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______________________________________________________________________________________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____

Commission File No. 001-35674 | Commission File No. 333-148153
REALOGY HOLDINGS CORP. | REALOGY GROUP LLC
(Exact name of registrant as specified in its charter) | (Exact name of registrant as specified in its charter)
20-8050955 | 20-4381990
(I.R.S. Employer Identification Number) | (I.R.S. Employer Identification Number)

Delaware
(State or other jurisdiction of incorporation or organization)
175 Park Avenue
Madison, NJ 07940
(Address of principal executive offices) (Zip Code)
(973) 407-2000
(Registrants' telephone number, including area code)
___________________________

Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Realogy Holdings Corp. | Common Stock, par value $0.01 per share |  | RLGY |  | New York Stock Exchange
Realogy Group LLC | None |  | None |  | None

Indicate by check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.
Realogy Holdings Corp. Yes ☑ No ☐ Realogy Group LLC Yes ☐ No ☑
Indicate by check mark whether the Registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit such files).
Realogy Holdings Corp. Yes ☑ No ☐ Realogy Group LLC Yes ☑ No ☐
Indicate by check mark whether the Registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

| Large accelerated filer |  | Accelerated filer |  | Non-accelerated filer |  | Smaller reporting company |  | Emerging growth company
Realogy Holdings Corp. | ☑ |  | ☐ |  | ☐ |  | ☐ |  | ☐
Realogy Group LLC | ☐ |  | ☐ |  | ☑ |  | ☐ |  | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the Registrants are a shell company (as defined in Rule 12b-2 of the Exchange Act).
Realogy Holdings Corp. Yes ☐ No ☑ Realogy Group LLC Yes ☐ No ☑
There were 115,456,844 shares of Common Stock, $0.01 par value, of Realogy Holdings Corp. outstanding as of November 3, 2020.
__________________________________________________________________________________________________________________

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TABLE OF CONTENTS

| Page
Introductory Note | 1
Forward-Looking Statements | 1
PART I | FINANCIAL INFORMATION |
Item 1. | Financial Statements (Unaudited) | 4
| Report of Independent Registered Public Accounting Firm for Realogy Holdings Corp. | 4
| Report of Independent Registered Public Accounting Firm for Realogy Group LLC | 5
| Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019 | 6
| Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and 2019 | 7
| Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 | 8
| Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 | 9
| Notes to Condensed Consolidated Financial Statements | 11
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 36
Item 3. | Quantitative and Qualitative Disclosures about Market Risks | 63
Item 4. | Controls and Procedures | 64
PART II | OTHER INFORMATION |
Item 1. | Legal Proceedings | 66
Item 1A. | Risk Factors | 66
Item 5. | Other Information | 66
Item 6. | Exhibits | 67
Signatures | 68
Exhibit Index | 69

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INTRODUCTORY NOTE
Except as otherwise indicated or unless the context otherwise requires, the terms "we," "us," "our," "our company," "Realogy," "Realogy Holdings" and the "Company" refer to Realogy Holdings Corp., a Delaware corporation, and its consolidated subsidiaries, including Realogy Intermediate Holdings LLC, a Delaware limited liability company ("Realogy Intermediate"), and Realogy Group LLC, a Delaware limited liability company ("Realogy Group"). Neither Realogy Holdings, the indirect parent of Realogy Group, nor Realogy Intermediate, the direct parent company of Realogy Group, conducts any operations other than with respect to its respective direct or indirect ownership of Realogy Group. As a result, the consolidated financial positions, results of operations and cash flows of Realogy Holdings, Realogy Intermediate and Realogy Group are the same.
Realogy Holdings is not a party to the Amended and Restated Credit Agreement dated as of March 5, 2013, as amended, amended and restated, modified or supplemented from time to time (the "Senior Secured Credit Agreement") that governs our senior secured credit facility (the "Senior Secured Credit Facility", which includes our "Revolving Credit Facility" and our "Term Loan B Facility") and the Term Loan A Agreement dated as of October 23, 2015, as amended from time to time (the "Term Loan A Agreement") that governs our senior secured term loan A credit facility (the "Term Loan A Facility") and certain references in this report to our consolidated indebtedness exclude Realogy Holdings with respect to indebtedness under the Senior Secured Credit Facility and Term Loan A Facility. In addition, while Realogy Holdings is a guarantor of Realogy Group's obligations under both its unsecured and secured second lien notes (in each case on an unsecured senior subordinated basis), Realogy Holdings is not subject to the restrictive covenants in the indentures governing such indebtedness.
As used in this Quarterly Report on Form 10-Q, the terms "4.875% Senior Notes" and "9.375% Senior Notes" refer to our 4.875% Senior Notes due 2023 and our 9.375% Senior Notes due 2027, respectively, and are referred to collectively as the "Unsecured Notes." The term "7.625% Senior Secured Second Lien Notes" refer to our 7.625% Senior Secured Second Lien Notes due 2025. The term "5.25% Senior Notes" refers to our 5.25% Senior Notes due 2021 (paid in full in June 2020).
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as "believe," "expect," "anticipate," "intend," "project," "estimate," "plan," and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could."
In particular, information appearing under "Management's Discussion and Analysis of Financial Condition and Results of Operations" includes forward-looking statements. Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, it is based on management's current plans and expectations, expressed in good faith and believed to have a reasonable basis. However, we can give no assurance that any such expectation or belief will result or will be achieved or accomplished.
The following include some, but not all, of the factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the coronavirus disease (COVID-19) pandemic:
•the extent, duration and severity of the spread of the COVID-19 pandemic and the economic consequences stemming from the COVID-19 crisis (including continued economic contraction and/or the failure of any recovery to be sustained) as well as related risks such as governmental regulation (including those that preclude or strictly limit showings of properties), changes in patterns of commerce or consumer activities and changes in consumer attitudes and the impact of any of the foregoing on our business, results of operations and liquidity;
•adverse developments or the absence of sustained improvement in general business, economic or political conditions or the U.S. residential real estate markets, either regionally or nationally, including but not limited to:
◦a decline in consumer confidence or spending;
◦weak capital, credit and financial markets and/or the instability of financial institutions;
1

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◦intensifying or continued economic contraction in the U.S. economy, including the impact of recessions, slow economic growth, or a deterioration in other economic factors (including potential consumer, business or governmental defaults or delinquencies due to the COVID-19 crisis or otherwise);
◦continued low or accelerated declines in home inventory levels;
◦continuing high levels of unemployment and/or declining wages or stagnant wage growth in the U.S.;
◦the economic impact of the termination and/or substantial curtailment of, or failure to extend, one or more federal and/or state monetary or fiscal programs meant to assist businesses and individuals navigate COVID-19 related financial challenges;
◦an increase in potential homebuyers with low credit ratings, inability to afford down payments, or other mortgage challenges due to disrupted earnings, including constraints on the availability of mortgage financing;
◦an increase in foreclosure activity;
◦a reduction in the affordability of housing, including in connection with rising home prices;
◦a decline or a lack of improvement in the number of homesales;
◦stagnant or declining home prices;
◦increases in mortgage rates;
◦a lack of improvement or deceleration in the building of new housing for homesales and/or irregular timing or volume of new development closings;
◦the potential negative impact of certain provisions of the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) on (i) home values over time in states with high property, sales and state and local income taxes and (ii) homeownership rates, in particular in light of our market concentration in high-tax states; and/or
◦geopolitical and economic instability, including uncertainty around the 2020 U.S. election;
•risks associated with our substantial indebtedness, interest obligations and the restrictions contained in our debt agreements as well as risks relating to our having to dedicate a significant portion of our cash flows from operations to service our debt and our ability to refinance or repay our indebtedness or incur additional indebtedness;
•the impact of disruption in the residential real estate brokerage industry, and on our results of operations and financial condition, as a result of actions taken by listing aggregators to monetize their concentration and market power, including, among other things, expanding into the brokerage business, diluting the relationship between agents and brokers (and between agents and the consumer), and consolidating and leveraging data;
•the impact of increased competition in the industry for clients and for the affiliation of independent sales agents and franchisees on our results of operations and market share, including competition from:
◦real estate brokerages, including those seeking to disrupt historical real estate brokerage models as well as virtual brokerages or brokerages that operate in a more virtual fashion;
◦other industry participants seeking to eliminate brokers or agents from, or minimize the role they play in, the homesale transaction;
◦other industry participants otherwise competing for a portion of gross commission income; and
◦other residential real estate franchisors;
•continuing pressure on the share of gross commission income paid by our company owned brokerages and affiliated franchisees to affiliated independent sales agents and independent sales agent teams;
•our inability to develop products, technology and programs (including our company-directed affinity programs) that support our strategy to grow the base of independent sales agents at our company owned and franchisee real estate brokerages and the base of our franchisees;
•our geographic and high-end market concentration, including the heightened competition for independent sales agents in those geographies and price points;
•our inability to enter into franchise agreements with new franchisees or renew existing franchise agreements, without reducing contractual royalty rates or increasing the amount and prevalence of sales incentives;
•the lack of revenue growth or declining profitability of our franchisees and company owned brokerage operations or declines in other revenue streams;
•increases in uncollectible accounts receivable and note reserves as a result of the adverse financial effects of the COVID-19 crisis on our franchisees and relocation clients;
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•the potential impact of negative industry or business trends (including further declines in our market capitalization) on our valuation of goodwill and intangibles;
•the loss of our largest affinity client or multiple significant relocation clients;
•changes in corporate relocation practices, including in connection with the COVID-19 crisis, resulting in fewer employee relocations, reduced relocation benefits and/or increasing competition in corporate relocation;
•an increase in the experienced claims losses of our title underwriter;
•our failure or alleged failure to comply with laws, regulations and regulatory interpretations and any changes or stricter interpretations of any of the foregoing (whether through private litigation or governmental action), including but not limited to (1) state or federal employment laws or regulations that would require reclassification of independent contractor sales agents to employee status, (2) privacy or data security laws and regulations, (3) the Real Estate Settlement Procedures Act ("RESPA") or other federal or state consumer protection or similar laws and (4) antitrust laws and regulations;
•risks related to the impact on our operations and financial results that may be caused by any future meaningful changes in industry operations or structure as a result of governmental pressures (including pressures for lower brokerage commission rates), the actions of certain competitors, the introduction or growth of certain competitive models, changes to the rules of the multiple listing services ("MLS"), or otherwise; and
•risks and growing costs related to both cybersecurity threats to our data and customer, franchisee, employee and independent sales agent data, as well as those related to our compliance with the growing number of laws, regulations and other requirements related to the protection of personal information.
More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission ("SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K"), particularly under the captions "Forward-Looking Statements," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, particularly under the caption "Risk Factors". Most of these factors are difficult to anticipate and are generally beyond our control. You should consider these factors in connection with any forward-looking statements that may be made by us and our businesses generally.
All forward-looking statements herein speak only as of the date of this Quarterly Report and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this Quarterly Report. Except as is required by law, we expressly disclaim any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this Quarterly Report. For any forward-looking statement contained in this Quarterly Report, our public filings or other public statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Realogy Holdings Corp.
Results of Review of Interim Financial Statements
We have reviewed the accompanying condensed consolidated balance sheet of Realogy Holdings Corp. and its subsidiaries (the "Company") as of September 30, 2020, and the related condensed consolidated statements of operations and comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2020 and 2019, and of cash flows for the nine-month periods ended September 30, 2020 and 2019, including the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2019, and the related consolidated statements of operations, comprehensive (loss) income, equity and of cash flows for the year then ended (not presented herein), and in our report dated February 25, 2020, which included a paragraph describing a change in the manner of accounting for leases in the 2019 financial statements, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
November 5, 2020
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholder of Realogy Group LLC
Results of Review of Interim Financial Statements
We have reviewed the accompanying condensed consolidated balance sheet of Realogy Group LLC and its subsidiaries (the "Company") as of September 30, 2020, and the related condensed consolidated statements of operations and comprehensive income (loss) for the three-month and nine-month periods ended September 30, 2020 and 2019, and of cash flows for the nine-month periods ended September 30, 2020 and 2019, including the related notes (collectively referred to as the "interim financial statements"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of the Company as of December 31, 2019, and the related consolidated statements of operations, comprehensive (loss) income and of cash flows for the year then ended (not presented herein), and in our report dated February 25, 2020, which included a paragraph describing a change in the manner of accounting for leases in the 2019 financial statements, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These interim financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our reviews in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America applicable to reviews of interim financial information. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB or in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
November 5, 2020
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REALOGY HOLDINGS CORP. AND REALOGY GROUP LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)

| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Revenues |  |  |  |  |  |  |
Gross commission income | $ | 1,458 |  |  | $ | 1,201 |  |  | $ | 3,227 |  |  | $ | 3,310 |
Service revenue | 230 |  |  | 191 |  |  | 553 |  |  | 503 |
Franchise fees | 133 |  |  | 108 |  |  | 289 |  |  | 290 |
Other | 36 |  |  | 50 |  |  | 111 |  |  | 165 |
Net revenues | 1,857 |  |  | 1,550 |  |  | 4,180 |  |  | 4,268 |
Expenses |  |  |  |  |  |  |
Commission and other agent-related costs | 1,105 |  |  | 875 |  |  | 2,420 |  |  | 2,405 |
Operating | 342 |  |  | 343 |  |  | 953 |  |  | 1,016 |
Marketing | 56 |  |  | 63 |  |  | 155 |  |  | 200 |
General and administrative | 97 |  |  | 69 |  |  | 230 |  |  | 217 |
Former parent legacy cost, net | 1 |  |  | 1 |  |  | 1 |  |  | 1 |
Restructuring costs, net | 13 |  |  | 11 |  |  | 38 |  |  | 29 |
Impairments | 6 |  |  | 240 |  |  | 460 |  |  | 243 |
Depreciation and amortization | 43 |  |  | 42 |  |  | 134 |  |  | 126 |
Interest expense, net | 48 |  |  | 66 |  |  | 208 |  |  | 209 |
(Gain) loss on the early extinguishment of debt | — |  |  | (10) |  |  | 8 |  |  | (5) |
Total expenses | 1,711 |  |  | 1,700 |  |  | 4,607 |  |  | 4,441 |
Income (loss) from continuing operations before income taxes, equity in earnings and noncontrolling interests | 146 |  |  | (150) |  |  | (427) |  |  | (173) |
Income tax expense (benefit) from continuing operations | 54 |  |  | (23) |  |  | (67) |  |  | (22) |
Equity in earnings of unconsolidated entities | (53) |  |  | (7) |  |  | (98) |  |  | (15) |
Net income (loss) from continuing operations | 145 |  |  | (120) |  |  | (262) |  |  | (136) |
(Loss) income from discontinued operations, net of tax | (3) |  |  | 8 |  |  | (17) |  |  | (5) |
Estimated loss on the sale of discontinued operations, net of tax | (43) |  |  | — |  |  | (97) |  |  | — |
Net (loss) income from discontinued operations | (46) |  |  | 8 |  |  | (114) |  |  | (5) |
Net income (loss) | 99 |  |  | (112) |  |  | (376) |  |  | (141) |
Less: Net income attributable to noncontrolling interests | (1) |  |  | (1) |  |  | (2) |  |  | (2) |
Net income (loss) attributable to Realogy Holdings and Realogy Group | $ | 98 |  |  | $ | (113) |  |  | $ | (378) |  |  | $ | (143) |
Basic earnings (loss) per share attributable to Realogy Holdings shareholders:
Basic earnings (loss) per share from continuing operations | $ | 1.25 |  |  | $ | (1.06) |  |  | $ | (2.29) |  |  | $ | (1.21) |
Basic (loss) earnings per share from discontinued operations | (0.40) |  |  | 0.07 |  |  | (0.99) |  |  | (0.04) |
Basic earnings (loss) per share | $ | 0.85 |  |  | $ | (0.99) |  |  | $ | (3.28) |  |  | $ | (1.25) |
Diluted earnings (loss) per share attributable to Realogy Holdings shareholders:
Diluted earnings (loss) per share from continuing operations | $ | 1.23 |  |  | $ | (1.06) |  |  | $ | (2.29) |  |  | $ | (1.21) |
Diluted (loss) earnings per share from discontinued operations | (0.39) |  |  | 0.07 |  |  | (0.99) |  |  | (0.04) |
Diluted earnings (loss) per share | $ | 0.84 |  |  | $ | (0.99) |  |  | $ | (3.28) |  |  | $ | (1.25) |
Weighted average common and common equivalent shares of Realogy Holdings outstanding:
Basic | 115.4 |  |  | 114.3 |  |  | 115.2 |  |  | 114.2 |
Diluted | 116.7 |  |  | 114.3 |  |  | 115.2 |  |  | 114.2 |

See Notes to Condensed Consolidated Financial Statements.
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REALOGY HOLDINGS CORP. AND REALOGY GROUP LLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
(Unaudited)

| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Net income (loss) | $ | 99 |  |  | $ | (112) |  |  | $ | (376) |  |  | $ | (141) |
Currency translation adjustment | — |  |  | (1) |  |  | (1) |  |  | (1) |
Defined benefit pension plan—amortization of actuarial loss to periodic pension cost | 1 |  |  | 1 |  |  | 2 |  |  | 2 |
Other comprehensive income, before tax | 1 |  |  | — |  |  | 1 |  |  | 1 |
Income tax expense related to items of other comprehensive income amounts | — |  |  | 1 |  |  | — |  |  | 1 |
Other comprehensive income (loss), net of tax | 1 |  |  | (1) |  |  | 1 |  |  | — |
Comprehensive income (loss) | 100 |  |  | (113) |  |  | (375) |  |  | (141) |
Less: comprehensive income attributable to noncontrolling interests | (1) |  |  | (1) |  |  | (2) |  |  | (2) |
Comprehensive income (loss) attributable to Realogy Holdings and Realogy Group | $ | 99 |  |  | $ | (114) |  |  | $ | (377) |  |  | $ | (143) |

See Notes to Condensed Consolidated Financial Statements.
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REALOGY HOLDINGS CORP. AND REALOGY GROUP LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)

| September 30, 2020 |  | December 31, 2019
ASSETS |  |  |
Current assets: |  |  |
Cash, cash equivalents and restricted cash | $ | 380 |  |  | $ | 235 |
Trade receivables (net of allowance for doubtful accounts of $13 and $11) | 109 |  |  | 79 |
Other current assets | 149 |  |  | 147 |
Current assets - held for sale | 583 |  |  | 750 |
Total current assets | 1,221 |  |  | 1,211 |
Property and equipment, net | 288 |  |  | 308 |
Operating lease assets, net | 477 |  |  | 515 |
Goodwill | 2,887 |  |  | 3,300 |
Trademarks | 643 |  |  | 673 |
Franchise agreements, net | 1,109 |  |  | 1,160 |
Other intangibles, net | 69 |  |  | 72 |
Other non-current assets | 354 |  |  | 304 |
Total assets | $ | 7,048 |  |  | $ | 7,543 |
LIABILITIES AND EQUITY |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 87 |  |  | $ | 84 |
Current portion of long-term debt | 198 |  |  | 234 |
Current portion of operating lease liabilities | 125 |  |  | 122 |
Accrued expenses and other current liabilities | 439 |  |  | 350 |
Current liabilities - held for sale | 297 |  |  | 356 |
Total current liabilities | 1,146 |  |  | 1,146 |
Long-term debt | 3,159 |  |  | 3,211 |
Long-term operating lease liabilities | 441 |  |  | 467 |
Deferred income taxes | 279 |  |  | 390 |
Other non-current liabilities | 290 |  |  | 233 |
Total liabilities | 5,315 |  |  | 5,447 |
Commitments and contingencies (Note 9) |  |  |
Equity: |  |  |
Realogy Holdings preferred stock: $0.01 par value; 50,000,000 shares authorized, none issued and outstanding at September 30, 2020 and December 31, 2019 | — |  |  | — |
Realogy Holdings common stock: $0.01 par value; 400,000,000 shares authorized, 115,440,569 shares issued and outstanding at September 30, 2020 and 114,355,519 shares issued and outstanding at December 31, 2019 | 1 |  |  | 1 |
Additional paid-in capital | 4,856 |  |  | 4,842 |
Accumulated deficit | (3,073) |  |  | (2,695) |
Accumulated other comprehensive loss | (55) |  |  | (56) |
Total stockholders' equity | 1,729 |  |  | 2,092 |
Noncontrolling interests | 4 |  |  | 4 |
Total equity | 1,733 |  |  | 2,096 |
Total liabilities and equity | $ | 7,048 |  |  | $ | 7,543 |

See Notes to Condensed Consolidated Financial Statements.
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REALOGY HOLDINGS CORP. AND REALOGY GROUP LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

| Nine Months Ended September 30,
| 2020 |  | 2019
Operating Activities |  |  |
Net loss | $ | (376) |  |  | $ | (141) |
Net loss from discontinued operations | 114 |  |  | 5 |
Net loss from continuing operations | (262) |  |  | (136) |
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities: |  |
Depreciation and amortization | 134 |  |  | 126 |
Deferred income taxes | (70) |  |  | (29) |
Impairments | 460 |  |  | 243 |
Amortization of deferred financing costs and debt discount | 8 |  |  | 7 |
Loss (gain) on the early extinguishment of debt | 8 |  |  | (5) |
Equity in earnings of unconsolidated entities | (98) |  |  | (15) |
Stock-based compensation | 18 |  |  | 22 |
Mark-to-market adjustments on derivatives | 59 |  |  | 50 |
Other adjustments to net loss | — |  |  | (3) |
Net change in assets and liabilities, excluding the impact of acquisitions and dispositions: |  |  |
Trade receivables | (30) |  |  | (17) |
Other assets | 13 |  |  | (6) |
Accounts payable, accrued expenses and other liabilities | 115 |  |  | 14 |
Dividends received from unconsolidated entities | 59 |  |  | 2 |
Other, net | (16) |  |  | (3) |
Net cash provided by operating activities from continuing operations | 398 |  |  | 250 |
Net cash provided by (used in) operating activities from discontinued operations | 20 |  |  | (20) |
Net cash provided by operating activities | 418 |  |  | 230 |
Investing Activities |  |  |
Property and equipment additions | (60) |  |  | (71) |
Payments for acquisitions, net of cash acquired | (1) |  |  | (1) |
Investment in unconsolidated entities | (2) |  |  | (10) |
Other, net | (12) |  |  | 3 |
Net cash used in investing activities from continuing operations | (75) |  |  | (79) |
Net cash used in investing activities from discontinued operations | (9) |  |  | (7) |
Net cash used in investing activities | $ | (84) |  |  | $ | (86) |

See Notes to Condensed Consolidated Financial Statements.
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| Nine Months Ended September 30,
| 2020 |  | 2019
Financing Activities |  |  |
Net change in Revolving Credit Facility | $ | (50) |  |  | $ | (5) |
Proceeds from issuance of Senior Secured Second Lien Notes | 550 |  |  | — |
Proceeds from issuance of Senior Notes | — |  |  | 550 |
Redemption and repurchases of Senior Notes | (550) |  |  | (533) |
Amortization payments on term loan facilities | (31) |  |  | (22) |
Debt issuance costs | (14) |  |  | (9) |
Cash paid for fees associated with early extinguishment of debt | (7) |  |  | (5) |
Repurchase of common stock | — |  |  | (20) |
Dividends paid on common stock | — |  |  | (31) |
Taxes paid related to net share settlement for stock-based compensation | (5) |  |  | (6) |
Payments of contingent consideration related to acquisitions | (1) |  |  | (3) |
Other, net | (22) |  |  | (18) |
Net cash used in financing activities from continuing operations | (130) |  |  | (102) |
Net cash used in financing activities from discontinued operations | (73) |  |  | (2) |
Net cash used in financing activities | (203) |  |  | (104) |
Effect of changes in exchange rates on cash, cash equivalents and restricted cash | — |  |  | — |
Net increase in cash, cash equivalents and restricted cash | 131 |  |  | 40 |
Cash, cash equivalents and restricted cash, beginning of period | 266 |  |  | 238 |
Cash, cash equivalents and restricted cash, end of period | 397 |  |  | 278 |
Less cash, cash equivalents and restricted cash of discontinued operations, end of period | 17 |  |  | 25 |
Cash, cash equivalents and restricted cash of continuing operations, end of period | $ | 380 |  |  | $ | 253 |
Supplemental Disclosure of Cash Flow Information |  |  |
Interest payments for continuing operations | $ | 128 |  |  | $ | 124 |
Income tax (refunds) payments for continuing operations, net | (9) |  |  | 7 |

See Notes to Condensed Consolidated Financial Statements.
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REALOGY HOLDINGS CORP. AND REALOGY GROUP LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unless otherwise noted, all amounts are in millions)
(Unaudited)
1. BASIS OF PRESENTATION
Realogy Holdings Corp. ("Realogy Holdings", "Realogy" or the "Company") is a holding company for its consolidated subsidiaries including Realogy Intermediate Holdings LLC ("Realogy Intermediate") and Realogy Group LLC ("Realogy Group") and its consolidated subsidiaries. Realogy, through its subsidiaries, is a global provider of residential real estate services. Neither Realogy Holdings, the indirect parent of Realogy Group, nor Realogy Intermediate, the direct parent company of Realogy Group, conducts any operations other than with respect to its respective direct or indirect ownership of Realogy Group. As a result, the consolidated financial positions, results of operations, comprehensive income and cash flows of Realogy Holdings, Realogy Intermediate and Realogy Group are the same.
The accompanying Condensed Consolidated Financial Statements include the financial statements of Realogy Holdings and Realogy Group. Realogy Holdings' only asset is its investment in the common stock of Realogy Intermediate, and Realogy Intermediate's only asset is its investment in Realogy Group. Realogy Holdings' only obligations are its guarantees of certain borrowings and certain franchise obligations of Realogy Group. All expenses incurred by Realogy Holdings and Realogy Intermediate are for the benefit of Realogy Group and have been reflected in Realogy Group's Condensed Consolidated Financial Statements.
The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America and with Article 10 of Regulation S-X. Interim results may not be indicative of full year performance because of seasonal and short-term variations. The Company has eliminated all material intercompany transactions and balances between entities consolidated in these financial statements. In presenting the Condensed Consolidated Financial Statements, management makes estimates and assumptions that affect the amounts reported and the related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ materially from those estimates.
In management's opinion, the accompanying unaudited Condensed Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair statement of Realogy Holdings and Realogy Group's financial position as of September 30, 2020 and the results of operations and comprehensive income (loss) for the three and nine months ended September 30, 2020 and 2019 and cash flows for the nine months ended September 30, 2020 and 2019. The Consolidated Balance Sheet at December 31, 2019 was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2019.
COVID-19
A strong recovery in the residential real estate market began late in the second quarter of 2020, following a period of sharp decline in homesale transactions starting in the final weeks of the first quarter of 2020. The Company attributes the recovery to date to a favorable mortgage rate environment, low inventory contributing to higher average homesale price, and increased demand as the quarantine restrictions in place in many states have begun to be relaxed. In addition, the Company observed growing strength in certain trends that it believes are largely driven by behavioral changes related to the COVID-19 crisis, including home buyer preferences for certain geographies, including suburban locations and attractive tax and weather destinations and second home purchases.
In mid-March 2020, the Company began taking a series of proactive cost-saving measures in reaction to the evolving COVID-19 crisis, including salary reductions, furloughs and reductions in marketing and other spending which resulted in substantial cost-savings in the second quarter of 2020 to partially offset the decline in revenues. While these temporary cost-saving measures resulted in cost savings in the second and third quarters of 2020, almost all of such measures were reversed during the third quarter of 2020 based upon the significant improvement in the volume of homesale transactions and ongoing business needs.
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There remain significant uncertainties regarding the COVID-19 crisis, including the severity, duration and extent of the pandemic. The Company's business could be negatively impacted if the crisis, including adverse economic consequences of the crisis, worsen, if directives and mandates requiring businesses to again curtail or cease normal operations are reinstated, if mortgage rates rise, or if housing inventory constraints, across geographies and price point, limit homesale transaction growth. These negative impacts may be more pronounced in future periods and could have a material adverse effect on the Company's results of operations and liquidity.
See Note 3, "Goodwill and Intangible Assets", to the Condensed Consolidated Financial Statements for additional information on goodwill and intangible asset impairment charges recorded in the first quarter of 2020 due to the impact on future earnings related to the COVID-19 pandemic which qualified as a triggering event for all of the Company's reporting units as of March 31, 2020, and Note 5, "Short and Long-Term Debt", to the Condensed Consolidated Financial Statements for additional information on the Company's amendments to the Senior Secured Credit Agreement and Term Loan A Agreement, pursuant to which the senior secured leverage ratio has been eased and certain other covenants have been tightened.
Fair Value Measurements
The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.

Level Input: |  | Input Definitions:
Level I |  | Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level II |  | Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
Level III |  | Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The availability of observable inputs can vary from asset to asset and is affected by a wide variety of factors, including, for example, the type of asset, whether the asset is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level III. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The fair value of financial instruments is generally determined by reference to quoted market values. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques, as appropriate. The fair value of interest rate swaps is determined based upon a discounted cash flow approach.
The Company measures financial instruments at fair value on a recurring basis and recognizes transfers within the fair value hierarchy at the end of the fiscal quarter in which the change in circumstances that caused the transfer occurred.
The following table summarizes fair value measurements by level at September 30, 2020 for assets and liabilities measured at fair value on a recurring basis:

| Level I |  | Level II |  | Level III |  | Total
Deferred compensation plan assets (included in other non-current assets) | $ | 1 |  |  | $ | — |  |  | $ | — |  |  | $ | 1 |
Interest rate swaps (included in other non-current liabilities) | — |  |  | 94 |  |  | — |  |  | 94 |
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and other non-current liabilities) | — |  |  | — |  |  | 4 |  |  | 4 |

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The following table summarizes fair value measurements by level at December 31, 2019 for assets and liabilities measured at fair value on a recurring basis:

| Level I |  | Level II |  | Level III |  | Total
Deferred compensation plan assets (included in other non-current assets) | $ | 2 |  |  | $ | — |  |  | $ | — |  |  | $ | 2 |
Interest rate swaps (included in other current and non-current liabilities) | — |  |  | 47 |  |  | — |  |  | 47 |
Contingent consideration for acquisitions (included in accrued expenses and other current liabilities and other non-current liabilities) | — |  |  | — |  |  | 4 |  |  | 4 |

The fair value of the Company’s contingent consideration for acquisitions is measured using a probability weighted-average discount rate to estimate future cash flows based upon the likelihood of achieving future operating results for individual acquisitions. These assumptions are deemed to be unobservable inputs and as such the Company’s contingent consideration is classified within Level III of the valuation hierarchy. The Company reassesses the fair value of the contingent consideration liabilities on a quarterly basis.
The following table presents changes in Level III financial liabilities measured at fair value on a recurring basis:

|  | Level III
Fair value of contingent consideration at December 31, 2019 |  | $ | 4 |
Additions: contingent consideration related to acquisitions completed during the period |  | 1 |
Reductions: payments of contingent consideration |  | (1) |
Changes in fair value (reflected in general and administrative expenses) |  | — |
Fair value of contingent consideration at September 30, 2020 |  | $ | 4 |

The following table summarizes the principal amount of the Company’s indebtedness compared to the estimated fair value, primarily determined by quoted market values, at:

| September 30, 2020 |  | December 31, 2019
Debt | Principal Amount |  | Estimated Fair Value (a) |  | Principal Amount |  | Estimated Fair Value (a)
Senior Secured Credit Facility: |  |  |  |  |  |  |
Revolving Credit Facility | $ | 140 |  |  | $ | 140 |  |  | $ | 190 |  |  | $ | 190 |
Term Loan B | 1,050 |  |  | 1,003 |  |  | 1,058 |  |  | 1,048 |
Term Loan A Facility: |  |  |  |  |  |  |
Term Loan A | 694 |  |  | 664 |  |  | 717 |  |  | 705 |
7.625% Senior Secured Second Lien Notes | 550 |  |  | 578 |  |  | — |  |  | — |
5.25% Senior Notes | — |  |  | — |  |  | 550 |  |  | 557 |
4.875% Senior Notes | 407 |  |  | 403 |  |  | 407 |  |  | 401 |
9.375% Senior Notes | 550 |  |  | 570 |  |  | 550 |  |  | 572 |

_______________
(a)The fair value of the Company's indebtedness is categorized as Level II.
Equity Method Investments
At September 30, 2020 and December 31, 2019, the Company had various equity method investments which are recorded within other non-current assets on the accompanying Condensed Consolidated Balance Sheets.
The Company's investment in Guaranteed Rate Affinity, LLC ("Guaranteed Rate Affinity") at Realogy Title Group had investment balances of $99 million and $60 million at September 30, 2020 and December 31, 2019, respectively. The Company recorded equity earnings of $51 million and $5 million related to its investment in Guaranteed Rate Affinity during the three months ended September 30, 2020 and 2019, respectively. The Company recorded equity earnings of $95 million and $12 million related to its investment in Guaranteed Rate Affinity during the nine months ended September 30, 2020 and 2019, respectively. The Company received $56 million in cash dividends from Guaranteed Rate Affinity during the nine months ended September 30, 2020 and no cash dividends during the nine months ended September 30, 2019. The Company invested $2 million of cash into Guaranteed Rate Affinity during the nine months ended September 30, 2019.
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The Company's other equity method investments at Realogy Title Group had investment balances totaling $9 million at both September 30, 2020 and December 31, 2019. The Company recorded equity earnings from the operations of these equity method investments of $2 million during both the three months ended September 30, 2020 and 2019. The Company recorded equity earnings from the operations of these equity method investments of $3 million during both the nine months ended September 30, 2020 and 2019. The Company received $3 million and $2 million in cash dividends from these equity method investments during the nine months ended September 30, 2020 and 2019, respectively.
Income Taxes
The provision for income taxes was an expense of $54 million and a benefit of $23 million for the three months ended September 30, 2020 and 2019, respectively, and a benefit of $67 million and $22 million for the nine months ended September 30, 2020 and 2019, respectively.
Derivative Instruments
The Company records derivatives and hedging activities on the balance sheet at their respective fair values. The Company enters into interest rate swaps to manage its exposure to changes in interest rates associated with its variable rate borrowings. Interest rates swaps with a notional value of $600 million expired on August 7, 2020. As of September 30, 2020, the Company had interest rate swaps with an aggregate notional value of $1,000 million to offset the variability in cash flows resulting from the term loan facilities as follows:

Notional Value (in millions) |  | Commencement Date |  | Expiration Date |
$450 |  | November 2017 |  | November 2022 |
$400 |  | August 2020 |  | August 2025 |
$150 |  | November 2022 |  | November 2027 |

The swaps help to protect our outstanding variable rate borrowings from future interest rate volatility. The Company has not elected to utilize hedge accounting for these interest rate swaps; therefore, any change in fair value is recorded in the Condensed Consolidated Statements of Operations.
The fair value of derivative instruments was as follows:

Not Designated as Hedging Instruments |  | Balance Sheet Location |  | September 30, 2020 |  | December 31, 2019
Interest rate swap contracts |  | Other current and non-current liabilities |  | 94 |  |  | 47 |

The effect of derivative instruments on earnings was as follows:

Derivative Instruments Not Designated as Hedging Instruments |  | Location of Loss Recognized for Derivative Instruments |  | Loss Recognized on Derivatives
Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Interest rate swap contracts |  | Interest expense |  | $ | — |  |  | $ | 12 |  |  | $ | 59 |  |  | $ | 50 |

Restricted Cash
Restricted cash approximated $1 million at September 30, 2020 and zero at December 31, 2019.
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Revenue
Revenue is recognized upon the transfer of control of promised services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services in accordance with the revenue standard. The Company's revenue is disaggregated by major revenue categories on our Condensed Consolidated Statements of Operations and further disaggregated by business segment as follows:

| Three Months Ended September 30,
| Realogy Franchise Group |  | Realogy Brokerage Group |  | Realogy Title Group |  | Corporate and Other |  | Total Company
| 2020 |  | 2019 |  | 2020 |  | 2019 |  | 2020 |  | 2019 |  | 2020 |  | 2019 |  | 2020 |  | 2019
Gross commission income (a) | $ | — |  |  | $ | — |  |  | $ | 1,458 |  |  | $ | 1,201 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,458 |  |  | $ | 1,201 |
Service revenue (b) | 14 |  |  | 24 |  |  | 9 |  |  | 2 |  |  | 207 |  |  | 165 |  |  | — |  |  | — |  |  | 230 |  |  | 191 |
Franchise fees (c) | 227 |  |  | 186 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (94) |  |  | (78) |  |  | 133 |  |  | 108 |
Other (d) | 21 |  |  | 30 |  |  | 12 |  |  | 19 |  |  | 6 |  |  | 5 |  |  | (3) |  |  | (4) |  |  | 36 |  |  | 50 |
Net revenues | $ | 262 |  |  | $ | 240 |  |  | $ | 1,479 |  |  | $ | 1,222 |  |  | $ | 213 |  |  | $ | 170 |  |  | $ | (97) |  |  | $ | (82) |  |  | $ | 1,857 |  |  | $ | 1,550 |

| Nine Months Ended September 30,
| Realogy Franchise Group |  | Realogy Brokerage Group |  | Realogy Title Group |  | Corporate and Other |  | Total Company
| 2020 |  | 2019 |  | 2020 |  | 2019 |  | 2020 |  | 2019 |  | 2020 |  | 2019 |  | 2020 |  | 2019
Gross commission income (a) | $ | — |  |  | $ | — |  |  | $ | 3,227 |  |  | $ | 3,310 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 3,227 |  |  | $ | 3,310 |
Service revenue (b) | 41 |  |  | 66 |  |  | 18 |  |  | 7 |  |  | 494 |  |  | 430 |  |  | — |  |  | — |  |  | 553 |  |  | 503 |
Franchise fees (c) | 502 |  |  | 505 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (213) |  |  | (215) |  |  | 289 |  |  | 290 |
Other (d) | 66 |  |  | 108 |  |  | 36 |  |  | 52 |  |  | 16 |  |  | 14 |  |  | (7) |  |  | (9) |  |  | 111 |  |  | 165 |
Net revenues | $ | 609 |  |  | $ | 679 |  |  | $ | 3,281 |  |  | $ | 3,369 |  |  | $ | 510 |  |  | $ | 444 |  |  | $ | (220) |  |  | $ | (224) |  |  | $ | 4,180 |  |  | $ | 4,268 |

______________
(a)Consists primarily of revenues related to gross commission income at Realogy Brokerage Group, which is recognized at a point in time at the closing of a homesale transaction.
(b)Service revenue primarily consists of title and escrow fees at Realogy Title Group, which are recognized at a point in time at the closing of a homesale transaction.
(c)Franchise fees at Realogy Franchise Group primarily include domestic royalties which are recognized at a point in time when the underlying franchisee revenue is earned (upon close of the homesale transaction).
(d)Other revenue is comprised of brand marketing funds received at Realogy Franchise Group from franchisees, third-party listing fees in 2019 and other miscellaneous revenues across all of the business segments.
The following table shows the change in the Company's contract liabilities (deferred revenue) related to revenue contracts by reportable segment for the period:

| Beginning Balance at January 1, 2020 |  | Additions during the period |  | Recognized as Revenue during the period |  | Ending Balance at September 30, 2020
Realogy Franchise Group: |  |  |  |  |  |  |
Deferred area development fees (a) | $ | 48 |  |  | $ | — |  |  | $ | (5) |  |  | $ | 43 |
Deferred brand marketing fund fees (b) | 13 |  |  | 45 |  |  | (50) |  |  | 8 |
Other deferred income related to revenue contracts | 11 |  |  | 19 |  |  | (21) |  |  | 9 |
Total Realogy Franchise Group | 72 |  |  | 64 |  |  | (76) |  |  | 60 |
Realogy Brokerage Group: |  |  |  |  |  |  |
Advanced commissions related to development business (c) | 9 |  |  | 6 |  |  | (6) |  |  | 9 |
Other deferred income related to revenue contracts | 4 |  |  | 1 |  |  | (2) |  |  | 3 |
Total Realogy Brokerage Group | 13 |  |  | 7 |  |  | (8) |  |  | 12 |
Total | $ | 85 |  |  | $ | 71 |  |  | $ | (84) |  |  | $ | 72 |

_______________
(a)The Company collects initial area development fees ("ADF") for international territory transactions, which are recorded as deferred revenue when received and recognized into franchise revenue over the average 25 year life of the related franchise agreement as consideration for the right to access and benefit from Realogy’s brands. In the event an ADF agreement is terminated prior to the end of its term, the unamortized deferred revenue balance will be recognized into revenue immediately upon termination.
(b)Revenues recognized include intercompany marketing fees paid by Realogy Brokerage Group.
(c)New development closings generally have a development period of between 18 and 24 months from contracted date to closing.
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Allowance for Doubtful Accounts
The Company estimates the allowance necessary to provide for uncollectible accounts receivable. The estimate is based on historical experience, combined with a review of current conditions and forecasts of future losses, and includes specific accounts for which payment has become unlikely. The process by which the Company calculates the allowance begins in the individual business units where specific problem accounts are identified and reserved primarily based upon the age profile of the receivables and specific payment issues, combined with reasonable and supportable forecasts of future losses.
Supplemental Cash Flow Information
Significant non-cash transactions during the nine months ended September 30, 2020 and 2019 included finance lease additions of $9 million and $12 million, respectively, which resulted in non-cash additions to property and equipment, net and other non-current liabilities.
Leases
Other than the Company's facility closures as described in Note 6, "Restructuring Costs," the Company's lease obligations as of September 30, 2020 have not changed materially from the amounts reported in our 2019 Form 10-K.
Recently Adopted Accounting Pronouncements
The Company adopted the new accounting standard on Financial Instruments—Credit Losses (Topic 326) effective January 1, 2020. The new standard amends the guidance for measuring credit losses on certain financial instruments and financial assets, including trade receivables. The standard requires that companies recognize an allowance that reflects the current estimate of credit losses expected to be incurred over the life of the financial instrument. The valuation allowance for credit losses should be recognized and measured based on historical experience, current conditions and expectations of the future. The initial adoption of this guidance did not have an impact to the Company’s Condensed Consolidated Financial Statements upon adoption on January 1, 2020.
Recently Issued Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs"). Recently issued standards were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations.
The FASB issued its new standard on Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity which simplifies the accounting for instruments with characteristics of liabilities and equity, including convertible debt. The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock resulting in fewer embedded conversion features being separately recognized from the host contract and the interest rate of more convertible debt instruments being closer to the coupon interest rate, as compared with current guidance. The new standard also amends the derivative guidance for the “own stock” scope exception, which exempts qualifying instruments from being accounted for as derivatives if certain criteria are met. In addition, the standard changes the diluted earnings per share calculation for instruments that may be settled in cash or shares and for convertible instruments. The new standard is effective for reporting periods beginning on or after December 15, 2021 with early adoption permitted as of January 1, 2021. The new standard requires adoption using either a full or modified retrospective approach and is not expected to have an impact on the Company's financial statements.
2. DISCONTINUED OPERATIONS
On November 6, 2019, the Company entered into a Purchase and Sale Agreement for the acquisition of Cartus Relocation Services, the Company's global employee relocation business, by North American Van Lines, Inc. (as assignee of SIRVA Worldwide, Inc., or "SIRVA"). On August 8, 2020, the Company entered into a confidential settlement agreement with SIRVA and affiliates of Madison Dearborn Partners, LLC to mutually dismiss and release all claims related to the termination of the Purchase and Sale Agreement. Management conducted an assessment under held for sale and discontinued operations guidance in ASC 360 and ASC 205 and determined that as of September 30, 2020 held for sale and discontinued operations accounting treatment continues to be appropriate for Cartus Relocation Services.
Commencing in the fourth quarter of 2019, the Company met the requirements to report the operating results of the Cartus Relocation Services business as discontinued operations. Accordingly, the income (loss) related to Cartus Relocation Services is reported in "Net (loss) income from discontinued operations" on the Condensed Consolidated Statements of
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Operations for all periods presented. In addition, the related assets and liabilities are reported as assets and liabilities held for sale on the Condensed Consolidated Balance Sheets. The cash flows related to discontinued operations have been segregated and are included in the Condensed Consolidated Statements of Cash Flows.
The following table summarizes the operating results of discontinued operations described above and reflected within "Net (loss) income from discontinued operations" in the Company’s Condensed Consolidated Statements of Operations for each of the periods presented:

|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2020 |  | 2019 |  | 2020 |  | 2019
Net revenues |  | $ | 52 |  |  | $ | 79 |  |  | $ | 152 |  |  | $ | 210 |
Total expenses |  | 57 |  |  | 69 |  |  | 176 |  |  | 216 |
(Loss) income from discontinued operations |  | (5) |  |  | 10 |  |  | (24) |  |  | (6) |
Estimated loss on the sale of discontinued operations (a) |  | (59) |  |  | — |  |  | (133) |  |  | — |
Income tax (benefit) expense from discontinued operations |  | (18) |  |  | 2 |  |  | (43) |  |  | (1) |
Net (loss) income from discontinued operations |  | $ | (46) |  |  | $ | 8 |  |  | $ | (114) |  |  | $ | (5) |

_______________
(a)Adjustment to record assets and liabilities held for sale at the lower of carrying value or fair value less any costs to sell based on a market price that is reasonable in relation to fair value.
Assets and liabilities held for sale related to discontinued operations presented in the Condensed Consolidated Balance Sheets at September 30, 2020 and December 31, 2019 are as follows:

| September 30, 2020 |  | December 31, 2019
Carrying amounts of the major classes of assets held for sale |  |  |
Cash and cash equivalents | $ | 13 |  |  | $ | 28 |
Restricted cash | 4 |  |  | 3 |
Trade receivables | 40 |  |  | 46 |
Relocation receivables | 200 |  |  | 203 |
Other current assets | 10 |  |  | 12 |
Property and equipment, net | 42 |  |  | 36 |
Operating lease assets, net | 21 |  |  | 36 |
Goodwill | 176 |  |  | 176 |
Trademarks | 76 |  |  | 76 |
Other intangibles, net | 156 |  |  | 156 |
Allowance for reduction of assets held for sale (a) | (155) |  |  | (22) |
Total assets classified as held for sale | $ | 583 |  |  | $ | 750 |
Carrying amounts of the major classes of liabilities held for sale |  |  |
Accounts payable | $ | 45 |  |  | $ | 53 |
Securitization obligations | 143 |  |  | 206 |
Current portion of operating lease liabilities | 6 |  |  | 6 |
Accrued expenses and other current liabilities | 78 |  |  | 62 |
Long-term operating lease liabilities | 25 |  |  | 29 |
Total liabilities classified as held for sale | $ | 297 |  |  | $ | 356 |

_______________
(a)Adjustment to record assets and liabilities held for sale at the lower of carrying value or fair value less any costs to sell based on a market price that is reasonable in relation to fair value.
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Securitization Obligations
Securitization Obligations in the table above are further broken out as follows:

| September 30, 2020 |  | December 31, 2019
Securitization Obligations: |  |  |
Apple Ridge Funding LLC | $ | 137 |  |  | $ | 195 |
Cartus Financing Limited | 6 |  |  | 11 |
Total Securitization Obligations | $ | 143 |  |  | $ | 206 |

Realogy Group has secured obligations through Apple Ridge Funding LLC under a securitization program. In June 2020, Realogy Group reduced the maximum borrowing capacity under the Apple Ridge Funding LLC securitization program from $250 million to $200 million and, in August 2020, extended the facility to June 2021. As of September 30, 2020, the Company had $200 million of borrowing capacity under the Apple Ridge Funding LLC securitization program with $137 million being utilized leaving $63 million of available capacity subject to maintaining sufficient relocation related assets to collateralize the securitization obligation.
Realogy Group, through a special purpose entity known as Cartus Financing Limited, has agreements providing for a £10 million revolving loan facility and a £5 million working capital facility. In August 2020, Realogy Group extended the existing Cartus Financing Limited securitization program to August 2021. As of September 30, 2020, there were $6 million of outstanding borrowings under the facilities leaving $13 million of available capacity subject to maintaining sufficient relocation related assets to collateralize the securitization obligation. These Cartus Financing Limited facilities are secured by the relocation assets of a U.K. government contract in this special purpose entity and are therefore classified as permitted securitization financings as defined in Realogy Group’s Senior Secured Credit Agreement and the indentures governing the Unsecured Notes and 7.625% Senior Secured Second Lien Notes.
The Apple Ridge entities and the Cartus Financing Limited entity are consolidated special purpose entities that are utilized to securitize relocation receivables and related assets. These assets are generated from advancing funds on behalf of clients of Realogy Group’s relocation business in order to facilitate the relocation of their employees. Assets of these special purpose entities are not available to pay Realogy Group’s general obligations. Under the Apple Ridge program, provided no termination or amortization event has occurred, any new receivables generated under the designated relocation management agreements are sold into the securitization program and as new eligible relocation management agreements are entered into, the new agreements are designated to the program.
The Apple Ridge program has restrictive covenants and trigger events, including performance triggers linked to the age and quality of the underlying assets, foreign obligor limits, multicurrency limits, financial reporting requirements, restrictions on mergers and change of control, any uncured breach of Realogy Group’s senior secured leverage ratio under Realogy Group’s Senior Secured Credit Facility, and cross-defaults to Realogy Group’s material indebtedness. The occurrence of a trigger event under the Apple Ridge securitization facility could restrict our ability to access new or existing funding under this facility or result in termination of the facility, either of which would adversely affect the operation of Cartus Relocation Services and the Company.
Certain of the funds that Realogy Group received from relocation receivables and related assets are required to be utilized to repay securitization obligations. These obligations are collateralized by $193 million and $200 million of underlying relocation receivables and other related relocation assets at September 30, 2020 and December 31, 2019, respectively. Substantially all relocation related assets are realized in less than twelve months from the transaction date.
Interest incurred in connection with borrowings under these facilities amounted to $1 million and $2 million for the three months ended September 30, 2020 and 2019, respectively, and $4 million and $6 million for the nine months ended September 30, 2020 and 2019, respectively. These securitization obligations represent floating rate debt for which the average weighted interest rate was 3.6% and 4.3% for the nine months ended September 30, 2020 and 2019, respectively.
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3. GOODWILL AND INTANGIBLE ASSETS
Impairment of Goodwill and Other Indefinite-lived Intangible Assets
Goodwill represents the excess of acquisition costs over the fair value of the net tangible assets and identifiable intangible assets acquired in a business combination. Other indefinite-lived intangible assets primarily consist of trademarks acquired in business combinations. Goodwill and other indefinite-lived assets are not amortized, but are subject to impairment testing. The aggregate carrying values of our goodwill and other indefinite-lived intangible assets are subject to an impairment assessment annually as of October 1, or whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. This assessment compares carrying values of the goodwill reporting units and other indefinite lived intangible assets to their respective fair values and, when appropriate, the carrying value is reduced to fair value.
In testing goodwill, the fair value of each reporting unit is estimated using the income approach, a discounted cash flow approach. For the other indefinite lived intangible assets, fair value is estimated using the relief from royalty method. Management utilizes long-term cash flow forecasts and the Company's annual operating plans adjusted for terminal value assumptions. The fair value of the Company's reporting units and other indefinite lived intangible assets are determined utilizing the best estimate of future revenues, operating expenses including commission expense, market and general economic conditions, trends in the industry, as well as assumptions that management believes marketplace participants would utilize including discount rates, cost of capital, trademark royalty rates, and long-term growth rates. The trademark royalty rate was determined by reviewing similar trademark agreements with third parties. Although management believes that assumptions are reasonable, actual results may vary significantly.
During the first quarter of 2020, the Company determined that the impact on future earnings related to the COVID-19 pandemic qualified as a triggering event for all of our reporting units and accordingly, the Company performed an impairment assessment of goodwill and other indefinite-lived intangible assets as of March 31, 2020. This assessment resulted in the recognition of an impairment of Realogy Franchise Group trademarks of $30 million and a goodwill impairment of $413 million for Realogy Brokerage Group offset by an income tax benefit of $99 million resulting in a net reduction to Realogy Brokerage Group's carrying value of $314 million. The primary drivers to the impairments were a significant increase in the weighted average cost of capital due to the volatility in the capital and debt markets due to COVID-19 and the related lower projected financial results for 2020. The impairment charges are recorded on a separate line in the accompanying Condensed Consolidated Statements of Operations and are non-cash in nature.
These impairment assessments involve the use of accounting estimates and assumptions, changes in which could materially impact our financial condition or operating performance if actual results differ from such estimates and assumptions. To address this uncertainty, a sensitivity analysis is performed on key estimates and assumptions. Under the income approach, management used key valuation assumptions in determining the fair value estimates of the Company's reporting units including a discount rate based on the Company's best estimate of the weighted average cost of capital and a long-term growth rate based on the Company's best estimate of terminal growth rates.
As a result of the COVID-19 pandemic which caused volatility in the capital and debt markets, there was a significant increase in the weighted average cost of capital used to discount the future cash flows in the impairment assessment model. The following table provides a comparison of key assumptions used in the Company's impairment assessment performed in the first quarter of 2020 compared to the prior assessment performed in the fourth quarter of 2019:

|  | Weighted Average Cost of Capital |  | Long-term Growth Rates
|  | First Quarter 2020 |  | Fourth Quarter 2019 |  | First Quarter 2020 |  | Fourth Quarter 2019
Realogy Franchise Group |  | 10.0% |  | 8.5% |  | 2.5% |  | 2.5%
Realogy Brokerage Group |  | 11.0% |  | 9.0% |  | 2.0% |  | 2.0%
Realogy Title Group |  | 11.0% |  | 9.5% |  | 2.5% |  | 2.5%

Given the increase in the discount rate and lower projected 2020 financial results in the first quarter 2020 impairment analysis, the estimated excess fair value over carrying value for Realogy Franchise Group and Realogy Title Group was reduced to 7% and 5%, respectively. While management believes the assumptions used in the impairment test are reasonable, a 100 basis point increase in the discount rate, holding other assumptions constant, would result in an impairment of goodwill at Realogy Franchise Group and Realogy Title Group.
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There is a significant amount of future uncertainty related to the impact of the COVID-19 pandemic. In addition, significant negative industry or economic trends, disruptions to the business, unexpected significant changes or planned changes in use of the assets, a decrease in business results, growth rates that fall below management's assumptions, divestitures, and a sustained decline in the Company's stock price and market capitalization may have a negative effect on the fair values and key valuation assumptions, and such changes could result in changes to management's estimates of fair value and a material impairment of goodwill or other indefinite-lived intangible assets.
Goodwill
Goodwill by reporting unit and changes in the carrying amount are as follows:

| Realogy Franchise Group |  | Realogy Brokerage Group |  | Realogy Title Group |  | Total Company
Balance at December 31, 2019 | $ | 2,476 |  |  | $ | 669 |  |  | $ | 155 |  |  | $ | 3,300 |
Goodwill acquired | — |  |  | — |  |  | — |  |  | — |
Impairment loss | — |  |  | (413) |  |  | — |  |  | (413) |
Balance at September 30, 2020 | $ | 2,476 |  |  | $ | 256 |  |  | $ | 155 |  |  | $ | 2,887 |
Accumulated impairment losses (a) | $ | 1,160 |  |  | $ | 808 |  |  | $ | 324 |  |  | $ | 2,292 |

_______________
(a)Includes impairment charges which reduced goodwill by $413 million, $237 million, $1,153 million and $489 million during the first quarter of 2020, third quarter of 2019, fourth quarter of 2008 and fourth quarter of 2007, respectively.
Intangible Assets
Intangible assets are as follows:

| As of September 30, 2020 |  | As of December 31, 2019
| Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Amortizable—Franchise agreements (a) | $ | 2,019 |  |  | $ | 910 |  |  | $ | 1,109 |  |  | $ | 2,019 |  |  | $ | 859 |  |  | $ | 1,160 |
Indefinite life—Trademarks (b) (c) | $ | 643 |  |  |  |  | $ | 643 |  |  | $ | 673 |  |  |  |  | $ | 673 |
Other Intangibles |  |  |  |  |  |  |  |  |  |  |
Amortizable—License agreements (d) | $ | 45 |  |  | $ | 13 |  |  | $ | 32 |  |  | $ | 45 |  |  | $ | 12 |  |  | $ | 33 |
Amortizable—Customer relationships (e) | 71 |  |  | 58 |  |  | 13 |  |  | 71 |  |  | 57 |  |  | 14 |
Indefinite life—Title plant shares (f) | 20 |  |  |  |  | 20 |  |  | 19 |  |  |  |  | 19 |
Amortizable—Other (g) | 23 |  |  | 19 |  |  | 4 |  |  | 27 |  |  | 21 |  |  | 6 |
Total Other Intangibles | $ | 159 |  |  | $ | 90 |  |  | $ | 69 |  |  | $ | 162 |  |  | $ | 90 |  |  | $ | 72 |

_______________
(a)Generally amortized over a period of 30 years.
(b)Primarily related to real estate franchise brands which are expected to generate future cash flows for an indefinite period of time.
(c)Realogy Franchise Group trademarks was impaired by $30 million during the first quarter of 2020.
(d)Relates to the Sotheby’s International Realty® and Better Homes and Gardens® Real Estate agreements which are being amortized over 50 years (the contractual term of the license agreements).
(e)Relates to the customer relationships at Realogy Title Group and Realogy Brokerage Group. These relationships are being amortized over a period of 2 to 12 years.
(f)Ownership in a title plant is required to transact title insurance in certain states. The Company expects to generate future cash flows for an indefinite period of time.
(g)Consists of covenants not to compete which are amortized over their contract lives and other intangibles which are generally amortized over periods ranging from 5 to 10 years.
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Intangible asset amortization expense is as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Franchise agreements | $ | 17 |  |  | $ | 17 |  |  | $ | 51 |  |  | $ | 51 |
License agreements | 1 |  |  | 1 |  |  | 1 |  |  | 1 |
Customer relationships | — |  |  | — |  |  | 1 |  |  | 2 |
Other | 1 |  |  | 2 |  |  | 3 |  |  | 4 |
Total | $ | 19 |  |  | $ | 20 |  |  | $ | 56 |  |  | $ | 58 |

Based on the Company’s amortizable intangible assets as of September 30, 2020, the Company expects related amortization expense for the remainder of 2020, the four succeeding years and thereafter to be approximately $18 million, $72 million, $70 million, $70 million, $70 million and $858 million, respectively.
4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of:

| September 30, 2020 |  | December 31, 2019
Accrued payroll and related employee costs | $ | 146 |  |  | $ | 103 |
Accrued volume incentives | 35 |  |  | 35 |
Accrued commissions | 52 |  |  | 32 |
Restructuring accruals | 12 |  |  | 11 |
Deferred income | 37 |  |  | 43 |
Accrued interest | 46 |  |  | 18 |
Current portion of finance lease liabilities | 13 |  |  | 13 |
Due to former parent | 19 |  |  | 18 |
Other | 79 |  |  | 77 |
Total accrued expenses and other current liabilities | $ | 439 |  |  | $ | 350 |

5. SHORT AND LONG-TERM DEBT
Total indebtedness is as follows:

| September 30, 2020 |  | December 31, 2019
Senior Secured Credit Facility: |  |  |
Revolving Credit Facility | $ | 140 |  |  | $ | 190 |
Term Loan B | 1,039 |  |  | 1,045 |
Term Loan A Facility: |  |  |
Term Loan A | 690 |  |  | 714 |
7.625% Senior Secured Second Lien Notes | 540 |  |  | — |
5.25% Senior Notes | — |  |  | 548 |
4.875% Senior Notes | 405 |  |  | 405 |
9.375% Senior Notes | 543 |  |  | 543 |
Total Short-Term & Long-Term Debt | $ | 3,357 |  |  | $ | 3,445 |

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Indebtedness Table
As of September 30, 2020, the Company’s borrowing arrangements were as follows:

| Interest Rate |  | Expiration Date |  | Principal Amount |  | Unamortized Discount and Debt Issuance Costs |  | Net Amount
Senior Secured Credit Facility: |  |  |  |  |  |  |  |  |
Revolving Credit Facility (1) | (2) |  | February 2023 |  | $ | 140 |  |  | $ * |  | $ | 140 |
Term Loan B | (3) |  | February 2025 |  | 1,050 |  |  | 11 |  |  | 1,039 |
Term Loan A Facility: |  |  |  |  |  |  |  |  |
Term Loan A | (4) |  | February 2023 |  | 694 |  |  | 4 |  |  | 690 |
Senior Secured Second Lien Notes | 7.625% |  | June 2025 |  | 550 |  |  | 10 |  |  | 540 |
Senior Notes | 4.875% |  | June 2023 |  | 407 |  |  | 2 |  |  | 405 |
Senior Notes | 9.375% |  | April 2027 |  | 550 |  |  | 7 |  |  | 543 |
Total | $ | 3,391 |  |  | $ | 34 |  |  | $ | 3,357 |

_______________
* The debt issuance costs related to our Revolving Credit Facility are classified as a deferred financing asset within other assets.
(1)As of September 30, 2020, the $1,425 million Revolving Credit Facility had outstanding borrowings of $140 million, as well as $40 million of outstanding undrawn letters of credit. The Revolving Credit Facility expires in February 2023 but is classified on the balance sheet as current due to the revolving nature and terms and conditions of the facility. On November 3, 2020, the Company had no outstanding borrowings under the Revolving Credit Facility and $40 million of outstanding undrawn letters of credit.
(2)Interest rates with respect to revolving loans under the Senior Secured Credit Facility at September 30, 2020 were based on, at the Company's option, (a) adjusted London Interbank Offering Rate ("LIBOR") plus an additional margin or (b) JP Morgan Chase Bank, N.A.'s prime rate ("ABR") plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter's senior secured leverage ratio, the LIBOR margin was 2.25% and the ABR margin was 1.25% for the three months ended September 30, 2020.
(3)The Term Loan B provides for quarterly amortization payments totaling 1% per annum of the original principal amount. The interest rate with respect to term loans under the Term Loan B is based on, at the Company’s option, (a) adjusted LIBOR plus 2.25% (with a LIBOR floor of 0.75%) or (b) ABR plus 1.25% (with an ABR floor of 1.75%).
(4)The Term Loan A provides for quarterly amortization payments, based on a percentage of the original principal amount of the Term Loan A, as follows: 0.625% per quarter from June 30, 2018 to March 31, 2020; 1.25% per quarter from June 30, 2020 to March 31, 2021; 1.875% per quarter from June 30, 2021 to March 31, 2022; and 2.50% per quarter for periods ending on or after June 30, 2022, with the balance of the Term Loan A due at maturity on February 8, 2023. The interest rates with respect to the Term Loan A are based on, at the Company's option, (a) adjusted LIBOR plus an additional margin or (b) ABR plus an additional margin, in each case subject to adjustment based on the then current senior secured leverage ratio. Based on the previous quarter's senior secured leverage ratio, the LIBOR margin was 2.25% and the ABR margin was 1.25% for the three months ended September 30, 2020.
Maturities Table
As of September 30, 2020, the combined aggregate amount of maturities for long-term borrowings for the remainder of 2020 and each of the next four years is as follows:

Year |  | Amount
Remaining 2020 (a) |  | $ | 152 |
2021 |  | 62 |
2022 |  | 81 |
2023 |  | 982 |
2024 |  | 11 |

_______________
(a)Remaining 2020 includes amortization payments totaling $9 million and $3 million for the Term Loan A and Term Loan B facilities, respectively, as well as $140 million of revolver borrowings under the Revolving Credit Facility which expires in February 2023 but is classified on the balance sheet as current due to the revolving nature and terms and conditions of the facility. The current portion of long-term debt of $198 million shown on the Condensed Consolidated Balance Sheets consists of four quarters of amortization payments totaling $47 million and $11 million for the Term Loan A and Term Loan B facilities, respectively, and $140 million of revolver borrowings under the Revolving Credit Facility.
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Senior Secured Credit Agreement and Term Loan A Agreement
The Company’s Amended and Restated Credit Agreement dated as of March 5, 2013, as amended, amended and restated, modified or supplemented from time to time (the “Senior Secured Credit Agreement”) governs the Company's senior secured credit facility (the “Senior Secured Credit Facility”, which includes the “Revolving Credit Facility” and the “Term Loan B”) and the Term Loan A Agreement dated as of October 23, 2015, as amended from time to time (the “Term Loan A Agreement”) governs the senior secured term loan A credit facility (the “Term Loan A Facility”).
Senior Secured Credit Facility
The Senior Secured Credit Facility includes:
(a)the Term Loan B issued in the original aggregate principal amount of $1,080 million with a maturity date of February 2025. The Term Loan B has quarterly amortization payments totaling 1% per annum of the initial aggregate principal amount. The interest rate with respect to term loans under the Term Loan B is based on, at Realogy Group's option, adjusted LIBOR plus 2.25% (with a LIBOR floor of 0.75%) or ABR plus 1.25% (with an ABR floor of 1.75%); and
(b)a $1,425 million Revolving Credit Facility with a maturity date of February 2023, which includes a $125 million letter of credit subfacility. The interest rate with respect to revolving loans under the Revolving Credit Facility is based on, at Realogy Group's option, adjusted LIBOR or ABR plus an additional margin subject to the following adjustments based on the Company’s then current senior secured leverage ratio:

Senior Secured Leverage Ratio |  | Applicable LIBOR Margin |  | Applicable ABR Margin
Greater than 3.50 to 1.00 |  | 2.50% |  | 1.50%
Less than or equal to 3.50 to 1.00 but greater than or equal to 2.50 to 1.00 |  | 2.25% |  | 1.25%
Less than 2.50 to 1.00 but greater than or equal to 2.00 to 1.00 |  | 2.00% |  | 1.00%
Less than 2.00 to 1.00 |  | 1.75% |  | 0.75%

The obligations under the Senior Secured Credit Agreement are secured to the extent legally permissible by substantially all of the assets of Realogy Group, Realogy Intermediate and all of their domestic subsidiaries, other than certain excluded subsidiaries.
Realogy Group’s Senior Secured Credit Agreement contains financial, affirmative and negative covenants and requires Realogy Group to maintain (so long as the Revolving Credit Facility is outstanding) a senior secured leverage ratio.
On July 24, 2020, Realogy Group entered into amendments to the Senior Secured Credit Agreement and Term Loan A Agreement (referred to collectively herein as the “Amendments”), pursuant to which Realogy Group is required to maintain a senior secured leverage ratio not to exceed 6.50 to 1.00 commencing with the third quarter of 2020 through and including the second quarter of 2021. Following the second quarter of 2021, the maximum senior secured leverage ratio permitted will then step down to 5.50 to 1.00 for the third quarter of 2021 and thereafter step down by 0.25 on a quarterly basis to 4.75 to 1.00 (which was the applicable level prior to the effectiveness of the Amendments) on and after the second quarter of 2022.
The Amendments also tighten certain other covenants during the period commencing on July 24, 2020 until the Company issues its financial results for the third quarter of 2021 and concurrently delivers an officer’s certificate to its lenders showing compliance with the quarterly financial covenant, subject to earlier termination, or the “covenant period.” If Realogy Group’s senior secured leverage ratio does not exceed 5.50 to 1.00 for the fiscal quarter ending June 30, 2021, the covenant period will end at the time the Company delivers the compliance certificate to the lenders for such period; however, in either instance, the gradual step down in the senior secured leverage ratio, as described above, will continue to apply. The covenants revised during this covenant period include the reduction or elimination of the amount available for certain types of additional indebtedness, liens, restricted payments (including dividends and stock repurchases), investments (including acquisitions and joint ventures), and voluntary junior debt repayments. The Company also may elect to end the covenant period at any time, provided the senior secured leverage ratio does not exceed 4.75 to 1.00 as of the most recently ended quarter for which financial statements have been delivered. In such event, the leverage ratio will reset to the pre-Amendment level of 4.75 to 1.00 thereafter.
As of September 30, 2020, Realogy Group was required to maintain a senior secured leverage ratio not to exceed 6.50 to 1.00. The leverage ratio is tested quarterly regardless of the amount of borrowings outstanding and letters of credit issued
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under the Revolving Credit Facility at the testing date. Total senior secured net debt does not include the securitization obligations, 7.625% Senior Secured Second Lien Notes, or our unsecured indebtedness, including the Unsecured Notes. At September 30, 2020, Realogy Group was in compliance with the senior secured leverage ratio covenant with a senior secured leverage ratio of 2.29 to 1.00. For the calculation of the senior secured leverage ratio for the third quarter of 2020, see Part I., Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Senior Secured Leverage Ratio applicable to our Senior Secured Credit Facility and Term Loan A Facility.
Term Loan A Facility
The Term Loan A of $750 million due February 2023 provides for quarterly amortization based on a percentage of the original principal amount of the Term Loan A, as follows: 0.625% per quarter from June 30, 2018 to March 31, 2020; 1.25% per quarter from June 30, 2020 to March 31, 2021; 1.875% per quarter from June 30, 2021 to March 31, 2022; and 2.50% per quarter for periods ending on or after June 30, 2022, with the balance of the Term Loan A due at maturity on February 8, 2023. The interest rates with respect to the Term Loan A are based on, at the Company's option, adjusted LIBOR or ABR plus an additional margin subject to the following adjustments based on the Company’s then current senior secured leverage ratio:

Senior Secured Leverage Ratio |  | Applicable LIBOR Margin |  | Applicable ABR Margin
Greater than 3.50 to 1.00 |  | 2.50% |  | 1.50%
Less than or equal to 3.50 to 1.00 but greater than or equal to 2.50 to 1.00 |  | 2.25% |  | 1.25%
Less than 2.50 to 1.00 but greater than or equal to 2.00 to 1.00 |  | 2.00% |  | 1.00%
Less than 2.00 to 1.00 |  | 1.75% |  | 0.75%

The Term Loan A Agreement contains covenants that are substantially similar to those in the Senior Secured Credit Agreement. The Amendment to the Term Loan A Agreement, effective July 24, 2020, contains provisions substantially similar to those contained in the Amendment to the Senior Secured Credit Agreement.
Senior Secured Second Lien Notes
In June 2020, Realogy Group issued $550 million 7.625% Senior Secured Second Lien Notes. The 7.625% Senior Secured Second Lien Notes mature on June 15, 2025 and interest is payable semiannually on June 15 and December 15 of each year, commencing December 15, 2020.
The 7.625% Senior Secured Second Lien Notes are guaranteed on a senior secured second priority basis by Realogy Intermediate and each domestic subsidiary of Realogy Group, other than certain excluded entities, that is a guarantor under its Senior Secured Credit Facility and Term Loan A Facility and certain of its outstanding debt securities. The 7.625% Senior Secured Second Lien Notes are also guaranteed by Realogy Holdings on an unsecured senior subordinated basis. The 7.625% Senior Secured Second Lien Notes are secured by substantially the same collateral as Realogy Group's existing first lien obligations under its Senior Secured Credit Facility and Term Loan A Facility on a second priority basis.
The indentures governing the 7.625% Senior Secured Second Lien Notes contain various covenants that limit the ability of Realogy Intermediate, Realogy Group and Realogy Group’s restricted subsidiaries to take certain actions, which covenants are subject to a number of important exceptions and qualifications. These covenants are substantially similar to the covenants in the indenture governing the 9.375% Senior Notes due 2027, as described under Unsecured Notes below.
Unsecured Notes
In June 2020, the Company used the entire net proceeds from the $550 million 7.625% Senior Secured Second Lien Notes, together with cash on hand, to fund the redemption of all of the outstanding 5.25% Senior Notes due 2021, and to pay related interest, premium, fees, and expenses.
The 4.875% Senior Notes and the 9.375% Senior Notes (collectively the "Unsecured Notes") are unsecured senior obligations of Realogy Group that mature on June 1, 2023 and April 1, 2027, respectively. Interest on the Unsecured Notes is payable each year semiannually on June 1 and December 1 for the 4.875% Senior Notes, and on April 1 and October 1 for the 9.375% Senior Notes.
The Unsecured Notes are guaranteed on an unsecured senior basis by each domestic subsidiary of Realogy Group that is a guarantor under the Senior Secured Credit Facility, Term Loan A Facility and Realogy Group's outstanding debt securities and are guaranteed by Realogy Holdings on an unsecured senior subordinated basis.
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The indentures governing the Unsecured Notes contain various negative covenants that limit Realogy Group's and its restricted subsidiaries’ ability to take certain actions, which covenants are subject to a number of important exceptions and qualifications. These covenants include limitations on Realogy Group's and its restricted subsidiaries’ ability to (a) incur or guarantee additional indebtedness, or issue disqualified stock or preferred stock, (b) pay dividends or make distributions to their stockholders, (c) repurchase or redeem capital stock, (d) make investments or acquisitions, (e) incur restrictions on the ability of certain of their subsidiaries to pay dividends or to make other payments to Realogy Group, (f) enter into transactions with affiliates, (g) create liens, (h) merge or consolidate with other companies or transfer all or substantially all of their assets, (i) transfer or sell assets, including capital stock of subsidiaries and (j) prepay, redeem or repurchase debt that is subordinated in right of payment to the Unsecured Notes.
The covenants in the indenture governing the 9.375% Senior Notes are substantially similar to the covenants in the indentures governing the other Unsecured Notes, with certain exceptions, including several changes relating to Realogy Group’s ability to make restricted payments, and in particular, its ability to repurchase shares and pay dividends. Specifically, (a) the cumulative credit basket for restricted payments (i) was reset to zero and builds from January 1, 2019, (ii) builds at 25% of Consolidated Net Income (as defined in the indenture governing the 9.375% Senior Notes) when the consolidated leverage ratio (as defined below) is equal to or greater than 4.0 to 1.0 (and 50% of Consolidated Net Income when it is less than 4.0 to 1.0) and, consistent with the indentures governing the other Unsecured Notes, is reduced by 100% of the deficit when Consolidated Net Income is a deficit and (iii) may not be used when the consolidated leverage ratio is equal to or greater than 4.0 to 1.0; (b) the $100 million general restricted payment basket may be used only for Restricted Investments (as defined in the indenture governing the 9.375% Senior Notes); (c) the indenture governing the 9.375% Senior Notes requires the consolidated leverage ratio to be less than 3.0 to 1.0 to use the unlimited general restricted payment basket (which payments will reduce the cumulative credit basket, but not below zero); and (d) the indenture governing the 9.375% Senior Notes contains a new restricted payment basket that may be used for up to $45 million of dividends per calendar year.
The consolidated leverage ratio is measured by dividing Realogy Group's total net debt by the trailing four quarters EBITDA. EBITDA, as defined in the indenture governing the 9.375% Senior Notes, is substantially similar to EBITDA calculated on a Pro Forma Basis, as those terms are defined in the Senior Secured Credit Agreement; however, under the Senior Secured Credit Agreement and Term Loan A Agreement (but not the indentures), the Company should include net after-tax gains or losses attributable to discontinued operations (pending divestiture) from the definition of consolidated net income solely for purposes of calculating compliance with the senior secured leverage ratio. Net debt under the indenture is Realogy Group's total indebtedness less (i) its cash and cash equivalents in excess of restricted cash and (ii) a $200 million seasonality adjustment permitted when measuring the ratio on a date during the period of March 1 to May 31.
Gain/Loss on the Early Extinguishment of Debt
During the nine months ended September 30, 2020, the Company recorded a loss on the early extinguishment of debt of $8 million as a result of the issuance of $550 million of 7.625% Senior Secured Second Lien Notes due 2025 and the redemption of $550 million of 5.25% Senior Notes due 2021 in June 2020.
During the nine months ended September 30, 2019, the Company recorded a gain on the early extinguishment of debt of $5 million which consisted of a $10 million gain as a result of the repurchase of $93 million of its 4.875% Senior Notes during the third quarter of 2019, partially offset by a $5 million loss a s a result of the refinancing transactions in the first quarter of 2019.
6. RESTRUCTURING COSTS
Restructuring charges were $13 million and $38 million for the three and nine months ended September 30, 2020, respectively, and $11 million and $29 million for the three and nine months ended September 30, 2019, respectively. The components of the restructuring charges for the three and nine months ended September 30, 2020 and 2019 were as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Personnel-related costs (1) | $ | 3 |  |  | $ | 4 |  |  | $ | 10 |  |  | $ | 17 |
Facility-related costs (2) | 10 |  |  | 6 |  |  | 28 |  |  | 11 |
Other restructuring costs (3) | — |  |  | 1 |  |  | — |  |  | 1 |
Total restructuring charges (4) | $ | 13 |  |  | $ | 11 |  |  | $ | 38 |  |  | $ | 29 |

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_______________
(1)Personnel-related costs consist of severance costs provided to employees who have been terminated and duplicate payroll costs during transition.
(2)Facility-related costs consist of costs associated with planned facility closures such as contract termination costs, amortization of lease assets that will continue to be incurred under the contract for its remaining term without economic benefit to the Company, accelerated depreciation on asset disposals and other facility and employee relocation related costs.
(3)Other restructuring costs consist of costs related to professional fees, consulting fees and other costs associated with restructuring activities which are primarily included in the Corporate and Other business segment.
(4)Restructuring charges for the three months ended September 30, 2020 relate to the Facility and Operational Efficiencies Program. Restructuring charges for the nine months ended September 30, 2020 include $36 million related to the Facility and Operational Efficiencies Program and $2 million related to the Leadership Realignment and Other Restructuring Activities Program. Restructuring charges for the three and nine months ended September 30, 2019 include $10 million and $25 million, respectively, related to the Facility and Operational Efficiencies Program and $1 million and $4 million, respectively, related to prior restructuring programs.
Facility and Operational Efficiencies Program
Beginning in the first quarter of 2019, the Company commenced the implementation of a plan to accelerate its office consolidation to reduce storefront costs, as well as institute other operational efficiencies to drive profitability. In addition, the Company commenced a plan to transform and centralize certain aspects of the operational support and drive changes in how it serves its affiliated independent sales agents from a marketing and technology perspective to help such agents be more productive and enable them to make their businesses more profitable. In the third quarter of 2019, the Company reduced headcount in connection with the wind-down of a former affinity program. In the fourth quarter of 2019, the Company expanded its operational efficiencies program to focus on workforce optimization. This workforce optimization initiative is focused on consolidating similar or overlapping roles, reducing the number of hierarchical layers and streamlining work and decision making. Furthermore, at the end of 2019, the Company expanded these strategic initiatives which have resulted in additional operational and facility related efficiencies in 2020. Additionally, the Company is evaluating its current office space needs and plans to transition to having more employees in a remote working environment as a result of opportunities identified during the COVID-19 crisis. As a result, additional facility and operational efficiencies are expected to be identified and implemented in the fourth quarter of 2020 and during 2021.
The following is a reconciliation of the beginning and ending reserve balances related to the Facility and Operational Efficiencies Program:

| Personnel-related costs |  | Facility-related costs |  | Total
Balance at December 31, 2019 | $ | 6 |  |  | $ | 5 |  |  | $ | 11 |
Restructuring charges (1) | 10 |  |  | 26 |  |  | 36 |
Costs paid or otherwise settled | (14) |  |  | (19) |  |  | (33) |
Balance at September 30, 2020 | $ | 2 |  |  | $ | 12 |  |  | $ | 14 |

_______________
(1)In addition, the Company incurred an additional $17 million of facility-related costs for lease asset impairments in connection with the Facility and Operational Efficiencies Program during the nine months ended September 30, 2020.
The following table shows the total costs currently expected to be incurred by type of cost related to the Facility and Operational Efficiencies Program:

| Total amount expected to be incurred (1) |  | Amount incurred to date |  | Total amount remaining to be incurred (1)
Personnel-related costs | $ | 34 |  |  | $ | 31 |  |  | $ | 3 |
Facility-related costs | 73 |  |  | 42 |  |  | 31 |
Other restructuring costs | 1 |  |  | 1 |  |  | — |
Total | $ | 108 |  |  | $ | 74 |  |  | $ | 34 |

_______________
(1)Facility-related costs include potential lease asset impairments to be incurred under the Facility and Operational Efficiencies Program.
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The following table shows the total costs currently expected to be incurred by reportable segment related to the Facility and Operational Efficiencies Program:

| Total amount expected to be incurred |  | Amount incurred to date |  | Total amount remaining to be incurred
Realogy Franchise Group | $ | 5 |  |  | $ | 5 |  |  | $ | — |
Realogy Brokerage Group | 84 |  |  | 55 |  |  | 29 |
Realogy Title Group | 5 |  |  | 5 |  |  | — |
Corporate and Other | 14 |  |  | 9 |  |  | 5 |
Total | $ | 108 |  |  | $ | 74 |  |  | $ | 34 |

Leadership Realignment and Other Restructuring Activities
Beginning in the first quarter of 2018, the Company commenced the implementation of a plan to drive its business forward and enhance stockholder value. The key aspects of this plan included senior leadership realignment, an enhanced focus on technology and talent, as well as further attention to office footprint and other operational efficiencies. The activities undertaken in connection with the restructuring plan are complete. At December 31, 2019, the remaining liability was $5 million. During the nine months ended September 30, 2020, the Company incurred facility-related costs of $2 million and paid or settled costs of $4 million resulting in a remaining accrual of $3 million.
7. EQUITY
Condensed Consolidated Statement of Changes in Equity for Realogy Holdings

| Three Months Ended September 30, 2020
| Common Stock |  | Additional Paid-In Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Non- controlling Interests |  | Total Equity
| Shares |  | Amount |
Balance at June 30, 2020 | 115.4 |  |  | $ | 1 |  |  | $ | 4,847 |  |  | $ | (3,171) |  |  | $ | (56) |  |  | $ | 4 |  |  | $ | 1,625 |
Net income | — |  |  | — |  |  | — |  |  | 98 |  |  | — |  |  | 1 |  |  | 99 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | 1 |
Stock-based compensation | — |  |  | — |  |  | 9 |  |  | — |  |  | — |  |  | — |  |  | 9 |
Issuance of shares for vesting of equity awards | 0.1 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Shares withheld for taxes on equity awards | (0.1) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Dividends | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (1) |  |  | (1) |
Balance at September 30, 2020 | 115.4 |  |  | $ | 1 |  |  | $ | 4,856 |  |  | $ | (3,073) |  |  | $ | (55) |  |  | $ | 4 |  |  | $ | 1,733 |

| Three Months Ended September 30, 2019
| Common Stock |  | Additional Paid-In Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Non- controlling Interests |  | Total Equity
| Shares |  | Amount |
Balance at June 30, 2019 | 114.3 |  |  | $ | 1 |  |  | $ | 4,837 |  |  | $ | (2,537) |  |  | $ | (51) |  |  | $ | 3 |  |  | $ | 2,253 |
Net (loss) income | — |  |  | — |  |  | — |  |  | (113) |  |  | — |  |  | 1 |  |  | (112) |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (1) |  |  | — |  |  | (1) |
Stock-based compensation | — |  |  | — |  |  | 10 |  |  | — |  |  | — |  |  | — |  |  | 10 |
Dividends declared ($0.09 per share) | — |  |  | — |  |  | (10) |  |  | — |  |  | — |  |  | — |  |  | (10) |
Balance at September 30, 2019 | 114.3 |  |  | $ | 1 |  |  | $ | 4,837 |  |  | $ | (2,650) |  |  | $ | (52) |  |  | $ | 4 |  |  | $ | 2,140 |

| Nine Months Ended September 30, 2020
| Common Stock |  | Additional Paid-In Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Non- controlling Interests |  | Total Equity
| Shares |  | Amount |
Balance at December 31, 2019 | 114.4 |  |  | $ | 1 |  |  | $ | 4,842 |  |  | $ | (2,695) |  |  | $ | (56) |  |  | $ | 4 |  |  | $ | 2,096 |
Net (loss) income | — |  |  | — |  |  | — |  |  | (378) |  |  | — |  |  | 2 |  |  | (376) |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |  |  | 1 |
Stock-based compensation | — |  |  | — |  |  | 19 |  |  | — |  |  | — |  |  | — |  |  | 19 |
Issuance of shares for vesting of equity awards | 1.6 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Shares withheld for taxes on equity awards | (0.6) |  |  | — |  |  | (5) |  |  | — |  |  | — |  |  | — |  |  | (5) |
Dividends | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2) |  |  | (2) |
Balance at September 30, 2020 | 115.4 |  |  | $ | 1 |  |  | $ | 4,856 |  |  | $ | (3,073) |  |  | $ | (55) |  |  | $ | 4 |  |  | $ | 1,733 |

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| Nine Months Ended September 30, 2019
| Common Stock |  | Additional Paid-In Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Non- controlling Interests |  | Total Equity
| Shares |  | Amount |
Balance at December 31, 2018 | 114.6 |  |  | $ | 1 |  |  | $ | 4,869 |  |  | $ | (2,507) |  |  | $ | (52) |  |  | $ | 4 |  |  | $ | 2,315 |
Net (loss) income | — |  |  | — |  |  | — |  |  | (143) |  |  | — |  |  | 2 |  |  | (141) |
Repurchase of common stock | (1.2) |  |  | — |  |  | (20) |  |  | — |  |  | — |  |  | — |  |  | (20) |
Stock-based compensation | — |  |  | — |  |  | 25 |  |  | — |  |  | — |  |  | — |  |  | 25 |
Issuance of shares for vesting of equity awards | 1.3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Shares withheld for taxes on equity awards | (0.4) |  |  | — |  |  | (6) |  |  | — |  |  | — |  |  | — |  |  | (6) |
Dividends declared ($0.27 per share) | — |  |  | — |  |  | (31) |  |  | — |  |  | — |  |  | (2) |  |  | (33) |
Balance at September 30, 2019 | 114.3 |  |  | $ | 1 |  |  | $ | 4,837 |  |  | $ | (2,650) |  |  | $ | (52) |  |  | $ | 4 |  |  | $ | 2,140 |

Condensed Consolidated Statement of Changes in Equity for Realogy Group
The Company has not included a statement of changes in equity for Realogy Group as the operating results of Group are consistent with the operating results of Realogy Holdings as all revenue and expenses of Realogy Group flow up to Realogy Holdings and there are no incremental activities at the Realogy Holdings level. The only difference between Realogy Group and Realogy Holdings is that the $1 million in par value of common stock in Realogy Holdings' equity is included in additional paid-in capital in Realogy Group's equity.
Stock Repurchases
Shares of Company common stock that have been repurchased pursuant to prior authorizations from the Company's Board of Directors have been retired and are not displayed separately as treasury stock on the consolidated financial statements. The par value of the shares repurchased and retired is deducted from common stock and the excess of the purchase price over par value is first charged against any available additional paid-in capital with the balance charged to retained earnings. Direct costs incurred to repurchase the shares are included in the total cost of the shares.
The Company's Board of Directors authorized a share repurchase program of up to $275 million, $300 million, $350 million and $175 million of the Company's common stock in February 2016, 2017, 2018 and 2019, respectively.
In the first quarter of 2019, the Company repurchased and retired 1.2 million shares of common stock for $20 million at a weighted average market price of $17.21 per share. The Company has not repurchased any shares under the share repurchase programs since 2019, and in May 2020, the Company's Board of Directors terminated its outstanding share repurchase programs.
The Company is restricted from repurchasing shares during the covenant period under the Amendments to the Senior Secured Credit Agreement and Term Loan A Agreement as well as pursuant to the restrictive covenants in the indentures governing the Unsecured Notes and 7.625% Senior Secured Second Lien Notes. See Note 5. "Short and Long-Term Debt—Senior Secured Credit Agreement and Term Loan A Agreement" and "—Unsecured Notes", to the Condensed Consolidated Financial Statements for additional information.
Stock-Based Compensation
During the first quarter of 2020, the Company granted restricted stock units related to 0.7 million shares with a weighted average grant date fair value of $9.70 and performance stock units related to 0.9 million shares with a weighted average grant date fair value of $9.23. The Company granted all time-based equity awards in the form of restricted stock units which are subject to ratable vesting over a three-year period.
During the first quarter of 2020, instead of issuing stock-based compensation to certain employees, the Company issued $18 million of time-vested cash awards which vest annually over a three-year vesting period, $6 million of cash-settled long-term performance awards which are tied to cumulative free cash flow goals that will vest at the end of the three-year performance cycle based on achievement of the performance metric and $3 million of cash-settled awards based on the change in Realogy stock price that will vest at the end of the three-year performance cycle.
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8. EARNINGS (LOSS) PER SHARE
Earnings (loss) per share attributable to Realogy Holdings
Basic earnings (loss) per share is computed based on net income (loss) attributable to Realogy Holdings stockholders divided by the basic weighted-average shares outstanding during the period. Dilutive earnings (loss) per share is computed consistently with the basic computation while giving effect to all dilutive potential common shares and common share equivalents that were outstanding during the period. Realogy Holdings uses the treasury stock method to reflect the potential dilutive effect of unvested stock awards and unexercised options. The following table sets forth the computation of basic and diluted earnings (loss) per share:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in millions, except per share data) | 2020 |  | 2019 |  | 2020 |  | 2019
Numerator: |  |  |  |  |  |  |
Numerator for earnings (loss) per share—continuing operations |  |  |  |  |  |  |
Net income (loss) from continuing operations | $ | 145 |  |  | $ | (120) |  |  | $ | (262) |  |  | $ | (136) |
Less: Net income attributable to noncontrolling interests | (1) |  |  | (1) |  |  | (2) |  |  | (2) |
Net income (loss) from continuing operations attributable to Realogy Holdings | $ | 144 |  |  | $ | (121) |  |  | $ | (264) |  |  | $ | (138) |
Numerator for earnings (loss) per share—discontinued operations |  |  |  |  |  |  |
Net (loss) income from discontinued operations | $ | (46) |  |  | $ | 8 |  |  | $ | (114) |  |  | $ | (5) |
Net income (loss) attributable to Realogy Holdings shareholders | $ | 98 |  |  | $ | (113) |  |  | $ | (378) |  |  | $ | (143) |
Denominator: |  |  |  |  |  |  |
Weighted average common shares outstanding (denominator for basic earnings (loss) per share calculation) | 115.4 |  |  | 114.3 |  |  | 115.2 |  |  | 114.2 |
Dilutive effect of stock-based compensation (a)(b) | 1.3 |  |  | — |  |  | — |  |  | — |
Weighted average common shares outstanding (denominator for diluted earnings (loss) per share calculation) | 116.7 |  |  | 114.3 |  |  | 115.2 |  |  | 114.2 |
Basic earnings (loss) per share attributable to Realogy Holdings shareholders:
Basic earnings (loss) per share from continuing operations | $ | 1.25 |  |  | $ | (1.06) |  |  | $ | (2.29) |  |  | $ | (1.21) |
Basic (loss) earnings per share from discontinued operations | (0.40) |  |  | 0.07 |  |  | (0.99) |  |  | (0.04) |
Basic earnings (loss) per share | $ | 0.85 |  |  | $ | (0.99) |  |  | $ | (3.28) |  |  | $ | (1.25) |
Diluted earnings (loss) per share attributable to Realogy Holdings shareholders:
Diluted earnings (loss) per share from continuing operations | $ | 1.23 |  |  | $ | (1.06) |  |  | $ | (2.29) |  |  | $ | (1.21) |
Diluted (loss) earnings per share from discontinued operations | (0.39) |  |  | 0.07 |  |  | (0.99) |  |  | (0.04) |
Diluted earnings (loss) per share | $ | 0.84 |  |  | $ | (0.99) |  |  | $ | (3.28) |  |  | $ | (1.25) |

_______________
(a)The three months ended September 30, 2020 exclude 8.3 million of common stock issuable for incentive equity awards, which includes performance share units based on the achievement of target amounts, that are anti-dilutive to the diluted earnings per share computation.
(b)The Company had a net loss from continuing operations for the nine months ended September 30, 2020 and three and nine months ended September 30, 2019 and therefore the impact of incentive equity awards were excluded from the computation of dilutive loss per share as the inclusion of such amounts would be anti-dilutive.
9. COMMITMENTS AND CONTINGENCIES
Litigation
The Company is involved in claims, legal proceedings, alternative dispute resolution and governmental inquiries related to alleged contract disputes, business practices, intellectual property and other commercial, employment, regulatory and tax matters. Examples of such matters include but are not limited to allegations:
•that independent residential real estate sales agents engaged by Realogy Brokerage Group or by affiliated franchisees—under certain state or federal laws—are potentially employees instead of independent contractors, and
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they or regulators therefore may bring claims against Realogy Brokerage Group for breach of contract, wage and hour classification claims, wrongful discharge, unemployment and workers' compensation and could seek benefits, back wages, overtime, indemnification, penalties related to classification practices and expense reimbursement available to employees or similar claims against Realogy Franchise Group as an alleged joint employer of an affiliated franchisee’s independent sales agents;
•concerning other employment law matters, including other types of worker classification claims as well as wage and hour claims and retaliation claims;
•concerning anti-trust and anti-competition matters;
•that the Company is vicariously liable for the acts of franchisees under theories of actual or apparent agency;
•by current or former franchisees that franchise agreements were breached including improper terminations;
•concerning alleged RESPA or state real estate law violations;
•concerning claims related to the Telephone Consumer Protection Act, including autodialer claims;
•concerning claims generally against the company owned brokerage operations for negligence, misrepresentation or breach of fiduciary duty in connection with the performance of real estate brokerage or other professional services as well as other brokerage claims associated with listing information and property history;
•related to copyright law, including infringement actions alleging improper use of copyrighted photographs on websites or in marketing materials without consent of the copyright holder;
•concerning breach of obligations to make websites and other services accessible for consumers with disabilities;
•concerning claims generally against the title agent contending that the agent knew or should have known that a transaction was fraudulent or that the agent was negligent in addressing title defects or conducting the settlement;
•concerning information security and cyber-crime, including claims under new and emerging data privacy laws related to the protection of customer, employee or third-party information, as well as those related to the diversion of homesale transaction closing funds; and
•those related to general fraud claims.
Worker Classification Litigation
Whitlach v. Premier Valley, Inc. d/b/a Century 21 M&M and Century 21 Real Estate LLC (Superior Court of California, Stanislaus County). This was filed as a putative class action complaint on December 20, 2018 by plaintiff James Whitlach against Premier Valley Inc., a Century 21 Real Estate independently-owned franchisee doing business as Century 21 M&M (“Century 21 M&M”). The complaint also names Century 21 Real Estate LLC, a wholly-owned subsidiary of the Company and the franchisor of Century 21 Real Estate (“Century 21”), as an alleged joint employer of the franchisee’s independent sales agents and seeks to certify a class that could potentially include all agents of both Century 21 M&M and Century 21 in California. In February 2019, the plaintiff amended his complaint to assert claims pursuant to the California Private Attorneys General Act (“PAGA”). Following the Court's dismissal of the plaintiff's non-PAGA claims without prejudice in June 2019, the plaintiff continues to pursue his PAGA claims as a representative of purported "aggrieved employees" as defined by PAGA. As such representative, the plaintiff seeks all non-individualized relief available to the purported aggrieved employees under PAGA, as well as attorneys’ fees. Under California law, PAGA claims are generally not subject to arbitration and may result in exposure in the form of additional penalties.
Following the Court's grant of the defendants' demurrer to the plaintiff's amended complaint (with leave to replead), the plaintiff filed a second amended complaint asserting one cause of action for alleged civil penalties under PAGA in June 2020. In the second amended complaint, the plaintiff continues to allege that Century 21 M&M misclassified all of its independent real estate agents, salespeople, sales professionals, broker associates and other similar positions as independent contractors, failed to pay minimum wages, failed to provide meal and rest breaks, failed to pay timely wages, failed to keep proper records, failed to provide appropriate wage statements, made unlawful deductions from wages, and failed to reimburse plaintiff and the putative class for business related expenses, resulting in violations of the California Labor Code. Century 21 M&M filed its demurrer to the amended complaint, to which Century 21 filed a joinder (and, in the alternative, a motion to strike certain portions of the amended complaint), on August 3, 2020. This case raises various previously unlitigated claims and the PAGA claim adds additional litigation, financial and operating uncertainties.
Real Estate Industry Litigation
Moehrl, Cole, Darnell, Nager, Ramey, Sawbill Strategic, Inc., Umpa and Ruh v. The National Association of Realtors, Realogy Holdings Corp., Homeservices of America, Inc., BHH Affiliates, LLC, The Long & Foster Companies, Inc., RE/
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MAX LLC, and Keller Williams Realty, Inc. (U.S. District Court for the Northern District of Illinois). This amended putative class action complaint (the "amended Moehrl complaint"), filed on June 14, 2019, (i) consolidates the Moehrl and Sawbill litigation reported in our Form 10-Q for the period ended March 31, 2019, (ii) adds certain plaintiffs and defendants, and (iii) serves as a response to the separate motions to dismiss filed on May 17, 2019 in the prior Moehrl litigation by each of NAR and the Company (along with the other defendants named in the prior Moehrl complaint).
In the amended Moehrl complaint, the plaintiffs allege that the defendants engaged in a continuing contract, combination, or conspiracy to unreasonably restrain trade and commerce in violation of Section 1 of the Sherman Act because defendant NAR allegedly established mandatory anticompetitive policies for the multiple listing services and its member brokers that require brokers to make an offer of buyer broker compensation when listing a property. The plaintiffs further allege that commission sharing, which provides for the broker representing the seller sharing or paying a portion of its commission to the broker representing the buyer, is anticompetitive and violates the Sherman Act, and that the defendant franchisors conspired with NAR by requiring their respective franchisees to comply with NAR’s policies and Code of Ethics. The plaintiffs seek a permanent injunction enjoining the defendants from requiring home sellers to pay buyer broker commissions or to otherwise restrict competition among buyer brokers, an award of damages and/or restitution, attorneys fees and costs of suit. In October 2019, the Department of Justice filed a statement of interest for this matter, in their words “to correct the inaccurate portrayal, by defendant The National Association of Realtors (‘NAR’), of a 2008 consent decree between the United States and NAR.” A motion to appoint lead counsel in the case was granted on an interim basis by the Court on May 30, 2020. On October 2, 2020, the Court denied the separate motions to dismiss filed in August 2019 by each of NAR and the Company (together with the other defendants named in the amended Moehrl complaint).
Sitzer and Winger v. The National Association of Realtors, Realogy Holdings Corp., Homeservices of America, Inc., RE/MAX Holdings, Inc., and Keller Williams Realty, Inc. (U.S. District Court for the Western District of Missouri). This is a putative class action complaint filed on April 29, 2019 and amended on June 21, 2019 by plaintiffs Joshua Sitzer and Amy Winger against NAR, the Company, Homeservices of America, Inc., RE/MAX Holdings, Inc., and Keller Williams Realty, Inc. The complaint contains substantially similar allegations, and seeks the same relief under the Sherman Act, as the Moehrl litigation. The Sitzer litigation is limited both in allegations and relief sought to the State of Missouri and includes an additional cause of action for alleged violation of the Missouri Merchandising Practices Act, or MMPA. On August 22, 2019, the Court denied defendants' motions to transfer the Sitzer matter to the U.S. District Court for the Northern District of Illinois and on October 16, 2019, denied the motions to dismiss this litigation filed respectively by NAR and the Company (together with the other named brokerage/franchisor defendants). In September 2019, the Department of Justice filed a statement of interest and appearances for this matter for the same purpose stated in the Moehrl matter and in July 2020 requested we provide them with all materials produced for Sitzer. Discovery between the plaintiffs and defendants is ongoing.
Rubenstein, Nolan v. The National Association of Realtors, Realogy Holdings Corp., Coldwell Banker, Sotheby’s Investment Realty, and Homeservices of America, Inc. (U.S. District Court for the District of Connecticut). In this action, the plaintiffs take issue with the same NAR policies related to buyer broker compensation at issue in the Moehrl and Sitzer matters, but claim the alleged conspiracy has harmed buyers (instead of sellers) and is a federal racketeering violation (instead of a violation of federal antitrust law). On October 29, 2020, the plaintiffs filed a statement with the Court outlining the alleged racketeering violations.
Securities Litigation
Tanaskovic v. Realogy Holdings Corp., et. al. (U.S. District Court for the District of New Jersey). This is a putative class action complaint filed on July 11, 2019 by plaintiff Sasa Tanaskovic against the Company and certain of its current and former executive officers. The lawsuit alleges violations of Sections 10(b), 20(a) and Rule 10b-5 of the Exchange Act in connection with allegedly false and misleading statements made by the Company about its business, operations, and prospects. The plaintiffs seek, among other things, compensatory damages for purchasers of the Company’s common stock between February 24, 2017 through May 22, 2019, as well as attorneys’ fees and costs. Locals 302 and 612 of the International Union of Operating Engineers-Employers Construction Industry Retirement Trust (the “Retirement Trust”), was appointed lead plaintiff on November 7, 2019. Lead plaintiff filed its amended complaint on March 6, 2020. The Company filed its motion to dismiss the amended complaint on August 3, 2020, the plaintiffs filed their opposition to such motion on September 17, 2020, and the Company filed its reply on November 2, 2020.
Fried v. Realogy Holdings Corp., et al. (U.S. District Court for the District of New Jersey). This is a putative derivative action filed on October 23, 2019 by plaintiff Adam Fried against the Company (as nominal defendant) and certain of its current and former executive officers and members of its Board of Directors (as defendants). The lawsuit alleges violations
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of Section 14(a) of the Exchange Act and breach of fiduciary duties for, among other things, allegedly false and misleading statements made by the Company about its business, operations and prospects as well as unjust enrichment claims. The plaintiff seeks, among other things, compensatory damages, disgorgement of improper compensation, certain reforms to the Company’s corporate governance and internal procedures and attorneys’ fees and costs. On December 23, 2019, the Court approved a motion staying this case pending further action in the Tanaskovic matter.
The Company disputes the allegations in each of the captioned matters described above and will vigorously defend these actions. Given the early stages of each of these cases, we cannot estimate a range of reasonably possible losses for this litigation.
The Company believes that it has adequately accrued for legal matters as appropriate. The Company records litigation accruals for legal matters which are both probable and estimable.
Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. In addition, class action lawsuits can be costly to defend and, depending on the class size and claims, could be costly to settle. As such, the Company could incur judgments or enter into settlements of claims with liability that are materially in excess of amounts accrued and these settlements could have a material adverse effect on the Company’s financial condition, results of operations or cash flows in any particular period.
* * *
Company-Initiated Litigation
Realogy Holdings Corp. v. SIRVA Worldwide, Inc., North American Van Lines, Inc., Madison Dearborn Capital Partners VII-A, L.P., Madison Dearborn Capital Partners VII-C, L.P., and Madison Dearborn Capital Partners VII Executive-A, L.P. (Court of Chancery of the State of Delaware). On August 8, 2020, the Company entered into a confidential settlement agreement with SIRVA, Inc., SIRVA Worldwide, Inc. (“SIRVA Worldwide”) and affiliates of Madison Dearborn Partners, LLC to mutually dismiss and release all claims related to the termination of the Purchase and Sale Agreement dated November 6, 2019 with North American Van Lines, Inc. (as assignee of SIRVA Worldwide) for the sale of the Company’s employee relocation services business, Cartus Corporation.
Realogy Holdings Corp., NRT New York LLC (d/b/a The Corcoran Group), Sotheby’s International Realty, Inc., Coldwell Banker Residential Brokerage Company, Coldwell Banker Residential Real Estate LLC, NRT West, Inc., Martha Turner Properties, L.P. And Better Homes and Gardens Real Estate LLC v. Urban Compass, Inc., and Compass, Inc. (Supreme Court New York, New York County). On July 10, 2019, the Company and certain of its subsidiaries filed a complaint against Urban Compass, Inc. and Compass, Inc. (together, "Compass") alleging misappropriation of trade secrets; tortious interference with contract; intentional and tortious interference with prospective economic advantage; unfair competition under New York common law; violations of the California Unfair Competition Law, Business and Professional Code Section 17200 et. seq. (unfair competition); violations of New York General Business Law Section 349 (deceptive acts or practices); violations of New York General Business Law Sections 350 and 350-a (false advertising); conversion; and aiding and abetting breach of contract. The Company seeks, among other things, actual and compensatory damages, injunctive relief, and attorneys’ fees and costs. The Company subsequently amended its complaint (which, among other things, withdrew the count for aiding and abetting breach of contract and added a count for defamation). Beginning in September 2019, Compass filed a series of motions, which the Company opposed, including a motion to dismiss and a motion to compel arbitration with respect to certain claims involving Corcoran. In June 2020, having previously denied certain portions of Compass’ motion to dismiss, the Court denied the balance of the motion to dismiss, and denied as moot Compass’ motion to compel arbitration, granting the Company leave to amend the allegations in its complaint that relate to Corcoran’s exclusive listings in order to clarify the claims and damages sought in the action. The Company filed its amended complaint in July 2020. On September 24, 2020, Compass filed a motion to compel arbitration with respect to certain claims in the Company's amended complaint concerning or purportedly related to Corcoran and Sotheby’s International Realty, Inc.
* * *
The Company is involved in certain other claims and legal actions arising in the ordinary course of our business. Such litigation, regulatory actions and other proceedings may include, but are not limited to, actions relating to intellectual property, commercial arrangements, franchising arrangements, the fiduciary duties of brokers, standard brokerage disputes like the failure to disclose accurate square footage or hidden defects in the property such as mold, vicarious liability based upon conduct of individuals or entities outside of our control, including franchisees and independent sales agents, antitrust
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and anti-competition claims, general fraud claims (including wire fraud associated with third-party diversion of funds from a brokerage transaction), employment law claims, including claims challenging the classification of independent sales agents as independent contractors, wage and hour related claims, and claims related to business actions responsive to the COVID-19 outbreak and governmental and regulatory directives thereto, and claims alleging violations of RESPA, state consumer fraud statutes or federal consumer protection statutes. While the results of such claims and legal actions cannot be predicted with certainty, we do not believe based on information currently available to us that the final outcome of current proceedings against the Company will have a material adverse effect on our consolidated financial position, results of operations or cash flows. In addition, with the increasing requirements resulting from government laws and regulations concerning data breach notifications and data privacy and protection obligations, claims associated with these laws may become more common. While most litigation involves claims against the Company, from time to time the Company commences litigation, including litigation against former employees, franchisees and competitors when it alleges that such persons or entities have breached agreements or engaged in other wrongful conduct.
* * *
Cendant Corporate Liabilities and Guarantees to Cendant and Affiliates
Realogy Group (then Realogy Corporation) separated from Cendant on July 31, 2006 (the "Separation"), pursuant to a plan by Cendant (now known as Avis Budget Group, Inc.) to separate into four independent companies—one for each of Cendant's business units—real estate services (Realogy Group), travel distribution services ("Travelport"), hospitality services, including timeshare resorts ("Wyndham Worldwide"), and vehicle rental ("Avis Budget Group"). Pursuant to the Separation and Distribution Agreement dated as of July 27, 2006 among Cendant, Realogy Group, Wyndham Worldwide and Travelport (the "Separation and Distribution Agreement"), each of Realogy Group, Wyndham Worldwide and Travelport have assumed certain contingent and other corporate liabilities (and related costs and expenses), which are primarily related to each of their respective businesses. In addition, Realogy Group has assumed 62.5% and Wyndham Worldwide has assumed 37.5% of certain contingent and other corporate liabilities (and related costs and expenses) of Cendant.
The due to former parent balance was $19 million at September 30, 2020 and $18 million at December 31, 2019, respectively. The due to former parent balance was comprised of the Company’s portion of the following: (i) Cendant’s remaining contingent tax liabilities, (ii) potential liabilities related to Cendant’s terminated or divested businesses, and (iii) potential liabilities related to the residual portion of accruals for Cendant operations.
Tax Matters
The Company is subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording related assets and liabilities. In the ordinary course of business, there are many transactions and calculations where the ultimate tax determination is uncertain. The Company is regularly under audit by tax authorities whereby the outcome of the audits is uncertain. The Company believes there is appropriate support for positions taken on its tax returns. The liabilities that have been recorded represent the best estimates of the probable loss on certain positions and are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. However, the outcomes of tax audits are inherently uncertain.
Escrow and Trust Deposits
As a service to its customers, the Company administers escrow and trust deposits which represent undisbursed amounts received for the settlement of real estate transactions. Deposits at FDIC-insured institutions are insured up to $250 thousand. These escrow and trust deposits totaled $943 million at September 30, 2020 and $475 million at December 31, 2019. These escrow and trust deposits are not assets of the Company and, therefore, are excluded from the accompanying Condensed Consolidated Balance Sheets. However, the Company remains contingently liable for the disposition of these deposits.
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10. SEGMENT INFORMATION
The reportable segments presented below represent the Company’s segments for which separate financial information is available and which is utilized on a regular basis by its chief operating decision maker to assess performance and to allocate resources. In identifying its reportable segments, the Company also considers the nature of services provided by its segments. During the first quarter of 2020, Realogy Leads Group was consolidated into Realogy Franchise Group and the segment change is reflected for all periods presented. Realogy Leads Group, which previously was part of Cartus, consists of the Company's affinity and broker-to-broker business, as well as the broker network made up of agents and brokers from Realogy’s residential real estate brands and certain independent real estate brokers (which is referred to as the Realogy Advantage Broker Network).
Management evaluates the operating results of each of its reportable segments based upon revenue and Operating EBITDA. Operating EBITDA is defined by us as net income (loss) before depreciation and amortization, interest expense, net, income taxes, and other items that are not core to the operating activities of the Company such as restructuring charges, former parent legacy items, gains or losses on the early extinguishment of debt, impairments, gains or losses on discontinued operations and gains or losses on the sale of investments or other assets. The Company’s presentation of Operating EBITDA may not be comparable to similar measures used by other companies.

| Revenues (a) (b)
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Realogy Franchise Group | $ | 262 |  |  | $ | 240 |  |  | $ | 609 |  |  | $ | 679 |
Realogy Brokerage Group | 1,479 |  |  | 1,222 |  |  | 3,281 |  |  | 3,369 |
Realogy Title Group | 213 |  |  | 170 |  |  | 510 |  |  | 444 |
Corporate and Other (c) | (97) |  |  | (82) |  |  | (220) |  |  | (224) |
Total Company | $ | 1,857 |  |  | $ | 1,550 |  |  | $ | 4,180 |  |  | $ | 4,268 |

_______________
(a)Transactions between segments are eliminated in consolidation. Revenues for the Realogy Franchise Group include intercompany royalties and marketing fees paid by Realogy Brokerage Group of $97 million and $220 million for the three and nine months ended September 30, 2020, respectively, and $82 million and $224 million for the three and nine months ended September 30, 2019, respectively. Such amounts are eliminated through the Corporate and Other line.
(b)Revenues for Realogy Franchise Group include intercompany referral commissions related to Realogy Advantage Broker Network paid by Realogy Brokerage Group of $3 million and $8 million for the three and nine months ended September 30, 2020, respectively, and $6 million and $14 million for the three and nine months ended September 30, 2019, respectively. Such amounts are recorded as contra-revenues by Realogy Brokerage Group. There are no other material intersegment transactions.
(c)Includes the elimination of transactions between segments.
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| Operating EBITDA
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Realogy Franchise Group | $ | 196 |  |  | $ | 170 |  |  | $ | 419 |  |  | $ | 448 |
Realogy Brokerage Group | 61 |  |  | 31 |  |  | 25 |  |  | 16 |
Realogy Title Group | 95 |  |  | 31 |  |  | 168 |  |  | 54 |
Corporate and Other (a) | (43) |  |  | (26) |  |  | (94) |  |  | (75) |
Total continuing operations | 309 |  |  | 206 |  |  | 518 |  |  | 443 |
Less: Depreciation and amortization | 43 |  |  | 42 |  |  | 134 |  |  | 126 |
Interest expense, net | 48 |  |  | 66 |  |  | 208 |  |  | 209 |
Income tax expense (benefit) | 54 |  |  | (23) |  |  | (67) |  |  | (22) |
Restructuring costs, net (b) | 13 |  |  | 11 |  |  | 38 |  |  | 29 |
Impairments (c) | 6 |  |  | 240 |  |  | 460 |  |  | 243 |
Former parent legacy cost (d) | 1 |  |  | 1 |  |  | 1 |  |  | 1 |
(Gain) loss on the early extinguishment of debt (d) | — |  |  | (10) |  |  | 8 |  |  | (5) |
Net income (loss) from continuing operations attributable to Realogy Holdings and Realogy Group | 144 |  |  | (121) |  |  | (264) |  |  | (138) |
Net (loss) income from discontinued operations (e) | (46) |  |  | 8 |  |  | (114) |  |  | (5) |
Net income (loss) attributable to Realogy Holdings and Realogy Group | $ | 98 |  |  | $ | (113) |  |  | $ | (378) |  |  | $ | (143) |

_______________
(a)Includes the elimination of transactions between segments.
(b)The three months ended September 30, 2020 includes restructuring charges of $11 million at Realogy Brokerage Group and $2 million at Corporate and Other.
The three months ended September 30, 2019 includes restructuring charges of $2 million at Realogy Franchise Group, $8 million at Realogy Brokerage Group and $1 million at Corporate and Other.
The nine months ended September 30, 2020 includes restructuring charges of $1 million at Realogy Franchise Group, $32 million at Realogy Brokerage Group, $3 million at Realogy Title Group and $2 million at Corporate and Other.
The nine months ended September 30, 2019 includes restructuring charges of $3 million at Realogy Franchise Group, $18 million at Realogy Brokerage Group, $2 million at Realogy Title Group and $6 million at Corporate and Other.
(c)Impairments for the three months ended September 30, 2020 relate to lease asset impairments. Impairments for the nine months ended September 30, 2020 include a goodwill impairment charge of $413 million (which reduced the net carrying value of Realogy Brokerage Group by $314 million after accounting for the related income tax benefit of $99 million), an impairment charge of $30 million (which reduced the carrying value of trademarks at Realogy Franchise Group) and $17 million related to lease asset impairments.
Impairments for the three and nine months ended September 30, 2019 include a goodwill impairment charge of $237 million (which reduced the net carrying value of Realogy Brokerage Group by $180 million after accounting for the related income tax benefit of $57 million). In addition, the three and nine months ended September 30, 2019 include other impairment charges primarily related to lease asset impairments of $3 million and $6 million, respectively.
(d)Former parent legacy items and (Gain) loss on the early extinguishment of debt are recorded in Corporate and Other.
(e)Includes estimated loss on the sale of discontinued operations, net of tax of $43 million and $97 million for the three and nine months ended September 30, 2020, respectively.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and accompanying notes thereto included elsewhere herein and with our Consolidated Financial Statements and accompanying notes included in the 2019 Form 10-K. Unless otherwise noted, all dollar amounts in tables are in millions. Neither Realogy Holdings, the indirect parent of Realogy Group, nor Realogy Intermediate, the direct parent company of Realogy Group, conducts any operations other than with respect to its respective direct or indirect ownership of Realogy Group. As a result, the condensed consolidated financial positions, results of operations and cash flows of Realogy Holdings, Realogy Intermediate and Realogy Group are the same. This Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, contains forward-looking statements. See "Forward-Looking Statements" and "Risk Factors" in this Quarterly Report as well as our 2019 Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements. Actual results may differ materially from those contained in any forward-looking statements.
OVERVIEW
We are a global provider of real estate services and report our operations in the following three business segments:
•Realogy Franchise Group—franchises the Century 21®, Coldwell Banker®, Coldwell Banker Commercial®, Corcoran®, ERA®, Sotheby's International Realty® and Better Homes and Gardens® Real Estate brand names. As of September 30, 2020, our real estate franchise systems and proprietary brands had approximately 318,000 independent sales agents worldwide, including approximately 189,000 independent sales agents operating in the U.S. (which included approximately 52,400 company owned brokerage independent sales agents). As of September 30, 2020, our real estate franchise systems and proprietary brands had approximately 19,500 offices worldwide in 115 countries and territories, including approximately 5,800 brokerage offices in the U.S. (which included approximately 680 company owned brokerage offices). Realogy Leads Group, which consists of Company- and client- directed affinity programs, broker-to-broker referrals and the Realogy Advantage Broker Network (previously referred to as the Cartus Broker Network) was consolidated in Realogy Franchise Group beginning in the first quarter of 2020 (see Note 10, "Segment Information", to the Condensed Consolidated Financial Statements for additional information).
•Realogy Brokerage Group—operates a full-service real estate brokerage business with approximately 680 owned and operated brokerage offices with approximately 52,400 independent sales agents principally under the Coldwell Banker®, Corcoran® and Sotheby’s International Realty® brand names in many of the largest metropolitan areas in the U.S.
•Realogy Title Group—provides full-service title and settlement services to real estate companies, affinity groups, corporations and financial institutions with many of these services provided in connection with the Company's real estate brokerage business. This segment also includes the Company's share of equity earnings and losses for our Guaranteed Rate Affinity mortgage origination joint venture.
Our technology and data group pursues technology-enabled solutions to support our business segments and franchisees as well as independent sales agents affiliated with Realogy Brokerage and Franchise Groups and their customers.
CURRENT BUSINESS AND INDUSTRY TRENDS
According to the National Association of Realtors ("NAR"), during the three months ended September 30, 2020, homesale transaction volume increased 23% primarily due to a 13% increase in the homesale transactions and a 9% increase in the average homesale price. During the nine months ended September 30, 2020, according to NAR, homesale transaction volume increased 6% due to a 6% increase in the average homesale price and flat homesale transactions.
Homesale transaction volume on a combined basis for Realogy Franchise and Brokerage Groups increased 28% during the three months ended September 30, 2020 compared to the three months ended September 30, 2019. Homesale transaction volume at Realogy Franchise Group increased 31% during such period, primarily as a result of a 17% increase in average homesale price and a 12% increase in existing homesale transactions. Homesale transaction volume at Realogy Brokerage Group increased 22% during such period, primarily as a result of an 11% increase in average homesale price and a 10% increase in existing homesale transactions.
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Homesale transaction volume on a combined basis for Realogy Franchise and Brokerage Groups increased 3% during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019. Homesale transaction volume at Realogy Franchise Group increased 6% during such period, as a result of a 9% increase in average homesale price, partially offset by a 3% decrease in existing homesale transactions. Homesale transaction volume at Realogy Brokerage Group decreased 2% during such period, as a result of a 5% decrease in existing homesale transactions, partially offset by a 3% increase in average homesale price.
The table below shows the trend of homesale transaction volume from January to September 2020 compared to the prior year and reflects the negative impact of COVID-19 starting in the final weeks of the first quarter of 2020 and recovery late in the second quarter of 2020.
COVID-19 Crisis. A strong recovery in the residential real estate market began late in the second quarter of 2020, following a period of sharp decline in homesale transactions starting in the final weeks of the first quarter of 2020. We attribute the recovery to date to a favorable mortgage rate environment, low inventory contributing to higher average homesale price, and increased demand as the quarantine restrictions in place in many states have begun to be relaxed. In addition, we have observed growing strength in certain trends that we believe are largely driven by behavioral changes related to the COVID-19 crisis, including home buyer preferences for certain geographies, including suburban locations and attractive tax and weather destinations and second home purchases.
During the second quarter of 2020, our company owned brokerages were negatively impacted by steeper declines in closed transactions in densely populated areas, such as California and the New York metropolitan area (geographies which also have an average sales price much higher than the U.S. average), as well as from lower inventory in the high-end markets, resulting in lower homesale transaction volume for company owned brokerages compared to franchised brokerages due to geographic and high-end market concentration. These geographies showed positive growth in September 2020; however, throughout the third quarter, the recovery trajectory in the New York metropolitan area continued to meaningfully lag the general residential real estate market, which continued to impact homesale transaction volume at our company-owned brokerages as compared to franchised brokerages. Although inventory across all price points continues to be constrained, limited inventory in the high-end did not materially impact results at our company owned brokerages in the third quarter of 2020. We believe that the increase in average homesale price at Realogy Franchise Group as compared to the broader market during the 2020 third quarter was primarily driven by particularly strong performance in the high-end of the market by one of our franchised brands.
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In mid-March 2020, we began taking a series of proactive cost-saving measures in reaction to the evolving COVID-19 crisis, including salary reductions, furloughs and reductions in marketing and other spending which resulted in substantial cost-savings in the second quarter of 2020 to partially offset the decline in revenues. While these temporary cost-saving measures resulted in cost savings in the second and third quarters of 2020, almost all of such measures were reversed during the third quarter of 2020 based upon the significant improvement in the volume of homesale transactions and ongoing business needs.
There remain significant uncertainties regarding the COVID-19 crisis, including the severity, duration and extent of the pandemic. Our business could be negatively impacted if the crisis, including adverse economic consequences of the crisis, worsen, if directives and mandates requiring businesses to again curtail or cease normal operations are reinstated, if mortgage rates rise, or if housing inventory constraints, across geographies and price point, limit homesale transaction growth. These negative impacts may be more pronounced in future periods and could have a material adverse effect on our results of operations and liquidity.
Inventory. Continued or accelerated declines in inventory, whether attributable to the COVID-19 crisis or otherwise, may result in insufficient supply to meet any increased demand driven by the lower interest rate environment. Even before the COVID-19 crisis, low housing inventory levels had been an industry-wide concern, in particular in certain highly sought-after geographies and at lower price points. According to NAR, the inventory of existing homes for sale in the U.S. decreased approximately 19% from 1.82 million as of September 2019 to 1.47 million as of September 2020. As a result, inventory has decreased from 4.0 months of supply in September 2019 to 2.7 months as of September 2020. These levels continue to be significantly below the 10-year average of 5.4 months, the 15-year average of 6.1 months and the 25-year average of 5.7 months. While insufficient inventory levels generally have a negative impact on homesale transaction growth, during the three months ended September 30, 2020, Realogy Franchise and Brokerage Groups saw a 12% increase in homesale transactions on a combined basis compared to September 30, 2019. We believe that during the third quarter of 2020, the intensified pace of inventory supply turnover contributed to the reported low levels of inventory, without a correlating decrease in homesale transactions. For example, at our company owned Coldwell Banker brokerages, the speed at which a home that was listed for sale went under contract reduced to a median of 19 days on the market in the third quarter of 2020 from a median of 31 days on the market in the third quarter of 2019. There is significant uncertainty as to whether the pattern seen in the third quarter of 2020 of low inventory, but increased homesale transactions driven by supply turnover will continue as constraints in home inventory levels have typically had and may continue to have an adverse impact on the number of homesale transactions closed by Realogy Franchise and Brokerage Groups.
Unemployment. Following the onset of the pandemic, many companies announced reductions in work weeks and salaries, although many people have recently returned to the labor market following weeks or months of COVID-19 induced restrictions. According to the U.S. Bureau of Labor Statistics, while the U.S. unemployment rate declined to 7.9% in September 2020, easing from a high of 14.7% reached in April 2020, this jobless rate still represents a 4.4% increase compared to February 2020. If the COVID-19 pandemic continues to impact employment levels and economic activity for a substantial period, or if jobs recovery continues to slow or worsens, it could lead to an increase in loan defaults and foreclosure activity and may make it more difficult for potential home buyers to arrange financing.
Mortgage Rates. A wide variety of factors can contribute to mortgage rates, including federal interest rates, demand, consumer income, unemployment levels and foreclosure rates. Yields on the 10-year Treasury note hit all-time lows during the COVID-19 crisis and as of September 30, 2020 were 0.69% as compared to 1.68% as of September 30, 2019. In addition, the Federal Reserve Board cut the interest rate two times, dropping its benchmark interest rate to a range of 0% to 0.25% on March 15, 2020. According to Freddie Mac, mortgage rates on commitments for a 30-year, conventional, fixed-rate first mortgage lowered to an average of 2.95% for the third quarter of 2020 compared to 3.67% for the third quarter of 2019. On September 30, 2020, mortgage rates were 2.89%, according to Freddie Mac.
Our financial results are favorably impacted by a low interest rate environment as a decline in mortgage rates generally drives increased refinancing activity and homesale transactions. For example, the Company recorded equity earnings from our mortgage origination joint venture, Guaranteed Rate Affinity, of $95 million and $12 million for the nine months ended September 30, 2020 and 2019 which represented approximately 18% of the Company's Operating EBITDA for the nine months ended September 30, 2020 (as compared to 3% of the Company's Operating EBITDA for the nine months ended September 30, 2019). Realogy Title Group also experienced a 159% increase in the number of title and closing units processed as a result of homeowners refinancing their home loans for the nine months ended September 30, 2020 as compared to the prior year period. The refinancing volume of these businesses are inherently cyclical and this level of volume may not be maintained or may meaningfully decrease with fluctuations in market conditions such as mortgage rates.
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Due to the economic effects of the COVID-19 crisis, banks may tighten mortgage standards, even as rates decline, which could limit the availability of mortgage financing. In addition, many individuals and businesses have benefited and may be continuing to benefit from one or more federal and/or state monetary or fiscal programs meant to assist in the navigation of COVID-related financial challenges, and the termination or substantial curtailment of, or failure to extend, such programs could have a negative impact on their financial health. Increases in mortgage rates adversely impact housing affordability and we have been and could again be negatively impacted by a rising interest rate environment.
Affordability. The fixed housing affordability index, as reported by NAR, was consistent year-over-year at 160 for August 2019 and 159 for August 2020. A housing affordability index above 100 signifies that a family earning the median income has sufficient income to purchase a median-priced home, assuming a 20 percent down payment and ability to qualify for a mortgage. Housing affordability may be impacted in future periods by increases in average homesale price and the low inventory environment as well as the rise in unemployment and economic challenges as a result of the COVID-19 crisis, but we are unable to estimate the extent due to the uncertainties of the COVID-19 crisis and its related impact on the U.S. economy.
Recruitment and Retention of Independent Sales Agents; Commission Income. Recruitment and retention of independent sales agents and independent sales agent teams are critical to the business and financial results of a brokerage, including our company owned brokerages and those operated by our affiliated franchisees. Aggressive competition for the affiliation of independent sales agents has negatively impacted recruitment and retention efforts at both Realogy Franchise and Brokerage Groups, in particular with respect to more productive sales agents, and drove a loss in our market share for 2019 compared to 2018. This competitive environment has continued despite general business disruption due to the COVID-19 crisis.
We believe that a variety of factors in recent years have driven intensifying recruitment and retention tactics for independent sales agents in the industry and has increasingly impacted our recruitment and retention of top producing agents. Such factors include increasing competition, increasing levels of commissions paid to agents (including up-front payments and equity), changes in the spending patterns of independent sales agents (as more independent sales agents purchase services from third-parties outside of their affiliated broker), a heightening focus on leads or business opportunities generated for the independent sales agent from the brokerage, differentiation in the bundling of agent services or industry offerings (including non-traditional offerings), and the growth in independent sales agent teams.
In addition, industry competition for independent sales agents has been and is expected to continue to be further complicated by competitive models that do not prioritize traditional business objectives. For example, we believe that certain owned-brokerage competitors have investors that have historically allowed the pursuit of increases in market share over profitability, which not only exacerbates competition for independent sales agents, but places additional pressure on the share of commission income received by the agent.
Competition for productive agents is expected to continue to have a negative impact on our homesale transaction volume and to put upward pressure on the average share of commissions earned by independent sales agents and may have a negative impact on our market share. These competitive market factors also impact our franchisees and such franchisees have and may continue to seek reduced royalty fee arrangements or other incentives from us to offset the continued business pressures on such franchisees, which would result in a reduction in royalty fees paid to us.
Non-Traditional Market Participants. While real estate brokers using historical real estate brokerage models typically compete for business primarily on the basis of services offered, brokerage commission, reputation, utilization of technology and personal contacts, participants pursuing non-traditional methods of marketing real estate may compete in other ways, including companies that employ technologies intended to disrupt historical real estate brokerage models or minimize or eliminate the role traditional brokers and sales agents perform in the homesale transaction process.
A growing number of companies are competing in non-traditional ways for a portion of the gross commission income generated by homesale transactions. For example, many iBuying business models seek to disintermediate real estate brokers and independent sales agents from buyers and sellers of homes by reducing or eliminating brokerage commissions that may be earned on those transactions. In October 2020, we continued to evolve our agent-focused iBuying offerings through the launch of a joint venture with Home Partners of America intended to expand the geographic reach of our RealSure program, which has been available in pilot form in 10 U.S. markets. Under the RealSure Sell program, sellers with qualifying properties receive a cash offer valid for 45 days immediately upon listing, and during this time frame have the opportunity to pursue a better price by marketing their property with an affiliated independent sales agent. Sellers who are enrolled in
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RealSure Sell can utilize RealSure Buy to make a more competitive offer on their next home before their current home is sold by leveraging their RealSure Sell cash offer.
In addition, the concentration and market power of the top listing aggregators allow them to monetize their platforms by a variety of actions, including expanding into the brokerage business, charging significant referral fees, charging listing and display fees, diluting the relationship between agents and brokers (and between agents and the consumer), tying referrals to use of their products, consolidating and leveraging data, and engaging in preferential or exclusionary practices to favor or disfavor other industry participants. These actions divert and reduce the earnings of other industry participants, including our company owned and franchised brokerages. Aggregators could intensify their current business tactics or introduce new programs that could be materially disadvantageous to our business and other brokerage participants in the industry and such tactics could further increase pressures on the profitability of our company owned and franchised brokerages and affiliated independent sales agents, reduce our franchisor service revenue and dilute our relationships with our franchisees and our and our franchisees' relationships with affiliated independent sales agents and buyers and sellers of homes. For example, one dominant listing aggregator recently announced its intention to launch a brokerage with employee sales agents in several locations to support its iBuying offering. It also announced that it expects to join local multiple listing services, known as MLSs, as a participating broker to gain electronic access directly to real estate listings rather than relying on disparate electronic feeds from other brokers participating in the MLSs or MLS syndication feeds.
New Development. Realogy Brokerage Group has relationships with developers, primarily in major cities, in particular New York City, to provide marketing and brokerage services in new developments. New development closings can vary significantly from year to year due to timing matters that are outside of our control, including long cycle times and irregular project completion timing. In addition, the new development industry has also experienced significant disruption due to the COVID-19 crisis. Accordingly, earnings attributable to this business can fluctuate meaningfully from year to year, impacting both homesale transaction volume and the share of gross commission income we realize on such transactions.
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Existing Homesales
For the nine months ended September 30, 2020 compared to the same period in 2019, NAR existing homesale transactions remained flat at 4 million homes. For the nine months ended September 30, 2020, homesale transactions on a combined basis for Realogy Franchise and Brokerage Groups decreased 4% compared to the same period in 2019 due primarily to the impact of the COVID-19 crisis on second quarter homesale transaction volume, the impact of competition (including on our market share), the loss of certain franchisees and the geographic concentration of Realogy Brokerage Group.
During the three months ended September 30, 2020, NAR's existing homesale transactions increased 13% as compared to an increase in homesale transactions of 12% at Realogy Franchise Group and 10% at Realogy Brokerage Group (for an increase of 12% on a combined basis). The quarterly and annual year-over-year trends in homesale transactions are as follows:
_______________
(a)Q1, Q2 and Q3 existing homesale data is as of the most recent NAR press release, which is subject to sampling error.
(b)Forecasted existing homesale data, on a seasonally adjusted basis, is as of the most recent NAR forecast.
(c)Forecasted existing homesale data, on a seasonally adjusted basis, is as of the most recent Fannie Mae press release.
As of their most recent releases, NAR is forecasting existing homesale transactions to increase 9% in 2021 while Fannie Mae is forecasting existing homesale transactions to increase 1% for the same period.
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Existing Homesale Price
For the nine months ended September 30, 2020 compared to the same period in 2019, NAR existing homesale average price increased 6%. For the nine months ended September 30, 2020, average homesale price on a combined basis for Realogy Franchise and Brokerage Groups increased 7% compared to the same period in 2019.
During the three months ended September 30, 2020, NAR's existing homesale average price increased 9% as compared to an average homesale price increase of 17% at Realogy Franchise Group and 11% at Realogy Brokerage Group (for an increase of 14% on a combined basis). We believe that the delta between Realogy Brokerage Group and Realogy Franchise Group in the 2020 third quarter was primarily driven by Realogy Brokerage Group's geographic concentration in the New York metropolitan area. We believe that the delta between Realogy Franchise Group and NAR in the 2020 third quarter was primarily driven by particularly strong performance by one of Realogy Franchise Group's brands in the high-end of the market. The quarterly and annual year-over-year trends in the price of homes are as follows:
_______________
(a)Q1, Q2 and Q3 homesale price data is for existing homesale average price and is as of the most recent NAR press release.
(b)Forecasted homesale price data is for median price and is as of the most recent NAR forecast.
(c)Existing homesale price data is for median price and is as of the most recent Fannie Mae press release.
As of their most recent releases, NAR and Fannie Mae are both forecasting median existing homesale price to increase 4% in 2021.
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* * *
We believe that long-term demand for housing and the growth of our industry are primarily driven by the affordability of housing, the economic health of the U.S. economy, demographic trends such as generational transitions, increases in U.S. household formation, mortgage rate levels and mortgage availability, certain tax benefits, job growth, increases in renters that qualify as homebuyers, the inherent attributes of homeownership versus renting and the availability of inventory in the consumer's desired location and within the consumer's price range. At this time, certain of these factors are trending favorably, such as mortgage rate levels and household formation, although the COVID-19 pandemic continues to materially impact the entire industry and the global economy. Factors that may negatively affect growth in the housing industry include:
•the extent, duration and severity of the COVID-19 pandemic and the economic consequences stemming from the COVID-19 crisis, including continued economic contraction or the failure of a recovery to be sustained as well as related risks such as governmental regulation (including those that preclude or strictly limit showings of properties), changes in patterns of commerce or consumer activities and changes in consumer attitudes;
•intensifying or continuing economic contraction in the U.S. economy including the impact of recessions, slow economic growth, or a deterioration in other economic factors (including potential consumer, business or governmental defaults or delinquencies due to the COVID-19 crisis or otherwise);
•continued low or accelerated declines in home inventory levels or stagnant and/or declining home prices;
•continued high levels of unemployment and/or declining wages or stagnant wage growth in the U.S.;
•the termination or substantial curtailment of, or failure to extend, one or more federal and/or state monetary or fiscal programs meant to assist businesses and individuals navigate COVID-19 related financial challenges;
•decreasing consumer confidence in the economy and/or the residential real estate market;
•an increase in potential homebuyers with low credit ratings or inability to afford down payments;
•reduced availability of mortgage financing or increasing down payment requirements or other mortgage challenges due to disrupted earnings;
•weak capital, credit and financial markets and/or the instability of financial institutions;
•an increase in foreclosure activity;
•a reduction in the affordability of homes, including in connection with rising home prices;
•increases in mortgage rates;
•certain provisions of the 2017 Tax Act that directly impact traditional incentives associated with home ownership and may reduce the financial distinction between renting and owning a home, including those that reduce the amount that certain taxpayers would be allowed to deduct for home mortgage interest or state, local and property taxes;
•state or local tax reform, such as the "mansion tax" in New York City;
•decelerated or lack of building of new housing for homesales, increased building of new rental properties, or irregular timing of new development closings leading to lower home sales at Realogy Brokerage Group, which has relationships with developers, primarily in major cities, to provide marketing and brokerage services in new developments;
•geopolitical and economic instability, including uncertainty around the 2020 U.S. election;
•homeowners retaining their homes for longer periods of time;
•a decline in home ownership levels in the U.S., including as a result of changing attitudes towards home ownership, particularly among potential first-time homebuyers who may delay, or decide not to, purchase a home, limits on the proclivity of home owners to purchase an alternative home due to constrained inventory, or changes in preferences to rent versus purchase a home;
•natural disasters, such as hurricanes, earthquakes, wildfires, mudslides and other events that disrupt local or regional real estate markets, including public health crises, such as pandemics and epidemics; and
•other legislative or regulatory reforms, including but not limited to reform that adversely impacts the financing of the U.S. housing market, changes relating to RESPA, potential reform of Fannie Mae and Freddie Mac, immigration reform, and further potential federal, state or local tax code reform (including, for example, the proposed "pied-a-terre tax" in New York City).
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Cartus Relocation Services is impacted by these general residential housing trends as well as global corporate spending on relocation services (which continue to shift to lower cost relocation benefits as corporate clients engage in cost reduction initiatives and/or restructuring programs) and changes in employment relocation trends.
* * *
While data provided by NAR and Fannie Mae are two indicators of the direction of the residential housing market, we believe that homesale statistics will continue to vary between us and NAR and Fannie Mae because:
•they use survey data and estimates in their historical reports and forecasting models, which are subject to sampling error, whereas we use data based on actual reported results;
•there are geographical differences and concentrations in the markets in which we operate versus the national market. For example, many of our company owned brokerage offices are geographically located where average homesale prices are generally higher than the national average and therefore NAR survey data will not correlate with Realogy Brokerage Group's results;
•comparability is also diminished due to NAR’s utilization of seasonally adjusted annualized rates whereas we report actual period-over-period changes and their use of median price for their forecasts compared to our average price;
•NAR historical data is subject to periodic review and revision and these revisions have been material in the past, and could be material in the future; and
•NAR and Fannie Mae generally update their forecasts on a monthly basis and a subsequent forecast may change materially from a forecast that was previously issued.
While we believe that the industry data presented herein is derived from the most widely recognized sources for reporting U.S. residential housing market statistical data, we do not endorse or suggest reliance on this data alone. We also note that forecasts are inherently uncertain or speculative in nature and actual results for any period could materially differ.
KEY DRIVERS OF OUR BUSINESSES
Within Realogy Franchise and Brokerage Groups, we measure operating performance using the following key operating metrics: (i) closed homesale sides, which represents either the "buy" side or the "sell" side of a homesale transaction, (ii) average homesale price, which represents the average selling price of closed homesale transactions, and (iii) average homesale broker commission rate, which represents the average commission rate earned on either the "buy" side or "sell" side of a homesale transaction.
For Realogy Franchise Group, we also use net royalty per side, which represents the royalty payment to Realogy Franchise Group for each homesale transaction side taking into account royalty rates, average broker commission rates, volume incentives achieved and other incentives. We utilize net royalty per side as it includes the impact of changes in average homesale price as well as all incentives and represents the royalty revenue impact of each incremental side.
For Realogy Brokerage Group, we also use gross commission income per side, which represents gross commission income divided by closed homesale sides. Gross commission income includes commissions earned in homesale transactions and certain other activities, primarily leasing transactions. Realogy Brokerage Group, as a franchisee of Realogy Franchise Group, pays a royalty fee of approximately 6% per transaction to Realogy Franchise Group from the commission earned on a real estate transaction. The remainder of gross commission income is split between the broker (Realogy Brokerage Group) and the independent sales agent in accordance with their applicable independent contractor agreement (which specifies the portion of the broker commission to be paid to the agent), which varies by agent agreement, which varies by agent.
In Realogy Title Group, operating performance is evaluated using the following key metrics: (i) purchase title and closing units, which represent the number of title and closing units we process as a result of home purchases, (ii) refinance title and closing units, which represent the number of title and closing units we process as a result of homeowners refinancing their home loans, and (iii) average fee per closing unit, which represents the average fee we earn on purchase title and refinancing title sides. Results are favorably impacted by the low mortgage rate environment. An increase or decrease in homesale transactions will impact the financial results of Realogy Title Group; however, their financial results are not significantly impacted by a change in homesale price.
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Realogy Leads Group, which consists of Company- and client- directed affinity programs, broker-to-broker referrals and the Realogy Advantage Broker Network (previously referred to as the Cartus Broker Network) was consolidated into Realogy Franchise Group during the first quarter of 2020.
For the three months ended September 30, 2020, Cartus Relocation Services had 15,097 initiations as compared to 21,020 initiations during the same period in 2019. Cartus Relocation Services earned referral fee revenue from approximately 3,417 referrals for the three months ended September 30, 2020 as compared to 4,698 referrals during the same period of 2019. For the nine months ended September 30, 2020, Cartus Relocation Services had 60,713 initiations as compared to 80,331 initiations during the same period of 2019. Cartus Relocation Services earned referral fee revenue from approximately 9,005 referrals for the nine months ended September 30, 2020 as compared to 11,808 referrals during the same period of 2019. Cartus Relocation Services experienced a decline in new initiations attributable to the COVID-19 pandemic in the second and third quarters of 2020 and this trend is expected to continue.
The following table presents our drivers for the three and nine months ended September 30, 2020 and 2019. See "Results of Operations" below for a discussion as to how these drivers affected our business for the periods presented.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | % Change |  | 2020 |  | 2019 |  | % Change
Realogy Franchise Group (a) |  |  |  |  |  |  |  |  |  |  |
Closed homesale sides | 336,737 |  |  | 299,937 |  |  | 12 | % |  | 778,010 |  |  | 803,976 |  |  | (3) | %
Average homesale price | $ | 367,095 |  |  | $ | 314,984 |  |  | 17 | % |  | $ | 341,427 |  |  | $ | 312,224 |  |  | 9 | %
Average homesale broker commission rate | 2.48 | % |  | 2.47 | % |  | 1 | bps |  | 2.48 | % |  | 2.47 | % |  | 1 | bps
Net royalty per side | $ | 367 |  |  | $ | 329 |  |  | 12 | % |  | $ | 341 |  |  | $ | 323 |  |  | 6 | %
Realogy Brokerage Group |  |  |  |  |  |  |  |  |  |  |
Closed homesale sides | 101,890 |  |  | 92,399 |  |  | 10 | % |  | 235,806 |  |  | 248,092 |  |  | (5) | %
Average homesale price | $ | 563,513 |  |  | $ | 509,425 |  |  | 11 | % |  | $ | 537,602 |  |  | $ | 522,050 |  |  | 3 | %
Average homesale broker commission rate | 2.44 | % |  | 2.41 | % |  | 3 | bps |  | 2.43 | % |  | 2.41 | % |  | 2 | bps
Gross commission income per side | $ | 14,315 |  |  | $ | 13,000 |  |  | 10 | % |  | $ | 13,685 |  |  | $ | 13,343 |  |  | 3 | %
Realogy Title Group |  |  |  |  |  |  |  |  |  |  |
Purchase title and closing units | 45,788 |  |  | 41,619 |  |  | 10 | % |  | 106,540 |  |  | 111,865 |  |  | (5) | %
Refinance title and closing units | 18,387 |  |  | 8,014 |  |  | 129 | % |  | 44,834 |  |  | 17,295 |  |  | 159 | %
Average fee per closing unit | $ | 2,239 |  |  | $ | 2,288 |  |  | (2) | % |  | $ | 2,189 |  |  | $ | 2,308 |  |  | (5) | %

_______________
(a)Includes all franchisees except for Realogy Brokerage Group.
A decline in the number of homesale transactions and/or decline in homesale prices could adversely affect our results of operations by: (i) reducing the royalties we receive from our franchisees, (ii) reducing the commissions our company owned brokerage operations earn, (iii) reducing the demand for our title and settlement services, (iv) reducing the referral fees we earn from affinity, broker-to-broker and the Realogy Advantage Leads Network, and (v) increasing the risk of franchisee default due to lower homesale volume. Our results could also be negatively affected by a decline in commission rates charged by brokers or greater commission payments to sales agents or by an increase in volume or other incentives paid to franchisees.
Since 2014, we have experienced approximately a one basis point decline in the average homesale broker commission rate each year, which we believe has been largely attributable to increases in average homesale prices (as higher priced homes tend to have a lower broker commission) and, to a lesser extent, competitors providing fewer or similar services for a reduced fee.
Royalty fees are charged to all franchisees pursuant to the terms of the relevant franchise agreements and are included in each of the real estate brands' franchise disclosure documents. Most of our third-party franchisees are subject to a 6% royalty rate and entitled to volume incentives, although a royalty fee generally equal to 5% of franchisee commission (capped at a set amount per independent sales agent per year) is applicable to franchisees operating under the "capped fee model" that was launched for our Better Homes and Gardens® Real Estate franchise business in January 2019. Volume incentives are calculated as a progressive percentage of the applicable franchisee's eligible annual gross commission income
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and generally result in a net or effective royalty rate ranging from 6% to 3% for the franchisee (prior to taking into account other incentives that may be applicable to the franchisee). Volume incentives increase or decrease as the franchisee's gross commission income generated increases or decreases, respectively. We have the right to adjust the annual volume incentive tables on an annual basis in response to changing market conditions. In addition, certain of our franchisees (including some of our largest franchisees) have a flat royalty rate of less than 6% and are not eligible for volume incentives.
Other incentives may also be used as consideration to attract new franchisees, grow franchisees (including through independent sales agent recruitment) or extend existing franchise agreements, although in contrast to volume incentives, the majority of other incentives are not homesale transaction based.
Transaction volume growth has exceeded royalty revenue growth due primarily to the growth in gross commission income generated by our top 250 franchisees and our increased use of other sales incentives, both of which directly impact royalty revenue. Over the past several years, our top 250 franchisees have grown faster than our other franchisees through organic growth and market consolidation. If the amount of gross commission income generated by our top 250 franchisees continues to grow at a quicker pace relative to our other franchisees, we would expect our royalty revenue to continue to increase, but at a slower pace than homesale transaction volume. Likewise, our royalty revenue would continue to increase, but at a slower pace than homesale transaction volume, if the gross commission income generated by all of our franchisees grows faster than the applicable annual volume incentive table increase or if we increase our use of standard volume or other incentives. However, in the event that the gross commission income generated by our franchisees increases as a result of increased transaction volume, we would expect to recognize an increase in overall royalty payments to us.
We face significant competition from other national real estate brokerage brand franchisors for franchisees and we expect that the trend of increasing incentives will continue in the future in order to attract, retain, and help grow certain franchisees. We expect to experience pressures on net royalty per side, largely due to the impact of competitive market factors noted above, continued concentration among our top 250 franchisees, and the impact of affiliated franchisees of our Better Homes and Gardens® Real Estate brand moving to the "capped fee model" we adopted in 2019; however, these pressures were offset by increases in homesale prices in the three and nine-month periods ended September 30, 2020.
Realogy Brokerage Group has a significant concentration of real estate brokerage offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts, while Realogy Franchise Group has franchised offices that are more widely dispersed across the United States. Accordingly, operating results and homesale statistics may differ between Realogy Brokerage Group and Realogy Franchise Group based upon geographic presence and the corresponding homesale activity in each geographic region. In addition, the share of commissions earned by independent sales agents directly impacts the margin earned by Realogy Brokerage Group. Such share of commissions earned by independent sales agents varies by region and commission schedules are generally progressive to incentivize sales agents to achieve higher levels of production. Commission share has been and we expect will continue to be subject to upward pressure in favor of the independent sales agent for a variety of factors, including more aggressive recruitment and retention activities taken by us and our competitors as well as growth in independent sales agent teams.
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RESULTS OF OPERATIONS
Discussed below are our condensed consolidated results of operations and the results of operations for each of our reportable segments. The reportable segments presented below represent our segments for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying our reportable segments, we also consider the nature of services provided by our segments. Management evaluates the operating results of each of our reportable segments based upon revenue and Operating EBITDA. Operating EBITDA is defined by us as net income (loss) before depreciation and amortization, interest expense, net, income taxes, and other items that are not core to the operating activities of the Company such as restructuring charges, former parent legacy items, gains or losses on the early extinguishment of debt, impairments, gains or losses on discontinued operations and gains or losses on the sale of investments or other assets. Our presentation of Operating EBITDA may not be comparable to similarly titled measures used by other companies.
Our results of operations should be read in conjunction with our other disclosures in this Item 2. including under the heading Current Business and Industry Trends.
Three Months Ended September 30, 2020 vs. Three Months Ended September 30, 2019
Our consolidated results comprised the following:

| Three Months Ended September 30,
| 2020 |  | 2019 |  | Change
Net revenues | $ | 1,857 |  |  | $ | 1,550 |  |  | $ | 307 |
Total expenses | 1,711 |  |  | 1,700 |  |  | 11 |
Income (loss) from continuing operations before income taxes, equity in earnings and noncontrolling interests | 146 |  |  | (150) |  |  | 296 |
Income tax expense (benefit) | 54 |  |  | (23) |  |  | 77 |
Equity in earnings of unconsolidated entities | (53) |  |  | (7) |  |  | (46) |
Net income (loss) from continuing operations | 145 |  |  | (120) |  |  | 265 |
Net (loss) income from discontinued operations | (46) |  |  | 8 |  |  | (54) |
Net income (loss) | 99 |  |  | (112) |  |  | 211 |
Less: Net income attributable to noncontrolling interests | (1) |  |  | (1) |  |  | — |
Net income (loss) attributable to Realogy Holdings and Realogy Group | $ | 98 |  |  | $ | (113) |  |  | $ | 211 |

Net revenues increased $307 million or 20% for the three months ended September 30, 2020 compared with the three months ended September 30, 2019 driven by higher homesale transaction volume at both Realogy Franchise and Brokerage Groups primarily due to a strong recovery in the residential real estate market which began late in the second quarter of 2020 following a period of sharp decline in homesale transactions starting in the final weeks of the first quarter of 2020.
Total expenses increased $11 million or 1% for the third quarter of 2020 compared to the third quarter of 2019 primarily due to:
•a $230 million increase in commission and other sales agent-related costs primarily as a result of the impact of higher homesale transaction volume at Realogy Brokerage Group and higher agent commission costs primarily driven by a shift in mix to more productive, higher compensated agents, the impact of retention efforts, and business and geographic mix;
•a $27 million increase in operating and general and administrative expenses primarily due to higher employee incentive accruals, partially offset by lower employee-related, occupancy and other operating costs as a result of temporary COVID-19 related cost savings initiatives; and
•the absence of a $10 million gain on the early extinguishment of debt as a result of the repurchase of Senior Notes completed in the third quarter of 2019,
partially offset by:
•lease asset impairments of $6 million during the third quarter of 2020 compared to impairments of $240 million during the third quarter of 2019 which included a goodwill impairment charge of $237 million (reducing the net carrying value of Realogy Brokerage Group by $180 million after accounting for the related income tax benefit of $57 million) and $3 million related to lease asset impairments;
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•an $18 million net decrease in interest expense primarily due to a $12 million decline in expense related to mark-to-market adjustments for our interest rate swaps that resulted in no gains or losses during the third quarter of 2020 compared to losses of $12 million during the third quarter of 2019 and a decrease in interest expense due to LIBOR rate decreases; and
•a $7 million decrease in marketing expense primarily due to not holding in person meetings and conferences and lower advertising costs due to the COVID-19 pandemic.
Equity in earnings were $53 million during the third quarter of 2020 compared to earnings of $7 million during the third quarter of 2019 primarily due to an improvement in earnings of Guaranteed Rate Affinity at Realogy Title Group. Equity in earnings for Guaranteed Rate Affinity represented approximately 17% of the Company's Operating EBITDA for the third quarter of 2020, increasing by $46 million from $5 million in the third quarter of 2019 to $51 million in the third quarter of 2020 as a result of the low mortgage rate environment and improved margins in the venture. Equity in earnings for Realogy Title Group's other equity method investments remained flat at $2 million during the third quarter of 2020 and 2019.
During the third quarter of 2020, we incurred $13 million of restructuring costs primarily related to the Company's restructuring program focused on office consolidation and instituting operational efficiencies to drive profitability. The Company expects the estimated total cost to be approximately $108 million, with $74 million incurred to date. See Note 6, "Restructuring Costs", to the Condensed Consolidated Financial Statements for additional information.
The provision for income taxes was an expense of $54 million for the three months ended September 30, 2020 compared to a benefit of $23 million for the three months ended September 30, 2019. Our effective tax rate was 27% and 16% for the three months ended September 30, 2020 and September 30, 2019, respectively.
The following table reflects the results of each of our reportable segments during the three months ended September 30, 2020 and 2019:

| Revenues (a) |  | $ Change |  | % Change |  | Operating EBITDA |  | $ Change |  | % Change |  | Operating EBITDA Margin |  | Change
| 2020 |  | 2019 |  |  |  | 2020 |  | 2019 |  |  |  | 2020 |  | 2019 |
Realogy Franchise Group | $ | 262 |  |  | $ | 240 |  |  | $ | 22 |  |  | 9 | % |  | $ | 196 |  |  | $ | 170 |  |  | $ | 26 |  |  | 15 | % |  | 75 | % |  | 71 | % |  | 4 |
Realogy Brokerage Group | 1,479 |  |  | 1,222 |  |  | 257 |  |  | 21 |  |  | 61 |  |  | 31 |  |  | 30 |  |  | 97 |  |  | 4 |  |  | 3 |  |  | 1 |
Realogy Title Group | 213 |  |  | 170 |  |  | 43 |  |  | 25 |  |  | 95 |  |  | 31 |  |  | 64 |  |  | 206 |  | 45 |  |  | 18 |  |  | 27 |
Corporate and Other | (97) |  |  | (82) |  |  | (15) |  |  | * |  | (43) |  |  | (26) |  |  | (17) |  |  | * |  |  |  |  |  |
Total continuing operations | $ | 1,857 |  |  | $ | 1,550 |  |  | $ | 307 |  |  | 20 | % |  | $ | 309 |  |  | $ | 206 |  |  | $ | 103 |  |  | 50 | % |  | 17 | % |  | 13 | % |  | 4 |
Less: Depreciation and amortization |  | 43 |  |  | 42 |  |  |  |  |  |  |  |  |  |  |
Interest expense, net |  | 48 |  |  | 66 |  |  |  |  |  |  |  |  |  |  |
Income tax expense (benefit) |  | 54 |  |  | (23) |  |  |  |  |  |  |  |  |  |  |
Restructuring costs, net (b) |  | 13 |  |  | 11 |  |  |  |  |  |  |  |  |  |  |
Impairments (c) |  | 6 |  |  | 240 |  |  |  |  |  |  |  |  |  |  |
Former parent legacy cost, net (d) |  | 1 |  |  | 1 |  |  |  |  |  |  |  |  |  |  |
Gain on the early extinguishment of debt (d) |  | — |  |  | (10) |  |  |  |  |  |  |  |  |  |  |
Net income (loss) from continuing operations attributable to Realogy Holdings and Realogy Group |  | 144 |  |  | (121) |  |  |  |  |  |  |  |  |  |  |
Net (loss) income from discontinued operations |  | (46) |  |  | 8 |  |  |  |  |  |  |  |  |  |  |
Net income (loss) attributable to Realogy Holdings and Realogy Group |  | $ | 98 |  |  | $ | (113) |  |  |  |  |  |  |  |  |  |  |

_______________
* not meaningful
(a)Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by Realogy Brokerage Group of $97 million and $82 million during the three months ended September 30, 2020 and 2019, respectively.
(b)Restructuring charges incurred for the three months ended September 30, 2020 include $11 million at Realogy Brokerage Group and $2 million at Corporate and Other. Restructuring charges incurred for the three months ended September 30, 2019 include $2 million at Realogy Franchise Group, $8 million at Realogy Brokerage Group and $1 million at Corporate and Other.
(c)Impairments for the three months ended September 30, 2020 relate to lease asset impairments. Impairments for the three months ended September 30, 2019 include a goodwill impairment charge of $237 million (which reduced the net carrying value of Realogy
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Brokerage Group by $180 million after accounting for the related income tax benefit of $57 million) and $3 million related to lease asset impairments.
(d)Former parent legacy items and Gain on the early extinguishment of debt are recorded in Corporate and Other. During the third quarter of 2019, the Company repurchased $93 million of its 4.875% Senior Notes through open market purchases resulting in a gain on the early extinguishment of debt of $10 million.
As described in the aforementioned table, Operating EBITDA margin for "Total continuing operations" expressed as a percentage of revenues increased 4 percentage points to 17% for the three months ended September 30, 2020 compared to 13% for the same period in 2019. On a segment basis, Realogy Franchise Group's margin increased 4 percentage points to 75% from 71% primarily due to an increase in royalty revenues. Realogy Brokerage Group's margin increased 1 percentage point to 4% from 3% primarily due to lower operating and employee expenses primarily due to temporary COVID-19 related cost savings initiatives, partially offset by higher agent commission costs primarily driven by a shift in mix to more productive, higher compensated agents, the impact of retention efforts, and business and geographic mix. Realogy Title Group's margin increased 27 percentage points to 45% from 18% primarily as a result of an increase in equity in earnings of Guaranteed Rate Affinity as a result of the low mortgage rate environment and improved margins in the venture.
The Corporate and Other segment Operating EBITDA for the three months ended September 30, 2020 decreased $17 million to negative $43 million primarily due to higher employee incentive accruals.
Realogy Franchise and Brokerage Groups on a Combined Basis
The following table reflects Realogy Franchise and Brokerage Group's results before the intercompany royalties and marketing fees as well as on a combined basis to show the Operating EBITDA contribution of these business segments to the overall Operating EBITDA of the Company. The Operating EBITDA margin for the combined segments increased 1 percentage point from 15% to 16% primarily due to lower operating and employee expenses primarily due to temporary COVID-19 related cost savings initiatives and an increase in royalty revenues at Realogy Franchise Group, partially offset by higher agent commission costs at Realogy Brokerage Group during the third quarter of 2020 compared to the third quarter of 2019:

| Revenues |  | $ Change |  | % Change |  | Operating EBITDA |  | $ Change |  | % Change |  | Operating EBITDA Margin |  | Change
| 2020 |  | 2019 |  |  |  | 2020 |  | 2019 |  |  |  | 2020 |  | 2019 |
Realogy Franchise Group (a) | $ | 165 |  |  | $ | 158 |  |  | 7 |  |  | 4 |  |  | $ | 99 |  |  | $ | 88 |  |  | 11 |  |  | 13 |  |  | 60 | % |  | 56 | % |  | 4 |
Realogy Brokerage Group (a) | 1,479 |  |  | 1,222 |  |  | 257 |  |  | 21 |  |  | 158 |  |  | 113 |  |  | 45 |  |  | 40 |  |  | 11 |  |  | 9 |  |  | 2 |
Realogy Franchise and Brokerage Groups Combined | $ | 1,644 |  |  | $ | 1,380 |  |  | 264 |  |  | 19 |  |  | $ | 257 |  |  | $ | 201 |  |  | 56 |  |  | 28 |  |  | 16 | % |  | 15 | % |  | 1 |

_______________
(a)The segment numbers noted above do not reflect the impact of intercompany royalties and marketing fees paid by Realogy Brokerage Group to Realogy Franchise Group of $97 million and $82 million during the three months ended September 30, 2020 and 2019, respectively.
Realogy Franchise Group
Revenues increased $22 million to $262 million and Operating EBITDA increased $26 million to $196 million for the three months ended September 30, 2020 compared with the same period in 2019.
Revenues increased $22 million primarily as a result of:
•a $24 million increase in third-party domestic franchisee royalty revenue primarily due to a 31% increase in homesale transaction volume at Realogy Franchise Group which consisted of a 17% increase in average homesale price and a 12% increase in existing homesale transactions; and
•a $16 million increase in intercompany royalties received from Realogy Brokerage Group,
partially offset by:
•a $10 million decrease in lead referral revenues driven by lower volume and referral transactions primarily driven by the discontinuation of the USAA affinity program which ceased new enrollments in the third quarter of 2019;
•a $5 million decrease in revenue related to the early termination of third party listing fee agreements; and
•a $2 million decrease in registration and brand marketing fund revenue, which had a related expense decrease of $5 million resulting in a $3 million net positive impact on Operating EBITDA, due to not holding in person meetings
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and conferences and lower advertising costs due to the COVID-19 pandemic in the third quarter of 2020 compared to the third quarter of 2019.
Realogy Franchise Group revenue includes intercompany royalties received from Realogy Brokerage Group of $94 million and $78 million during the third quarter of 2020 and 2019, respectively, which are eliminated in consolidation against the expense reflected in Realogy Brokerage Group's results.
The $26 million increase in Operating EBITDA was primarily due to the $22 million increase in revenues and the $5 million decrease in marketing expense discussed above, partially offset by higher employee incentive accruals.
Realogy Brokerage Group
Revenues increased $257 million to $1,479 million and Operating EBITDA increased $30 million to $61 million for the three months ended September 30, 2020 compared with the same period in 2019.
The revenue increase of $257 million was primarily driven by a 22% increase in homesale transaction volume at Realogy Brokerage Group which primarily consisted of an 11% increase in average homesale price and a 10% increase in existing homesale transactions due to a strong recovery in the residential real estate market which began in the late second quarter of 2020 following a period of sharp decline in homesale transactions starting in the final weeks of the first quarter of 2020.
Operating EBITDA increased $30 million primarily due to:
•a $257 million increase in revenues discussed above;
•a $15 million decrease in employee-related, occupancy costs and other operating costs due primarily to temporary COVID-19 related cost savings initiatives, partially offset by higher employee incentive accruals; and
•a $4 million decrease in marketing expense due to lower advertising costs as a result of the COVID-19 pandemic,
partially offset by:
•a $230 million increase in commission expenses paid to independent sales agents from $875 million in the third quarter of 2019 to $1,105 million in the third quarter of 2020. Commission expense increased primarily as a result of the impact of higher homesale transaction volume as discussed above, as well as higher agent commission costs primarily driven by a shift in mix to more productive, higher compensated agents, the impact of retention efforts, and business and geographic mix; and
•a $16 million increase in royalties paid to Realogy Franchise Group from $78 million in the third quarter of 2019 to $94 million in the third quarter of 2020 associated with the homesale transaction volume increase as described above.
Realogy Title Group
Revenues increased $43 million to $213 million and Operating EBITDA increased $64 million to $95 million for the three months ended September 30, 2020 compared with the same period in 2019.
Revenues increased $43 million primarily as a result of a $17 million increase in resale revenue due to an increase in purchase transactions, a $12 million increase in underwriter revenue with unaffiliated agents, which had a $2 million net positive impact on Operating EBITDA due to the related expense increase of $10 million, and an $11 million increase in refinance revenue due to an increase in activity in the refinance market.
Operating EBITDA increased $64 million primarily as a result of a $46 million increase in equity in earnings related to Guaranteed Rate Affinity due to the favorable mortgage rate environment and improved margins in the venture, a $17 million increase in resale revenue, an $11 million increase in refinance revenue and the $2 million net positive impact in underwriter transactions with unaffiliated agents discussed above, partially offset by a $15 million increase in employee and other operating costs due to an increase in variable costs due to higher volume and higher employee incentive accruals.
Discontinued Operations - Cartus Relocation
Revenues for Cartus Relocation Services decreased $27 million to $52 million and Operating EBITDA decreased $13 million to $4 million for the three months ended September 30, 2020 compared with the same period in 2019.
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Revenues decreased $27 million primarily as a result of a $10 million decrease in international revenue, a $10 million decrease in other relocation revenue and a $7 million decrease in referral revenue, which were primarily driven by lower volume largely related to the COVID-19 pandemic. Cartus Relocation Services experienced a decline in new initiations due to the COVID-19 pandemic in the second and third quarters of 2020 and this trend is expected to continue.
Operating EBITDA decreased $13 million due to the revenue decrease discussed above, partially offset by a decrease in employee and other operating costs as a result of cost savings initiatives.
Nine Months Ended September 30, 2020 vs. Nine Months Ended September 30, 2019
Our consolidated results comprised the following:

| Nine Months Ended September 30,
| 2020 |  | 2019 |  | Change
Net revenues | $ | 4,180 |  |  | $ | 4,268 |  |  | $ | (88) |
Total expenses | 4,607 |  |  | 4,441 |  |  | 166 |
Loss from continuing operations before income taxes, equity in earnings and noncontrolling interests | (427) |  |  | (173) |  |  | (254) |
Income tax benefit | (67) |  |  | (22) |  |  | (45) |
Equity in earnings of unconsolidated entities | (98) |  |  | (15) |  |  | (83) |
Net loss from continuing operations | (262) |  |  | (136) |  |  | (126) |
Net loss from discontinued operations | (114) |  |  | (5) |  |  | (109) |
Net loss | (376) |  |  | (141) |  |  | (235) |
Less: Net income attributable to noncontrolling interests | (2) |  |  | (2) |  |  | — |
Net loss attributable to Realogy Holdings and Realogy Group | $ | (378) |  |  | $ | (143) |  |  | $ | (235) |

Net revenues decreased $88 million or 2% for the nine months ended September 30, 2020 compared with the nine months ended September 30, 2019 driven by lower homesale transaction volume at Realogy Brokerage Group primarily due to the COVID-19 pandemic, which resulted in a sharp decline in homesale transactions starting in the final weeks of the first quarter of 2020 followed by a strong recovery in the residential real estate market beginning late in the second quarter of 2020.
Total expenses increased $166 million or 4% for the nine months ended September 30, 2020 compared to the same period of 2019 primarily due to:
•impairments of $460 million during the nine months ended September 30, 2020 compared to impairments of $243 million during the nine months ended September 30, 2019. The nine months ended September 30, 2020 include a goodwill impairment charge of $413 million (which reduced the net carrying value of Realogy Brokerage Group by $314 million after accounting for the related income tax benefit of $99 million), an impairment charge of $30 million (which reduced the carrying value of trademarks at Realogy Franchise Group) and $17 million related to lease asset impairments. The nine months ended September 30, 2019 include a goodwill impairment charge of $237 million (which reduced the net carrying value of Realogy Brokerage Group by $180 million after accounting for the related income tax benefit of $57 million) and $6 million related to lease asset impairments;
•a $15 million increase in commission and other sales agent-related costs primarily as a result of higher agent commission costs primarily driven by a shift in mix to more productive, higher compensated agents, the impact of retention efforts, and business and geographic mix;
•an $8 million loss on the early extinguishment of debt during the nine months ended September 30, 2020 as a result of the refinancing transactions in June 2020 compared to a $5 million net gain on the early extinguishment of debt during the nine months ended September 30, 2019 primarily due to the repurchase of Senior Notes during the third quarter of 2019; and
•a $9 million increase in restructuring costs,
partially offset by:
•a $50 million decrease in operating and general and administrative expenses primarily due to lower employee-related, occupancy and other operating costs as a result of temporary COVID-19 related cost savings initiatives, partially offset by higher employee incentive accruals; and
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•a $45 million decrease in marketing expense primarily due to not holding in person meetings and conferences and lower advertising costs due to the COVID-19 pandemic during the first nine months of 2020 compared to the same period in 2019.
Interest expense was $208 million for the nine months ended September 30, 2020 and remained relatively flat compared to the same period in 2019 due to a $9 million net expense related to mark-to-market adjustments for our interest rate swaps that resulted in losses of $59 million for the nine months ended September 30, 2020 compared to losses of $50 million during the same period of 2019, offset by a decrease in interest expense due to LIBOR rate decreases.
Equity in earnings were $98 million for the nine months ended September 30, 2020 compared to earnings of $15 million during the same period of 2019 primarily due to an improvement in earnings of Guaranteed Rate Affinity at Realogy Title Group. Equity in earnings for Guaranteed Rate Affinity represented approximately 18% of the Company's Operating EBITDA for the nine months ended September 30, 2020, increasing by $83 million from $12 million during the nine months ended September 30, 2019 to $95 million during the same period of 2020 as a result of the low mortgage rate environment and improved margins in the venture. Equity in earnings for Realogy Title Group's other equity method investments remained flat at $3 million during both the nine months ended September 30, 2020 and 2019.
During the nine months ended September 30, 2020, we incurred $38 million of restructuring costs primarily related to the Company's restructuring program focused on office consolidation and instituting operational efficiencies to drive profitability. The Company expects the estimated total cost to be approximately $108 million, with $74 million incurred to date. See Note 6, "Restructuring Costs", to the Condensed Consolidated Financial Statements for additional information.
The provision for income taxes was a benefit of $67 million for the nine months ended September 30, 2020 compared to a benefit of $22 million for the nine months ended September 30, 2019. Our effective tax rate was 20% and 14% for the nine months ended September 30, 2020 and September 30, 2019, respectively. The effective tax rate for the nine months ended September 30, 2020 was primarily impacted by items related to the goodwill impairment charge and equity awards for which the market value at vesting was lower than at the date of grant.
The following table reflects the results of each of our reportable segments during the nine months ended September 30, 2020 and 2019:

| Revenues (a) |  | $ Change |  | % Change |  | Operating EBITDA |  | $ Change |  | % Change |  | Operating EBITDA Margin |  | Change
| 2020 |  | 2019 |  |  |  | 2020 |  | 2019 |  |  |  | 2020 |  | 2019 |
Realogy Franchise Group | $ | 609 |  |  | $ | 679 |  |  | $ | (70) |  |  | (10) | % |  | $ | 419 |  |  | $ | 448 |  |  | $ | (29) |  |  | (6) | % |  | 69 | % |  | 66 | % |  | 3 |
Realogy Brokerage Group | 3,281 |  |  | 3,369 |  |  | (88) |  |  | (3) |  |  | 25 |  |  | 16 |  |  | 9 |  |  | 56 |  |  | 1 |  |  | — |  |  | 1 |
Realogy Title Group | 510 |  |  | 444 |  |  | 66 |  |  | 15 |  |  | 168 |  |  | 54 |  |  | 114 |  |  | 211 |  | 33 |  |  | 12 |  |  | 21 |
Corporate and Other | (220) |  |  | (224) |  |  | 4 |  |  | * |  | (94) |  |  | (75) |  |  | (19) |  |  | * |  |  |  |  |  |
Total continuing operations | $ | 4,180 |  |  | $ | 4,268 |  |  | $ | (88) |  |  | (2) | % |  | $ | 518 |  |  | $ | 443 |  |  | $ | 75 |  |  | 17 | % |  | 12 | % |  | 10 | % |  | 2 |
Less: Depreciation and amortization |  | 134 |  |  | 126 |  |  |  |  |  |  |  |  |  |  |
Interest expense, net |  | 208 |  |  | 209 |  |  |  |  |  |  |  |  |  |  |
Income tax benefit |  | (67) |  |  | (22) |  |  |  |  |  |  |  |  |  |  |
Restructuring costs, net (b) |  | 38 |  |  | 29 |  |  |  |  |  |  |  |  |  |  |
Impairments (c) |  | 460 |  |  | 243 |  |  |  |  |  |  |  |  |  |  |
Former parent legacy cost, net (d) |  | 1 |  |  | 1 |  |  |  |  |  |  |  |  |  |  |
Loss (gain) on the early extinguishment of debt (d) |  | 8 |  |  | (5) |  |  |  |  |  |  |  |  |  |  |
Net loss from continuing operations attributable to Realogy Holdings and Realogy Group |  | (264) |  |  | (138) |  |  |  |  |  |  |  |  |  |  |
Net loss from discontinued operations |  | (114) |  |  | (5) |  |  |  |  |  |  |  |  |  |  |
Net loss attributable to Realogy Holdings and Realogy Group |  | $ | (378) |  |  | $ | (143) |  |  |  |  |  |  |  |  |  |  |

_______________
* not meaningful
(a)Includes the elimination of transactions between segments, which consists of intercompany royalties and marketing fees paid by Realogy Brokerage Group of $220 million and $224 million during the nine months ended September 30, 2020 and 2019, respectively.
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(b)Restructuring charges incurred for the nine months ended September 30, 2020 include $1 million at Realogy Franchise Group, $32 million at Realogy Brokerage Group, $3 million at Realogy Title Group and $2 million at Corporate and Other. Restructuring charges incurred for the nine months ended September 30, 2019 include $3 million at Realogy Franchise Group, $18 million at Realogy Brokerage Group, $2 million at Realogy Title Group and $6 million at Corporate and Other.
(c)Impairments for the nine months ended September 30, 2020 include a goodwill impairment charge of $413 million (which reduced the net carrying value of Realogy Brokerage Group by $314 million after accounting for the related income tax benefit of $99 million), an impairment charge of $30 million (which reduced the carrying value of trademarks at Realogy Franchise Group) and $17 million related to lease asset impairments. Impairments for the nine months ended September 30, 2019 include a goodwill impairment charge of $237 million (which reduced the net carrying value of Realogy Brokerage Group by $180 million after accounting for the related income tax benefit of $57 million) and $6 million related to lease asset impairments.
(d)Former parent legacy items and Loss (gain) on the early extinguishment of debt are recorded in Corporate and Other. During the nine months ended September 30, 2019, the Company recorded a net gain on the early extinguishment of debt of $5 million which consisted of a $10 million gain as a result of the repurchase of Senior Notes completed in the third quarter of 2019, partially offset by a $5 million loss as a result of the refinancing transactions in the first quarter of 2019.
As described in the aforementioned table, Operating EBITDA margin for "Total continuing operations" expressed as a percentage of revenues increased 2 percentage points to 12% for the nine months ended September 30, 2020 compared to 10% for the same period in 2019. On a segment basis, Realogy Franchise Group's margin increased 3 percentage points to 69% from 66% primarily due to a decrease in employee and other operating costs primarily as a result of temporary COVID-19 related cost savings initiatives, partially offset by a decrease in revenue related to the early termination of third party listing fee agreements. Realogy Brokerage Group's margin increased 1 percentage point from zero to 1% primarily due to lower operating expenses primarily due to temporary COVID-19 related cost savings initiatives, partially offset by higher agent commission costs primarily driven by a shift in mix to more productive, higher compensated agents, the impact of retention efforts, and business and geographic mix. Realogy Title Group's margin increased 21 percentage points to 33% from 12% primarily as a result of an increase in equity in earnings due to an improvement in earnings of Guaranteed Rate Affinity as a result of the low mortgage rate environment and improved margins in the venture.
The Corporate and Other segment Operating EBITDA for the nine months ended September 30, 2020 decreased $19 million to negative $94 million primarily due to higher employee incentive accruals.
Realogy Franchise and Brokerage Groups on a Combined Basis
The following table reflects Realogy Franchise and Brokerage Group's results before the intercompany royalties and marketing fees as well as on a combined basis to show the Operating EBITDA contribution of these business segments to the overall Operating EBITDA of the Company. The Operating EBITDA margin for the combined segments remained flat at 12% during both the nine months ended September 30, 2020 and 2019:

| Revenues |  | $ Change |  | % Change |  | Operating EBITDA |  | $ Change |  | % Change |  | Operating EBITDA Margin |  | Change
| 2020 |  | 2019 |  |  |  | 2020 |  | 2019 |  |  |  | 2020 |  | 2019 |
Realogy Franchise Group (a) | $ | 389 |  |  | $ | 455 |  |  | (66) |  |  | (15) |  |  | $ | 199 |  |  | $ | 224 |  |  | (25) |  |  | (11) |  |  | 51 | % |  | 49 | % |  | 2 |
Realogy Brokerage Group (a) | 3,281 |  |  | 3,369 |  |  | (88) |  |  | (3) |  |  | 245 |  |  | 240 |  |  | 5 |  |  | 2 |  |  | 7 |  |  | 7 |  |  | — |
Realogy Franchise and Brokerage Groups Combined | $ | 3,670 |  |  | $ | 3,824 |  |  | (154) |  |  | (4) |  |  | $ | 444 |  |  | $ | 464 |  |  | (20) |  |  | (4) |  |  | 12 | % |  | 12 | % |  | — |

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(a)The segment numbers noted above do not reflect the impact of intercompany royalties and marketing fees paid by Realogy Brokerage Group to Realogy Franchise Group of $220 million and $224 million during the nine months ended September 30, 2020 and 2019, respectively.
Realogy Franchise Group
Revenues decreased $70 million to $609 million and Operating EBITDA decreased $29 million to $419 million for the nine months ended September 30, 2020 compared with the same period in 2019.
Revenues decreased $70 million primarily as a result of:
•a $28 million decrease in registration revenue and brand marketing fund revenue (associated with the waiver of marketing fees from affiliates in response to the COVID-19 pandemic), which had a related expense decrease of $35 million resulting in a net $7 million net positive impact on Operating EBITDA, due to not holding in person meetings and conferences and lower advertising costs due to the COVID-19 pandemic;
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•a $25 million decrease in leads referral revenues driven by lower volume and referral transactions primarily driven by the discontinuation of the USAA affinity program which ceased new enrollments in the third quarter of 2019;
•an $11 million decrease in revenue related to the early termination of third party listing fee agreements; and
•a $6 million decrease in other revenue.
Realogy Franchise Group revenue includes intercompany royalties received from Realogy Brokerage Group of $213 million and $215 million during the nine months ended September 30, 2020 and 2019, respectively, which are eliminated in consolidation against the expense reflected in Realogy Brokerage Group's results.
The $29 million decrease in Operating EBITDA was primarily due to the $70 million decrease in revenues discussed above and $9 million of higher expense for bad debt primarily due to the early termination of third party listing fee agreements. These Operating EBITDA decreases were partially offset by the $35 million decrease in marketing expense discussed above and a $15 million decrease in employee and other operating costs principally due to temporary COVID-19 related cost savings initiatives and the discontinuation of the USAA affinity program, partially offset by higher employee incentive accruals.
Realogy Brokerage Group
Revenues decreased $88 million to $3,281 million and Operating EBITDA increased $9 million to $25 million for the nine months ended September 30, 2020 compared with the same period in 2019.
The revenue decrease of $88 million was primarily driven by a 2% decrease in homesale transaction volume at Realogy Brokerage Group primarily due to lower transaction volume in the second quarter of 2020 due to the COVID-19 pandemic and consisted of a 5% decrease in existing homesale transactions, partially offset by a 3% increase in average homesale price. There was a strong recovery in the residential real estate market which began late in the second quarter of 2020, following a period of sharp decline in homesale transactions starting in the final weeks of the first quarter of 2020.
Operating EBITDA increased $9 million primarily due to:
•an $85 million decrease in employee-related, occupancy costs and other operating costs due to temporary COVID-19 related cost savings initiatives, partially offset by higher employee incentive accruals;
•a $25 million decrease in marketing expense due to lower advertising costs as a result of the COVID-19 pandemic; and
•a $2 million decrease in royalties paid to Realogy Franchise Group from $215 million for the nine months ended September 30, 2019 to $213 million in the same period of 2020 associated with the volume decline as described above,
partially offset by:
•the $88 million decrease in revenues discussed above; and
•a $15 million increase in commission expenses paid to independent sales agents from $2,405 million for the nine months ended September 30, 2019 to $2,420 million for the nine months ended September 30, 2020. Commission expense increased primarily as a result of higher agent commission costs primarily driven by a shift in mix to more productive, higher compensated agents, the impact of retention efforts, and business and geographic mix, partially offset by the impact of lower homesale transaction volume as discussed above.
Realogy Title Group
Revenues increased $66 million to $510 million and Operating EBITDA increased $114 million to $168 million for the nine months ended September 30, 2020 compared with the same period in 2019.
Revenues increased $66 million primarily as a result of a $35 million increase in refinance revenue due to an increase in activity in the refinance market and a $32 million increase in underwriter revenue with unaffiliated agents, which had a $5 million net positive impact on Operating EBITDA due to the related expense increase of $27 million. These revenue increases were partially offset by a $4 million decrease in resale revenue due to a decline in purchase transactions as result of the COVID-19 pandemic.
Operating EBITDA increased $114 million primarily as a result of an $83 million increase in equity in earnings primarily related to Guaranteed Rate Affinity due to the favorable mortgage rate environment and improved margins in the venture, a $35 million increase in refinance revenue, the $5 million net positive impact of underwriter transactions with
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unaffiliated agents discussed above, partially offset by a $9 million increase in employee and other operating costs due to an increase in variable costs due to higher volume and higher employee incentive accruals, partially offset by temporary COVID-19 related cost savings initiatives.
Discontinued Operations - Cartus Relocation
Revenues for Cartus Relocation Services decreased $58 million to $152 million and Operating EBITDA decreased $19 million to $2 million for the nine months ended September 30, 2020 compared with the same period in 2019.
Revenues decreased $58 million primarily as a result of a $25 million decrease in international revenue, a $17 million decrease in other relocation revenue and a $15 million decrease in referral revenue, which were primarily driven by lower volume largely related to the COVID-19 pandemic. Cartus Relocation Services experienced a decline in new initiations due to the COVID-19 pandemic in the second and third quarters of 2020 and this trend is expected to continue.
Operating EBITDA decreased $19 million due to the revenue decrease discussed above, partially offset by a decrease in employee and other operating costs due to cost savings initiatives, including temporary COVID-19 related savings.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Financial Condition

| September 30, 2020 |  | December 31, 2019 |  | Change
Total assets | $ | 7,048 |  |  | $ | 7,543 |  |  | $ | (495) |
Total liabilities | 5,315 |  |  | 5,447 |  |  | (132) |
Total equity | 1,733 |  |  | 2,096 |  |  | (363) |

For the nine months ended September 30, 2020, total a ssets decreased $495 million primarily due to:
•a $413 million decrease in goodwill as a result of the impairment at Realogy Brokerage Group during the first quarter of 2020;
•a $167 million decrease in assets held for sale;
•a $55 million net decrease in franchise agreements and other amortizable intangible assets primarily due to amortization;
•a $38 million net decrease in operating lease assets;
•a $30 million decrease in trademarks as a result of the impairment of trademarks at Realogy Franchise Group during the first quarter of 2020; and
•a $20 million decrease in property and equipment,
partially offset by:
•a $145 million increase in cash and cash equivalents;
•a $52 million increase in other current and non-current assets primarily related to an increase in our investment in Guaranteed Rate Affinity due to an increase in equity in earnings partially offset by dividends received, an increase in prepaid incentives and an increase in marketable securities due to the reinvestment of certificates of deposit at Realogy Title Group; and
•a $30 million increase in trade receivables primarily due to increases in volume.
Total liabilities decreased $132 million primarily due to:
•a $111 million decrease in deferred tax liabilities primarily due to the recognition of an income tax benefit of $99 million related to the goodwill impairment charge during the first quarter of 2020;
•an $88 million decrease in corporate debt primarily due to lower borrowings under the Revolving Credit Facility and quarterly amortization payments on the term loan facilities;
•a $59 million decrease in liabilities held for sale; and
•a $23 million decrease in operating lease liabilities,
partially offset by:
•an $89 million increase in accrued expenses and other current liabilities primarily due to higher employee-related accruals and accrued interest; and
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•a $57 million increase in other non-current liabilities primarily due to mark-to-market adjustments on the Company's interest rate swaps.
Total equity decreased $363 million primarily due to a net loss of $378 million, primarily due to impairments of $460 million during the nine months ended September 30, 2020, partially offset by a $14 million increase in additional paid in capital related to the Company's stock-based compensation activity for the nine months ended September 30, 2020.
Liquidity and Capital Resources
We have historically satisfied our liquidity needs with cash flows from operations and funds available under our Revolving Credit Facility and securitization facilities. Our primary liquidity needs have been to service our debt and finance our working capital and capital expenditures. We currently expect to prioritize investing in our business and reducing indebtedness. Accordingly, as of November 3, 2020, we had no outstanding borrowings under our Revolving Credit Facility, representing a reduction of $190 million as compared to the amount drawn on December 31, 2019. Additionally, we discontinued acquiring stock under our share repurchase programs in the first quarter of 2019 and discontinued our quarterly dividend in the fourth quarter of 2019.
We are significantly encumbered by our debt obligations. As of September 30, 2020, our total debt, excluding our securitization obligations, was $3,391 million compared to $3,472 million as of December 31, 2019. Our liquidity position has been and is expected to continue to be negatively impacted by the interest expense on our debt obligations, which could be intensified by a significant increase in LIBOR (or any replacement rate) or ABR.
Our nearest debt maturity is not until early 2023 (other than amortization payments under our Term Loan B and Term Loan A Facilities) as we redeemed all of our outstanding 5.25% Senior Notes in June 2020 using the proceeds from our 7.625% Senior Secured Second Lien Notes, together with cash on hand.
In July 2020, Realogy Group entered into amendments to the Senior Secured Credit Agreement and Term Loan A Agreement (referred to collectively herein as the “Amendments”), pursuant to which the senior secured leverage ratio (the financial covenant under such agreements) has been temporarily eased and certain other covenants have been temporarily tightened during the covenant period. See Note 5, "Short and Long-Term Debt", to the Condensed Consolidated Financial Statements for additional information.
At September 30, 2020, we were in compliance with the financial covenant in each of the Senior Secured Credit Agreement and the Term Loan A Agreement with a senior secured leverage of 2.29 to 1.00 (as compared to the maximum ratio permitted of 6.50 to 1.00) with secured debt (net of readily available cash) of $1,654 million and trailing f our quarters EBITDA calculated on a Pro Forma Basis (as those terms are defined in the Senior Secured Credit Agreement) of $721 million.
We believe that we will continue to be in compliance with the senior secured leverage ratio and meet our cash flow needs during the next twelve months.
For additional information, see below under the header "Financial Obligations—Covenants under the Senior Secured Credit Facility, Term Loan A Facility and Indentures".
We will continue to evaluate potential refinancing and financing transactions, subject to the Amendments during the covenant period, including refinancing certain tranches of our indebtedness and extending maturities, among other potential alternatives, such public or private placements of our common stock or preferred stock (either of which could, among other things, dilute our current stockholders and materially and adversely affect the market price of our common stock). There can be no assurance as to which, if any, of these alternatives we may pursue as the choice of any alternative will depend upon numerous factors such as market conditions, our financial performance and the limitations applicable to such transactions under our existing financing agreements and the consents we may need to obtain under the relevant documents. F inancing may not be available to us on commercially reasonable terms, on t erms that are acceptable to us, or at all. Any future indebtedness may impose various additional restrictions and covenants on us which could limit our ability to respond to market conditions, to make capital investments or to take advantage of business opportunities.
Subject to the restrictions against voluntary payments of junior debt that apply to us during the covenant period under the Amendments, we may from time to time seek to repurchase our outstanding Unsecured Notes or 7.625% Senior Secured Second Lien Notes through tender offers, open market purchases, privately negotiated transactions or otherwise. Such
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repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Under the Amendments, we are restricted from making certain restricted payments, including dividend payments or share repurchases during the covenant period. The covenants in the indentures governing the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes further restrict our ability to make dividend payments or repurchase shares in any amount until the Company's consolidated leverage ratio is below 4.00 to 1.00. See Note 5, "Short and Long-Term Debt", to the Condensed Consolidated Financial Statements for additional information.
In addition, we are required to pay quarterly amortization payments for the Term Loan A and Term Loan B facilities. Remaining payments for 2020 total $9 million and $3 million for the Term Loan A and Term Loan B facilities, respectively, and we expect payments for 2021 to total $51 million and $11 million for the Term Loan A and Term Loan B facilities, respectively.
If the recovery of the residential real estate market were to materially slow or reverse itself, if the economy as a whole does not improve or continues to weaken or if the broader real estate industry (including REITs, commercial and rental markets) were to experience a significant downtown, our business, financial condition and liquidity may be materially adversely affected, including our ability to access capital, grow our business and return capital to stockholders.
Cash Flows
At September 30, 2020, we had $380 million of cash, cash equivalents and restricted cash, an increase of $145 million compared to the balance of $235 million at December 31, 2019. The following table summarizes our cash flows from continuing operations for the nine months ended September 30, 2020 and 2019:

| Nine Months Ended September 30,
| 2020 |  | 2019 |  | Change
Cash provided by (used in) activities from continuing operations: |  |  |  |  |
Operating activities | $ | 398 |  |  | $ | 250 |  |  | $ | 148 |
Investing activities | (75) |  |  | (79) |  |  | 4 |
Financing activities | (130) |  |  | (102) |  |  | (28) |

For the nine months ended September 30, 2020, $148 million more cash was provided by operating activities from continuing operations compared to the same period in 2019 principally due to:
•$101 million less cash used for accounts payable, accrued expenses and other liabilities;
•$57 million more cash dividends received primarily from Guaranteed Rate Affinity; and
•$19 million less cash used for other assets,
partially offset by:
•$13 million less cash provided by the net change in trade receivables; and
•$13 million more cash used for other operating activities; and
•$3 million less cash provided by operating results.
For the nine months ended September 30, 2020, we used $4 million less cash for investing activities from continuing operations compared to the same period in 2019 primarily due to:
•$11 million less cash used for property and equipment additions; and
•$8 million less cash used for investments in unconsolidated entities,
partially offset by $15 million more cash used for other investing activities primarily due to the reinvestment of certificates of deposit.
For the nine months ended September 30, 2020, $130 million of cash was used in financing activities from continuing operations compared to $102 million of cash used during the same period in 2019. For the nine months ended September 30, 2020, $130 million of cash was used as follows:
•$50 million repayment of borrowings under the Revolving Credit Facility;
•$31 million of quarterly amortization payments on the term loan facilities;
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•$22 million of other financing payments primarily related to finance leases;
•$21 million of cash paid primarily as a result of the refinancing transactions in the second quarter of 2020; and
•$5 million of tax payments related to net share settlement for stock-based compensation.
For the nine months ended September 30, 2019, $102 million of cash was used in financing activities from continuing operations related to:
•$31 million of dividend payments;
•$22 million of quarterly amortization payments on the term loan facilities;
•$20 million for the repurchase of our common stock;
•$18 million of other financing payments primarily related to finance leases;
•$6 million of tax payments related to net share settlement for stock-based compensation; and
•$5 million repayment of borrowings under the Revolving Credit Facility,
partially offset by $3 million of net cash received as a result of the refinancing transactions in 2019.
Financial Obligations
See Note 5, "Short and Long-Term Debt", to the Condensed Consolidated Financial Statements, for information on the Company's indebtedness as of September 30, 2020.
LIBOR Transition
In July 2017, the Financial Conduct Authority, the UK regulator responsible for the oversight of the London Interbank Offering Rate ("LIBOR"), announced that it would no longer require banks to participate in the LIBOR submission process and would cease oversight over the rate after the end of 2021. Various industry groups continue to discuss replacement benchmark rates, the process for amending existing LIBOR-based contracts, and the potential economic impacts of different alternatives. For example, in the U.S., a proposed replacement benchmark rate is the Secured Overnight Funding Rate (SOFR), which is an overnight rate based on secured financing, although uncertainty exists as to the transition process and broad acceptance of SOFR as the primary alternative to LIBOR.
Our primary interest rate exposure is interest rate fluctuations, specifically with respect to LIBOR, due to its impact on our variable rate borrowings under the Senior Secured Credit Facility (for our Revolving Credit Facility and Term Loan B) and the Term Loan A Facility (for our Term Loan A). As of September 30, 2020, we had interest rate swaps based on LIBOR with a notional value of $1.0 billion to manage a portion of our exposure to changes in interest rates associated with our variable rate borrowings.
At this time, it is not possible to predict the effect of any changes to LIBOR, any phase out of LIBOR or any establishment of alternative benchmark rates. LIBOR may disappear entirely or perform differently than in the past. Any new benchmark rate will likely not replicate LIBOR exactly and if future rates based upon a successor rate (or a new method of calculating LIBOR) are higher than LIBOR rates as currently determined, it could result in an increase in the cost of our variable rate indebtedness and may have a material adverse effect on our financial condition and results of operations.
Covenants under the Senior Secured Credit Facility, Term Loan A Facility and Indentures
The Senior Secured Credit Agreement, Term Loan A Agreement, and the indentures governing the Unsecured Notes and 7.625% Senior Secured Second Lien Notes contain various covenants that limit (subject to certain exceptions) Realogy Group’s ability to, among other things:
•incur or guarantee additional debt or issue disqualified stock or preferred stock;
•pay dividends or make distributions to Realogy Group’s stockholders, including Realogy Holdings;
•repurchase or redeem capital stock;
•make loans, investments or acquisitions;
•incur restrictions on the ability of certain of Realogy Group's subsidiaries to pay dividends or to make other payments to Realogy Group;
•enter into transactions with affiliates;
•create liens;
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•merge or consolidate with other companies or transfer all or substantially all of Realogy Group's and its material subsidiaries' assets;
•transfer or sell assets, including capital stock of subsidiaries; and
•prepay, redeem or repurchase subordinated indebtedness.
Pursuant to the Amendments to the Senior Secured Credit Agreement and Term Loan A Agreement, certain of these restrictions were tightened, including reducing (or eliminating) the amount available for certain types of additional indebtedness, liens, restricted payments (including dividends and stock repurchases), investments (including acquisitions and joint ventures), and voluntary junior debt repayments. Under the Amendments, we are permitted during the covenant period to obtain up to $50 million of additional credit facilities on a combined basis (less any amounts previously incurred under this provision) from lenders reasonably satisfactory to the administrative agent and us, without the consent of the existing lenders under the Senior Secured Credit Agreement or Term Loan A Agreement. In addition, during the covenant period under the Amendments, our ability to issue senior secured or unsecured notes is limited to the use of financings junior to our first lien debt to refinance the Unsecured Notes or 7.625% Senior Secured Second Lien Notes.
As a result of the covenants to which we remain subject, we are limited in the manner in which we conduct our business and we may be unable to engage in favorable business activities or finance future operations or capital needs. In addition, the Senior Secured Credit Agreement and Term Loan A Agreement require us to maintain a senior secured leverage ratio. We are further restricted under the indentures governing the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes from making restricted payments, including our ability to issue dividends in excess of $45 million per calendar year or our ability to repurchase shares in any amount for so long as our consolidated leverage ratio is equal to or greater than 4.00 to 1.00 and then (unless that ratio falls below 3.00 to 1.00) only to the extent of available cumulative credit, as defined under those indentures.
Senior Secured Leverage Ratio applicable to our Senior Secured Credit Facility and Term Loan A Facility
The senior secured leverage ratio is tested quarterly. Prior to the Amendments, the senior secured leverage ratio could not exceed 4.75 to 1.00. Pursuant to the Amendments, the financial covenant contained in each of the Senior Secured Credit Agreement and Term Loan A Agreement has been amended to require that Realogy Group maintain a senior secured leverage ratio not to exceed 6.50 to 1.00 commencing with the third quarter of 2020 through and including the second quarter of 2021 and thereafter will step down on a quarterly basis to 4.75 to 1.00 (which was the applicable level prior to the effectiveness of the Amendments) on and after the second quarter of 2022.
The senior secured leverage ratio is measured by dividing Realogy Group's total senior secured net debt by the trailing four quarters EBITDA calculated on a Pro Forma Basis, as those terms are defined in the Senior Secured Credit Agreement. Total senior secured net debt does not include the 7.625% Senior Secured Second Lien Notes, our unsecured indebtedness, including the Unsecured Notes, or the securitization obligations. EBITDA calculated on a Pro Forma Basis, as defined in the Senior Secured Credit Agreement, includes adjustments to EBITDA for restructuring, retention and disposition costs, former parent legacy cost (benefit) items, net, loss (gain) on the early extinguishment of debt, non-cash charges and incremental securitization interest costs, as well as pro forma cost savings for restructuring initiatives, the pro forma effect of business optimization initiatives and the pro forma effect of acquisitions and new franchisees, in each case calculated as of the beginning of the trailing four-quarter period. The Company was in compliance with the senior secured leverage ratio covenant at September 30, 2020.
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A reconciliation of net loss attributable to Realogy Group to Operating EBITDA including discontinued operations, Operating EBITDA and EBITDA calculated on a Pro Forma Basis, as those terms are defined in the Senior Secured Credit Agreement, for the four-quarter period ended September 30, 2020 is set forth in the following table:

|  |  | Less |  | Equals |  | Plus |  | Equals
| Year Ended |  | Nine Months Ended |  | Three Months Ended |  | Nine Months Ended |  | Twelve Months Ended
| December 31, 2019 |  | September 30, 2019 |  | December 31, 2019 |  | September 30, 2020 |  | September 30, 2020
Net loss attributable to Realogy Group (a) | $ | (188) |  |  | $ | (143) |  |  | $ | (45) |  |  | $ | (378) |  |  | $ | (423) |
Income tax benefit | (22) |  |  | (22) |  |  | — |  |  | (67) |  |  | (67) |
Loss before income taxes | (210) |  |  | (165) |  |  | (45) |  |  | (445) |  |  | (490) |
Depreciation and amortization | 169 |  |  | 126 |  |  | 43 |  |  | 134 |  |  | 177 |
Interest expense, net | 249 |  |  | 209 |  |  | 40 |  |  | 208 |  |  | 248 |
Restructuring costs, net | 42 |  |  | 29 |  |  | 13 |  |  | 38 |  |  | 51 |
Impairments | 249 |  |  | 243 |  |  | 6 |  |  | 460 |  |  | 466 |
Former parent legacy cost, net | 1 |  |  | 1 |  |  | — |  |  | 1 |  |  | 1 |
(Gain) loss on the early extinguishment of debt | (5) |  |  | (5) |  |  | — |  |  | 8 |  |  | 8 |
Adjustments attributable to discontinued operations (b) | 95 |  |  | 26 |  |  | 69 |  |  | 116 |  |  | 185 |
Operating EBITDA including discontinued operations (c) | 590 |  |  | 464 |  |  | 126 |  |  | 520 |  |  | 646 |
Less: Contribution to Operating EBITDA from discontinued operations (d) |  | 9 |
Operating EBITDA |  | 637
Bank covenant adjustments: |  |
Pro forma effect of business optimization initiatives (e) |  | 49 |
Non-cash charges (f) |  | 29 |
Pro forma effect of acquisitions and new franchisees (g) |  | 6 |
EBITDA as defined by the Senior Secured Credit Agreement |  | $ | 721 |
Total senior secured net debt (h) |  | $ | 1,654 |
Senior secured leverage ratio |  | 2.29 | x

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(a)Net loss attributable to Realogy consists of: (i) loss of $45 million for the fourth quarter of 2019, (ii) loss of $462 million for the first quarter of 2020, (iii) loss of $14 million for the second quarter of 2020 and (iv) income of $98 million for the third quarter of 2020.
(b)Includes depreciation and amortization, interest expense, income tax and restructuring charges related to discontinued operations. In addition, includes the adjustment to record assets and liabilities held for sale at the lower of carrying value or fair value less any costs to sell based on a market price that is reasonable in relation to fair value.
(c)Consists of Operating EBITDA including discontinued operations of: (i) $126 million for the fourth quarter of 2019, (ii) $32 million for the first quarter of 2020, (iii) $175 million for the second quarter of 2020 and (iv) $313 million for the third quarter of 2020.
(d)Pursuant to the Amendments, the definition of "Consolidated Net Income" (as defined in the Senior Secured Credit Agreement) should be adjusted for discontinued operations (pending divestiture) solely for purposes of calculating compliance with the senior secured leverage ratio. Such adjustment is not reflected in the calculation above for consistency with the presentation of Consolidated Leverage Ratio in the "Consolidated Leverage Ratio applicable to our 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes" on the next page. Had discontinued operations been included for the four-quarter period ended September 30, 2020, the senior secured leverage ratio for the four-quarter period ended September 30, 2020 would have been 2.24x.
(e)Represents the four-quarter pro forma effect of business optimization initiatives.
(f)Represents the elimination of non-cash expenses in cluding $24 million of stock-based compensation expense, $4 million for the change in the allowance for doubtful accounts and notes reserves and $1 million of other items f o r the four-quarter period ended September 30, 2020.
(g)Represents the esti mated impact of acquisitions and franchise sales activity, net of brokerages that exited our franchise system as if these changes had occurred on October 1, 2019. Franchisee sales activity is comprised of new franchise agreements as well as growth through acquisitions and independent sales agent recruitment by existing franchisees with our assistance. We have made a number of assumptions in calculating such estimates and there can be no assurance that we would have generated the projected levels of Operating EBITDA had we owned the acquired entities or entered into the franchise contracts as of October 1, 2019.
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(h)Represents total borrowings under the Senior Secured Credit Facility (including the Revolving Credit Facility and Term Loan B Facility) and Term Loan A Facility and borrowings secured by a first priority lien on our assets of $1,884 million plus $33 million of finance lease obligations less $263 million of readily available cash as of September 30, 2020. Pursuant to the terms of our senior secured credit facilities, total senior secured net debt does not include our securitization obligations, 7.625% Senior Secured Second Lien Notes or unsecured indebtedness, including the Unsecured Notes.
Consolidated Leverage Ratio applicable to our 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes
The consolidated leverage ratio is measured by dividing Realogy Group's total net debt by the trailing four quarter EBITDA. EBITDA, as defined in the indentures governing the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes, is substantially similar to EBITDA calculated on a Pro Forma Basis, as those terms are defined in the Senior Secured Credit Agreement; however, the indentures do not allow for the adjustment to Consolidated Net Income (as defined in the indentures) described in footnote (d) to the table set forth above under "Senior Secured Leverage Ratio applicable to our Senior Secured Credit Facility and Term Loan A Facility." Net debt under the indentures is Realogy Group's total indebtedness (excluding securitizations) less (i) its cash and cash equivalents in excess of restricted cash and (ii) a $200 million seasonality adjustment permitted when measuring the ratio on a date during the period of March 1 to May 31.
The consolidated leverage ratio under the indentures governing the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes for the four-quarter period ended September 30, 2020 is set forth in the following table:

|  | As of September 30, 2020
Revolver |  | $ | 140 |
Term Loan A |  | 694 |
Term Loan B |  | 1,050 |
7.625% Senior Secured Second Lien Notes |  | 550 |
4.875% Senior Notes |  | 407 |
9.375% Senior Notes |  | 550 |
Finance lease obligations |  | 33 |
Corporate Debt (excluding securitizations) |  | 3,424 |
Less: Cash and cash equivalents |  | 379 |
Net debt under the indentures governing the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes |  | $ | 3,045 |
EBITDA as defined under the indentures governing the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes (a) |  | $ | 721 |
Consolidated leverage ratio under the indentures governing the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes |  | 4.2 | x

_______________
(a)As set forth in the immediately preceding table, for the four-quarter period ended September 30, 2020, EBITDA, as defined under the indentures governing the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes, was the same as EBITDA calculated on a Pro Forma Basis, as those terms are defined in the Senior Secured Credit Agreement.
See Note 5, "Short and Long-Term Debt—Senior Secured Credit Facility and Term Loan A Facility" and "—Unsecured Notes" and "— Senior Secured Second Lien Notes", to the Condensed Consolidated Financial Statements for additional information.
At September 30, 2020 the amount of the Company's cumulative credit under the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes was approximately $172 million. Under the terms of the indentures governing the 9.375% Senior Notes and 7.625% Senior Secured Second Lien Notes, the Company may utilize its cumulative credit to make restricted payments when the Company's consolidated leverage ratio is less than 4.00 to 1.00, provided that any such restricted payments will reduce the amount of cumulative credit available for future restricted payments. The Company made approximately $21 million in dividend payments in 2019 after the issuance of the 9.375% Senior Notes (but prior to the issuance of the 7.625% Senior Secured Second Lien Notes) and accordingly at September 30, 2020, the cumulative credit basket available for restricted payments was approximately $151 million under the indenture governing the 9.375% Senior Notes and approximately $172 million under the indenture governing 7.625% Senior Secured Second Lien Notes. However, neither of these baskets may generally be utilized until the Company's consolidated leverage ratio is less than 4.0 to 1.0. In any event, during the covenant period under the Amendments to the Senior Secured Credit Facility and Term Loan A Facility, the Company is generally restricted from making restricted payments.
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Non-GAAP Financial Measures
The SEC has adopted rules to regulate the use in filings with the SEC and in public disclosures of "non-GAAP financial measures," such as Operating EBITDA. These measures are derived on the basis of methodologies other than in accordance with GAAP.
Operating EBITDA is defined by us as net income (loss) before depreciation and amortization, interest expense, net, income taxes, and other items that are not core to the operating activities of the Company such as restructuring charges, former parent legacy items, gains or losses on the early extinguishment of debt, impairments, gains or losses on discontinued operations and gains or losses on the sale of investments or other assets. Operating EBITDA is our primary non-GAAP measure.
We present Operating EBITDA because we believe it is useful as a supplemental measure in evaluating the performance of our operating businesses and provides greater transparency into our results of operations. Our management, including our chief operating decision maker, uses Operating EBITDA as a factor in evaluating the performance of our business. Operating EBITDA should not be considered in isolation or as a substitute for net income or other statement of operations data prepared in accordance with GAAP.
We believe Operating EBITDA facilitates company-to-company operating performance comparisons by backing out potential differences caused by variations in capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, as well as other items that are not core to the operating activities of the Company such as restructuring charges, gains or losses on the early extinguishment of debt, former parent legacy items, impairments, gains or losses on discontinued operations and gains or losses on the sale of investments or other assets, which may vary for different companies for reasons unrelated to operating performance. We further believe that Operating EBITDA is frequently used by securities analysts, investors and other interested parties in their evaluation of companies, many of which present an Operating EBITDA measure when reporting their results.
Operating EBITDA has limitations as an analytical tool, and you should not consider Operating EBITDA either in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations are:
•this measure does not reflect changes in, or cash required for, our working capital needs;
•this measure does not reflect our interest expense (except for interest related to our securitization obligations), or the cash requirements necessary to service interest or principal payments on our debt;
•this measure does not reflect our income tax expense or the cash requirements to pay our taxes;
•this measure does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often require replacement in the future, and this measure does not reflect any cash requirements for such replacements; and
•other companies may calculate this measure differently so they may not be comparable.
Operating EBITDA including discontinued operations includes Operating EBITDA, as defined above plus the Operating EBITDA contribution from discontinued operations on the same basis.
Contractual Obligations
Other than the Company's debt transactions which occurred during the second quarter of 2020, resulting in the issuance of $550 million of 7.625% Senior Secured Second Lien Notes due 2025 and the redemption of $550 million of 5.25% Senior Notes due 2021 as described in Note 5, "Short and Long-Term Debt", included elsewhere in this Quarterly Report, the Company's future contractual obligations as of September 30, 2020 have not changed materially from the amounts reported in our 2019 Form 10-K.
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Critical Accounting Policies
In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our combined results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time.
These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019, which includes a description of our critical accounting policies that involve subjective and complex judgments that could potentially affect reported results.
Impairment of goodwill and other indefinite-lived intangible assets
See Note 3, "Goodwill and Intangible Assets", to the Condensed Consolidated Financial Statements for a discussion on impairment of goodwill and other indefinite-lived intangible assets.
Recently Issued Accounting Pronouncements
The SEC issued its final rule on the Modernization of Regulation S-K Items 101, 103, and 105 which is intended to improve readability of disclosure documents, as well as discourage repetition and disclosure of information that is not material. The new rule amends disclosure requirements relating to the description of a company's business, legal proceedings and risk factors made in applicable registration statements and reports filed on and after November 9, 2020, including the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
See Note 1, "Basis of Presentation", to the Condensed Consolidated Financial Statements for a discussion of recently issued FASB accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures about Market Risks.
We are exposed to market risk from changes in interest rates primarily through our senior secured debt. At September 30, 2020, our primary interest rate exposure was to interest rate fluctuations, specifically LIBOR, due to its impact on our variable rate borrowings of our Revolving Credit Facility and Term Loan B under the Senior Secured Credit Facility and the Term Loan A Facility. Given that our borrowings under the Senior Secured Credit Facility and Term Loan A Facility are generally based upon LIBOR, this rate (or any replacement rate) will be the Company's primary market risk exposure for the foreseeable future. We do not have significant exposure to foreign currency risk nor do we expect to have significant exposure to foreign currency risk in the foreseeable future.
We assess our market risk based on changes in interest rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential impact on earnings, fair values and cash flows based on a hypothetical change (increase and decrease) in interest rates.
At September 30, 2020, we had variable interest rate long-term debt outstanding under our Senior Secured Credit Facility and Term Loan A Facility of $1.9 billion. The weighted average interest rate on the outstanding amounts under our Senior Secured Credit Facility and Term Loan A Facility at September 30, 2020 was 2.62%. The interest rate with respect to the Term Loan B is based on adjusted LIBOR plus 2.25% (with a LIBOR floor of 0.75%). The interest rates with respect to the Revolving Credit Facility and term loans under the Term Loan A Facility are based on adjusted LIBOR plus an additional margin subject to adjustment based on the current senior secured leverage ratio. Based on the September 30, 2020 senior secured leverage ratio, the LIBOR margin was 2.00%. At September 30, 2020, the one-month LIBOR rate was 0.15%; therefore, we have estimated that a 0.25% increase in LIBOR would have a $2 million impact on our annual interest expense.
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As of September 30, 2020, we had interest rate swaps with a notional value of $1.0 billion to manage a portion of our exposure to changes in interest rates associated with our $1.9 billion of variable rate borrowings. Interest rates swaps with a notional value of $600 million expired on August 7, 2020. Our interest rate swaps were as follows:

Notional Value (in millions) |  | Commencement Date |  | Expiration Date |
$450 |  | November 2017 |  | November 2022 |
$400 |  | August 2020 |  | August 2025 |
$150 |  | November 2022 |  | November 2027 |

The swaps help protect our outstanding variable rate borrowings from future interest rate volatility. The fixed interest rates on the swaps range from 2.07% to 3.11%. The Company had a liability of $94 million for the fair value of the interest rate swaps at September 30, 2020. The fair value of these interest rate swaps is subject to movements in LIBOR and will fluctuate in future periods. We have estimated that a 0.25% increase in the LIBOR yield curve would increase the fair value of our interest rate swaps by $9 million and would decrease interest expense. While these results may be used as a benchmark, they should not be viewed as a forecast of future results.
Item 4. Controls and Procedures.
Controls and Procedures for Realogy Holdings Corp.
(a)Realogy Holdings Corp. ("Realogy Holdings") maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Realogy Holdings' management, including the Chief Executive Officer and the Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
(b)As of the end of the period covered by this quarterly report on Form 10-Q, Realogy Holdings has carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Realogy Holdings' disclosure controls and procedures are effective at the "reasonable assurance" level.
(c)There has not been any change in Realogy Holdings' internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
Controls and Procedures for Realogy Group LLC
(a)Realogy Group LLC ("Realogy Group") maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Realogy Group's management, including the Chief Executive Officer and the Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
(b)As of the end of the period covered by this quarterly report on Form 10-Q, Realogy Group has carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that Realogy Group's disclosure controls and procedures are effective at the "reasonable assurance" level.
(c)There has not been any change in Realogy Group's internal control over financial reporting during the period covered by this quarterly report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
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Other Financial Information
The Condensed Consolidated Financial Statements as of September 30, 2020 and for the three and nine-month periods ended September 30, 2020 and 2019 have been reviewed by PricewaterhouseCoopers LLP, an independent registered public accounting firm. Their reports, dated November 5, 2020, are included on pages 4 and 5. The reports of PricewaterhouseCoopers LLP state that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 (the "Act") for their report on the unaudited financial information because that report is not a "report" or a "part" of the registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
See Note 9, "Commitments and Contingencies—Litigation", to the Condensed Consolidated Financial Statements included elsewhere in this quarterly report on Form 10-Q for additional information on the Company's legal proceedings.
The Company believes that it has adequately accrued for legal matters as appropriate. The Company records litigation accruals for legal matters which are both probable and estimable.
Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur and even cases brought by us can involve counterclaims asserted against us. In addition, litigation and other legal matters, including class action lawsuits and regulatory proceedings challenging practices that have broad impact can be costly to defend and, depending on the class size and claims, could be costly to settle. As such, the Company could incur judgments or enter into settlements of claims with liability that are materially in excess of amounts accrued and these settlements could have a material adverse effect on the Company’s financial condition, results of operations or cash flows in any particular period.
Litigation, investigations and claims against other participants in the residential real estate industry may impact the Company and its affiliated franchisees when the rulings or settlements in those cases cover practices common to the broader industry and which may generate litigation for the Company. Examples may include claims associated with RESPA compliance (including, but not limited to, those related to the broker-to-broker exception, marketing agreements or consumer rebates), broker fiduciary duties, multiple listing service practices, sales agent classification and federal and state fair housing laws. For example, there is active worker classification litigation in New Jersey against a competing residential real estate brokerage where the plaintiff seeks to reclassify independent sales agents as employees, from which the Company could be impacted if there is an adverse ruling. The Company also may be impacted by litigation and other claims against companies in other industries. For example, there have been several challenges to the constitutionality and enforceability of a California worker classification statute adopted in 2019 as it applies to other industries, which could potentially result in the statute being found unconstitutional and of no force - which could have the effect of eliminating that statute's less restrictive test applicable to real estate professionals in that state. Changes in current legislation, regulations or interpretations that are applicable to the residential real estate service industry may also impact the Company.
Item 1A. Risk Factors
Other than the risk factors disclosed in Part II, "Item 1A. Risk Factors" of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, which is hereby incorporated by reference into this Part II, "Item 1A. Risk Factors" of this Form 10-Q, there were no material changes to the risk factors reported in Part 1, "Item 1A. Risk Factors" in our 2019 Form 10-K.
Item 5. Other Information.
On November 3, 2020, the Compensation Committee of the Board of Directors (the “Committee”) of the Company granted a cash-based performance incentive and retention award (the “Performance Award”) under the Company’s 2018 Long-Term Incentive Plan to the Company’s Chief Executive Officer & President (the “CEO”). Performance conditions apply to 75% of the award, with the remaining portion time-based vesting. In granting the award, the Committee considered multiple factors, including Mr. Schneider’s executive management and leadership expertise, the broad scope of Mr. Schneider’s responsibilities and the critical role he plays in setting and executing the Company’s business strategy, his outstanding performance with the challenges presented during 2020, and the potential business disruption likely to be caused by a loss of his services.
The performance component of the Performance Award has two tranches, each based on market share growth (as measured by our transaction volume for existing home sale transactions). The first tranche will be earned if our market share as of September 30, 2022 exceeds market share as of September 30, 2020 and the second tranche will be earned if our market share as of September 30, 2023 exceeds market share as of September 30, 2022 (each, a “Performance Period”), with each tranche equal to $1.5 million. No amount will be earned under a tranche if the performance metric for the applicable Performance Period is not satisfied, except as stated herein.
The CEO generally must remain employed with the Company throughout the applicable Performance Period in order to be eligible to receive a payout of the performance component of the applicable Performance Award tranche. If the CEO’s
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employment is terminated without cause or due to his death or disability during the applicable Performance Period, he will be eligible to receive a pro-rata amount of the performance portion of his Performance Award based on actual performance.
In order to be eligible to receive a payout of the retention portion of the Performance Award in the amount of $1.0 million, the CEO generally must remain employed with the Company from the date of grant through September 30, 2021. If terminated in connection with a change in control, he would be entitled to full payout of any outstanding retention or performance component of the Performance Award.
Our Clawback Policy will apply to both the performance and retention portions of the Performance Award, which will allow our Board of Directors to recoup incentive compensation in the event of a material restatement or adjustment of our financial statements, misconduct, or breach of the CEO’s restrictive covenants with the Company, including those related to non-competition and non-solicitation.
The description of the Performance Award set forth above is qualified in its entirety by reference to the Performance Award filed as Exhibit 10.6 to this Quarterly Report and incorporated by reference herein.
Item 6. Exhibits.
See Exhibit Index.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
REALOGY HOLDINGS CORP.
and
REALOGY GROUP LLC
(Registrants)
Date: November 5, 2020
/S/ CHARLOTTE C. SIMONELLI
Charlotte C. Simonelli
Executive Vice President and
Chief Financial Officer
Date: November 5, 2020
/S/ TIMOTHY B. GUSTAVSON
Timothy B. Gustavson
Senior Vice President,
Chief Accounting Officer and
Controller
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EXHIBIT INDEX
Exhibit Description
4.1* Supplemental Indenture No. 1 dated as of August 28, 2020 to the 7.625% Senior Secured Second Lien Notes Indenture.
10.1* Joinder No. 1 dated as of August 28, 2020 to the First Lien / Second Lien Intercreditor Agreement, dated as of June 16, 2020, among Realogy Group LLC, the other Grantors (as defined therein) party thereto, JPMorgan Chase Bank, N.A., as the Initial First Lien Priority Representative (as defined therein), The Bank of New York, Mellon Trust Company, N.A., as the Initial Second Lien Priority Representative (as defined therein), and the additional authorized representatives from time to time party thereto.
10.2* Supplement No. 1 to the Second Lien Priority Collateral Agreement, dated as of June 16, 2020, among Realogy Intermediate Holdings Corp., Realogy Group LLC, each other Grantor identified therein and party thereto and The Bank of New York Mellon Trust Company, N.A., as Collateral Agent.
10.3 Fifteenth Omnibus Amendment, dated as of August 5, 2020, among Cartus Corporation, Cartus Financial Corporation, Apple Ridge Services Corporation, Apple Ridge Funding LLC, Realogy Group LLC, U.S. Bank National Association, the managing agents party to the Note Purchase Agreement dated December 14, 2011, as amended, and Crédit Agricole Corporate and Investment Bank (Incorporated by reference to Exhibit 10.6 to the Registrants' Quar terly Report on Form 10-Q filed on August 6, 2020).
10.4 Ninth Amendment, dated as of July 24, 2020, to the Amended and Restated Credit Agreement, dated as of March 5, 2013, as amended, among Realogy Intermediate Holdings LLC, Realogy Group LLC, the several lenders parties thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent for the lenders (Incorporated by reference to Exhibit 10.1 to the Registrants' Current Report on Form 8-K filed on July 30, 2020).
10.5 Third Amendment, dated as of July 24, 2020, to the Term Loan A Agreement, dated as of October 23, 2015, among Realogy Intermediate Holdings LLC, Realogy Group LLC, the lenders party thereto from time to time and JPMorgan Chase Bank, N.A., as administrative agent for the lenders (Incorporated by reference to Exhibit 10.2 to Registrants' Current Report on Form 8-K filed on July 30, 2020).
10.6* Performance and Retention Award between Ryan Sch neider and Realogy Holdings Corp.
15.1* Letter Regarding Unaudited Interim Financial Statements.
31.1* Certification of the Chief Executive Officer of Realogy Holdings Corp. pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2* Certification of the Chief Financial Officer of Realogy Holdings Corp. pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.3* Certification of the Chief Executive Officer of Realogy Group LLC pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.4* Certification of the Chief Financial Officer of Realogy Group LLC pursuant to Rules 13(a)-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1* Certification for Realogy Holdings Corp. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification for Realogy Group LLC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 The following financial information from Realogy's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 formatted in iXBRL (Inline eXtensible Business Reporting Language) includes: (i) the Condensed Consolidated Statements of Operations, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
______________
* Filed herewith.
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