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Allowance for Loss-Sharing Obligations | 9 Months Ended
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Sep. 30, 2024
Loss Contingency Accrual, Disclosures [Abstract] |
Allowance for Loss-Sharing Obligations | Allowance for Loss-Sharing Obligations Our allowance for loss-sharing obligations related to the Fannie Mae DUS program is as follows (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Beginning balance | $ | 76,561 |  |  | $ | 66,681 |  |  | $ | 71,634 |  |  | $ | 57,168 |
Provisions for loss sharing | 3,521 |  |  | 1,703 |  |  | 9,294 |  |  | 13,992 |
Provisions reversal for loan repayments | (341) |  |  | (24) |  |  | (735) |  |  | (1,464) |
Recoveries (charge-offs), net | 836 |  |  | 901 |  |  | 384 |  |  | (435) |
Ending balance | $ | 80,577 |  |  | $ | 69,261 |  |  | $ | 80,577 |  |  | $ | 69,261 |
When a loan is sold under the Fannie Mae DUS program, we undertake an obligation to partially guarantee the performance of the loan. A liability is recognized for the fair value of the guarantee obligation undertaken for the non-contingent aspect of the guarantee and is removed only upon either the expiration or settlement of the guarantee. At September 30, 2024 and December 31, 2023, we had $34.8 million and $34.6 million, respectively, of guarantee obligations included in the allowance for loss-sharing obligations. In addition to and separately from the fair value of the guarantee, we estimate our allowance for loss-sharing under CECL over the contractual period in which we are exposed to credit risk. The current expected loss related to loss-sharing was based on a collective pooling basis with similar risk characteristics, a reasonable and supportable forecast and a reversion period based on our average historical losses through the remaining contractual term of the portfolio. When we settle a loss under the DUS loss-sharing model, the net loss is charged-off against the previously recorded loss-sharing obligation. The settled loss is often net of any previously advanced principal and interest payments in accordance with the DUS program, which are reflected as reductions to the proceeds needed to settle losses. At September 30, 2024 and December 31, 2023, we had outstanding advances of $0.5 million and $1.1 million, respectively, which were netted against the allowance for loss-sharing obligations. At September 30, 2024 and December 31, 2023, our allowance for loss-sharing obligations, associated with expected losses under CECL, was $45.8 million and $37.0 million, respectively, and represented 0.20% and 0.17%, respectively, of our Fannie Mae servicing portfolio. During the three and nine months ended September 30, 2024, we recorded an increase in CECL reserves of $4.0 million and $8.8 million, respectively. During the three and nine months ended September 30, 2023, we recorded an increase in CECL reserves of $2.5 million and $11.9 million, respectively. At September 30, 2024 and December 31, 2023, the maximum quantifiable liability associated with our guarantees under the Fannie Mae DUS agreement was $4.20 billion and $3.95 billion, respectively. The maximum quantifiable liability is not representative of the actual loss we would incur. We would be liable for this amount only if all of the loans we service for Fannie Mae, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement.

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- Definition The entire disclosure for loss and gain contingencies. Describes any existing condition, situation, or set of circumstances involving uncertainty as of the balance sheet date (or prior to issuance of the financial statements) as to a probable or reasonably possible loss incurred by an entity that will ultimately be resolved when one or more future events occur or fail to occur, and typically discloses the amount of loss recorded or a range of possible loss, or an assertion that no reasonable estimate can be made. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 720 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483359/720-20-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 450 -SubTopic 20 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 5.Y.Q4) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480102/450-20-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 450 -SubTopic 20 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 5.Y.Q2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480102/450-20-S99-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 450 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483076/450-20-50-1 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 450 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/450-20/tableOfContent Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 450 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 4 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147483076/450-20-50-4 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 450 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147483076/450-20-50-9 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 450 -SubTopic 30 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/450-30/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 450 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483049/450-30-50-1 + Details
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