-02 will have on its financial statements. ASU 2016-01, Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Financial Liabilities Q1 2016 The guidance requires that unconsolidated equity investments not accounted for under the equity method be recorded at fair value, with changes in fair value recorded through net income. The accounting principles that permitted available-for-sale classification with unrealized holding gains and losses recorded in other comprehensive income for equity securities will no longer be applicable. The guidance is not applicable to debt securities and loans and requires minor changes to the disclosure and presentation of financial instruments. January 1, 2018 The Company does not believe that ASU 2016-01 will have a material impact on its reported financial results. ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Q2 2014 ASU 2014-09 represents a comprehensive reform of many of the revenue recognition requirements in GAAP. The guidance in the ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition , and supersedes or amends much of the industry-specific revenue recognition guidance found throughout the Accounting Standards Codification. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The ASU creates a five-step process for achieving the core principle: 1) identifying the contract with the customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations, and 5) recognizing revenue when an entity has completed the performance obligations. The ASU also requires additional disclosures that allow users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows resulting from contracts with customers. The guidance permits the use of the retrospective or cumulative effect transition methods. January 1, 2018 The Company completed its analysis of ASU 2014-09 and concluded that it will not have a material impact on the amount or timing of revenue the Company records under its current revenue recognition practices. Additionally, the Company believes that this ASU will not impact the presentation of the Company's financial statements or require significant additional footnote disclosures. There are no other accounting pronouncements previously issued by the FASB but not yet effective or not yet adopted by the Company that have the potential to impact the Company’s condensed consolidated financial statements. There have been no material changes to the accounting policies discussed in Note 2 of the Company’s 2015 Form 10-K other than the changes made pursuant to the adoption of Accounting Standards Update 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, as disclosed in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016. |
Gains from Mortgage Banking Act
Gains from Mortgage Banking Activities | 9 Months Ended |
Sep. 30, 2016 | |
GAINS FROM MORTGAGE BANKING ACTIVITIES | |
Gains from mortgage banking activities | NOTE 3—GAINS FROM MORTGAGE BANKING ACTIVITIES Gains from mortgage banking activities consisted of the following activity for the three and nine months ended September 30, 2016 and 2015: For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Contractual loan origination related fees, net $ $ $ $ Fair value of expected net cash flows from servicing recognized at commitment Fair value of expected guaranty obligation recognized at commitment Total gains from mortgage banking activities $ $ $ $ The origination fees shown in the table are net of co-broker fees of $13.2 million and $2.3 million for the three months ended September 30, 2016 and 2015, respectively, and $29.8 million and $15.1 million for the nine months ended September 30, 2016 and 2015. Additionally, included in the contractual loan origination related fees, net balance are realized and unrealized losses related to the loans and derivative instruments from the CMBS Program of $1.2 million and $0 for the three months ended September 30, 2016 and 2015, respectively, and $0.6 million and $0 for the nine months ended September 30, 2016 and 2015, respectively. |
Mortgage Servicing Rights
Mortgage Servicing Rights | 9 Months Ended |
Sep. 30, 2016 | |
MSRs | |
Mortgage Servicing Rights | |
Mortgage Servicing Rights | NOTE 4—MORTGAGE SERVICING RIGHTS Mortgage Servicing Rights (“MSRs”) represent the carrying value of the servicing rights retained by the Company for mortgage loans originated and sold. The initial capitalized amount is equal to the estimated fair value of the expected net cash flows associated with the servicing rights. MSRs are amortized using the interest method over the period that servicing income is expected to be received. The fair values of the MSRs at September 30, 2016 and December 31, 2015 were $607.6 million and $510.6 million, respectively. The Company uses a discounted static cash flow valuation approach, and the key economic assumption is the discount rate. For example, see the following sensitivities: The impact of a 100 - basis point increase in the discount rate at September 30, 2016 is a decrease in the fair value of $19.4 million. The impact of a 200 - basis point increase in the discount rate at September 30, 2016 is a decrease in the fair value of $37.5 million. These sensitivities are hypothetical and should be used with caution. These estimates do not include interplay among assumptions and are estimated as a portfolio rather than individual assets. Activity related to capitalized MSRs for the three and nine months ended September 30, 2016 and 2015 is shown in the table below: For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Beginning balance $ $ $ $ Additions, following the sale of loan Purchases — — — Amortization Pre-payments and write-offs Ending balance $ $ $ $ As shown in the table above, during the first half of 2016, the Company purchased the rights to service a HUD loan portfolio from a third-party servicer. The closing-date purchase price was $44.8 million of cash consideration, with $43.4 million paid at closing and the remaining $1.4 million due upon the successful resolution of one defaulted loan, which occurred during the third quarter of 2016. The amount in the ‘Purchases’ line in the table above consists of the closing amount of $44.8 million, net of purchase-price adjustments reducing the closing amount by $2.1 million, for a revised purchase amount of $42.7 million. The servicing portfolio, after consideration of purchase-price adjustments, consisted of approximately $3.6 billion of unpaid principal balance and had a weighted average estimated remaining life of 10.9 years. The following summarizes the components of the net carrying value of the Company’s acquired and originated MSRs as of September 30, 2016: As of September 30, 2016 Gross Accumulated Net (in thousands) carrying value amortization carrying value Acquired MSRs $ $ $ Originated MSRs Total $ $ $ The expected amortization of MSRs recorded as of September 30, 2016 is shown in the table below. Actual amortization may vary from these estimates. Originated MSRs Acquired MSRs Total MSRs (in thousands) Amortization Amortization Amortization Three Months Ending December 31, 2016 $ $ $ Year Ending December 31, 2017 2018 2019 2020 2021 Thereafter Total $ $ $ |
Guaranty Obligation and Allowan
Guaranty Obligation and Allowance for Risk-Sharing Obligations | 9 Months Ended |
Sep. 30, 2016 | |
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS | |
Guaranty Obligation and Allowance for Risk-Sharing Obligations | NOTE 5—GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS When a loan is sold under the Fannie Mae DUS program, the Company typically agrees to guarantee a portion of the ultimate loss incurred on the loan should the borrower fail to perform. The compensation for this risk is a component of the servicing fee on the loan. The Company does not provide a guaranty for any other loan product it sells or brokers. Activity related to the guaranty obligation for the three and nine months ended September 30, 2016 and 2015 is presented in the following table: For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Beginning balance $ $ $ $ Additions, following the sale of loan Amortization Other — — Ending balance $ $ $ $ The Company evaluates the allowance for risk-sharing obligations by monitoring the performance of each loan for triggering events or conditions that may signal a potential default. In situations where payment under the guaranty is probable and estimable on a specific loan, the Company records an allowance for the estimated risk-sharing loss through a charge to the provision for risk-sharing obligations, which is a component of Provision for credit losses in the Condensed Consolidated Statements of Income, along with a write-off of the loan-specific MSR and guaranty obligation. The amount of the provision reflects our assessment of the likelihood of payment by the borrower, the estimated disposition value of the underlying collateral, and the level of risk sharing. Historically, the loss recognition occurs at or before the loan becomes 60 days delinquent. Activity related to the allowance for risk-sharing obligations for the three and nine months ended September 30, 2016 and 2015 is shown in the following table: For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Beginning balance $ $ $ $ Provision for risk-sharing obligations — Write-offs — Other — — Ending balance $ $ $ $ When the Company places a loan for which it has a risk-sharing obligation on its watch list, the Company ceases to amortize the guaranty obligation and transfers the remaining unamortized balance of the guaranty obligation to the allowance for risk-sharing obligations. When a loan for which the Company has a risk-sharing obligation is removed from the watch list, the loan’s reserve is transferred from the allowance for risk-sharing obligations to the guaranty obligation, and the amortization of the remaining balance over the remaining estimated life is resumed. This net transfer of the unamortized balance of the guaranty obligation from a noncontingent classification to a contingent classification (and vice versa) is presented in the guaranty obligation and allowance for risk-sharing obligations tables above as ‘Other.’ During the third quarter of 2016, the Company and Fannie Mae settled the loss sharing amounts related to the last three remaining previously defaulted at risk loans. As a result of these loss settlements, the Allowance for Risk-sharing Obligations as of September 30, 2016 is based entirely on the Company’s collective assessment of the probability of loss related to the loans on the watch list as of September 30, 2016. As of September 30, 2016, the maximum quantifiable contingent liability associated with the Company’s guarantees under the Fannie Mae DUS agreement was $4.6 billion. The maximum quantifiable contingent liability is not representative of the actual loss the Company would incur. The Company would be liable for this amount only if all of the loans it services for Fannie Mae, for which the Company retains some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. |
Servicing
Servicing | 9 Months Ended |
Sep. 30, 2016 | |
Loans and Other Servicing Accounts | |
Servicing | |
Servicing | NOTE 6—SERVICING The total unpaid principal balance of the Company’s servicing portfolio was $59.1 billion as of September 30, 2016 compared to $50.2 billion as of December 31, 2015. The September 30, 2016 balance includes the addition of $3.6 billion related to purchase activity as more fully discussed in Note 4. |
Warehouse Notes Payable
Warehouse Notes Payable | 9 Months Ended |
Sep. 30, 2016 | |
WAREHOUSE NOTES PAYABLE | |
Warehouse Notes Payable | NOTE 7—WAREHOUSE NOTES PAYABLE At September 30, 2016, to provide financing to borrowers under the GSE and HUD programs and the Company’s CMBS and Interim Programs, the Company has arranged for warehouse lines of credit. In support of the GSE and HUD programs, the Company has warehouse lines of credit in the amount of $2.0 billion with certain national banks and a $1.0 billion uncommitted facility with Fannie Mae (collectively, the “Agency Warehouse Facilities”). In support of the CMBS Program, the Company has warehouse lines of credit in the amount of $0.2 billion with certain national banks (the “CMBS Warehouse Facilities”). The Company has pledged substantially all of its loans held for sale against the Agency Warehouse Facilities and the CMBS Warehouse Facilities. The Company has arranged for warehouse lines of credit in the amount of $0.4 billion with certain national banks to assist in funding loans held for investment under the Interim Program (“Interim Warehouse Facilities”). The Company has pledged substantially all of its loans held for investment against these Interim Warehouse Facilities. The maximum amount and outstanding borrowings under the warehouse notes payable at September 30, 2016 are shown in the table below: September 30, 2016 (dollars in thousands) Maximum Outstanding Loan Type Facility Amount Balance Funded (1) Interest rate Agency warehouse facility #1 $ $ LHFS 30-day LIBOR plus 1.40% Agency warehouse facility #2 LHFS 30-day LIBOR plus 1.40% Agency warehouse facility #3 LHFS 30-day LIBOR plus 1.35% Agency warehouse facility #4 LHFS 30-day LIBOR plus 1.40% Agency warehouse facility #5 LHFS 30-day LIBOR plus 1.80% Fannie Mae repurchase agreement, uncommitted line and open maturity LHFS 30-day LIBOR plus 1.15% Total agency warehouse facilities $ $ CMBS warehouse facility #1 $ $ LHFS 30-day LIBOR plus 2.25% CMBS warehouse facility #2 LHFS 30-day LIBOR plus 2.75% Total CMBS warehouse facilities $ $ Interim warehouse facility #1 $ $ LHFI 30-day LIBOR plus 1.90% Interim warehouse facility #2 LHFI 30-day LIBOR plus 2.00% Interim warehouse facility #3 LHFI 30-day LIBOR plus 2.00% to 2.50% Total interim warehouse facilities $ $ Debt issuance costs — Total warehouse facilities $ $ (1) Type of loan the borrowing facility is used to fully or partially fund – loans held for sale (“LHFS”) or loans held for investment (“LHFI”). During the fourth quarter of 2016, the Company executed the 12 th amendment to the credit and security agreement related to Agency Warehouse Facility #1 that extended the maturity date to October 30, 2017. No other material modifications have been made to the agreement during 2016. During the second quarter of 2016, the Company executed the eighth amendment to the amended and restated credit and security agreement related to Agency Warehouse Facility #2 that extended the maturity date to June 21, 2017. No other material modifications have been made to the agreement during 2016. During the second quarter of 2016, the Company executed the fourth amendment to the credit and security agreement related to Agency Warehouse Facility #3. The amendment increased the committed amount to $280.0 million, reduced the interest rate to the 30-day London Interbank Offered Rate (“LIBOR”) plus 135 basis points, and extended the maturity date to April 30, 2017. Additionally, during the second and third quarters of 2016, the Company executed the fifth and sixth amendments to the credit and security agreement that provide temporary increases totaling $400.0 million to the maximum borrowing capacity that expire in January 2017. No other material modifications have been made to the agreement during 2016. During the fourth quarter of 2016, the Company executed the second amendment to the warehouse loan and security agreement related to Agency Warehouse Facility #4 that provides a $100.0 million permanent increase to the maximum borrowing capacity and extends the maturity date of the facility to October 27, 2017. No other material modifications have been made to the agreement during 2016. During the third quarter of 2016, the Company executed a warehousing credit and security agreement to establish Agency Warehouse Facility #5. The committed warehouse facility provides the Company with the ability to fund defaulted HUD and FHA loans. The warehouse agreement provides for a maximum borrowing amount of $30.0 million and is scheduled to mature in January 2018. The borrowings under the warehouse agreement bear interest at a rate of 30-day LIBOR plus 180 basis points. During the third quarter of 2016, Fannie Mae increased the maximum borrowing capacity of the Fannie Mae uncommitted facility to $1.0 billion. No other material modifications have been made to the Fannie Mae facility during 2016. During the second quarter of 2016, the Company executed a repurchase agreement to establish CMBS Warehouse Facility #2. The new warehouse facility has a maximum borrowing capacity of $100.0 million and matures in one year. The agreement provides the Company with the ability to fund first mortgage loans on various real estate property types for a short-term period, using available cash in combination with advances under the facility. All borrowings bear interest at 30-day LIBOR plus 275 basis points . The lender retains a first priority security interest in all mortgages funded by such advances on a cross-collateralized basis. Repayments under the credit agreement mirror the underlying mortgage loan, with each advance repaid upon sale of the underlying mortgage loan. During the fourth quarter of 2016, the repurchase agreement related to CMBS Warehouse Facility #1 expired according to its terms, and the Company determined not to renew the facility. During the second quarter of 2016, the Company executed the sixth amendment to the credit and security agreement related to Interim Warehouse Facility #1 that extended the maturity date to April 30, 2017. No other material modifications have been made to the agreement during 2016. During the second quarter of 2016, the Company exercised its option to extend the maturity date of Interim Warehouse Facility #3 to May 19, 2017. Additionally, the Company executed the second amendment to the repurchase agreement related to Interim Warehouse Facility #3. The amendment provides the Company with an additional unilateral option to extend the maturity date one year. As a result of the amendment, the Company now has three remaining one-year options that, if exercised, extend the maturity date through May 19, 2020. No other material modifications have been made to the agreement during 2016. The warehouse notes payable and the note payable are subject to various financial covenants, all of which the Company was in compliance with as of the current period end. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE MEASUREMENTS | |
Fair Value Measurements | NOTE 8—FAIR VALUE MEASUREMENTS The Company uses valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach to measure assets and liabilities that are measured at fair value. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: · Level 1 —Financial assets and liabilities whose values are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. · Level 2 —Financial assets and liabilities whose values are based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might 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 (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. · Level 3 —Financial assets and liabilities whose values are based on inputs that are both unobservable and significant to the overall valuation. The Company's MSRs are measured at fair value on a nonrecurring basis. That is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company's MSRs do not trade in an active, open market with readily observable prices. While sales of multifamily MSRs do occur, precise terms and conditions vary with each transaction and are not readily available. Accordingly, the estimated fair value of the Company’s MSRs was developed using discounted cash flow models that calculate the present value of estimated future net servicing income. The model considers contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service, and other economic factors. The Company periodically reassesses and adjusts, when necessary, the underlying inputs and assumptions used in the model to reflect observable market conditions and assumptions that a market participant would consider in valuing an MSR asset. MSRs are carried at the lower of amortized cost or fair value. A description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company's assets and liabilities carried at fair value on a recurring basis: · Derivative Instruments —The derivative instruments used by the Company consist of interest rate lock commitments (“IRLC”), forward sale agreements (“forwards”), interest rate swaps “(IRS”), and, on occasion, synthetic credit default swap index contracts (“CMBX”). The IRLCs and forwards are valued using a discounted cash flow model developed based on changes in the U.S. Treasury rate and other observable market data. The value was determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company, and are classified within Level 3 of the valuation hierarchy. CMBX are traded on an active market with prices determined based on observable inputs such as credit curves, recovery rates, and current credit spreads obtained from market participants. IRS trade in the over-the-counter market where quoted prices are not available. Therefore, the Company uses internal valuation techniques with observable inputs from a liquid market, the most significant of which is the related yield curve, to estimate the fair value of interest rate swaps. There were no CMBX outstanding as of September 30, 2016 as the positions were closed just prior to the end of the first quarter of 2016. During the rest of the first quarter of 2016, the Company had CMBX with a $25.0 million notional amount outstanding. The Company classifies IRS and CMBX as Level 2. · Loans Held for Sale —The loans held for sale are reported at fair value as the Company has elected the fair value option for all loans held for sale. The Company determines the fair value of the loans held for sale intended to be sold to the GSEs and HUD using discounted cash flow models that incorporate quoted observable prices from market participants. The Company determines the fair value of the loans held for sale intended to be sold under a CMBS execution using a hypothetical securitization model utilizing market data from recent securitization spreads and pricing of loans with similar characteristics. As necessary, these fair values are adjusted for typical securitization activities, including portfolio composition, market conditions, and liquidity. The Company classifies all loans held for sale as Level 2. · Pledged Securities —The pledged securities are valued using quoted market prices from recent trades. Therefore, the Company classifies pledged securities as Level 1. The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2016, and December 31, 2015, segregated by the level of the valuation inputs within the fair value hierarchy used to measure fair value: Quoted Prices in Significant Significant Active Markets Other Other For Identical Observable Unobservable Assets Inputs Inputs Balance as of (in thousands) (Level 1) (Level 2) (Level 3) Period End September 30, 2016 Assets Loans held for sale $ — $ $ — $ Pledged securities — — Derivative assets — — Total $ $ $ $ Liabilities Derivative liabilities $ — $ $ $ Total $ — $ $ $ December 31, 2015 Assets Loans held for sale $ — $ $ — $ Pledged securities — — Derivative assets — — Total $ $ $ $ Liabilities Derivative liabilities $ — $ — $ $ Total $ — $ — $ $ There were no transfers between any of the levels within the fair value hierarchy during the nine months ended September 30, 2016. Derivative instruments (Level 3) are outstanding for short periods of time (generally less than 60 days). A roll forward of derivative instruments is presented below for the three and nine months ended September 30, 2016 and 2015: Fair Value Measurements Using Significant Unobservable Inputs: Derivative Instruments For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Derivative assets and liabilities, net Beginning balance $ $ $ $ Settlements Realized gains recorded in earnings (1) Unrealized gains recorded in earnings (1) Ending balance $ $ $ $ (1) Realized and unrealized gains from derivatives are recognized in Gains from mortgage banking activities in the Condensed Consolidated Statements of Income. The following table presents information about significant unobservable inputs used in the measurement of the fair value of the Company’s Level 3 assets and liabilities as of September 30, 2016: Quantitative Information about Level 3 Measurements (in thousands) Fair Value Valuation Technique Unobservable Input (1) Input Value (1) Derivative assets $ Discounted cash flow Counterparty credit risk — Derivative liabilities Discounted cash flow Counterparty credit risk — (1) Significant increases in this input may lead to significantly lower fair value measurements. The carrying amounts and the fair values of the Company's financial instruments as of September 30, 2016 and December 31, 2015 are presented below: September 30, 2016 December 31, 2015 Carrying Fair Carrying Fair (in thousands) Amount Value Amount Value Financial assets: Cash and cash equivalents $ $ $ $ Restricted cash Pledged securities Loans held for sale Loans held for investment, net Derivative assets Total financial assets $ $ $ $ Financial liabilities: Derivative liabilities $ $ $ $ Warehouse notes payable Note payable Total financial liabilities $ $ $ $ The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value: Cash and Cash Equivalents and Restricted Cash —The carrying amounts approximate fair value because of the short maturity of these instruments (Level 1). Pledged Securities —Consist of highly liquid investments in money market accounts invested in government securities and investments in government guaranteed securities. Investments typically have maturities of 90 days or less and are valued using quoted market prices from recent trades. Loans Held For Sale —Consist of originated loans that are generally transferred or sold within 60 days from the date that the mortgage loan is funded and are valued using (i) discounted cash flow models that incorporate observable prices from market participants or (ii) a hypothetical securitization model utilizing observable market data from recent securitization spreads and observable pricing of loans with similar characteristics. Loans Held For Investment —Consist of originated interim loans which the Company expects to hold for investment for the term of the loan, which is three years or less, and are valued using discounted cash flow models that incorporate primarily observable inputs from market participants and also credit-related adjustments, if applicable (Level 3). As of September 30, 2016 and December 31, 2015, no credit-related adjustments were required. Derivative Instruments —Consist of IRLCs, forwards, and IRS. IRLCs and forwards are valued using discounted cash flow models developed based on changes in the U.S. Treasury rate and other observable market data. The value is determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company. The fair value of IRS is based on an internal valuation model with observable inputs from an active market. Warehouse Notes Payable —Consist of borrowings outstanding under warehouse line agreements. The borrowing rates on the warehouse lines are based upon 30-day LIBOR plus a margin. The unpaid principal balance of warehouse notes payable approximates fair value because of the short maturity of these instruments and the monthly resetting of the index rate to prevailing market rates (Level 2). Note Payable —Consists of borrowings outstanding under a term note agreement. The borrowing rate on the note payable is based upon 30-day LIBOR plus an applicable margin. The Company estimates the fair value by discounting the future cash flows at market rates (Level 2). Fair Value of Derivative Instruments and Loans Held for Sale —In the normal course of business, the Company enters into contractual commitments to originate and sell multifamily GSE and HUD mortgage loans at fixed prices with fixed expiration dates. The commitments become effective when the borrowers "lock-in" a specified interest rate within time frames established by the Company. All mortgagors are evaluated for creditworthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the "lock-in" of rates by the borrower and the sale date of the loan to an investor. To mitigate the effect of the interest rate risk inherent in providing IRLCs to borrowers for GSE and HUD loans, the Company's policy is to enter into a sale commitment with the investor simultaneous with the rate lock commitment with the borrower. The sale contract with the investor locks in an interest rate and price for the sale of the loan. The terms of the contract with the investor and the rate lock with the borrower are matched in substantially all respects, with the objective of eliminating interest rate risk to the extent practical. Forwards with the investors have an expiration date that is longer than our related IRLCs to the borrower to allow, among other things, for the closing of the loan and processing of paperwork to deliver the loan into the sale commitment. With respect to the Company’s loans held for sale intended to be sold under a CMBS execution, the Company is exposed to interest rate risk and credit risk (i.e., the risk that investor spreads will change due to perceived credit risk in CMBS loans). To mitigate the interest-rate risk, the Company’s policy is to execute IRS with large national banks. On occasion, the Company executes CMBX with large national banks to mitigate the credit risk. The IRLCs, forwards, and IRS are undesignated derivatives and, accordingly, are recorded at fair value through Gains on mortgage banking activities in the Condensed Consolidated Statements of Income. The fair value of the Company's IRLCs and loans held for sale and the related input levels includes, as applicable: · the assumed gain/loss of the expected resultant loan sale to the investor (Level 2); · the expected net cash flows associated with servicing the loan (Level 2); · the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and · the nonperformance risk of both the counterparty and the Company (IRLCs and forwards only; Level 3). The fair value of the Company's forwards and IRS considers effects of interest rate movements between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forwards and IRS to measure the fair value. The assumed gain/loss considers the amount that the Company has discounted the price to the borrower from par for competitive reasons, if at all, and the expected net cash flows from servicing to be received upon sale of the loan (Level 2). The fair value of the expected net cash flows associated with servicing the loan is calculated pursuant to the valuation techniques applicable to MSRs (Level 2). To calculate the effects of interest rate movements, the Company uses applicable published U.S. Treasury prices, and multiplies the price movement between the rate lock date or loan origination date and the balance sheet date by the notional loan commitment amount (Level 2). The fair value of the Company's forwards considers the market price movement of the same type of security between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forwards to measure the fair value. The fair value of the Company’s IRLCs and forwards is adjusted to reflect the risk that the agreement will not be fulfilled. The Company’s exposure to nonperformance in IRLCs and forwards is represented by the contractual amount of those instruments. Given the credit quality of our counterparties and the short duration of IRLCs and forwards, the risk of nonperformance by the Company’s counterparties has historically not been significant (Level 3). The following table presents the components of fair value and other relevant information associated with the Company’s derivative instruments and loans held for sale as of September 30, 2016 and December 31, 2015. Fair Value Adjustment Components Balance Sheet Location Fair Value Notional or Assumed Interest Rate Total Adjustment Principal Gain Movement or Fair Value Derivative Derivative To Loans (in thousands) Amount on Sale Other Effect Adjustment Assets Liabilities Held for Sale September 30, 2016 Rate lock commitments $ $ $ $ $ $ $ — Forward sale contracts — — Interest rate swaps — — — Loans held for sale — — Total $ $ $ $ $ $ December 31, 2015 Rate lock commitments $ $ $ $ $ $ — $ — Forward sale contracts — — Loans held for sale — — Total $ $ — $ $ $ $ |
Litigation, Commitments, and Co
Litigation, Commitments, and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Litigation, Commitments, and Contingencies | NOTE 9—LITIGATION, COMMITMENTS, AND CONTINGENCIES Fannie Mae DUS Related Commitments —Commitments for the origination and subsequent sale and delivery of loans to Fannie Mae represent those mortgage loan transactions where the borrower has locked an interest rate and scheduled closing and the Company has entered into a mandatory delivery commitment to sell the loan to Fannie Mae. As discussed in Note 8, the Company accounts for these commitments as derivatives recorded at fair value. The Company is generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program. The Company is required to secure these obligations by assigning restricted cash balances and securities to Fannie Mae. The amount of collateral required by Fannie Mae is a formulaic calculation at the loan level and considers the balance of the loan, the risk level of the loan, the age of the loan, and the level of risk-sharing. Fannie Mae requires restricted liquidity for Tier 2 loans of 75 basis points, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. Restricted liquidity held in the form of money market funds holding U.S. Treasuries is discounted 5% for purposes of calculating compliance with the restricted liquidity requirements. As of September 30, 2016, the Company held substantially all of its restricted liquidity in money market funds holding U.S. Treasuries. Additionally, substantially all of the loans for which the Company has risk sharing are Tier 2 loans. The Company is in compliance with the September 30, 2016 collateral requirements as outlined above. As of September 30, 2016, reserve requirements for the DUS loan portfolio will require the Company to fund $52.4 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within the at risk portfolio. Fannie Mae periodically reassesses the DUS Capital Standards and may make changes to these standards in the future. The Company generates sufficient cash flow from its operations to meet these capital standards and does not expect any future changes to have a material impact on its future operations; however, any future changes to collateral requirements may adversely impact the Company’s available cash. Fannie Mae has established benchmark standards for capital adequacy, and reserves the right to terminate the Company's servicing authority for all or some of the portfolio if at any time it determines that the Company's financial condition is not adequate to support its obligations under the DUS agreement. The Company is required to maintain acceptable net worth as defined in the agreement, and the Company satisfied the requirements as of September 30, 2016. The net worth requirement is derived primarily from unpaid balances on Fannie Mae loans and the level of risk sharing. At September 30, 2016, the minimum net worth requirement was $124.5 million, and the Company's net worth was $579.6 million, as measured at our wholly owned operating subsidiary, Walker & Dunlop, LLC. As of September 30, 2016, the Company was required to maintain at least $24.1 million of liquid assets to meet operational liquidity requirements for Fannie Mae, Freddie Mac, HUD, and Ginnie Mae . As of September 30, 2016, the Company had operational liquidity of $94.8 million , as measured at our wholly owned operating subsidiary, Walker & Dunlop, LLC . Other Commitments— Under certain limited circumstances, the Company may make preferred equity investments in entities controlled by certain of its borrowers that will assist those borrowers to acquire and reposition properties. The terms of such investments are negotiated with each investment. As of September 30, 2016, the Company has made commitments to fund such preferred equity investments in monthly installments totaling $42.8 million, $15.5 million of which has been funded. The Company expects to fund the unfunded commitment amounts over the next 12 to 18 months. Litigation — In the ordinary course of business, the Company may be party to various claims and litigation, none of which the Company believes is material. The Company cannot predict the outcome of any pending litigation and may be subject to consequences that could include fines, penalties, and other costs, and the Company’s reputation and business may be impacted. The Company believes that any liability that could be imposed on the Company in connection with the disposition of any pending lawsuits would not have a material adverse effect on its business, results of operations, liquidity, or financial condition. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2016 | |
EARNINGS PER SHARE | |
Earnings Per Share | NOTE 10—EARNINGS PER SHARE The following weighted average shares and share equivalents are used to calculate basic and diluted earnings per share for the three and nine months ended September 30, 2016 and 2015: For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Weighted average number of shares outstanding used to calculate basic earnings per share Dilutive securities Unvested restricted shares Stock options Weighted average number of shares and share equivalents outstanding used to calculate diluted earnings per share The assumed proceeds used for calculating the dilutive impact of restricted stock awards under the treasury method includes the unrecognized compensation costs associated with the awards. The following table presents any average outstanding options to purchase shares of common stock and average restricted shares that were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive (the exercise price of the options or the grant date market price of the restricted shares was greater than the average market price of the Company’s shares during the periods presented). For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Average options — — Average restricted shares — |
Total Equity
Total Equity | 9 Months Ended |
Sep. 30, 2016 | |
TOTAL EQUITY | |
Total Equity | NOTE 11—TOTAL EQUITY A summary of changes in total equity is presented below: Stockholders' Equity Additional Common Stock Paid-In Retained Noncontrolling Total (in thousands) Shares Amount Capital Earnings Interests Equity Balance at December 31, 2015 $ $ $ $ $ Cumulative effect from change in accounting for stock compensation — — — Walker & Dunlop net income — — — — Net income from noncontrolling interests — — — — Stock-based compensation — — — — Issuance of common stock in connection with equity compensation plans — — Repurchase and retirement of common stock — Other — — — Balance at September 30, 2016 $ $ $ $ $ During the nine months ended September 30, 2016, the Company repurchased 0.4 million shares of its common stock under a previously announced share repurchase program at a weighted average price of $23.11 per share and immediately retired the shares, reducing stockholders’ equity by $9.2 million. The Company had $65.8 million of authorized share repurchase capacity remaining as of September 30, 2016. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Consolidation | Consolidation —The condensed consolidated financial statements include the accounts of Walker & Dunlop, Inc., its wholly owned subsidiaries, and its majority owned subsidiaries. All intercompany transactions have been eliminated in consolidation. When the Company has significant influence over operating and financial decisions for an entity but does not own a majority of the voting interests, the Company accounts for the investment using the equity method of accounting. |
Subsequent Events | Subsequent Events —The Company has evaluated the effects of all events that have occurred subsequent to September 30, 2016. There have been no material events that would require recognition in the condensed consolidated financial statements. The Company has made certain disclosures in the notes to the condensed consolidated financial statements of events that have occurred subsequent to September 30, 2016. No other material subsequent events have occurred that would require disclosure. |
Use of Estimates | Use of Estimates —The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including guaranty obligations, allowance for risk-sharing obligations, allowance for loan losses, capitalized mortgage servicing rights, derivative instruments, and the disclosure of contingent assets and liabilities. Actual results may vary from these estimates. |
Comprehensive Income | Comprehensive Income —For the three and nine months ended September 30, 2016 and 2015, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying condensed consolidated financial statements. |
Loans Held for Investment, net | Loans Held for Investment, net — Loans held for investment are multifamily loans originated by the Company through the Interim Program for properties that currently do not qualify for permanent GSE or HUD financing. These loans have terms of up to three years. The loans are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs, and net of any allowance for loan losses. Interest income is accrued based on the actual coupon rate, adjusted for the amortization of net deferred fees and costs, and is recognized as revenue when earned and deemed collectible. All loans held for investment are multifamily loans with similar risk characteristics. As of September 30, 2016, Loans held for investment, net consisted of $264.5 million of unpaid principal balance less $ 2.1 million of net unamortized deferred fees and costs and $0.5 million of allowance for loan losses. As of December 31, 2015, Loans held for investment, net consisted of $233.4 million of unpaid principal balance less $1.1 million of net unamortized deferred fees and costs and $0.8 million of allowance for loan losses. The allowance for loan losses is the Company’s estimate of credit losses inherent in the interim loan portfolio at the balance sheet date. The Company has established a process to determine the appropriateness of the allowance for loan losses that assesses the losses inherent in the portfolio. That process includes assessing the credit quality of each of the loans held for investment by monitoring the financial condition of the borrower and the financial trends of the underlying property. The allowance levels are influenced by the outstanding portfolio balance, delinquency status, historic loss experience, and other conditions influencing loss expectations, such as economic conditions. The allowance for loan losses is estimated collectively for loans with similar characteristics and for which there is no evidence of impairment. The allowances for loan losses recorded as of September 30, 2016 and December 31, 2015 were based on the Company’s collective assessment of the portfolio. Loans held for investment are placed on non-accrual status when full and timely collection of interest or principal is not probable. Loans held for investment are considered past due when contractually required principal or interest payments have not been made on the due dates and are charged off when the loan is considered uncollectible. The Company evaluates all loans held for investment for impairment. A loan is considered impaired when the Company believes that the facts and circumstances of the loan suggest that the Company will not be able to collect all contractually due principal and interest. Delinquency status and property financial condition are key components of the Company’s consideration of impairment status. None of the loans held for investment was delinquent, impaired, or on non-accrual status as of September 30, 2016 or December 31, 2015. Additionally, we have not experienced any delinquencies related to these loans or charged off any loan held for investment since the inception of the Interim Program in 2012. |
Provision for Credit Losses | Provision for Credit Losses— The Company records the income statement impact of the changes in the allowance for loan losses and the allowance for risk-sharing obligations within Provision for credit losses in the Condensed Consolidated Statements of Income. Note 5 contains additional discussion related to the allowance for risk-sharing obligations. Provision for credit losses consisted of the following activity for the three and nine months ended September 30, 2016 and 2015: For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Provision (benefit) for loan losses $ $ $ $ Provision for risk-sharing obligations — Provision for credit losses $ $ $ $ |
Net Warehouse Interest Income | Net Warehouse Interest Income— The Company presents warehouse interest income net of warehouse interest expense. Warehouse interest income is the interest earned from loans held for sale and loans held for investment. Substantially all loans that are held for sale are financed with matched borrowings under our warehouse facilities incurred to fund a specific loan held for sale. A portion of all loans that are held for investment is financed with matched borrowings under our warehouse facilities. The portion of loans held for investment not funded with matched borrowings is financed with the Company’s own cash. Warehouse interest expense is incurred on borrowings used to fund loans solely while they are held for sale or for investment. Warehouse interest income and expense are earned or incurred on loans held for sale after a loan is closed and before a loan is sold. Warehouse interest income and expense are earned or incurred on loans held for investment after a loan is closed and before a loan is repaid. Included in Net warehouse interest income for the three and nine months ended September 30, 2016 and 2015 are the following components: For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Warehouse interest income - loans held for sale $ $ $ $ Warehouse interest expense - loans held for sale Net warehouse interest income - loans held for sale $ $ $ $ Warehouse interest income - loans held for investment $ $ $ $ Warehouse interest expense - loans held for investment Net warehouse interest income - loans held for investment $ $ $ $ Total net warehouse interest income $ $ $ $ |
Recently Announced Accounting Pronouncements | Recently Announced Accounting Pronouncement s —The following table presents the accounting pronouncements that the Financial Accounting Standards Board (“FASB”) has issued and that have the potential to impact the Company but have not yet been adopted by the Company. Standard Issue Date Description Effective Date Expected Financial Statement Impact Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Q2 2016 ASU 2016-13 ("the Standard") represents a significant change to the incurred loss model currently used to account for credit losses. The Standard requires an entity to estimate the credit losses expected over the life of the credit exposure upon initial recognition of that exposure. The expected credit losses consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. Exposures with similar risk characteristics are required to be grouped together when estimating expected credit losses. The initial estimate and subsequent changes to the estimated credit losses are required to be reported in current earnings in the income statement and through an allowance in the balance sheet. ASU 2016-13 is applicable to financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures. The Standard will modify the way the Company estimates its allowance for risk-sharing obligations and its allowance for loan losses. January 1, 2020 The Company is still in the process of determining the significance of the impact the Standard will have on its financial statements and the timing of when it will adopt the Standard. ASU 2016-02, Leases (Topic 842) Q1 2016 ASU 2016-02 represents a significant reform to the accounting for leases. Lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The ROU asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs. Lessees generally recognize lease expense for these leases on a straight-line basis, which is similar to what they do today. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. January 1, 2019 The Company is still in the process of determining the significance of the impact ASU 2016-02 will have on its financial statements. ASU 2016-01, Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Financial Liabilities Q1 2016 The guidance requires that unconsolidated equity investments not accounted for under the equity method be recorded at fair value, with changes in fair value recorded through net income. The accounting principles that permitted available-for-sale classification with unrealized holding gains and losses recorded in other comprehensive income for equity securities will no longer be applicable. The guidance is not applicable to debt securities and loans and requires minor changes to the disclosure and presentation of financial instruments. January 1, 2018 The Company does not believe that ASU 2016-01 will have a material impact on its reported financial results. ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Q2 2014 ASU 2014-09 represents a comprehensive reform of many of the revenue recognition requirements in GAAP. The guidance in the ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition , and supersedes or amends much of the industry-specific revenue recognition guidance found throughout the Accounting Standards Codification. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The ASU creates a five-step process for achieving the core principle: 1) identifying the contract with the customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations, and 5) recognizing revenue when an entity has completed the performance obligations. The ASU also requires additional disclosures that allow users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows resulting from contracts with customers. The guidance permits the use of the retrospective or cumulative effect transition methods. January 1, 2018 The Company completed its analysis of ASU 2014-09 and concluded that it will not have a material impact on the amount or timing of revenue the Company records under its current revenue recognition practices. Additionally, the Company believes that this ASU will not impact the presentation of the Company's financial statements or require significant additional footnote disclosures. There are no other accounting pronouncements previously issued by the FASB but not yet effective or not yet adopted by the Company that have the potential to impact the Company’s condensed consolidated financial statements. There have been no material changes to the accounting policies discussed in Note 2 of the Company’s 2015 Form 10-K other than the changes made pursuant to the adoption of Accounting Standards Update 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, as disclosed in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Provision for Credit Losses | For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Provision (benefit) for loan losses $ $ $ $ Provision for risk-sharing obligations — Provision for credit losses $ $ $ $ |
Schedule of Net Warehouse Interest Income | For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Warehouse interest income - loans held for sale $ $ $ $ Warehouse interest expense - loans held for sale Net warehouse interest income - loans held for sale $ $ $ $ Warehouse interest income - loans held for investment $ $ $ $ Warehouse interest expense - loans held for investment Net warehouse interest income - loans held for investment $ $ $ $ Total net warehouse interest income $ $ $ $ |
Summary of Recently Announced Accounting Pronouncements | Standard Issue Date Description Effective Date Expected Financial Statement Impact Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Q2 2016 ASU 2016-13 ("the Standard") represents a significant change to the incurred loss model currently used to account for credit losses. The Standard requires an entity to estimate the credit losses expected over the life of the credit exposure upon initial recognition of that exposure. The expected credit losses consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. Exposures with similar risk characteristics are required to be grouped together when estimating expected credit losses. The initial estimate and subsequent changes to the estimated credit losses are required to be reported in current earnings in the income statement and through an allowance in the balance sheet. ASU 2016-13 is applicable to financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures. The Standard will modify the way the Company estimates its allowance for risk-sharing obligations and its allowance for loan losses. January 1, 2020 The Company is still in the process of determining the significance of the impact the Standard will have on its financial statements and the timing of when it will adopt the Standard. ASU 2016-02, Leases (Topic 842) Q1 2016 ASU 2016-02 represents a significant reform to the accounting for leases. Lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The ROU asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs. Lessees generally recognize lease expense for these leases on a straight-line basis, which is similar to what they do today. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. January 1, 2019 The Company is still in the process of determining the significance of the impact ASU 2016-02 will have on its financial statements. ASU 2016-01, Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Financial Liabilities Q1 2016 The guidance requires that unconsolidated equity investments not accounted for under the equity method be recorded at fair value, with changes in fair value recorded through net income. The accounting principles that permitted available-for-sale classification with unrealized holding gains and losses recorded in other comprehensive income for equity securities will no longer be applicable. The guidance is not applicable to debt securities and loans and requires minor changes to the disclosure and presentation of financial instruments. January 1, 2018 The Company does not believe that ASU 2016-01 will have a material impact on its reported financial results. ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Q2 2014 ASU 2014-09 represents a comprehensive reform of many of the revenue recognition requirements in GAAP. The guidance in the ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition , and supersedes or amends much of the industry-specific revenue recognition guidance found throughout the Accounting Standards Codification. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The ASU creates a five-step process for achieving the core principle: 1) identifying the contract with the customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations, and 5) recognizing revenue when an entity has completed the performance obligations. The ASU also requires additional disclosures that allow users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows resulting from contracts with customers. The guidance permits the use of the retrospective or cumulative effect transition methods. January 1, 2018 The Company completed its analysis of ASU 2014-09 and concluded that it will not have a material impact on the amount or timing of revenue the Company records under its current revenue recognition practices. Additionally, the Company believes that this ASU will not impact the presentation of the Company's financial statements or require significant additional footnote disclosures. |
Gains from Mortgage Banking A19
Gains from Mortgage Banking Activities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
GAINS FROM MORTGAGE BANKING ACTIVITIES | |
Schedule of Gains from Mortgage Banking Activities | For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Contractual loan origination related fees, net $ $ $ $ Fair value of expected net cash flows from servicing recognized at commitment Fair value of expected guaranty obligation recognized at commitment Total gains from mortgage banking activities $ $ $ $ |
Mortgage Servicing Rights (Tabl
Mortgage Servicing Rights (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
MORTGAGE SERVICING RIGHTS | |
Schedule of Activity Related to Capitalized MSRs | For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Beginning balance $ $ $ $ Additions, following the sale of loan Purchases — — — Amortization Pre-payments and write-offs Ending balance $ $ $ $ |
Summary of Components of Net Carrying Value of Acquired and Originated MSRs | As of September 30, 2016 Gross Accumulated Net (in thousands) carrying value amortization carrying value Acquired MSRs $ $ $ Originated MSRs Total $ $ $ |
Schedule of Expected Amortization of MSRs | Originated MSRs Acquired MSRs Total MSRs (in thousands) Amortization Amortization Amortization Three Months Ending December 31, 2016 $ $ $ Year Ending December 31, 2017 2018 2019 2020 2021 Thereafter Total $ $ $ |
Guaranty Obligation and Allow21
Guaranty Obligation and Allowance for Risk-Sharing Obligations (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS | |
Schedule of Activity Related to Guaranty Obligation | For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Beginning balance $ $ $ $ Additions, following the sale of loan Amortization Other — — Ending balance $ $ $ $ |
Summary of Allowance for Risk-Sharing Obligations | For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Beginning balance $ $ $ $ Provision for risk-sharing obligations — Write-offs — Other — — Ending balance $ $ $ $ |
Warehouse Notes Payable (Tables
Warehouse Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
WAREHOUSE NOTES PAYABLE | |
Schedule of Debt Obligations | September 30, 2016 (dollars in thousands) Maximum Outstanding Loan Type Facility Amount Balance Funded (1) Interest rate Agency warehouse facility #1 $ $ LHFS 30-day LIBOR plus 1.40% Agency warehouse facility #2 LHFS 30-day LIBOR plus 1.40% Agency warehouse facility #3 LHFS 30-day LIBOR plus 1.35% Agency warehouse facility #4 LHFS 30-day LIBOR plus 1.40% Agency warehouse facility #5 LHFS 30-day LIBOR plus 1.80% Fannie Mae repurchase agreement, uncommitted line and open maturity LHFS 30-day LIBOR plus 1.15% Total agency warehouse facilities $ $ CMBS warehouse facility #1 $ $ LHFS 30-day LIBOR plus 2.25% CMBS warehouse facility #2 LHFS 30-day LIBOR plus 2.75% Total CMBS warehouse facilities $ $ Interim warehouse facility #1 $ $ LHFI 30-day LIBOR plus 1.90% Interim warehouse facility #2 LHFI 30-day LIBOR plus 2.00% Interim warehouse facility #3 LHFI 30-day LIBOR plus 2.00% to 2.50% Total interim warehouse facilities $ $ Debt issuance costs — Total warehouse facilities $ $ (1) Type of loan the borrowing facility is used to fully or partially fund – loans held for sale (“LHFS”) or loans held for investment (“LHFI”). |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE MEASUREMENTS | |
Summary of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis | Quoted Prices in Significant Significant Active Markets Other Other For Identical Observable Unobservable Assets Inputs Inputs Balance as of (in thousands) (Level 1) (Level 2) (Level 3) Period End September 30, 2016 Assets Loans held for sale $ — $ $ — $ Pledged securities — — Derivative assets — — Total $ $ $ $ Liabilities Derivative liabilities $ — $ $ $ Total $ — $ $ $ December 31, 2015 Assets Loans held for sale $ — $ $ — $ Pledged securities — — Derivative assets — — Total $ $ $ $ Liabilities Derivative liabilities $ — $ — $ $ Total $ — $ — $ $ |
Schedule of Roll Forward of Derivative Instruments | Fair Value Measurements Using Significant Unobservable Inputs: Derivative Instruments For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Derivative assets and liabilities, net Beginning balance $ $ $ $ Settlements Realized gains recorded in earnings (1) Unrealized gains recorded in earnings (1) Ending balance $ $ $ $ (1) Realized and unrealized gains from derivatives are recognized in Gains from mortgage banking activities in the Condensed Consolidated Statements of Income. |
Schedule of Significant Unobservable Inputs Used in the Measurement of the Fair Value of Level 3 Assets and Liabilities | Quantitative Information about Level 3 Measurements (in thousands) Fair Value Valuation Technique Unobservable Input (1) Input Value (1) Derivative assets $ Discounted cash flow Counterparty credit risk — Derivative liabilities Discounted cash flow Counterparty credit risk — (1) Significant increases in this input may lead to significantly lower fair value measurements. |
Schedule of Carrying Amounts and the Fair Values of the Company's Financial Instruments | September 30, 2016 December 31, 2015 Carrying Fair Carrying Fair (in thousands) Amount Value Amount Value Financial assets: Cash and cash equivalents $ $ $ $ Restricted cash Pledged securities Loans held for sale Loans held for investment, net Derivative assets Total financial assets $ $ $ $ Financial liabilities: Derivative liabilities $ $ $ $ Warehouse notes payable Note payable Total financial liabilities $ $ $ $ |
Schedule of Fair Value of Derivative Instruments and Loans Held for Sale | Fair Value Adjustment Components Balance Sheet Location Fair Value Notional or Assumed Interest Rate Total Adjustment Principal Gain Movement or Fair Value Derivative Derivative To Loans (in thousands) Amount on Sale Other Effect Adjustment Assets Liabilities Held for Sale September 30, 2016 Rate lock commitments $ $ $ $ $ $ $ — Forward sale contracts — — Interest rate swaps — — — Loans held for sale — — Total $ $ $ $ $ $ December 31, 2015 Rate lock commitments $ $ $ $ $ $ — $ — Forward sale contracts — — Loans held for sale — — Total $ $ — $ $ $ $ |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
EARNINGS PER SHARE | |
Schedule of Weighted Average Shares and Share Equivalents that are Used to Calculate Basic and Diluted Earnings Per Share | For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Weighted average number of shares outstanding used to calculate basic earnings per share Dilutive securities Unvested restricted shares Stock options Weighted average number of shares and share equivalents outstanding used to calculate diluted earnings per share |
Schedule of Outstanding Options to Purchase Shares of Common Stock and Average Restricted Shares that were not Included in Computation of Diluted Earnings per Share | For the three months ended For the nine months ended September 30, September 30, (in thousands) 2016 2015 2016 2015 Average options — — Average restricted shares — |
Total Equity (Tables)
Total Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
TOTAL EQUITY | |
Summary of Changes in Total Equity | Stockholders' Equity Additional Common Stock Paid-In Retained Noncontrolling Total (in thousands) Shares Amount Capital Earnings Interests Equity Balance at December 31, 2015 $ $ $ $ $ Cumulative effect from change in accounting for stock compensation — — — Walker & Dunlop net income — — — — Net income from noncontrolling interests — — — — Stock-based compensation — — — — Issuance of common stock in connection with equity compensation plans — — Repurchase and retirement of common stock — Other — — — Balance at September 30, 2016 $ $ $ $ $ |
Organization and Basis of Pre26
Organization and Basis of Presentation - CMBS Program (Details) | Jan. 01, 2016 |
CMBS | |
Consolidation | |
Percentage of ownership | 100.00% |
Summary of Significant Accoun27
Summary of Significant Accounting Policies - Loans Held-for-Investment, Net (Detail) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Loans Held-for-Investment, Net | ||
Unpaid principal balance of loans held for investment | $ 264.5 | $ 233.4 |
Net unamortized deferred fees and costs | 2.1 | 1.1 |
Allowance for loan losses | 0.5 | 0.8 |
Loans Held for Investment | ||
Loans Held-for-Investment, Net | ||
Loans held for investment, delinquent | 0 | 0 |
Loans held for investment, impaired | 0 | 0 |
Loans, non-accrual status | $ 0 | $ 0 |
Loans Held for Investment | Maximum | ||
Loans Held-for-Investment, Net | ||
Loan term (in years) | 3 years |
Summary of Significant Accoun28
Summary of Significant Accounting Policies - Schedule of Provision for Credit Losses (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Provision for Credit Losses | ||||
Provision (benefit) for loan losses | $ (49) | $ 94 | $ (287) | $ 368 |
Provision for risk-sharing obligations | 332 | 453 | 208 | |
Provision for credit losses | $ 283 | $ 94 | $ 166 | $ 576 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies - Schedule of Net Warehouse Interest Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Interest Income Expense Net Line Items | ||||
Net warehouse interest income | $ 5,614 | $ 6,860 | $ 15,925 | $ 17,824 |
Loans Held for Sale | ||||
Interest Income Expense Net Line Items | ||||
Warehouse interest income | 11,507 | 9,433 | 32,328 | 27,905 |
Warehouse interest expense | (8,032) | (5,122) | (21,548) | (16,840) |
Net warehouse interest income | 3,475 | 4,311 | 10,780 | 11,065 |
Loans Held for Investment | ||||
Interest Income Expense Net Line Items | ||||
Warehouse interest income | 3,518 | 4,318 | 8,971 | 11,145 |
Warehouse interest expense | (1,379) | (1,769) | (3,826) | (4,386) |
Net warehouse interest income | $ 2,139 | $ 2,549 | $ 5,145 | $ 6,759 |
Gains from Mortgage Banking A30
Gains from Mortgage Banking Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Gains from mortgage banking activities | ||||
Contractual loan origination related fees, net | $ 52,401 | $ 36,994 | $ 121,682 | $ 115,989 |
Fair value of expected net future cash flows from servicing recognized at commitment | 50,964 | 35,845 | 135,971 | 104,095 |
Fair value of expected guaranty obligation recognized at commitment | (2,735) | (2,029) | (8,247) | (6,604) |
Total gains from mortgage banking activities | 100,630 | 70,810 | 249,406 | 213,480 |
Co-broker fees from mortgage banking activities | 13,200 | 2,300 | 29,800 | 15,100 |
CMBS | ||||
Gains from mortgage banking activities | ||||
Realized and unrealized gains from sale and mark-to-market of loans and derivative instruments | $ (1,200) | $ 0 | $ (600) | $ 0 |
Mortgage Servicing Rights - Fai
Mortgage Servicing Rights - Fair Value Disclosures (Detail) - MSRs - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Servicing | ||
Fair value of the MSRs | $ 607.6 | $ 510.6 |
Sensitivity Analysis of Fair Value, example 1, impact of percent adverse change in discount rate, percent | 1.00% | |
Decrease in fair value as a result of 100 basis point increase in discount rate | $ 19.4 | |
Sensitivity Analysis of Fair Value, example 2, impact of percent adverse change in discount rate, percent | 2.00% | |
Decrease in fair value as a result of 200 basis point increase in discount rate | $ 37.5 |
Mortgage Servicing Rights - Sch
Mortgage Servicing Rights - Schedule of Activity Related to Capitalized MSRs (Detail) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2016USD ($)loan | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | |
Mortgage Servicing Rights | |||||
Beginning balance | $ 412,348 | $ 412,348 | |||
Ending balance | $ 496,678 | 496,678 | |||
Purchase of mortgage servicing rights | 42,705 | ||||
MSRs | |||||
Mortgage Servicing Rights | |||||
Beginning balance | 468,093 | $ 395,020 | 412,348 | 412,348 | $ 375,907 |
Additions, following sale of loan | 60,955 | 34,940 | 124,982 | 102,331 | |
Purchases | 42,705 | ||||
Amortization | (26,074) | (20,532) | (72,030) | (59,102) | |
Pre-payments and write-offs | (6,296) | (5,478) | (11,327) | (15,186) | |
Ending balance | 496,678 | $ 403,950 | 468,093 | 496,678 | $ 403,950 |
HUD Loan Portfolio Acquired | |||||
Mortgage Servicing Rights | |||||
Purchased servicing portfolio loans final unpaid principal balance | 3,600,000 | 3,600,000 | |||
HUD Loan Portfolio Acquired | MSRs | |||||
Mortgage Servicing Rights | |||||
Purchases | 44,800 | ||||
Purchase of mortgage servicing rights | 43,400 | ||||
Remaining amount due on purchase of servicing portfolio | $ 1,400 | ||||
Number of defaulted loans to be resolved as a condition of the purchase | loan | 1 | ||||
Adjustments reducing purchase price | 2,100 | ||||
Purchased servicing portfolio loans final unpaid principal balance | $ 3,600,000 | $ 3,600,000 | |||
Weighted average estimated remaining life of acquired servicing portfolio | 10 years 10 months 24 days |
Mortgage Servicing Rights - Sum
Mortgage Servicing Rights - Summary of Components of Net Carrying Value of Acquired and Originated MSRs (Detail) $ in Thousands | Sep. 30, 2016USD ($) |
MSRs | |
Mortgage Servicing Rights Acquired and Originated | |
Gross carrying value | $ 776,838 |
Accumulated amortization | (280,160) |
Net carrying value | 496,678 |
Acquired MSRs | |
Mortgage Servicing Rights Acquired and Originated | |
Gross carrying value | 175,542 |
Accumulated amortization | (99,124) |
Net carrying value | 76,418 |
Originated MSRs | |
Mortgage Servicing Rights Acquired and Originated | |
Gross carrying value | 601,296 |
Accumulated amortization | (181,036) |
Net carrying value | $ 420,260 |
Mortgage Servicing Rights - S34
Mortgage Servicing Rights - Schedule of Expected Amortization of MSRs (Detail) $ in Thousands | Sep. 30, 2016USD ($) |
MSRs | |
Future amortization | |
Three Months Ending December 31, 2016 | $ 25,833 |
2,017 | 95,653 |
2,018 | 81,106 |
2,019 | 71,113 |
2,020 | 61,663 |
2,021 | 51,018 |
Thereafter | 110,292 |
Net carrying value | 496,678 |
Originated MSRs | |
Future amortization | |
Three Months Ending December 31, 2016 | 21,821 |
2,017 | 80,561 |
2,018 | 68,707 |
2,019 | 60,161 |
2,020 | 52,606 |
2,021 | 43,947 |
Thereafter | 92,457 |
Net carrying value | 420,260 |
Acquired MSRs | |
Future amortization | |
Three Months Ending December 31, 2016 | 4,012 |
2,017 | 15,092 |
2,018 | 12,399 |
2,019 | 10,952 |
2,020 | 9,057 |
2,021 | 7,071 |
Thereafter | 17,835 |
Net carrying value | $ 76,418 |
Guaranty Obligation and Allow35
Guaranty Obligation and Allowance for Risk-Sharing Obligations - Schedule of Activity Related to Guaranty Obligation (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS | ||||
Guaranty obligation, net of accumulated amortization - beginning balance | $ 28,406 | $ 27,140 | $ 27,570 | $ 24,975 |
Additions, following the sale of loan | 4,039 | 1,957 | 7,727 | 6,827 |
Amortization | (1,682) | (1,395) | (4,431) | (4,100) |
Other | 175 | 72 | ||
Guaranty obligation, net of accumulated amortization - ending balance | $ 30,938 | $ 27,702 | $ 30,938 | $ 27,702 |
Guaranty Obligation and Allow36
Guaranty Obligation and Allowance for Risk-Sharing Obligations - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2016 | |
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS | |
Maximum delinquency period of loans at which initial loss recognition occurs | 60 days |
Guaranty Obligation and Allow37
Guaranty Obligation and Allowance for Risk-Sharing Obligations - Summary of Allowance for Risk-Sharing Obligations (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)loan | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | |
Allowance for Risk-Sharing Contracts | ||||
Beginning balance | $ 5,810 | $ 3,304 | $ 5,586 | $ 3,904 |
Provision for risk-sharing obligations | 332 | 453 | 208 | |
Write-offs | (2,567) | (2,567) | (808) | |
Other | (175) | (72) | ||
Ending balance | $ 3,400 | $ 3,304 | 3,400 | $ 3,304 |
Number of defaulted at risk loans on which loss sharing settlements were reached | loan | 3 | |||
Fannie Mae DUS program | ||||
Allowance for Risk-Sharing Contracts | ||||
Maximum quantifiable contingent liability associated with guarantees | $ 4,600,000 | $ 4,600,000 |
Servicing - Additional Informat
Servicing - Additional Information (Detail) - USD ($) $ in Billions | Sep. 30, 2016 | Dec. 31, 2015 |
Loans serviced | ||
Servicing | ||
Purchased servicing portfolio loans final unpaid principal balance | $ 59.1 | $ 50.2 |
HUD Loan Portfolio Acquired | ||
Servicing | ||
Purchased servicing portfolio loans final unpaid principal balance | $ 3.6 |
Warehouse Notes Payable - Sched
Warehouse Notes Payable - Schedule of Debt (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2016USD ($) | Sep. 30, 2016USD ($)Option | Jun. 30, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | |
Warehouse notes payable | |||||
Maximum Amount | $ 3,595,000 | $ 3,595,000 | |||
Debt issuance costs | (1,345) | (1,345) | |||
Outstanding Balance | 1,440,425 | 1,440,425 | $ 2,649,470 | ||
Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 3,035,000 | 3,035,000 | |||
Outstanding Balance | 1,247,319 | 1,247,319 | |||
CMBS Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 200,000 | 200,000 | |||
Outstanding Balance | 11,844 | 11,844 | |||
Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 360,000 | 360,000 | |||
Outstanding Balance | 182,607 | $ 182,607 | |||
Agency Warehouse Facility #1 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 1.40% | ||||
Agency Warehouse Facility #1 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maturity date | Oct. 30, 2017 | ||||
Agency Warehouse Facility #2 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 1.40% | ||||
Agency Warehouse Facility #2 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maturity date | Jun. 21, 2017 | ||||
Agency Warehouse Facility #3 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | 30-day LIBOR | |||
Basis points added to reference rate | 1.35% | 1.35% | |||
Agency Warehouse Facility #3 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | $ 280,000 | ||||
Maturity date | Apr. 30, 2017 | ||||
Agency Warehouse Facility #3 | Agency Warehouse Facility | Temporary Commitment Increase Period Maturing January 2017 | |||||
Warehouse notes payable | |||||
Temporary increase in maximum borrowing capacity | 400,000 | $ 400,000 | |||
Agency Warehouse Facility #4 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 1.40% | ||||
Agency Warehouse Facility #4 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Increase in maximum borrowing capacity | $ 100,000 | ||||
Maturity date | Oct. 27, 2017 | ||||
Agency Warehouse Facility #5 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 1.80% | ||||
Agency Warehouse Facility #5 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | $ 30,000 | $ 30,000 | |||
Maturity date | Jan. 1, 2018 | ||||
Agency Warehouse Facility #5 | Agency Warehouse Facility | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 1.80% | ||||
Uncommitted Agency Warehouse Facility | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 1.15% | ||||
CMBS Warehouse Facility #1 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 2.25% | ||||
CMBS Warehouse Facility #2 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 2.75% | ||||
CMBS Warehouse Facility #2 | CMBS Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | $ 100,000 | $ 100,000 | |||
Term of facility | 1 year | ||||
Interim Warehouse Facility #1 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 1.90% | ||||
Interim Warehouse Facility #1 | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Maturity date | Apr. 30, 2017 | ||||
Interim Warehouse Facility #2 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Basis points added to reference rate | 2.00% | ||||
Interim Warehouse Facility #3 | LIBOR | |||||
Warehouse notes payable | |||||
Reference rate for variable interest on the line of credit | 30-day LIBOR | ||||
Interim Warehouse Facility #3 | LIBOR | Minimum | |||||
Warehouse notes payable | |||||
Basis points added to reference rate | 2.00% | ||||
Interim Warehouse Facility #3 | LIBOR | Maximum | |||||
Warehouse notes payable | |||||
Basis points added to reference rate | 2.50% | ||||
Interim Warehouse Facility #3 | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Term of facility extension option | 1 year | ||||
Number of extension options available | Option | 3 | ||||
Maturity date | May 19, 2017 | ||||
Interim Warehouse Facility #3 | Interim Warehouse Facility | Extended maturity if all options exercised | |||||
Warehouse notes payable | |||||
Maturity date | May 19, 2020 | ||||
Loans Held for Sale | Agency Warehouse Facility #1 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | $ 425,000 | $ 425,000 | |||
Outstanding Balance | 202,070 | 202,070 | |||
Loans Held for Sale | Agency Warehouse Facility #2 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 650,000 | 650,000 | |||
Outstanding Balance | 452,182 | 452,182 | |||
Loans Held for Sale | Agency Warehouse Facility #3 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 680,000 | 680,000 | |||
Outstanding Balance | 270,493 | 270,493 | |||
Loans Held for Sale | Agency Warehouse Facility #4 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 250,000 | 250,000 | |||
Outstanding Balance | 115,628 | 115,628 | |||
Loans Held for Sale | Agency Warehouse Facility #5 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 30,000 | 30,000 | |||
Outstanding Balance | 14,551 | 14,551 | |||
Loans Held for Sale | Uncommitted Agency Warehouse Facility | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 1,000,000 | 1,000,000 | |||
Outstanding Balance | 192,395 | 192,395 | |||
Loans Held for Sale | CMBS Warehouse Facility #1 | CMBS Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 100,000 | 100,000 | |||
Outstanding Balance | 9,750 | 9,750 | |||
Loans Held for Sale | CMBS Warehouse Facility #2 | CMBS Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 100,000 | 100,000 | |||
Outstanding Balance | 2,094 | 2,094 | |||
Loans Held for Investment | Interim Warehouse Facility #1 | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 85,000 | 85,000 | |||
Outstanding Balance | 36,916 | 36,916 | |||
Loans Held for Investment | Interim Warehouse Facility #2 | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 200,000 | 200,000 | |||
Outstanding Balance | 109,686 | 109,686 | |||
Loans Held for Investment | Interim Warehouse Facility #3 | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 75,000 | 75,000 | |||
Outstanding Balance | 36,005 | 36,005 | |||
National Banks | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 2,000,000 | 2,000,000 | |||
National Banks | CMBS Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 200,000 | 200,000 | |||
National Banks | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 400,000 | 400,000 | |||
Fannie Mae | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | 1,000,000 | 1,000,000 | |||
Fannie Mae | Uncommitted Agency Warehouse Facility | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Maximum Amount | $ 1,000,000 | $ 1,000,000 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Mar. 30, 2016 | Dec. 31, 2015 |
Assets | |||
Loans held for sale | $ 1,299,028 | $ 2,499,111 | |
Pledged securities | 81,933 | 72,190 | |
Derivative assets | 33,796 | 11,678 | |
Liabilities | |||
Derivative liabilities | 2,918 | 1,333 | |
Recurring | |||
Assets | |||
Loans held for sale | 1,299,028 | 2,499,111 | |
Pledged securities | 81,933 | 72,190 | |
Derivative assets | 33,796 | 11,678 | |
Total financial assets | 1,414,757 | 2,582,979 | |
Liabilities | |||
Derivative liabilities | 2,918 | 1,333 | |
Total financial liabilities | 2,918 | 1,333 | |
Level 1 | Recurring | |||
Assets | |||
Pledged securities | 81,933 | 72,190 | |
Total financial assets | 81,933 | 72,190 | |
Level 2 | Recurring | |||
Assets | |||
Loans held for sale | 1,299,028 | 2,499,111 | |
Total financial assets | 1,299,028 | 2,499,111 | |
Liabilities | |||
Derivative liabilities | 278 | ||
Total financial liabilities | 278 | ||
Level 3 | Recurring | |||
Assets | |||
Derivative assets | 33,796 | 11,678 | |
Total financial assets | 33,796 | 11,678 | |
Liabilities | |||
Derivative liabilities | 2,640 | 1,333 | |
Total financial liabilities | 2,640 | $ 1,333 | |
CMBX | Level 2 | Recurring | |||
Derivative instruments | |||
Notional amount outstanding | $ 0 | $ 25,000 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Fair Value Measurements | |
Amount of transfers between any of the levels within the fair value hierarchy | $ 0 |
Maximum | |
Fair Value Measurements | |
Contract term | 60 days |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Roll Forward of Derivative Instruments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Derivative assets and liabilities, net | ||||
Beginning balance | $ 600 | $ 23,911 | $ 10,345 | $ 9,658 |
Settlements | (71,250) | (85,733) | (229,178) | (214,150) |
Realized gains recorded in earnings | 70,650 | 61,822 | 218,833 | 204,492 |
Unrealized gains recorded in earnings | 31,156 | 8,988 | 31,156 | 8,988 |
Ending balance | $ 31,156 | $ 8,988 | $ 31,156 | $ 8,988 |
Fair Value Measurements - Sch43
Fair Value Measurements - Schedule of Significant Unobservable Inputs Used in the Measurement of the Fair Value of Level 3 Assets and Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value Measurements | ||
Derivative assets | $ 33,796 | $ 11,678 |
Derivative liabilities | 2,918 | $ 1,333 |
Level 3 | Discounted Cash Flow | Derivative Assets | ||
Fair Value Measurements | ||
Derivative assets | 33,796 | |
Level 3 | Derivative Liabilities | Discounted Cash Flow | ||
Fair Value Measurements | ||
Derivative liabilities | $ 2,640 |
Fair Value Measurements - Sch44
Fair Value Measurements - Schedule of Carrying Amounts and the Fair Values of the Company's Financial Instruments (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Financial assets: | ||||
Cash and cash equivalents | $ 83,887 | $ 136,988 | $ 60,163 | $ 113,354 |
Restricted cash | 14,370 | 5,306 | ||
Pledged securities | 81,933 | 72,190 | ||
Loans held for sale | 1,299,028 | 2,499,111 | ||
Loans held for investment, net | 261,915 | 231,493 | ||
Derivative assets | 33,796 | 11,678 | ||
Financial liabilities: | ||||
Derivative liabilities | 2,918 | 1,333 | ||
Warehouse notes payable | 1,440,425 | 2,649,470 | ||
Note payable | 164,238 | 164,462 | ||
Carrying Amount | ||||
Financial assets: | ||||
Cash and cash equivalents | 83,887 | 136,988 | ||
Restricted cash | 14,370 | 5,306 | ||
Pledged securities | 81,933 | 72,190 | ||
Loans held for sale | 1,299,028 | 2,499,111 | ||
Loans held for investment, net | 261,915 | 231,493 | ||
Derivative assets | 33,796 | 11,678 | ||
Total financial assets | 1,774,929 | 2,956,766 | ||
Financial liabilities: | ||||
Derivative liabilities | 2,918 | 1,333 | ||
Warehouse notes payable | 1,440,425 | 2,649,470 | ||
Note payable | 164,238 | 164,462 | ||
Total financial liabilities | 1,607,581 | 2,815,265 | ||
Fair Value | ||||
Financial assets: | ||||
Cash and cash equivalents | 83,887 | 136,988 | ||
Restricted cash | 14,370 | 5,306 | ||
Pledged securities | 81,933 | 72,190 | ||
Loans held for sale | 1,299,028 | 2,499,111 | ||
Loans held for investment, net | 264,508 | 233,370 | ||
Derivative assets | 33,796 | 11,678 | ||
Total financial assets | 1,777,522 | 2,958,643 | ||
Financial liabilities: | ||||
Derivative liabilities | 2,918 | 1,333 | ||
Warehouse notes payable | 1,441,770 | 2,652,011 | ||
Note payable | 167,602 | 168,431 | ||
Total financial liabilities | $ 1,612,290 | $ 2,821,775 |
Fair Value Measurements - Gener
Fair Value Measurements - General information (Detail) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Loans Held for Sale | ||
Other information | ||
Period of originated loans within which they are transferred or sold | 60 days | |
Maximum | ||
Other information | ||
Term Of Maturity Of Investments | 90 days | |
Investment period for loans held for investment | 3 years | |
Level 3 | ||
Other information | ||
Credit Adjustments to Loans Held for investment | $ 0 | $ 0 |
Fair Value Measurements - Sch46
Fair Value Measurements - Schedule of Fair Value of Derivative Instruments and Loans Held for Sale (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Derivative notional amount and balance sheet location | ||
Assumed Gain on Sale | $ 59,109 | $ 29,575 |
Interest Rate Movement Effect | (348) | |
Total Fair Value Adjustment | 58,761 | 29,575 |
Derivative assets | 33,796 | 11,678 |
Derivative Liabilities | (2,918) | (1,333) |
Fair Value Adjustment To Loans Held for Sale | 27,883 | 19,231 |
Loans Held for Sale | ||
Derivative notional amount and balance sheet location | ||
Notional or Principal Amount | 1,271,145 | 2,479,880 |
Assumed Gain on Sale | 28,649 | 20,108 |
Interest Rate Movement Effect | (766) | (877) |
Total Fair Value Adjustment | 27,883 | 19,231 |
Fair Value Adjustment To Loans Held for Sale | 27,883 | 19,231 |
Rate Lock Commitments | ||
Derivative notional amount and balance sheet location | ||
Notional or Principal Amount | 862,987 | 267,710 |
Assumed Gain on Sale | 30,460 | 9,467 |
Interest Rate Movement Effect | (76) | (1,494) |
Total Fair Value Adjustment | 30,384 | 7,973 |
Derivative assets | 30,411 | 7,973 |
Derivative Liabilities | (27) | |
Forward Sale Contracts | ||
Derivative notional amount and balance sheet location | ||
Notional or Principal Amount | 2,111,142 | 2,747,590 |
Interest Rate Movement Effect | 772 | 2,371 |
Total Fair Value Adjustment | 772 | 2,371 |
Derivative assets | 3,385 | 3,705 |
Derivative Liabilities | (2,613) | $ (1,333) |
Interest Rate Swaps | ||
Derivative notional amount and balance sheet location | ||
Notional or Principal Amount | 10,310 | |
Interest Rate Movement Effect | (278) | |
Total Fair Value Adjustment | (278) | |
Derivative Liabilities | $ (278) |
Litigation, Commitments, and 47
Litigation, Commitments, and Contingencies - Commitments (Detail) - DUS Risk-Sharing Obligations - Fannie Mae $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Period of funding for collateral requirement | 48 months |
Amount of additional capital required to be funded over the next 48 months | $ 52.4 |
Net worth | 579.6 |
Minimum liquid assets to be maintained to meet operational liquidity requirements | 24.1 |
Operational liquidity | 94.8 |
Minimum | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Net worth requirement | $ 124.5 |
New Tier 2 loans | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Collateral requirements percentage (as a percent) | 0.75% |
Period of funding for collateral requirement | 48 months |
New Tier 2 loans | Money Market Funds Holding US Treasuries | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Restricted liquidity collateral reduction percentage | 5.00% |
Litigation, Commitments, and 48
Litigation, Commitments, and Contingencies - Other Commitments (Detail) - Preferred Equity Investments $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Other Commitments | |
Investment commitments | $ 42.8 |
Investment commitment, funded | $ 15.5 |
Minimum | |
Other Commitments | |
Commitment funding period (in months) | 12 months |
Maximum | |
Other Commitments | |
Commitment funding period (in months) | 18 months |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Weighted Average Shares and Share Equivalents that are Used to Calculate Basic and Diluted Earnings Per Share (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings per share | ||||
Weighted average number of shares outstanding used to calculate basic earnings per share | 29,374 | 29,165 | 29,417 | 29,904 |
Dilutive securities | ||||
Weighted average number of shares and share equivalents outstanding used to calculate diluted earnings per share | 30,793 | 30,460 | 30,743 | 31,045 |
Restricted Shares | ||||
Dilutive securities | ||||
Dilutive securities | 1,068 | 1,008 | 1,024 | 942 |
Stock options | ||||
Dilutive securities | ||||
Dilutive securities | 351 | 287 | 302 | 199 |
Earnings Per Share - Antidiluti
Earnings Per Share - Antidilutive securities (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stock options | ||||
Antidilutive Securities | ||||
Shares outstanding excluded from computation of earnings per share | 207 | 172 | ||
Restricted Shares | ||||
Antidilutive Securities | ||||
Shares outstanding excluded from computation of earnings per share | 19 | 211 | 6 |
Total Equity - Summary of Chang
Total Equity - Summary of Changes in Total Equity (Detail) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Change in Stockholders' Equity | ||||
Balance at the beginning of the period | $ 492,349 | |||
Balance at the beginning of the period (in shares) | 29,466 | |||
Cumulative effect from change in accounting for stock compensation | $ 15 | $ 15 | ||
Walker & Dunlop net income | 29,628 | $ 20,251 | 77,107 | $ 61,717 |
Net income from noncontrolling interests | 233 | $ 460 | 198 | $ 598 |
Stock-based compensation | 12,130 | |||
Issuance of common stock in connection with equity compensation plans | 3,439 | |||
Repurchase and retirement of common stock | (12,374) | |||
Other | (84) | |||
Balance at the end of the period | $ 572,780 | $ 572,780 | ||
Balance at the end of the period (in shares) | 29,375 | 29,375 | ||
Common Stock | ||||
Change in Stockholders' Equity | ||||
Balance at the beginning of the period | $ 295 | |||
Balance at the beginning of the period (in shares) | 29,466 | |||
Issuance of common stock in connection with equity compensation plans | $ 4 | |||
Issuance of common stock in connection with equity compensation plans (in shares) | 452 | |||
Repurchase and retirement of common stock | $ (5) | |||
Repurchase and retirement of common stock (in shares) | (543) | |||
Balance at the end of the period | $ 294 | $ 294 | ||
Balance at the end of the period (in shares) | 29,375 | 29,375 | ||
Additional Paid-In Capital | ||||
Change in Stockholders' Equity | ||||
Balance at the beginning of the period | $ 215,575 | |||
Cumulative effect from change in accounting for stock compensation | $ 135 | 135 | ||
Stock-based compensation | 12,130 | |||
Issuance of common stock in connection with equity compensation plans | 3,435 | |||
Repurchase and retirement of common stock | (7,593) | |||
Other | (79) | |||
Balance at the end of the period | 223,603 | 223,603 | ||
Retained Earnings | ||||
Change in Stockholders' Equity | ||||
Balance at the beginning of the period | 272,030 | |||
Cumulative effect from change in accounting for stock compensation | (120) | (120) | ||
Walker & Dunlop net income | 77,107 | |||
Repurchase and retirement of common stock | (4,776) | |||
Balance at the end of the period | 344,241 | 344,241 | ||
Noncontrolling Interests | ||||
Change in Stockholders' Equity | ||||
Balance at the beginning of the period | 4,449 | |||
Net income from noncontrolling interests | 198 | |||
Other | (5) | |||
Balance at the end of the period | $ 4,642 | $ 4,642 |
Total Equity - Additional Infor
Total Equity - Additional Information (Detail) $ / shares in Units, $ in Thousands, shares in Millions | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Repurchases of common stock | |
Repurchase and retirement of common stock | $ 12,374 |
Common shares | |
Repurchases of common stock | |
Repurchased and retired shares | shares | 0.4 |
Price paid per share for repurchased common stock | $ / shares | $ 23.11 |
Repurchase and retirement of common stock | $ 9,200 |
Authorized share repurchase capacity remaining | $ 65,800 |