Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 10, 2024 | |
Document Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-40143 | |
Entity Registrant Name | Better Home & Finance Holding Company | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 93-3029990 | |
Entity Address, Address Line One | 175 Greenwich Street | |
Entity Address, Address Line Two | 57th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10007 | |
City Area Code | 415 | |
Local Phone Number | 522-8837 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001835856 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Common Class A | ||
Document Entity Information | ||
Title of 12(b) Security | Class A common stock, par value $0.0001 per share | |
Trading Symbol | BETR | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding | 391,904,734 | |
Warrants | ||
Document Entity Information | ||
Title of 12(b) Security | Warrants exercisable for one share of Class A common stock at an exercise price of $11.50 | |
Trading Symbol | BETRW | |
Security Exchange Name | NASDAQ | |
Common Class B | ||
Document Entity Information | ||
Entity Common Stock, Shares Outstanding | 291,817,659 | |
Common Class C | ||
Document Entity Information | ||
Entity Common Stock, Shares Outstanding | 71,877,283 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Cash and cash equivalents | $ 424,528 | $ 503,591 |
Restricted cash | 26,075 | 24,475 |
Short-term investments | 58,089 | 25,597 |
Mortgage loans held for sale, at fair value | 166,214 | 170,150 |
Other receivables, net | 11,486 | 16,888 |
Property and equipment, net | 15,898 | 16,454 |
Right-of-use assets | 18,840 | 19,988 |
Internal use software and other intangible assets, net | 30,849 | 38,126 |
Goodwill | 32,209 | 32,390 |
Derivative assets, at fair value | 1,737 | 1,716 |
Prepaid expenses and other assets | 55,661 | 56,179 |
Total Assets | 841,586 | 905,554 |
Liabilities | ||
Warehouse lines of credit | 126,161 | 126,218 |
Convertible Note | 514,758 | 514,644 |
Customer deposits | 11,831 | 11,839 |
Accounts payable and accrued expenses | 55,721 | 66,558 |
Escrow payable and other customer accounts | 3,760 | 3,376 |
Derivative liabilities, at fair value | 560 | 949 |
Warrant and equity related liabilities, at fair value | 1,509 | 2,331 |
Lease liabilities | 29,199 | 31,202 |
Other liabilities (includes $334 and $390 payable to related parties as of March 31, 2024 and December 31, 2023, respectively) | 21,797 | 25,837 |
Total Liabilities | 765,296 | 782,954 |
Commitments and contingencies (see Note 11) | ||
Stockholders’ Equity | ||
Common stock $0.0001 par value; 3,300,000,000 shares authorized as of March 31, 2024 and December 31, 2023, and 755,578,694 and 751,773,361 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 75 | 74 |
Notes receivable from stockholders | (10,976) | (10,111) |
Additional paid-in capital | 1,844,786 | 1,838,427 |
Accumulated deficit | (1,755,568) | (1,704,076) |
Accumulated other comprehensive loss | (2,027) | (1,714) |
Total Stockholders’ Equity | 76,290 | 122,600 |
Total Liabilities and Stockholders’ Equity | $ 841,586 | $ 905,554 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Liabilities and Stockholders’ Equity | ||
Other liabilities | $ 21,797 | $ 25,837 |
Stockholders’ Equity | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized (in shares) | 3,300,000,000 | 3,300,000,000 |
Common stock, issued (in shares) | 755,578,694 | 751,773,361 |
Common stock, outstanding (in shares) | 755,578,694 | 751,773,361 |
Related Party | ||
Liabilities and Stockholders’ Equity | ||
Other liabilities | $ 334 | $ 390 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenues: | ||
Gain on loans, net | $ 15,652 | $ 12,761 |
Other revenue | 2,817 | 4,944 |
Net interest income | ||
Interest income | 8,636 | 6,390 |
Interest expense | (4,854) | (5,469) |
Net interest income | 3,782 | 921 |
Total net revenues | 22,251 | 18,626 |
Expenses: | ||
Compensation and benefits | 38,073 | 38,112 |
General and administrative | 14,047 | 16,762 |
Technology | 5,458 | 14,446 |
Marketing and advertising | 4,554 | 7,760 |
Loan origination expense | 2,577 | 5,202 |
Depreciation and amortization | 9,074 | 11,477 |
Other expenses | (183) | 11,065 |
Total expenses | 73,600 | 104,824 |
Loss before income tax expense | (51,349) | (86,198) |
Income tax expense/(benefit) | 143 | 1,424 |
Net loss | (51,492) | (87,622) |
Other comprehensive loss: | ||
Foreign currency translation adjustment, net of tax | (313) | (152) |
Comprehensive loss | $ (51,805) | $ (87,774) |
Per share data: | ||
Basic (in dollars per share) | $ (0.07) | $ (0.29) |
Diluted (in dollars per share) | $ (0.07) | $ (0.29) |
Weighted average common shares outstanding - basic (in shares) | 753,993,530 | 297,514,644 |
Weighted average common shares outstanding - diluted (in shares) | 753,993,530 | 297,514,644 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Previously Reported, Before Reclassification | Recapitalization | Adjusted Balance | Common Stock | Common Stock Previously Reported, Before Reclassification | Common Stock Recapitalization | Common Stock Adjusted Balance | Notes Receivables from Stockholders | Notes Receivables from Stockholders Previously Reported, Before Reclassification | Notes Receivables from Stockholders Adjusted Balance | Additional Paid-In Capital | Additional Paid-In Capital Previously Reported, Before Reclassification | Additional Paid-In Capital Adjusted Balance | Accumulated Deficit | Accumulated Deficit Previously Reported, Before Reclassification | Accumulated Deficit Adjusted Balance | Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Previously Reported, Before Reclassification | Accumulated Other Comprehensive Loss Adjusted Balance |
Beginning balance (in shares) at Dec. 31, 2022 | 108,721,433 | 223,593,304 | 332,314,737 | |||||||||||||||||
Beginning balance at Dec. 31, 2022 | $ 436,280 | $ 436,280 | ||||||||||||||||||
Ending balance (in shares) at Mar. 31, 2023 | 332,314,737 | |||||||||||||||||||
Ending balance at Mar. 31, 2023 | $ 436,280 | |||||||||||||||||||
Beginning balance (in shares) at Dec. 31, 2022 | 98,078,356 | 201,705,065 | 299,783,421 | |||||||||||||||||
Beginning balance at Dec. 31, 2022 | $ (604,183) | $ (604,183) | $ 10 | $ 10 | $ (53,225) | $ (53,225) | $ 618,111 | $ 618,111 | $ (1,167,656) | $ (1,167,656) | $ (1,423) | $ (1,423) | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||
Issuance of common stock (in shares) | 133,645 | |||||||||||||||||||
Issuance of common stock | 1,353 | $ 1,353 | ||||||||||||||||||
Repurchase or cancellation of common stock (in shares) | (326,301) | |||||||||||||||||||
Repurchase or cancellation of common stock | (8) | (8) | ||||||||||||||||||
Stock-based compensation | 5,917 | 5,917 | ||||||||||||||||||
Shares issued for vested restricted stock units (in shares) | 1,048,752 | |||||||||||||||||||
Vesting of common stock issued via notes receivable from stockholders | (2,038) | $ (2,210) | 172 | |||||||||||||||||
Net loss | (87,622) | $ (87,622) | ||||||||||||||||||
Other comprehensive loss— foreign currency translation adjustment, net of tax | (152) | |||||||||||||||||||
Other comprehensive loss— foreign currency translation adjustment, net of tax | (368) | (146) | $ (222) | |||||||||||||||||
Ending balance (in shares) at Mar. 31, 2023 | 300,639,517 | |||||||||||||||||||
Ending balance at Mar. 31, 2023 | $ (686,949) | $ 10 | (55,581) | 625,545 | (1,255,278) | (1,645) | ||||||||||||||
Beginning balance (in shares) at Dec. 31, 2023 | 751,773,361 | 751,773,361 | ||||||||||||||||||
Beginning balance at Dec. 31, 2023 | $ 122,600 | $ 74 | (10,111) | 1,838,427 | (1,704,076) | (1,714) | ||||||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||||||||||
Adjustment of transaction costs related to the Business Combination | (2,372) | (2,372) | ||||||||||||||||||
Issuance of common stock for options exercised (in shares) | 120,887 | |||||||||||||||||||
Issuance of common stock for options exercised | 19 | 19 | ||||||||||||||||||
Repurchase or cancellation of common stock (in shares) | (673,973) | |||||||||||||||||||
Stock-based compensation | 9,143 | 9,143 | ||||||||||||||||||
Tax withholding upon vesting of restricted stock units | (1,288) | (1,288) | ||||||||||||||||||
Shares issued for vested restricted stock units (in shares) | 4,358,419 | |||||||||||||||||||
Share issued for vested restricted stock units | 1 | $ 1 | ||||||||||||||||||
Vesting of common stock issued via notes receivable from stockholders | (8) | (865) | 857 | |||||||||||||||||
Net loss | (51,492) | (51,492) | ||||||||||||||||||
Other comprehensive loss— foreign currency translation adjustment, net of tax | $ (313) | (313) | ||||||||||||||||||
Ending balance (in shares) at Mar. 31, 2024 | 755,578,694 | 755,578,694 | ||||||||||||||||||
Ending balance at Mar. 31, 2024 | $ 76,290 | $ 75 | $ (10,976) | $ 1,844,786 | $ (1,755,568) | $ (2,027) |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (51,492) | $ (87,622) |
Adjustments to reconcile net loss to net cash (used in)/provided by operating activities: | ||
Depreciation of property and equipment | 1,029 | 2,116 |
Impairments | 0 | 4,542 |
Amortization of internal use software and other intangible assets | 8,045 | 9,361 |
Gain on sale of loans, net | (9,821) | (12,524) |
Non-cash interest and amortization of debt issuance costs and discounts | 1,217 | 164 |
Change in fair value of warrants | (823) | (553) |
Change in fair value of bifurcated derivative | 0 | 1,887 |
Stock-based compensation | 8,760 | 4,408 |
(Recovery of)/Provision for loan repurchase reserve | (3,563) | 2,124 |
Change in fair value of derivatives | (410) | 4,520 |
Change in fair value of mortgage loans held for sale | 829 | 36,683 |
Change in operating lease of right-of-use assets | 1,148 | 622 |
Change in operating assets and liabilities: | ||
Originations of mortgage loans held for sale | (650,505) | (828,671) |
Proceeds from sale of mortgage loans held for sale | 662,965 | 696,635 |
Operating lease liabilities | (2,003) | (3,968) |
Other receivables, net | 5,404 | (4,027) |
Prepaid expenses and other assets | 519 | (3,818) |
Accounts payable and accrued expenses | (14,534) | 18,219 |
Escrow payable and other customer accounts | 384 | (273) |
Other liabilities | 45 | (2,584) |
Net cash used in operating activities | (42,806) | (162,759) |
Cash Flows from Investing Activities: | ||
Purchase of property and equipment | (473) | (48) |
Proceeds from sale of property and equipment | 0 | 115 |
Capitalization of internal use software | (386) | (3,456) |
Acquisitions of businesses, net of cash acquired | 0 | (2,658) |
Maturities of short-term investments | 22,638 | 0 |
Purchase of short-term investments | (55,165) | 0 |
Net cash used in investing activities | (33,386) | (6,047) |
Cash Flows from Financing Activities: | ||
Net (repayments)/ borrowings on warehouse lines of credit | (57) | |
Net (repayments)/ borrowings on warehouse lines of credit | 94,105 | |
Repayments on finance lease liabilities | 0 | (205) |
Net decrease in customer deposits | (8) | 0 |
Repayments on corporate line of credit | 0 | (20,000) |
Principal payments on convertible notes | (1,103) | 0 |
Proceeds from exercise of stock options | 20 | 0 |
Repurchase or cancellation of common stock | 0 | (104) |
Net cash (used in)/ provided by financing activities | (1,148) | 73,796 |
Effects of currency translation on cash, cash equivalents, and restricted cash | (123) | (368) |
Net Decrease in Cash, Cash Equivalents, and Restricted Cash | (77,463) | (95,378) |
Cash, cash equivalents, and restricted cash—Beginning of period | 528,066 | 346,065 |
Cash, cash equivalents, and restricted cash—End of period | 450,603 | 250,687 |
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents, end of period | 424,528 | 225,362 |
Restricted cash, end of period | 26,075 | 25,325 |
Total cash, cash equivalents and restricted cash, end of period | 450,603 | 250,687 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 2,550 | 2,526 |
Income taxes paid/(refunded) | 247 | (6,017) |
Non-Cash Investing and Financing Activities: | ||
Capitalization of stock-based compensation related to internal use software | 383 | 689 |
Vesting of stock options early exercised in prior periods | 0 | 452 |
Vesting of common stock issued via notes receivable from stockholders | $ 865 | $ 2,210 |
Organization and Nature of the
Organization and Nature of the Business | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of the Business | 1. Organization and Nature of the Business Better Home & Finance Holding Company, formerly known as Aurora Acquisition Corp. (“Aurora”), together with its subsidiaries (collectively, the “Company”), provides a comprehensive set of homeownership offerings in the United States while expanding in the United Kingdom. The Company’s offerings include mortgage loans, real estate agent services, title and homeowner’s insurance, and other homeownership offerings, such as the Company’s cash offer program. The Company leverages Tinman, its proprietary technology platform, to optimize the mortgage process from the initial application, to the integration of a suite of additional homeownership offerings, to the sale of loans to a network of loan purchasers. Mortgage loans originated within the United States are through the Company’s wholly-owned subsidiary Better Mortgage Corporation (“BMC”). BMC is an approved Title II Single Family Program Lender with the Department of Housing and Urban Development’s (“HUD”) Federal Housing Administration (“FHA”), and is an approved seller and servicer with the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FMCC”). The Company has expanded into the U.K. and offers a multitude of financial products and services to consumers via regulated entities obtained through acquisitions. On August 22, 2023 (the “Closing Date”), the Company consummated its business combination (the “Business Combination”), pursuant to the terms of the Agreement and Plan of Merger, dated as of May 10, 2021, as amended as of October 27, 2021, November 9, 2021, November 30, 2021, August 26, 2022, February 24, 2023 and June 23, 2023 (as amended, the “Merger Agreement”), by and among Aurora, Better Holdco, Inc. (“Pre-Business Combination Better”), and Aurora Merger Sub I, Inc., formerly a wholly owned subsidiary of Aurora (“Merger Sub”). On the Closing Date, Merger Sub merged with and into Pre-Business Combination Better, with Pre-Business Combination Better surviving the merger (the “First Merger”) and Pre-Business Combination Better merged with and into Aurora, with Aurora surviving the merger and changing its name to “Better Home & Finance Holding Company” (referred to as “Better Home & Finance” or the “Company”) (such merger, and together with the First Merger, the “Business Combination” and the completion thereof, the “Closing”). Unless otherwise indicated, references to “Better,” “Better Home & Finance,” the “Company,” “we,” “us,” “our” and other similar terms refer to (i) Pre-Business Combination Better and its consolidated subsidiaries prior to the Closing and (ii) Better Home & Finance and its consolidated subsidiaries following the Closing. The Company’s Class A common stock, par value $0.0001 per share (“Class A common stock”) and public warrants are listed on the Nasdaq Capital Market under the ticker symbols “BETR” and “BETRW,” respectively. Going Concern Considerations— In connection with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, Basis of Presentation - Going Concern , the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. On October 12, 2023, and on April 9, 2024, the Company was notified by the Listing Qualifications Staff of The Nasdaq Stock Market, LLC ("Nasdaq") that the Company’s Class A common stock was not in compliance with the $1.00 minimum bid price rule for continued listing on Nasdaq, and would be subject to delisting for failure to regain compliance with such rule within the first 180-day compliance period (ending April 9, 2024) or a subsequent 180-day compliance period (ending October 7, 2024). If the Class A common stock is no longer listed on Nasdaq, or another national securities exchange, such delisting would constitute a fundamental change under the indenture for the Convertible Note (as defined below) that would require the Company to redeem the Convertible Note prior to maturity for an amount in cash equal to the principal amount of the Convertible Note plus accrued and unpaid interest to the redemption date. As of March 31, 2024, the Company had cash and cash equivalents, together with short-term investments of $482.6 million, compared to $528.6 million principal amount outstanding under the Convertible Note. If the Company is required to redeem the Convertible Note prior to maturity, the Company may not have sufficient available cash and cash equivalents or be able to obtain additional liquidity, on acceptable terms or at all, to enable the Company to redeem or refinance the Convertible Note and continue operating its business. The Company is evaluating options for regaining compliance with the $1.00 minimum bid price rule. The Company applied for and, on March 7, 2024, received approval from Nasdaq to transfer the listing of its Class A common stock, from the Nasdaq Global Market to the Nasdaq Capital Market. The Class A common stock transferred to the Nasdaq Capital Market effective as of the opening of business on March 13, 2024 and continues to trade under the symbol “BETR.” On March 19, 2024, the Company’s board of directors approved a proposal for its annual meeting of stockholders in 2024 to seek stockholder approval to declare and effect one or more reverse stock splits designed to increase the price of the Class A common stock above the $1.00 minimum bid price rule to maintain its Nasdaq listing. Directors and officers, certain senior employees, and significant stockholders, who together hold a majority of the voting power of our outstanding common stock, have indicated that they will vote to approve the reverse stock splits at the Company’s meeting of stockholders in June 2024. On April 9, 2024, the Company received formal notice that Nasdaq granted the Company’s request for an additional 180-day period, or until October 7, 2024, to evidence compliance with the $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to the Bid Price Rule. If at any time before October 7, 2024, the bid price of the Company’s Class A common stock closes at or above $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Bid Price Rule. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation —The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of its financial position and its results of operations, changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows. The results of operations and other information for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2024. The unaudited condensed consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes of Pre-Business Combination Better thereto for the year ended December 31, 2023. Consolidation —The accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates —The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the fair value of mortgage loans held for sale, the fair value of derivative assets and liabilities, including bifurcated derivatives, interest rate lock commitments and forward sale commitments, the determination of a valuation allowance on the Company’s deferred tax assets, capitalization of internally developed software and its associated useful life, determination of fair value of the stock options at grant date, the fair value of acquired intangible assets and goodwill, the provision for loan repurchase reserves, and the incremental borrowing rate used in determining lease liabilities and warrant liabilities. Short-term investments —Short term investments consist of fixed income securities, typically U.K. government treasury securities and U.K. government agency securities with maturities ranging from 91 days to one year. Management determines the appropriate classification of short-term investments at the time of purchase. Short-term investments reported as held-to-maturity are those investments which the Company has both the positive intent and ability to hold to maturity and are stated at amortized cost on the condensed consolidated balance sheets. All of the Company’s short term investments are classified as held to maturity. The Company has not recognized any impairments on these investments to date and any unrealized gains or losses on these investments are immaterial. Allowance for Credit Losses – Held to Maturity (“HTM”) Short-term Investments —The Company’s HTM Short-term investments are also required to utilize the Current Expected Credit Loss approach to estimate expected credit losses. Management measures expected credit losses on short-term investments on a collective basis by major security types that share similar risk characteristics, such as financial asset type and collateral type adjusted for current conditions and reasonable and supportable forecasts. Management classifies the short term investments portfolio by security types, such as U.K. government agency securities. The U.K. government treasury securities and U.K. government agency securities are issued by U.K. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.K. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of no credit losses. Therefore, credit losses for these securities were immaterial as the Company does not currently expect any material credit losses on these short-term investments. Mortgage Loans Held for Sale, at Fair Value —The Company sells its mortgage loans held for sale (“LHFS”) to loan purchasers. These loans can be sold in one of two ways, servicing released, or servicing retained. If a loan is sold servicing released, the Company has sold all the rights to the loan and the associated servicing rights. If a loan is sold servicing retained, the Company has sold the loan and kept the servicing rights, and thus the Company is responsible for collecting monthly principal and interest payments and performing certain escrow services for the borrower. The loan purchaser, in turn, pays a fee for these services. The Company generally sells all of its loans servicing released. For interim servicing, the Company engages a third-party sub-servicer to collect monthly payments and perform associated services. LHFS consists of loans originated for sale by BMC. The Company elects the fair value option, in accordance with ASC 825 – Financial Instruments (“ASC 825”), for all LHFS with changes in fair value recorded in gain on loans, net in the condensed consolidated statements of operations and comprehensive loss. Management believes that the election of the fair value option for LHFS improves financial reporting by presenting the most relevant market indication of LHFS. The fair value of LHFS is based on market prices and yields at period end. The Company accounts for the gains or losses resulting from sales of mortgage loans based on the guidance of ASC 860-20 – Sales of Financial Assets . The Company issues interest rate lock commitments (“IRLC”) to originate mortgage loans and the fair value of the IRLC, adjusted for the probability that a given IRLC will close and fund, is recognized within gain on loans, net. Subsequent changes in the fair value of the IRLC are measured at each reporting period within gain on loans, net until the loan is funded. When the loan is funded, the IRLC is derecognized and the LHFS is recognized based on the fair value of the loan. The LHFS is subsequently remeasured at fair value at each reporting period and the changes in fair value are included within gain on loans, net until the loan is sold on the secondary market. When the loan is sold on the secondary market, the LHFS is derecognized and the gain/(loss) is included within gain on loans, net based on the cash settlement. LHFS are considered sold when the Company surrenders control over the loans. Control is considered to have been surrendered when the transferred loans have been isolated from the Company, are beyond the reach of the Company and its creditors, and the loan purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred loans. The Company typically considers the above criteria to have been met upon receipt of sales proceeds from the loan purchaser. Loans Held for Investment —The Company holds a small amount of loans held for investment, for which management has the intent and ability to hold for the foreseeable future or until maturity or payoff and are reported at amortized cost, which is the principal amount outstanding, net of cumulative charge-offs, unamortized net deferred loan origination fees and costs and unamortized premiums or discounts on purchased loans. Loans held for investment are included within prepaid expenses and other assets on the condensed consolidated balance sheets. The allowance for credit losses is a valuation account that is deducted from the loans held for investment amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged-off against the allowance when management believes the loan balance is deemed to be uncollectible. Management’s estimation of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts, including expected defaults and prepayments. The Company recognized an immaterial current expected credit loss for loans held for investment as of March 31, 2024 and December 31, 2023. Fair Value Measurements —Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The price used to measure fair value is not adjusted for transaction costs. The principal market is the market in which the Company would sell or transfer the asset with the greatest volume and level of activity for the asset. In determining the principal market for an asset or liability, it is assumed that the Company has access to the market as of the measurement date. If no market for the asset exists, or if the Company does not have access to the principal market, a hypothetical market is used. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1 —Unadjusted quoted market prices in active markets for identical assets or liabilities; Level 2 —Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value on a recurring basis include LHFS, derivative assets and liabilities, including IRLCs and forward sale commitments, mortgage servicing rights, bifurcated derivatives, convertible preferred stock warrants and warrant liabilities. Common stock warrants are measured at fair value at issuance only and are classified as equity on the condensed consolidated balance sheets. When developing fair value measurements, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. However, for certain instruments, the Company must utilize unobservable inputs in determining fair value due to the lack of observable inputs in the market, which requires greater judgment in measuring fair value. In instances where there is limited or no observable market data, fair value measurements for assets and liabilities are based primarily upon the Company’s own estimates, and the measurements reflect information and assumptions that management believes a market participant would use in pricing the asset or liability. Warehouse Lines of Credit —Warehouse lines of credit represent the outstanding balance of the Company’s warehouse borrowings collateralized by mortgage loans held for sale or related borrowings collateralized by restricted cash. Generally, warehouse lines of credit are used as interim, short-term financing which bears interest at a fixed margin over an index rate, such as the Secured Overnight Financing Rate (“SOFR”). The outstanding balance of the Company’s warehouse lines of credit will fluctuate based on its lending volume. The advances received under the warehouse lines of credit are based upon a percentage of the fair value or par value of the mortgage loans collateralizing the advance, depending upon the type of mortgage loan. Should the fair value of the pledged mortgage loans decline, the warehouse provider may require the Company to provide additional cash collateral or mortgage loans to maintain the required collateral level under the relevant warehouse line. The Company did not incur any significant issuance costs related to its warehouse lines of credit. Convertible Note— As part of the Closing of the Business Combination, the Company issued the Convertible Note. Upon initial issuance, the Convertible Note is evaluated for redemption and conversion features that could result in embedded derivatives that require bifurcation from the notes. Upon initial issuance, any embedded derivatives are measured at fair value. Convertible Note proceeds are allocated between the carrying value of the note and the fair value of embedded derivatives on the initial issuance date. Any portion of proceeds allocated to embedded derivatives are treated as reductions in, or discounts to, the carrying value of the convertible notes on the issuance date. Embedded derivatives are adjusted to fair value at each reporting period, with the change in fair value included within the consolidated statements of operations and comprehensive income (loss). See Note 9 for further details on the Company’s Convertible Note. Income Taxes —Income taxes are calculated in accordance with ASC 740, Accounting for Income Taxes . An estimated annual effective tax rate is applied to year-to-date income (loss). At the end of each interim period, the estimated effective tax rate expected to be applicable for the full year is calculated. This method differs from that described in the Company’s income taxes policy footnote in the audited consolidated financial statements and related notes thereto for the year ended December 31, 2023, which describes the Company’s annual significant income tax accounting policy and related methodology. Revenue Recognition —The Company generates revenue from the following streams: 1) Gain on loans, net includes revenues generated from the Company’s mortgage production process. See Note 3. The components of gain on loans, net are as follows: i. Gain on sale of loans, net —This represents the premium the Company receives in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market. Gain on sale of loans, net includes unrealized changes in the fair value of LHFS, which are recognized on a loan by loan basis as part of current period earnings until the loan is sold on the secondary market. The fair value of LHFS is measured based on observable market data. This also includes activity for loans originated on behalf of the integrated partnership that are subsequently purchased by the Company as well as the portion of the sale proceeds to be received by the integrated partner. The portion of the sale proceeds that is to be allocated to the integrated partner is accrued as a reduction of gain on sale of loans, net when the loan is initially purchased by the Company from the integrated partner. Gain on sale of loans, net also includes the changes in fair value of IRLCs and forward sale commitments. IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market. Fair value of forward sale commitments hedging IRLCs and LHFS are measured based on quoted prices for similar assets. ii. Integrated partnership fees —Includes fees that the Company receives for originating loans on behalf of an integrated partnership, which are recognized as revenue upon the integrated partner’s funding of the loan. iii. Provision for loan repurchase reserve —In connection with the sale of loans on the secondary market, the Company makes customary representations and warranties to the relevant loan purchasers about various characteristics of each loan, such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws. In the event of a breach of its representations and warranties, the Company may be required to repurchase the loan with the identified defects. The provision for loan repurchase reserve, represents the charge for these potential losses. 2) Net interest income includes interest income from LHFS calculated based on the note rate of the respective loan, interest income from short-term investments, and interest income on loans held for investment. Interest expense includes interest expense on warehouse lines of credit, interest expense on customer deposits, as well as interest expense on the Convertible Note. 3) Other revenue consists of revenue from the Company’s additional offerings which primarily consist real estate services, insurance, and international lending revenue which is recognized based on ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”). ASC 606 outlines a single comprehensive model in accounting for revenue arising from contracts with customers. The core principle, involving a five-step process, of the revenue model is that an entity recognizes 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 or services. For real estate services, the Company generates revenues from fees related to real estate agent services, mainly from cooperative brokerage fees from the Company’s network of third-party real estate agents, which assist customers in the purchase or sale of a home. The Company recognizes revenues from real estate services upon completion of the performance obligation which is when the mortgage transaction closes. Performance obligations for real estate agent services are typically completed 40 to 60 days after the commencement of the home search process. Payment for these services is typically settled in cash as part of closing costs to the borrower upon closing of the mortgage transaction. Also included in real estate services are settlement services which are revenue from fees charged for services such as title search fees, wire fees, policy and document preparation, and other mortgage settlement services. The Company recognizes revenues from settlement services upon completion of the performance obligation which is when the mortgage transaction closes. Insurance revenue primarily consists of fees earned on homeowners insurance policies and title insurance. The Company generates revenues from agent fees on homeowners insurance policies obtained by customers through the Company’s marketplace of third-party insurance carriers. The Company offers title insurance as an agent and works with third-party providers that underwrite the title insurance policies. For title insurance, the Company recognizes revenue from fees upon the completion of the performance obligation which is when the mortgage transaction closes. For homeowners insurance and title insurance, the Company is the agent in the transactions as the Company does not control the ability to direct the fulfillment of the service, is not primarily responsible for fulfilling the performance of the service, and does not assume the risk in a claim against a policy. For international lending revenue, the Company generates revenue primarily from broker fees earned in the U.K. The Company recognizes international lending revenue upon completion of the performance obligation which is when the mortgage transaction closes. Compensation and Benefits —Compensation and benefits include salaries, wages, and incentive pay as well as stock-based compensation, employee health benefits, 401(k) plan benefits, and social security and unemployment taxes. Stock-based compensation includes expenses associated with restricted stock unit grants, performance stock unit grants, and stock option grants, under the Company’s stock plans. Compensation expense for the stock-based payments is based on the fair value of the awards on the grant date. Compensation and benefits expenses are expensed as incurred with the exception of stock-based compensation, which is recognized in a straight-line basis over the requisite service period. General and Administrative Expenses —General and administrative expenses include rent and occupancy expenses, insurance, and external legal, tax and accounting services. General and administrative expenses are expensed as incurred. Technology Expenses —Technology expenses consist of direct costs related to vendors engaged in product management, design, development, and testing of the Company’s websites and products. Technology expenses are expensed as incurred. Marketing and Advertising Expenses —Marketing and advertising expenses consist of direct costs related to customer acquisition expenses, brand costs, and paid marketing. For customer acquisition expenses, the Company primarily generates loan origination leads through third-party financial service websites for which they incur “pay-per-click” expenses. A majority of the Company’s marketing and advertising expenses are incurred from leads purchased from these third-party financial service websites. Marketing and advertising expenses are expensed as incurred. Loan Origination Expenses —Loan origination expenses consist of costs directly attributable to the production of loans such as appraisal fees, processing expenses, underwriting, closing fees, and servicing costs. These expenses are expensed as incurred. Other Expenses —Other expenses consist of direct costs related to other non-mortgage homeownership activities, including settlement service expenses, lead generation expenses, expenses incurred in relation to our international lending activities, and gains and losses from equity related liabilities. Settlement service expenses consist of fees for transactional services performed by third-party providers for borrowers while lead generation expenses consist of fees for services related to real estate agents. Other expenses are expensed as incurred. Segments —The Company has one reportable segment. The Company’s chief operating decision maker, the Chief Executive Officer, reviews financial information presented on a company-wide basis for purposes of allocating resources and evaluating financial performance. Reclassification of Prior Period Presentation in the Statement of Operations and Comprehensive Loss —Reclassifications of the previously reported statement of operations and comprehensive loss have been made to conform to the current period’s presentation which provides increased transparency to the nature of the costs. To conform to the current presentation, the following changes were made to the prior period statement of operations: Revenue • Gain on loans, net (Previously mortgage platform revenue, net)—Loan repurchase reserve recovery (provision) has been reclassified from mortgage platform expenses to gain on loans, net. The Company’s mortgage related activities that do not include originating and selling loans, namely in the U.K., have been reclassified to other revenue. • Net interest income: • Interest income—Interest income from short-term investments has been reclassified from other income. • Interest expense (Previously warehouse interest expense)—Interest expense and amortization on non-funding debt has been reclassified to interest expenses from interest expense and amortization on non-funding debt. Expenses • Loan origination expense (Previously mortgage platform expenses)—The Company’s expenses that were not incurred to originate and sell loans, namely in the U.K., have been reclassified to other expenses. • Other expenses (Previously other platform expenses)—Restructuring and impairment expenses, change in fair value of convertible preferred stock warrants, and change in fair value of bifurcated derivative have been reclassified to other expenses. Previously Allocated Expenses • Compensation and benefits—Compensation and benefits, which includes stock-based compensation, was previously allocated to mortgage platform expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses based on allocated headcount is now presented as its own financial statement line item. • Rent and occupancy—Rent and occupancy, which is now included within general and administrative expenses, was previously allocated to mortgage platform expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses based on allocated headcount. • Depreciation and amortization—Depreciation and amortization was previously allocated to mortgage platform expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses based on allocated headcount is now presented as its own financial statement line item. The impacts of the reclassifications on the condensed consolidated statements of operations and comprehensive loss are as follows: (Amounts in thousands) Three Months Ended March 31, 2023 Caption name change As previously reported Reclassifications As reclassified Revenues: Mortgage platform revenue, net Gain on loans, net $ 15,964 $ (3,203) $ 12,761 Cash offer program revenue 3 (3) — Other platform revenue Other revenue 3,845 1,099 4,944 Net interest income Interest income 3,925 2,465 6,390 Interest expense (2,779) (2,690) (5,469) Net interest income 1,146 (225) 921 Total net revenues 20,958 (2,332) 18,626 Expenses: Compensation and benefits — 38,112 38,112 Mortgage platform expenses Loan origination expense 30,623 (25,421) 5,202 Cash offer program expenses 103 (103) — Other platform expenses Other expenses 4,693 6,372 11,065 General and administrative expenses 28,828 (12,066) 16,762 Marketing and advertising expenses 8,623 (863) 7,760 Technology and product development expenses 23,606 (9,160) 14,446 Restructuring and impairment expenses 9,137 (9,137) — Depreciation and amortization — 11,477 11,477 Total expenses 105,613 (789) 104,824 Interest and other income (expense), net Other income (expense) 2,481 (2,481) — Interest and amortization on non-funding debt (2,690) 2,690 — Change in fair value of convertible preferred stock warrants 553 (553) — Change in fair value of bifurcated derivative (1,887) 1,887 — Total interest and other expense, net (1,543) 1,543 — Loss before income tax (benefit) expense (86,198) — (86,198) Income tax (benefit) expense 1,424 — 1,424 Net loss $ (87,622) $ — $ (87,622) Reclassification of the Statement of Cash Flows —To conform to the current presentation, borrowings on warehouse lines of credit and repayments of warehouse lines of credit on the statement of cash flows have been combined into net borrowings (repayments) on warehouse lines of credit within cash (used in)/provided by financing activities as well as the breakout for gain on sale of loans, net from proceeds from sale of mortgage loans held for sale within cash used in operating activities. Recently Issued Accounting Standards Not Yet Adopted In July 2023, the FASB issued Accounting Standard Update (“ASU”) 2023-03, Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock (“ASU 2023-03”). This ASU amends or supersedes various Securities and Exchange Commission ("SEC") paragraphs within the applicable codification to conform to past SEC staff announcements. This ASU does not provide any new guidance. ASU 2023-03 will become effective for the Company once the addition to the FASB Codification is made available. As of March 31, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements. In August 2023, the FASB issued ASU 2023-04, Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121 (“ASU 2023-04”). This ASU amends and adds various SEC paragraphs to the FASB Codification to reflect guidance regarding the accounting for obligations to safeguard crypto assets an entity holds for platform users. This ASU does not provide any new guidance. ASU 2023-04 will become effective for the Company once the addition to the FASB Codification is made available. As of March 31, 2024, the Company does not expect ASU 2023-04 will have any impact on the consolidated financial statements. In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). This ASU incorporates certain SEC disclosure requirements into the FASB ASC. The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. ASU 2023-06 will become effective for each amendment on the effective date of the SEC’s corresponding disclosure rule changes. As of March 31, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures . This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for our annual fiscal year 2024, and interim periods starting in fiscal year 2025. Early adoption is permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact of the disclosure requirements on the consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. The Company is currently assessing the impact of the disclosure requirements on the consolidated financial statements. Recent Securities and Exchange Commission (SEC) Final Rules Not Yet Adopted In March 2024, the SEC adopted final rules under SEC Release No. 33-11275 : The Enhancement and Standardization of Climate-Related Disclosures for Investors , which requires registrants to provide certain climate-related information in their registration statements and annual reports. The rules require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks will also include disclosure of a registrant’s greenhouse gas emissions. In addition, the rules will require registrants to present certain climate-related financial metrics in their audited financial statements. These requirements are effective for the Company in various fiscal years, starting with its fiscal year beginning January 1, 2027. Disclosures will be required prospectively, with information for prior periods required only to the extent it was previously disclosed in an SEC filing. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2024 | |
Revenue [Abstract] | |
Revenue | 3. Revenue Revenue — The Company disaggregates revenue based on the following revenue streams: Gain on loans, net consisted of the following : Three Months Ended March 31, (Amounts in thousands) 2024 2023 Gain on sale of loans, net $ 9,821 $ 12,524 Integrated partnership fees 2,268 2,361 Loan repurchase reserve recovery/(provision) 3,563 (2,124) Total gain on loans, net $ 15,652 $ 12,761 Other revenue consisted of the following: Three Months Ended March 31, (Amounts in thousands) 2024 2023 International lending revenue $ 1,108 $ 988 Insurance Services 639 629 Real estate services 347 2,870 Other revenue 723 457 Total other revenue $ 2,817 $ 4,944 |
Restructuring and Impairments
Restructuring and Impairments | 3 Months Ended |
Mar. 31, 2024 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Impairments | 4. Restructuring and Impairments In December 2021, the Company initiated an operational restructuring program that included plans for costs reductions in response to a difficult interest rate environment as well as a slowing housing market. The restructuring program, which continued during the three months ended March 31, 2024, consists of reductions in headcount and any associated costs which primarily include one-time employee termination benefits. The Company expects the restructuring initiatives to continue at least through the end of 2024. Due to reduced headcount, the Company has also reduced its real estate footprint. The Company has impaired right-of-use assets related to office space that is no longer in use or has been completely abandoned. Leases where the Company is unable to terminate or amend the lease with the landlord remain on the balance sheet under lease liabilities. In February 2023, the Company entered into a lease amendment with a landlord to surrender an office floor and reassign the lease to a third party. The amendment relieves the Company of the primary obligation under the original lease and as such is considered a termination of the original lease. In February 2023, the Company impaired the right-of-use asset of $13.0 million and removed the lease liability of $13.0 million related to one of the office spaces and as part of the amendment the Company incurred a loss of $5.3 million which included a $4.7 million payment in cash to the third party and $0.6 million other related fees to terminate the lease early. For the three months ended March 31, 2024 and 2023, the Company impaired property and equipment of none and $4.5 million, respectively, which was related to termination of lease agreement and sale of laptops resulting from a reduction in the workforce. For the three months ended March 31, 2024 and 2023, the Company’s restructuring and impairment expenses consist of the following: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Employee one-time termination benefits (1) $ 721 $ 288 Real estate restructuring loss (2) — 5,284 Gain on lease settlement (2) — (977) Impairment of property and equipment (2) — 4,542 Total Restructuring and Impairments $ 721 $ 9,137 _______________ (1) Employee one-time termination benefits are included in compensation and benefits on the condensed consolidated statements of operations and comprehensive loss. (2) Real estate restructuring loss, gain on lease settlement, and impairment of property and equipment are included in other expenses on the condensed consolidated statements of operations and comprehensive loss. The cumulative amount of one-time termination benefits, impairment of loan commitment assets, impairment of right-of-use assets, and impairment of property and equipment as of March 31, 2024 is $123.0 million, $105.6 million, $8.5 million, and $12.0 million, respectively. |
Mortgage Loans Held for Sale an
Mortgage Loans Held for Sale and Warehouse Lines of Credit | 3 Months Ended |
Mar. 31, 2024 | |
Mortgage Loans Held For Sale And Warehouse Agreement Borrowings [Abstract] | |
Mortgage Loans Held for Sale and Warehouse Lines of Credit | 5. Mortgage Loans Held for Sale and Warehouse Lines of Credit The Company has the following outstanding warehouse lines of credit: (Amounts in thousands) Maturity Facility Size March 31, 2024 December 31, 2023 Funding Facility 1 (1) July 31, 2024 $ 100,000 $ 40,266 $ 61,709 Funding Facility 2 (2) December 6, 2024 150,000 61,673 40,088 Funding Facility 3 (3) August 2, 2024 175,000 24,222 24,421 Total warehouse lines of credit $ 425,000 $ 126,161 $ 126,218 __________________ (1) Interest charged under the facility is at the 30-day term SOFR plus 2.125% . Cash collateral deposit of $15.0 million is maintained and included in restricted cash. (2) Interest charged under the facility is at the 30-day term SOFR plus 2.10% - 2.25%. Cash collateral deposit of $3.8 million is maintained and included in restricted cash. (3) Interest charged under the facility is at the 30-day term SOFR plus 1.75% - 3.75%. There is no cash collateral deposit maintained as of March 31, 2024. The unpaid principal amounts of the Company’s LHFS are also pledged as collateral under the relevant warehouse funding facilities. The Company’s LHFS are summarized below by those pledged as collateral and those fully funded by the Company: (Amounts in thousands) March 31, 2024 December 31, 2023 Funding Facility 1 $ 40,582 $ 63,483 Funding Facility 2 64,620 42,316 Funding Facility 3 26,473 26,894 Total LHFS pledged as collateral 131,675 132,693 Company-funded LHFS 7,072 12,386 Company-funded Home Equity Line of Credit 28,295 25,098 Total LHFS 167,042 170,177 Fair value adjustment (828) (27) Total LHFS at fair value $ 166,214 $ 170,150 Average days loans held for sale, other than Company-funded LHFS and Company-funded HELOC, for the three months ended March 31, 2024 and 2023 were approximately 20 days. This is defined as the average days between funding and sale for loans funded during each period. As of March 31, 2024 and December 31, 2023, the Company had an immaterial amount of loans either 90 days past due or non-performing. |
Goodwill and Internal Use Softw
Goodwill and Internal Use Software and Other Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Internal Use Software and Other Intangible Assets, Net | 6. Goodwill and Internal Use Software and Other Intangible Assets, Net Changes in the carrying amount of goodwill, net consisted of the following: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Balance at beginning of period $ 32,390 $ 18,525 Goodwill acquired—Goodholm — 1,741 Effect of foreign currency exchange rate changes (181) 240 Balance at end of period $ 32,209 $ 20,507 No impairment of goodwill was recognized for the three months ended March 31, 2024 and 2023. Internal use software and other intangible assets, net consisted of the following: As of March 31, 2024 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.0 $ 137,655 $ (111,572) $ 26,083 Other 5.7 1,000 (294) 706 Total Intangible assets with finite lives, net 138,654 (111,866) 26,788 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 2,241 — 2,241 Total Internal use software and other intangible assets, net $ 142,715 $ (111,866) $ 30,849 As of December 31, 2023 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.0 $ 136,879 $ (103,587) $ 33,292 Intellectual property and other 5.7 1,008 (254) 754 Total Intangible assets with finite lives, net 137,887 (103,841) 34,046 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 2,260 — 2,260 Total Internal use software and other intangible assets, net $ 141,967 $ (103,841) $ 38,126 The Company capitalized $0.4 million and $3.5 million in internal use software and website development costs during the three months ended March 31, 2024 and 2023, respectively. Included in capitalized internal use software and website development costs are $0.4 million and $0.7 million of stock-based compensation costs for the three months ended March 31, 2024 and 2023, respectively. Amortization expense totaled $8.0 million and $9.4 million during the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024 and 2023, |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 3 Months Ended |
Mar. 31, 2024 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Assets | 7. Prepaid Expenses and Other Assets Prepaid expenses and other assets consisted of the following: As of March 31, As of December 31, (Amounts in thousands) 2024 2023 Prepaid expenses $ 25,430 $ 27,859 Tax receivables 8,473 8,348 Security Deposits 13,858 15,179 Loans held for investment 7,900 4,793 Total prepaid expenses and other assets $ 55,661 $ 56,179 |
Customer Deposits
Customer Deposits | 3 Months Ended |
Mar. 31, 2024 | |
Deposits [Abstract] | |
Customer Deposits | 8. Customer Deposits Customer Deposits —In relation to the Company’s banking activities tied to the Company’s acquisition of Birmingham Bank in the U.K., the Company offers individual savings accounts and other depository products with differing maturities and interest rates to its customers. The balance of customer deposits as of both March 31, 2024 and December 31, 2023 was $11.8 million on the condensed consolidated balance sheets. The following table presents average balances and weighted average rates paid on deposits for the periods indicated: Three Months Ended March 31, 2024 (Amounts in thousands) Average Balance Average Rate Paid Notice $ 2,406 2.85 % Term 5,432 3.77 % Savings 4,260 2.28 % Total Deposits $ 12,098 2.97 % The following table presents maturities of customer deposits: (Amounts in thousands) As of March 31, 2024 Demand deposits $ 4,389 Maturing In: 2024 3,583 2025 2,376 2026 1,174 2027 309 2028 — Thereafter — Total $ 11,831 Interest Expense on deposits is recorded in interest expense in the condensed consolidated statements of operations and comprehensive loss for the periods indicated as follows: Three Months Ended March 31, (Amounts in thousands) 2024 Notice $ 24 Term 52 Savings 29 Total Interest Expense $ 105 Deposits are for U.K. banking clients and are protected up to £85.0 thousand ($107.3 thousand) per eligible person by the Financial Services Compensation Scheme in the U.K. Of the total customer deposits as of March 31, 2024, $1.0 million were over the applicable insured amount. |
Corporate Line of Credit and Co
Corporate Line of Credit and Convertible Note | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Corporate Line of Credit and Convertible Note | 9. Corporate Line of Credit and Convertible Note Corporate Line of Credit —The Company made the final principal payment on its corporate line of credit in August 2023 and as such incurred no interest expense under the corporate line of credit during the three months ended March 31, 2024. For the three months ended March 31, 2023, the Company recorded a total of $2.6 million related to interest expense as follows: $2.3 million in interest expense related to the line of credit and $0.3 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest expense within the condensed consolidated statements of operations and comprehensive loss. Convertible Note— In connection with the Closing of the Business Combination, the Company issued to SB Northstar LP, a Cayman Islands exempted limited partnership and an affiliate of SoftBank Group Corp., a senior subordinated convertible note in the aggregate principal amount of $528.6 million (the “Convertible Note”), $550.0 million less approximately $21.4 million released to the Company at the Closing from Aurora’s trust account, pursuant to an Indenture, dated as of August 22, 2023 (the “Indenture”). The Convertible Note bears 1% interest per annum and matures on August 22, 2028, unless earlier converted or redeemed. Per the Indenture, the Company may elect to pay all or any portion of interest in kind by issuing to the holder of such note an additional note or in cash. The Convertible Note is convertible, at the option of SB Northstar, into shares of the Company’s Class A common stock, with an initial conversion rate per $1,000 principal amount of Convertible Note equal to (a) $1,000 divided by (b) a dollar amount equal to 115% of the First Anniversary VWAP (as defined in the Indenture), subject to adjustments as described therein. The Indenture provides that the First Anniversary VWAP may be no less than $8.00 and no greater than $12.00, subject to adjustments as described therein. The Convertible Note may be redeemed at the option of the Company at a redemption price of 115% of par pl us accrued interest in cash, at any time on or before the 30th trading day prior to the maturity date of the Convertible Note if the last reported sale price of the Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during the 30 trading day period ending on, and including, the trading day immediately preceding the d ate of notice of optional redemption. The Convertible Note is redeemable prior to maturity in the event of a fundamental change under the Indenture, such as the removal of the Company’s Class A common stock from the Nasdaq. In this event, the Company would be required to redeem the Convertible Note for an amount in cash equal to the principal balance plus accrued and unpaid interest on the redemption date. As of March 31, 2024 and December 31, 2023, the carrying amount of the Convertible Note was $514.8 million and $514.6 million on the condensed consolidated balance sheets, respectively. For the three months ended March 31, 2024, the Company recorded a total of $2.7 million of interest expense |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 10. Related Party Transactions The Company has entered into a number of commercial agreements with related parties, which management believes provide the Company with products or services that are beneficial to its commercial objectives. Often these products and services have been tailored to the Company’s specific needs or are part of pilot programs, both for the Company and the counterparty, for which there are no clear alternative vendors offering comparable services to compare pricing with. It is reasonable to assume that none of these related party commercial agreements were structured at arm’s length and therefore may be beneficial to the counterparty. 1/0 Capital —The Company is a party to an employee and expense allocation agreement with 1/0 Capital, LLC (“1/0 Capital”), an entity affiliated with 1/0 Real Estate, LLC (“1/0 Real Estate”) (an entity wholly owned by 1/0 Holdco LLC, in which Vishal Garg, the Chief Executive Officer of the Company, and the Company’s executive officers each hold a more than five percent ownership interest). Under the employee and expense allocation agreement, 1/0 Capital provides the Company access to certain employees in exchange for reasonable consideration in the form of fees based on their time, as well as IT support services. Any intellectual property created under the agreement by 1/0 Capital employees working on behalf of the Company belongs to the Company. The term of the agreement will continue in perpetuity. The services provided by 1/0 Capital are not integral to the Company’s technology platform and amounts incurred are not material to the Company. In connection with this agreement, the Company incurred gross expense of none and $28 thousand in the three months ended three months ended March 31, 2024 and 2023, respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss. As part of this agreement, the Company may provide access to certain of its employees for use by 1/0 Capital which reduced the amounts owed to 1/0 Capital by none for both the three months ended March 31, 2024 and 2023, respectively. The Company is invoiced on a net basis and recorded a $152 thousand and $153 thousand payable as of March 31, 2024 and December 31, 2023, respectively, included within other liabilities on the condensed consolidated balance sheets. TheNumber —The Company originally entered into a data analytics services agreement in August 2016 with TheNumber, LLC (“TheNumber”), an entity affiliated with both Vishal Garg, the Chief Executive Officer of the Company, and 1/0 Real Estate. In September 2021, the Company and TheNumber entered into a technology integration and license agreement, which was amended in November 2021, to develop a consumer credit profile technology which is to be launched in three stages. The first stage involves testing TheNumber’s limited graph Application Programming Interface in a testing environment with test data. The second stage involves data such as credit, income, and assets of staged borrowers meeting certain measures of speed and performance. The third stage requires TheNumber to run the product and serve all borrowers on the production side as well as provide data to the Company from its rich data set. The listed services provided by TheNumber are lead generation, market rate analysis, lead growth analysis, property listing analysis, automated valuation models, and financial risk analysis. Both parties agreed to jointly develop all aspects of this program, and the agreement provides for the utilization of TheNumber employees by the Company. In January 2024, the agreement was extended for an additional year. The services provided by TheNumber are not integral to the Company’s technology platform and amounts incurred are not material to the Company. In connection with these agreements, the Company paid expenses of $62 thousand and $301 thousand for the three months ended March 31, 2024 and 2023 respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss and had a payable of $171 thousand and $230 thousand as of March 31, 2024 and December 31, 2023, respectively, within other liabilities on the condensed consolidated balance sheets. Notable —In October 2021, the Company entered into a private label and consumer lending program agreement (the “2021 Notable Program Agreement”) to provide home improvement lines of credit to qualified borrowers of the Company with Notable Finance, LLC (“Notable”), an entity in which Vishal Garg, the Chief Executive Officer of the Company, and 1/0 Real Estate collectively hold a majority ownership interest. The program is intended to be used by qualified customers of the Company for home improvement purchases. This program required Notable to originate and service the loan and in consideration, the Company pays Notable $600 for each loan originated pursuant to the agreement. In connection with the 2021 Notable Program Agreement, Notable provided an unsecured personal loan product with an initial 12-month “draw period” during which the customers can use the approved loan amount and only pay interest on the used loan fund. Following this initial 12-month draw period, the customers are no longer able to withdraw funds and there is a 3 or 5-year “fixed” period to pay back the loan in full in monthly installments. In January 2022, Better Trust I, a subsidiary of the Company, entered into a master loan purchase agreement (the “Notable MLPA”) with Notable to purchase from Notable up to $20.0 million of unsecured home improvement loans underwritten and originated by Notable for the Company’s customers. Under the Notable MLPA, Notable originated home improvement loans, all of which Notable makes available for purchase by the Company. No additional cost outside the sale of the loan was contemplated by the Notable MLPA. The services provided by Notable are not integral to the Company’s technology platform and expenses incurred are not material to the Company. As of March 31, 2024 and December 31, 2023, the Company had $5.8 million and $6.3 million of unsecured home improvement loans from Notable, which are included within mortgage loans held for sale, at fair value on the condensed consolidated balance sheets. For the three months ended March 31, 2024, the Company incurred $16 thousand of expenses for amortization of internal use software under the agreement, which are included within depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss. For the three months ended March 31, 2023, the Company incurred $21 thousand of expenses under the agreement, $5 thousand of which are included within marketing expenses and $16 thousand of which are included within depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss. Truework |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies Litigation —The Company, among other things, engages in mortgage lending, title and settlement services, and other financial technology services. The Company operates in a highly regulated industry and may be subject to various legal and administrative proceedings concerning matters that arise in the normal and ordinary course of business, including inquiries, complaints, audits, examinations, investigations, employee labor disputes, vendors, and potential enforcement actions from regulatory agencies. While the ultimate outcome of these matters cannot be predicted with certainty due to inherent uncertainties in litigation, management is of the opinion that these matters will not have a material impact on the condensed consolidated financial statements of the Company. The Company accrues for losses when they are probable to occur and such losses are reasonably estimable, and discloses pending litigation if the Company believes a possibility exists that the litigation will have a material effect on its financial results. Legal costs expected to be incurred are accounted for as they are incurred. The Company is currently a party to pending legal claims and proceedings regarding an employee related labor dispute brought forth during the third quarter of 2020. The dispute alleges that the Company has failed to pay certain employees for overtime and is in violation of the Fair Labor Standards Act and labor laws in the State of California and the State of Florida. The case is still in its early stages and has not yet reached the class certification stage and as such the ultimate outcome cannot be predicted with certainty due to inherent uncertainties in the legal claims. As part of the dispute, the Company included an estimated liability of $8.4 million as of both March 31, 2024 and December 31, 2023, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets. No additional expense was accrued for the three months ended March 31, 2024. During the first quarter of 2023, the Company settled its employee related labor dispute in the State of Florida for an immaterial amount. On June 7, 2022, Sarah Pierce, Pre-Business Combination Better’s former Head of Sales and Operations, filed litigation against Pre-Business Combination Better, Mr. Garg, and Nicholas Calamari, our Chief Administrative Officer and Senior Counsel. Ms. Pierce has since voluntarily dismissed her claims against the Company and Messrs. Garg and Calamari with prejudice and withdrawn her appeal of a separate judgment obtained by the Company against her. Regulatory Matters —In the third quarter of 2021, following third-party audits of samples of loans produced during the fiscal years 2018, 2019, and 2022, the Company became aware of certain TILA-RESPA Integrated Disclosure (“TRID”) defects in the loan production process that resulted in the final closing costs disclosed in the closing disclosure, in some instances, being greater than those disclosed in the loan estimate. Some of these defects were outside applicable tolerances under the TRID rule, which resulted in potential overcharges to consumers. As of March 31, 2024 and December 31, 2023, the Company included an estimated liability of $8.7 million and $8.6 million, respectively, within accounts payable and accrued expenses on the condensed consolidated balance sheets. For the three months ended March 31, 2024, the Company recorded an additional accrual for these potential TRID defects of $0.1 million and is included within loan origination expense in the condensed consolidated statement of operations and comprehensive loss. This accrual is the Company’s best estimate of potential exposure on the larger population of loans based on the results obtained by the audited sample. The accrued amounts are for estimated refunds potentially due to consumers for TRID tolerance errors for loans produced from 2018 through 2024. The Company is continuing to remediate TRID tolerance defects as necessary. Minimum Bid Price Notice —On October 12, 2023, the Company received a letter from Nasdaq notifying the Company that it is not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) for continued listing. The Bid Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Company applied for and, on March 7, 2024, received approval from Nasdaq to transfer the listing of its Class A common stock, from the Nasdaq Global Market to the Nasdaq Capital Market. The Class A common stock transferred to the Nasdaq Capital Market effective as of the opening of business on March 13, 2024 and continues to trade under the symbol “BETR.” In accordance with the Compliance Period Rule, the Company has 180 calendar days, from the date of notification, October 12, 2023, to regain compliance. On April 9, 2024, the Company received formal notice that Nasdaq granted the Company’s request for an additional 180-day period, or until October 7, 2024, to evidence compliance with the $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to the Bid Price Rule. If at any time before October 7, 2024, the bid price of the Company’s Class A common stock, par value $0.0001 per share closes at $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Bid Price Rule. If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Class A common stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. Loan Commitments —The Company enters into IRLCs to fund mortgage loans, at specified interest rates and within a specified period of time, with potential borrowers who have applied for a loan and meet certain credit and underwriting criteria. As of March 31, 2024 and December 31, 2023, the Company had outstanding commitments to fund mortgage loans in notional amounts of approximately $262.7 million and $227.4 million, respectively. The IRLCs derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets. See Note 14. Forward Sale Commitments —In the ordinary course of business, the Company enters into contracts to sell existing LHFS or loans committed but yet to be funded into the secondary market at specified future dates. As of March 31, 2024 and December 31, 2023, the Company had outstanding forward sales commitment contracts of notional amounts of approximately $356.0 million and $265.0 million, respectively. The forward sales commitments derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets. See Note 14. Concentrations —See below for areas considered to be concentrations of credit risk for the Company: Significant loan purchasers are those which represent more than 10% of the Company’s loan volume. During the three months ended March 31, 2024, the Company had three loan purchasers that accounted for 53%, 17% and 18% of loans sold by the Company. During the three months ended March 31, 2023, the Company had one loan purchaser that accounted for 79% of loans sold by the Company. Concentrations of credit risk associated with the LHFS carried at fair value are limited due to the large number of borrowers and their dispersion across many geographic areas throughout the United States. As of March 31, 2024 , the company originated 10% of its LHFS secured by properties in Florida. As of December 31, 2023 , the Company originated 12% and 11% of its LHFS secured by properties in Florida and Texas, respectively. The Company maintains cash and cash equivalent balances at various financial institutions. Cash accounts at each bank are insured by the Federal Deposit Insurance Corporation for amounts up to $0.25 million. As of March 31, 2024 and December 31, 2023, the majority of the Company’s cash and cash equivalent balances are in excess of the insured limits at various financial institutions. Escrow Payable and Other Customer Accounts —In accordance with its lender obligations, the Company maintains a separate escrow bank account to hold borrower funds pending future disbursement. The Company administers escrow deposits representing undisbursed amounts received for payment of property taxes, insurance and principal, and interest on mortgage loans held for sale. The Company also administers customer deposits in relation to other non-mortgage products and services that the Company offers. These funds are shown as restricted cash and there is a corresponding escrow payable on the consolidated balance sheet, as they are being held on behalf of the borrower or customer. The balance in these accounts as of March 31, 2024 and December 31, 2023 was $3.8 million and $3.4 million, respectively. 12. Risks and Uncertainties In the normal course of business, companies in the mortgage lending industry encounter certain economic and regulatory risks. Economic risks include credit risk and interest rate risk, in either a rising or declining interest rate environment. Credit risk is the risk of default that may result from the borrowers’ inability or unwillingness to make contractually required payments during the period in which loans are being held for sale by the Company. Interest Rate Risk —The Company is subject to interest rate risk in a rising interest rate environment, as the Company may experience a decrease in loan production, as well as decreases in the fair value of LHFS, loan applications in process with locked-in rates, and commitments to originate loans, which may negatively impact the Company’s operations. To preserve the value of such fixed-rate loans or loan applications in process with locked-in rates, agreements are executed for best effort or mandatory loan sales to be settled at future dates with fixed prices. These loan sales take the form of short-term forward sales of mortgage-backed securities and commitments to sell loans to loan purchasers. Alternatively, in a declining interest rate environment, customers may withdraw their loan applications that include locked-in rates with the Company. Additionally, when interest rates decline, interest income received from LHFS will decrease. The Company uses an interest rate hedging program to manage these risks. Through this program, mortgage-backed securities are purchased and sold forward. For all counterparties with open positions as of March 31, 2024, in the event that the Company does not deliver into the forward-delivery commitments, they can be settled on a net basis. Net settlements entail paying or receiving cash based upon the change in market value of the existing instrument. The Company currently uses forward sales of mortgage-backed securities, interest rate commitments from borrowers, and mandatory and/or best-efforts forward commitments to sell loans to loan purchasers to protect the Company from interest rate fluctuations. These short-term instruments, which do not require any payments to be paid to the counterparty in connection with the execution of the commitments, are generally executed simultaneously. Credit Risk —The Company’s hedging program is not designated as formal hedging from an accounting standpoint, contains an element of risk because the counterparties to its mortgage securities transactions may be unable to meet their obligations. While the Company does not anticipate nonperformance by any counterparty, it is exposed to potential credit losses in the event the counterparty fails to perform. The Company’s exposure to credit risk in the event of default by the counterparty is the difference between the contract and the current market price. The Company minimizes its credit risk exposure by limiting the counterparties to well-established banks and securities dealers who meet established credit and capital guidelines. Loan Repurchase Reserve —The Company sells loans to loan purchasers without recourse. As such, the loan purchasers have assumed the risk of loss or default by the borrower. However, the Company is usually required by these loan purchasers to make certain standard representations and warranties relating to the loan for up to three years post sale. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase the loans or indemnify these loan purchasers for losses. In addition, if loans pay-off within a specified time frame the Company may be required to refund a portion of the sales proceeds to the loan purchasers. The Company repurchased $2.0 million ( 6 l oans) and $8.2 million ( 21 l oans) in unpaid principal balance of loans during the three months ended March 31, 2024 and 2023, respectively, related to its loan repurchase obligations. The Company’s loan repurchase reserve is included within other liabilities on the consolidated balance sheets. The (recovery of)/provision for the loan repurchase reserve is included within gain on loans, net on the consolidated statements of operations and comprehensive loss. The following presents the activity of the Company’s loan repurchase reserve: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Loan repurchase reserve at beginning of period $ 19,472 $ 26,745 (Recovery)/provision (3,563) 2,124 Charge-offs (468) (2,278) Loan repurchase reserve at end of period $ 15,441 $ 26,591 Borrowing Capacity —The Company funds the majority of mortgage loans on a short-term basis through committed and uncommitted warehouse lines as well as from operations for any amounts not advanced by warehouse lenders. As a result, the Company’s ability to fund current operations depends on its ability to secure these types of short-term financings. If the Company’s principal lenders decided to terminate or not to renew any of the warehouse lines with the Company, the loss of borrowing capacity could be detrimental to the Company’s condensed consolidated financial statements unless the Company found a suitable alternative source. |
Risks and Uncertainties
Risks and Uncertainties | 3 Months Ended |
Mar. 31, 2024 | |
Risks and Uncertainties [Abstract] | |
Risks and Uncertainties | 11. Commitments and Contingencies Litigation —The Company, among other things, engages in mortgage lending, title and settlement services, and other financial technology services. The Company operates in a highly regulated industry and may be subject to various legal and administrative proceedings concerning matters that arise in the normal and ordinary course of business, including inquiries, complaints, audits, examinations, investigations, employee labor disputes, vendors, and potential enforcement actions from regulatory agencies. While the ultimate outcome of these matters cannot be predicted with certainty due to inherent uncertainties in litigation, management is of the opinion that these matters will not have a material impact on the condensed consolidated financial statements of the Company. The Company accrues for losses when they are probable to occur and such losses are reasonably estimable, and discloses pending litigation if the Company believes a possibility exists that the litigation will have a material effect on its financial results. Legal costs expected to be incurred are accounted for as they are incurred. The Company is currently a party to pending legal claims and proceedings regarding an employee related labor dispute brought forth during the third quarter of 2020. The dispute alleges that the Company has failed to pay certain employees for overtime and is in violation of the Fair Labor Standards Act and labor laws in the State of California and the State of Florida. The case is still in its early stages and has not yet reached the class certification stage and as such the ultimate outcome cannot be predicted with certainty due to inherent uncertainties in the legal claims. As part of the dispute, the Company included an estimated liability of $8.4 million as of both March 31, 2024 and December 31, 2023, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets. No additional expense was accrued for the three months ended March 31, 2024. During the first quarter of 2023, the Company settled its employee related labor dispute in the State of Florida for an immaterial amount. On June 7, 2022, Sarah Pierce, Pre-Business Combination Better’s former Head of Sales and Operations, filed litigation against Pre-Business Combination Better, Mr. Garg, and Nicholas Calamari, our Chief Administrative Officer and Senior Counsel. Ms. Pierce has since voluntarily dismissed her claims against the Company and Messrs. Garg and Calamari with prejudice and withdrawn her appeal of a separate judgment obtained by the Company against her. Regulatory Matters —In the third quarter of 2021, following third-party audits of samples of loans produced during the fiscal years 2018, 2019, and 2022, the Company became aware of certain TILA-RESPA Integrated Disclosure (“TRID”) defects in the loan production process that resulted in the final closing costs disclosed in the closing disclosure, in some instances, being greater than those disclosed in the loan estimate. Some of these defects were outside applicable tolerances under the TRID rule, which resulted in potential overcharges to consumers. As of March 31, 2024 and December 31, 2023, the Company included an estimated liability of $8.7 million and $8.6 million, respectively, within accounts payable and accrued expenses on the condensed consolidated balance sheets. For the three months ended March 31, 2024, the Company recorded an additional accrual for these potential TRID defects of $0.1 million and is included within loan origination expense in the condensed consolidated statement of operations and comprehensive loss. This accrual is the Company’s best estimate of potential exposure on the larger population of loans based on the results obtained by the audited sample. The accrued amounts are for estimated refunds potentially due to consumers for TRID tolerance errors for loans produced from 2018 through 2024. The Company is continuing to remediate TRID tolerance defects as necessary. Minimum Bid Price Notice —On October 12, 2023, the Company received a letter from Nasdaq notifying the Company that it is not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) for continued listing. The Bid Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Company applied for and, on March 7, 2024, received approval from Nasdaq to transfer the listing of its Class A common stock, from the Nasdaq Global Market to the Nasdaq Capital Market. The Class A common stock transferred to the Nasdaq Capital Market effective as of the opening of business on March 13, 2024 and continues to trade under the symbol “BETR.” In accordance with the Compliance Period Rule, the Company has 180 calendar days, from the date of notification, October 12, 2023, to regain compliance. On April 9, 2024, the Company received formal notice that Nasdaq granted the Company’s request for an additional 180-day period, or until October 7, 2024, to evidence compliance with the $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to the Bid Price Rule. If at any time before October 7, 2024, the bid price of the Company’s Class A common stock, par value $0.0001 per share closes at $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Bid Price Rule. If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Class A common stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. Loan Commitments —The Company enters into IRLCs to fund mortgage loans, at specified interest rates and within a specified period of time, with potential borrowers who have applied for a loan and meet certain credit and underwriting criteria. As of March 31, 2024 and December 31, 2023, the Company had outstanding commitments to fund mortgage loans in notional amounts of approximately $262.7 million and $227.4 million, respectively. The IRLCs derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets. See Note 14. Forward Sale Commitments —In the ordinary course of business, the Company enters into contracts to sell existing LHFS or loans committed but yet to be funded into the secondary market at specified future dates. As of March 31, 2024 and December 31, 2023, the Company had outstanding forward sales commitment contracts of notional amounts of approximately $356.0 million and $265.0 million, respectively. The forward sales commitments derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets. See Note 14. Concentrations —See below for areas considered to be concentrations of credit risk for the Company: Significant loan purchasers are those which represent more than 10% of the Company’s loan volume. During the three months ended March 31, 2024, the Company had three loan purchasers that accounted for 53%, 17% and 18% of loans sold by the Company. During the three months ended March 31, 2023, the Company had one loan purchaser that accounted for 79% of loans sold by the Company. Concentrations of credit risk associated with the LHFS carried at fair value are limited due to the large number of borrowers and their dispersion across many geographic areas throughout the United States. As of March 31, 2024 , the company originated 10% of its LHFS secured by properties in Florida. As of December 31, 2023 , the Company originated 12% and 11% of its LHFS secured by properties in Florida and Texas, respectively. The Company maintains cash and cash equivalent balances at various financial institutions. Cash accounts at each bank are insured by the Federal Deposit Insurance Corporation for amounts up to $0.25 million. As of March 31, 2024 and December 31, 2023, the majority of the Company’s cash and cash equivalent balances are in excess of the insured limits at various financial institutions. Escrow Payable and Other Customer Accounts —In accordance with its lender obligations, the Company maintains a separate escrow bank account to hold borrower funds pending future disbursement. The Company administers escrow deposits representing undisbursed amounts received for payment of property taxes, insurance and principal, and interest on mortgage loans held for sale. The Company also administers customer deposits in relation to other non-mortgage products and services that the Company offers. These funds are shown as restricted cash and there is a corresponding escrow payable on the consolidated balance sheet, as they are being held on behalf of the borrower or customer. The balance in these accounts as of March 31, 2024 and December 31, 2023 was $3.8 million and $3.4 million, respectively. 12. Risks and Uncertainties In the normal course of business, companies in the mortgage lending industry encounter certain economic and regulatory risks. Economic risks include credit risk and interest rate risk, in either a rising or declining interest rate environment. Credit risk is the risk of default that may result from the borrowers’ inability or unwillingness to make contractually required payments during the period in which loans are being held for sale by the Company. Interest Rate Risk —The Company is subject to interest rate risk in a rising interest rate environment, as the Company may experience a decrease in loan production, as well as decreases in the fair value of LHFS, loan applications in process with locked-in rates, and commitments to originate loans, which may negatively impact the Company’s operations. To preserve the value of such fixed-rate loans or loan applications in process with locked-in rates, agreements are executed for best effort or mandatory loan sales to be settled at future dates with fixed prices. These loan sales take the form of short-term forward sales of mortgage-backed securities and commitments to sell loans to loan purchasers. Alternatively, in a declining interest rate environment, customers may withdraw their loan applications that include locked-in rates with the Company. Additionally, when interest rates decline, interest income received from LHFS will decrease. The Company uses an interest rate hedging program to manage these risks. Through this program, mortgage-backed securities are purchased and sold forward. For all counterparties with open positions as of March 31, 2024, in the event that the Company does not deliver into the forward-delivery commitments, they can be settled on a net basis. Net settlements entail paying or receiving cash based upon the change in market value of the existing instrument. The Company currently uses forward sales of mortgage-backed securities, interest rate commitments from borrowers, and mandatory and/or best-efforts forward commitments to sell loans to loan purchasers to protect the Company from interest rate fluctuations. These short-term instruments, which do not require any payments to be paid to the counterparty in connection with the execution of the commitments, are generally executed simultaneously. Credit Risk —The Company’s hedging program is not designated as formal hedging from an accounting standpoint, contains an element of risk because the counterparties to its mortgage securities transactions may be unable to meet their obligations. While the Company does not anticipate nonperformance by any counterparty, it is exposed to potential credit losses in the event the counterparty fails to perform. The Company’s exposure to credit risk in the event of default by the counterparty is the difference between the contract and the current market price. The Company minimizes its credit risk exposure by limiting the counterparties to well-established banks and securities dealers who meet established credit and capital guidelines. Loan Repurchase Reserve —The Company sells loans to loan purchasers without recourse. As such, the loan purchasers have assumed the risk of loss or default by the borrower. However, the Company is usually required by these loan purchasers to make certain standard representations and warranties relating to the loan for up to three years post sale. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase the loans or indemnify these loan purchasers for losses. In addition, if loans pay-off within a specified time frame the Company may be required to refund a portion of the sales proceeds to the loan purchasers. The Company repurchased $2.0 million ( 6 l oans) and $8.2 million ( 21 l oans) in unpaid principal balance of loans during the three months ended March 31, 2024 and 2023, respectively, related to its loan repurchase obligations. The Company’s loan repurchase reserve is included within other liabilities on the consolidated balance sheets. The (recovery of)/provision for the loan repurchase reserve is included within gain on loans, net on the consolidated statements of operations and comprehensive loss. The following presents the activity of the Company’s loan repurchase reserve: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Loan repurchase reserve at beginning of period $ 19,472 $ 26,745 (Recovery)/provision (3,563) 2,124 Charge-offs (468) (2,278) Loan repurchase reserve at end of period $ 15,441 $ 26,591 Borrowing Capacity —The Company funds the majority of mortgage loans on a short-term basis through committed and uncommitted warehouse lines as well as from operations for any amounts not advanced by warehouse lenders. As a result, the Company’s ability to fund current operations depends on its ability to secure these types of short-term financings. If the Company’s principal lenders decided to terminate or not to renew any of the warehouse lines with the Company, the loss of borrowing capacity could be detrimental to the Company’s condensed consolidated financial statements unless the Company found a suitable alternative source. |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 13. Net Loss Per Share The computation of net loss per share and weighted average shares of the Company's common stock outstanding during the periods presented is as follows: Three Months Ended March 31, (Amounts in thousands, except for share and per share amounts) 2024 2023 Basic net loss per share: Net loss $ (51,492) $ (87,622) Income allocated to participating securities — — Net loss attributable to common stockholders - Basic $ (51,492) $ (87,622) Diluted net loss per share: Net loss attributable to common stockholders - Basic $ (51,492) $ (87,622) Interest expense and change in fair value of bifurcated derivatives on convertible notes — — Income allocated to participating securities — — Net loss income attributable to common stockholders - Diluted $ (51,492) $ (87,622) Shares used in computation: Weighted average common shares outstanding 753,993,530 297,514,644 Weighted-average effect of dilutive securities: — — Assumed exercise of stock options — — Assumed exercise of warrants — — Assumed conversion of convertible preferred stock — — Diluted weighted-average common shares outstanding 753,993,530 297,514,644 Earnings (loss) per share attributable to common stockholders: Basic $ (0.07) $ (0.29) Diluted $ (0.07) $ (0.29) Basic and diluted loss per share are the same for each class of common stock (i.e., Class A, Class B and Class C) because they are entitled to the same dividend rights. Basic and diluted loss per share are presented together as the amounts for basic and diluted loss per share are the same (i.e., the Company’s other equity-linked instruments outstanding are anti-dilutive for the periods presented). There were no preferred dividends declared or accumulated during the three months ended March 31, 2024 and 2023. Historically, the Company applied the two-class method which requires earnings available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all earnings for the period had been distributed. The Company’s outstanding convertible preferred stock was a participating security as the holders of such shares participated in earnings but did not contractually participate in the Company’s losses and therefore no losses were allocated to the convertible preferred stock in prior periods. The Company's potentially dilutive securities, which include stock options, convertible preferred stock that would have been issued under the if-converted method, warrants to purchase shares of common stock, warrants to purchase shares of preferred stock, and stock options exercised, not vested, have been excluded from the computation of diluted net loss per share, as the effect would be anti-dilutive. The Company excluded the following securities, presented based on amounts outstanding at each year end, from the computation of diluted net loss per share attributable to common stockholders for the years indicated as including them would have had an anti-dilutive effect: Three Months Ended March 31, (Amounts in thousands) 2024 2023 RSUs and Options to purchase common stock (1) 49,562 141,059 Convertible preferred stock (2) — 332,315 Pre-Closing Bridge Notes — 764,681 Warrants to purchase convertible preferred stock (1) — 14,592 Public Warrants (1) 3,733 — Private Warrants (1) 6,075 — Sponsor locked-up shares (1) 694 — Warrants to purchase common stock (1) — 5,731 Total 60,064 1,258,378 __________________ (1) Securities have an antidilutive effect under the treasury stock method. (2) Securities have an antidilutive effect under the if-converted method. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 14. Fair Value Measurements The Company’s financial instruments measured at fair value on a recurring basis are summarized below: March 31, 2024 (Amounts in thousands) Level 1 Level 2 Level 3 Total Mortgage loans held for sale, at fair value $ — $ 166,214 $ — $ 166,214 Derivative assets, at fair value (1) — 20 1,717 1,737 Total Assets $ — $ 166,234 $ 1,717 $ 167,951 Derivative liabilities, at fair value (1) $ — $ 518 $ 42 $ 560 Warrants and equity related liabilities, at fair value $ 638 $ 871 $ — $ 1,509 Total Liabilities $ 638 $ 1,389 $ 42 $ 2,069 December 31, 2023 (Amounts in thousands) Level 1 Level 2 Level 3 Total Mortgage loans held for sale, at fair value $ — $ 170,150 $ — $ 170,150 Derivative assets, at fair value (1) — — 1,716 1,716 Total Assets $ — $ 170,150 $ 1,716 $ 171,866 Derivative liabilities, at fair value (1) $ — $ 872 $ 77 $ 949 Warrant and equity related liabilities, at fair value (2) 972 1,359 — 2,331 Total Liabilities $ 972 $ 2,231 $ 77 $ 3,280 __________________ (1) As of March 31, 2024 and December 31, 2023, derivative assets and liabilities represent both IRLCs and forward sale commitments. (2) Fair value is based on the intrinsic value of the Company’s underlying stock price at each balance sheet date and includes certain assumptions with regard to volatility. Specific valuation techniques and inputs used in determining the fair value of each significant class of assets and liabilities are as follows: Mortgage Loans Held for Sale —The Company originates certain LHFS to be sold to loan purchasers and elected to carry these loans at fair value in accordance with ASC 825. The fair value is primarily based on the price obtained for other mortgage loans with similar characteristics. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and receipt of principal payments associated with the relevant LHFS. Derivative Assets and Liabilities —The Company uses derivatives to manage various financial risks. The fair values of derivative instruments are determined based on quoted prices for similar assets and liabilities, dealer quotes, and internal pricing models that are primarily sensitive to market observable data. The Company utilizes IRLCs and forward sale commitments. The fair value of IRLCs, which are related to mortgage loan commitments, is based on quoted market prices, adjusted by the pull-through factor, and includes the value attributable to the net servicing fee. The Company evaluated the significance and unobservable nature of the pull-through factor and determined that the classification of IRLCs should be Level 3 as of March 31, 2024 and December 31, 2023. Significant changes in the pull-through factor of the IRLCs, in isolation, could result in significant changes in the IRLCs’ fair value measurement. The value of IRLCs also rises and falls with changes in interest rates; for example, entering into interest rate lock commitments at low interest rates followed by an increase in interest rates in the market, will decrease the value of IRLC. The Company had purchases/issuances of approximately $2.6 million and $0.9 million of IRLCs during the three months ended March 31, 2024 and 2023, respectively. The number of days from the date of the IRLC to expiration of the rate lock commitment outstanding as of March 31, 2024 was approximately 51 days on average. The Company attempts to match the maturity date of the IRLCs with the forward commitments. Derivatives are presented in the condensed consolidated balance sheets under derivative assets, at fair value and derivative liabilities, at fair value. During the three months ended March 31, 2024, the Company recognized none of losses and $2.5 million of gains related to changes in fair value of IRLCs and forward sale commitments, respectively. During the three months ended March 31, 2023, the Company recognized $4.2 million of gains and $4.5 million of losses related to changes in the fair value of IRLCs and forward sale commitments, respectively. Gains and losses related to changes in the fair value of IRLCs and forward sale commitments are included in gain on loans, net within the condensed consolidated statements of operations and comprehensive loss. Unrealized activity related to changes in the fair value of forward sale commitments were $3.8 million of gains and $8.8 million of losses, included in the $2.5 million of gains and $4.5 million of losses, during the three months ended March 31, 2024 and 2023, respectively. The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows: (Amounts in thousands) Notional Value Derivative Asset Derivative Liability Balance as of March 31, 2024 IRLCs $ 262,715 $ 1,717 $ 42 Forward commitments $ 356,000 20 518 Total $ 1,737 $ 560 Balance as of December 31, 2023 IRLCs $ 227,380 $ 1,716 $ 77 Forward commitments $ 265,000 — 872 Total $ 1,716 $ 949 Warrant and equity related liabilities— The warrant liability consists of Warrants and certain shares issued to Novator Capital Sponsor Ltd. ("Sponsor") that are subject to transfer restrictions contingent on the price of Class A common stock exceeding certain thresholds (the "Sponsor-Locked-Up Shares"). The warrants consist of the Company's publicly traded warrants ("Public Warrants") and private warrants to acquire shares of Aurora that have been converted into warrants to acquire shares of Class A common stock ("Private Warrants"). The Public Warrants trade on the Nasdaq Capital Market under the ticker symbol “BETRW” and as such is considered a Level 1 input from an active market to derive the value. The Private Warrants and Sponsor-Locked up Shares, although not publicly traded on an active market, use inputs from the publicly traded Public Warrants and the Company’s publicly traded common stock, respectively, and are further calibrated using unobservable inputs representing Level 2 measurements within the fair value hierarchy. As of March 31, 2024 and December 31, 2023, Level 3 instruments include IRLCs, bifurcated derivative and convertible preferred stock warrants. The following table presents the rollforward of Level 3 IRLCs: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Balance at beginning of period $ 1,640 $ 7,568 Change in fair value of IRLCs 35 (22,891) Balance at end of period $ 1,675 $ (15,323) The following table presents the rollforward of Level 3 bifurcated derivative: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Balance at beginning of period $ — $ 236,603 Change in fair value of bifurcated derivative — (1,887) Balance at end of period $ — $ 234,716 The following table presents the rollforward of Level 3 convertible preferred stock warrants: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Balance at beginning of period $ — $ 3,096 Exercises — — Change in fair value of convertible preferred stock warrants — (553) Balance at end of period $ — $ 2,543 Counterparty agreements for forward sale commitments contain master netting agreements, which contain a legal right to offset amounts due to and from the same counterparty and can be settled on a net basis. The table below presents gross amounts of recognized assets and liabilities subject to master netting agreements. (Amounts in thousands) Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Net Amounts Presented in the Condensed Consolidated Balance Sheet Offsetting of Forward Commitments - Assets Balance as of: March 31, 2024: $ — $ — $ — December 31, 2023 $ — $ — $ — Offsetting of Forward Commitments - Liabilities Balance as of: March 31, 2024: $ 311 $ (828) $ (517) December 31, 2023 $ 168 $ (1,041) $ (872) Significant Unobservable Inputs —The following table presents quantitative information about the significant unobservable inputs used in the recurring fair value measurements categorized within Level 3 of the fair value hierarchy: March 31, 2024 (Amounts in dollars, except percentages) Range Weighted Average Level 3 Financial Instruments: IRLCs Pull-through factor 5.12% - 100.00% 76.3 % December 31, 2023 (Amounts in dollars, except percentages) Range Weighted Average Level 3 Financial Instruments: IRLCs Pull-through factor 0.77% - 100.00% 89.8 % U.S. GAAP requires disclosure of fair value information about financial instruments, whether recognized or not recognized in the condensed consolidated financial statements, for which it is practical to estimate the fair value. In cases where quoted market prices are not available, fair values are based upon the estimation of discount rates to estimated future cash flows using market yields or other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimates of fair value in both inactive and orderly markets. Accordingly, fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments in a current market exchange. The use of market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts. The estimated fair value of the Company’s cash and cash equivalents, restricted cash, warehouse lines of credit, and escrow funds and customer deposits approximates their carrying values as these financial instruments are highly liquid or short-term in nature. The following table presents the carrying amounts and estimated fair value of financial instruments that are not recorded at fair value on a recurring or non-recurring basis: March 31, 2024 December 31, 2023 (Amounts in thousands) Fair Value Level Carrying Amount Fair Value Carrying Amount Fair Value Short-term investments Level 1 $ 58,089 $ 57,055 $ 25,597 $ 25,563 Loans held for investment Level 3 $ 7,900 $ 8,258 $ 4,793 $ 5,103 Convertible Note Level 3 $ 514,758 $ 322,803 $ 514,644 $ 309,135 In determining the fair value of the Short term investments, management used observable inputs such as quoted prices in active markets for identical assets. The fair value of loans held for investment is determined by management estimates of the specific credit risk attributes of each pool of loans, in addition to the quoted secondary-market prices which account for the interest rate characteristics of each loan. In determining the fair value of the Convertible Note, management used factors that are material to the valuation process, including but not limited to, the trading price of the Company’s securities, actual and projected financial results, risks, prospects, and economic and market conditions, among other factors. As a number of assumptions and estimates were involved that are largely unobservable, loans held for investment and the Convertible Note were classified as Level 3 inputs within the fair value hierarchy. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 15. Income Taxes On a consolidated basis, the Company recorded total income tax expense (benefit) of $0.1 million and $1.4 million for the three months ended March 31, 2024 and 2023, respectively. The Company’s quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including the ability to accurately project the Company’s pre-tax income or loss for the year and the mix of earnings among various tax jurisdictions. The year-to-date effective tax rate, after discrete items, of (0.28)% for the three months ended March 31, 2024, changed from (1.65)% for the three months ended March 31, 2023, as the Company is forecasting reduction in losses for 2024. In addition, the Company was subject to withholding taxes on a dividend in 2023. The income tax expense for the three months ended March 31, 2024 primarily relates to the pre-tax income projections in certain foreign jurisdictions where the Company files standalone returns. The income tax expense for the three months ended March 31, 2023 relates to the pre-tax income projections and dividend income withholding tax paid in certain foreign jurisdictions where the Company files standalone returns. As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred income tax assets. The Company is in a three-year cumulative loss position as of March 31, 2024. Further, due to losses being estimated in the future, management continues to believe it is more likely than not that the benefit of the deferred income tax assets will not be realized. In recognition of this risk, the Company continues to provide a full valuation allowance on deferred income tax assets. |
Convertible Preferred Stock
Convertible Preferred Stock | 3 Months Ended |
Mar. 31, 2024 | |
Temporary Equity Disclosure [Abstract] | |
Convertible Preferred Stock | 16. Convertible Preferred Stock In connection with the Business Combination, as described in Note 1, all series of Pre-Business Combination Better convertible preferred stock were converted into Pre-Business Combination Better common stock and subsequently converted to the Company’s common stock at an exchange ratio of approximately 3.06. Convertible Preferred Stock Warrants —Immediately prior to the Closing of the Business Combination, certain convertible preferred stock warrant holders exercised their warrants on a cash basis and the remaining convertible preferred stock warrant holders exercised their warrants on a net basis at the Closing. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Stockholders' Equity | 17. Stockholders' Equity On the Closing Date, the Company consummated the Business Combination pursuant to the terms of the Merger Agreement. The Company’s Class A common stock and Public Warrants currently trade on the Nasdaq Capital Market, under the ticker symbols “BETR” and “BETRW”, respectively. Each outstanding share of Pre-Business Combination Better common stock was exchanged for approximately 3.06 shares of the Company’s Class A or Class B common stock, par value $0.0001 per share (“Class B common stock”). Private and Public Warrants— As of March 31, 2024 and December 31, 2023, the Company had a total of $1.3 million and $1.9 million, in respect of Private Warrants and Public Warrants, respectively, included as warrant and equity related liabilities within the condensed consolidated balance sheets. The change in fair value of Warrants for the three months ended March 31, 2024 was a gain of $0.6 million and is included in other expenses within the condensed consolidated statements of operations and comprehensive loss. There was no activity for the three months ended March 31, 2023 as the Warrants were assumed at the Closing of the Business Combination. Sponsor Locked-up Shares— As of March 31, 2024 and December 31, 2023, the Company had a total of $0.2 million and $0.4 million, respectively, in respect of Sponsor Locked-up Share liabilities which are included within warrant and equity liabilities in the condensed consolidated balance sheets. The change in fair value of Sponsor Locked-up Shares for the three months ended March 31, 2024 was a gain of $0.2 million and was included in other expenses within the condensed consolidated statements of operations and comprehensive loss. There was no activity for the three months ended March 31, 2023 as the Sponsor Locked-up shares were assumed at the Closing of the Business Combination. Notes Receivable from Stockholders —The Company, previously at times, entered into promissory note agreements with certain employees for the purpose of financing the exercise of the Company’s stock options. These employees may have the ability to use the promissory notes to exercise stock options that have not yet been vested by the respective employees. Interest is compounded and accrued based on any unpaid principal balance and is due upon the earliest of maturity, 120 days after an employee leaves the Company, the date the employee sells shares acquired through the promissory note agreement without prior written consent of the Company, or the day prior to the date that any change in the employee’s status would cause the loan to be a prohibited extension or maintenance of credit under Section 402 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). The Company no longer enters into promissory note agreements for the purpose of financing the exercise of the Company’s stock options and no longer allows for the early exercise of stock options. As of March 31, 2024 and December 31, 2023, the Company had a total of $17.9 million and $18.3 million, respectively, of outstanding promissory notes. Of the notes outstanding as of March 31, 2024 and December 31, 2023, $11.0 million and $10.1 million, respectively, were issued for the exercise of stock options vested and are recorded as a component of stockholders’ equity within the condensed consolidated balance sheets. The balance as of March 31, 2024 does not include any promissory notes due from directors and officers of the Company. During the three months ended March 31, 2024 and 2023 the Company recognized interest income from the promissory notes of $0.1 million, and $0.1 million, respectively which is included within interest income on the condensed consolidated statements of operations and comprehensive loss. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 18. Stock-Based Compensation Stock-Based Compensation Expense —Stock-based compensation expense is included within compensation and benefits in the condensed consolidated statements of operations and comprehensive loss. The Company recognized stock-based compensation expense as follows: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Stock-based compensation expense 8,760 4,408 Stock-based compensation expense excludes $0.4 million and $0.7 million of stock-based compensation expense for the three months ended March 31, 2024 and 2023, which was capitalized (see Note 6). |
Regulatory Requirements
Regulatory Requirements | 3 Months Ended |
Mar. 31, 2024 | |
Mortgage Banking [Abstract] | |
Regulatory Requirements | 19. Regulatory Requirements The Company is subject to various local, state, and federal regulations related to its loan production by the various states it operates in, as well as federal agencies such as the Consumer Financial Protection Bureau, the U.S. Department of Housing and Urban Development ("HUD"), and the Federal Housing Administration ("FHA") and is subject to the requirements of the agencies to which it sells loans, such as FNMA and FMCC. As a result, the Company may become involved in requests for information, periodic reviews, investigations, and proceedings by such various federal, state, and local regulatory bodies and agencies. The Company is required to meet certain minimum net worth, minimum capital ratio and minimum liquidity requirements, including those established by HUD, FMCC and FNMA. As of March 31, 2024, the Company was in compliance with all necessary requirements. Additionally, the Company is subject to other financial requirements established by government-sponsored enterprises (“GSEs”), which include a limit for a decline in net worth and quarterly profitability requirements. On March 12, 2023 and subsequently on May 19, 2023, the Company failed to meet the additional financial requirements due to the Company’s decline in profitability and decline in net worth. The decline in net worth and decline in profitability permit GSEs to declare a breach of the Company’s contract. The Company instituted additional financial requirements and remains in compliance with these requirements as of March 31, 2024. As a result of failing to meet additional financial requirements, the Company has entered into a Pledge and Security Agreement in July 2023, to post additional cash collateral against the representation and warranty exposed to the Company. As of March 31, 2024, there have been no changes to the required cash deposit amount, which is included within the prepaid expenses and other assets on the consolidated balance sheet. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | 20. Subsequent Events The Company evaluated subsequent events from the date of the condensed consolidated balance sheets of March 31, 2024 through the date of the release of financial statements, and has determined that, there have been no subsequent events that require recognition or disclosure in the condensed consolidated financial statements, except as described in Note 1 and Note 11. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (51,492) | $ (87,622) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of its financial position and its results of operations, changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows. The results of operations and other information for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2024. The unaudited condensed consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes of Pre-Business Combination Better thereto for the year ended December 31, 2023. |
Consolidation | The accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the fair value of mortgage loans held for sale, the fair value of derivative assets and liabilities, including bifurcated derivatives, interest rate lock commitments and forward sale commitments, the determination of a valuation allowance on the Company’s deferred tax assets, capitalization of internally developed software and its associated useful life, determination of fair value of the stock options at grant date, the fair value of acquired intangible assets and goodwill, the provision for loan repurchase reserves, and the incremental borrowing rate used in determining lease liabilities and warrant liabilities. |
Short-term investments | Short term investments consist of fixed income securities, typically U.K. government treasury securities and U.K. government agency securities with maturities ranging from 91 days to one year. Management determines the appropriate classification of short-term investments at the time of purchase. Short-term investments reported as held-to-maturity are those investments which the Company has both the positive intent and ability to hold to maturity and are stated at amortized cost on the condensed consolidated balance sheets. All of the Company’s short term investments are classified as held to maturity. The Company has not recognized any impairments on these investments to date and any unrealized gains or losses on these investments are immaterial. |
Allowance for Credit Losses | Held to Maturity (“HTM”) Short-term Investments —The Company’s HTM Short-term investments are also required to utilize the Current Expected Credit Loss approach to estimate expected credit losses. Management measures expected credit losses on short-term investments on a collective basis by major security types that share similar risk characteristics, such as financial asset type and collateral type adjusted for current conditions and reasonable and supportable forecasts. Management classifies the short term investments portfolio by security types, such as U.K. government agency securities. The U.K. government treasury securities and U.K. government agency securities are issued by U.K. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.K. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of no credit losses. Therefore, credit losses for these securities were immaterial as the Company does not currently expect any material credit losses on these short-term investments. |
Mortgage Loans Held for Sale, at Fair Value | The Company sells its mortgage loans held for sale (“LHFS”) to loan purchasers. These loans can be sold in one of two ways, servicing released, or servicing retained. If a loan is sold servicing released, the Company has sold all the rights to the loan and the associated servicing rights. If a loan is sold servicing retained, the Company has sold the loan and kept the servicing rights, and thus the Company is responsible for collecting monthly principal and interest payments and performing certain escrow services for the borrower. The loan purchaser, in turn, pays a fee for these services. The Company generally sells all of its loans servicing released. For interim servicing, the Company engages a third-party sub-servicer to collect monthly payments and perform associated services. LHFS consists of loans originated for sale by BMC. The Company elects the fair value option, in accordance with ASC 825 – Financial Instruments (“ASC 825”), for all LHFS with changes in fair value recorded in gain on loans, net in the condensed consolidated statements of operations and comprehensive loss. Management believes that the election of the fair value option for LHFS improves financial reporting by presenting the most relevant market indication of LHFS. The fair value of LHFS is based on market prices and yields at period end. The Company accounts for the gains or losses resulting from sales of mortgage loans based on the guidance of ASC 860-20 – Sales of Financial Assets . The Company issues interest rate lock commitments (“IRLC”) to originate mortgage loans and the fair value of the IRLC, adjusted for the probability that a given IRLC will close and fund, is recognized within gain on loans, net. Subsequent changes in the fair value of the IRLC are measured at each reporting period within gain on loans, net until the loan is funded. When the loan is funded, the IRLC is derecognized and the LHFS is recognized based on the fair value of the loan. The LHFS is subsequently remeasured at fair value at each reporting period and the changes in fair value are included within gain on loans, net until the loan is sold on the secondary market. When the loan is sold on the secondary market, the LHFS is derecognized and the gain/(loss) is included within gain on loans, net based on the cash settlement. LHFS are considered sold when the Company surrenders control over the loans. Control is considered to have been surrendered when the transferred loans have been isolated from the Company, are beyond the reach of the Company and its creditors, and the loan purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred loans. The Company typically considers the above criteria to have been met upon receipt of sales proceeds from the loan purchaser. |
Loans Held for Investment | The Company holds a small amount of loans held for investment, for which management has the intent and ability to hold for the foreseeable future or until maturity or payoff and are reported at amortized cost, which is the principal amount outstanding, net of cumulative charge-offs, unamortized net deferred loan origination fees and costs and unamortized premiums or discounts on purchased loans. Loans held for investment are included within prepaid expenses and other assets on the condensed consolidated balance sheets. The allowance for credit losses is a valuation account that is deducted from the loans held for investment amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged-off against the allowance when management believes the loan balance is deemed to be uncollectible. Management’s estimation of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts, including expected defaults and prepayments. The Company recognized an immaterial current expected credit loss for loans held for investment as of March 31, 2024 and December 31, 2023. |
Fair Value Measurements | Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The price used to measure fair value is not adjusted for transaction costs. The principal market is the market in which the Company would sell or transfer the asset with the greatest volume and level of activity for the asset. In determining the principal market for an asset or liability, it is assumed that the Company has access to the market as of the measurement date. If no market for the asset exists, or if the Company does not have access to the principal market, a hypothetical market is used. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1 —Unadjusted quoted market prices in active markets for identical assets or liabilities; Level 2 —Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value on a recurring basis include LHFS, derivative assets and liabilities, including IRLCs and forward sale commitments, mortgage servicing rights, bifurcated derivatives, convertible preferred stock warrants and warrant liabilities. Common stock warrants are measured at fair value at issuance only and are classified as equity on the condensed consolidated balance sheets. When developing fair value measurements, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. However, for certain instruments, the Company must utilize unobservable inputs in determining fair value due to the lack of observable inputs in the market, which requires greater judgment in measuring fair value. In instances where there is limited or no observable market data, fair value measurements for assets and liabilities are based primarily upon the Company’s own estimates, and the measurements reflect information and assumptions that management believes a market participant would use in pricing the asset or liability. |
Warehouse Lines of Credit and Convertible Notes | Warehouse lines of credit represent the outstanding balance of the Company’s warehouse borrowings collateralized by mortgage loans held for sale or related borrowings collateralized by restricted cash. Generally, warehouse lines of credit are used as interim, short-term financing which bears interest at a fixed margin over an index rate, such as the Secured Overnight Financing Rate (“SOFR”). The outstanding balance of the Company’s warehouse lines of credit will fluctuate based on its lending volume. The advances received under the warehouse lines of credit are based upon a percentage of the fair value or par value of the mortgage loans collateralizing the advance, depending upon the type of mortgage loan. Should the fair value of the pledged mortgage loans decline, the warehouse provider may require the Company to provide additional cash collateral or mortgage loans to maintain the required collateral level under the relevant warehouse line. The Company did not incur any significant issuance costs related to its warehouse lines of credit.As part of the Closing of the Business Combination, the Company issued the Convertible Note. Upon initial issuance, the Convertible Note is evaluated for redemption and conversion features that could result in embedded derivatives that require bifurcation from the notes. Upon initial issuance, any embedded derivatives are measured at fair value. Convertible Note proceeds are allocated between the carrying value of the note and the fair value of embedded derivatives on the initial issuance date. Any portion of proceeds allocated to embedded derivatives are treated as reductions in, or discounts to, the carrying value of the convertible notes on the issuance date. Embedded derivatives are adjusted to fair value at each reporting period, with the change in fair value included within the consolidated statements of operations and comprehensive income (loss). See Note 9 for further details on the Company’s Convertible Note. |
Income Taxes | Income taxes are calculated in accordance with ASC 740, Accounting for Income Taxes . An estimated annual effective tax rate is applied to year-to-date income (loss). At the end of each interim period, the estimated effective tax rate expected to be applicable for the full year is calculated. This method differs from that described in the Company’s income taxes policy footnote in the audited consolidated financial statements and related notes thereto for the year ended December 31, 2023, which describes the Company’s annual significant income tax accounting policy and related methodology. |
Revenue Recognition | The Company generates revenue from the following streams: 1) Gain on loans, net includes revenues generated from the Company’s mortgage production process. See Note 3. The components of gain on loans, net are as follows: i. Gain on sale of loans, net —This represents the premium the Company receives in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market. Gain on sale of loans, net includes unrealized changes in the fair value of LHFS, which are recognized on a loan by loan basis as part of current period earnings until the loan is sold on the secondary market. The fair value of LHFS is measured based on observable market data. This also includes activity for loans originated on behalf of the integrated partnership that are subsequently purchased by the Company as well as the portion of the sale proceeds to be received by the integrated partner. The portion of the sale proceeds that is to be allocated to the integrated partner is accrued as a reduction of gain on sale of loans, net when the loan is initially purchased by the Company from the integrated partner. Gain on sale of loans, net also includes the changes in fair value of IRLCs and forward sale commitments. IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market. Fair value of forward sale commitments hedging IRLCs and LHFS are measured based on quoted prices for similar assets. ii. Integrated partnership fees —Includes fees that the Company receives for originating loans on behalf of an integrated partnership, which are recognized as revenue upon the integrated partner’s funding of the loan. iii. Provision for loan repurchase reserve —In connection with the sale of loans on the secondary market, the Company makes customary representations and warranties to the relevant loan purchasers about various characteristics of each loan, such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws. In the event of a breach of its representations and warranties, the Company may be required to repurchase the loan with the identified defects. The provision for loan repurchase reserve, represents the charge for these potential losses. 2) Net interest income includes interest income from LHFS calculated based on the note rate of the respective loan, interest income from short-term investments, and interest income on loans held for investment. Interest expense includes interest expense on warehouse lines of credit, interest expense on customer deposits, as well as interest expense on the Convertible Note. 3) Other revenue consists of revenue from the Company’s additional offerings which primarily consist real estate services, insurance, and international lending revenue which is recognized based on ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”). ASC 606 outlines a single comprehensive model in accounting for revenue arising from contracts with customers. The core principle, involving a five-step process, of the revenue model is that an entity recognizes 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 or services. For real estate services, the Company generates revenues from fees related to real estate agent services, mainly from cooperative brokerage fees from the Company’s network of third-party real estate agents, which assist customers in the purchase or sale of a home. The Company recognizes revenues from real estate services upon completion of the performance obligation which is when the mortgage transaction closes. Performance obligations for real estate agent services are typically completed 40 to 60 days after the commencement of the home search process. Payment for these services is typically settled in cash as part of closing costs to the borrower upon closing of the mortgage transaction. Also included in real estate services are settlement services which are revenue from fees charged for services such as title search fees, wire fees, policy and document preparation, and other mortgage settlement services. The Company recognizes revenues from settlement services upon completion of the performance obligation which is when the mortgage transaction closes. Insurance revenue primarily consists of fees earned on homeowners insurance policies and title insurance. The Company generates revenues from agent fees on homeowners insurance policies obtained by customers through the Company’s marketplace of third-party insurance carriers. The Company offers title insurance as an agent and works with third-party providers that underwrite the title insurance policies. For title insurance, the Company recognizes revenue from fees upon the completion of the performance obligation which is when the mortgage transaction closes. For homeowners insurance and title insurance, the Company is the agent in the transactions as the Company does not control the ability to direct the fulfillment of the service, is not primarily responsible for fulfilling the performance of the service, and does not assume the risk in a claim against a policy. |
Compensation and Benefits | Compensation and benefits include salaries, wages, and incentive pay as well as stock-based compensation, employee health benefits, 401(k) plan benefits, and social security and unemployment taxes. Stock-based compensation includes expenses associated with restricted stock unit grants, performance stock unit grants, and stock option grants, under the Company’s stock plans. Compensation expense for the stock-based payments is based on the fair value of the awards on the grant date. Compensation and benefits expenses are expensed as incurred with the exception of stock-based compensation, which is recognized in a straight-line basis over the requisite service period. |
General and Administrative Expenses | General and administrative expenses include rent and occupancy expenses, insurance, and external legal, tax and accounting services. General and administrative expenses are expensed as incurred. |
Technology Expenses | Technology expenses consist of direct costs related to vendors engaged in product management, design, development, and testing of the Company’s websites and products. Technology expenses are expensed as incurred. |
Marketing and Advertising Expenses | Marketing and advertising expenses consist of direct costs related to customer acquisition expenses, brand costs, and paid marketing. For customer acquisition expenses, the Company primarily generates loan origination leads through third-party financial service websites for which they incur “pay-per-click” expenses. A majority of the Company’s marketing and advertising expenses are incurred from leads purchased from these third-party financial service websites. Marketing and advertising expenses are expensed as incurred. |
Loan Origination Expenses | Loan origination expenses consist of costs directly attributable to the production of loans such as appraisal fees, processing expenses, underwriting, closing fees, and servicing costs. These expenses are expensed as incurred. |
Other Expenses | Other expenses consist of direct costs related to other non-mortgage homeownership activities, including settlement service expenses, lead generation expenses, expenses incurred in relation to our international lending activities, and gains and losses from equity related liabilities. Settlement service expenses consist of fees for transactional services performed by third-party providers for borrowers while lead generation expenses consist of fees for services related to real estate agents. Other expenses are expensed as incurred. |
Segments | The Company has one reportable segment. The Company’s chief operating decision maker, the Chief Executive Officer, reviews financial information presented on a company-wide basis for purposes of allocating resources and evaluating financial performance. |
Reclassification of Prior Period Presentation in the Statement of Operations and Comprehensive Loss | Reclassifications of the previously reported statement of operations and comprehensive loss have been made to conform to the current period’s presentation which provides increased transparency to the nature of the costs. To conform to the current presentation, the following changes were made to the prior period statement of operations: Revenue • Gain on loans, net (Previously mortgage platform revenue, net)—Loan repurchase reserve recovery (provision) has been reclassified from mortgage platform expenses to gain on loans, net. The Company’s mortgage related activities that do not include originating and selling loans, namely in the U.K., have been reclassified to other revenue. • Net interest income: • Interest income—Interest income from short-term investments has been reclassified from other income. • Interest expense (Previously warehouse interest expense)—Interest expense and amortization on non-funding debt has been reclassified to interest expenses from interest expense and amortization on non-funding debt. Expenses • Loan origination expense (Previously mortgage platform expenses)—The Company’s expenses that were not incurred to originate and sell loans, namely in the U.K., have been reclassified to other expenses. • Other expenses (Previously other platform expenses)—Restructuring and impairment expenses, change in fair value of convertible preferred stock warrants, and change in fair value of bifurcated derivative have been reclassified to other expenses. Previously Allocated Expenses • Compensation and benefits—Compensation and benefits, which includes stock-based compensation, was previously allocated to mortgage platform expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses based on allocated headcount is now presented as its own financial statement line item. • Rent and occupancy—Rent and occupancy, which is now included within general and administrative expenses, was previously allocated to mortgage platform expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses based on allocated headcount. • Depreciation and amortization—Depreciation and amortization was previously allocated to mortgage platform expenses, other platform expenses, general and administrative expenses, marketing and advertising expenses, and technology and product development expenses based on allocated headcount is now presented as its own financial statement line item. The impacts of the reclassifications on the condensed consolidated statements of operations and comprehensive loss are as follows: (Amounts in thousands) Three Months Ended March 31, 2023 Caption name change As previously reported Reclassifications As reclassified Revenues: Mortgage platform revenue, net Gain on loans, net $ 15,964 $ (3,203) $ 12,761 Cash offer program revenue 3 (3) — Other platform revenue Other revenue 3,845 1,099 4,944 Net interest income Interest income 3,925 2,465 6,390 Interest expense (2,779) (2,690) (5,469) Net interest income 1,146 (225) 921 Total net revenues 20,958 (2,332) 18,626 Expenses: Compensation and benefits — 38,112 38,112 Mortgage platform expenses Loan origination expense 30,623 (25,421) 5,202 Cash offer program expenses 103 (103) — Other platform expenses Other expenses 4,693 6,372 11,065 General and administrative expenses 28,828 (12,066) 16,762 Marketing and advertising expenses 8,623 (863) 7,760 Technology and product development expenses 23,606 (9,160) 14,446 Restructuring and impairment expenses 9,137 (9,137) — Depreciation and amortization — 11,477 11,477 Total expenses 105,613 (789) 104,824 Interest and other income (expense), net Other income (expense) 2,481 (2,481) — Interest and amortization on non-funding debt (2,690) 2,690 — Change in fair value of convertible preferred stock warrants 553 (553) — Change in fair value of bifurcated derivative (1,887) 1,887 — Total interest and other expense, net (1,543) 1,543 — Loss before income tax (benefit) expense (86,198) — (86,198) Income tax (benefit) expense 1,424 — 1,424 Net loss $ (87,622) $ — $ (87,622) Reclassification of the Statement of Cash Flows |
Recently Adopted Accounting Standards, Recently Issued Accounting Standards Not Yet Adopted and Recent Securities and Exchange Commission (SEC) Final Rules Not Yet Adopted | In July 2023, the FASB issued Accounting Standard Update (“ASU”) 2023-03, Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock (“ASU 2023-03”). This ASU amends or supersedes various Securities and Exchange Commission ("SEC") paragraphs within the applicable codification to conform to past SEC staff announcements. This ASU does not provide any new guidance. ASU 2023-03 will become effective for the Company once the addition to the FASB Codification is made available. As of March 31, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements. In August 2023, the FASB issued ASU 2023-04, Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 121 (“ASU 2023-04”). This ASU amends and adds various SEC paragraphs to the FASB Codification to reflect guidance regarding the accounting for obligations to safeguard crypto assets an entity holds for platform users. This ASU does not provide any new guidance. ASU 2023-04 will become effective for the Company once the addition to the FASB Codification is made available. As of March 31, 2024, the Company does not expect ASU 2023-04 will have any impact on the consolidated financial statements. In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). This ASU incorporates certain SEC disclosure requirements into the FASB ASC. The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. ASU 2023-06 will become effective for each amendment on the effective date of the SEC’s corresponding disclosure rule changes. As of March 31, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures . This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for our annual fiscal year 2024, and interim periods starting in fiscal year 2025. Early adoption is permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact of the disclosure requirements on the consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which provides qualitative and quantitative updates to the rate reconciliation and income taxes paid disclosures, among others, in order to enhance the transparency of income tax disclosures, including consistent categories and greater disaggregation of information in the rate reconciliation and disaggregation by jurisdiction of income taxes paid. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively; however, retrospective application is also permitted. The Company is currently assessing the impact of the disclosure requirements on the consolidated financial statements. In March 2024, the SEC adopted final rules under SEC Release No. 33-11275 : The Enhancement and Standardization of Climate-Related Disclosures for Investors , which requires registrants to provide certain climate-related information in their registration statements and annual reports. The rules require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks will also include disclosure of a registrant’s greenhouse gas emissions. In addition, the rules will require registrants to present certain climate-related financial metrics in their audited financial statements. These requirements are effective for the Company in various fiscal years, starting with its fiscal year beginning January 1, 2027. Disclosures will be required prospectively, with information for prior periods required only to the extent it was previously disclosed in an SEC filing. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. The Company is currently evaluating the impact of these final rules on its consolidated financial statements and disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of Condensed Consolidated Statements of Operations and Comprehensive Loss | The impacts of the reclassifications on the condensed consolidated statements of operations and comprehensive loss are as follows: (Amounts in thousands) Three Months Ended March 31, 2023 Caption name change As previously reported Reclassifications As reclassified Revenues: Mortgage platform revenue, net Gain on loans, net $ 15,964 $ (3,203) $ 12,761 Cash offer program revenue 3 (3) — Other platform revenue Other revenue 3,845 1,099 4,944 Net interest income Interest income 3,925 2,465 6,390 Interest expense (2,779) (2,690) (5,469) Net interest income 1,146 (225) 921 Total net revenues 20,958 (2,332) 18,626 Expenses: Compensation and benefits — 38,112 38,112 Mortgage platform expenses Loan origination expense 30,623 (25,421) 5,202 Cash offer program expenses 103 (103) — Other platform expenses Other expenses 4,693 6,372 11,065 General and administrative expenses 28,828 (12,066) 16,762 Marketing and advertising expenses 8,623 (863) 7,760 Technology and product development expenses 23,606 (9,160) 14,446 Restructuring and impairment expenses 9,137 (9,137) — Depreciation and amortization — 11,477 11,477 Total expenses 105,613 (789) 104,824 Interest and other income (expense), net Other income (expense) 2,481 (2,481) — Interest and amortization on non-funding debt (2,690) 2,690 — Change in fair value of convertible preferred stock warrants 553 (553) — Change in fair value of bifurcated derivative (1,887) 1,887 — Total interest and other expense, net (1,543) 1,543 — Loss before income tax (benefit) expense (86,198) — (86,198) Income tax (benefit) expense 1,424 — 1,424 Net loss $ (87,622) $ — $ (87,622) |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Revenue [Abstract] | |
Schedule of Disaggregation of Revenue | The Company disaggregates revenue based on the following revenue streams: Gain on loans, net consisted of the following : Three Months Ended March 31, (Amounts in thousands) 2024 2023 Gain on sale of loans, net $ 9,821 $ 12,524 Integrated partnership fees 2,268 2,361 Loan repurchase reserve recovery/(provision) 3,563 (2,124) Total gain on loans, net $ 15,652 $ 12,761 Other revenue consisted of the following: Three Months Ended March 31, (Amounts in thousands) 2024 2023 International lending revenue $ 1,108 $ 988 Insurance Services 639 629 Real estate services 347 2,870 Other revenue 723 457 Total other revenue $ 2,817 $ 4,944 |
Restructuring and Impairments (
Restructuring and Impairments (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Related Costs | For the three months ended March 31, 2024 and 2023, the Company’s restructuring and impairment expenses consist of the following: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Employee one-time termination benefits (1) $ 721 $ 288 Real estate restructuring loss (2) — 5,284 Gain on lease settlement (2) — (977) Impairment of property and equipment (2) — 4,542 Total Restructuring and Impairments $ 721 $ 9,137 _______________ (1) Employee one-time termination benefits are included in compensation and benefits on the condensed consolidated statements of operations and comprehensive loss. (2) Real estate restructuring loss, gain on lease settlement, and impairment of property and equipment are included in other expenses on the condensed consolidated statements of operations and comprehensive loss. |
Mortgage Loans Held for Sale _2
Mortgage Loans Held for Sale and Warehouse Lines of Credit (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Mortgage Loans Held For Sale And Warehouse Agreement Borrowings [Abstract] | |
Schedule of Warehouse Lines Of Credit | The Company has the following outstanding warehouse lines of credit: (Amounts in thousands) Maturity Facility Size March 31, 2024 December 31, 2023 Funding Facility 1 (1) July 31, 2024 $ 100,000 $ 40,266 $ 61,709 Funding Facility 2 (2) December 6, 2024 150,000 61,673 40,088 Funding Facility 3 (3) August 2, 2024 175,000 24,222 24,421 Total warehouse lines of credit $ 425,000 $ 126,161 $ 126,218 __________________ (1) Interest charged under the facility is at the 30-day term SOFR plus 2.125% . Cash collateral deposit of $15.0 million is maintained and included in restricted cash. (2) Interest charged under the facility is at the 30-day term SOFR plus 2.10% - 2.25%. Cash collateral deposit of $3.8 million is maintained and included in restricted cash. (3) |
Schedule Of Loans Held For Sale | The Company’s LHFS are summarized below by those pledged as collateral and those fully funded by the Company: (Amounts in thousands) March 31, 2024 December 31, 2023 Funding Facility 1 $ 40,582 $ 63,483 Funding Facility 2 64,620 42,316 Funding Facility 3 26,473 26,894 Total LHFS pledged as collateral 131,675 132,693 Company-funded LHFS 7,072 12,386 Company-funded Home Equity Line of Credit 28,295 25,098 Total LHFS 167,042 170,177 Fair value adjustment (828) (27) Total LHFS at fair value $ 166,214 $ 170,150 |
Goodwill and Internal Use Sof_2
Goodwill and Internal Use Software and Other Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill, net consisted of the following: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Balance at beginning of period $ 32,390 $ 18,525 Goodwill acquired—Goodholm — 1,741 Effect of foreign currency exchange rate changes (181) 240 Balance at end of period $ 32,209 $ 20,507 |
Schedule of Indefinite-Lived Intangible Assets | Internal use software and other intangible assets, net consisted of the following: As of March 31, 2024 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.0 $ 137,655 $ (111,572) $ 26,083 Other 5.7 1,000 (294) 706 Total Intangible assets with finite lives, net 138,654 (111,866) 26,788 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 2,241 — 2,241 Total Internal use software and other intangible assets, net $ 142,715 $ (111,866) $ 30,849 As of December 31, 2023 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.0 $ 136,879 $ (103,587) $ 33,292 Intellectual property and other 5.7 1,008 (254) 754 Total Intangible assets with finite lives, net 137,887 (103,841) 34,046 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 2,260 — 2,260 Total Internal use software and other intangible assets, net $ 141,967 $ (103,841) $ 38,126 |
Schedule of Finite-Lived Intangible Assets | Internal use software and other intangible assets, net consisted of the following: As of March 31, 2024 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.0 $ 137,655 $ (111,572) $ 26,083 Other 5.7 1,000 (294) 706 Total Intangible assets with finite lives, net 138,654 (111,866) 26,788 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 2,241 — 2,241 Total Internal use software and other intangible assets, net $ 142,715 $ (111,866) $ 30,849 As of December 31, 2023 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.0 $ 136,879 $ (103,587) $ 33,292 Intellectual property and other 5.7 1,008 (254) 754 Total Intangible assets with finite lives, net 137,887 (103,841) 34,046 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 2,260 — 2,260 Total Internal use software and other intangible assets, net $ 141,967 $ (103,841) $ 38,126 |
Prepaid Expenses and Other As_2
Prepaid Expenses and Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Assets | Prepaid expenses and other assets consisted of the following: As of March 31, As of December 31, (Amounts in thousands) 2024 2023 Prepaid expenses $ 25,430 $ 27,859 Tax receivables 8,473 8,348 Security Deposits 13,858 15,179 Loans held for investment 7,900 4,793 Total prepaid expenses and other assets $ 55,661 $ 56,179 |
Customer Deposits (Tables)
Customer Deposits (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Deposits [Abstract] | |
Schedule of Average Balances and Weighted Average Rates Paid on Deposits | The following table presents average balances and weighted average rates paid on deposits for the periods indicated: Three Months Ended March 31, 2024 (Amounts in thousands) Average Balance Average Rate Paid Notice $ 2,406 2.85 % Term 5,432 3.77 % Savings 4,260 2.28 % Total Deposits $ 12,098 2.97 % |
Schedule of Maturities of Customer Deposits | The following table presents maturities of customer deposits: (Amounts in thousands) As of March 31, 2024 Demand deposits $ 4,389 Maturing In: 2024 3,583 2025 2,376 2026 1,174 2027 309 2028 — Thereafter — Total $ 11,831 |
Schedule of Interest Expense on Deposits | Interest Expense on deposits is recorded in interest expense in the condensed consolidated statements of operations and comprehensive loss for the periods indicated as follows: Three Months Ended March 31, (Amounts in thousands) 2024 Notice $ 24 Term 52 Savings 29 Total Interest Expense $ 105 |
Risks and Uncertainties (Tables
Risks and Uncertainties (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Risks and Uncertainties [Abstract] | |
Schedule of Loan Repurchase Reserve Activity | The following presents the activity of the Company’s loan repurchase reserve: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Loan repurchase reserve at beginning of period $ 19,472 $ 26,745 (Recovery)/provision (3,563) 2,124 Charge-offs (468) (2,278) Loan repurchase reserve at end of period $ 15,441 $ 26,591 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Net Loss Per Share and Weighted Average Shares | The computation of net loss per share and weighted average shares of the Company's common stock outstanding during the periods presented is as follows: Three Months Ended March 31, (Amounts in thousands, except for share and per share amounts) 2024 2023 Basic net loss per share: Net loss $ (51,492) $ (87,622) Income allocated to participating securities — — Net loss attributable to common stockholders - Basic $ (51,492) $ (87,622) Diluted net loss per share: Net loss attributable to common stockholders - Basic $ (51,492) $ (87,622) Interest expense and change in fair value of bifurcated derivatives on convertible notes — — Income allocated to participating securities — — Net loss income attributable to common stockholders - Diluted $ (51,492) $ (87,622) Shares used in computation: Weighted average common shares outstanding 753,993,530 297,514,644 Weighted-average effect of dilutive securities: — — Assumed exercise of stock options — — Assumed exercise of warrants — — Assumed conversion of convertible preferred stock — — Diluted weighted-average common shares outstanding 753,993,530 297,514,644 Earnings (loss) per share attributable to common stockholders: Basic $ (0.07) $ (0.29) Diluted $ (0.07) $ (0.29) |
Schedule of Antidilutive Securities Excluded from Computation of Net Loss Per Share | Three Months Ended March 31, (Amounts in thousands) 2024 2023 RSUs and Options to purchase common stock (1) 49,562 141,059 Convertible preferred stock (2) — 332,315 Pre-Closing Bridge Notes — 764,681 Warrants to purchase convertible preferred stock (1) — 14,592 Public Warrants (1) 3,733 — Private Warrants (1) 6,075 — Sponsor locked-up shares (1) 694 — Warrants to purchase common stock (1) — 5,731 Total 60,064 1,258,378 __________________ (1) Securities have an antidilutive effect under the treasury stock method. (2) Securities have an antidilutive effect under the if-converted method. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Instruments Measured at Fair Value on a Recurring Basis | The Company’s financial instruments measured at fair value on a recurring basis are summarized below: March 31, 2024 (Amounts in thousands) Level 1 Level 2 Level 3 Total Mortgage loans held for sale, at fair value $ — $ 166,214 $ — $ 166,214 Derivative assets, at fair value (1) — 20 1,717 1,737 Total Assets $ — $ 166,234 $ 1,717 $ 167,951 Derivative liabilities, at fair value (1) $ — $ 518 $ 42 $ 560 Warrants and equity related liabilities, at fair value $ 638 $ 871 $ — $ 1,509 Total Liabilities $ 638 $ 1,389 $ 42 $ 2,069 December 31, 2023 (Amounts in thousands) Level 1 Level 2 Level 3 Total Mortgage loans held for sale, at fair value $ — $ 170,150 $ — $ 170,150 Derivative assets, at fair value (1) — — 1,716 1,716 Total Assets $ — $ 170,150 $ 1,716 $ 171,866 Derivative liabilities, at fair value (1) $ — $ 872 $ 77 $ 949 Warrant and equity related liabilities, at fair value (2) 972 1,359 — 2,331 Total Liabilities $ 972 $ 2,231 $ 77 $ 3,280 __________________ (1) As of March 31, 2024 and December 31, 2023, derivative assets and liabilities represent both IRLCs and forward sale commitments. (2) Fair value is based on the intrinsic value of the Company’s underlying stock price at each balance sheet date and includes certain assumptions with regard to volatility. |
Schedule of Notional and Fair Value of Derivative Financial Instruments | The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows: (Amounts in thousands) Notional Value Derivative Asset Derivative Liability Balance as of March 31, 2024 IRLCs $ 262,715 $ 1,717 $ 42 Forward commitments $ 356,000 20 518 Total $ 1,737 $ 560 Balance as of December 31, 2023 IRLCs $ 227,380 $ 1,716 $ 77 Forward commitments $ 265,000 — 872 Total $ 1,716 $ 949 |
Schedule of Change in Fair Value of Derivative Liabilities | The following table presents the rollforward of Level 3 IRLCs: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Balance at beginning of period $ 1,640 $ 7,568 Change in fair value of IRLCs 35 (22,891) Balance at end of period $ 1,675 $ (15,323) The following table presents the rollforward of Level 3 bifurcated derivative: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Balance at beginning of period $ — $ 236,603 Change in fair value of bifurcated derivative — (1,887) Balance at end of period $ — $ 234,716 |
Schedule of Change in Fair Value of Warrant Liabilities | The following table presents the rollforward of Level 3 convertible preferred stock warrants: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Balance at beginning of period $ — $ 3,096 Exercises — — Change in fair value of convertible preferred stock warrants — (553) Balance at end of period $ — $ 2,543 |
Schedule of Offsetting Assets | The table below presents gross amounts of recognized assets and liabilities subject to master netting agreements. (Amounts in thousands) Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Net Amounts Presented in the Condensed Consolidated Balance Sheet Offsetting of Forward Commitments - Assets Balance as of: March 31, 2024: $ — $ — $ — December 31, 2023 $ — $ — $ — Offsetting of Forward Commitments - Liabilities Balance as of: March 31, 2024: $ 311 $ (828) $ (517) December 31, 2023 $ 168 $ (1,041) $ (872) |
Schedule of Offsetting Liabilities | The table below presents gross amounts of recognized assets and liabilities subject to master netting agreements. (Amounts in thousands) Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Net Amounts Presented in the Condensed Consolidated Balance Sheet Offsetting of Forward Commitments - Assets Balance as of: March 31, 2024: $ — $ — $ — December 31, 2023 $ — $ — $ — Offsetting of Forward Commitments - Liabilities Balance as of: March 31, 2024: $ 311 $ (828) $ (517) December 31, 2023 $ 168 $ (1,041) $ (872) |
Schedule of Quantitative Information about Significant Unobservable Inputs | The following table presents quantitative information about the significant unobservable inputs used in the recurring fair value measurements categorized within Level 3 of the fair value hierarchy: March 31, 2024 (Amounts in dollars, except percentages) Range Weighted Average Level 3 Financial Instruments: IRLCs Pull-through factor 5.12% - 100.00% 76.3 % December 31, 2023 (Amounts in dollars, except percentages) Range Weighted Average Level 3 Financial Instruments: IRLCs Pull-through factor 0.77% - 100.00% 89.8 % |
Schedule of Carrying Amounts and Estimated Fair Value of Financial Instruments Measured at Fair Value on Recurring or Non-Recurring Basis | The following table presents the carrying amounts and estimated fair value of financial instruments that are not recorded at fair value on a recurring or non-recurring basis: March 31, 2024 December 31, 2023 (Amounts in thousands) Fair Value Level Carrying Amount Fair Value Carrying Amount Fair Value Short-term investments Level 1 $ 58,089 $ 57,055 $ 25,597 $ 25,563 Loans held for investment Level 3 $ 7,900 $ 8,258 $ 4,793 $ 5,103 Convertible Note Level 3 $ 514,758 $ 322,803 $ 514,644 $ 309,135 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-Based Compensation Expense | The Company recognized stock-based compensation expense as follows: Three Months Ended March 31, (Amounts in thousands) 2024 2023 Stock-based compensation expense 8,760 4,408 |
Organization and Nature of th_2
Organization and Nature of the Business (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 | Aug. 22, 2023 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Cash and cash equivalents, and short-term investments | $ 482.6 | ||
Common Class A | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Common stock, par value (in dollars per share) | $ 0.0001 | ||
Convertible Notes | Convertible Debt | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Aggregate principal amount | $ 528.6 | $ 528.6 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) | 3 Months Ended |
Mar. 31, 2024 segment | |
Property, Plant and Equipment [Line Items] | |
Number of reportable segments | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Condensed Consolidated Statements of Operations and Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Gain on loans, net | $ 15,652 | $ 12,761 |
Other revenue | 2,817 | 4,944 |
Interest income | 8,636 | 6,390 |
Interest expense | (4,854) | (5,469) |
Net interest income | 3,782 | 921 |
Total net revenues | 22,251 | 18,626 |
Compensation and benefits | 38,073 | 38,112 |
Loan origination expense | 2,577 | 5,202 |
Other expenses | (183) | 11,065 |
General and administrative | 14,047 | 16,762 |
Marketing and advertising expense | 4,554 | 7,760 |
Technology and product development expenses | 5,458 | 14,446 |
Restructuring and impairment expenses | 721 | 9,137 |
Depreciation and amortization | 9,074 | 11,477 |
Total expenses | 73,600 | 104,824 |
Change in fair value of bifurcated derivative | 0 | (1,887) |
Loss before income tax (benefit) expense | (51,349) | (86,198) |
Income tax (benefit) expense | 143 | 1,424 |
Net loss | $ (51,492) | (87,622) |
Previously Reported | ||
Interest income | 3,925 | |
Interest expense | (2,779) | |
Net interest income | 1,146 | |
Total net revenues | 20,958 | |
Compensation and benefits | 0 | |
Loan origination expense | 30,623 | |
Other expenses | 4,693 | |
General and administrative | 28,828 | |
Marketing and advertising expense | 8,623 | |
Technology and product development expenses | 23,606 | |
Restructuring and impairment expenses | 9,137 | |
Depreciation and amortization | 0 | |
Total expenses | 105,613 | |
Other income (expense) | 2,481 | |
Interest and amortization on non-funding debt | (2,690) | |
Change in fair value of convertible preferred stock warrants | 553 | |
Change in fair value of bifurcated derivative | (1,887) | |
Total interest and other expense, net | (1,543) | |
Loss before income tax (benefit) expense | (86,198) | |
Income tax (benefit) expense | 1,424 | |
Net loss | (87,622) | |
Reclassifications | ||
Interest income | 2,465 | |
Interest expense | (2,690) | |
Net interest income | (225) | |
Total net revenues | (2,332) | |
Compensation and benefits | 38,112 | |
Loan origination expense | (25,421) | |
Other expenses | 6,372 | |
General and administrative | (12,066) | |
Marketing and advertising expense | (863) | |
Technology and product development expenses | (9,160) | |
Restructuring and impairment expenses | (9,137) | |
Depreciation and amortization | 11,477 | |
Total expenses | (789) | |
Other income (expense) | (2,481) | |
Interest and amortization on non-funding debt | 2,690 | |
Change in fair value of convertible preferred stock warrants | (553) | |
Change in fair value of bifurcated derivative | 1,887 | |
Total interest and other expense, net | 1,543 | |
Loss before income tax (benefit) expense | 0 | |
Income tax (benefit) expense | 0 | |
Net loss | 0 | |
Mortgage platform | Previously Reported | ||
Total net revenues | 15,964 | |
Mortgage platform | Reclassifications | ||
Total net revenues | (3,203) | |
Cash offer program | Previously Reported | ||
Total net revenues | 3 | |
Cash offer program | Reclassifications | ||
Total net revenues | (3) | |
Other platform | Previously Reported | ||
Total net revenues | 3,845 | |
Cash offer program expenses | 103 | |
Other platform | Reclassifications | ||
Total net revenues | 1,099 | |
Cash offer program expenses | $ (103) |
Revenue - Gain on Loans (Detail
Revenue - Gain on Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenue [Abstract] | ||
Gain on sale of loans, net | $ 9,821 | $ 12,524 |
Integrated partnership fees | 2,268 | 2,361 |
Loan repurchase reserve recovery/(provision) | 3,563 | (2,124) |
Total gain on loans, net | $ 15,652 | $ 12,761 |
Revenue - Other Platform Revenu
Revenue - Other Platform Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||
Total other revenue | $ 2,817 | $ 4,944 |
International lending revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total other revenue | 1,108 | 988 |
Insurance Services | ||
Disaggregation of Revenue [Line Items] | ||
Total other revenue | 639 | 629 |
Real estate services | ||
Disaggregation of Revenue [Line Items] | ||
Total other revenue | 347 | 2,870 |
Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total other revenue | $ 723 | $ 457 |
Restructuring and Impairments -
Restructuring and Impairments - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Feb. 28, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Restructuring Cost and Reserve [Line Items] | |||
Total Restructuring and Impairments | $ 721 | $ 9,137 | |
Employee one-time termination benefits | |||
Restructuring Cost and Reserve [Line Items] | |||
Total Restructuring and Impairments | 721 | 288 | |
Cumulative restructuring liability | 123,000 | ||
Impairment of loan commitment asset | |||
Restructuring Cost and Reserve [Line Items] | |||
Cumulative restructuring liability | 105,600 | ||
Impairments of Right-of-Use Assets | |||
Restructuring Cost and Reserve [Line Items] | |||
Cumulative restructuring liability | 8,500 | ||
Impairment of property and equipment | |||
Restructuring Cost and Reserve [Line Items] | |||
Total Restructuring and Impairments | 0 | 4,542 | |
Cumulative restructuring liability | 12,000 | ||
Real estate restructuring loss | |||
Restructuring Cost and Reserve [Line Items] | |||
Total Restructuring and Impairments | $ 0 | $ 5,284 | |
Operational Restructuring Program | Contract termination, cash payments to third party | |||
Restructuring Cost and Reserve [Line Items] | |||
Total Restructuring and Impairments | $ 4,700 | ||
Operational Restructuring Program | Contract termination, other related fees | |||
Restructuring Cost and Reserve [Line Items] | |||
Total Restructuring and Impairments | 600 | ||
Operational Restructuring Program | Real estate restructuring loss | |||
Restructuring Cost and Reserve [Line Items] | |||
Impairment of right of use assets | 13,000 | ||
Operating lease liability removed | 13,000 | ||
Total Restructuring and Impairments | $ 5,300 |
Restructuring and Impairments_2
Restructuring and Impairments - Schedule of Restructuring and Impairment Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||
Total Restructuring and Impairments | $ 721 | $ 9,137 |
Employee one-time termination benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Total Restructuring and Impairments | 721 | 288 |
Real estate restructuring loss | ||
Restructuring Cost and Reserve [Line Items] | ||
Total Restructuring and Impairments | 0 | 5,284 |
Gain on lease settlement | ||
Restructuring Cost and Reserve [Line Items] | ||
Total Restructuring and Impairments | 0 | (977) |
Impairment of property and equipment | ||
Restructuring Cost and Reserve [Line Items] | ||
Total Restructuring and Impairments | $ 0 | $ 4,542 |
Mortgage Loans Held for Sale _3
Mortgage Loans Held for Sale and Warehouse Lines of Credit - Schedule of Outstanding Warehouse Lines of Credit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Short-Term Debt [Line Items] | ||
Facility Size | $ 425,000 | |
Warehouse lines of credit | 126,161 | $ 126,218 |
Warehouse Agreement Borrowings | Funding Facility 1 | ||
Short-Term Debt [Line Items] | ||
Facility Size | 100,000 | |
Warehouse lines of credit | 40,266 | 61,709 |
Cash collateral deposit | $ 15,000 | |
Warehouse Agreement Borrowings | Funding Facility 1 | Secured Overnight Financing Rate (SOFR) | ||
Short-Term Debt [Line Items] | ||
Variable interest rate (as a percent) | 2.125% | |
Warehouse Agreement Borrowings | Funding Facility 2 | ||
Short-Term Debt [Line Items] | ||
Facility Size | $ 150,000 | |
Warehouse lines of credit | 61,673 | 40,088 |
Cash collateral deposit | $ 3,800 | |
Warehouse Agreement Borrowings | Funding Facility 2 | Secured Overnight Financing Rate (SOFR) | Minimum | ||
Short-Term Debt [Line Items] | ||
Variable interest rate (as a percent) | 2.10% | |
Warehouse Agreement Borrowings | Funding Facility 2 | Secured Overnight Financing Rate (SOFR) | Maximum | ||
Short-Term Debt [Line Items] | ||
Variable interest rate (as a percent) | 2.25% | |
Warehouse Agreement Borrowings | Funding Facility 3 | ||
Short-Term Debt [Line Items] | ||
Facility Size | $ 175,000 | |
Warehouse lines of credit | $ 24,222 | $ 24,421 |
Warehouse Agreement Borrowings | Funding Facility 3 | Secured Overnight Financing Rate (SOFR) | Minimum | ||
Short-Term Debt [Line Items] | ||
Variable interest rate (as a percent) | 1.75% | |
Warehouse Agreement Borrowings | Funding Facility 3 | Secured Overnight Financing Rate (SOFR) | Maximum | ||
Short-Term Debt [Line Items] | ||
Variable interest rate (as a percent) | 3.75% |
Mortgage Loans Held for Sale _4
Mortgage Loans Held for Sale and Warehouse Lines of Credit - Schedule of Loans Held For Sale (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total LHFS | $ 167,042 | $ 170,177 |
Fair value adjustment | (828) | (27) |
Total LHFS at fair value | 166,214 | 170,150 |
Collateral Pledged | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total LHFS | 131,675 | 132,693 |
Collateral Pledged | Funding Facility 1 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total LHFS | 40,582 | 63,483 |
Collateral Pledged | Funding Facility 2 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total LHFS | 64,620 | 42,316 |
Collateral Pledged | Funding Facility 3 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total LHFS | 26,473 | 26,894 |
Uncollateralized | Company-funded LHFS | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total LHFS | 7,072 | 12,386 |
Uncollateralized | Company-funded Home Equity Line of Credit | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total LHFS | $ 28,295 | $ 25,098 |
Mortgage Loans Held for Sale _5
Mortgage Loans Held for Sale and Warehouse Lines of Credit - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Collateral Pledged | |||
Short-Term Debt [Line Items] | |||
Average days loans held for sale | 20 days | ||
Warehouse Agreement Borrowings | |||
Short-Term Debt [Line Items] | |||
Weighted average interest rate (as a percent) | 7.39% | 6.67% | |
Compensating balances | $ 18.8 | $ 18.8 |
Goodwill and Internal Use Sof_3
Goodwill and Internal Use Software and Other Intangible Assets, Net - Schedule of Changes in Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Goodwill [Roll Forward] | ||
Balance at beginning of period | $ 32,390 | $ 18,525 |
Goodwill acquired—Goodholm | 0 | 1,741 |
Effect of foreign currency exchange rate changes | (181) | 240 |
Balance at end of period | $ 32,209 | $ 20,507 |
Goodwill and Internal Use Sof_4
Goodwill and Internal Use Software and Other Intangible Assets, Net - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment | $ 0 | $ 0 |
Capitalized software | 400,000 | 3,500,000 |
Capitalized stock-based compensation costs | 383,000 | 689,000 |
Amortization of internal use software and other intangible assets | 8,045,000 | 9,361,000 |
Impairment of intangibles | $ 0 | $ 0 |
Goodwill and Internal Use Sof_5
Goodwill and Internal Use Software and Other Intangible Assets, Net - Schedule of Finite and Indefinite-Lived Intangibles (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Value | $ 138,654 | $ 137,887 |
Total Internal use software and other intangible assets, net | 142,715 | 141,967 |
Accumulated Amortization | (111,866) | (103,841) |
Net Carrying Value | 26,788 | 34,046 |
Total Internal use software and other intangible assets, net, gross carrying value | 142,715 | 141,967 |
Internal use software and other intangible assets, net | 30,849 | 38,126 |
Domain name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets with indefinite lives | 1,820 | 1,820 |
Licenses and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets with indefinite lives | $ 2,241 | $ 2,260 |
Internal use software and website development | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Useful Lives (in years) | 3 years | 3 years |
Gross Carrying Value | $ 137,655 | $ 136,879 |
Accumulated Amortization | (111,572) | (103,587) |
Net Carrying Value | $ 26,083 | $ 33,292 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Useful Lives (in years) | 5 years 8 months 12 days | |
Gross Carrying Value | $ 1,000 | |
Accumulated Amortization | (294) | |
Net Carrying Value | $ 706 | |
Intellectual property and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Useful Lives (in years) | 5 years 8 months 12 days | |
Gross Carrying Value | $ 1,008 | |
Accumulated Amortization | (254) | |
Net Carrying Value | $ 754 |
Prepaid Expenses and Other As_3
Prepaid Expenses and Other Assets - Schedule of Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 25,430 | $ 27,859 |
Tax receivables | 8,473 | 8,348 |
Security Deposits | 13,858 | 15,179 |
Loans held for investment | 7,900 | 4,793 |
Total prepaid expenses and other assets | $ 55,661 | $ 56,179 |
Customer Deposits - Narrative (
Customer Deposits - Narrative (Details) | Mar. 31, 2024 USD ($) | Mar. 31, 2024 GBP (£) | Dec. 31, 2023 USD ($) |
Deposits [Abstract] | |||
Customer deposits | $ 11,831,000 | $ 11,800,000 | |
Deposits, FSCS Insured Amount | 107,300 | £ 85,000 | |
Deposits over the insured amount | $ 1,000,000 |
Customer Deposits - Average Bal
Customer Deposits - Average Balances and Weighted Average Rates (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Deposits [Abstract] | |
Average balance, Notice | $ 2,406 |
Average balance, Term | 5,432 |
Average balance, Savings | 4,260 |
Average balance, Total deposits | $ 12,098 |
Average paid rate, Notice | 2.85% |
Average paid rate, Term | 3.77% |
Average paid rate, Savings | 2.28% |
Average paid rate, Total deposits | 2.97% |
Customer Deposits - Maturities
Customer Deposits - Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Deposits [Abstract] | ||
Demand deposits | $ 4,389 | |
Maturing In: | ||
2024 | 3,583 | |
2025 | 2,376 | |
2026 | 1,174 | |
2027 | 309 | |
2028 | 0 | |
Thereafter | 0 | |
Total | $ 11,831 | $ 11,800 |
Customer Deposits - Interest Ex
Customer Deposits - Interest Expense (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Deposits [Abstract] | |
Notice | $ 24 |
Term | 52 |
Savings | 29 |
Total Interest Expense | $ 105 |
Corporate Line of Credit and _2
Corporate Line of Credit and Convertible Note - Corporate Line of Credit and Amended Corporate Line of Credit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Line of Credit Facility [Line Items] | ||
Amortization of deferred debt issuance costs and discount and other debt servicing fees | $ 1,217 | $ 164 |
Corporate line of credit | Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Interest expense on debt | 2,600 | |
Interest expense, line of credit | 2,300 | |
Amortization of deferred debt issuance costs and discount and other debt servicing fees | $ 300 |
Corporate Line of Credit and _3
Corporate Line of Credit and Convertible Notes - Convertible Note (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Aug. 22, 2023 USD ($) day $ / shares | Feb. 29, 2024 USD ($) | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Debt Instrument [Line Items] | |||||
Funds held in trust, amount | $ 21,400 | ||||
Convertible notes payable | $ 514,758 | $ 514,644 | |||
Interest expense | 4,854 | $ 5,469 | |||
Convertible Debt | Convertible Notes | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount | 528,600 | 528,600 | |||
Carrying amount | $ 550,000 | ||||
Fixed interest rate (as a percent) | 1% | ||||
First anniversary VWAP | 115% | ||||
VWAP threshold, minimum (in dollars per share) | $ / shares | $ 8 | ||||
VWAP threshold, maximum (in dollars per share) | $ / shares | $ 12 | ||||
Redemption price percentage | 115% | ||||
Threshold percentage stock price trigger | 130% | ||||
Threshold trading days | day | 20 | ||||
Threshold consecutive trading days | day | 30 | ||||
Convertible notes payable | 514,800 | $ 514,600 | |||
Interest expense | $ 2,700 | ||||
Convertible Debt | Post-Closing Convertible Notes | |||||
Debt Instrument [Line Items] | |||||
Interest expense on debt | $ 2,500 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Oct. 31, 2021 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Jan. 31, 2022 | |
Related Party Transactions | |||||
Other receivables | $ 11,486,000 | $ 16,888,000 | |||
Other liabilities | 21,797,000 | 25,837,000 | |||
Mortgage loans held for sale, at fair value | 166,214,000 | 170,150,000 | |||
Marketing and advertising expense | 4,554,000 | $ 7,760,000 | |||
Related Party | |||||
Related Party Transactions | |||||
Other liabilities | 334,000 | 390,000 | |||
Employee and Expense Allocation Agreement | |||||
Related Party Transactions | |||||
Annual payments | 0 | 28,000 | |||
Reduction of expenses | 0 | ||||
Employee and Expense Allocation Agreement | Related Party | |||||
Related Party Transactions | |||||
Other receivables | 152,000 | 153,000 | |||
Technology Integration and License Agreement | Related Party | |||||
Related Party Transactions | |||||
Other liabilities | 171,000 | 230,000 | |||
Technology Integration and License Agreement | Related Party | Mortgage platform | |||||
Related Party Transactions | |||||
Expenses | 62,000 | 301,000 | |||
Private Label and Consumer Lending Program Agreement | Related Party | |||||
Related Party Transactions | |||||
Expenses | 21,000 | ||||
Marketing and advertising expense | 5,000 | ||||
Private Label and Consumer Lending Program Agreement | Related Party | Mortgage platform | |||||
Related Party Transactions | |||||
Expenses | 16,000 | 16,000 | |||
Amount paid per loan | $ 600 | ||||
Draw period | 12 months | ||||
Fixed period to pay back loan | 3 years | ||||
Fixed period to pay back loan, one | 5 years | ||||
Master Loan Purchase Agreement | Related Party | |||||
Related Party Transactions | |||||
Mortgage loans held for sale, at fair value | 5,800,000 | $ 6,300,000 | |||
Master Loan Purchase Agreement | Related Party | Better Trust I | |||||
Related Party Transactions | |||||
Master loan purchase agreement, amount | $ 20,000,000 | ||||
Data Analytics Services Agreement | Related Party | Mortgage platform | |||||
Related Party Transactions | |||||
Expenses | $ 8,000 | $ 43,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Loss Contingencies [Line Items] | |||
Loss contingency, estimated liability | $ 8,700 | ||
Ordinary shares, par value, (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Restricted cash | $ 26,075 | $ 25,325 | $ 24,475 |
Common Class A | |||
Loss Contingencies [Line Items] | |||
Ordinary shares, par value, (in dollars per share) | $ 0.0001 | ||
Commitment to Fund Mortgage Loans | |||
Loss Contingencies [Line Items] | |||
Other commitment | $ 262,700 | 227,400 | |
Escrow deposits | |||
Loss Contingencies [Line Items] | |||
Restricted cash | $ 3,800 | $ 3,400 | |
LHFS originated | Geographic concentration risk | Florida | |||
Loss Contingencies [Line Items] | |||
Concentration risk percentage | 10% | 12% | |
LHFS originated | Geographic concentration risk | Texas | |||
Loss Contingencies [Line Items] | |||
Concentration risk percentage | 11% | ||
Loan Purchaser One | Loans sold | Customer concentration risk | |||
Loss Contingencies [Line Items] | |||
Concentration risk percentage | 53% | 79% | |
Loan Purchaser Two | Loans sold | Customer concentration risk | |||
Loss Contingencies [Line Items] | |||
Concentration risk percentage | 17% | ||
Loan Purchaser Three | Loans sold | Customer concentration risk | |||
Loss Contingencies [Line Items] | |||
Concentration risk percentage | 18% | ||
Forward commitments | |||
Loss Contingencies [Line Items] | |||
Notional amounts | $ 356,000 | $ 265,000 | |
Employee related labor dispute | |||
Loss Contingencies [Line Items] | |||
Loss contingency, estimated liability | 8,400 | 8,400 | |
Regulatory matters | |||
Loss Contingencies [Line Items] | |||
Loss contingency, estimated liability | $ 8,600 | ||
Loss contingency, (gain) loss in period | $ 100 |
Risks and Uncertainties - Narra
Risks and Uncertainties - Narrative (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 USD ($) loan | Mar. 31, 2023 USD ($) loan | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Risks and Uncertainties [Abstract] | ||||
Unpaid principal balance of loans repurchased | $ 2,000 | $ 8,200 | ||
Number of loans repurchased | loan | 6 | 21 | ||
Loan repurchase reserve recovery/(provision) | $ 15,441 | $ 26,591 | $ 19,472 | $ 26,745 |
Risks and Uncertainties - Loan
Risks and Uncertainties - Loan Repurchase Reserve Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Loan Repurchase Reserve [Roll Forward] | ||
Loan repurchase reserve at beginning of period | $ 19,472 | $ 26,745 |
(Recovery)/provision | (3,563) | 2,124 |
Charge-offs | (468) | (2,278) |
Loan repurchase reserve at end of period | $ 15,441 | $ 26,591 |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Basic net loss per share: | ||
Net loss | $ (51,492) | $ (87,622) |
Income allocated to participating securities | 0 | 0 |
Net loss attributable to common stockholders - Basic | (51,492) | (87,622) |
Diluted net loss per share: | ||
Net loss attributable to common stockholders - Basic | (51,492) | (87,622) |
Interest expense and change in fair value of bifurcated derivatives on convertible notes | 0 | 0 |
Income allocated to participating securities | 0 | 0 |
Net loss income attributable to common stockholders - Diluted | $ (51,492) | $ (87,622) |
Shares used in computation: | ||
Weighted average common shares outstanding (in shares) | 753,993,530 | 297,514,644 |
Weighted-average effect of dilutive securities: | ||
Assumed exercise of stock options (in shares) | 0 | 0 |
Assumed exercise of warrants (in shares) | 0 | 0 |
Assumed conversion of convertible preferred stock (in shares) | 0 | 0 |
Diluted weighted-average common shares outstanding (in shares) | 753,993,530 | 297,514,644 |
Earnings (loss) per share attributable to common stockholders: | ||
Basic (in dollars per share) | $ (0.07) | $ (0.29) |
Diluted (in dollars per share) | $ (0.07) | $ (0.29) |
Net Loss Per Share - Antidiluti
Net Loss Per Share - Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 60,064 | 1,258,378 |
RSUs and Options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 49,562 | 141,059 |
Convertible preferred stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 0 | 332,315 |
Pre-Closing Bridge Notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 0 | 764,681 |
Warrants | Warrants to purchase convertible preferred stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 0 | 14,592 |
Warrants | Public Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 3,733 | 0 |
Warrants | Private Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 6,075 | 0 |
Warrants | Common Stock Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 0 | 5,731 |
Sponsor Locked-up Shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 694 | 0 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value Measurements | ||
Mortgage loans held for sale, at fair value | $ 166,214 | $ 170,150 |
Derivative assets, at fair value | 1,737 | 1,716 |
Total Assets | 167,951 | 171,866 |
Derivative liabilities, at fair value | 560 | 949 |
Warrant and equity related liabilities, at fair value | 1,509 | 2,331 |
Total Liabilities | 2,069 | 3,280 |
Level 1 | ||
Fair Value Measurements | ||
Mortgage loans held for sale, at fair value | 0 | 0 |
Derivative assets, at fair value | 0 | 0 |
Total Assets | 0 | 0 |
Derivative liabilities, at fair value | 0 | 0 |
Warrant and equity related liabilities, at fair value | 638 | 972 |
Total Liabilities | 638 | 972 |
Level 2 | ||
Fair Value Measurements | ||
Mortgage loans held for sale, at fair value | 166,214 | 170,150 |
Derivative assets, at fair value | 20 | 0 |
Total Assets | 166,234 | 170,150 |
Derivative liabilities, at fair value | 518 | 872 |
Warrant and equity related liabilities, at fair value | 871 | 1,359 |
Total Liabilities | 1,389 | 2,231 |
Level 3 | ||
Fair Value Measurements | ||
Mortgage loans held for sale, at fair value | 0 | 0 |
Derivative assets, at fair value | 1,717 | 1,716 |
Total Assets | 1,717 | 1,716 |
Derivative liabilities, at fair value | 42 | 77 |
Warrant and equity related liabilities, at fair value | 0 | 0 |
Total Liabilities | $ 42 | $ 77 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Fair Value Measurements | ||
Unrealized gain (loss) on derivatives | $ 410 | $ (4,520) |
IRLCs | ||
Fair Value Measurements | ||
Issuances (purchases) of derivative instruments | $ 2,600 | 900 |
Derivative term | 51 days | |
Gain (loss) on derivatives | $ 0 | 4,200 |
Forward commitments | ||
Fair Value Measurements | ||
Gain (loss) on derivatives | 2,500 | 4,500 |
Unrealized gain (loss) on derivatives | $ 3,800 | $ 8,800 |
Fair Value Measurements - Notio
Fair Value Measurements - Notional and Fair Value of Derivative Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Derivative [Line Items] | ||
Derivative Asset | $ 1,737 | $ 1,716 |
Derivative Liability | 560 | 949 |
IRLCs | ||
Derivative [Line Items] | ||
Notional Value | 262,715 | 227,380 |
Derivative Asset | 1,717 | 1,716 |
Derivative Liability | 42 | 77 |
Forward commitments | ||
Derivative [Line Items] | ||
Notional Value | 356,000 | 265,000 |
Derivative Asset | 20 | 0 |
Derivative Liability | $ 518 | $ 872 |
Fair Value Measurements - Chang
Fair Value Measurements - Change in Fair Value of Derivative Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
IRLCs | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Balance at beginning of period | $ 1,640 | $ 7,568 |
Change in fair value | 35 | (22,891) |
Balance at end of period | 1,675 | (15,323) |
Bifurcated derivative | ||
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | ||
Balance at beginning of period | 0 | 236,603 |
Change in fair value | 0 | (1,887) |
Balance at end of period | $ 0 | $ 234,716 |
Fair Value Measurements - Cha_2
Fair Value Measurements - Change in Fair Value of Warrant Liabilities (Details) - Warrants - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at beginning of period | $ 0 | $ 3,096 |
Exercises | 0 | 0 |
Change in fair value of convertible preferred stock warrants | 0 | (553) |
Balance at end of period | $ 0 | $ 2,543 |
Fair Value Measurements - Offse
Fair Value Measurements - Offsetting Derivatives (Details) - Forward commitments - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Offsetting of Forward Commitments - Assets | ||
Gross Amount of Recognized Assets | $ 0 | $ 0 |
Gross Amount of Recognized Liabilities | 0 | 0 |
Net Amounts Presented in the Condensed Consolidated Balance Sheet | 0 | 0 |
Offsetting of Forward Commitments - Liabilities | ||
Gross Amount of Recognized Assets | 311 | 168 |
Gross Amount of Recognized Liabilities | (828) | (1,041) |
Net Amounts Presented in the Condensed Consolidated Balance Sheet | $ (517) | $ (872) |
Fair Value Measurements - Quant
Fair Value Measurements - Quantitative Information about Significant Unobservable Inputs (Details) - IRLCs - Level 3 - Pull-through factor | Mar. 31, 2024 | Dec. 31, 2023 |
Minimum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input, derivatives | 0.0512 | 0.0077 |
Maximum | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input, derivatives | 1 | 1 |
Weighted average | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Measurement input, derivatives | 0.763 | 0.898 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring and Non-Recurring (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value Measurements | ||
Short-term investments | $ 58,089 | $ 25,597 |
Level 1 | Carrying Amount | ||
Fair Value Measurements | ||
Short-term investments | 58,089 | 25,597 |
Level 1 | Fair Value | ||
Fair Value Measurements | ||
Short-term investments | 57,055 | 25,563 |
Level 3 | Carrying Amount | ||
Fair Value Measurements | ||
Loans held for investment | 7,900 | 4,793 |
Convertible Note | 514,758 | 514,644 |
Level 3 | Fair Value | ||
Fair Value Measurements | ||
Loans held for investment | 8,258 | 5,103 |
Convertible Note | $ 322,803 | $ 309,135 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense/(benefit) | $ 143 | $ 1,424 |
Effective tax rate | (0.28%) | (1.65%) |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details) | 3 Months Ended | ||
Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) | Aug. 24, 2023 | |
Class of Warrant or Right [Line Items] | |||
Recapitalization exchange ratio | 3.06 | ||
Gain on change in fair value of warrants | $ 823,000 | $ 553,000 | |
Preferred Stock Warrants | |||
Class of Warrant or Right [Line Items] | |||
Gain on change in fair value of warrants | $ 0 | $ 600,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 3 Months Ended | |||
Mar. 31, 2024 USD ($) $ / shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) $ / shares | Aug. 24, 2023 | |
Stockholders' Equity | ||||
Recapitalization exchange ratio | 3.06 | |||
Ordinary shares, par value, (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||
Gain on change in fair value of warrants | $ 823,000 | $ 553,000 | ||
Notes receivable from stockholders | 10,976,000 | $ 10,111,000 | ||
Interest income | $ 8,636,000 | 6,390,000 | ||
Common Class A | ||||
Stockholders' Equity | ||||
Ordinary shares, par value, (in dollars per share) | $ / shares | $ 0.0001 | |||
Common Class B | ||||
Stockholders' Equity | ||||
Ordinary shares, par value, (in dollars per share) | $ / shares | $ 0.0001 | |||
Directors and Officers | ||||
Stockholders' Equity | ||||
Interest income | $ 100,000 | $ 100,000 | ||
Directors and Officers | Minimum | ||||
Stockholders' Equity | ||||
Interest rate | 0.50% | |||
Directors and Officers | Maximum | ||||
Stockholders' Equity | ||||
Interest rate | 2.50% | |||
Notes Receivables from Stockholders | ||||
Stockholders' Equity | ||||
Outstanding promissory notes | $ 17,900,000 | 18,300,000 | ||
Notes receivable from stockholders | 11,000,000 | 10,100,000 | ||
Notes receivable from stockholders, stock options not yet vested | 6,900,000 | 8,200,000 | ||
Private and Public Warrants | ||||
Stockholders' Equity | ||||
Warrants | 1,300,000 | 1,900,000 | ||
Gain on change in fair value of warrants | 600,000 | |||
Sponsor Locked-up Shares | ||||
Stockholders' Equity | ||||
Warrants | 200,000 | $ 400,000 | ||
Gain on change in fair value of warrants | $ 200,000 |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | ||
Stock-based compensation expense | $ 8,760 | $ 4,408 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | ||
Capitalized stock-based compensation costs | $ 383 | $ 689 |