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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2026

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 Number: 001-39183

Velocity Financial, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware | 46-0659719
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
2945 Townsgate Road, Suite 110 Westlake Village, California | 91361
(Address of principal executive offices) | (Zip Code)

Registrant’s telephone number, including area code: (818) 532-3700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common stock, par value $0.01 per share |  | VEL |  | The New York Stock Exchange
Common stock, par value $0.01 per share |  | VEL |  | NYSE Texas, Inc.

Indicate by check mark whether the registrant (1) has 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) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has 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 registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. 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 |  | ☐ |  |  |  |

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 registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2026, the registrant had 39,255,281 shares of common stock outstanding.

Table of Contents

|  | Page
PART I. | FINANCIAL INFORMATION |
Item 1. | Consolidated Financial Statements (Unaudited) | 2
| Consolidated Balance Sheets | 2
| Consolidated Statements of Income | 4
| Consolidated Statements of Comprehensive Income | 5
| Consolidated Statements of Changes in Stockholders’ Equity | 6
| Consolidated Statements of Cash Flows | 7
| Notes to Consolidated Financial Statements (Unaudited) | 9
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 37
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 59
Item 4. | Controls and Procedures | 59
PART II. | OTHER INFORMATION |
Item 1. | Legal Proceedings | 60
Item 1A. | Risk Factors | 60
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 60
Item 3. | Defaults Upon Senior Securities | 60
Item 4. | Mine Safety Disclosures | 60
Item 5. | Other Information | 60
Item 6. | Exhibits | 62
SIGNATURES | 64

i

PART I—FINANCI AL INFORMATION

Item 1. Consolidated Financ ial Statements (Unaudited)

VELOCITY FINANCIAL, INC.

CONSOLIDATED B ALANCE SHEETS

(In thousands, except share data)

|  | March 31, 2026 |  |  | December 31, 2025 |
|  | (Unaudited) |  |  |  |
ASSETS |  |  |  |  |  |
Cash and cash equivalents |  | $ | 87,054 |  |  | $ | 92,103 |
Restricted cash |  |  | 24,996 |  |  |  | 157,134 |
Loans held for investment, at amortized cost (net of allowance for credit losses of $4,860 and $4,521 as of March 31, 2026 and December 31, 2025, respectively) |  |  | 1,951,030 |  |  |  | 2,028,262 |
Loans held for investment, at fair value |  |  | 5,154,508 |  |  |  | 4,729,869 |
Total loans, net |  |  | 7,105,538 |  |  |  | 6,758,131 |
Accrued interest receivables |  |  | 51,259 |  |  |  | 49,678 |
Receivables due from servicers |  |  | 142,354 |  |  |  | 150,902 |
Other receivables |  |  | 2,690 |  |  |  | 1,897 |
Real estate owned, net |  |  | 131,849 |  |  |  | 118,289 |
Property and equipment, net |  |  | 1,324 |  |  |  | 1,415 |
Deferred tax asset, net |  |  | 18,462 |  |  |  | 22,709 |
Mortgage servicing rights, at fair value |  |  | 12,645 |  |  |  | 12,963 |
Derivative assets |  |  | 464 |  |  |  | 66 |
Goodwill |  |  | 6,775 |  |  |  | 6,775 |
Other assets |  |  | 6,033 |  |  |  | 9,451 |
Total assets |  | $ | 7,591,443 |  |  | $ | 7,381,513 |
LIABILITIES |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 173,076 |  |  | $ | 168,314 |
Secured financing, net |  |  | 73,274 |  |  |  | 286,679 |
Unsecured senior notes, net |  |  | 485,445 |  |  |  | - |
Securitized debt, at amortized cost |  |  | 1,638,995 |  |  |  | 1,705,589 |
Securitized debt, at fair value |  |  | 4,426,240 |  |  |  | 4,236,737 |
Warehouse and repurchase facilities, net |  |  | 98,009 |  |  |  | 308,506 |
Total liabilities |  |  | 6,895,039 |  |  |  | 6,705,825 |
Commitments and contingencies |  |  |  |  |  |
EQUITY |  |  |  |  |  |
Common stock ($0.01 par value, 100,000,000 shares authorized; 40,071,992 and 39,573,657 shares issued, 39,235,281 and 38,965,317 shares outstanding as of March 31, 2026 and December 31, 2025, respectively) |  |  | 403 |  |  |  | 398 |
Additional paid-in capital |  |  | 385,254 |  |  |  | 382,564 |
Retained earnings |  |  | 324,742 |  |  |  | 302,379 |
Treasury stock, at cost (836,711 and 608,340 common shares as of March 31, 2026 and December 31, 2025, respectively) |  |  | (14,741 | ) |  |  | (10,204 | )
Accumulated other comprehensive loss |  |  | (2,310 | ) |  |  | (2,602 | )
Total Velocity Financial, Inc. stockholders' equity |  |  | 693,348 |  |  |  | 672,535 |
Noncontrolling interest in subsidiary |  |  | 3,056 |  |  |  | 3,153 |
Total equity |  |  | 696,404 |  |  |  | 675,688 |
Total liabilities and equity |  | $ | 7,591,443 |  |  | $ | 7,381,513 |

See accompanying Notes to Consolidated Financial Statements.

2

VELOCITY FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In thousands)

The following table represents the assets and liabilities of consolidated variable interest entities:

|  | March 31, 2026 |  |  | December 31, 2025 |
|  | (Unaudited) |  |  |  |
ASSETS |  |  |  |  |  |
Restricted cash |  | $ | 15,489 |  |  | $ | 151,827 |
Loans held for investment, at amortized cost |  |  | 1,947,390 |  |  |  | 2,023,030 |
Loans held for investment, at fair value |  |  | 4,652,149 |  |  |  | 4,273,757 |
Accrued interest and other receivables |  |  | 185,712 |  |  |  | 191,313 |
Real estate owned, net |  |  | 115,316 |  |  |  | 114,485 |
Deferred tax asset |  |  | 1,066 |  |  |  | 1,085 |
Other assets |  |  | 3 |  |  |  | 5 |
Total assets |  | $ | 6,917,125 |  |  | $ | 6,755,502 |
LIABILITIES |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 125,482 |  |  | $ | 120,691 |
Securitized debt |  |  | 6,065,235 |  |  |  | 5,942,326 |
Total liabilities |  | $ | 6,190,717 |  |  | $ | 6,063,017 |

See accompanying Notes to Consolidated Financial Statements.

3

VELOCITY FINANCIAL, INC.

CONSOLIDATED STAT EMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
Interest income |  | $ | 153,080 |  |  | $ | 118,740 |
Interest expense — portfolio related |  |  | 94,027 |  |  |  | 75,088 |
Net interest income — portfolio related |  |  | 59,053 |  |  |  | 43,652 |
Interest expense — corporate debt |  |  | 15,133 |  |  |  | 6,142 |
Net interest income |  |  | 43,920 |  |  |  | 37,510 |
Provision for credit losses |  |  | 1,661 |  |  |  | 1,872 |
Net interest income after provision for credit losses |  |  | 42,259 |  |  |  | 35,638 |
Other operating income |  |  |  |  |  |
Gain on disposition of loans |  |  | 2,896 |  |  |  | 2,834 |
Unrealized gain on fair value loans |  |  | 1,039 |  |  |  | 34,836 |
Unrealized gain (loss) on fair value securitized debt |  |  | 26,254 |  |  |  | (13,682 | )
Unrealized loss on mortgage servicing rights |  |  | (337 | ) |  |  | (1,081 | )
Origination fee income |  |  | 7,970 |  |  |  | 8,679 |
Interest income on cash balance |  |  | 1,405 |  |  |  | 1,339 |
Other income |  |  | 3,730 |  |  |  | 521 |
Total other operating income |  |  | 42,957 |  |  |  | 33,446 |
Operating expenses |  |  |  |  |  |
Compensation and employee benefits |  |  | 23,520 |  |  |  | 21,684 |
Origination expenses |  |  | 1,163 |  |  |  | 838 |
Securitization expenses |  |  | 5,285 |  |  |  | 4,043 |
Loan servicing |  |  | 8,563 |  |  |  | 8,008 |
Professional fees |  |  | 5,781 |  |  |  | 1,783 |
Rent and occupancy |  |  | 340 |  |  |  | 275 |
Real estate owned, net |  |  | 6,862 |  |  |  | 3,029 |
Other operating expenses |  |  | 2,825 |  |  |  | 2,530 |
Total operating expenses |  |  | 54,339 |  |  |  | 42,190 |
Income before income taxes |  |  | 30,877 |  |  |  | 26,894 |
Income tax expense |  |  |  |  |  |
Federal |  |  | 6,494 |  |  |  | 5,850 |
State |  |  | 2,084 |  |  |  | 2,396 |
Income tax expense |  |  | 8,578 |  |  |  | 8,246 |
Net income |  |  | 22,299 |  |  |  | 18,648 |
Net loss attributable to noncontrolling interest |  |  | (64 | ) |  |  | (239 | )
Net income attributable to Velocity Financial, Inc. |  | $ | 22,363 |  |  | $ | 18,887 |
Less undistributed earnings attributable to unvested restricted stock awards |  |  | 312 |  |  |  | 233 |
Net earnings attributable to common stockholders |  | $ | 22,051 |  |  | $ | 18,654 |
Earnings per common share |  |  |  |  |  |
Basic |  | $ | 0.57 |  |  | $ | 0.55 |
Diluted |  | $ | 0.57 |  |  | $ | 0.51 |
Weighted average common shares outstanding |  |  |  |  |  |
Basic |  |  | 38,626 |  |  |  | 33,687 |
Diluted |  |  | 39,174 |  |  |  | 36,811 |

See accompanying Notes to Consolidated Financial Statements.

4

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
Net income |  | $ | 22,299 |  |  | $ | 18,648 |
Net loss attributable to noncontrolling interest |  |  | (64 | ) |  |  | (239 | )
Net income attributable to Velocity Financial, Inc. |  | $ | 22,363 |  |  | $ | 18,887 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |
Net unrealized gain (loss) on cash flow hedges arising during the period |  |  | 86 |  |  |  | (1,056 | )
Reclassification adjustments included in net income |  |  | 206 |  |  |  | 62 |
Total other comprehensive income (loss), net of tax |  |  | 292 |  |  |  | (994 | )
Total comprehensive income attributable to Velocity Financial, Inc. |  | $ | 22,655 |  |  | $ | 17,893 |

See accompanying Notes to Consolidated Financial Statements.

5

VELOCITY FINANCIAL, INC.

CONSOLI DATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

($ in thousands, except share data)

(Unaudited)

|  | Common Stock - Number of Shares |  |  | Stockholders' Equity |  |  |  |  |  |  |
|  | Shares Issued |  |  | Treasury Shares |  |  | Shares Outstanding |  |  | Common Stock |  |  | Additional Paid-in Capital |  |  | Retained Earnings |  |  | Treasury Stock, at Cost |  |  | Accumulated Other Comprehensive Income (Loss), Net of Tax |  |  | Total Stockholders' Equity |  |  | Noncontrolling Interest |  |  | Total Equity |
Balance – December 31, 2024 |  |  | 33,761,147 |  |  |  | (215,562 | ) |  |  | 33,545,585 |  |  | $ | 339 |  |  | $ | 322,954 |  |  | $ | 197,325 |  |  | $ | (2,869 | ) |  | $ | (805 | ) |  | $ | 516,944 |  |  | $ | 3,271 |  |  | $ | 520,215 |
Issuance of common stock |  |  | 1,569,255 |  |  |  | — |  |  |  | 1,569,255 |  |  |  | 20 |  |  |  | 28,522 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 28,542 |  |  |  | — |  |  |  | 28,542 |
Shares surrendered for tax withholding on vested awards |  |  | — |  |  |  | (115,596 | ) |  |  | (115,596 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,162 | ) |  |  | — |  |  |  | (2,162 | ) |  |  | — |  |  |  | (2,162 | )
Restricted stock awarded and stock-based compensation expenses |  |  | 385,503 |  |  |  | — |  |  |  | 385,503 |  |  |  | — |  |  |  | 1,970 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,970 |  |  |  | — |  |  |  | 1,970 |
Net income (loss) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 18,887 |  |  |  | — |  |  |  | — |  |  |  | 18,887 |  |  |  | (239 | ) |  |  | 18,648 |
Other comprehensive loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (994 | ) |  |  | (994 | ) |  |  | — |  |  |  | (994 | )
Balance – March 31, 2025 |  |  | 35,715,905 |  |  |  | (331,158 | ) |  |  | 35,384,747 |  |  | $ | 359 |  |  | $ | 353,446 |  |  | $ | 216,212 |  |  | $ | (5,031 | ) |  | $ | (1,799 | ) |  | $ | 563,187 |  |  | $ | 3,032 |  |  | $ | 566,219 |
Balance – December 31, 2025 |  |  | 39,573,657 |  |  |  | (608,340 | ) |  |  | 38,965,317 |  |  | $ | 398 |  |  | $ | 382,564 |  |  | $ | 302,379 |  |  | $ | (10,204 | ) |  | $ | (2,602 | ) |  | $ | 672,535 |  |  | $ | 3,153 |  |  | $ | 675,688 |
Shares surrendered for tax withholding on vested awards |  |  | — |  |  |  | (228,371 | ) |  |  | (228,371 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (4,537 | ) |  |  | — |  |  |  | (4,537 | ) |  |  | — |  |  |  | (4,537 | )
Restricted stock awarded and stock-based compensation expenses |  |  | 498,335 |  |  |  | — |  |  |  | 498,335 |  |  |  | 5 |  |  |  | 2,690 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,695 |  |  |  | — |  |  |  | 2,695 |
Distribution to non-controlling interest |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (33 | ) |  |  | (33 | )
Net income (loss) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 22,363 |  |  |  | — |  |  |  | — |  |  |  | 22,363 |  |  |  | (64 | ) |  |  | 22,299 |
Other comprehensive income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 292 |  |  |  | 292 |  |  |  | — |  |  |  | 292 |
Balance – March 31, 2026 |  |  | 40,071,992 |  |  |  | (836,711 | ) |  |  | 39,235,281 |  |  |  | 403 |  |  | $ | 385,254 |  |  | $ | 324,742 |  |  | $ | (14,741 | ) |  | $ | (2,310 | ) |  | $ | 693,348 |  |  | $ | 3,056 |  |  | $ | 696,404 |

See accompanying Notes to Consolidated Financial Statements.

6

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEM ENTS OF CASH FLOWS

(In thousands)

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (Unaudited) |
Cash flows from operating activities: |  |  |  |  |  |
Net income |  | $ | 22,299 |  |  | $ | 18,648 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |
Depreciation and amortization |  |  | 133 |  |  |  | 138 |
Amortization of right-of-use assets |  |  | 187 |  |  |  | 469 |
Provision for credit losses |  |  | 1,661 |  |  |  | 1,872 |
Origination of loans held for sale |  |  | (2,226 | ) |  |  | (4,886 | )
Proceeds from sales of loans held for sale |  |  | 2,270 |  |  |  | — |
Net accretion of discount on purchased loans and deferred loan origination costs |  |  | 809 |  |  |  | 954 |
(Reversal of) provision for uncollectible corporate and escrow advances receivable |  |  | (84 | ) |  |  | 627 |
Gain on disposition of loans |  |  | (64 | ) |  |  | — |
Real estate acquired through foreclosure in excess of recorded investment |  |  | (2,832 | ) |  |  | (2,834 | )
Amortization of debt issuance discount and costs |  |  | 4,037 |  |  |  | 2,894 |
Change in valuation of real estate owned |  |  | 3,217 |  |  |  | 2,073 |
Change in valuation of fair value loans |  |  | (1,039 | ) |  |  | (34,836 | )
Change in valuation of mortgage servicing rights |  |  | 337 |  |  |  | 1,081 |
Change in valuation of fair value securitized debt |  |  | (26,254 | ) |  |  | 13,682 |
Hedging activities |  |  | 134 |  |  |  | (1,552 | )
Loss (gain) on sale of real estate owned |  |  | 129 |  |  |  | (300 | )
Stock-based compensation |  |  | 2,695 |  |  |  | 1,970 |
Deferred tax expense |  |  | 4,079 |  |  |  | 2,963 |
Change in operating assets and liabilities: |  |  |  |  |  |
Accrued interest and other receivables |  |  | (3,086 | ) |  |  | (5,004 | )
Other assets |  |  | 3,632 |  |  |  | 430 |
Accounts payable and accrued expenses |  |  | 2,052 |  |  |  | 5,147 |
Net cash provided by operating activities |  |  | 12,086 |  |  |  | 3,536 |
Cash flows from investing activities: |  |  |  |  |  |
Purchase of loans held for investment |  |  | (70 | ) |  |  | — |
Origination of loans held for investment |  |  | (637,146 | ) |  |  | (635,537 | )
Payments of loans held for investment |  |  | 266,873 |  |  |  | 228,322 |
Proceeds from sale of real estate owned |  |  | 18,470 |  |  |  | 8,019 |
Capitalized improvement on real estate owned |  |  | (298 | ) |  |  | (19 | )
Change in corporate and escrow advances receivable |  |  | (1,467 | ) |  |  | (1,859 | )
Change in impounds and deposits |  |  | 2,308 |  |  |  | (259 | )
Purchase of property and equipment |  |  | (42 | ) |  |  | (80 | )
Net cash used in investing activities |  |  | (351,372 | ) |  |  | (401,413 | )
Cash flows from financing activities: |  |  |  |  |  |
Warehouse repurchase facilities advances |  |  | 374,404 |  |  |  | 819,529 |
Warehouse repurchase facilities repayments |  |  | (585,489 | ) |  |  | (597,740 | )
Proceeds from unsecured financing |  |  | 500,000 |  |  |  | — |
Repayment of secured financing |  |  | (215,000 | ) |  |  | — |
Proceeds of securitized debt |  |  | 513,725 |  |  |  | 415,680 |
Repayment of securitized debt |  |  | (365,907 | ) |  |  | (262,319 | )
Debt issuance costs |  |  | (15,064 | ) |  |  | (253 | )
Deferred stock issuance costs |  |  | — |  |  |  | (24 | )
Proceeds from issuance of common stock, net |  |  | — |  |  |  | 28,797 |
Purchase of treasury stock |  |  | (4,537 | ) |  |  | (2,162 | )
Distribution to non-controlling interest |  |  | (33 | ) |  |  | — |
Net cash provided by financing activities |  |  | 202,099 |  |  |  | 401,508 |
Net (decrease) increase in cash, cash equivalents, and restricted cash |  |  | (137,187 | ) |  |  | 3,631 |
Cash, cash equivalents, and restricted cash at beginning of period |  |  | 249,237 |  |  |  | 70,830 |
Cash, cash equivalents, and restricted cash at end of period |  | $ | 112,050 |  |  | $ | 74,461 |

See accompanying Notes to Consolidated Financial Statements.

7

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (Unaudited) |
Supplemental cash flow information: |  |  |  |  |  |
Cash paid during the period for interest |  | $ | 100,415 |  |  | $ | 78,344 |
Cash paid during the period for income taxes, net |  |  | 699 |  |  |  | 771 |
Noncash transactions from investing and financing activities: |  |  |  |  |  |
Transfer of loans held for investment to real estate owned |  |  | 32,245 |  |  |  | 22,384 |
Transfer of accrued interest to loans held for investment |  |  | 642 |  |  |  | 699 |
Recognition of new leases in exchange for lease obligations |  |  | 403 |  |  |  | 814 |
Deferred stock issuance costs charged against additional paid-in capital |  |  | — |  |  |  | 255 |

See accompanying Notes to Consolidated Financial Statements.

8

VELOCITY FINANCIAL, INC. AND SUBSIDIARIES

Notes to Consolidated Finan cial Statements (Unaudited)

Note 1 — Organization and Description of Business

Velocity Financial, LLC (“VF” or “the Company”) was a Delaware limited liability company formed on July 9, 2012, for the purpose of acquiring all membership units in Velocity Commercial Capital, LLC (“VCC”). On January 16, 2020, Velocity Financial, LLC converted from a Delaware limited liability company to a Delaware corporation and changed its name to Velocity Financial, Inc. Upon completion of the conversion, Velocity Financial, LLC’s Class A equity units of 97,513,533 and Class D equity units of 60,193,989 were converted to 11,749,994 shares of Velocity Financial, Inc. common stock. On January 22, 2020, the Company completed its initial public offering of 7,250,000 shares of common stock at a price of $13.00 per share to the public. On January 28, 2020, the Company completed the sale of an additional 1,087,500 shares of its common stock, representing the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $13.00 per share. The Company’s stock trades on The New York Stock Exchange under the symbol “VEL.” The Company's stock also trades on the NYSE Texas, Inc. under the same symbol “VEL.” starting August 2025.

VCC, a California LLC formed on June 2, 2004, is a mortgage lender that originates and acquires residential and commercial investor real estate loans, providing capital to the investor real estate loan market. The Company is licensed as a California Finance Lender and, as such, is required to maintain a minimum net worth of $250 thousand. The Company does not believe there is any potential risk of not being able to meet this regulatory requirement. The Company uses its equity capital and borrowed funds to originate and invest in investor real estate loans and seeks to generate income based primarily on the difference between the yield on its investor real estate loan portfolio and the cost of its borrowings. The Company may also sell loans from time to time. The Company does not originate or acquire investments outside of the United States of America.

The Company, through its wholly owned subsidiaries, is the sole beneficial owner of the Velocity Commercial Capital Loan Trusts, from the 2017-2 Trust through and including the 2026-P1 Trust, all of which are New York common law trusts, with the exception of the VCC 2025-MC1 Trust, and VCC 2025-RTL1 Trust which are Delaware statutory trusts. The Trusts are bankruptcy remote, variable interest entities (“VIEs”) formed for the purpose of providing secured borrowings to the Company and are consolidated with the accounts of the Company.

On December 28, 2021, the Company acquired an 80% ownership interest in Century Health & Housing Capital, LLC (“Century”). Century is a licensed Government National Mortgage Association (“Ginnie Mae” or “GNMA”) issuer/servicer that provides government-insured Federal Housing Administration (“FHA”) mortgage financing for multifamily housing, senior housing and long-term care/assisted living facilities. Century originates loans through its borrower-direct origination channel and services the loans through its in-house servicing platform, which enables the formation of long-term relationships with its clients and drives strong portfolio retention. Century is a consolidated subsidiary of the Company as of completion of the acquisition. In addition, as a servicer of Ginnie Mae loans, Century is required to maintain a minimum net worth, and Century is in compliance with this requirement as of March 31, 2026.

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited Consolidated Financial Statements as of and for the three months ended March 31, 2026 and 2025 have been prepared on a basis that is substantially consistent with the accounting principles applied to the Company’s audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal, recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the Company’s audited Consolidated Financial Statements.

(a)
Use of Estimates

The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of consolidated income and expenses during the reporting period. These estimates relate to the allowance for credit losses and fair value option accounting.

9

(b)
Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 — Basis of Presentation and Summary of Significant Accounting Policies, of its audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the Securities and Exchange Commission (“SEC”).

There have been no material changes to the Company’s significant accounting policies as described in its 2025 Annual Report.

(c)
Principles of Consolidation

The principles of consolidation require management to determine and reassess the requirement to consolidate VIEs each reporting period, and therefore, the determination may change based on new facts and circumstances pertaining to each VIE. This could result in a material impact to the Company’s consolidated financial statements in subsequent reporting periods.

The Company consolidates the assets, liabilities, and remainder interests of the Trusts as management determined that VCC is the primary beneficiary of these entities. The Company’s ongoing asset management responsibilities provide the Company with the power to direct the activities that most significantly impact the VIE’s economic performance, and the remainder interests provide the Company with the right to receive benefits and the obligation to absorb losses, limited to its investment in the remainder interest of the Trusts.

The consolidated financial statements as of March 31, 2026 and December 31, 2025 include only those assets, liabilities, and results of operations related to the business of the Company, its subsidiaries, and VIEs.

(d)
Fair Value Option Accounting

The Company elected to apply fair value option (“FVO”) accounting to mortgage loans originated effective October 1, 2022. The fair value option loans are presented as a separate line item in the Consolidated Balance Sheets. Interest income on FVO loans is recorded on an accrual basis in the Consolidated Statements of Income under the heading “Interest income.” Changes in the fair value of the loans are recorded as “Unrealized gain (loss) on fair value of loans” in the Consolidated Statements of Income. The Company does not record a current expected credit loss (“CECL”) reserve on fair value option loans.

The Company elected to apply FVO accounting to securitized debt issued effective January 1, 2023 when the underlying collateral is also carried at fair value. The FVO securitized debt is presented as a separate line item in the Consolidated Balance Sheets. The Company reflects interest expense on the FVO securitized debt as “Interest expense – portfolio related” and presents the other fair value changes of the FVO securitized debt separately as “Unrealized gain (loss) on fair value securitized debt” in the Consolidated Statements of Income.

(e)
Derivative Instruments and Hedge Accounting

The Company issues fixed rate debt at regular intervals during the year through the securitization of its fixed rate mortgage assets. The Company is subject to interest rate risk on its forecasted debt issuances as these fixed rate debt issuances are priced at then-current market rates. The Company’s risk management objective is to hedge the risk of variability in its interest payment cash flows attributable to changes in the benchmark Secured Overnight Financing Rate (“SOFR”) between the time the fixed rate mortgages are originated and the fixed rate debt is issued. To accomplish this hedging strategy, the Company may from time to time enter into derivative instruments such as forward starting payer interest rate swaps or interest rate payer and receiver swaptions designated as cash flow hedges that are designed to be highly correlated to the underlying terms of the forecasted debt instruments. To qualify for hedge accounting, the Company formally documents its hedging relationships at inception, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction at the time the derivative contract is executed. The Company also formally assesses effectiveness both at the hedge's inception and on an ongoing basis.

The Company's policy is to present all derivative balances on a gross basis, without regard to counterparty master netting agreements or similar arrangements. The fair value of the derivative instruments is recorded as a separate line item on the Consolidated Balance Sheets as an asset or liability with the related gains or losses reported as a component of Accumulated Other Comprehensive Income (“AOCI”). Beginning in the period in which the forecasted debt issuance occurs and the related derivative instruments are terminated, the gains or losses accumulated in AOCI are then reclassified into interest expense as a yield adjustment over the term of the related debt. If the Company determines it is not probable that the forecasted transaction will occur, gains and losses are reclassified immediately to earnings. The related cash flows are recognized on the cash flows from operating activities section on the Consolidated Statements of Cash Flows. The Company uses hedge accounting based on the exposure being hedged as cash flow hedges in operations.

(f)
Other Comprehensive Income

Other comprehensive income (“OCI”) is reported in the Consolidated Statements of Comprehensive Income. OCI is comprised of net income and the effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges, net of tax, less amounts reclassified into earnings.

10

Accumulated other comprehensive income represents the cumulative balance of OCI, net of tax, as of the end of the reporting period and relates to unrealized gains or losses on cash flow hedges, net of tax.

Note 3 — Current Accounting Developments

Recently Issued Accounting Standards

Codification Improvements

In December 2025, the FASB issued ASU No. 2025-12 “Codification Improvements” to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to U.S. GAAP. The update represents changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. The amendments make the Codification easier to understand and apply. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

Interim Reporting

In December 2025, the FASB issued ASU No. 2025-11 “Interim Reporting (Topic 270): Narrow-Scope Improvements” (“ASU 2025-11”). ASU 2025-11 clarifies the applicability of interim reporting guidance, types of interim reporting, and the form and content of interim financial statements in accordance with United States generally accepted accounting principles (“GAAP”). ASU 2025-11 does not change the fundamental nature of interim reporting or modify the scope of current interim disclosure requirements, but clarifies and improves the navigability of existing interim reporting requirements. This guidance is effective for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. Upon adoption, ASU 2025-11 may be applied prospectively or retrospectively to any or all periods presented in the interim financial statements. The Company is currently evaluating the impact ASU 2025-11 will have on its consolidated financial statements and related disclosures.

Derivatives and Hedging

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815), Hedge Accounting Improvements, which aligns financial reporting with the economics of some of an entity's risk management activities by updating similar risk assessment for cash flow hedges, hedging interest payments on choose-your-rate debt, cash flow hedges of nonfinancial forecasted transactions, net written options as hedging instruments, and foreign currency-denominated debt designated as a hedging instrument and a hedged item. The amendments in ASU 2025-09 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods and applied on a prospective basis. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

Expense Disaggregation

In January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income (Subtopic 220-40) Expense Disaggregation Disclosures,” clarifies for non-calendar year end entities the interim effective date of ASU 2024-03. All public business entities are required to adopt the guidance in the annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income (Subtopic 220-40) Expense Disaggregation Disclosures,” which requires specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively will need to be disclosed. The accounting update is effective January 1, 2027 for the Company. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

11

Note 4 — Cash, Cash Equivalents, and Restricted Cash

The Company is required to hold cash for potential future advances due to certain borrowers. In accordance with various mortgage servicing and related agreements, Century maintains escrow accounts for mortgage insurance premium, tax and insurance, working capital, sinking fund and other mortgage related escrows. The total escrow balances payable amounted to $79.2 million and $85.5 million as of March 31, 2026 and 2025, respectively. These amounts are not reflected on the Consolidated Balance Sheets of the Company.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s Consolidated Balance Sheets to the total of the same such amounts shown in the Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025:

|  | March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Cash and cash equivalents |  | $ | 87,054 |  |  | $ | 51,676 |
Restricted cash |  |  | 24,996 |  |  |  | 22,785 |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows |  | $ | 112,050 |  |  | $ | 74,461 |

Note 5 — Loans Held for Sale at Fair Value

There were no loans held for sale at fair value as of March 31, 2026 and December 31, 2025.

Note 6 — Loans Held for Investment at Amortized Cost and Loans Held for Investment at Fair Value

The following tables summarize loans held for investment as of March 31, 2026 and December 31, 2025:

|  | March 31, 2026 |
|  | Loans Held for Investment, at Amortized Cost |  |  | Loans Held for Investment, at Fair Value |  |  | Total Loans Held for Investment |
|  | (In thousands) |
Unpaid principal balance |  | $ | 1,937,474 |  |  | $ | 4,899,070 |  |  | $ | 6,836,544 |
Valuation adjustments on performing FVO loans |  |  | — |  |  |  | 307,626 |  |  |  | 307,626 |
Valuation adjustments on nonperforming FVO loans |  |  | — |  |  |  | (52,188 | ) |  |  | (52,188 | )
Deferred loan origination costs, net |  |  | 18,416 |  |  |  | — |  |  |  | 18,416 |
|  |  | 1,955,890 |  |  |  | 5,154,508 |  |  |  | 7,110,398 |
Allowance for credit losses |  |  | (4,860 | ) |  |  | — |  |  |  | (4,860 | )
Total loans held for investment |  | $ | 1,951,030 |  |  | $ | 5,154,508 |  |  | $ | 7,105,538 |

|  | December 31, 2025 |
|  | Loans Held for Investment, at Amortized Cost |  |  | Loans Held for Investment, at Fair Value |  |  | Total Loans Held for Investment |
|  | (In thousands) |
Unpaid principal balance |  | $ | 2,013,514 |  |  | $ | 4,477,824 |  |  | $ | 6,491,338 |
Valuation adjustments on performing FVO loans |  |  | — |  |  |  | 300,344 |  |  |  | 300,344 |
Valuation adjustments on nonperforming FVO loans |  |  | — |  |  |  | (48,299 | ) |  |  | (48,299 | )
Deferred loan origination costs, net |  |  | 19,269 |  |  |  | — |  |  |  | 19,269 |
|  |  | 2,032,783 |  |  |  | 4,729,869 |  |  |  | 6,762,652 |
Allowance for credit losses |  |  | (4,521 | ) |  |  | — |  |  |  | (4,521 | )
Total loans held for investment |  | $ | 2,028,262 |  |  | $ | 4,729,869 |  |  | $ | 6,758,131 |

12

The following tables summarize the Unpaid Principal Balance (“UPB”) and amortized cost basis of loans in the Company's COVID-19 forbearance program for the three months ended March 31, 2026 and the year ended December 31, 2025:

|  | Three Months Ended March 31, 2026
|  | UPB |  |  | % |  | Amortized Cost |  |  | %
|  | ($ in thousands)
Beginning balance |  | $ | 126,142 |  |  |  |  | $ | 127,328 |  |  |
Repayments |  |  | (5,218 | ) |  |  |  |  | (5,294 | ) |  |
Ending balance |  | $ | 120,924 |  |  |  |  | $ | 122,034 |  |  |
Performing/Accruing |  | $ | 93,631 |  |  | 77.4% |  | $ | 94,464 |  |  | 77.4%
Nonperforming/Nonaccrual |  | $ | 27,293 |  |  | 22.6% |  | $ | 27,570 |  |  | 22.6%

|  | Year Ended December 31, 2025
|  | UPB |  |  | % |  | Amortized Cost |  |  | %
|  | ($ in thousands)
Beginning balance |  | $ | 142,827 |  |  |  |  | $ | 144,247 |  |  |
Foreclosures |  |  | (1,980 | ) |  |  |  |  | (1,996 | ) |  |
Repayments |  |  | (14,705 | ) |  |  |  |  | (14,923 | ) |  |
Ending balance |  | $ | 126,142 |  |  |  |  | $ | 127,328 |  |  |
Performing/Accruing |  | $ | 96,577 |  |  | 76.6% |  | $ | 97,461 |  |  | 76.5%
Nonperforming/Nonaccrual |  | $ | 29,565 |  |  | 23.4% |  | $ | 29,867 |  |  | 23.5%

Since April 1, 2020, the inception of the COVID-19 forbearance program, the Company has modified $415.4 million in UPB of loans, which includes capitalized interest of $17.3 million. As of March 31, 2026, $289.7 million in UPB of modified loans has been paid down, which includes $6.8 million of capitalized interest received. The Company has not forgiven any capitalized interest.

Approximately 77.4% and 76.6% of the COVID forbearance loans in UPB were performing, and 22.6% and 23.4% were on nonaccrual status as of March 31, 2026 and December 31, 2025, respectively.

13

As of March 31, 2026 and December 31, 2025, the gross unpaid principal balances of loans held for investment pledged as collateral for the Company’s warehouse facilities and securitized debt issued were as follows:

|  | March 31, 2026 |  |  | December 31, 2025 |
|  | (In thousands) |
The 2013 repurchase agreement |  | $ | — |  |  | $ | 165,484 |
The 2021/2024 repurchase agreements |  |  | — |  |  |  | 134,901 |
The 2021 term repurchase agreement |  |  | — |  |  |  | 23,478 |
The 2023 repurchase agreement |  |  | 91,052 |  |  |  | 50,611 |
The 2024 bank credit agreement |  |  | 59,821 |  |  |  | 36,479 |
Total pledged loans |  | $ | 150,873 |  |  | $ | 410,953 |
2017-2 Trust |  | $ | 27,219 |  |  | $ | 29,111 |
2018-1 Trust |  |  | 20,216 |  |  |  | 21,618 |
2018-2 Trust |  |  | 48,405 |  |  |  | 49,759 |
2019-1 Trust |  |  | 52,186 |  |  |  | 58,324 |
2019-2 Trust |  |  | 40,727 |  |  |  | 42,618 |
2019-3 Trust |  |  | 39,719 |  |  |  | 41,166 |
2020-1 Trust |  |  | 80,691 |  |  |  | 83,154 |
2021-1 Trust |  |  | 131,618 |  |  |  | 135,627 |
2021-2 Trust |  |  | 106,452 |  |  |  | 112,332 |
2021-3 Trust |  |  | 113,650 |  |  |  | 119,070 |
2021-4 Trust |  |  | 185,812 |  |  |  | 190,186 |
2022-1 Trust |  |  | 193,620 |  |  |  | 198,203 |
2022-2 Trust |  |  | 174,205 |  |  |  | 178,346 |
2022-3 Trust |  |  | 202,845 |  |  |  | 206,020 |
2022-4 Trust |  |  | 213,868 |  |  |  | 221,652 |
2022-5 Trust |  |  | 136,472 |  |  |  | 146,126 |
2023-1 Trust |  |  | 132,456 |  |  |  | 141,805 |
2023-2 Trust |  |  | 90,800 |  |  |  | 94,269 |
2023-3 Trust |  |  | 114,094 |  |  |  | 124,129 |
2023-4 Trust |  |  | 103,392 |  |  |  | 118,953 |
2024-1 Trust |  |  | 132,804 |  |  |  | 140,464 |
2024-2 Trust |  |  | 172,930 |  |  |  | 183,376 |
2024-3 Trust |  |  | 138,287 |  |  |  | 145,659 |
2024-4 Trust |  |  | 168,827 |  |  |  | 175,820 |
2024-5 Trust |  |  | 226,145 |  |  |  | 246,456 |
2024-6 Trust |  |  | 253,670 |  |  |  | 268,354 |
2025-1 Trust |  |  | 306,618 |  |  |  | 321,431 |
2025-RTL1 Trust |  |  | 121,225 |  |  |  | 117,733 |
2025-2 Trust |  |  | 361,470 |  |  |  | 369,814 |
2025-MC1 Trust |  |  | 79,760 |  |  |  | 86,083 |
2025-3 Trust |  |  | 365,048 |  |  |  | 377,229 |
2025-P1 Trust |  |  | 182,698 |  |  |  | 190,012 |
2025-4 Trust |  |  | 452,161 |  |  |  | 459,557 |
2025-P2 Trust |  |  | 203,302 |  |  |  | 210,368 |
2025-5 Trust |  |  | 439,029 |  |  |  | 445,822 |
2026-1 Trust |  |  | 353,065 |  |  |  | — |
2026-P1 Trust |  |  | 189,769 |  |  |  | — |
Total |  | $ | 6,355,255 |  |  | $ | 6,050,646 |

14

(a)
Nonaccrual Loans

The following tables present the amortized cost basis, or recorded investment, of the Company’s loans held for investment, excluding loans carried at fair value, that were nonperforming and on nonaccrual status as of March 31, 2026 and December 31, 2025.

|  | March 31, 2026 |
|  | Total Nonaccrual |  |  | Nonaccrual with No Allowance for Credit Losses |  |  | Nonaccrual with Allowance for Credit Losses |  |  | Allowance for Loans Individually Evaluated |
|  | (In thousands) |
Commercial - Purchase |  | $ | 35,132 |  |  | $ | 34,476 |  |  | $ | 656 |  |  | $ | 76 |
Commercial - Refinance |  |  | 72,179 |  |  |  | 68,280 |  |  |  | 3,899 |  |  |  | 475 |
Residential 1-4 Unit - Purchase |  |  | 25,036 |  |  |  | 24,469 |  |  |  | 567 |  |  |  | 14 |
Residential 1-4 Unit - Refinance |  |  | 90,871 |  |  |  | 84,381 |  |  |  | 6,490 |  |  |  | 542 |
Short Term 1-4 Unit - Purchase |  |  | 1,180 |  |  |  | 1,180 |  |  |  | — |  |  |  | — |
Short Term 1-4 Unit - Refinance |  |  | 16,815 |  |  |  | 16,815 |  |  |  | — |  |  |  | — |
Total |  | $ | 241,213 |  |  | $ | 229,601 |  |  | $ | 11,612 |  |  | $ | 1,107 |

|  | December 31, 2025 |
|  | Total Nonaccrual |  |  | Nonaccrual with No Allowance for Credit Losses |  |  | Nonaccrual with Allowance for Credit Losses |  |  | Allowance for Loans Individually Evaluated |
|  | (In thousands) |
Commercial - Purchase |  | $ | 30,429 |  |  | $ | 29,773 |  |  | $ | 656 |  |  | $ | 76 |
Commercial - Refinance |  |  | 74,398 |  |  |  | 71,043 |  |  |  | 3,355 |  |  |  | 402 |
Residential 1-4 Unit - Purchase |  |  | 27,383 |  |  |  | 27,068 |  |  |  | 315 |  |  |  | 6 |
Residential 1-4 Unit - Refinance |  |  | 90,666 |  |  |  | 83,143 |  |  |  | 7,523 |  |  |  | 535 |
Short Term 1-4 Unit - Purchase |  |  | 1,180 |  |  |  | 1,180 |  |  |  | — |  |  |  | — |
Short Term 1-4 Unit - Refinance |  |  | 13,336 |  |  |  | 13,336 |  |  |  | — |  |  |  | — |
Total |  | $ | 237,392 |  |  | $ | 225,543 |  |  | $ | 11,849 |  |  | $ | 1,019 |

The Company has made the accounting policy election not to measure an allowance for accrued interest receivables. The Company has also made the accounting policy election to write off accrued interest receivables by reversing interest income when loans are placed on nonaccrual status, or 90 days or more past due. Any future payments received for these loans will be recognized on a cash basis.

The following tables present the amortized cost basis in loans held for investment, excluding loans held for investment at fair value, as of March 31, 2026 and 2025, and the amount of accrued interest receivable written off by reversing interest income by portfolio segment of loans that have been placed on nonaccrual for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | Amortized Cost |  |  | Interest Reversal |  |  | Amortized Cost |  |  | Interest Reversal |
|  | (In thousands) |
Commercial - Purchase |  | $ | 474,257 |  |  | $ | 249 |  |  | $ | 548,796 |  |  | $ | 264 |
Commercial - Refinance |  |  | 584,152 |  |  |  | 304 |  |  |  | 687,917 |  |  |  | 278 |
Residential 1-4 Unit - Purchase |  |  | 339,677 |  |  |  | 60 |  |  |  | 400,778 |  |  |  | 141 |
Residential 1-4 Unit - Refinance |  |  | 509,086 |  |  |  | 330 |  |  |  | 636,983 |  |  |  | 275 |
Short Term 1-4 Unit - Purchase |  |  | 31,903 |  |  |  | — |  |  |  | 30,602 |  |  |  | 80 |
Short Term 1-4 Unit - Refinance |  |  | 16,815 |  |  |  | 112 |  |  |  | 21,950 |  |  |  | — |
Total |  | $ | 1,955,890 |  |  | $ | 1,055 |  |  | $ | 2,327,026 |  |  | $ | 1,038 |

The cash basis interest income recognized on nonaccrual loans, including loans held for investment at fair value, was $9.6 million and $8.5 million for the three months ended March 31, 2026 and 2025, respectively. No accrued interest income was recognized on nonaccrual loans for the three months ended March 31, 2026 and 2025. The average recorded investment of individually evaluated loans, computed using month-end balances, was $243.1 million and $300.6 million for the three months ended March 31, 2026 and 2025. There were no commitments to lend additional funds to debtors experiencing financial difficulty whose loans have been modified as of March 31, 2026 and 2025.

15

(b)
Allowance for Credit Losses

The following tables present the activity in the allowance for credit losses for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, 2026 |
|  | Commercial Purchase |  |  | Commercial Refinance |  |  | Residential 1-4 Unit Purchase |  |  | Residential 1-4 Unit Refinance |  |  | Short Term 1-4 Unit Purchase |  |  | Short Term 1-4 Unit Refinance |  |  | Total |
|  | (In thousands) |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance - January 1, 2026 |  | $ | 345 |  |  | $ | 1,858 |  |  | $ | 771 |  |  | $ | 1,540 |  |  | $ | 7 |  |  | $ | — |  |  | $ | 4,521 |
Provision for (reversal of) credit losses |  |  | (45 | ) |  |  | 1,373 |  |  |  | 90 |  |  |  | 160 |  |  |  | 5 |  |  |  | 78 |  |  |  | 1,661 |
Charge-offs |  |  | — |  |  |  | (928 | ) |  |  | (113 | ) |  |  | (203 | ) |  |  | — |  |  |  | (78 | ) |  |  | (1,322 | )
Ending balance |  | $ | 300 |  |  | $ | 2,303 |  |  | $ | 748 |  |  | $ | 1,497 |  |  | $ | 12 |  |  | $ | — |  |  | $ | 4,860 |
Allowance related to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated |  | $ | 76 |  |  | $ | 475 |  |  | $ | 14 |  |  | $ | 542 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,107 |
Loans collectively evaluated |  | $ | 224 |  |  | $ | 1,828 |  |  | $ | 734 |  |  | $ | 955 |  |  | $ | 12 |  |  | $ | — |  |  | $ | 3,753 |
Amortized cost related to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated |  | $ | 35,132 |  |  | $ | 72,179 |  |  | $ | 25,036 |  |  | $ | 90,871 |  |  | $ | 1,180 |  |  | $ | 16,815 |  |  | $ | 241,213 |
Loans collectively evaluated |  | $ | 439,125 |  |  | $ | 511,973 |  |  | $ | 314,641 |  |  | $ | 418,215 |  |  | $ | 30,723 |  |  | $ | — |  |  | $ | 1,714,677 |

|  | Three Months Ended March 31, 2025 |
|  | Commercial Purchase |  |  | Commercial Refinance |  |  | Residential 1-4 Unit Purchase |  |  | Residential 1-4 Unit Refinance |  |  | Short Term 1-4 Unit Purchase |  |  | Short Term 1-4 Unit Refinance |  |  | Total |
|  | (In thousands) |
Allowance for credit losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance - January 1, 2025 |  | $ | 662 |  |  | $ | 1,399 |  |  | $ | 746 |  |  | $ | 1,281 |  |  | $ | 12 |  |  | $ | 74 |  |  | $ | 4,174 |
Provision for (reversal of) credit losses |  |  | (7 | ) |  |  | 848 |  |  |  | 271 |  |  |  | 640 |  |  |  | 33 |  |  |  | 87 |  |  |  | 1,872 |
Charge-offs |  |  | — |  |  |  | (118 | ) |  |  | (177 | ) |  |  | (624 | ) |  |  | (7 | ) |  |  | (103 | ) |  |  | (1,029 | )
Ending balance |  | $ | 655 |  |  | $ | 2,129 |  |  | $ | 840 |  |  | $ | 1,297 |  |  | $ | 38 |  |  | $ | 58 |  |  | $ | 5,017 |
Allowance related to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated |  | $ | 85 |  |  | $ | 1,105 |  |  | $ | — |  |  | $ | 193 |  |  | $ | — |  |  | $ | 46 |  |  | $ | 1,429 |
Loans collectively evaluated |  | $ | 570 |  |  | $ | 1,024 |  |  | $ | 840 |  |  | $ | 1,104 |  |  | $ | 38 |  |  | $ | 13 |  |  | $ | 3,589 |
Amortized cost related to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated |  | $ | 33,954 |  |  | $ | 96,686 |  |  | $ | 29,358 |  |  | $ | 115,903 |  |  | $ | 2,595 |  |  | $ | 17,465 |  |  | $ | 295,961 |
Loans collectively evaluated |  | $ | 514,842 |  |  | $ | 591,231 |  |  | $ | 371,420 |  |  | $ | 521,080 |  |  | $ | 28,007 |  |  | $ | 4,485 |  |  | $ | 2,031,065 |

(c)
Credit Quality Indicator

A credit quality indicator is a statistic used by the Company to monitor and assess the credit quality of loans held for investment, excluding loans held for investment at fair value. The Company monitors its charge-offs rate in relation to its nonperforming loans as a credit quality indicator. The annualized charge-offs rates were 2.20% and 1.38% of average nonperforming loans at amortized cost for the three months ended March 31, 2026 and 2025, respectively.

16

Other credit quality indicators include aging status and accrual status. Nonperforming loans are loans that are 90 or more days past due, in bankruptcy, in foreclosure, or not accruing interest. Past due status is based on the contractual terms of the loan. The following tables present the aging status of the amortized cost basis in the loans held for investment portfolio, which include $122.0 million and $127.3 million loans in the Company’s COVID-19 forbearance program, excluding loans held for investment at fair value, as of March 31, 2026 and December 31, 2025, respectively:

March 31, 2026 |  | 30–59 Days Past Due |  |  | 60–89 Days Past Due |  |  | 90+ Days Past Due(1) |  |  | Total Past Due |  |  | Current |  |  | Total Loans |
|  | (In thousands) |
Loans individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - Purchase |  | $ | 434 |  |  | $ | 1,770 |  |  | $ | 32,928 |  |  | $ | 35,132 |  |  | $ | — |  |  | $ | 35,132 |
Commercial - Refinance |  |  | 4,023 |  |  |  | 1,530 |  |  |  | 66,511 |  |  |  | 72,064 |  |  |  | 115 |  |  |  | 72,179 |
Residential 1-4 Unit - Purchase |  |  | 2,833 |  |  |  | 678 |  |  |  | 21,525 |  |  |  | 25,036 |  |  |  | — |  |  |  | 25,036 |
Residential 1-4 Unit - Refinance |  |  | 1,776 |  |  |  | 4,978 |  |  |  | 84,117 |  |  |  | 90,871 |  |  |  | — |  |  |  | 90,871 |
Short Term 1-4 Unit - Purchase |  |  | — |  |  |  | — |  |  |  | 1,180 |  |  |  | 1,180 |  |  |  | — |  |  |  | 1,180 |
Short Term 1-4 Unit - Refinance |  |  | — |  |  |  | — |  |  |  | 16,815 |  |  |  | 16,815 |  |  |  | — |  |  |  | 16,815 |
Total loans individually evaluated |  | $ | 9,066 |  |  | $ | 8,956 |  |  | $ | 223,076 |  |  | $ | 241,098 |  |  | $ | 115 |  |  | $ | 241,213 |
Loans collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - Purchase |  | $ | 19,955 |  |  | $ | 5,714 |  |  | $ | — |  |  | $ | 25,669 |  |  | $ | 413,456 |  |  | $ | 439,125 |
Commercial - Refinance |  |  | 28,064 |  |  |  | 10,343 |  |  |  | — |  |  |  | 38,407 |  |  |  | 473,566 |  |  |  | 511,973 |
Residential 1-4 Unit - Purchase |  |  | 10,175 |  |  |  | 3,025 |  |  |  | — |  |  |  | 13,200 |  |  |  | 301,441 |  |  |  | 314,641 |
Residential 1-4 Unit - Refinance |  |  | 19,751 |  |  |  | 12,663 |  |  |  | — |  |  |  | 32,414 |  |  |  | 385,801 |  |  |  | 418,215 |
Short Term 1-4 Unit - Purchase |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 30,723 |  |  |  | 30,723 |
Short Term 1-4 Unit - Refinance |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total loans collectively evaluated |  | $ | 77,945 |  |  | $ | 31,745 |  |  | $ | — |  |  | $ | 109,690 |  |  | $ | 1,604,987 |  |  | $ | 1,714,677 |
Ending balance |  | $ | 87,011 |  |  | $ | 40,701 |  |  | $ | 223,076 |  |  | $ | 350,788 |  |  | $ | 1,605,102 |  |  | $ | 1,955,890 |

(1)
Includes loans in bankruptcy and foreclosure less than 90 days past due.

December 31, 2025 |  | 30–59 Days Past Due |  |  | 60–89 Days Past Due |  |  | 90+ Days Past Due(1) |  |  | Total Past Due |  |  | Current |  |  | Total Loans |
|  | (In thousands) |
Loans individually evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - Purchase |  | $ | 197 |  |  | $ | 2,499 |  |  | $ | 27,733 |  |  | $ | 30,429 |  |  | $ | — |  |  | $ | 30,429 |
Commercial - Refinance |  |  | 4,403 |  |  |  | 3,817 |  |  |  | 66,178 |  |  |  | 74,398 |  |  |  | — |  |  |  | 74,398 |
Residential 1-4 Unit - Purchase |  |  | 2,621 |  |  |  | 688 |  |  |  | 24,074 |  |  |  | 27,383 |  |  |  | — |  |  |  | 27,383 |
Residential 1-4 Unit - Refinance |  |  | 4,169 |  |  |  | 2,376 |  |  |  | 84,121 |  |  |  | 90,666 |  |  |  | — |  |  |  | 90,666 |
Short Term 1-4 Unit - Purchase |  |  | — |  |  |  | — |  |  |  | 1,180 |  |  |  | 1,180 |  |  |  | — |  |  |  | 1,180 |
Short Term 1-4 Unit - Refinance |  |  | — |  |  |  | — |  |  |  | 13,336 |  |  |  | 13,336 |  |  |  | — |  |  |  | 13,336 |
Total loans individually evaluated |  | $ | 11,390 |  |  | $ | 9,380 |  |  | $ | 216,622 |  |  | $ | 237,392 |  |  | $ | — |  |  | $ | 237,392 |
Loans collectively evaluated |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - Purchase |  | $ | 17,461 |  |  | $ | 10,059 |  |  | $ | — |  |  | $ | 27,520 |  |  | $ | 431,786 |  |  | $ | 459,306 |
Commercial - Refinance |  |  | 29,871 |  |  |  | 12,111 |  |  |  | — |  |  |  | 41,982 |  |  |  | 492,895 |  |  |  | 534,877 |
Residential 1-4 Unit - Purchase |  |  | 8,996 |  |  |  | 4,474 |  |  |  | — |  |  |  | 13,470 |  |  |  | 311,365 |  |  |  | 324,835 |
Residential 1-4 Unit - Refinance |  |  | 26,912 |  |  |  | 17,494 |  |  |  | — |  |  |  | 44,406 |  |  |  | 397,821 |  |  |  | 442,227 |
Short Term 1-4 Unit - Purchase |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 29,598 |  |  |  | 29,598 |
Short Term 1-4 Unit - Refinance |  |  | — |  |  |  | 4,548 |  |  |  | — |  |  |  | 4,548 |  |  |  | — |  |  |  | 4,548 |
Total loans collectively evaluated |  | $ | 83,240 |  |  | $ | 48,686 |  |  | $ | — |  |  | $ | 131,926 |  |  | $ | 1,663,465 |  |  | $ | 1,795,391 |
Ending balance |  | $ | 94,630 |  |  | $ | 58,066 |  |  | $ | 216,622 |  |  | $ | 369,318 |  |  | $ | 1,663,465 |  |  | $ | 2,032,783 |

(1)
Includes loans in bankruptcy and foreclosure less than 90 days past due.

17

In addition to the aging status, the Company also evaluates credit quality by accrual status. The following tables present the amortized cost in loans held for investment, excluding loans held for investment at fair value, based on accrual status and by loan origination year as of March 31, 2026 and December 31, 2025.

|  | Term Loans Amortized Cost Basis by Origination Year |
March 31, 2026: |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Total |
|  | (In thousands) |
Commercial - Purchase |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 185,110 |  |  | $ | 178,266 |  |  | $ | 22,237 |  |  | $ | 25,896 |  |  | $ | 27,616 |  |  | $ | 439,125 |
Nonperforming |  |  | 14,085 |  |  |  | 12,238 |  |  |  | 2,474 |  |  |  | 4,167 |  |  |  | 2,168 |  |  |  | 35,132 |
Total Commercial - Purchase |  | $ | 199,195 |  |  | $ | 190,504 |  |  | $ | 24,711 |  |  | $ | 30,063 |  |  | $ | 29,784 |  |  | $ | 474,257 |
Commercial - Refinance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  |  | 176,934 |  |  | $ | 148,603 |  |  | $ | 29,969 |  |  | $ | 62,006 |  |  | $ | 94,461 |  |  | $ | 511,973 |
Nonperforming |  |  | 18,928 |  |  |  | 13,588 |  |  |  | 4,740 |  |  |  | 14,258 |  |  |  | 20,665 |  |  |  | 72,179 |
Total Commercial - Refinance |  | $ | 195,862 |  |  | $ | 162,191 |  |  | $ | 34,709 |  |  | $ | 76,264 |  |  | $ | 115,126 |  |  | $ | 584,152 |
Residential 1-4 Unit - Purchase |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 140,452 |  |  | $ | 137,354 |  |  | $ | 4,809 |  |  | $ | 13,770 |  |  | $ | 18,256 |  |  | $ | 314,641 |
Nonperforming |  |  | 8,270 |  |  |  | 11,262 |  |  |  | 391 |  |  |  | 788 |  |  |  | 4,325 |  |  |  | 25,036 |
Total Residential 1-4 Unit - Purchase |  | $ | 148,722 |  |  | $ | 148,616 |  |  | $ | 5,200 |  |  | $ | 14,558 |  |  | $ | 22,581 |  |  | $ | 339,677 |
Residential 1-4 Unit - Refinance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 169,546 |  |  | $ | 158,776 |  |  | $ | 12,838 |  |  | $ | 36,399 |  |  | $ | 40,656 |  |  | $ | 418,215 |
Nonperforming |  |  | 31,199 |  |  |  | 33,160 |  |  |  | 1,627 |  |  |  | 11,412 |  |  |  | 13,473 |  |  |  | 90,871 |
Total Residential 1-4 Unit - Refinance |  | $ | 200,745 |  |  | $ | 191,936 |  |  | $ | 14,465 |  |  | $ | 47,811 |  |  | $ | 54,129 |  |  | $ | 509,086 |
Short Term 1-4 Unit - Purchase |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | — |  |  | $ | — |  |  | $ | 22,672 |  |  | $ | 8,051 |  |  | $ | — |  |  | $ | 30,723 |
Nonperforming |  |  | 597 |  |  |  | — |  |  |  | 583 |  |  |  | — |  |  |  | — |  |  |  | 1,180 |
Total Short Term 1-4 Unit - Purchase |  | $ | 597 |  |  | $ | — |  |  | $ | 23,255 |  |  | $ | 8,051 |  |  | $ | — |  |  | $ | 31,903 |
Short Term 1-4 Unit - Refinance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Nonperforming |  |  | 5,456 |  |  |  | — |  |  |  | 1,522 |  |  |  | 8,251 |  |  |  | 1,586 |  |  |  | 16,815 |
Total Short Term 1-4 Unit - Refinance |  | $ | 5,456 |  |  | $ | — |  |  | $ | 1,522 |  |  | $ | 8,251 |  |  | $ | 1,586 |  |  | $ | 16,815 |
Total Portfolio |  | $ | 750,577 |  |  | $ | 693,247 |  |  | $ | 103,862 |  |  | $ | 184,998 |  |  | $ | 223,206 |  |  | $ | 1,955,890 |
Gross charge-offs - quarter-ended March 31, 2026 |  | $ | 554 |  |  | $ | 364 |  |  | $ | — |  |  | $ | 110 |  |  | $ | 294 |  |  | $ | 1,322 |
Gross charge-offs - year-to-date March 31, 2026 |  | $ | 554 |  |  | $ | 364 |  |  | $ | — |  |  | $ | 110 |  |  | $ | 294 |  |  | $ | 1,322 |

18

|  | Term Loans Amortized Cost Basis by Origination Year |
December 31, 2025 |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | Total |
|  | (In thousands) |
Commercial - Purchase |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 195,654 |  |  | $ | 183,471 |  |  | $ | 22,409 |  |  | $ | 26,427 |  |  | $ | 31,345 |  |  | $ | 459,306 |
Nonperforming |  |  | 9,992 |  |  |  | 12,081 |  |  |  | 2,981 |  |  |  | 3,819 |  |  |  | 1,556 |  |  |  | 30,429 |
Total Commercial - Purchase |  | $ | 205,646 |  |  | $ | 195,552 |  |  | $ | 25,390 |  |  | $ | 30,246 |  |  | $ | 32,901 |  |  | $ | 489,735 |
Commercial - Refinance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 184,326 |  |  | $ | 152,510 |  |  | $ | 32,023 |  |  | $ | 64,788 |  |  | $ | 101,230 |  |  | $ | 534,877 |
Nonperforming |  |  | 18,536 |  |  |  | 14,907 |  |  |  | 4,308 |  |  |  | 14,815 |  |  |  | 21,832 |  |  |  | 74,398 |
Total Commercial - Refinance |  | $ | 202,862 |  |  | $ | 167,417 |  |  | $ | 36,331 |  |  | $ | 79,603 |  |  | $ | 123,062 |  |  | $ | 609,275 |
Residential 1-4 Unit - Purchase |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 144,277 |  |  | $ | 142,870 |  |  | $ | 4,718 |  |  | $ | 13,852 |  |  | $ | 19,118 |  |  | $ | 324,835 |
Nonperforming |  |  | 10,318 |  |  |  | 10,958 |  |  |  | 1,390 |  |  |  | 788 |  |  |  | 3,929 |  |  |  | 27,383 |
Total Residential 1-4 Unit - Purchase |  | $ | 154,595 |  |  | $ | 153,828 |  |  | $ | 6,108 |  |  | $ | 14,640 |  |  | $ | 23,047 |  |  | $ | 352,218 |
Residential 1-4 Unit - Refinance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 182,214 |  |  | $ | 165,344 |  |  | $ | 13,247 |  |  | $ | 38,741 |  |  | $ | 42,681 |  |  | $ | 442,227 |
Nonperforming |  |  | 27,281 |  |  |  | 34,311 |  |  |  | 3,178 |  |  |  | 11,342 |  |  |  | 14,554 |  |  |  | 90,666 |
Total Residential 1-4 Unit - Refinance |  | $ | 209,495 |  |  | $ | 199,655 |  |  | $ | 16,425 |  |  | $ | 50,083 |  |  | $ | 57,235 |  |  | $ | 532,893 |
Short Term 1-4 Unit - Purchase |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | — |  |  | $ | — |  |  | $ | 21,904 |  |  | $ | 7,694 |  |  | $ | — |  |  | $ | 29,598 |
Nonperforming |  |  | 597 |  |  |  | — |  |  |  | 583 |  |  |  | — |  |  |  | — |  |  |  | 1,180 |
Total Short Term 1-4 Unit - Purchase |  | $ | 597 |  |  | $ | — |  |  | $ | 22,487 |  |  | $ | 7,694 |  |  | $ | — |  |  | $ | 30,778 |
Short Term 1-4 Unit - Refinance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Payment performance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Performing |  | $ | 4,548 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4,548 |
Nonperforming |  |  | 916 |  |  |  | — |  |  |  | 1,844 |  |  |  | 8,230 |  |  |  | 2,346 |  |  |  | 13,336 |
Total Short Term 1-4 Unit - Refinance |  | $ | 5,464 |  |  | $ | — |  |  | $ | 1,844 |  |  | $ | 8,230 |  |  | $ | 2,346 |  |  | $ | 17,884 |
Total Portfolio |  | $ | 778,659 |  |  | $ | 716,452 |  |  | $ | 108,585 |  |  | $ | 190,496 |  |  | $ | 238,591 |  |  | $ | 2,032,783 |
Gross charge-offs - quarter-ended December 31, 2025 |  | $ | 1,321 |  |  | $ | 422 |  |  | $ | — |  |  | $ | — |  |  | $ | 276 |  |  | $ | 2,019 |
Gross charge-offs - year-ended December 31, 2025 |  | $ | 4,120 |  |  | $ | 751 |  |  | $ | 45 |  |  | $ | 75 |  |  | $ | 467 |  |  | $ | 5,458 |

19

Nonaccrual Loans - Loans Held for Investment at Fair Value

The following tables present the aggregate fair value of loans held for investment at fair value that are 90 days or more past due and/or in nonaccrual status, and the difference between the aggregate fair value and the aggregate unpaid principal balance as of March 31, 2026 and December 31, 2025 by loan segments:

|  | Fair Value |  |  | Unpaid Principal Balance |  |  | Difference |
|  | Current–89 Days |  |  | 90+ Days Past Due |  |  |  |  |  | Current–89 Days |  |  | 90+ Days Past Due |  |  |  |  |  | 90+ Days Past Due |
March 31, 2026 |  | Past Due |  |  | or Nonaccrual |  |  | Total |  |  | Past Due |  |  | or Nonaccrual |  |  | Total |  |  | or Nonaccrual |
|  | (In thousands) |
Commercial - Purchase |  | $ | 1,015,768 |  |  | $ | 26,626 |  |  | $ | 1,042,394 |  |  | $ | 937,206 |  |  | $ | 31,932 |  |  | $ | 969,138 |  |  | $ | (5,306 | )
Commercial - Refinance |  |  | 1,636,186 |  |  |  | 99,747 |  |  |  | 1,735,933 |  |  |  | 1,503,225 |  |  |  | 111,951 |  |  |  | 1,615,176 |  |  |  | (12,204 | )
Residential 1-4 Unit - Purchase |  |  | 505,396 |  |  |  | 39,792 |  |  |  | 545,188 |  |  |  | 484,156 |  |  |  | 44,940 |  |  |  | 529,096 |  |  |  | (5,148 | )
Residential 1-4 Unit - Refinance |  |  | 1,468,002 |  |  |  | 198,982 |  |  |  | 1,666,984 |  |  |  | 1,395,278 |  |  |  | 223,739 |  |  |  | 1,619,017 |  |  |  | (24,757 | )
Short Term 1-4 Unit - Purchase |  |  | 50,033 |  |  |  | 14,921 |  |  |  | 64,954 |  |  |  | 49,474 |  |  |  | 16,956 |  |  |  | 66,430 |  |  |  | (2,035 | )
Short Term 1-4 Unit - Refinance |  |  | 77,520 |  |  |  | 21,535 |  |  |  | 99,055 |  |  |  | 75,941 |  |  |  | 24,272 |  |  |  | 100,213 |  |  |  | (2,737 | )
Ending balance |  | $ | 4,752,905 |  |  | $ | 401,603 |  |  | $ | 5,154,508 |  |  | $ | 4,445,280 |  |  | $ | 453,790 |  |  | $ | 4,899,070 |  |  | $ | (52,187 | )

|  | Fair Value |  |  | Unpaid Principal Balance |  |  | Difference |
|  | Current–89 Days |  |  | 90+ Days Past Due |  |  |  |  |  | Current–89 Days |  |  | 90+ Days Past Due |  |  |  |  |  | 90+ Days Past Due |
December 31, 2025 |  | Past Due |  |  | or Nonaccrual |  |  | Total |  |  | Past Due |  |  | or Nonaccrual |  |  | Total |  |  | or Nonaccrual |
|  | (In thousands) |
Commercial - Purchase |  | $ | 917,607 |  |  | $ | 34,903 |  |  | $ | 952,510 |  |  | $ | 841,434 |  |  | $ | 41,485 |  |  | $ | 882,919 |  |  | $ | (6,582 | )
Commercial - Refinance |  |  | 1,449,157 |  |  |  | 60,074 |  |  |  | 1,509,231 |  |  |  | 1,325,078 |  |  |  | 70,790 |  |  |  | 1,395,868 |  |  |  | (10,716 | )
Residential 1-4 Unit - Purchase |  |  | 509,464 |  |  |  | 31,108 |  |  |  | 540,572 |  |  |  | 486,499 |  |  |  | 36,781 |  |  |  | 523,280 |  |  |  | (5,673 | )
Residential 1-4 Unit - Refinance |  |  | 1,431,311 |  |  |  | 121,826 |  |  |  | 1,553,137 |  |  |  | 1,356,593 |  |  |  | 143,147 |  |  |  | 1,499,740 |  |  |  | (21,321 | )
Short Term 1-4 Unit - Purchase |  |  | 64,004 |  |  |  | 11,206 |  |  |  | 75,210 |  |  |  | 63,552 |  |  |  | 13,009 |  |  |  | 76,561 |  |  |  | (1,803 | )
Short Term 1-4 Unit - Refinance |  |  | 86,446 |  |  |  | 12,763 |  |  |  | 99,209 |  |  |  | 84,488 |  |  |  | 14,968 |  |  |  | 99,456 |  |  |  | (2,205 | )
Ending balance |  | $ | 4,457,989 |  |  | $ | 271,880 |  |  | $ | 4,729,869 |  |  | $ | 4,157,644 |  |  | $ | 320,180 |  |  | $ | 4,477,824 |  |  | $ | (48,300 | )

Note 7 — Receivables Due From Servicers

The following tables summarize receivables due from servicers as of March 31, 2026 and December 31, 2025:

|  |  | March 31, 2026 |
|  |  | Securitized Debt |  |  | Warehouse and Repurchase Facilities and Other |  |  | Total |
|  |  | (In thousands) |
Loan principal payments due from servicers | $ | 71,980 |  |  | $ | 1,834 |  |  | $ | 73,814 |
Other loan servicing receivables |  | 24,481 |  |  |  | 3,542 |  |  |  | 28,023 |
Loan servicing receivables |  | 96,461 |  |  |  | 5,376 |  |  |  | 101,837 |
Corporate and escrow advances receivable |  | 39,710 |  |  |  | 807 |  |  |  | 40,517 |
Total receivables due from servicers | $ | 136,171 |  |  | $ | 6,183 |  |  | $ | 142,354 |

|  |  | December 31, 2025 |
|  |  | Securitized Debt |  |  | Warehouse and Repurchase Facilities and Other |  |  | Total |
|  |  | (In thousands) |
Loan principal payments due from servicers | $ | 75,922 |  |  | $ | 4,221 |  |  | $ | 80,143 |
Other loan servicing receivables |  | 28,972 |  |  |  | 2,822 |  |  |  | 31,794 |
Loan servicing receivables |  | 104,894 |  |  |  | 7,043 |  |  |  | 111,937 |
Corporate and escrow advances receivable |  | 38,027 |  |  |  | 938 |  |  |  | 38,965 |
Total receivables due from servicers | $ | 142,921 |  |  | $ | 7,981 |  |  | $ | 150,902 |

20

Note 8 — Real Estate Owned, Net

As of March 31, 2026, the carrying value of real estate owned was $131.8 million, of which $115.3 million were pledged as collateral for the Company's securitized debt. As of December 31, 2025, the carrying value of real estate owned was $118.3 million, of which $114.5 million were pledged as collateral for the Company's securitized debt.

Note 9 — Mortgage Servicing Rights

Mortgage loans sold with servicing retained are not included in the Consolidated Balance Sheets. The Company has elected to record its mortgage servicing rights using the fair value measurement method. Fair value adjustments recorded at the end of the current period reflect valuation changes from the prior period-end.

The following table presents the Company's mortgage servicing rights, unpaid principal balance of GNMA loans serviced for GNMA by Century and loans serviced for BPC MC Trust, a related party (see Note 16 — Related Party Transactions), and significant assumptions used in determining the fair value of servicing rights as of March 31, 2026, December 31, 2025, and March 31, 2025:

﻿ |  | Mortgage Servicing Rights |  |  | UPB Serviced |  |  | Weighted Average Discount Rate |  |  | Weighted Average Conditional Prepayment Rate |
|  | ($ in thousands) |
March 31, 2026 |  |  |  |  |  |  |  |  |  |  |  |
GNMA loans |  | $ | 12,485 |  |  | $ | 795,352 |  |  |  | 8.0 | % |  |  | 5.6 | %
BPC MC Trust loans |  |  | 160 |  |  |  | 118,221 |  |  |  | 15.0 |  |  |  | 38.1 |
Total |  | $ | 12,645 |  |  | $ | 913,573 |  |  |  | 8.9 |  |  |  | 9.8 |
December 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |
GNMA loans |  | $ | 12,748 |  |  | $ | 820,070 |  |  |  | 8.0 |  |  |  | 5.6 |
BPC MC Trust loans |  |  | 215 |  |  |  | 128,047 |  |  |  | 15.0 |  |  |  | 36.5 |
Total |  | $ | 12,963 |  |  | $ | 948,117 |  |  |  | 8.9 |  |  |  | 9.7 |
March 31, 2025 |  |  |  |  |  |  |  |  |  |  |  |
GNMA loans |  | $ | 12,631 |  |  | $ | 798,729 |  |  |  | 8.0 |  |  |  | 5.2 |

The following table presents the Company's mortgage servicing rights activity for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Balance at the beginning of period |  | $ | 12,963 |  |  | $ | 13,712 |
Additions |  |  | 19 |  |  |  | — |
Fair value adjustments |  |  | (337 | ) |  |  | (1,081 | )
Balance at the end of period |  | $ | 12,645 |  |  | $ | 12,631 |

Note 10 — Goodwill

The following table presents the activity for goodwill as of March 31, 2026 and December 31, 2025:

|  | March 31, 2026 |  |  | December 31, 2025 |
|  | (In thousands) |
Balance at the beginning of period |  | $ | 6,775 |  |  | $ | 6,775 |
Balance at the end of period |  | $ | 6,775 |  |  | $ | 6,775 |

Note 11 — Securitized Debt at Amortized Cost and Securitized Debt at Fair Value

As of March 31, 2026, the Company is the sole beneficial interest holder of 37 Trusts, which are variable interest entities included in the consolidated financial statements. The securitization transactions are accounted for as secured b orrowings under U.S. GAAP. The securities are subject to redemption by the Company when the stated principal balance is less than a certain percentage, ranging from 10% to 30% of the original stated principal balance of loans at issuance. As a result, the actual maturity dates of the securities issued could be earlier than their respective stated maturity dates, ranging from March 2030 through March 2056.

21

The following tables summarize securitized debt at amortized cost and securitized debt at fair value as of March 31, 2026 and December 31, 2025:

Securitized Debt, at Amortized Cost |  | March 31, 2026 |  |  | December 31, 2025 |
|  | (In thousands) |
Unpaid principal balance |  | $ | 1,666,410 |  |  | $ | 1,734,350 |
Deferred issuance costs and discounts |  |  | (27,415 | ) |  |  | (28,761 | )
Total securitized debt, at amortized cost |  | $ | 1,638,995 |  |  | $ | 1,705,589 |

Securitized Debt, at Fair Value |  | March 31, 2026 |  |  | December 31, 2025 |
|  | (In thousands) |
Unpaid principal balance |  | $ | 4,445,580 |  |  | $ | 4,229,767 |
Adjustment at issuance to recognize fair value (1) |  |  | (28,078 | ) |  |  | (28,022 | )
Fair value at issuance |  |  | 4,417,502 |  |  |  | 4,201,745 |
Valuation adjustment subsequent to issuance (2) |  |  | 8,738 |  |  |  | 36,875 |
Fair value adjustment related to refinance of securitization trust |  |  | — |  |  |  | (1,883 | )
Total securitized debt at fair value |  | $ | 4,426,240 |  |  | $ | 4,236,737 |

(1)
Balance sheet adjustment to recognize fair value at issuance. This valuation adjustment is not recognized in net income.
(2)
Valuation adjustment recognized in net income. No valuation change is due to instrument specific credit risk as the Company’s (issuer) credit risk has not changed.

The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of securitized debt at fair value as of March 31, 2026 and December 31, 2025:

|  | Fair Value |  |  | Unpaid Principal Balance |  |  | Difference |
|  | (In thousands) |
March 31, 2026 |  | $ | 4,426,240 |  |  | $ | 4,445,580 |  |  | $ | (19,340 | )
December 31, 2025 |  |  | 4,236,737 |  |  |  | 4,229,767 |  |  |  | 6,970 |

The following table presents the effective interest rate of securitized debt at amortized cost and securitized debt at fair value for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | ($ in thousands) |
Interest expense |  | $ | 90,304 |  |  | $ | 66,583 |
Average outstanding unpaid principal balance |  |  | 6,003,318 |  |  |  | 4,387,277 |
Effective interest rate (1) |  |  | 6.02 | % |  |  | 6.07 | %

(1)
Effective interest rate represents annualized interest expense divided by average gross outstanding balance, which includes average rates of 5.93% and 5.89%, and debt issuance cost amortization of 0.09% and 0.18% for the three months ended March 31, 2026 and 2025, respectively.

Note 12 — Other Debt

Secured and unsecured financings and warehouse facilities are utilized to finance the origination and purchase of commercial real estate mortgage loans. Warehouse facilities are designated to fund mortgage loans that are purchased and originated within specified underwriting guidelines. Most of these lines of credit fund less than 100% of the principal balance of the mortgage loans originated and purchased, requiring the use of working capital to fund the remaining portion.

(a)
Secured Financing, Net (Corporate Debt)

On March 15, 2022, the Company entered into a five-year $215.0 million syndicated corporate debt agreement, the (“the 2022 Term Loan”). The 2022 Term Loan bore interest at a fixed rate of 7.125% and was to mature on March 15, 2027. Interest on the 2022 Term Loan was paid every six months. As of March 31, 2026 and December 31, 2025, the balance of the 2022 Term Loan was zero and $215.0 million, respectively. The 2022 Term Loan was paid off on January 30, 2026 with proceeds from the issuance and sale of $500.0 million 2026 Term Notes.

On February 5, 2024, the Company entered into a five-year $75.0 million syndicated corporate debt agreement, the (“the 2024 Term Loan”). The 2024 Term Loan bears interest at 9.875% and matures on February 15, 2029. Interest on the 2024 Term Loan is paid every six months. As of March 31, 2026 and December 31, 2025, the balance of the 2024 Term Loan was $75.0 million.

22

The total balance of the 2022 Term Loan and the 2024 Term Loan in the Consolidated Balance Sheets is net of debt issuance costs and discount of $1.7 million and $3.3 million as of March 31, 2026 and December 31, 2025, respectively. The secured financing is secured by substantially all assets of the Company not otherwise pledged under a securitized debt or warehouse facility and contains certain reporting and financial covenants. Should the Company fail to adhere to those covenants, the lenders have the right to demand immediate repayment that may require the Company to sell the collateral at less than the carrying amounts. As of March 31, 2026, the Company was in compliance with all covenants.

(b)
Unsecured Senior Notes, Net (Corporate Debt)

On January 30, 2026, Velocity Commercial Capital, LLC (“VCC”) completed the issuance and sale of $500.0 million aggregate principal amount of 9.375% Unsecured Senior Notes due 2031 (the “2026 Term Notes”). The 2026 Term Notes were sold at an offering price equal to 100% of the principal thereof and bear interest at a rate of 9.375% per annum. Interest on the 2026 Term Notes is payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2026 and will mature on February 15, 2031. The 2026 Term Notes are guaranteed by the Company on a senior unsecured basis, with no conditions to the guarantee and no additional risks on a consolidated basis as VCC is the Company's primary operating company. After deducting fees and expenses, the net proceeds from the issuance and sale of the 2026 Term Notes were approximately $484.9 million. The 2026 Term Notes were sold in an offering exempt from the registration requirements of the Securities Act of 1933. The balance of the 2026 Term Notes in the Consolidated Balance Sheets is net of debt issuance costs of $14.6 million as of March 31, 2026.

(c) Warehouse Repurchase and Revolving Loan Facilities, Net

On January 4, 2011, Century entered into a Master Participation and Facility Agreement with a bank (“the September 2022 Term Repurchase Agreement”). The Facility Agreement has a current extended maturity date of July 31, 2026, and is a short-term borrowing facility, collateralized by performing loans, with a maximum capacity of $60.0 million, and bears interest at one-month SOFR plus 1.60% with a 0.25% floor.

On May 17, 2013, the Company entered into a Repurchase Agreement (“the 2013 Repurchase Agreement”) with a warehouse lender. The 2013 Repurchase Agreement is a modified mark-to-market agreement and has a curren t maturity date of September 23, 2026, and i s a short-term borrowing facility, collateralized by a pool of performing loans, with a maximum capacity of $400.0 million, and bears interest at SOFR plus 2.75%. All borrower payments on loans financed under the warehouse repurchase facility are first used to pay interest on the facility.

On January 29, 2021, the Company entered into a non-mark-to-market Repurchase Agreement (“the 2021 Repurchase Agreement”) with a warehouse lender. The 2021 Repurchase Agreement has a current extended maturity date of May 20, 2026, and is a short-term borrowing facility, collateralized by a pool of loans. On July 25, 2024, the Company entered into a mark-to-market Repurchase Agreement (“the 2024 Repurchase Agreement”) with the same warehouse lender. The 2024 Repurchase Agreement also has a maturity date of May 20, 2026, an d is a short-term borrowing facility, collateralized by a pool of loans. The maximum capacity under both agreements is $200.0 million individually and in the aggregate. The 2024 Repurchase Agreement includes a $75.0 million sublimit for nonperforming loans. Borrowings under these two facilities bear interest at SOFR plus 3.00% during the availability period and 4.00% during the amortization period. All borrower payments on loans financed under the warehouse repurchase facilities are first used to pay interest on the facilities.

On April 16, 2021, the Company entered into a non-mark-to-market Term Repurchase Agreement (“the 2021 Term Repurchase Agreement”) with a warehouse lender. The 2021 Term Repurchase Agreement has a maturity date of April 14, 2028, with an extended borrowing period through April 14, 2027. During the borrowing period, the Company can take loan advances from time to time, subject to availability. Each loan advance bears interest at SOFR plus 2.95%. The maximum capacity under this facility is $100.0 million.

On December 27, 2023, the Company entered into a loan facility agreement (“the 2023 Repurchase Agreement”) with a bank. The 2023 Repurchase Agreement has a maturity date of December 27, 2026. During the borrowing period, the Company can take loan advances from time to time subject to availability. Each loan advance bears interest at SOFR plus 3.00%. The maximum loan amount under this facility is $125.0 million.

On November 7, 2024, the Company entered into a non-mark-to-market secured revolving loan facility agreement (“the 2024 Bank Credit Agreement”) with a bank. The 2024 Bank Credit Agreement has a current maturity date of May 7, 2027. Each loan advance bears interest at SOFR plus 3.50%, with a floor of 2.00%. The maximum loan amount under this facility is $50.0 million.

Certain loans are pledged as collateral under the warehouse repurchase facilities and the revolving loan facility, which contain covenants. Should the Company fail to adhere to those covenants or otherwise default under the facilities, the lenders have the right to terminate the facilities and demand immediate repayment that may require the Company to sell the collateral at less than the carrying amounts. As of March 31, 2026 and December 31, 2025, the Company was in compliance with all covenants.

23

The following table summarizes the maximum borrowing capacity, current gross balances outstanding, and effective interest rates of the Company’s warehouse facilities and loan agreements as of March 31, 2026 and December 31, 2025:

|  |  |  |  |  | March 31, 2026 |  | December 31, 2025
|  | Contract Date |  | Current Maturity Date |  | Period End Balance (1) |  |  | Maximum Borrowing Capacity |  |  | Effective Interest Rate |  |  |  | Period End Balance (1) |  |  | Maximum Borrowing Capacity |  |  | Effective Interest Rate |  |
|  |  |  |  |  | ($ in thousands)
The September 2022 term repurchase agreement |  | 01/04/11 |  | 07/31/26 |  | $ | — |  |  | $ | 60,000 |  |  |  | — |  | % |  | $ | — |  |  | $ | 60,000 |  |  |  | 6.0 |  | %
The 2013 repurchase agreement |  | 05/17/13 |  | 09/23/26 |  |  | — |  |  |  | 400,000 |  |  |  | 7.6 |  |  |  |  | 132,100 |  |  |  | 400,000 |  |  |  | 7.6 |  |
The 2021/2024 repurchase agreements |  | 1/29/2021 7/25/2024 |  | 05/20/26 |  |  | — |  |  |  | 200,000 |  |  |  | 8.2 |  |  |  |  | 105,712 |  |  |  | 200,000 |  |  |  | 7.9 |  |
The 2021 term repurchase agreement |  | 04/16/21 |  | 04/14/28 |  |  | — |  |  |  | 100,000 |  |  |  | 7.9 |  |  |  |  | 18,132 |  |  |  | 100,000 |  |  |  | 7.7 |  |
The 2023 repurchase agreement |  | 12/27/23 |  | 12/27/26 |  |  | 50,000 |  |  |  | 125,000 |  |  |  | 11.0 |  | (2) |  |  | 24,400 |  |  |  | 125,000 |  |  |  | 8.8 |  |
The 2024 bank credit agreement |  | 11/07/24 |  | 05/07/27 |  |  | 49,354 |  |  |  | 50,000 |  |  |  | 7.9 |  |  |  |  | 30,095 |  |  |  | 50,000 |  |  |  | 8.7 |  |
Total |  |  |  |  |  | $ | 99,354 |  |  | $ | 935,000 |  |  |  |  |  |  | $ | 310,439 |  |  | $ | 935,000 |  |  |  |  |

(1)
Warehouse repurchase facilities amounts on the Consolidated Balance Sheets are net of debt issuance costs, amounting to $1.3 million and $1.9 million as of March 31, 2026 and December 31, 2025, respectively.
(2)
The higher effective interest rate for the 2023 repurchase agreement reflects the lower average outstanding balance during the quarter, which resulted from the paydown of the warehouse line using proceeds from the Company's unsecured debt issuance.

The following table provides an overview of the activity and effective interest rates of the Company’s warehouse facilities and loan agreements for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | ($ in thousands) |
Average outstanding balance |  | $ | 176,760 |  |  | $ | 433,790 |
Highest outstanding balance at any month-end |  |  | 201,390 |  |  |  | 571,834 |
Effective interest rate (1) |  |  | 8.43 | % |  |  | 7.84 | %

(1)
Effective interest rate represents annualized interest expense divided by average gross outstanding balance. The rate includes average rate of 7.10% and 7.45%, and debt issuance cost amortization of 1.33% and 0.39%, for the three months ended March 31, 2026 and 2025, respectively. The 1.33% debt cost amortization rate for the three months ended March 31, 2026, reflects the lower average outstanding balance during the quarter, which resulted from the paydown of warehouse lines with proceeds from the Company's unsecured debt issuance.

The following table provides a summary of interest expense that includes interest, amortization of discount, and deal cost amortization of the Company’s warehouse facilities, securitizations and other financing for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Warehouse and repurchase facilities |  | $ | 3,723 |  |  | $ | 8,505 |
Securitized debt |  |  | 90,304 |  |  |  | 66,583 |
Interest expense — portfolio related |  |  | 94,027 |  |  |  | 75,088 |
Interest expense — Corporate - Secured debt |  |  | 6,681 |  |  |  | 6,142 |
Interest expense — Corporate - Unsecured debt |  |  | 8,452 |  |  |  | — |
Total interest expense |  | $ | 109,160 |  |  | $ | 81,230 |

Note 13 — Commitments and Contingencies

(a)
Repurchase Liability

When the Company sells loans, it is required to make normal and customary representations and warranties about the loans to the purchaser. The loan sale agreements generally require the Company to repurchase loans if the Company breaches a representation or warranty given to the loan purchaser. In addition, the Company may be required to repurchase loans as a result of borrower fraud or if a payment default occurs on a loan shortly after its sale.

The Company records a repurchase liability relating to representations and warranties and early payment defaults. The method used to estimate the liability for repurchase is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults. The Company establishes a liability at the time loans are sold and continually updates the estimated repurchase liability. The level of the repurchase liability for representations and warranties and early payment default requires considerable management judgment.

24

The Company regularly evaluates the adequacy of repurchase reserves based on trends in repurchase, actual loss experience, estimated future loss exposure and other relevant factors including economic conditions. As of March 31, 2026 and December 31, 2025, the balance of repurchase liability was $144 thousand, and is included in “Accounts payable and accrued expenses” on the Consolidated Balance Sheets.

(b)
Legal Proceedings

The Company is a party to various legal proceedings in the normal course of business. The Company, after consultation with legal counsel, believes the disposition of all pending litigation will not have a material effect on the Company’s consolidated financial condition or results of operations as of March 31, 2026.

(c)
Employee Retention Credit

Under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company, with the guidance from a third-party specialist, determined it was eligible for a refundable employee retention credit (“ERC”) subject to certain criteria.

The Company applied for ERC for the first three quarters’ wages paid in calendar year 2021. During the second quarter of 2023, the Company received approximately $4.2 million of ERC. Due to the subjectivity of the credit, the Company elected to account for the ERC as a gain analogizing to ASC 450-30, Gain Contingencies. Accordingly, the $4.2 million ERC, net of the third-party specialist fees of $0.6 million, were deferred until the uncertainty surrounding them is resolved. As of March 31, 2026, the IRS statute of limitations for the ERC refunds received related to the first and second quarters of 2021 have expired, as such, the Company recognized $2.4 million of ERC as other income during the quarter ended March 31, 2026. The Company continues to defer the third quarter 2021 net ERC refund of $1.3 million until the special six-year IRS statute of limitations expires in 2028. The deferred net ERC refunds of $1.3 million and $4.2 million is included in “Accounts payable and accrued expenses” on the Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, respectively.

(d)
Commitments

Century originated a $25.9 million government-backed construction loan in September 2025. The funded advances (draws) on the construction loan were sold after funding. The unfunded portion of the construction loan totaled $19.8 million as of March 31, 2026.

Note 14 — Stock-Based Compensation

The Company’s Amended and Restated 2020 Omnibus Incentive Plan, or “the 2020 Plan,” authorizes grants of stock‑based compensation instruments including but not limited to non-qualified stock options, restricted stock awards (“RSAs”) and performance stock unit awards (“PSUs”) to certain employees and non-employee directors of the Company, to purchase or issue up to 4,520,000 shares of the Company's common stock.

Expenses related to the stock-based compensation instruments and Employee Stock Purchase Plan (“ESPP”) are included in “Compensation and employee benefits” and “Other operating expenses” on the Consolidated Statements of Income.

Below are summaries of the recognized and unrecognized stock-based compensation expense by instrument for the periods indicated:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Recognized compensation expense: |  |  |  |  |  |
Options |  | $ | 16 |  |  | $ | 129 |
RSAs |  |  | 1,109 |  |  |  | 747 |
PSUs |  |  | 1,292 |  |  |  | 907 |
ESPP |  |  | 278 |  |  |  | 187 |
Total recognized compensation expense |  | $ | 2,695 |  |  | $ | 1,970 |

25

|  | March 31, 2026 |
|  | (In thousands) |
Unrecognized compensation expense: |  |  |
Options |  | $ | 92 |
RSAs |  |  | 8,321 |
PSUs |  |  | 7,734 |
ESPP |  |  | 281 |
Total unrecognized compensation expense |  | $ | 16,428 |
Weighted average period expected to be recognized (in years) |  |  |
Options |  |  | 1.6 |
RSAs |  |  | 2.2 |

Stock Options

Stock option awards provide for the option to purchase the Company's common stock. From the date of the grant, the stock options generally vest ratably over a service period of three years and are exercisable for a period up to ten years.

The Company uses the Black-Scholes option pricing model to value stock options in determining the stock-based compensation expense. Compensation expense is recognized over the three-year vesting period using the straight-line method. Forfeitures are recognized as they occur. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant. The expected dividend yield is zero as the Company does not expect to pay dividends in the foreseeable future. Expected volatility is based on historical volatilities of the Company’s common stock.

The table below summarizes stock option activity for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | ($ in thousands, except per share amounts) |
Number of shares: |  |  |  |  |  |
Options outstanding at beginning of period |  |  | 786,722 |  |  |  | 1,065,772 |
Granted |  |  | — |  |  |  | — |
Exercised |  |  | — |  |  |  | — |
Modified |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |
Options outstanding at end of period |  |  | 786,722 |  |  |  | 1,065,772 |
Options exercisable at end of period |  |  | 760,838 |  |  |  | 749,344 |
Options expected to vest (1) |  |  | 25,884 |  |  |  | 316,428 |
Weighted average exercise price per share: |  |  |  |  |  |
Options outstanding at beginning of period |  | $ | 13.12 |  |  | $ | 14.46 |
Granted |  |  | — |  |  |  | — |
Exercised |  |  | — |  |  |  | — |
Modified |  |  | — |  |  |  | — |
Forfeited |  |  | — |  |  |  | — |
Options outstanding at end of period |  | $ | 13.12 |  |  | $ | 14.46 |
Options exercisable at end of period |  |  | 12.96 |  |  |  | 12.88 |
Options expected to vest (1) |  |  | 17.95 |  |  |  | 18.19 |
Aggregate intrinsic value (2): |  |  |  |  |  |
Options outstanding at end of period |  | $ | 3,874 |  |  | $ | 4,538 |
Options exercisable at end of period |  |  | 3,860 |  |  |  | 4,365 |
Options expected to vest (1) |  |  | 14 |  |  |  | 173 |
Weighted average remaining contractual life (in years): |  |  |  |  |  |
Options outstanding at end of period |  |  | 4.0 |  |  |  | 6.2 |
Options exercisable at end of period |  |  | 3.9 |  |  |  | 4.8 |
Options expected to vest (1) |  |  | 8.5 |  |  |  | 9.4 |

(1)
The number of options expected to vest reflects no expected forfeiture.
(2)
The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the “in-the-money” option exercise price.

26

RSAs

The fair value of RSAs is determined based on the fair market value of the Company's common shares on the grant date. The estimated fair value of RSA awards is generally amortized as an expense over the three-year requisite service period. The Company has elected to recognize forfeitures as they occur rather than estimating service-based forfeitures over the requisite service period.

The table below summarizes RSA activity for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | Employee |  |  | Non-Employee Director |  |  | Total |  |  | Employee |  |  | Non-Employee Director |  |  | Total |
Number of shares: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unvested at beginning of period |  |  | 494,478 |  |  |  | 38,461 |  |  |  | 532,939 |  |  |  | 355,505 |  |  |  | 47,430 |  |  |  | 402,935 |
Granted |  |  | 191,061 |  |  |  | — |  |  |  | 191,061 |  |  |  | 180,003 |  |  |  | — |  |  |  | 180,003 |
Vested |  |  | (185,445 | ) |  |  | — |  |  |  | (185,445 | ) |  |  | (163,779 | ) |  |  | — |  |  |  | (163,779 | )
Forfeited |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unvested at end of period |  |  | 500,094 |  |  |  | 38,461 |  |  |  | 538,555 |  |  |  | 371,729 |  |  |  | 47,430 |  |  |  | 419,159 |
Weighted average grant date fair value per share: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unvested at beginning of period |  | $ | 16.95 |  |  | $ | 14.83 |  |  | $ | 16.79 |  |  | $ | 13.52 |  |  | $ | 12.03 |  |  | $ | 13.34 |
Granted |  |  | 19.60 |  |  |  | — |  |  |  | 19.60 |  |  |  | 18.82 |  |  |  | — |  |  |  | 18.82 |
Vested |  |  | 14.89 |  |  |  | — |  |  |  | 14.89 |  |  |  | 12.92 |  |  |  | — |  |  |  | 12.92 |
Forfeited |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unvested at end of period |  | $ | 18.73 |  |  | $ | 14.83 |  |  | $ | 18.44 |  |  | $ | 16.35 |  |  | $ | 12.03 |  |  | $ | 15.86 |

PSUs

In February 2022, the Company began granting PSUs to certain employees, including named executive officers under the 2020 Plan. PSUs are linked to the average core net income annual growth over the three-year period from the year of grant. Settlement of vested PSUs will be made on the date that the Compensation Committee certifies the average core net income annual growth for the three-year period. PSUs are subject to forfeiture until predetermined performance conditions have been achieved. The number of shares issued at the end of any performance period could range between 0% and 200% of the original target award amount. Compensation expense related to PSUs is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using an estimate of the probability of achieving the performance target. Adjustments to compensation expense are made each year based on changes in estimate of the number of PSUs that are probable of vesting.

The table below summarizes PSU activity for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value Per Share |  |  | Number of Shares |  |  | Weighted Average Grant Date Fair Value Per Share |
Outstanding at beginning of period, unvested |  |  | 620,433 |  |  | $ | 13.70 |  |  |  | 517,131 |  |  | $ | 12.83 |
Granted (1) |  |  | 169,766 |  |  |  |  |  |  | 155,165 |  |  |  | 18.82 |
Performance adjustment |  |  | 157,994 |  |  |  |  |  |  | 153,637 |  |  |  | 10.00 |
Vested |  |  | (307,274 | ) |  |  |  |  |  | (205,500 | ) |  |  | 12.63 |
Forfeited |  |  | — |  |  |  |  |  |  | — |  |  |  | — |
Outstanding at end of period, unvested |  |  | 640,919 |  |  | $ | 13.26 |  |  |  | 620,433 |  |  | $ | 13.69 |

(1)
The number of PSUs are presented at 100% of the specified target shares.

ESPP

In July 2022, the Company initiated an ESPP which allows permitted eligible employees to purchase shares of the Company's common stock through payroll deductions of up to 15% of their eligible compensation, subject to certain limitations. The purchase price of the shares under the ESPP equals 85% of the lower of the fair market value of the Company's common stock on either the first or last day of each offering period. Compensation expense for the ESPP is calculated as of the beginning of the offering period as the fair value of the employees’ purchase rights utilizing the Black-Scholes option valuation model and is recognized as a compensation expense over the offering period.

27

Treasury Stock

Treasury stock represents shares surrendered to the Company to satisfy tax withholding obligations in connection with the vesting or exercise of stock-based awards. During the three months ended March 31, 2026 and 2025, shares withheld were 228,371 and 115,596, at an average price of $20.00 and $18.70 per share, respectively.

Note 15 — Earnings Per Share

The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock and resulted in the issuance of common stock that shared in earnings.

The following table presents the basic and diluted earnings per share calculations for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands, except per share data) |
Basic EPS: |  |  |  |  |  |
Net income attributable to Velocity Financial, Inc. |  | $ | 22,363 |  |  | $ | 18,887 |
Less: undistributed earnings attributable to unvested restricted stock awards |  |  | 312 |  |  |  | 233 |
Net earnings attributable to common stockholders |  | $ | 22,051 |  |  | $ | 18,654 |
Weighted average common shares outstanding |  |  | 38,626 |  |  |  | 33,687 |
Basic earnings per common share |  | $ | 0.57 |  |  | $ | 0.55 |
Diluted EPS: |  |  |  |  |  |
Net income attributable to Velocity Financial, Inc. |  | $ | 22,363 |  |  | $ | 18,887 |
Weighted average common shares outstanding |  |  | 38,626 |  |  |  | 33,687 |
Add dilutive effects for warrants |  |  | — |  |  |  | 2,434 |
Add dilutive effects for stock options |  |  | 240 |  |  |  | 237 |
Add dilutive effects of unvested restricted stock awards |  |  | 108 |  |  |  | 128 |
Add dilutive effects of unvested performance-based stock units |  |  | 192 |  |  |  | 322 |
Add dilutive effects of employee stock purchase plan |  |  | 8 |  |  |  | 3 |
Weighted average diluted common shares outstanding |  |  | 39,174 |  |  |  | 36,811 |
Diluted earnings per common share |  | $ | 0.57 |  |  | $ | 0.51 |

The following table sets forth the number of shares excluded from the computation of diluted earnings per share, as their inclusion would have been anti-dilutive:

|  | Three Months Ended March 31, |
|  | 2026(1) |  |  | 2025 |
|  | (In thousands) |
Stock options |  |  | 34 |  |  |  | 313 |
Unvested restricted stock awards |  |  | 191 |  |  |  | 180 |
Unvested performance-based stock units |  |  | 170 |  |  |  | — |
Share equivalents excluded from EPS |  |  | 395 |  |  |  | 493 |

(1)
Weighted average.

Note 16 — Related Party Transactions

In the ordinary course of business, the Company sells held for sale loans, and issues securitized debt to various financial institutions and investors through a market bidding process. As a result of this process, the Company may sell held for sale loans and/or issue securitized debt to an affiliate.

28

On December 29, 2025, the Company entered into a Master Flow Mortgage Loan Purchase Agreement (“MLPA”) with BPC MC Trust (a Beach Point Capital affiliate) to sell $128.9 million of nonperforming loans. Beach Point Capital is a related party of the Company. The sale was servicing retained whereby the Company sold whole loans, but retained the servicing rights to the loans. The MLPA contained standard loan level and corporate representations and warranties from the Company as the seller under the agreement. The Company entered into a Servicing Agreement to service and special service the loans for a fee. In addition to the servicing fee, the Company is entitled to a disposition fee of the unpaid principal balance of all loans that are paid off or resolved through an REO sale. This fee is not due on loans that are paid current. The Company also entered into a Servicing Fee Incentive Side Letter with the BPC MC Trust that provides further incentives to the Company based on meeting certain future Internal Rate of Return (“IRR”) hurdles.

The Company recognized $19.3 million gain from the sale of nonperforming loans to BPC MC Trust on December 29, 2025. The Company also recognized mortgage servicing rights of $0.2 million as of December 31, 2025. The mortgage servicing right is approximately $0.2 million as of March 31, 2026, which is included in “Mortgage servicing rights, at fair value” on the Consolidated Balance Sheets.” See Note 9— Mortgage Servicing Rights.

The following table presents the related party transactions completed during the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Securitized debt issued to related parties (1) |  | $ | 6,750 |  |  | $ | — |

(1)
The 2026-1 Loan Trust included $6.75 million of securitized debt issued to related parties. The 2026-1 Loan Trust was a broadly marketed securitization through the Company’s normal securitization process.

Note 17 — Derivative Instruments

In September 2023, the Company began utilizing derivative instruments designated as cash flow hedges to manage the exposure to interest rate volatility related to its forecasted issuances of fixed-rate debt through its securitization process. The derivative instruments include forward starting interest rate swaps or interest rate payer and receiver swaptions. The Company’s risk management objective is to hedge the risk of variability in its interest payment cash flows attributable to changes in the benchmark SOFR between the time the fixed rate mortgages are originated and the fixed rate debt is issued. As of March 31, 2026, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed four years.

The gains or losses on derivative instruments that are designated and qualify as cash flow hedges are reported as a component of AOCI. Beginning in the period in which the forecasted debt is issued and the related derivative instruments are terminated, the accumulated gains or losses associated with the terminated derivatives are then reclassified into interest expense as a yield adjustment over the term of the related debt. For the quarters ended March 31, 2026 and 2025, $206 thousand and $62 thousand, respectively, of after-tax net losses on terminated derivative instruments were reclassified from AOCI to interest expense. As of March 31, 2026 and 2025, the Company had $2.3 million and $1.8 million of after-tax net unrealized loss, respectively, associated with cash flow hedging instruments recorded in AOCI. As of March 31, 2026, the Company expects to reclassify an estimated $0.9 $0.9 million of after-tax net unrealized loss on derivative instruments designated as cash flow hedges from AOCI into earnings over the next 12 months.

The following tables present the fair value of the Company’s derivative financial instruments on a gross basis, as well as its classification on the Company’s Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025:

|  |  |  | March 31, 2026 |
Derivatives designated as hedging instruments: |  | Balance Sheet Location |  | Notional Amount |  |  | Fair Value (1) |
Cash flow hedges: |  |  |  | (In thousands) |
Interest rate payer and receiver swaptions |  | Derivative asset |  | $ | 197,000 |  |  | $ | 464 |

|  |  |  | December 31, 2025 |
Derivatives designated as hedging instruments: |  | Balance Sheet Location |  | Notional Amount |  |  | Fair Value (1) |
Cash flow hedges: |  |  |  | (In thousands) |
Forward starting payer interest rate swaps |  | Derivative liability |  | $ | 215,000 |  |  | $ | 66 |

(1)
Fair value reported is exclusive of collateral held and pledged, related to derivative exposure between the Company and its derivative counterparty. As of March 31, 2026, no collateral was pledged to its derivative counterparty. As of December 31, 2025, $0.1 million was pledged to its derivative counterparty. These amounts were included in “Other receivables” on the Consolidated Balance Sheets.

The counterparty to the financial derivatives that the Company enters into is a major institution. The Company is exposed to credit-related losses in the event of non-performance by the counterparty. This credit risk is generally limited to the unrealized gains in such contracts, less collateral held, should the counterparty fail to perform as contracted.

29

Note 18 — Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in the components of accumulated other comprehensive income (loss) balances for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Beginning balance |  | $ | (2,602 | ) |  | $ | (805 | )
Net unrealized gain (loss) on cash flow hedges arising during the period, net of tax |  |  | 86 |  |  |  | (1,056 | )
Reclassification adjustments included in net income |  |  | 206 |  |  |  | 62 |
Ending balance |  | $ | (2,310 | ) |  | $ | (1,799 | )

The following tables present the components of other comprehensive income (loss) and the related tax effect for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | Before-Tax |  |  | Tax Effect |  |  | Net-of-Tax |  |  | Before-Tax |  |  | Tax Effect |  |  | Net-of-Tax |
|  | (In thousands) |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swaps/swaptions: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net unrealized gain (loss) arising during the period |  | $ | 172 |  |  | $ | (86 | ) |  | $ | 86 |  |  | $ | (1,488 | ) |  | $ | 432 |  |  | $ | (1,056 | )
Reclassification adjustments included in net income |  |  | 290 |  |  |  | (84 | ) |  |  | 206 |  |  |  | 88 |  |  |  | (26 | ) |  |  | 62 |
Other comprehensive income (loss) |  | $ | 462 |  |  | $ | (170 | ) |  | $ | 292 |  |  | $ | (1,400 | ) |  | $ | 406 |  |  | $ | (994 | )

Note 19 — Fair Value Measurements

Fair Value Determination

ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and requires disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

o
Level 1 - Valuation is based on quoted prices for identical instruments traded in active markets.
o
Level 2 - Valuation is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable and can be corroborated by market data.
o
Level 3 - Valuation is based on significant unobservable inputs for determining the fair value of assets or liabilities. These significant unobservable inputs reflect assumptions that market participants may use in pricing the assets or liabilities.

Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period in which a change in valuation technique or methodology occurs. Given the nature of some of the Company’s assets and liabilities, clearly determinable market-based valuation inputs are often not available; therefore, these assets and liabilities are valued using internal estimates. As subjectivity exists with respect to the valuation estimates used, the fair values disclosed may not equal prices that can ultimately be realized if the assets are sold or the liabilities are settled with third parties.

Below is a description of the valuation methods for the assets and liabilities recorded at fair value on either a recurring or nonrecurring basis and for estimating fair value of financial instruments not recorded at fair value for disclosure purposes. While management believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the measurement date.

30

Cash, Cash Equivalents and Restricted Cash

Cash and restricted cash are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities and interest rates that approximate market, a Level 1 measurement.

Loans Held for Investment, at Amortized Cost and Loans Held for Investment, at Fair Value

The Company uses a third-party loan valuation specialist to estimate the fair value of its nonperforming mortgage loans, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s nonperforming mortgage loans are interest rates, market yield requirements, the probability of default, loss given default, voluntary prepayment speed and loss timing. The Company uses a third-party loan valuation model to estimate the fair value of its performing mortgage loans, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s performing mortgage loans are discount rate, constant prepayment rate, constant default rate, and loss severity rate. Significant changes in any of those inputs in isolation could result in a significant change to the mortgage loans’ fair value measurement.

Collateral Dependent or Loans Individually Evaluated

Nonaccrual loans held for investment and carried at amortized cost are evaluated individually and are adjusted to the fair value of the collateral when the fair value of the collateral is below the carrying value of the loan. To the extent such a loan is collateral dependent, the Company determines the allowance for credit losses based on the estimated fair value of the underlying collateral. The fair value of each loan’s collateral is generally based on appraisals or broker price opinions obtained, less estimated costs to sell, a Level 3 measurement.

Loans Held for Sale, at Fair Value

The Company elected to account for certain loans originated with the intent to sell at fair value using FASB ASC Topic 825, Financial Instruments (ASC 825). The FVO loans held for sale are measured based on a discounted cash flow model, or on the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value, including the value attributable to mortgage servicing and credit risk, and current commitments to purchase loans, a Level 2 measurement. Management identified all loans to be accounted for at estimated fair value at the instrument level. Changes in fair value are reflected in income as they occur.

Real Estate Owned, Net (“REO”)

Real estate owned, net is initially recorded at the property’s estimated fair value, based on appraisals or broker price opinions obtained, less estimated costs to sell at acquisition date, a Level 3 measurement. From time to time, nonrecurring fair value adjustments are made to real estate owned, net based on the current updated appraised value of the property, or management’s judgment and estimation of value based on recent market trends or negotiated sales prices with potential buyers.

Mortgage Servicing Rights

The Company determined the fair values based on a third-party valuation specialist using a model that calculates the present value of estimated future net servicing income, a Level 3 measurement.

Derivative Instruments

Derivative financial instruments are measured at fair value using readily observable market inputs and the overall fair value measurement is classified as Level 2.

Secured and Unsecured Financing, Net (“Corporate Debt”)

The Company determined the fair values estimate of the secured and unsecured financing using the estimated cash flows discounted at an appropriate market rate, a Level 3 measurement.

Warehouse Repurchase Facilities, Net

Warehouse repurchase facilities are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities of one-year or less and interest rates that approximate market plus a spread, a Level 2 measurement.

31

Securitized Debt, at Amortized Cost and Securitized Debt, at Fair Value

The Company obtains the fair value estimates at instrument level from a third-party broker dealer based on trader input on benchmark securities. The fair values take into consideration input factors such as bond structure and collateral characteristics, and performance and pricing factors such as yield, spread, average life, prepayment speeds, default rate, and severity. The fair values are considered a Level 2 measurement. Significant changes in any of the input factors in isolation could result in a significant change to securitized debt’s fair value measurement.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amounts of accrued interest receivable and accrued interest payable approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.

The Company does not have any off-balance sheet financial instruments.

Receivables Due From Servicers

The carrying amounts of receivables due from servicers approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.

Fair Value Disclosures

The following tables present information on assets and liabilities measured and recorded at fair value as of March 31, 2026 and December 31, 2025, by level, in the fair value hierarchy:

|  | Fair Value Measurements Using |  |  | Total at |
March 31, 2026 |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Fair Value |
|  | (In thousands) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Nonrecurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated loans requiring specific allowance, net |  | $ | — |  |  | $ | — |  |  | $ | 10,505 |  |  | $ | 10,505 |
Real estate owned, net |  |  | — |  |  |  | — |  |  |  | 131,849 |  |  |  | 131,849 |
Total nonrecurring fair value measurements |  |  | — |  |  |  | — |  |  |  | 142,354 |  |  |  | 142,354 |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |
Loans held for investment, at fair value |  |  | — |  |  |  | — |  |  |  | 5,154,508 |  |  |  | 5,154,508 |
Mortgage servicing rights |  |  | — |  |  |  | — |  |  |  | 12,645 |  |  |  | 12,645 |
Derivative assets |  |  | — |  |  |  | 464 |  |  |  | — |  |  |  | 464 |
Total recurring fair value measurements |  |  | — |  |  |  | 464 |  |  |  | 5,167,153 |  |  |  | 5,167,617 |
Total assets |  | $ | — |  |  | $ | 464 |  |  | $ | 5,309,507 |  |  | $ | 5,309,971 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |
Securitized debt, at fair value |  | $ | — |  |  | $ | 4,426,240 |  |  | $ | — |  |  | $ | 4,426,240 |
Total recurring fair value measurements |  |  | — |  |  |  | 4,426,240 |  |  |  | — |  |  |  | 4,426,240 |
Total liabilities |  | $ | — |  |  | $ | 4,426,240 |  |  | $ | — |  |  | $ | 4,426,240 |

32

|  | Fair Value Measurements Using |  |  | Total at |
December 31, 2025 |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Fair Value |
|  | (In thousands) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Nonrecurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated loans requiring specific allowance, net |  | $ | — |  |  | $ | — |  |  | $ | 10,830 |  |  | $ | 10,830 |
Real estate owned, net |  |  | — |  |  |  | — |  |  |  | 118,289 |  |  |  | 118,289 |
Total nonrecurring fair value measurements |  |  | — |  |  |  | — |  |  |  | 129,119 |  |  |  | 129,119 |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |
Loans held for investment, at fair value |  |  | — |  |  |  | — |  |  |  | 4,729,869 |  |  |  | 4,729,869 |
Mortgage servicing rights |  |  | — |  |  |  | — |  |  |  | 12,963 |  |  |  | 12,963 |
Derivative assets |  |  | — |  |  |  | 66 |  |  |  | — |  |  |  | 66 |
Total recurring fair value measurements |  |  | — |  |  |  | 66 |  |  |  | 4,742,832 |  |  |  | 4,742,898 |
Total assets |  | $ | — |  |  | $ | 66 |  |  | $ | 4,871,951 |  |  | $ | 4,872,017 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |  |
Securitized debt, at fair value |  | $ | — |  |  | $ | 4,236,737 |  |  | $ | — |  |  | $ | 4,236,737 |
Total recurring fair value measurements |  |  | — |  |  |  | 4,236,737 |  |  |  | — |  |  |  | 4,236,737 |
Total liabilities |  | $ | — |  |  | $ | 4,236,737 |  |  | $ | — |  |  | $ | 4,236,737 |

The following table presents gains and losses recognized on assets measured on a nonrecurring basis for the three months ended March 31, 2026 and 2025:

|  | Three Months Ended March 31, |
Gain (Loss) on Assets Measured on a Nonrecurring Basis |  | 2026 |  |  | 2025 |
|  | (In thousands) |
Real estate owned, net |  | $ | (3,217 | ) |  | $ | (2,073 | )
Individually evaluated loans requiring specific allowance, net |  |  | (88 | ) |  |  | (400 | )
Total net loss |  | $ | (3,305 | ) |  | $ | (2,473 | )

The following tables present the primary valuation techniques and unobservable inputs related to Level 3 assets that are recorded on a recurring and nonrecurring basis as of March 31, 2026 and December 31, 2025:

|  | March 31, 2026
Asset Category |  | Fair Value |  |  | Primary Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average (1)
|  | ($ in thousands)
Nonrecurring: |  |  |  |  |  |  |  |  |  |  |
Individually evaluated loans requiring specific allowance, net |  | $ | 10,505 |  |  | Market comparables |  | Selling costs |  | 8.0% |  | 8.0%
Real estate owned, net |  |  | 131,849 |  |  | Market comparables |  | Selling costs |  | 8.0% |  | 8.0%
Recurring: |  |  |  |  |  |  |  |  |  |  |
Loans held for investment, at fair value |  | $ | 5,154,508 |  |  | Discounted cash flow |  | Discount rate |  | 7.6% |  | 7.6%
|  |  |  |  |  |  | Prepayment rate |  | 0.0% to 65.0% |  | 12.8%
|  |  |  |  |  |  | Default rate |  | 0.5% to 6.0% |  | 1.4%
|  |  |  |  |  |  | Loss severity rate |  | 0.0% to 20.6% |  | 9.1%
Mortgage servicing rights - GNMA loans |  |  | 12,485 |  |  | Discounted cash flow |  | Discount rate |  | 8.0% to 12.0% |  | 8.0%
|  |  |  |  |  |  | Prepayment rate |  | 2.2% to 12.1% |  | 5.6%
Mortgage servicing rights - BPC MC Trust loans |  |  | 160 |  |  | Discounted cash flow |  | Discount rate |  | 15.0% |  | 15.0%
|  |  |  |  |  |  | Prepayment rate |  | 3.9% to 63.9% |  | 38.1%

33

(1)
Individually evaluated loans requiring specific allowance, net is weighted by collateral value; real estate owned, net is weighted by selling price; loans held for investment at fair value and mortgage servicing rights are weighted by UPB.

|  | December 31, 2025
Asset Category |  | Fair Value |  |  | Primary Valuation Technique |  | Unobservable Input |  | Range |  | Weighted Average (1)
|  | ($ in thousands)
Nonrecurring: |  |  |  |  |  |  |  |  |  |  |
Individually evaluated loans requiring specific allowance, net |  | $ | 10,830 |  |  | Market comparables |  | Selling costs |  | 8.0% |  | 8.0%
Real estate owned, net |  |  | 118,289 |  |  | Market comparables |  | Selling costs |  | 8.0% |  | 8.0%
Recurring: |  |  |  |  |  |  |  |  |  |  |
Loans held for investment, at fair value |  | $ | 4,729,869 |  |  | Discounted cash flow |  | Discount rate |  | 7.6% |  | 7.6%
|  |  |  |  |  |  | Prepayment rate |  | 0.0% to 65.0% |  | 12.0%
|  |  |  |  |  |  | Default rate |  | 0.4% to 6.0% |  | 1.0%
|  |  |  |  |  |  | Loss severity rate |  | 0.0% to 8.7% |  | 1.0%
Mortgage servicing rights - GNMA loans |  |  | 12,748 |  |  | Discounted cash flow |  | Discount rate |  | 8.0% |  | 8.0%
|  |  |  |  |  |  | Prepayment rate |  | 2.2% to 12.0% |  | 5.6%
Mortgage servicing rights - BPC MC Trust loans |  |  | 215 |  |  | Discounted cash flow |  | Discount rate |  | 15.0% |  | 15.0%
|  |  |  |  |  |  | Prepayment rate |  | 4.9% to 54.1% |  | 36.5%

(1)
Individually evaluated loans requiring specific allowance, net is weighted by collateral value; real estate owned, net is weighted by selling price; loans held for investment at fair value and mortgage servicing rights are weighted by UPB.

The following is a roll-forward of loans held for investment that are measured and recorded at estimated fair value on a recurring basis for the periods indicated:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Beginning balance |  | $ | 4,729,869 |  |  | $ | 2,766,951 |
Originations |  |  | 637,146 |  |  |  | 635,537 |
Loans liquidated |  |  | (174,751 | ) |  |  | (132,710 | )
Loans repurchased |  |  | 70 |  |  |  | — |
REO transfer |  |  | (26,042 | ) |  |  | (6,529 | )
Principal paydowns |  |  | (12,823 | ) |  |  | (10,775 | )
Unrealized gain included in net income |  |  | 1,039 |  |  |  | 34,714 |
Ending balance |  | $ | 5,154,508 |  |  | $ | 3,287,188 |

The following is a roll-forward of loans held for sale that are measured and recorded at estimated fair value on a recurring basis for the periods indicated:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Originations |  | $ | 2,226 |  |  | $ | 4,886 |
Loans sold |  |  | (2,226 | ) |  |  | — |
Unrealized gain included in net income |  |  | — |  |  |  | 122 |
Ending balance |  | $ | — |  |  | $ | 5,008 |

34

The following is a roll-forward of securitized debt measured and recorded at estimated fair value on a recurring basis for the periods indicated:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Beginning balance |  | $ | 4,236,737 |  |  | $ | 2,207,408 |
Additions |  |  | 513,725 |  |  |  | 374,360 |
Paydowns and payoffs |  |  | (297,968 | ) |  |  | (135,683 | )
Total unrealized (gain) loss included in net income |  |  | (26,254 | ) |  |  | 13,682 |
Ending balance |  | $ | 4,426,240 |  |  | $ | 2,459,767 |

The Company estimates the fair value of certain financial instruments on a quarterly basis. These instruments are recorded at fair value using a valuation allowance only if they are individually evaluated. As described above, these adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. As of March 31, 2026 and December 31, 2025, financial assets and liabilities measured at fair value include loans held for investment at fair value, loans held for sale at fair value, mortgage servicing rights, derivative instruments, and securitized debt at fair value. Financial assets measured at the lower of cost or estimated fair value include certain individually evaluated loans held for investment and REOs, which are measured using unobservable inputs, including appraisals and broker price opinions on the values of the underlying collateral. Individually evaluated loans requiring an allowance were carried at approximately $10.5 million and $10.8 million as of March 31, 2026 and December 31, 2025, respectively, net of specific allowance for credit losses of approximately $1.1 million and $1.0 million, respectively.

A financial instrument is cash, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity on potentially favorable terms. The methods and assumptions used in estimating the fair values of the Company’s financial instruments are described above.

The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:

|  | March 31, 2026 |
|  | Carrying |  |  |  |  |  |  |  |  |  |  |  | Estimated |
Asset Category |  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Fair Value |
|  | (In thousands) |
Assets: |  |  |
Cash |  | $ | 87,054 |  |  | $ | 87,054 |  |  | $ | — |  |  | $ | — |  |  | $ | 87,054 |
Restricted cash |  |  | 24,996 |  |  |  | 24,996 |  |  |  | — |  |  |  | — |  |  |  | 24,996 |
Loans held for investment, at amortized cost |  |  | 1,951,030 |  |  |  | — |  |  |  | — |  |  |  | 1,904,870 |  |  |  | 1,904,870 |
Loans held for investment, at fair value |  |  | 5,154,508 |  |  |  | — |  |  |  | — |  |  |  | 5,154,508 |  |  |  | 5,154,508 |
Accrued interest receivables |  |  | 51,259 |  |  |  | 51,259 |  |  |  | — |  |  |  | — |  |  |  | 51,259 |
Mortgage servicing rights |  |  | 12,645 |  |  |  | — |  |  |  | — |  |  |  | 12,645 |  |  |  | 12,645 |
Derivative assets |  |  | 464 |  |  |  | — |  |  |  | 464 |  |  |  | — |  |  |  | 464 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured financing, net |  | $ | 73,274 |  |  | $ | — |  |  | $ | — |  |  | $ | 75,100 |  |  | $ | 75,100 |
Unsecured senior notes, net |  |  | 485,445 |  |  |  | — |  |  |  | — |  |  |  | 499,165 |  |  |  | 499,165 |
Warehouse and repurchase facilities, net |  |  | 98,009 |  |  |  | — |  |  |  | 98,009 |  |  |  | — |  |  |  | 98,009 |
Securitized debt, at amortized cost |  |  | 1,638,995 |  |  |  | — |  |  |  | 1,512,949 |  |  |  | — |  |  |  | 1,512,949 |
Securitized debt, at fair value |  |  | 4,426,240 |  |  |  | — |  |  |  | 4,426,240 |  |  |  | — |  |  |  | 4,426,240 |
Accrued interest payable |  |  | 41,529 |  |  |  | 41,529 |  |  |  | — |  |  |  | — |  |  |  | 41,529 |

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|  | December 31, 2025 |
|  | Carrying |  |  |  |  |  |  |  |  |  |  |  | Estimated |
Asset Category |  | Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Fair Value |
|  | (In thousands) |
Assets: |  |  |
Cash |  | $ | 92,103 |  |  | $ | 92,103 |  |  | $ | — |  |  | $ | — |  |  | $ | 92,103 |
Restricted cash |  |  | 157,134 |  |  |  | 157,134 |  |  |  | — |  |  |  | — |  |  |  | 157,134 |
Loans held for investment, at amortized cost |  |  | 2,028,262 |  |  |  | — |  |  |  | — |  |  |  | 1,976,279 |  |  |  | 1,976,279 |
Loans held for investment, at fair value |  |  | 4,729,869 |  |  |  | — |  |  |  | — |  |  |  | 4,729,869 |  |  |  | 4,729,869 |
Accrued interest receivable |  |  | 49,678 |  |  |  | 49,678 |  |  |  | — |  |  |  | — |  |  |  | 49,678 |
Mortgage servicing rights |  |  | 12,963 |  |  |  | — |  |  |  | — |  |  |  | 12,963 |  |  |  | 12,963 |
Derivative assets |  |  | 66 |  |  |  | — |  |  |  | 66 |  |  |  | — |  |  |  | 66 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secured financing, net |  | $ | 286,679 |  |  | $ | — |  |  | $ | — |  |  | $ | 289,660 |  |  | $ | 289,660 |
Warehouse repurchase facilities, net |  |  | 308,506 |  |  |  | — |  |  |  | 308,506 |  |  |  | — |  |  |  | 308,506 |
Securitized debt, at amortized cost |  |  | 1,705,589 |  |  |  | — |  |  |  | 1,588,620 |  |  |  | — |  |  |  | 1,588,620 |
Securitized debt, at fair value |  |  | 4,236,737 |  |  |  | — |  |  |  | 4,236,737 |  |  |  | — |  |  |  | 4,236,737 |
Accrued interest payable |  |  | 37,111 |  |  |  | 37,111 |  |  |  | — |  |  |  | — |  |  |  | 37,111 |

Note 20 — Segment Information

The Company operates as a single reportable segment, conducting its business activities within the United States. The Company's chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis.

The CODM regularly reviews net income as presented on the Company’s Consolidated Statements of Income for purposes of assessing performance and making decisions about resource allocation. Items regularly reviewed by the CODM include those line items reported on the Company’s Consolidated Statements of Income, the most significant of which include net interest income, unrealized gain (loss) on fair value loans, unrealized gain (loss) on fair value securitized debt, origination fee income, and compensation and benefits. See Consolidated Statements of Income.

Note 21 — Subsequent Events

The Company has evaluated events that have occurred subsequent to March 31, 2026 through the issuance of the accompanying consolidated financial statements and has concluded there are no other subsequent events that would require recognition or disclosure in the accompanying consolidated financial statements.

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

The following discussion should be read in conjunction with the information included in our Annual Report on Form 10-K for the year ended December 31, 2025, as well as the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”).

In addition, the statements and assumptions in this Quarterly Report that are not statements of historical fact are forward-looking statements within the meaning of federal securities laws. In particular, statements about our plans, strategies and prospects as well as estimates of industry growth for the next quarter and beyond are forward-looking statements. For important information regarding these forward-looking statements, please see the discussion below under the caption “Forward-Looking Statements.”

References to “the Company,” “Velocity,” “we,” “us” and “our” refer to Velocity Financial, Inc. and include all of its consolidated subsidiaries, unless otherwise indicated or the context requires otherwise.

Business

We are a vertically integrated real estate finance company founded in 2004. We originate, securitize, and manage a nationwide portfolio of loans secured by real estate to earn attractive risk adjusted spreads for our shareholders. We primarily originate investor loans secured by 1-4 unit residential rental properties, as well as loans for multi-family, mixed use and commercial properties. We originate loans nationwide across our extensive network of independent mortgage brokers and direct borrower relationships, which we have built and refined over the 22 years since our inception. Our objective is to be the preferred and one of the most recognized brands in our core market.

We operate in a large and highly fragmented market with substantial demand for financing and limited supply of institutional financing alternatives. We have developed the highly-specialized skill set required to effectively compete in this market, which we believe has afforded us a durable business model capable of generating attractive risk-adjusted returns for our stockholders throughout various business cycles. We offer competitive pricing to our borrowers by pursuing low-cost financing strategies and by driving front-end process efficiencies through customized technology designed to control the cost of originating a loan. Furthermore, by originating loans through our efficient and scalable network of approved mortgage brokers, we are able to maintain a wide geographical presence and nimble operating infrastructure capable of reacting quickly to changing market environments.

Our primary source of revenue is interest income earned on our loan portfolio. Our typical loan is secured by a first lien on the underlying property with a personal guarantee, and based on all loans in our portfolio as of March 31, 2026, has an average balance of approximately $388 thousand. As of March 31, 2026, our loan portfolio totaled $6.8 billion of UPB on properties in 48 states and the District of Columbia. The total portfolio had a weighted average loan-to-value ratio, or LTV at origination, of 64.9%, of which the 1-4 unit residential rental loans, which we refer to as investor 1-4 loans, represented 46.9% of the UPB. For the three months ended March 31, 2026, the annualized yield on our total portfolio was 9.23%.

We fund our portfolio primarily through a combination of committed and uncommitted secured warehouse facilities, securitized debt, unsecured and secured debt, and equity. The securitized debt market is our primary source of long-term financing. We have successfully executed 48 securitized debt transactions, resulting in a total of over $11.1 billion in gross debt proceeds from May 2011 through March 2026. We may also sell loans from time to time for cash in lieu of holding the loans in our loan portfolio.

One of our core profitably measurements is our portfolio related net interest margin, which measures the difference between interest income earned on loans and interest expense paid on portfolio-related debt, relative to the amount of loans outstanding over the period. Our portfolio-related debt consists of warehouse facilities and securitized debt and excludes corporate debt and unsecured debt. For the three months ended March 31, 2026, our annualized portfolio related net interest margin was 3.56%, compared to 3.35% for the three months ended March 31, 2025. We generate profits to the extent that our portfolio related net interest income exceeds our interest expense on corporate debt and unsecured debt, provision for credit losses and operating expenses. For the three months ended March 31, 2026, including net income attributable to noncontrolling interest, we generated pre-tax income of $30.9 million, and net income of $22.4 million. For the three months ended March 31, 2025, including net income attributable to noncontrolling interest, we generated pre-tax income of $26.9 million, and net income of $18.9 million.

On December 28, 2021, the Company acquired an 80% ownership interest in Century Health & Housing Capital, LLC (“Century”). Century is a licensed Ginnie Mae issuer/servicer that provides government-insured Federal Housing Administration (“FHA”) mortgage financing for multifamily housing, senior housing and long-term care/assisted living facilities. Century originates loans through its borrower-direct origination channel and services the loans through its in-house servicing platform, which enables the formation of long-term relationships with its clients and drives strong portfolio retention. Century earns origination fees and servicing fees from the mortgage servicing rights on its servicing portfolio.

Items Affecting Comparability of Results

Due to a number of factors, our historical financial results may not be comparable, either from period to period, or to our financial results in future periods. We have summarized the key factors affecting the comparability of our financial results below.

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Recent Developments

Corporate Debt

In January 2026, we completed the issuance and sale of $500.0 million aggregate principal amount of 9.375% Senior Notes due 2031 (“the 2026 Term Notes”), which will mature on February 15, 2031. The 2026 Term Notes bear interest at 9.375% and are guaranteed by us on an unsecured basis.

In January 2026, we paid off the $215.0 million secured debt, or the "2022 Term Loan" with proceeds from the issuance and sale of $500.0 million Senior Notes.

Securitized Debt

In February 2026, we completed the securitization of $355.2 million of investor real estate loans, as measured by UPB, through a consolidated VIE.

In March 2026, we completed the securitization of $189.9 million of investor real estate loans, as measured by UPB, through a consolidated VIE.

Continued Market Uncertainties

Our operational and financial performance will depend on certain market developments, including the impact of tariffs, the actions of the Federal Reserve, the Russia/Ukraine war, the ongoing conflicts in the Middle East, the prolonged government shutdown, heightened stress in the real estate and corporate debt markets, and macroeconomic conditions and market fundamentals, which can all affect each of these factors and potentially impact our business performance.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires certain judgments and assumptions, based on information available at the time of preparation of the consolidated financial statements, in determining accounting estimates used in preparation of the consolidated financial statements. The following discussion addresses the accounting policies that we believe apply to us based on the nature of our operations. Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all the decisions and assessments used to prepare our financial statements are based upon reasonable assumptions given the information available at that time.

These policies and estimates relate to the allowance for credit losses and fair value option accounting. Our critical accounting policies and estimates are described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC.

How We Assess Our Business Performance

Net income is the primary metric by which we assess our business performance. Accordingly, we closely monitor the primary drivers of net income which consist of the following:

Net Interest Income

Net interest income is the largest contributor to our net income and is monitored both on an absolute basis and relative to provision for credit losses and operating expenses. We generate net interest income to the extent that the rate at which we lend in our portfolio exceeds the cost of financing our portfolio, which we primarily achieve through long-term securitized debt. Accordingly, we closely monitor the financing markets and maintain consistent dialogue with investors and financial institutions as we evaluate our financing sources and cost of funds.

To evaluate net interest income, we measure and monitor: (1) the yields on our loans, (2) the costs of our funding sources, (3) our net interest spread and (4) our net interest margin. Net interest spread measures the difference between the rates earned on our loans and the rates paid on our funding sources. Net interest margin measures the difference between our annualized interest income and annualized interest expense, or net interest income, as a percentage of average loans outstanding over the specified time period.

Periodic changes in net interest income are primarily driven by: (1) origination volume and changes in average outstanding loan balances and (2) interest rates and changes in interest earned on our portfolio or paid on our debt. Historically, origination volume and portfolio size have been the largest contributors to the growth in our net interest income. We measure net interest income before and after interest expense related to our secured and unsecured corporate debt, and before and after our provision for credit losses.

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Credit Losses

We strive to minimize actual credit losses through our rigorous screening and underwriting process and life of loan portfolio management and special servicing practices. We closely monitor the credit performance of our loan portfolio, including delinquency rates and expected and actual credit losses, as a key factor in assessing our overall business performance.

Operating Expenses

We incur operating expenses from compensation and benefits related to our employee base, rent and other occupancy costs associated with our leased facilities, our third-party primary loan servicing vendors, professional fees to the extent we utilize third-party legal, consulting and advisory firms, and costs associated with the resolution and disposition of real estate owned, and securitization expenses, among other items. We monitor and strive to prudently manage operating expenses and to balance current period profitability with investment in the continued development of our platform. Because volume and portfolio size determine the magnitude of the impact of each of the above factors on our earnings, we also closely monitor origination volume along with all key terms of new loan originations, such as interest rates, loan-to-value ratios, estimated credit losses and expected duration.

Factors Affecting Our Results of Operations

Our results of operations depend on, among other things, the level of our net interest income, the credit performance of our loan portfolio and the efficiency of our operating platform. These measures are affected by various factors, including the demand for investor real estate loans, the competitiveness of the market for originating or acquiring investor real estate loans, the cost of financing our portfolio, operating costs, the availability of funding sources and the underlying performance of the collateral supporting our loans. While we have been successful at managing these elements in the past, there are certain circumstances beyond our control, including the ongoing geopolitical conflicts, the changing economic policies, an expected recession, and macroeconomic conditions and market fundamentals, which can all affect each of these factors and potentially impact our business performance.

Competition

The investor real estate loan market is highly competitive which could affect our profitability and growth. We believe we compete favorably through diversified borrower access driven by our extensive network of mortgage brokers and by emphasizing a high level of real estate and financial expertise, customer service, and flexibility in structuring transactions, as well as by attracting and retaining experienced managerial and marketing personnel. However, some of our competitors may be better positioned to market their services and financing programs because of their ability to offer more favorable rates and terms and other services.

Availability and Cost of Funding

Our primary funding sources have historically included cash from operations, warehouse facilities, term securitized debt, corporate debt, and equity. We believe we have an established brand in the term securitized debt market and that this market will continue to support our portfolio growth with long-term financing. Changes in macroeconomic conditions can adversely impact our ability to issue securitized debt and, thereby, limit our options for long-term financing. In consideration of this potential risk, we have entered into a credit facility for longer-term financing that will provide us with capital resources to fund loan growth in the event we are not able to issue securitized debt.

All our warehouse repurchase and revolving loan facilities have interest payment obligations tied to the Secured Overnight Offering Rate (“SOFR”).

Loan Performance

We underwrite and structure our loans to minimize potential losses. We believe our fully amortizing loan structures and avoidance of large balloon payments, coupled with meaningful borrower equity in properties, limit the probability of losses and that our proven in-house asset management capability allows us to minimize potential losses in situations where there is insufficient equity in the property. Our income is highly dependent upon borrowers making their payments and resolving delinquent loans as favorably as possible. Macroeconomic conditions can, however, impact credit trends in our core market and adversely affect financial results.

Macroeconomic Conditions

The investor real estate loan market may be impacted by a wide range of macroeconomic factors such as interest rates, residential and commercial real estate prices, home ownership and unemployment rates, and availability of credit, among others. We believe our prudent underwriting, conservative loan structures and interest rate protections, and proven in-house asset management capability leave us well positioned to manage changing macroeconomic conditions.

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Portfolio and Asset Quality

Key Portfolio Statistics

|  | March 31, 2026 |  |  | December 31, 2025 |  |  | March 31, 2025 |
|  | ($ in thousands) |
Total loans (UPB) |  | $ | 6,836,544 |  |  | $ | 6,491,338 |  |  | $ | 5,449,901 |
Loan count |  |  | 17,639 |  |  |  | 16,652 |  |  |  | 13,858 |
Average loan balance |  | $ | 388 |  |  | $ | 390 |  |  | $ | 393 |
Weighted average loan-to-value |  |  | 64.9 | % |  |  | 65.2 | % |  |  | 66.1 | %
Weighted average coupon |  |  | 9.75 | % |  |  | 9.74 | % |  |  | 9.6 | %
Nonperforming loans (UPB) (A) |  | $ | 692,073 |  |  | $ | 554,540 |  |  | $ | 587,811 |
Nonperforming loans (% of total) (A) |  |  | 10.1 | % |  |  | 8.5 | % |  |  | 10.8 | %

(A) Reflects the UPB of loans 90 days or more past due or placed on nonaccrual status. Includes $27.3 million, $29.6 million and $36.7 million of COVID-19 forbearance-granted loans 90 days or more past due or placed on nonaccrual status as of March 31, 2026, December 31, 2025, and March 31, 2025, respectively.

Total Loans. Total loans reflects the aggregate UPB at the end of the period. It excludes deferred origination costs, acquisition discounts, fair value adjustments and allowance for credit losses.

Loan Count. Loan count reflects the number of loans at the end of the period. It includes all loans with an outstanding principal balance.

Average Loan Balance. Average loan balance reflects the average UPB at the end of the period (i.e., total loans divided by loan count).

Weighted Average Loan-to-Value. Loan-to-value, or LTV, reflects the ratio of the original loan amount to the appraised value of the underlying property at the time of origination. In instances where the LTV at origination is not available for an acquired loan, the LTV reflects our best estimate of value at the time of acquisition. Weighted average LTV is calculated for the population of loans outstanding at the end of each specified period using the original loan amounts and appraised LTVs at the time of origination of each loan. LTV is a key statistic because requiring the borrower to invest more equity in the collateral minimizes our exposure for future credit losses.

Weighted Average Coupon. Weighted average coupon reflects the weighted average loan rate at the end of the period.

Nonperforming Loans. Loans that are 90 or more days past due, in bankruptcy, in foreclosure, or not accruing interest, are considered nonperforming loans. The dollar amount of nonperforming loans presented in the table above reflects the UPB of all loans that meet this definition.

Originations and Acquisitions

The following table presents new loan originations including unfunded commitments and acquisitions and includes average loan size, weighted average coupon and weighted average loan-to-value for the periods indicated:

|  | Loan Count |  |  | Loan Balance |  |  | Average Loan Size |  |  | Weighted Average Coupon |  |  | Weighted Average LTV |
|  | ($ in thousands) |
Three Months Ended March 31, 2026: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan originations — held for investment |  |  | 1,682 |  |  | $ | 637,146 |  |  | $ | 379 |  |  |  | 10.15 | % |  |  | 62.5 | %
Construction loan advances — held for sale |  |  | — |  |  |  | 2,226 |  |  |  | — |  |  |  | 5.90 | % |  |  | 85.0 | %
Total loan originations |  |  | 1,682 |  |  | $ | 639,372 |  |  | $ | 380 |  |  |  | 10.15 | % |  |  | 62.5 | %
Three Months Ended December 31, 2025: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan originations — held for investment |  |  | 1,714 |  |  | $ | 632,796 |  |  | $ | 369 |  |  |  | 10.14 | % |  |  | 62.8 | %
Construction loan advances — held for sale |  |  | — |  |  |  | 1,818 |  |  |  | — |  |  |  | 5.90 | % |  |  | 85.0 | %
Total loan originations |  |  | 1,714 |  |  | $ | 634,614 |  |  | $ | 370 |  |  |  | 10.13 | % |  |  | 62.9 | %
Three Months Ended March 31, 2025: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan originations — held for investment |  |  | 1,513 |  |  | $ | 635,537 |  |  | $ | 420 |  |  |  | 10.51 | % |  |  | 62.6 | %
Loan originations — held for sale |  |  | 1 |  |  |  | 4,886 |  |  |  | 4,886 |  |  |  | 5.70 | % |  |  | 19.9 | %
Total loan originations |  |  | 1,514 |  |  | $ | 640,423 |  |  | $ | 423 |  |  |  | 10.47 | % |  |  | 62.3 | %

During the first quarter of 2026, loan originations increased $4.8 million and decreased $1.1 million from the quarters ended December 31, 2025 and March 31, 2025, respectively.

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Loans Held for Investment

Our total portfolio of loans held for investment consists of both loans held for investment carried at amortized cost and loans held for investment at fair value, which are presented in the Consolidated Balance Sheets as “Loans held for investment, at amortized cost” and “Loans held for investment, at fair value,” respectively. The following tables show the various components of loans held for investment as of the dates indicated:

Loans held for investment, at amortized cost |  | March 31, 2026 |  |  | December 31, 2025 |
|  | (In thousands) |
Unpaid principal balance |  | $ | 1,937,474 |  |  | $ | 2,013,514 |
Deferred loan origination costs |  |  | 18,416 |  |  |  | 19,269 |
Allowance for credit losses |  |  | (4,860 | ) |  |  | (4,521 | )
Loans held for investment, at amortized cost |  | $ | 1,951,030 |  |  | $ | 2,028,262 |

Loans held for investment, at fair value |  | March 31, 2026 |  |  | December 31, 2025 |
|  | (In thousands) |
Unpaid principal balance |  | $ | 4,899,070 |  |  | $ | 4,477,824 |
Valuation adjustments on performing FVO loans |  |  | 307,626 |  |  |  | 300,344 |
Valuation adjustments on nonperforming FVO loans |  |  | (52,188 | ) |  |  | (48,299 | )
Loans held for investment, at fair value |  | $ | 5,154,508 |  |  | $ | 4,729,869 |

The following table illustrates the contractual maturities of our loans held for investment in aggregate UPB and as a percentage of total held for investment loan portfolio as of the dates indicated:

|  | March 31, 2026 |  |  | December 31, 2025 |
|  | UPB |  |  | % |  |  | UPB |  |  | % |
|  | ($ in thousands) |
Loans due in less than one year |  | $ | 162,465 |  |  |  | 2.4 | % |  | $ | 159,623 |  |  |  | 2.5 | %
Loans due in one to five years |  |  | 73,042 |  |  |  | 1.1 |  |  |  | 78,875 |  |  |  | 1.2 |
Loans due in more than five years |  |  | 6,601,037 |  |  |  | 96.5 |  |  |  | 6,252,840 |  |  |  | 96.3 |
Total loans held for investment |  | $ | 6,836,544 |  |  |  | 100.0 | % |  | $ | 6,491,338 |  |  |  | 100.0 | %

Allowance for Credit Losses

For the March 31, 2026 CECL estimate, we considered a severe stress scenario with a seven-quarter reasonable and supportable forecast period followed by a three-quarter straight-line reversion period. Management concluded that applying the severe stress scenario was appropriate and reflected the economic uncertainties due to the recent Iran War and unstable labor market conditions.

For the December 31, 2025 CECL estimate, we considered a severe stress scenario with a seven-quarter reasonable and supportable forecast period followed by a three-quarter straight-line reversion period. The severe stress scenario was applied to reflect the uncertainties in the market with the tariffs, change in immigration policy, and unstable inflation rates.

Our allowance for credit losses as of March 31, 2026 was $4.9 million compared to $5.0 million as of March 31, 2025. The decrease in allowance for credit losses from March 31, 2025 was primarily due to a decrease in the amortized cost loan portfolio subject to CECL, and the removal of COVID pandemic era data from the macroeconomic forecasts in the latest CECL model update. Additionally, we believe borrower equity of 25% to 40% provides significant protection against credit losses. The various scenarios, the weighting of scenarios, as well as the forecast period and reversion to historical loss are subject to change as conditions in the market change and our ability to forecast as economic events evolve.

To estimate the allowance for credit losses in our portfolio of loans held for investment carried at amortized cost, we follow a detailed internal review process, considering a number of different factors including, but not limited to, our ongoing analyses of loans, historical loss rates, relevant environmental factors, relevant market research, trends in delinquencies, effects and changes in credit concentrations, and ongoing evaluation of fair values.

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The following table illustrates the activity in our allowance for credit losses of loans held for investment, excluding loans held for investment, at fair value over the periods indicated:

|  | Three Months Ended |  |
|  | March 31, 2026 |  |  | December 31, 2025 |  |  | March 31, 2025 |  |
Allowance for credit losses: |  | ($ in thousands)
Beginning balance |  | $ | 4,521 |  |  | $ | 4,586 |  |  | $ | 4,174 |  |
Provision for credit losses |  |  | 1,661 |  |  |  | 1,954 |  |  |  | 1,872 |  |
Charge-offs |  |  | (1,322 | ) |  |  | (2,019 | ) |  |  | (1,029 | ) |
Ending balance |  | $ | 4,860 |  |  | $ | 4,521 |  |  | $ | 5,017 |  |
Total UPB(1) |  | $ | 1,937,474 |  |  | $ | 2,013,514 |  |  | $ | 2,304,587 |  |
Nonperforming loans UPB |  | $ | 238,407 |  |  | $ | 234,490 |  |  | $ | 292,811 |  |
Nonperforming loans UPB / Total UPB(1) |  |  | 12.3 | % |  |  | 11.6 | % |  |  | 12.7 | % |
Allowance for credit losses / Total UPB(1) |  |  | 0.25 | % |  |  | 0.22 | % |  |  | 0.22 | % |
Charge-offs / Total UPB(1) |  |  | 0.27 | % | (2) |  | 0.40 | % | (2) |  | 0.18 | % | (2)

(1)
Reflects the UPB of loans held for investment at amortized cost.
(2)
Annualized.

The allowance for credit losses was 0.25% of total UPB of loans held for investment carried at amortized cost as of March 31, 2026. Nonperforming loans were 12.3% of total UPB of loans held for investment carried at amortized cost as of March 31, 2026. Management believes the allowance for credit losses is adequate to absorb expected lifetime credit losses because historically, most loans that become nonperforming either paid off or paid current, resulting in an overall gain. This is due to low LTVs at origination and active management of our portfolio. Historically, our actual annual charge-offs rate was 0.11% over the last four years.

Credit Quality – Loans Held for Investment

The following table provides delinquency information on our loans held for investment by UPB as of the dates indicated:

|  | March 31, 2026 (A) |  |  | COVID-19 Forbearance |  |  | December 31, 2025 (A) |  |  | COVID-19 Forbearance |  |  | March 31, 2025 (A) |  |  | COVID-19 Forbearance |
|  | ($ in thousands) |
Performing/Accruing: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 5,648,159 |  |  |  | 82.6 |  | % | $ | 87,769 |  |  | $ | 5,432,204 |  |  |  | 83.7 |  | % | $ | 90,159 |  |  | $ | 4,504,854 |  |  |  | 82.7 |  | % | $ | 88,462 |
30-59 days past due |  |  | 293,479 |  |  |  | 4.3 |  |  |  | 4,201 |  |  |  | 296,100 |  |  |  | 4.6 |  |  |  | 3,377 |  |  |  | 239,547 |  |  |  | 4.4 |  |  |  | 9,186 |
60-89 days past due |  |  | 202,833 |  |  |  | 3.0 |  |  |  | 1,661 |  |  |  | 208,494 |  |  |  | 3.2 |  |  |  | 3,040 |  |  |  | 112,803 |  |  |  | 2.1 |  |  |  | 1,800 |
Total Performing Loans |  |  | 6,144,471 |  |  |  | 89.9 |  |  |  | 93,631 |  |  |  | 5,936,798 |  |  |  | 91.5 |  |  |  | 96,576 |  |  |  | 4,857,204 |  |  |  | 89.2 |  |  |  | 99,448 |
Nonperforming/Nonaccrual: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
<90 days past due |  |  | 57,685 |  |  |  | 0.8 |  |  |  | 1,030 |  |  |  | 41,296 |  |  |  | 0.6 |  |  |  | 3,242 |  |  |  | 33,488 |  |  |  | 0.6 |  |  |  | 3,189 |
90+ days past due |  |  | 108,963 |  |  |  | 1.6 |  |  |  | 487 |  |  |  | 71,985 |  |  |  | 1.1 |  |  |  | — |  |  |  | 46,545 |  |  |  | 0.9 |  |  |  | 205 |
Bankruptcy |  |  | 50,669 |  |  |  | 0.7 |  |  |  | 10,128 |  |  |  | 57,919 |  |  |  | 0.9 |  |  |  | 5,945 |  |  |  | 76,606 |  |  |  | 1.4 |  |  |  | 3,688 |
In foreclosure |  |  | 474,756 |  |  |  | 7.0 |  |  |  | 15,648 |  |  |  | 383,340 |  |  |  | 5.9 |  |  |  | 20,379 |  |  |  | 431,172 |  |  |  | 7.9 |  |  |  | 29,612 |
Total nonperforming loans |  |  | 692,073 |  |  |  | 10.1 |  |  |  | 27,293 |  |  |  | 554,540 |  |  |  | 8.5 |  |  |  | 29,566 |  |  |  | 587,811 |  |  |  | 10.8 |  |  |  | 36,694 |
Total loans held for investment |  | $ | 6,836,544 |  |  |  | 100.0 |  | % | $ | 120,924 |  |  | $ | 6,491,338 |  |  |  | 100.0 |  | % | $ | 126,142 |  |  | $ | 5,445,015 |  |  |  | 100.0 |  | % | $ | 136,142 |

(A)
Balance includes $120.9 million UPB of loans held for investment at amortized cost as of March 31, 2026, $126.1 million as of December 31, 2025, and $136.1 million as of March 31, 2025 in our COVID-19 forbearance program.

Loans that are 90+ days past due, in bankruptcy, in foreclosure, or not accruing interest are considered nonperforming loans. Nonperforming loans were $692.1 million, or 10.1% of our held for investment loan portfolio as of March 31, 2026, compared to $554.5 million, or 8.5% as of December 31, 2025, and $587.8 million, or 10.8% as of March 31, 2025. The increase in total nonperforming loans as of March 31, 2026 compared to December 31, 2025 and March 31, 2025 was primarily due to an increase in the size and aging of our portfolio.

Resolution of Nonperforming Loans

Historically, most loans that become nonperforming resolve prior to converting to REO. The following tables summarize the resolution activities of loans that became nonperforming prior to the beginning of the periods indicated or became nonperforming and subsequently resolved during the periods indicated. We resolved $70.1 million of long-term and short-term nonperforming loans for the quarter ended March 31, 2026, compared to $78.1 million for the quarter ended December 31, 2025, and $68.3 million for the quarter ended March 31, 2025. We recovered total revenue of $4.6 million, $5.2 million and $7.6 million for the quarters ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively. This is largely the result of collecting all regular accrued interest, default interest, and prepayment penalties in excess of the principal on loans.

The tables below include resolutions of our long-term nonperforming loans during the periods indicated. Historically, we have resolved our nonperforming loans at a gain over and above contractual interest due. Below is a breakout of the net gains, regular accrued interest income and expense recognized with the resolution of these nonperforming loans. Total nonperforming loans

42

recovered include default interest, prepayment penalty, and contractual regular interest received, and any servicing advance recovered or written off:

|  | Three Months Ended March 31, 2026 |
Long-Term Nonperforming Loans |  | UPB |  |  | Default Interest |  |  | Prepayment Penalty |  |  |  | Net Gain |  |  | Regular Accrued Interest |  |  | Servicing Advances Write-Offs |  |  | Total Recovered |
|  | ($ in thousands) |
Resolved — loans paid off |  | $ | 32,971 |  |  | $ | 573 |  |  | $ | 433 |  |  |  | $ | 1,006 |  |  | $ | 1,695 |  |  | $ | (709 | ) |  | $ | 1,992 |
Resolved — loans paid current |  |  | 29,491 |  |  |  | 409 |  |  |  | — |  |  |  |  | 409 |  |  |  | 1,603 |  |  |  | (31 | ) |  |  | 1,981 |
Total resolutions |  | $ | 62,462 |  |  | $ | 982 |  |  | $ | 433 |  |  |  | $ | 1,415 |  |  | $ | 3,298 |  |  | $ | (740 | ) |  | $ | 3,973 |
Recovery rate |  |  |  |  |  |  |  |  |  |  |  |  | 102.3 | % |  |  |  |  |  |  |  |  | 106.4 | %

|  | Three Months Ended December 31, 2025 |
Long-Term Nonperforming Loans |  | UPB |  |  | Default Interest |  |  | Prepayment Penalty |  |  |  | Net Gain |  |  | Regular Accrued Interest |  |  | Servicing Advances Write-Offs |  |  | Total Recovered |
|  | ($ in thousands) |
Resolved — loans paid off |  | $ | 35,505 |  |  | $ | 849 |  |  | $ | 696 |  |  |  | $ | 1,545 |  |  | $ | 3,281 |  |  | $ | (391 | ) |  | $ | 4,435 |
Resolved — loans paid current |  |  | 35,053 |  |  |  | 371 |  |  |  | — |  |  |  |  | 371 |  |  |  | 1,869 |  |  |  | (9 | ) |  |  | 2,231 |
Total resolutions |  | $ | 70,558 |  |  | $ | 1,220 |  |  | $ | 696 |  |  |  | $ | 1,916 |  |  | $ | 5,150 |  |  | $ | (400 | ) |  | $ | 6,666 |
Recovery rate |  |  |  |  |  |  |  |  |  |  |  |  | 102.7 | % |  |  |  |  |  |  |  |  | 109.4 | %

|  | Three Months Ended March 31, 2025 |
Long-Term Nonperforming Loans |  | UPB |  |  | Default Interest |  |  | Prepayment Penalty |  |  |  | Net Gain |  |  | Regular Accrued Interest |  |  | Servicing Advances Write-Offs |  |  | Total Recovered |
|  | ($ in thousands) |
Resolved — loans paid off |  | $ | 20,589 |  |  | $ | 573 |  |  | $ | 416 |  |  |  | $ | 989 |  |  | $ | 1,685 |  |  | $ | (291 | ) |  | $ | 2,383 |
Resolved — loans paid current |  |  | 30,563 |  |  |  | 375 |  |  |  | — |  |  |  |  | 375 |  |  |  | 1,596 |  |  |  | (1 | ) |  |  | 1,970 |
Total resolutions |  | $ | 51,152 |  |  | $ | 948 |  |  | $ | 416 |  |  |  | $ | 1,364 |  |  | $ | 3,281 |  |  | $ | (292 | ) |  | $ | 4,353 |
Recovery rate |  |  |  |  |  |  |  |  |  |  |  |  | 102.7 | % |  |  |  |  |  |  |  |  | 108.5 | %

Short-term loans, or loans with a maturity of two-year or less, do not require prepayment fees and usually result in a lower gain when paid in full, as compared to long-term loans. The table below includes resolutions of our short-term nonperforming loans and loans granted a COVID-19 forbearance in 2020, for the periods indicated:

|  | Three Months Ended March 31, 2026 |
Short-Term Nonperforming Loans |  | UPB |  |  | Default Interest |  |  | Prepayment Penalty |  |  |  | Net Gain |  |  | Regular Accrued Interest |  |  | Servicing Advances Recoveries |  |  | Total Recovered |
|  | ($ in thousands) |
Resolved — loans paid off |  | $ | 3,829 |  |  | $ | 137 |  |  | $ | 1 |  |  |  | $ | 138 |  |  | $ | 178 |  |  | $ | 32 |  |  | $ | 348 |
Resolved — loans paid current |  |  | 3,798 |  |  |  | 28 |  |  |  | — |  |  |  |  | 28 |  |  |  | 221 |  |  |  | — |  |  |  | 249 |
Total resolutions |  | $ | 7,627 |  |  | $ | 165 |  |  | $ | 1 |  |  |  | $ | 166 |  |  | $ | 399 |  |  | $ | 32 |  |  | $ | 597 |
Recovery rate |  |  |  |  |  |  |  |  |  |  |  |  | 102.2 | % |  |  |  |  |  |  |  |  | 107.8 | %

43

|  | Three Months Ended December 31, 2025 |
Short-Term Nonperforming Loans |  | UPB |  |  | Default Interest |  |  | Prepayment Penalty |  |  |  | Net Gain |  |  | Regular Accrued Interest |  |  | Servicing Advances Write-Offs |  |  | Total Recovered |
|  | ($ in thousands) |
Resolved — loans paid off |  | $ | 5,686 |  |  | $ | 308 |  |  | $ | 10 |  |  |  | $ | 318 |  |  | $ | 500 |  |  | $ | (44 | ) |  | $ | 774 |
Resolved — loans paid current |  |  | 1,873 |  |  |  | 92 |  |  |  | — |  |  |  |  | 92 |  |  |  | 121 |  |  |  | (17 | ) |  |  | 196 |
Total resolutions |  | $ | 7,559 |  |  | $ | 400 |  |  | $ | 10 |  |  |  | $ | 410 |  |  | $ | 621 |  |  | $ | (61 | ) |  | $ | 970 |
Recovery rate |  |  |  |  |  |  |  |  |  |  |  |  | 105.4 | % |  |  |  |  |  |  |  |  | 112.8 | %

|  | Three Months Ended March 31, 2025 |
Short-Term Nonperforming Loans |  | UPB |  |  | Default Interest |  |  | Prepayment Penalty |  |  |  | Net Gain |  |  | Regular Accrued Interest |  |  | Servicing Advances Write-Offs |  |  | Total Recovered |
|  | ($ in thousands) |
Resolved — loans paid off |  | $ | 5,341 |  |  | $ | 180 |  |  | $ | 2 |  |  |  | $ | 182 |  |  | $ | 467 |  |  | $ | (134 | ) |  | $ | 515 |
Resolved — loans paid current |  |  | 11,845 |  |  |  | 14 |  |  |  | — |  |  |  |  | 14 |  |  |  | 340 |  |  |  | (9 | ) |  |  | 345 |
Total resolutions |  | $ | 17,186 |  |  | $ | 194 |  |  | $ | 2 |  |  |  | $ | 196 |  |  | $ | 807 |  |  | $ | (143 | ) |  | $ | 860 |
Recovery rate |  |  |  |  |  |  |  |  |  |  |  |  | 101.1 | % |  |  |  |  |  |  |  |  | 105.0 | %

Real Estate Owned, Net (“REO”)

REO includes real estate we acquire through foreclosure or by deed-in-lieu of foreclosure. REO assets are initially recorded at fair value, less estimated costs to sell on the date of foreclosure. Adjustments that reduce the carrying value of the loan to the fair value of the real estate at the time of foreclosure are recognized as charge-offs in the allowance for credit losses. Gains at the time of foreclosure are recognized in other operating income. The difference between the carrying value of the FVO loan and the REO fair value less estimated costs to sell, is recorded as unrealized gain or loss on fair value loans. After foreclosure, we periodically obtain new valuations, and any subsequent changes to fair value, less estimated costs to sell, are reflected as valuation adjustments, included in “Real estate owned, net” in the Consolidated Statements of Income.

As of March 31, 2026, REO included 259 properties with a lower of cost or estimated fair value of $131.8 million compared to 254 properties with a lower of cost or estimated fair value of $118.3 million as of December 31, 2025, and 157 properties with a lower of cost or estimated fair value of $83.4 million as of March 31, 2025.

Gain (Loss) on REO

The table below shows our initial REO gain (loss) upon transfer from loans, for the periods indicated:

|  | Three Months Ended |  |  | Three Months Ended |
|  | March 31, 2026 |  |  | March 31, 2025 |
|  | ($ in thousands) |
Gain (loss) on new REO: |  |  |  |  |  |
Gain on transfer to REO - amortized cost loans |  | $ | 2,832 |  |  | $ | 2,834 |
Valuation gain on transfer to REO - fair value loans |  |  | 3,971 |  |  |  | 1,589 |
Total gain on new REO |  | $ | 6,803 |  |  | $ | 4,423 |

The table below shows the gain (loss) activity subsequent to the REO being record, for the periods indicated:

|  | Three Months Ended |  |  | Three Months Ended |
|  | March 31, 2026 |  |  | March 31, 2025 |
|  | ($ in thousands) |
Gain (loss) on existing REO: |  |  |  |  |  |
REO valuation loss, net |  | $ | (3,217 | ) |  | $ | (2,073 | )
(Loss) gain on sale of REO |  |  | (129 | ) |  |  | 300 |
Total (loss) on existing REO |  | $ | (3,346 | ) |  | $ | (1,773 | )

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Concentrations – Loans Held for Investment

As of March 31, 2026, our held for investment loan portfolio was concentrated in Investor 1-4 loans, representing 46.9% of the UPB. Mixed use and Retail properties represented 10.8% and 10.8%, respectively, of the UPB. No other property type represented more than 10.0% of our held for investment loan portfolio. Geographically, the principal balance of our loans held for investment were concentrated 19.6% in California, 13.6% in New York, 11.7% in Florida, 7.6% in New Jersey, and 6.3% in Texas.

Property Type |  | March 31, 2026 |
|  | Loan Count |  |  | UPB |  |  | % of Total UPB |
|  | ($ in thousands) |
Investor 1-4 |  |  | 10,836 |  |  | $ | 3,203,963 |  |  |  | 46.9 | %
Mixed use |  |  | 1,759 |  |  |  | 744,157 |  |  |  | 10.8 |
Retail |  |  | 1,416 |  |  |  | 739,426 |  |  |  | 10.8 |
Office |  |  | 1,271 |  |  |  | 606,938 |  |  |  | 8.9 |
Warehouse |  |  | 765 |  |  |  | 493,995 |  |  |  | 7.2 |
Multifamily |  |  | 806 |  |  |  | 482,152 |  |  |  | 7.1 |
Other (1) |  |  | 786 |  |  |  | 565,913 |  |  |  | 8.3 |
Total loans held for investment |  |  | 17,639 |  |  | $ | 6,836,544 |  |  |  | 100.0 | %

(1)
All other properties individually comprise less than 5.0% of the total unpaid principal balance.

Geography (State) |  | March 31, 2026 |
|  | Loan Count |  |  | UPB |  |  | % of Total UPB |
|  | ($ in thousands) |
California |  |  | 1,949 |  |  | $ | 1,338,691 |  |  |  | 19.6 | %
New York |  |  | 1,742 |  |  |  | 932,252 |  |  |  | 13.6 |
Florida |  |  | 2,028 |  |  |  | 802,431 |  |  |  | 11.7 |
New Jersey |  |  | 1,295 |  |  |  | 517,801 |  |  |  | 7.6 |
Texas |  |  | 1,184 |  |  |  | 427,637 |  |  |  | 6.3 |
Other (1) |  |  | 9,441 |  |  |  | 2,817,732 |  |  |  | 41.2 |
Total loans held for investment |  |  | 17,639 |  |  | $ | 6,836,544 |  |  |  | 100.0 | %

(1)
All other states individually comprise less than 5.0% of the total unpaid principal balance.

Key Performance Metrics

|  | Three Months Ended |
|  | March 31, 2026 |  |  | December 31, 2025 |  |  | March 31, 2025 |
|  | ($ in thousands) |
Average loans |  | $ | 6,632,988 |  |  | $ | 6,434,214 |  |  | $ | 5,214,186 |
Portfolio yield |  |  | 9.23 | % |  |  | 9.47 | % |  |  | 9.11 | %
Average debt — portfolio related |  |  | 6,180,078 |  |  |  | 6,079,838 |  |  |  | 4,821,067 |
Average debt — total company |  |  | 6,655,454 |  |  |  | 6,369,838 |  |  |  | 5,111,067 |
Cost of funds — portfolio related |  |  | 6.09 | % |  |  | 6.23 | % |  |  | 6.23 | %
Cost of funds — total company |  |  | 6.56 | % |  |  | 6.33 | % |  |  | 6.36 | %
Net interest margin — portfolio related |  |  | 3.56 | % |  |  | 3.59 | % |  |  | 3.35 | %
Net interest margin — total company |  |  | 2.65 | % |  |  | 3.21 | % |  |  | 2.88 | %
Charge-offs/Average loans held for investment at amortized cost |  |  | 0.27 | % |  |  | 0.39 | % |  |  | 0.18 | %
Pre-tax return on average equity (2) |  |  | 18.1 | % |  |  | 30.7 | % |  |  | 20.1 | %
Return on average equity |  |  | 13.1 | % |  |  | 21.3 | % |  |  | 13.9 | %

(1)
Percentages are annualized.
(2)
Non-GAAP financial measure. Refer to the Return on Average Equity section on Page 48.

Average Loans

Average loans reflects the daily average of total outstanding loans, including both loans held for investment and loans held for sale, as measured by UPB, over the specified time period.

45

Portfolio Yield

Portfolio yield is an annualized measure of the total interest income earned on our loan portfolio as a percentage of average loans over the given period. Interest income includes interest earned on performing loans, cash interest received on nonperforming loans, default interest and prepayment fees. The increase in our portfolio yield for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025 was primarily driven by the increase in weighted average loan coupons. Portfolio yield for the three months ended March 31, 2026 decreased slightly from three months ended December 31, 2025 mainly attributable to less interest income and default interest collected on nonperforming loans.

Average Debt — Portfolio Related and Total Company

Portfolio-related debt consists of borrowings related directly to financing our loan portfolio, which includes our warehouse facilities and securitized debt. Total company debt consists of portfolio-related debt and corporate debt including secured and unsecured debt. The measures presented here reflect the monthly average of all portfolio-related and total company debt, as measured by outstanding principal balance, over the specified time period.

Cost of Funds — Portfolio Related and Total Company

Portfolio related cost of funds is an annualized measure of the interest expense incurred on our portfolio-related debt as a percentage of average portfolio-related debt outstanding over the given period. Total company cost of funds is an annualized measure of the interest expense incurred on our portfolio-related debt and corporate debt outstanding over the given period. Interest expense includes the amortization of expenses incurred in connection with our portfolio related financing activities and corporate debt. Through the issuance of long-term securitized debt, we have been able to fix a significant portion of our borrowing costs over time. The strong credit performance on our securitized debt has allowed us to issue debt at attractive rates.

Our portfolio related cost of funds decreased to 6.09% for the three months ended March 31, 2026 from 6.23% for the prior quarter and 6.23% for the three months ended March 31, 2025. The decrease was primarily due to lower securitized debt interest expense.

Net Interest Margin — Portfolio Related and Total Company

Portfolio related net interest margin measures the difference between the interest income earned on our loan portfolio and the interest expense paid on our portfolio-related debt as a percentage of average loans over the specified time period. Total company net interest margin measures the difference between the interest income earned on our loan portfolio and the interest expense paid on our portfolio-related debt and corporate debt as a percentage of average loans over the specified time period.

Over the periods shown in the tables below, portfolio related net interest margin increased to 3.56% for the three months ended March 31, 2026 from 3.35% for the three months ended March 31, 2025, and decreased from 3.59% for the three months ended December 31, 2025. The increase from the three months ended March 31, 2025 was primarily due to higher average yield and balance. The decrease from the three month ended December 31, 2025 was primarily due to lower average yield.

Total company net interest margin of 2.65% for the three months ended March 31, 2026 decreased from 2.88% for the three months ended March 31, 2025, and decreased from 3.21% for the three months ended December 31, 2025. The decreases were primarily due to higher interest expense on our corporate debt due to expensing the non-cash unamortized debt issuance costs related to the payoff of our $215.0 million corporate debt in January 2025.

46

The following tables show the average outstanding balance of our loan portfolio and portfolio-related debt, together with interest income and the corresponding yield earned on our portfolio, and interest expense and the corresponding rate paid on our portfolio-related debt for the periods indicated:

|  | Three Months Ended |  |
|  | March 31, 2026 |  |  | December 31, 2025 |  |  | March 31, 2025 |  |
|  |  |  |  | Interest |  |  | Average |  |  |  |  |  | Interest |  |  | Average |  |  |  |  |  | Interest |  |  | Average |  |
|  | Average |  |  | Income / |  |  | Yield / |  |  | Average |  |  | Income / |  |  | Yield / |  |  | Average |  |  | Income / |  |  | Yield / |  |
|  | Balance |  |  | Expense |  |  | Rate (1) |  |  | Balance |  |  | Expense |  |  | Rate (1) |  |  | Balance |  |  | Expense |  |  | Rate (1) |  |
|  | ($ in thousands) |  |
Loan portfolio: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans held for sale |  | $ | 189 |  |  |  |  |  |  |  |  | $ | 359 |  |  |  |  |  |  |  |  | $ | 998 |  |  |  |  |  |  |  |
Loans held for investment |  |  | 6,632,799 |  |  |  |  |  |  |  |  |  | 6,433,855 |  |  |  |  |  |  |  |  |  | 5,213,188 |  |  |  |  |  |  |  |
Total loans |  | $ | 6,632,988 |  |  | $ | 153,080 |  |  |  | 9.23 | % |  | $ | 6,434,214 |  |  | $ | 152,403 |  |  |  | 9.47 | % |  | $ | 5,214,186 |  |  | $ | 118,740 |  |  |  | 9.11 | % |
Debt: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Warehouse facilities |  | $ | 176,760 |  |  | $ | 3,723 |  |  |  | 8.42 | % |  | $ | 353,540 |  |  | $ | 6,939 |  |  |  | 7.85 | % |  | $ | 433,790 |  |  | $ | 8,505 |  |  |  | 7.84 | % |
Securitized debt |  |  | 6,003,318 |  |  |  | 90,304 |  |  |  | 6.02 | % |  |  | 5,726,298 |  |  |  | 87,713 |  |  |  | 6.13 | % |  |  | 4,387,277 |  |  |  | 66,583 |  |  |  | 6.07 | % |
Total debt - portfolio related |  |  | 6,180,078 |  |  |  | 94,027 |  |  |  | 6.09 | % |  |  | 6,079,838 |  |  |  | 94,652 |  |  |  | 6.23 | % |  |  | 4,821,067 |  |  |  | 75,088 |  |  |  | 6.23 | % |
Corporate - Secured debt |  |  | 142,043 |  |  |  | 6,681 |  |  |  | 18.81 | % | (4) |  | 290,000 |  |  |  | 6,142 |  |  |  | 8.47 | % |  |  | 290,000 |  |  |  | 6,142 |  |  |  | 8.47 | % |
Corporate - Unsecured debt |  |  | 333,333 |  |  |  | 8,452 |  |  |  | 10.14 | % | (5) |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | - |  |
Total debt |  | $ | 6,655,454 |  |  | $ | 109,160 |  |  |  | 6.56 | % |  | $ | 6,369,838 |  |  | $ | 100,794 |  |  |  | 6.33 | % |  | $ | 5,111,067 |  |  | $ | 81,230 |  |  |  | 6.36 | % |
Net interest spread - portfolio related (2) |  |  |  |  |  |  |  |  | 3.15 | % |  |  |  |  |  |  |  |  | 3.25 | % |  |  |  |  |  |  |  |  | 2.88 | % |
Net interest margin - portfolio related |  |  |  |  |  |  |  |  | 3.56 | % |  |  |  |  |  |  |  |  | 3.59 | % |  |  |  |  |  |  |  |  | 3.35 | % |
Net interest spread - total company (3) |  |  |  |  |  |  |  |  | 2.67 | % |  |  |  |  |  |  |  |  | 3.15 | % |  |  |  |  |  |  |  |  | 2.75 | % |
Net interest margin - total company |  |  |  |  |  |  |  |  | 2.65 | % |  |  |  |  |  |  |  |  | 3.21 | % |  |  |  |  |  |  |  |  | 2.88 | % |

(1)
Annualized.
(2)
Net interest spread - portfolio related is the difference between the rate earned on our loan portfolio and the interest rates paid on our portfolio-related debt.
(3)
Net interest spread - total company is the difference between the rate earned on our loan portfolio and the interest rates paid on our total debt.
(4)
The average yield of 18.81% for corporate secured debt reflects a lower average balance given that the $215.0 million secured debt was paid off at the end of January 2026, and interest expense also included $1.3 million write-off of debt issuance costs and $3.2 million interest expense for the quarter. Excluding these non-recurring costs, the adjusted average yield on the remaining secured debt would be 10.50% going forward.
(5)
The average yield of 10.14% for corporate unsecured debt reflects a lower average balance given that the $500.0 million unsecured debt was not issued until the end of January 2026; on a full-quarter basis, the average yield would be 9.98%.

Charge-Offs

Our annualized charge-offs rate over average loans held for investment carried at amortized cost for the three months ended March 31, 2026 decreased to 0.27% as compared to 0.39% for the three months ended December 31, 2025 and increased from 0.18% for the three months ended March 31, 2025. The charge-offs rate reflects year-to-date annualized charge-offs as a percentage of average loans held for investment at amortized cost, for the respective quarters. We do not record charge-offs on loans carried at estimated fair value and loans held for sale.

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Return on Average Equity

Pre-tax return on average equity and return on average equity reflect income before income taxes and net income including income attributable to noncontrolling interest, respectively, as a percentage of the monthly average total stockholders’ equity including noncontrolling interest over the specified period. Pre-tax return on average equity and return on average equity decreased during the quarter ended March 31, 2026 as compared to the quarter ended December 31, 2025 primarily due to a gain of $19.7 million on sale of nonperforming loans in December 2025 and higher average shareholders' equity. Pre-tax return on average equity and return on average equity slightly decreased as compared to the quarter ended March 31, 2025 primarily due to non-recurring expenses during the quarter ended March 31, 2026.

|  | Three Months Ended |
|  | March 31, 2026 |  |  | December 31, 2025 |  |  | March 31, 2025 |
|  | ($ in thousands) |
Income before income taxes (A) |  | $ | 30,877 |  |  | $ | 50,049 |  |  | $ | 26,893 |
Net income (B) |  |  | 22,299 |  |  |  | 34,754 |  |  |  | 18,648 |
Monthly average balance: |  |  |  |  |  |  |  |  |
Stockholders' equity (C) |  |  | 682,417 |  |  |  | 651,352 |  |  |  | 534,940 |
Pre-tax return on average equity (A)/(C) (1) |  |  | 18.1 | % |  |  | 30.7 | % |  |  | 20.1 | %
Return on average equity (B)/(C) (1) |  |  | 13.1 | % |  |  | 21.3 | % |  |  | 13.9 | %

(1)
Annualized.

Components of Results of Operations

Interest Income

We accrue interest on the UPB of our loans in accordance with the individual terms and conditions of each loan, discontinuing interest and reversing previously accrued interest once a loan becomes 90 days or more past due (nonaccrual status). When a loan is placed on nonaccrual status, the accrued and unpaid interest is reversed as a reduction to interest income and accrued interest receivable. Interest income is subsequently recognized only to the extent that cash payments are received or when the loan has returned to accrual status. Payments received on nonaccrual loans are first applied to interest due, then principal. Interest accrual resumes once a borrower has made all principal and interest payments due, bringing the loan back to current status.

Interest income on loans held for investment is comprised of interest income on loans and prepayment fees, less the amortization of deferred net costs related to the origination of loans carried at amortized cost. Interest income on loans held for sale is comprised of interest income earned on loans prior to their sale. The net fees and costs associated with loans held for sale carried at the lower of cost or fair value, are deferred as part of the carrying value of the loan and recognized as a gain or loss on the sale of the loan. The fees and costs associated with loans carried at fair value are recognized and expensed as incurred.

Interest Expense — Portfolio Related

Portfolio related interest expense is incurred on the debt we obtained to fund our loan origination and portfolio activities and consists of our warehouse facilities and securitized debt. Portfolio related interest expense also includes the amortization of other comprehensive income or loss from terminated derivative instruments, amortization of expenses incurred as a result of issuing the debt when the debt is carried at amortized cost. Other comprehensive income or loss, and deferred debt issuance costs are amortized using the level yield method. Key drivers of interest expense include the debt amounts outstanding, interest rates, other comprehensive income or loss from terminated derivative instruments, and the mix of our securitized debt and warehouse liabilities.

Net Interest Income — Portfolio Related

Portfolio related net interest income represents the difference between interest income and portfolio related interest expense.

Interest Expense — Corporate Debt

Interest expense on corporate debt consists of interest expense paid with respect to the 2022 Term Loan until its payoff in January 2026 and the 2024 Term Loan, as reflected in “Secured financing, net” on our Consolidated Balance Sheets, and the related amortization of deferred debt issuance costs. Interest expense on corporate debt also includes the interest expense paid with respect to the 2026 Term Notes, as reflected in “Unsecured senior notes, net” on our Consolidated Balance Sheets, and the related amortization of deferred debt issuance costs.

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Net Interest Income

Net interest income represents the difference between portfolio related net interest income and interest expense on corporate debt.

Provision for Credit Losses

Under the CECL methodology, the allowance for credit losses is calculated using a third-party model with our historical loss rates by segment, loan position as of the balance sheet date, and assumptions from us. We do not record provision for credit losses on loans held for sale, or loans carried at fair value.

Other Operating Income

Gain (Loss) on Disposition of Loans. When we sell a loan held for sale, we record a gain or loss that reflects the difference between the proceeds received for the sale of the loans and their respective carrying values. The gain or loss that we ultimately realize on the sale of our loans held for sale is primarily determined by the terms of the originated loans, current market interest rates and the sale price of the loans. In addition, when we transfer a loan to REO, we record the REO at its fair value, less estimated costs to sell, at the time of the transfer. The difference between the fair value of the real estate and the carrying value of the loan is recorded as a gain or a loan charge-off.

Unrealized Gain (Loss) on Fair Value Loans. We have elected to apply fair value option accounting to all our originated mortgage loans on a go-forward basis beginning October 1, 2022. We have elected to account for certain purchased distressed loans at fair value using FASB ASC Topic 825, Financial Instruments (ASC 825). We regularly estimate the fair value of these loans. Changes in fair value, subsequent to initial recognition of fair value loans are reported as “Unrealized gain (loss) on fair value loans,” a component of other operating income within the Consolidated Statements of Income.

Unrealized Gain (Loss) on Mortgage Servicing Rights. We have elected to record our mortgage servicing rights using the fair value measurement method. Changes in fair value are reported as “Unrealized gain (loss) on mortgage servicing rights,” a component of other operating income within the Consolidated Statements of Income.

Unrealized Gain (Loss) on Fair Value Securitized Debt. We have elected to apply fair value option accounting to securitized debt issued effective January 1, 2023 when the underlying collateral is also carried at fair value. We regularly estimate the fair value of securitized debt. Changes in fair value subsequent to initial recognition of fair value securitized debt are reported as “Unrealized gain (loss) on fair value securitized debt,” a component of other operating income within the Consolidated Statements of Income.

Origination Income. Fee income related to our loan origination activities.

Interest Income on Cash Balance. Interest income on bank balances.

Other Income. Other income primarily consists of servicing fee income and other miscellaneous income. We earn servicing fees for servicing mortgage loans for others.

Operating Expenses

Compensation and Employee Benefits. Costs related to employee compensation, commissions and related employee benefits, such as health, retirement, and payroll taxes.

Origination Expenses. Costs related to our loan origination activities.

Securitization Expenses. Costs related to issuance of our securitized debt.

Loan Servicing. Costs related to our third-party servicers.

Professional Fees. Costs related to professional services, such as external audits, legal fees, tax, compliance and outside consultants.

Rent and Occupancy. Costs related to occupying our locations, including rent, maintenance and property taxes.

Real Estate Owned, Net. Costs related to our real estate owned, net, including gains (losses) on disposition of REO, maintenance of REO properties, and taxes and insurance.

Other Operating Expenses. Other operating expenses consist of general and administrative costs such as travel and entertainment, marketing, data processing, insurance and office equipment.

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Provision for Income Taxes

The provision for income taxes consists of the current and deferred U.S. federal and state income taxes we expect to pay, currently and in future years, with respect to the net income for the year. The amount of the provision is derived by adjusting our reported net income with various permanent differences. The tax-adjusted net income amount is then multiplied by the applicable federal and state income tax rates to arrive at the provision for income taxes.

Consolidated Results of Operations

The following table summarizes our unaudited consolidated results of operations for the periods indicated:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Interest income |  | $ | 153,080 |  |  | $ | 118,740 |
Interest expense - portfolio related |  |  | 94,027 |  |  |  | 75,088 |
Net interest income - portfolio related |  |  | 59,053 |  |  |  | 43,652 |
Interest expense - corporate debt |  |  | 15,133 |  |  |  | 6,142 |
Net interest income |  |  | 43,920 |  |  |  | 37,510 |
Provision for credit losses |  |  | 1,661 |  |  |  | 1,872 |
Net interest income after provision for credit losses |  |  | 42,259 |  |  |  | 35,638 |
Other operating income |  |  | 42,957 |  |  |  | 33,446 |
Total operating expenses |  |  | 54,339 |  |  |  | 42,190 |
Income before income taxes |  |  | 30,877 |  |  |  | 26,894 |
Income tax expense |  |  | 8,578 |  |  |  | 8,246 |
Net income |  |  | 22,299 |  |  |  | 18,648 |
Net loss attributable to noncontrolling interest |  |  | (64 | ) |  |  | (239 | )
Net income attributable to Velocity Financial, Inc. |  | $ | 22,363 |  |  | $ | 18,887 |

Net Interest Income — Portfolio Related

|  | Three Months Ended March 31, |  |  |  |
|  | 2026 |  |  | 2025 |  |  | $ Change |
|  | (In thousands) |
Interest income |  | $ | 153,080 |  |  | $ | 118,740 |  |  | $ | 34,340 |
Interest expense - portfolio related |  |  | 94,027 |  |  |  | 75,088 |  |  |  | 18,939 |
Net interest income - portfolio related |  | $ | 59,053 |  |  | $ | 43,652 |  |  | $ | 15,401 |

Portfolio related net interest income is the largest contributor to our net income. Our portfolio related net interest income increased 35.3% to $59.1 million from $43.7 million for the three months ended March 31, 2026 and 2025, respectively.

Interest Income. Interest income increased by $34.3 million or 28.9% to $153.1 million for the three months ended March 31, 2026, compared to $118.7 million for the three months ended March 31, 2025, attributable to higher average loan portfolio balances and yield. For the three months ended March 31, 2026, the average loan yield was 9.23% compared to 9.11% for the three months ended March 31, 2025.

The following tables distinguish between the changes in interest income attributable to changes in average loan balance (volume) and the changes in interest income attributable to changes in annualized yield (rate) for the three months ended March 31, 2026 and 2025.

|  | Average Loans |  |  | Interest Income |  |  | Average Yield(1) |
|  | ($ in thousands) |
Three months ended March 31, 2026 |  | $ | 6,632,988 |  |  | $ | 153,080 |  |  |  | 9.23 | %
Three months ended March 31, 2025 |  |  | 5,214,186 |  |  |  | 118,740 |  |  |  | 9.11 | %
Volume variance |  |  | 1,418,802 |  |  |  | 32,310 |  |  |  |
Rate variance |  |  |  |  |  | 2,030 |  |  |  | 0.12 | %
Total interest income variance |  |  |  |  |  | 34,340 |  |  |  |

(1)
Annualized.

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Interest Expense — Portfolio Related. Portfolio related interest expense, which consists of interest incurred on our warehouse facilities and securitized debt, increased 25.2% to $94.0 million for the three months ended March 31, 2026 from $75.1 million for the three months ended March 31, 2025. The increase was primarily attributable to a higher loan portfolio being financed, offsets by lower portfolio cost of funds.

The following tables present information regarding portfolio related interest expense and distinguish between the changes in interest expense attributable to changes in the average outstanding debt balance (volume) and changes in cost of funds (rate) for the three months ended March 31, 2026 and 2025.

|  | Average Debt(1) |  |  | Interest Expense |  |  | Cost of Funds(2) |
|  | ($ in thousands) |
Three months ended March 31, 2026 |  | $ | 6,180,078 |  |  | $ | 94,027 |  |  |  | 6.09 | %
Three months ended March 31, 2025 |  |  | 4,821,067 |  |  |  | 75,088 |  |  |  | 6.23 | %
Volume variance |  |  | 1,359,011 |  |  |  | 21,167 |  |  |  |
Rate variance |  |  |  |  |  | (2,228 | ) |  |  | -0.14 | %
Total interest expense variance |  |  |  |  |  | 18,939 |  |  |  |

(1)
Includes securitized debt and warehouse agreements.
(2)
Annualized.

Net Interest Income After Provision for Credit Losses

|  | Three Months Ended March 31, |  |  |  |
|  | 2026 |  |  | 2025 |  |  | $ Change |
|  | (In thousands) |
Net interest income - portfolio related |  | $ | 59,053 |  |  | $ | 43,652 |  |  | $ | 15,401 |
Interest expense - corporate debt |  |  | 15,133 |  |  |  | 6,142 |  |  |  | 8,991 |
Net interest income |  |  | 43,920 |  |  |  | 37,510 |  |  |  | 6,410 |
Provision for credit losses |  |  | 1,661 |  |  |  | 1,872 |  |  |  | (211 | )
Net interest income after provision for credit losses |  | $ | 42,259 |  |  | $ | 35,638 |  |  | $ | 6,621 |

Interest Expense — Corporate Debt. Corporate debt interest expense increased to $15.1 million from $6.1 million for the three months ended March 31, 2026 and 2025, respectively. The increase in corporate debt interest expense was primarily due to the issuance of $500.0 million unsecured senior notes in January 2026 and write-off of $1.3 million non-cash unamortized debt issuance costs related to the payoff of the $215.0 million secured corporate debt in January 2026.

Provision for Credit Losses. Our provision for credit losses decreased to $1.7 million for the three months ended March 31, 2026 from $1.9 million for the three months ended March 31, 2025, primarily due to the decrease in loans carried at amortized cost subject to the CECL allowance methodology.

Other Operating Income

The $9.5 million increase in total other operating income from the three months ended March 31, 2025 to the three months ended March 31, 2026 was primarily due to a net unrealized gain of $6.1 million on loans and securitized debt and the recognition of $2.4 million employee retention credit as other income in the first quarter of 2026.

|  | Three Months Ended March 31, |  |  |  |
|  | 2026 |  |  | 2025 |  |  | $ Change |
|  | (In thousands) |
Gain on disposition of loans |  | $ | 2,896 |  |  | $ | 2,834 |  |  | $ | 62 |
Unrealized gain on fair value loans |  |  | 1,039 |  |  |  | 34,836 |  |  |  | (33,797 | )
Unrealized gain (loss) on fair value securitized debt |  |  | 26,254 |  |  |  | (13,682 | ) |  |  | 39,936 |
Unrealized loss on mortgage servicing rights |  |  | (337 | ) |  |  | (1,081 | ) |  |  | 744 |
Origination fee income |  |  | 7,970 |  |  |  | 8,679 |  |  |  | (709 | )
Interest income on cash balance |  |  | 1,405 |  |  |  | 1,339 |  |  |  | 66 |
Other income |  |  | 3,730 |  |  |  | 521 |  |  |  | 3,209 |
Total other operating income |  | $ | 42,957 |  |  | $ | 33,446 |  |  | $ | 9,511 |

Gain on Disposition of Loans. Gain on disposition of loans remained relatively consistent at $2.9 million for the three months ended March 31, 2026 compared to $2.8 million for the three months ended March 31, 2025.

Unrealized Gain on Fair Value Loans. Unrealized gain on fair value loans decreased by $33.8 million to $1.0 million for the three months ended March 31, 2026 compared to $34.8 million for the three months ended March 31, 2025. The decrease was mainly driven by an increase in market interest rates and spreads.

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Unrealized Gain (Loss) on Fair Value Securitized Debt. Unrealized gain on fair value securitized debt was $26.3 million for the three months ended March 31, 2026, compared to $13.7 million of unrealized loss for the three months ended March 31, 2025. The increase in unrealized gain on fair value securitized debt was primarily attributable to the increase in market interest rates and spreads.

Unrealized Gain (Loss) on Mortgage Servicing Rights. Unrealized loss on mortgage servicing rights was $0.3 million for the three months ended March 31, 2026 as compared to $1.1 million for the three months ended March 31, 2025. The decrease in unrealized loss on mortgage servicing rights was primarily attributable to an increase in the servicing portfolio.

Origination Fee Income. Origination fee income slightly decreased by $0.7 million to $8.0 million for the three months ended March 31, 2026 compared to $8.7 million for the three months ended March 31, 2025. The decrease was primarily attributable to slightly lower fees collected on new loans.

Interest Income on Cash Balance. Interest income on cash balance increased by $0.1 million to $1.4 million for the three months ended March 31, 2026 compared to $1.3 million for the three months ended March 31, 2025. The increase was primarily attributable to an overall higher cash balance.

Other Income. Other income was $3.7 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively. The increase was primarily attributable to the recognition of $2.4 million employee retention credit as other income in March 2026, and higher servicing fee income from the new loan servicing portfolio serviced for others.

Operating Expenses

Operating expenses are presented in the following table. Changes in operating expenses compared to the same period of the prior year are discussed below.

|  | Three Months Ended March 31, |  |  |  |  |
|  | 2026 |  |  | 2025 |  |  | $ Change |  |
|  | (In thousands) |  |
Compensation and employee benefits |  | $ | 23,520 |  |  | $ | 21,684 |  |  | $ | 1,836 |  |
Origination expenses |  |  | 1,163 |  |  |  | 838 |  |  |  | 325 |  |
Securitization expenses |  |  | 5,285 |  |  |  | 4,043 |  |  |  | 1,242 |  |
Loan servicing |  |  | 8,563 |  |  |  | 8,008 |  |  |  | 555 |  |
Professional fees |  |  | 5,781 |  |  |  | 1,783 |  |  |  | 3,998 |  |
Rent and occupancy |  |  | 340 |  |  |  | 275 |  |  |  | 65 |  |
Real estate owned, net |  |  | 6,862 |  |  |  | 3,029 |  |  |  | 3,833 |  |
Other operating expenses |  |  | 2,825 |  |  |  | 2,530 |  |  |  | 295 |  |
Total operating expenses |  | $ | 54,339 |  |  | $ | 42,190 |  |  | $ | 12,149 |  |

Compensation and Employee Benefits. Compensation and employee benefits slightly increased by $1.8 million to $23.5 million for the three months ended March 31, 2026 compared to $21.7 million for the three months ended March 31, 2025. The increase was primarily attributable to the annual salary increases and increase in headcount to support future growth in loan production.

Origination Expenses. Origination expenses increased by $0.3 million to $1.2 million for the three months ended March 31, 2026 from $0.8 million for the three months ended March 31, 2025. The increase in origination expenses was due to higher third party fees paid.

Securitization Expenses. Securitization expenses were $5.3 million for the three months ended March 31, 2026 compared to $4.0 million for the three months ended March 31, 2025. The increase in securitization expenses was due to two securitization transactions issued in the first quarter of 2026 as compared to one transaction in the same period of the prior year.

Loan Servicing. Loan servicing expenses increased to $8.6 million for the three months ended March 31, 2026 from $8.0 million for the three months ended March 31, 2025. The increase was primarily attributable to the growth of our loan portfolio.

Professional Fees. Professional fees increased to $5.8 million for the three months ended March 31, 2026 compared to $1.8 million for the three months ended March 31, 2025. The increase was primarily attributable to higher legal fees related to potential merger and acquisition due diligence.

Rent and Occupancy. Rent and occupancy expenses remained relatively consistent at $0.3 million for the three months ended March 31, 2026 and the three months ended March 31, 2025.

Real Estate Owned, Net. Net expenses of real estate owned increased to $6.9 million for the three months ended March 31, 2026 from $3.0 million for the three months ended March 31, 2025. The increase was mainly due to the increase in REOs combined with higher valuation adjustments.

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Other Operating Expenses. Other operating expenses increased to $2.8 million for the three months ended March 31, 2026 from $2.5 million for the three months ended March 31, 2025. The increase reflected higher information technology maintenance and data processing costs.

Income Tax Expense. Income tax expense was $8.6 million and $8.2 million for the three months ended March 31, 2026 and 2025, respectively. The increase in income tax expense was primarily attributable to the increase in pretax income. Our annual consolidated effective tax rates were 28.2% and 28.5% for the years 2026 and 2025, respectively.

Quarterly Results of Operations

The following table sets forth certain unaudited financial information for each of the last eight completed quarters. The quarterly information has been prepared on the same basis as the consolidated financial statements and includes all adjustments (consisting of normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the information presented. This information should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full year.

|  | Three Months Ended |  |
|  | March 31, 2026 |  |  | December 31, 2025 |  |  | September 30, 2025 |  |  | June 30, 2025 |  |  | March 31, 2025 |  |  | December 31, 2024 |  |  | September 30, 2024 |  |  | June 30, 2024 |  |
|  | ($ in thousands) |  |
|  | (Unaudited) |  |
Interest income |  | $ | 153,080 |  |  | $ | 152,403 |  |  | $ | 144,119 |  |  | $ | 135,567 |  |  | $ | 118,740 |  |  | $ | 113,484 |  |  | $ | 105,070 |  |  | $ | 97,760 |  |
Interest expense - portfolio related |  |  | 94,027 |  |  |  | 94,652 |  |  |  | 88,899 |  |  |  | 81,838 |  |  |  | 75,088 |  |  |  | 68,484 |  |  |  | 63,871 |  |  |  | 59,188 |  |
Net interest income - portfolio related |  |  | 59,053 |  |  |  | 57,751 |  |  |  | 55,220 |  |  |  | 53,729 |  |  |  | 43,652 |  |  |  | 45,000 |  |  |  | 41,199 |  |  |  | 38,572 |  |
Net interest margin - portfolio related |  |  | 3.56 | % |  |  | 3.59 | % |  |  | 3.65 | % |  |  | 3.82 | % |  |  | 3.35 | % |  |  | 3.70 | % |  |  | 3.60 | % |  |  | 3.54 | % |
Interest expense - corporate debt |  |  | 15,133 |  |  |  | 6,142 |  |  |  | 6,144 |  |  |  | 6,143 |  |  |  | 6,142 |  |  |  | 6,143 |  |  |  | 6,143 |  |  |  | 6,155 |  |
Net interest income |  |  | 43,920 |  |  |  | 51,609 |  |  |  | 49,076 |  |  |  | 47,586 |  |  |  | 37,510 |  |  |  | 38,857 |  |  |  | 35,056 |  |  |  | 32,417 |  |
Net interest margin - total company |  |  | 2.65 | % |  |  | 3.21 | % |  |  | 3.25 | % |  |  | 3.39 | % |  |  | 2.88 | % |  |  | 3.20 | % |  |  | 3.06 | % |  |  | 2.98 | % |
Provision for (reversal of) credit losses |  |  | 1,661 |  |  |  | 1,954 |  |  |  | 381 |  |  |  | 1,598 |  |  |  | 1,872 |  |  |  | 22 |  |  |  | (69 | ) |  |  | 218 |  |
Net interest income after provision for (reversal of) credit losses |  |  | 42,259 |  |  |  | 49,655 |  |  |  | 48,695 |  |  |  | 45,988 |  |  |  | 35,638 |  |  |  | 38,835 |  |  |  | 35,125 |  |  |  | 32,199 |  |
Other operating income |  |  | 42,957 |  |  |  | 53,249 |  |  |  | 37,077 |  |  |  | 39,847 |  |  |  | 33,446 |  |  |  | 32,330 |  |  |  | 20,732 |  |  |  | 22,561 |  |
Operating expenses |  |  | 54,339 |  |  |  | 52,855 |  |  |  | 50,397 |  |  |  | 51,913 |  |  |  | 42,190 |  |  |  | 39,127 |  |  |  | 34,613 |  |  |  | 34,887 |  |
Income before income taxes |  |  | 30,877 |  |  |  | 50,049 |  |  |  | 35,375 |  |  |  | 33,922 |  |  |  | 26,894 |  |  |  | 32,038 |  |  |  | 21,244 |  |  |  | 19,873 |  |
Income tax expense |  |  | 8,578 |  |  |  | 15,296 |  |  |  | 9,963 |  |  |  | 7,752 |  |  |  | 8,246 |  |  |  | 11,233 |  |  |  | 5,627 |  |  |  | 5,162 |  |
Net income |  |  | 22,299 |  |  |  | 34,753 |  |  |  | 25,412 |  |  |  | 26,170 |  |  |  | 18,648 |  |  |  | 20,805 |  |  |  | 15,617 |  |  |  | 14,711 |  |
Net income (loss) attributable to noncontrolling interest |  |  | (64 | ) |  |  | (44 | ) |  |  | 39 |  |  |  | 173 |  |  |  | (239 | ) |  |  | 218 |  |  |  | (186 | ) |  |  | (67 | ) |
Net income attributable to Velocity Financial, Inc. |  | $ | 22,363 |  |  | $ | 34,797 |  |  | $ | 25,373 |  |  | $ | 25,997 |  |  | $ | 18,887 |  |  | $ | 20,587 |  |  | $ | 15,803 |  |  | $ | 14,778 |  |

Liquidity and Capital Resources

Sources and Uses of Liquidity

We fund our lending activities primarily through borrowings under our warehouse repurchase facilities, securitized debt, other corporate-level debt, equity and debt securities, and net cash provided by operating activities to manage our business. We use cash to originate and acquire investor real estate loans, repay principal and interest on our borrowings, fund our operations and meet other general business needs.

Cash and Cash Equivalents

Our total liquidity was $329.0 million as of March 31, 2026, comprised of $87.1 million in cash and $241.9 million in borrowings from available warehouse capacity on unencumbered loans. Our additional available warehouse capacity as of March 31, 2026, was $593.7 million, bringing total liquidity plus available warehouse capacity to $922.7 million.

We had cash of $87.1 million and $51.7 million, excluding restricted cash of $25.0 million and $22.8 million as of March 31, 2026 and 2025, respectively.

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Cash Flows

The following table summarizes the net cash provided by (used in) operating activities, investing activities and financing activities for the periods indicated:

|  | Three Months Ended March 31, |
|  | 2026 |  |  | 2025 |
|  | (In thousands) |
Cash provided by (used in): |  |  |  |  |  |
Operating activities |  | $ | 12,086 |  |  | $ | 3,536 |
Investing activities |  |  | (351,372 | ) |  |  | (401,413 | )
Financing activities |  |  | 202,099 |  |  |  | 401,508 |
Net change in cash, cash equivalents, and restricted cash |  | $ | (137,187 | ) |  | $ | 3,631 |

Cash flows from operating activities primarily includes net income adjusted for: (1) cash used for origination of held for sale loans and the related cash proceeds from the sales of such loans, (2) non-cash items including valuation changes, provision for credit losses, discount accretion, and amortization of debt issuance discount and costs, and (3) changes in the balances of operating assets and liabilities.

For the three months ended March 31, 2026, our net cash provided by operating activities consisted mainly of $22.3 million in net income, $4.0 million in amortization of debt issuance discount and costs, $2.3 million in proceeds from sale of loans held for sale, $3.2 million change in valuation of real estate owned, and $2.7 million in stock-based compensation, offset by $26.3 million change in valuation of securitized debt at fair value.

For the three months ended March 31, 2026, our net cash used in investing activities consisted mainly of $637.1 million in cash used to originate loans held for investment at fair value, partially offset by $266.9 million in cash received from payments of loans held for investment.

For the three months ended March 31, 2026, our net cash provided by financing activities consisted mainly of $374.4 million in borrowings from our warehouse and repurchase facilities, $484.9 million in proceeds from the issuance of unsecured corporate debt, and $513.7 million in proceeds from issuing securitized debt. The cash generated was partially offset by repayments of $585.5 million on warehouse and repurchase facilities, repayments of $365.9 million on securitized debt, and payoff of the 2022 Term Loan in the amount of $215.0 million.

During the three months ended March 31, 2026 and 2025, we used approximately $137.2 million and generated $3.6 million, respectively, of net cash and cash equivalents on operating, investing and financing activities.

Warehouse Facilities

As of March 31, 2026, we had five non-mark-to-market warehouse facilities, one mark-to-market warehouse facility, and one modified mark-to-market warehouse facility to support our loan origination and acquisition facilities. The maturity of our warehouse facilities ranges from one to three years. The borrowings are collateralized primarily by performing loans. All warehouse facilities are based on SOFR, plus margins ranging from 1.60% to 4.00%. Borrowing under these facilities was $99.4 million with $835.6 million of available capacity as of March 31, 2026.

Six warehouse facilities fund less than 100% and one warehouse facility funds at 100% of the principal balance of the mortgage loans we own, requiring us to use working capital to fund the remaining portion. We may need to use additional working capital if loans become delinquent, because the amount permitted to be financed by the facilities may change based on the delinquency performance of the pledged collateral.

All borrower payments on loans financed under the warehouse facilities are segregated into pledged accounts with the loan servicer. All principal amounts in excess of the interest due are applied to reduce the outstanding borrowings under the warehouse facilities. The warehouse facilities also contain customary covenants, including financial covenants that require us to maintain minimum liquidity, a minimum net worth, a maximum debt-to-net worth ratio and a ratio of a minimum earnings before interest, taxes, depreciation and amortization of interest expense. If we fail to meet any of the covenants, or otherwise default under the facilities, the lenders have the right to terminate their facility and require immediate repayment, which may require us to sell our loans at less than optimal terms. As of March 31, 2026, we were in compliance with these covenants.

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Securitized debt

From May 2011 through March 2026, we have completed 48 transactions, issuing $11.1 billion in principal amount of securities to third parties. All borrower payments are segregated into remittance accounts at the primary servicer and remitted to the trustee of each trust monthly. We are the sole beneficial interest holder of the applicable trusts, which are variable interest entities included in our consolidated financial statements. The transactions are accounted for as secured borrowings under U.S. GAAP.

Accumulated interest represents our total ownership interest in each trust which is the difference between the UPB of the loan collateral and the principal amount due external bondholders. The following table summarizes securities issued at the time of securitization, accumulated interest as of March 31, 2026 and December 31, 2025, and the stated maturity for each outstanding securitized debt. The securities are callable by us when the stated principal balance is less than a certain percentage, ranging from 10% to 30%, of the original stated principal balance of loans at issuance. As a result, the actual maturity date of the securities issued will likely be earlier than their respective stated maturity date.

|  |  |  |  | Accumulated Interest as of |  |  |
Trusts |  | Securities Issued |  |  | March 31, 2026 |  |  | December 31, 2025 |  |  | Stated Maturity Date
|  | (In thousands) |  |  |
2017-2 Trust |  | $ | 245,601 |  |  | $ | 6,784 |  |  | $ | 6,693 |  |  | October 2047
2018-1 Trust |  |  | 176,816 |  |  |  | 4,880 |  |  |  | 4,967 |  |  | April 2048
2018-2 Trust |  |  | 307,988 |  |  |  | 9,284 |  |  |  | 10,001 |  |  | October 2048
2019-1 Trust |  |  | 235,580 |  |  |  | 9,904 |  |  |  | 12,021 |  |  | March 2049
2019-2 Trust |  |  | 207,020 |  |  |  | 6,575 |  |  |  | 6,644 |  |  | July 2049
2019-3 Trust |  |  | 154,419 |  |  |  | 5,766 |  |  |  | 5,792 |  |  | October 2049
2020-1 Trust |  |  | 248,700 |  |  |  | 8,472 |  |  |  | 8,881 |  |  | February 2050
2021-1 Trust |  |  | 251,301 |  |  |  | 12,200 |  |  |  | 13,097 |  |  | May 2051
2021-2 Trust |  |  | 194,918 |  |  |  | 5,452 |  |  |  | 5,056 |  |  | August 2051
2021-3 Trust |  |  | 204,205 |  |  |  | 7,335 |  |  |  | 5,875 |  |  | October 2051
2021-4 Trust |  |  | 319,116 |  |  |  | 7,009 |  |  |  | 6,974 |  |  | December 2051
2022-1 Trust |  |  | 273,594 |  |  |  | 9,203 |  |  |  | 9,304 |  |  | February 2052
2022-2 Trust |  |  | 241,388 |  |  |  | 12,360 |  |  |  | 11,611 |  |  | March 2052
2022-3 Trust |  |  | 296,323 |  |  |  | 17,322 |  |  |  | 25,409 |  |  | May 2052
2022-4 Trust |  |  | 308,357 |  |  |  | 20,651 |  |  |  | 20,062 |  |  | July 2052
2022-5 Trust |  |  | 188,754 |  |  |  | 17,176 |  |  |  | 17,162 |  |  | October 2052
2023-1 Trust |  |  | 198,715 |  |  |  | 16,144 |  |  |  | 17,030 |  |  | December 2052
2023-2 Trust |  |  | 202,210 |  |  |  | 5,179 |  |  |  | 10,669 |  |  | April 2053
2023-3 Trust |  |  | 234,741 |  |  |  | 3,701 |  |  |  | 7,055 |  |  | July 2053
2023-4 Trust |  |  | 202,890 |  |  |  | 4,784 |  |  |  | 8,227 |  |  | November 2053
2024-1 Trust |  |  | 209,862 |  |  |  | 9,273 |  |  |  | 9,714 |  |  | January 2054
2024-2 Trust |  |  | 286,235 |  |  |  | 11,944 |  |  |  | 17,786 |  |  | April 2054
2024-3 Trust |  |  | 204,599 |  |  |  | 4,292 |  |  |  | 7,172 |  |  | June 2054
2024-4 Trust |  |  | 253,612 |  |  |  | 7,346 |  |  |  | 13,358 |  |  | July 2054
2024-5 Trust |  |  | 292,880 |  |  |  | 15,808 |  |  |  | 14,220 |  |  | October 2054
2024-6 Trust |  |  | 293,895 |  |  |  | 19,729 |  |  |  | 18,490 |  |  | December 2054
2025-1 Trust |  |  | 342,791 |  |  |  | 18,878 |  |  |  | 18,152 |  |  | February 2055
2025-RTL1 Trust |  |  | 111,395 |  |  |  | 10,673 |  |  |  | 7,048 |  |  | March 2030
2025-2 Trust |  |  | 377,526 |  |  |  | 23,806 |  |  |  | 20,898 |  |  | April 2055
2025-MC1 Trust |  |  | 114,136 |  |  |  | 22,410 |  |  |  | 20,925 |  |  | May 2055
2025-3 Trust |  |  | 382,461 |  |  |  | 17,962 |  |  |  | 15,367 |  |  | June 2055
2025-P1 Trust |  |  | 190,865 |  |  |  | 6,792 |  |  |  | 5,370 |  |  | July 2055
2025-4 Trust |  |  | 457,543 |  |  |  | 19,170 |  |  |  | 14,769 |  |  | September 2055
2025-P2 Trust |  |  | 207,013 |  |  |  | 7,103 |  |  |  | 5,305 |  |  | October 2055
2025-5 Trust |  |  | 439,292 |  |  |  | 14,048 |  |  |  | 11,346 |  |  | December 2055
2026-1 Trust |  |  | 335,448 |  |  |  | 19,625 |  |  |  | - |  |  | February 2056
2026-P1 Trust |  |  | 178,333 |  |  |  | 11,520 |  |  |  | - |  |  | March 2056
Total |  | $ | 9,370,522 |  |  | $ | 430,560 |  |  | $ | 412,450 |  |  |

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The following table summarizes outstanding bond principal balances for each securitized debt as of March 31, 2026 and December 31, 2025:

|  | March 31, 2026 |  |  | December 31, 2025 |
|  | (In thousands) |
2017-2 Trust |  | $ | 21,078 |  |  | $ | 22,445 |
2018-1 Trust |  |  | 15,549 |  |  |  | 17,828 |
2018-2 Trust |  |  | 45,412 |  |  |  | 46,790 |
2019-1 Trust |  |  | 48,286 |  |  |  | 50,131 |
2019-2 Trust |  |  | 35,365 |  |  |  | 38,266 |
2019-3 Trust |  |  | 34,528 |  |  |  | 37,606 |
2020-1 Trust |  |  | 73,798 |  |  |  | 76,345 |
2021-1 Trust |  |  | 121,343 |  |  |  | 126,176 |
2021-2 Trust |  |  | 102,072 |  |  |  | 108,845 |
2021-3 Trust |  |  | 111,140 |  |  |  | 113,979 |
2021-4 Trust |  |  | 184,768 |  |  |  | 187,001 |
2022-1 Trust |  |  | 185,997 |  |  |  | 190,618 |
2022-2 Trust |  |  | 165,487 |  |  |  | 170,257 |
2022-3 Trust |  |  | 191,375 |  |  |  | 203,208 |
2022-4 Trust |  |  | 198,222 |  |  |  | 204,089 |
2022-5 Trust |  |  | 131,991 |  |  |  | 140,766 |
2023-1 Trust |  |  | 125,505 |  |  |  | 134,177 |
2023-2 Trust |  |  | 93,641 |  |  |  | 116,579 |
2023-3 Trust |  |  | 118,120 |  |  |  | 147,149 |
2023-4 Trust |  |  | 103,906 |  |  |  | 136,392 |
2024-1 Trust |  |  | 128,787 |  |  |  | 138,490 |
2024-2 Trust |  |  | 175,571 |  |  |  | 199,850 |
2024-3 Trust |  |  | 139,304 |  |  |  | 162,649 |
2024-4 Trust |  |  | 164,461 |  |  |  | 187,255 |
2024-5 Trust |  |  | 217,424 |  |  |  | 240,918 |
2024-6 Trust |  |  | 243,705 |  |  |  | 259,120 |
2025-1 Trust |  |  | 296,457 |  |  |  | 312,863 |
2025-RTL1 Trust |  |  | 111,395 |  |  |  | 111,395 |
2025-2 Trust |  |  | 342,054 |  |  |  | 350,312 |
2025-MC1 Trust |  |  | 83,966 |  |  |  | 91,607 |
2025-3 Trust |  |  | 353,630 |  |  |  | 365,978 |
2025-P1 Trust |  |  | 176,737 |  |  |  | 185,424 |
2025-4 Trust |  |  | 435,553 |  |  |  | 445,803 |
2025-P2 Trust |  |  | 196,721 |  |  |  | 206,550 |
2025-5 Trust |  |  | 426,650 |  |  |  | 437,256 |
2026-1 Trust |  |  | 333,735 |  |  |  | — |
2026-P1 Trust |  |  | 178,257 |  |  |  | — |
Total |  | $ | 6,111,990 |  |  | $ | 5,964,117 |

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As of March 31, 2026 and December 31, 2025, the weighted average annualized rates on the securities and certificates for the Trusts were as follows:

|  | March 31, 2026 |  |  | December 31, 2025 |
2017-2 Trust |  |  | 4.50 | % |  |  | 4.23 | %
2018-1 Trust |  |  | 4.44 |  |  |  | 4.35 |
2018-2 Trust |  |  | 4.64 |  |  |  | 4.53 |
2019-1 Trust |  |  | 4.11 |  |  |  | 4.11 |
2019-2 Trust |  |  | 3.50 |  |  |  | 3.46 |
2019-3 Trust |  |  | 3.28 |  |  |  | 3.29 |
2020-1 Trust |  |  | 2.87 |  |  |  | 2.88 |
2021-1 Trust |  |  | 1.79 |  |  |  | 1.77 |
2021-2 Trust |  |  | 2.03 |  |  |  | 2.03 |
2021-3 Trust |  |  | 2.54 |  |  |  | 2.48 |
2021-4 Trust |  |  | 3.24 |  |  |  | 3.25 |
2022-1 Trust |  |  | 3.94 |  |  |  | 3.94 |
2022-2 Trust |  |  | 5.03 |  |  |  | 5.05 |
2022-MC1 Trust |  |  | — |  |  |  | 6.78 |
2022-3 Trust |  |  | 5.60 |  |  |  | 5.68 |
2022-4 Trust |  |  | 6.29 |  |  |  | 6.23 |
2022-5 Trust |  |  | 7.33 |  |  |  | 7.26 |
2023-1 Trust |  |  | 7.43 |  |  |  | 7.23 |
2023-1R Trust |  |  | — |  |  |  | 13.75 |
2023-2 Trust |  |  | 7.17 |  |  |  | 7.66 |
2023-RTL1 Trust |  |  | — |  |  |  | 9.86 |
2023-3 Trust |  |  | 7.71 |  |  |  | 8.16 |
2023-4 Trust |  |  | 7.79 |  |  |  | 8.63 |
2024-1 Trust |  |  | 8.10 |  |  |  | 7.56 |
2024-2 Trust |  |  | 6.77 |  |  |  | 7.46 |
2024-3 Trust |  |  | 7.10 |  |  |  | 7.26 |
2024-4 Trust |  |  | 7.26 |  |  |  | 6.76 |
2024-5 Trust |  |  | 6.18 |  |  |  | 6.00 |
2024-6 Trust |  |  | 6.16 |  |  |  | 6.39 |
2025-1 Trust |  |  | 6.61 |  |  |  | 6.59 |
2025-RTL1 Trust |  |  | 7.17 |  |  |  | 7.17 |
2025-2 Trust |  |  | 6.65 |  |  |  | 6.41 |
2025-MC1 Trust |  |  | 8.51 |  |  |  | 8.49 |
2025-3 Trust |  |  | 6.46 |  |  |  | 6.46 |
2025-P1 Trust |  |  | 6.57 |  |  |  | 6.57 |
2025-4 Trust |  |  | 5.76 |  |  |  | 5.76 |
2025-P2 Trust |  |  | 6.09 |  |  |  | 6.06 |
2025-5 Trust |  |  | 5.88 |  |  |  | 6.10 |
2026-1 Trust |  |  | 5.60 |  |  |  | — |
2026-P1 Trust |  |  | 5.96 |  |  |  | — |

Our intent is to use the proceeds from the issuance of new securities primarily to repay our warehouse borrowings and originate new investor real estate loans in accordance with our underwriting guidelines, as well as for general corporate purposes. Our financing sources may include borrowings in the form of additional bank credit facilities (including term loans and revolving credit facilities), agreements, warehouse facilities and other sources of private financing. We also plan to continue using securitized debt as long-term financing for our portfolio, and we do not plan to structure any securitized debt as sales or utilize off-balance-sheet vehicles. We believe any financing of assets and/or securitized debt we may undertake will be sufficient to fund our working capital requirements.

Secured and Unsecured Financing (Corporate Debt)

On February 5, 2024, the Company entered into a five-year $75.0 million syndicated corporate debt agreement, (“the 2024 Term Loan”). The 2024 Term Loan bears interest at 9.875% and matures on February 15, 2029. Interest on the 2024 Term Loan is paid every six months.

57

On January 30, 2026, we entered into a five-year $500.0 million syndicated corporate debt agreement, the (“the 2026 Term Note”). The 2026 Term Note bears interest at a fixed rate of 9.375% and matures on January 30, 2031. Interest on the 2026 Term Note is paid every three months. A portion of the proceeds was used to pay off the $215.0 million 2022 Term Loan.

At-The-Market Equity Offering Program

On September 3, 2021, we entered into separate Equity Distribution Agreements with counterparties to establish an at-the-market equity offering program (“ATM Program”) where we may issue and sell, from time to time, shares of our common stock. Our ATM Program allows for aggregate gross sales of our common stock of up to $50,000,000 provided that the number of shares sold under the ATM Program does not exceed 4,000,000.

On May 3, 2024, we entered into separate Equity Distribution Agreements, each as amended by Amendment No. 1 to such agreement, dated December 12, 2024, with counterparties to establish a successor ATM Program, with substantially the same terms as the prior Equity Distribution Agreements noted above, under which we may issue and sell, from time to time, shares of our common stock up to $50,000,000 provided that the number of shares sold under the ATM Program does not exceed 4,000,000.

On April 11, 2025, we entered into separate Amendment No. 2 (the “Amendments”) to the Equity Distribution Agreements, each dated as of May 3, 2024, each as amended by Amendment No. 1 thereto, each dated December 12, 2024. The Amendments increased the maximum aggregate offering amount of shares of the Company’s common stock that may be sold pursuant to the Equity Distribution Agreements, from $50,000,000 to $100,000,000, and increased the maximum number of shares that may be sold pursuant to the Equity Distribution Agreements from 4,000,000 to 6,000,000.

The following table summarizes the activity in our ATM Program for the periods indicated:

| Three Months Ended March 31, |
| 2026 |  |  | 2025 |
| (In thousands, except per share amount) |
Number of shares sold |  | — |  |  |  | 1,569 |
Net sale proceeds | $ | — |  |  | $ | 28,796 |
Weighted average price per share | $ | — |  |  | $ | 18.66 |

Contractual Obligations and Commitments

On March 15, 2022, we entered into a five-year $215.0 million syndicated corporate debt agreement, the (“the 2022 Term Loan”). The 2022 Term Loan bore interest at a fixed rate of 7.125% and was to mature on March 15, 2027. Interest on the 2022 Term Loan was paid every six months. The 2022 Term Loans was paid off with proceeds from the 2026 Term Notes.

On February 5, 2024, the Company entered into a five-year $75.0 million syndicated corporate debt agreement, (“the 2024 Term Loan”). The 2024 Term Loan bears interest at 9.875% and matures on February 15, 2029. Interest on the 2024 Term Loan is paid every six months. As of March 31, 2026 and December 31, 2025, the balance of the 2024 Term Loan was $75.0 million.

On January 30, 2026, we entered into a five-year $500.0 million unsecured syndicated corporate debt agreement, the (“the 2026 Term Note”). The 2026 Term Note bears interest at a fixed rate of 9.375% and matures on January 30, 2031. Interest on the 2026 Term Note is paid every three months. A portion of the proceeds was used to pay off the 2022 Term Loan. As of March 31, 2026, the balance of the 2024 Term Loan was $500.0 million.

Velocity Commercial Capital, LLC is the borrower of the 2024 Term Loan, which is secured by substantially all of the borrower’s non-warehoused assets, with a guarantee from Velocity Financial, Inc., that is secured by the equity interests of the borrower. The syndicated unsecured corporate debt (the 2026 Term Notes) agreement contains customary affirmative and negative covenants, including financial maintenance covenants and limitations on dividends by the borrower.

As of March 31, 2026, we maintained warehouse facilities to finance our investor real estate loans and had approximately $99.4 million in outstanding borrowings with $835.6 million of available capacity under our warehouse and repurchase facilities. The warehouse and repurchase facilities have maturity dates ranging from May 2026 to April 2028.

Off-Balance-Sheet Arrangements

At no time have we maintained any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance, or special-purpose or variable interest entities, established for the purpose of facilitating off-balance-sheet arrangements or other contractually narrow or limited purposes. Further, we have never guaranteed any obligations of unconsolidated entities or entered into any commitment or intent to provide funding to any such entities.

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Forward-Looking Statements

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. All statements (other than statements of historical facts) in this Quarterly Report regarding the prospects of the industry and our prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “plan,” “believe,” “predict,” “potential” or “continue” or the negatives of these terms or variations of them or similar terminology. Forward-looking statements may contain expectations regarding our operations, including our loan originations, our ability to resolve non-performing loans and avoid losses on non-performing loans and the disposition of REOs and other results, and may include statements of future performance, plans and objectives. Forward looking statements also include statements pertaining to our strategies for future funding and development of our business and products, including the future results of our at-the-market equity offering program. Although we believe that the expectations reflected in these forward-looking statements have a reasonable basis, we cannot provide any assurance that these expectations will prove to be correct. Such statements reflect the current views of our management with respect to our operations, results of operations and future financial performance. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in this Quarterly Report and other documents we file. You should read and interpret any forward-looking statement together with these documents, including the following:

•
the description of our business and the risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2025 and filed with the Securities and Exchange Commission on March 12, 2026
•
the discussion of our analysis of financial condition and results of operations contained in this Quarterly Report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
•
the notes to the consolidated financial statements contained in this Quarterly Report
•
cautionary statements we make in our public documents, reports and announcements

Any forward-looking statement speaks only as of the date on which that statement is made. We will not update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as required by applicable law.

Item 3. Quantitative and Qualitat ive Disclosures About Market Risk.

Intentionally omitted pursuant to smaller reporting company reduced disclosure requirements.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In accordance with Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report and has concluded that our disclosure controls and procedures, as of such date, were effective to accomplish their objectives at a reasonable assurance level. Management concluded that the consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Changes in Internal Control over Financial Reporting.

During the period to which this report relates, there have not been any changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or that are reasonably likely to materially affect, such controls.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, in the ordinary course of business, we are involved in various judicial, regulatory or administrative claims, proceedings and investigations. These proceedings and actions may include, among other things, allegations of violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort. Although occasional adverse decisions or settlements may occur, our management does not believe that the final disposition of any currently pending or threatened matter will have a material adverse effect on our business, financial position, results of operations or cash flows.

Item 1A. Ri sk Factors.

We have included in Part I, Item 1A of our 2025 Form 10-K descriptions of certain risks and uncertainties that could affect our business, future performance, or financial condition (the "Risk Factors"). There have been no material changes from the disclosures provided in our 2025 Form 10-K. Investors should consider the Risk Factors prior to making an investment decision with respect to our stock.

Item 2. Unregistered Sales of Equi ty Securities and Use of Proceeds.

The following table provides information on common stock purchases made by us to satisfy tax withholdings obligations during the three months ended March 31, 2026.

Period |  | Total Number of Shares Purchased (1) (2) |  |  | Average Price Paid Per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |  |  | Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs |
January 2026 |  |  | 228,371 |  |  | $ | 19.87 |  |  |  | — |  |  | $ | — |
February 2026 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
March 2026 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total |  |  | 228,371 |  |  | $ | 19.87 |  |  |  | — |  |  | $ | — |

(1)
The Company currently does not have a common stock repurchase program.
(2)
Shares surrendered to the Company to satisfy tax withholding obligations in connection with the vesting or exercise of stock-based awards.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safe ty Disclosures.

Not applicable.

Item 5. Other Information.

Insider Trading Arrangements and Policies

On March 20, 2026, Jeffrey T. Taylor, our Executive Vice President, Capital Markets, adopted a Rule 10b5-1 trading arrangement (as such term is defined in Item 408(a) of Regulation S-K) intended to satisfy the affirmative defense of Rule 10b5-1(c) with respect to the sale of up to an aggregate of 25,980 shares of our common stock. The plan will expire June 30, 2027, subject to early termination for certain specified events as set forth in the plan.

On March 19, 2026, Mark R. Szczepaniak, our Chief Financial Officer, adopted a Rule 10b5-1 trading arrangement (as such term is defined in Item 408(a) of Regulation S-K) intended to satisfy the affirmative defense of Rule 10b5-1(c) with respect to the sale of up to an aggregate of 24,000 shares of our common stock. The plan will expire June 30, 2027, subject to early termination for certain specified events as set forth in the plan.

On March 14, 2026, Fiona L. Tam, our Chief Accounting Officer, adopted a Rule 10b5-1 trading arrangement (as such term is defined in Item 408(a) of Regulation S-K) intended to satisfy the affirmative defense of Rule 10b5-1(c) with respect to the sale of up to an aggregate of 10,000 shares of our common stock. The plan will expire June 30, 2027, subject to early termination for certain specified events as set forth in the plan.

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On March 18, 2026, Roland T. Kelly, our Chief Legal Officer, adopted a Rule 10b5-1 trading arrangement (as such term is defined in Item 408(a) of Regulation S-K) intended to satisfy the affirmative defense of Rule 10b5-1(c) with respect to the sale of up to an aggregate of 20,000 shares of our common stock. The plan will expire June 30, 2027, subject to early termination for certain specified events as set forth in the plan.

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Item 6. E xhibits.

The exhibits below are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

|  |  | Incorporated by Reference
Exhibit Number |  | Exhibit Title | Form | File No. | Exhibit | Filing Date
3.1 |  | Certificate of Conversion | 8-K | 001-39183 | 3.1 | 1/22/2020
3.2 |  | Restated Certificate of Incorporation of Velocity Financial, Inc. | 8-K | 001-39183 | 3 | 5/23/2022
3.3 |  | Amended and Restated Bylaws of Velocity Financial, Inc. | 8-K | 001-39183 | 3.2 | 3/25/2022
4.1 |  | Form of Stock Certificate for Common Stock | S-1 | 333-234250 | 4.1 | 10/18/2019
4.2 |  | Form of Warrant to Purchase Common Stock | 8-K | 001-39183 | 4.1 | 4/7/2020
4.3 |  | Description of the Registrant’s Securities | 10K | 001-39183 | 4.3 | 4/7/2020
10.1 |  | Stockholders Agreement, dated as of January 16, 2020 | 10-K | 001-39183 | 10.1 | 4/7/2020
10.2 |  | Registration Rights Agreement, dated as of January 16, 2020 | 10-K | 001-39183 | 10.2 | 4/7/2020
10.3 |  | Registration Rights Agreement, dated as of April 7, 2020 | 8-K | 333-234250 | 10.1 | 4/7/2020
10.4 |  | Securities Purchase Agreement among Velocity Financial, Inc. and the Purchasers Party thereto dated April 5, 2020 | 8-K | 001-39183 | 10.1 | 4/6/2020
10.5 |  | Velocity Financial, Inc. Employee Stock Purchase Plan* | DEF 14A | 001-39183 | AII | 4/8/2022
10.6 |  | Amended and Restated Velocity Financial, Inc. 2020 Omnibus Incentive Plan* | DEF 14A | 001-39183 | AI | 4/11/2025
10.7 |  | Form of Nonqualified Stock Option Award Notice and Agreement under the 2020 Omnibus Incentive Plan* | S-1/A | 333-234250 | 10.6 | 1/6/2020
10.8 |  | Form of Nonqualified Stock Option Award Notice and Agreement (Director Grant-IPO) under the 2020 Omnibus Incentive Plan* | S-1/A | 333-234250 | 10.7 | 1/6/2020
10.9 |  | Form of Nonqualified Stock Option Award Notice and Agreement (Executive Officer Grant-IPO) under the 2020 Omnibus Incentive Plan* | S-1/A | 333-234250 | 10.8 | 1/6/2020
10.10 |  | Form of Restricted Stock Unit Grant and Agreement (Director Grant) under the 2020 Omnibus Incentive Plan* | S-1/A | 333-234250 | 10.9 | 1/6/2020
10.11 |  | Form of Restricted Stock Unit Grant and Agreement (Standard Grant) under the 2020 Omnibus Incentive Plan* | S-1/A | 333-234250 | 10.10 | 1/6/2020
10.12 |  | Form of Restricted Stock Grant and Agreement under the 2020 Omnibus Incentive Plan* | S-1/A | 333-234250 | 10.11 | 1/6/2020
10.13 |  | Velocity Financial 2026 Annual Cash Incentive and Performance Stock Units Programs for Messrs. Farrar, Szczepaniak and Taylor* | 8-K | 001-39183 | - | 1/20/2026
10.14 |  | Form of Equity Distribution Agreement, dated May 3, 2024 | 8-K | 001-39183 | 1.1 | 5/3/2024
10.15 |  | Form of Amendment No. 1 to Equity Distribution Agreement, dated December 12, 2024 | 10-K | 001-39183 | 10.15 | 3/12/2025
10.16 |  | Form of Officer and Director Indemnity Agreement* | S-1/A | 333-234250 | 10.37 | 11/6/2019
10.17 |  | Form of Performance Stock Unit Grant and Agreement* | 10-K | 001-39183 | 10.16 | 3/15/2024
10.18 |  | Note Purchase Agreement Dated as of March 15, 2022, among Velocity Financial, Inc., Velocity Commercial Capital, LLC, U.S. Bank Trust Company, National Association, as collateral agent, and the respective purchasers of the Notes. | 8-K | 001-39183 | 10.1 | 3/16/2022
10.19 |  | Security Agreement, dated as of March 15, 2022, among Velocity Financial, Inc., Velocity Commercial Capital, LLC and U.S. Bank Trust Company, National Association, as collateral agent. | 8-K | 001-39183 | 10.2 | 3/16/2022
10.20 |  | Velocity Financial, Inc. Incentive Compensation Clawback Policy* | 8-K | 001-39183 | 99 | 2/7/2024

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10.21 |  | Form of Note Purchase Agreement, dated as of February 5, 2024, among Velocity Financial, Inc., Velocity Commercial Capital, LLC, U.S. Bank Trust Company, National Association, as Collateral Agent and the respective purchasers of the Notes. | 8-K | 001-39183 | 10.1 | 2/6/2024
10.22 |  | Security Agreement, dated as of February 5, 2024, among Velocity Financial, Inc., Velocity Commercial Capital, LLC and U.S. Bank Trust Company, National Association. | 8-K | 001-39183 | 10.2 | 2/6/2024
10.23 |  | Equal Priority Intercreditor Agreement, dated as of February 5, 2024, among Velocity Financial, Inc., Velocity Commercial Capital, LLC, U.S. Bank Trust Company, National Association as the 2027 Notes Collateral Agent and U.S. Bank Trust Company, National Association as the 2029 Notes Collateral Agent. | 8-K | 001-39183 | 10.3 | 2/6/2024
10.24 |  | Form of Amendment No. 2 to Equity Distribution Agreement, dated April 11, 2025 | 10-Q | 001-39183 | 10.24 | 5/1/2025
19.1 |  | Securities Trading Policy | 10-K | 001-39183 | 19.1 | 3/12/2025
31.1 |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  |
31.2 |  | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  |  |  |
32.1 |  | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ |  |  |  |
32.2 |  | Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ |  |  |  |
101 |  | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (ii) the Consolidated Statements of Income for the three months ended March 31, 2026 and 2025, (iii) the Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2026 and 2025, (iv) the Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 and (v) the Notes to unaudited Consolidated Financial Statements.
101.INS |  | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH |  | Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document
104 |  | Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Management contract or compensatory plan or arrangement.

+ This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act

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SIGNA TURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|  | VELOCITY FINANCIAL, INC.
Date: May 6, 2026 |  | By: |  | /s/ Christopher D. Farrar
|  |  |  | Christopher D. Farrar
|  |  |  | Chief Executive Officer
Date: May 6, 2026 |  | By: |  | /s/ Mark R. Szczepaniak
|  |  |  | Mark R. Szczepaniak
|  |  |  | Chief Financial Officer

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