Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .
The following discussion should be read in conjunction with the historical financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K (“10-K”). The following discussion contains, in addition to historical information, forward-looking statements that include risks and uncertainties. Our actual results may differ materially from those expressed or contemplated in those forward-looking statements as a result of certain factors, including those set forth under the headings “Forward-Looking Statements” and “Risk Factors” elsewhere in this 10-K.
Business
Walker & Dunlop, Inc. is a holding company, and we conduct the majority of our operations through Walker & Dunlop, LLC, our primary operating company. During the fourth quarter of 2025, we granted profit interest awards to certain non-executive employees of Walker & Dunlop, LLC to better align their incentive compensation with our goals. The profit interest awards allocate 15% of the income before taxes of a wholly owned subsidiary to these employees. The wholly owned subsidiary is focused on debt financing transactions closed by these employees and is part of our Capital Markets segment.
We are one of the leading commercial real estate services and finance companies in the United States, with a primary focus on multifamily lending and property sales, commercial real estate debt brokerage, and investment management services. We originate, sell, and service a range of multifamily and other commercial real estate financing products to owners and developers of commercial real estate across the country, provide multifamily property sales brokerage and appraisal services in various regions throughout the United States, and engage in commercial real estate and investment management services focused on debt and equity investments on commercial real estate assets and equity investments in affordable housing. We are a leader in commercial real estate technology, developing and acquiring technology resources that (i) provide innovative solutions and a better experience for our customers and (ii) allow us to reach a broader customer base.
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Multifamily Lending, Commercial Real Estate Brokerage Service, and Property Sales
We originate and sell multifamily loans through the programs of Fannie Mae, Freddie Mac, Ginnie Mae, and HUD, with which we have licenses and long-established relationships. We retain servicing rights and asset management responsibilities on nearly all loans that we originate for the Agencies’ programs. We are approved as a Fannie Mae DUS lender nationally, a Freddie Mac Optigo lender nationally for Conventional, Seniors Housing, Targeted Affordable Housing and Small Balance Loans, a HUD MAP lender nationally, a HUD LEAN lender nationally, and a Ginnie Mae issuer. We broker and service loans for many life insurance companies, commercial banks, and other institutional investors, in which cases we do not fund the loan but rather act as a loan broker. Fannie Mae recently announced that we ranked as its largest DUS lender in 2025, by loan deliveries, and Freddie Mac recently announced that we ranked as its 3 rd largest Freddie Mac lender in 2025, by loan deliveries. Our market share with Fannie Mae and Freddie Mac was 11.2% on a combined basis, by loan deliveries in 2025, compared to 10.7% in 2024. Additionally, we were the 5 th largest overall lender for HUD for its fiscal year ended September 30, 2025 .
We fund loans for the Agencies’ programs, generally through warehouse facility financings, and sell them to investors in accordance with the related loan sale commitment, which we obtain at rate lock. Proceeds from the sale of the loan are used to pay off the warehouse facility. The sale of the loan is typically completed within 60 days after the loan is closed, and we retain the right to service substantially all of these loans. In cases where we do not fund the loan, we act as a loan broker and service some of the loans. Our mortgage bankers who focus on loan brokerage are engaged by borrowers to work with a variety of institutional lenders to find the most appropriate loan. These loans are then funded directly by the institutional lender, and for those brokered loans we service, we collect ongoing servicing fees while those loans remain in our servicing portfolio. The servicing fees we typically earn on brokered loan transactions are lower than the servicing fees we earn on Agency loans.
We recognize revenue when we make simultaneous commitments to originate a loan to a borrower and sell that loan to an investor. The revenues earned reflect the fair value attributable to loan origination fees, premiums on the sale of loans, net of any co-broker fees, and the fair value of the expected net cash flows associated with servicing the loans, net of any guaranty obligations retained. We also recognize revenue when we receive the origination fee from a brokered loan transaction. Other transaction-related sources of revenue include (i) net warehouse interest income we earn or expense we incur while the loan is held for sale, (ii) sales commissions for brokering the sale of multifamily and hospitality properties, and (iii) syndication and transaction-based asset management fees from our investment management activities.
We are currently not exposed to unhedged interest rate risk during the loan commitment, closing, and delivery process. The sale or placement of each loan to an investor is negotiated concurrently with establishing the coupon rate for the loan. We also seek to mitigate the risk of a loan not closing. We have agreements in place with the Agencies that specify the cost of a failed loan delivery in the event we fail to deliver the loan to the investor. To protect us against such fees, we require a deposit from the borrower at rate lock that is typically more than the potential fee. The deposit is returned to the borrower only once the loan is closed. Any potential loss from a catastrophic change in the property condition while the loan is held for sale using warehouse facility financing is mitigated through property insurance equal to replacement cost. We are also protected contractually from an investor’s failure to purchase the loan. We have experienced a de minimis number of deliveries in our history and have incurred insignificant on such deliveries.
We have risk-sharing obligations on substantially all loans we originate under the Fannie Mae DUS program. When a Fannie Mae DUS loan is subject to full risk-sharing, we absorb losses on the first 5% of the unpaid principal balance of a loan at the time of loss settlement, and above 5% we share a percentage of the loss with Fannie Mae, with our maximum loss capped at 20% of the original loan amount (subject to doubling or tripling if the loan does not meet specific underwriting criteria or if the loan defaults within 12 months of its sale to Fannie Mae). Our full risk-sharing is currently limited to loans up to $400 million, which equates to a maximum loss per loan of $80 million (such exposure would occur in the event that the underlying collateral is determined to be completely without value at the time of loss), updated from $300 million in the fourth quarter of 2025. For loans in excess of $400 million, we receive modified risk-sharing. We also may request modified risk-sharing at the time of origination on loans below $400 million, which reduces our potential risk-sharing from the levels described above if we do not believe that we are being fully compensated for the risks of the transactions. The full risk-sharing limit in prior years was less than $400 million. Accordingly, loans originated in those prior years were subject to risk-sharing at lower levels. In limited circumstances we have agreed, and may in the future agree, with Fannie Mae to increase our sharing up to 100% of a loan’s UPB in lieu of the risk-sharing agreement described above. Our servicing fees for risk-sharing loans include compensation for the risk-sharing obligations and are substantially larger than the servicing fees we receive from Fannie Mae for loans with no risk-sharing obligations.
Through WDIS, we offer property sales brokerage services to owners and developers of multifamily and hospitality properties that are seeking to sell these properties. Through these property sales brokerage services, we seek to maximize proceeds and certainty of closure for our clients using our knowledge of the commercial real estate and capital markets and relying on our experienced transaction professionals. Our property sales services are offered in various regions throughout the United States and cover many major markets. We have added several property sales brokerage teams over the past few years and continue to seek to add other property sales brokers, with the goal of continuing to expand the depth and number of regions covered by our brokerage services.
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Commercial Loan Servicing
We retain servicing rights on substantially all the loans we originate and sell to Fannie Mae, Freddie Mac, and HUD, and generate revenues from the fees we receive for servicing the loans, from the placement fees on escrow deposits held on behalf of borrowers, and from other ancillary fees. Servicing fees are set at the time an investor agrees to purchase the loan and are generally paid monthly for the duration of the loan based on the unpaid principal balance of the loan. Our Fannie Mae servicing arrangements generally provide for prepayment protection in the event of a voluntary prepayment. For loans serviced for Freddie Mac, the economic deterrent that reduces the risk of loan prepayment comes in the form of a defeasance requirement wherein the borrower is required to replace the prepaid loan with securities that offer an equivalent return. We also service loans for many of the life insurance companies, conduits and private credit vehicles to which we broker loans. Our responsibilities for servicing brokered loans are limited to cashiering only, and typically earn lower servicing fees than our Fannie Mae, Freddie Mac and HUD loan servicing arrangements. For loans serviced outside of Fannie Mae, Freddie Mac and HUD, we typically do not have similar prepayment protections that reduce the risk of loan prepayment.
As of December 31, 2025, our servicing portfolio was $144.0 billion, up 6% from December 31, 2024, which was the 6 th largest commercial/multifamily primary and master servicing portfolio in the nation according to the Mortgage Bankers’ Association’s (“MBA”) 2025 year-end survey (the “Survey”). Our servicing portfolio includes $72.7 billion of loans serviced for Fannie Mae and $42.6 billion for Freddie Mac, making us the 1 st and 7 th largest servicer of Fannie Mae and Freddie Mac multifamily loans in the nation, respectively, according to the Survey. Also included in our servicing portfolio is $11.6 billion of multifamily HUD loans, the 4 th largest HUD primary and servicing portfolio in the nation according to the Survey.
Investment Management Services
WDIP is a registered investment adviser and general partner of private commercial real estate investment funds focused on the management of debt, preferred equity, and mezzanine equity investments through private middle-market commercial real estate funds and separately managed accounts. WDIP’s current AUM of $2.7 billion primarily consist of the “Funds”, separate accounts managed for life insurance companies and a preferred equity JV with a large Canadian pension fund. AUM for the Funds and for the separate accounts consists of both unfunded commitments and funded investments. Unfunded commitments are highest during the fund raising and investment phases. AUM disclosed in this 10-K may differ from regulatory assets under management disclosed on WDIP’s Form ADV.
WDIP typically receives management fees based on limited partner capital commitments, unfunded investment commitments, and funded investments. Additionally, with respect to Fund IV, Fund V, Fund VI, and Fund VII, WDIP receives a percentage of the profits above the fund expenses and preferred return specified in the fund offering agreements, referred to as “carry” or “promote”. Unrealized carry is recognized based on the estimated fair value of the underlying investments, and realized carry is recognized when an investment is repaid and capital is returned to investors in the respective fund.
Through WDAE, a wholly owned subsidiary of the Company, we are the 9 th largest tax credit syndicator in the U.S., as measured by the number of Affordable units under management, and an affordable housing developer through various joint venture partnerships. Affordable assets under management from our LIHTC operations is part of our strategy to grow our investment management platform and to strengthen our position in the affordable housing debt, equity, and property sales sector. We manage $15.9 billion of affordable AUM and have an established tax syndication and affordable housing development platform from which we earn investment management, syndication, and other LIHTC related fees.
Basis of Presentation
The accompanying consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiaries, and all intercompany transactions have been eliminated. During the fourth quarter of 2025, we granted profit interest awards to certain non-executive employees of Walker & Dunlop, LLC to better align their incentive compensation with our goals. The profit interest awards allocate 15% of the income before taxes of a wholly owned subsidiary to these employees. The wholly owned subsidiary is focused on debt financing transactions closed by these employees and is part of our Capital Markets segment.
Critical Accounting Estimates
Our consolidated financial statements have been prepared in accordance with GAAP, which requires management to make estimates based on certain judgments and assumptions that are inherently uncertain and affect reported amounts. The estimates and assumptions are based on historical experience and other factors management believes to be reasonable. Actual results may differ from those estimates and assumptions and the use of different judgments and assumptions may have a material impact on our results. The following critical accounting estimates involve significant estimation uncertainty that may have or is reasonably likely to have a material impact on our financial condition
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or results of operations. Additional information about our critical accounting estimates and other significant accounting policies is discussed in NOTE 2 of the consolidated financial statements.
Mortgage Servicing Rights. MSRs are recorded at fair value at loan sale. The fair value at loan sale is based on estimates of expected net cash flows associated with the servicing rights and takes into consideration an estimate of loan prepayment. Initially, the fair value amount is included as a component of the derivative asset fair value at the loan commitment date. The estimated net cash flows from servicing, which includes assumptions for discount rate, placement fees on escrow accounts (“placement fees”), prepayment speeds, and servicing costs, are discounted using a discounted cash flow model at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan. The discount rates used throughout the periods presented for all MSRs were between 8-14% and varied based on the loan type. The life of the underlying loan is estimated giving consideration to the prepayment provisions in the loan and assumptions about loan behaviors around those provisions. Our model for MSRs assumes no prepayment prior to the expiration of the prepayment provisions and full prepayment of the loan at or near the point when the prepayment provisions have expired. The estimated net cash flows also include cash flows related to the future earnings from placement of escrow accounts associated with servicing the loans. We include a servicing cost assumption to account for our expected costs to service a loan. The estimated placement fee rate associated with servicing the loan increases estimated cash flows, and the estimated future cost to service the loan decreases estimated future cash flows. The servicing cost assumption has had a de minimis impact on the estimate historically. We record an individual MSR asset for each loan at loan sale.
The assumptions used to estimate the fair value of capitalized MSRs are developed internally and are periodically compared to assumptions used by other market participants. Due to the relatively few transactions in the multifamily MSR market and the lack of significant changes in assumptions by market participants, we have experienced limited volatility in the assumptions historically and do not expect to observe significant changes in the foreseeable future, including the assumption that most significantly impacts the estimate: the discount rate. We actively monitor the assumptions used and make adjustments when market conditions change, or other factors indicate such adjustments are warranted. Over the past several years, we have adjusted the placement fee rate assumption several times to reflect the current and expected future earnings rate projected for the life of the MSR as the interest rate environment has experienced significant volatility over the past several years. A 100-basis point change in the discount rate would increase or decrease the capitalized MSRs for the year ended December 31, 2025 by 4%. A 200-basis point change in the discount rate would increase or decrease the capitalized MSRs for the year ended December 31, 2025 by 7%. These sensitivities are hypothetical and should be used with caution as they do not include interplay among assumptions.
Subsequent to loan origination, the carrying value of the MSR is amortized over the expected life of the loan. We engage a third party to assist in determining an estimated fair value of our existing and outstanding MSRs on at least a semi-annual basis, primarily for financial statement disclosure purposes. Changes in our discount rate and placement fee rate assumptions on existing and outstanding MSRs may materially impact the fair value of our MSRs (NOTE 3 of the consolidated financial statements details the portfolio-level impact of hypothetical changes in the discount rate and placement fee rate).
Allowance for Risk-Sharing Obligations. This reserve liability (referred to as “allowance”) for risk-sharing obligations relates to our Fannie Mae at-risk and Freddie Mac SBL servicing portfolios and is presented as a separate liability on our balance sheets. We record an estimate of the loss reserve for the current expected credit losses (“CECL”) for all loans in these servicing portfolios. For those loans that are collectively evaluated, we use the weighted-average remaining maturity method (“WARM”). WARM uses an average annual loss rate that contains loss content over multiple vintages and loan terms and is used as a foundation for estimating the collective reserves. The average annual loss rate is applied to the estimated unpaid principal balance over the contractual term, adjusted for estimated prepayments and amortization to arrive at the allowance on loans that are collectively evaluated (“CECL allowance”). We currently use one year for our reasonable and supportable forecast period (“forecast period”) as we believe forecasts beyond one year are inherently less reliable. During the forecast period we apply an adjusted loss factor based on generally available economic and forecasts and a blended rate from historical periods that we believe reflect the forecasts. We revert to the historical rate over a one-year period on a straight-line basis. Over the past couple of years, the rate used in the forecast period has been updated to reflect our expectations of the economic conditions over the coming year in relation to the historical period. For example, over the past two years, we updated the rate used in the forecast period several times within a range of 2.1 basis points to 2.3 basis points. The forecast rate fluctuating within a tight range reflects our relatively unchanged view of the uncertainty of the evolving macroeconomic conditions facing the multifamily sector. We made multiple revisions to the rate used in the forecast period in the past, and those changes have significantly impacted the CECL reserve.
One of the key components of a WARM calculation is the runoff rate, which is the expected rate at which loans in the current portfolio will amortize and prepay in the future based on our historical prepayment and amortization experience. We group loans by similar origination dates (vintage) and contractual maturity terms for purposes of calculating the runoff rate. We originate loans under the DUS program with various terms generally ranging from several years to 15 years; each of these various loan terms has a different runoff rate. The runoff rates applied to each vintage and contractual maturity term are determined using historical data; however, changes in prepayment and amortization
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behavior may significantly impact the estimate. We have not experienced significant changes in the runoff rate since we implemented CECL in 2020.
The weighted-average annual loss rate is calculated using a ten-year look-back period, utilizing the average portfolio balance and settled losses for each year. A ten-year lookback period is used as we believe this period of time includes sufficiently different economic conditions to generate a reasonable estimate of expected results in the future, given the relatively long-term nature of the current portfolio. As the weighted-average annual loss rate utilizes a rolling ten-year look-back period, the loss rate used in the estimate will change as loss data from earlier periods in the look-back period continue to roll off as new loss data are added. For example, in the first quarter of 2024, loss data from earlier periods in the look-back period with significantly higher losses rolled off and were replaced with more recent loss data with fewer losses, resulting in the weighted-average historical annual loss rate changing from 0.6 basis points to 0.3 basis points. Our historical rate over the past ten years is 0.2 basis points.
NOTE 4 of the consolidated financial statements outlines adjustments made in the loss rates used to account for the expected economic conditions as of a given period and the related impact on the CECL allowance.
Changes in our expectations and forecasts have materially impacted, and in the future may materially impact, these inputs and the CECL allowance.
We evaluate our risk-sharing loans on a quarterly basis to determine whether there are loans that are probable of foreclosure and thus collateral dependent. Specifically, we assess a loan’s qualitative and quantitative risk factors, such as payment status, property financial performance, local real estate market conditions, loan-to-value ratio, debt-service-coverage ratio, and property condition. When a loan is determined to be probable of foreclosure based on these factors (or has foreclosed), we remove the loan from the WARM calculation and individually assess the loan for potential credit loss. This assessment requires certain judgments and assumptions to be made regarding the property values and other factors that may differ significantly from actual results. Loss settlement with Fannie Mae has historically concluded within 18 to 36 months after foreclosure. Historically, the initial collateral-based reserves have not varied significantly from the final settlement.
We actively monitor the judgments and assumptions used in our Allowance for Risk-Sharing Obligation estimate and make adjustments to those assumptions when market conditions change, or when other factors indicate such adjustments are warranted. We believe the level of Allowance for Risk-Sharing Obligation is appropriate based on our expectations of future market conditions; however, changes in one or more of the judgments or assumptions used above could have a significant impact on the reserve. For example, a 10% change in the forecasted loss rate as of December 31, 2025 would have increased or decreased the allowance for risk-sharing obligations by 8%. A 20% change in the forecasted loss rate as of December 31, 2025 would have increased or decreased the allowance for risk-sharing obligations by 16%. These sensitivities are hypothetical and should be used with caution as they do not include interplay among assumptions.
Property Valuations. As noted above, property valuations are a key component of our collateral-based reserves for our risk-sharing portfolio. Additionally, property valuations impact our impairment analyses for real estate held for use (“real estate HFU”) and other real estate owned (“OREO”), the assessment of allowances for loan losses, and the assessment of any e xpected principal losses on loan repurchase. Those property values are determined using (i) standard appraisals obtained from certified appraisers at national firms subjected to management review or (ii) internal management valuations using inputs and assumptions such as capitalization rates (“cap rates”), net operating income of the property, vacancy rates, bad debt expense, and rental rates. The appraisals often include assumptions about comparable sales and cap rates, among other things. Management reviews those assumptions against its own experience and market data to assess the reasonableness of the assumptions and the resulting property valuations. When management determines the property valuation using an internal model, management maximizes the use of its historical experience with the property and market data from well-recognized data providers. We also may benchmark our historical experience with external data sources to assess the reasonableness of our inputs and assumptions.
We believe our property valuations are reasonable and in line with those a market participant would develop. However, actual sales prices for these properties may differ from those used by management. Additionally, significant changes in the assumptions or judgments would have a significant impact on our reserves and impairment analyses and thus our reported financial results. As noted above, with respect to the property valuations and associated reserves for our risk-sharing portfolio, we have not experienced significant changes from the time of initial reserve and final settlement. However, with respect to properties used for reserves on repurchased loans and impairment analyses for real estate HFU and OREO, we have never disposed of a property.
Goodwill . As of both December 31, 2025 and 2024, goodwill was $868.7 million. Goodwill represents the excess of cost over the identifiable net assets of businesses acquired. Goodwill is assigned to the reporting unit to which the acquisition relates. Goodwill is recognized as an asset and is reviewed for impairment annually as of October 1. Between annual impairment analyses, we perform an evaluation of recoverability, when events and circumstances indicate that it is more-likely than not that the fair value of a reporting unit is below its carrying
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value. Impairment testing requires an assessment of qualitative factors to determine if there are indicators of potential impairment, followed by, if necessary, an assessment of quantitative factors. These factors include, but are not limited to, whether there has been a significant or adverse change in the business climate that could affect the value of an asset and/or significant or adverse changes in cash flow projections or earnings forecasts. These assessments require management to make judgments, assumptions, and estimates about projected cash flows, discount rates and other factors.
In 2022, we acquired GeoPhy, a software development company focused on data analytics and product development with a specific concentration in U.S. commercial real estate. As part of the acquisition, a significant portion of the transaction proceeds were contingent upon the achievement of performance-based hurdles tied to commercial real estate transaction volumes and associated revenues from the date of the acquisition through December 31, 2025. Due to the sustained challenging macroeconomic conditions in the U.S. commercial real estate sector from the date of the acquisition through December 31, 2025, outlined more fully in Overview of Current Business Environment , our projected cash flows for this reporting unit declined, resulting in goodwill impairment during 2024 of $33.0 million or 3.7% of the aggregate goodwill balance outstanding at the time. We attributed this goodwill impairment to one of the reporting units to which the GeoPhy operations and goodwill are assigned, which is a component of the Capital Markets segment.
As of December 31, 2025, our assessment of the remaining goodwill at each of our reporting units indicates they are not impaired (NOTE 9 of the consolidated financial statements details the changes in the goodwill balance).
Overview of Current Business Environme nt
From 2022 through the first quarter of 2025, the commercial real estate (CRE) market, and in particular the multifamily sector experienced a challenging environment shaped by elevated interest rates that directly impacted the cost and availability of capital, slower rent growth that has impacted growth expectations and asset valuations, and macroeconomic uncertainties that impacted investors’ long-term outlook and overall demand for transactions.
Many of these factors showed signs of improvement throughout 2025 and the outlook for the commercial real estate sector has improved, and transaction activity has steadily grown over the course of the year. The impact of these factors can be summarized as follows:
Interest Rates & Cost of Capital: The Federal Open Market Committee’s (“FOMC”) aggressive rate hikes that began in 2022 dramatically increased the cost of capital for commercial real estate operators in a short period of time. Higher borrowing costs reduced leverage, pressured debt service coverage ratios, and led to asset valuation declines as cap rates adjusted. Deal flow slowed considerably as buyers and sellers struggled to align on pricing in an environment of heightened uncertainty. Beginning in 2024, the FOMC began easing monetary policy and decreasing its target Federal Funds Rate to 3.50% to 3.75% by the end of 2025. The FOMC has indicated it will remain data dependent and that conditions are likely to lead to rates remaining stable in the near term as the FOMC remains attentive to economic growth and the labor markets. The FOMC’s future rate policy will be a key driver of the cost of capital, transaction volume and capital markets activity. A pronounced pause in rate hikes or additional rate cuts could unlock additional demand and further improve financing conditions for commercial real estate assets. Our expectation is that long-term interest rates, which stabilized in the spring of 2025, will remain at similar levels in the upcoming year and transaction activity will continue its steady again in 2026.
Capital Availability & Lending Markets: During the period of rapid interest rate increases by the FOMC, liquidity was constrained as lenders found it difficult to effectively price the long-term cost of capital. As interest rates have stabilized, capital has grown more abundant. Banks, life insurance companies, conduits (CMBS), and debt funds remain active but are selective, with a preference for high-quality assets and well-capitalized sponsors. Meanwhile, the availability of equity capital has also improved, although at higher spreads than periods prior the FOMC’s rate hikes. This has increased the availability of equity capital, and improved the overall transactions environment. For multifamily, which drives the vast majority of our transaction volumes, the GSEs remain the predominant suppliers of capital, deploying over $150 billion of capital to the industry in 2025, up from $120 billion in 2024. Entering 2025, the GSEs’ lending caps were set at a combined $146 billion, a 22% increase in capacity over 2024 volumes, and for 2026 the lending caps have been set at a combined $176 billion, another 21% increase over 2025. As Fannie Mae’s largest partner for seven consecutive years, and Freddie Mac’s third largest partner in 2025, we are the second largest combined GSE lender in the country. Their participation in the market is a significant driver of our financial performance, and a material increase in their lending activity should our business and results from operations.
Multifamily Rent Growth & Asset Values: Rent growth has slowed considerably since the FOMC began increasing interest rates, particularly in high-supply Sun Belt markets. This has made it difficult for net operating income (NOI) growth to offset valuation declines caused by elevated interest rates. Markets with strong job growth and in-migration continue to see minor rent increases, with
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Zelman, our housing research business, reporting national rent growth of 1.3% in 2025. According to MSCI, in December 2025, multifamily property prices remained stable month-over-month but were down 1.3% year over year, which compares to a year over year decline of 4.2% the previous year. Notably, multifamily prices are estimated to have declined by 19.7% from peak levels in 2022 but remain 11.5% above pre-COVID January 2020 levels.
Other Macroeconomic Considerations: GDP growth has remained strong at 4.4% as of the third quarter of 2025. National unemployment remained low at 4.4% in December 2025, near 25-year lows. GDP growth and unemployment levels will drive FOMC policy decisions in 2026. According to RealPage, vacancies in the multifamily sector stabilized around 5.2% as of December 2025, consistent with the vacancy rate of 5.2% in December 2024. An all-time high number of multifamily units were delivered to the sector in 2024, particularly in high demand Sun Belt markets. Most of those units were absorbed in 2024 and 2025, and we expect that absorption will continue into the first half of 2026. Looking forward, multifamily completions are anticipated to decrease significantly due to stalled new construction over the last several years, largely driven by tighter liquidity and higher cost of capital. Long term, we believe the fundamentals for multifamily properties will trend positively due to constrained supply, recent negative trends in household formation and a persistent affordability advantage for renting over owning given a lack of entry-level single-family homes and the high cost of residential mortgages.
Fraud Trends in Commercial Real Estate: Over the last two years, several high-profile criminal proceedings and lawsuits have surfaced in the commercial real estate lending market alleging borrower fraud around loan collateral, asset title and borrower misrepresentation of asset financial performance that inflated net operating income. The existence of the fraud has been revealed following the prolonged period of market stress brought on by rapidly rising interest rates, higher inflation and stagnant rent growth. Federal prosecutors and regulators have ramped up enforcement and scrutiny of borrower misrepresentation and loan fraud over the last two years, indicating the historical risk is systemic, and no longer anecdotal. In total, we have been required to repurchase or indemnify the GSEs for $221.6 million of loans since 2024, largely driven by borrower and . The repurchases to date represent only 19 basis points of our outstanding GSE mortgage lending portfolio as of December 31, 2025. Since 2024, we have incurred $33.5 million of loan related , representing the difference between the principal balance of the loans and the current estimated fair value of the loan or underlying collateral. In addition, since 2024, we have also incurred additional costs and expenses in connection with repurchased or indemnified assets totaling $31.3 million, which are principally driven by legal, financing, and other operating costs. In response to this risk, we have rolled out training around known red flags, our production and underwriting policies, procedures and internal controls, and our risk management and compliance practices to mitigate future risk associated with sophisticated borrower schemes.
Multifamily remains one of the most resilient asset classes in CRE. Market participants are adjusting to current conditions and we expect the market to continue recovering and transaction activity to continue to increase. Improving conditions in the second half of 2025 led to increased transaction volumes across nearly all aspects of our business during 2025, which surged to $54.8 billion with notable increases in Brokered (37%), GSE (38%) and property sales (37%) transaction volumes compared to last year. Consequently, our Capital Markets segment produced net income of $89.8 million in 2025, up 35% compared to 2024.
Our Servicing & Asset Management segment is not directly correlated to the transaction markets like our Capital Markets segment. This segment’s total managed portfolio of $162.6 billion as of December 31, 2025 was up 6% from December 31, 2024, and included our $144.0 billion loan servicing portfolio and our $18.6 billion of AUM. Total revenues for the segment decreased 4%, to $566.6 million, while net income decreased 46%, to $85.1 million, in 2025 compared to 2024, with net income decreasing in the fourth quarter of 2025 compared to 2024. We hold escrow deposits on behalf of our servicing portfolio and place those deposits with large, multinational banks that earn close to the Federal funds rate. Revenues from those escrow deposits have benefitted over the last several years from higher short-term interest rates, but we have begun to see declines in those revenues as the FOMC has eased monetary policy and adjusted short-term rates downward. We expect that trend to continue, but moderate, in 2026 as the FOMC may slow the pace, and rate, of interest rate reductions. We have increased our focus on scaling our assets under management, and in the fourth quarter of 2024 we successfully closed a first round of $200 million of equity capital for Debt Fund II from life insurance companies, pension funds, high net worth investors and a co-investment from Walker & Dunlop. The initial provided our investment management team with over $500 million of levered capital, of which approximately $490 million was deployed into transitional multifamily assets in 2025. We continue to actively raise capital for Debt Fund II, and we expect the revenues of our investment management business to grow as that capital is raised and deployed. This segment also includes the activities of WDAE, an alternative investment manager focused on affordable housing, including LIHTC syndication and joint venture development. We ranked as the ninth largest LIHTC syndicator in 2025 and continue to pursue combined LIHTC syndication and affordable housing services to generate significant long-term financing, property sales, and syndication . We expect the revenues for WDAE to remain fairly moving forward, as the realization revenues from our historical LIHTC investments are tied to the underlying value of the affordable assets, and we do not expect a material increase in the value of affordable assets in the near term due to the aforementioned macroeconomic facing the commercial real estate sector.
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Factors That May Impact Our Operating Results
We believe that our results are affected by a number of factors, including the items discussed below.
Performance of Multifamily and Other Commercial Real Estate Related Markets. Our business is dependent on the general demand for, and value of, commercial real estate and related services, particularly multifamily, which are sensitive to long-term mortgage interest rates and other macroeconomic conditions and the continued existence of the GSEs multifamily business. Demand for multifamily and other commercial real estate generally increases during stronger economic environments, resulting in increased property values, property sales, transaction volumes, and loan origination volumes. During weaker economic environments, multifamily and other commercial real estate may experience higher property vacancies, lower demand and reduced values. These conditions can result in lower property sales volume and loan origination volume, as well as an increased level of servicer advances and losses from our Fannie Mae DUS risk-sharing obligations.
The Level of Losses from Fannie Mae Risk-Sharing Obligations. Under the Fannie Mae DUS program, we share risk of loss on most loans we sell to Fannie Mae. In the majority of cases, we absorb the first 5% of any losses on the loan’s unpaid principal balance at the time of loss settlement, and above 5% we share a percentage of the loss with Fannie Mae, with our maximum loss generally capped at 20% of the loan’s unpaid principal balance on the origination date. In some instances, we negotiate a cap that may be higher, including up to 100% of a loan’s unpaid principal balance or lower for loans with unique attributes. As a result, a rise in defaults on loans in our at-risk portfolio could have a material adverse effect on us, including our profitability and liquidity.
The Number and UPB of Loan Repurchases and Indemnifications. In the event of a breach of any representation or warranty concerning a loan, Fannie Mae or Freddie Mac could, among other things, require us to repurchase the full amount of the loan and/or seek indemnification for losses from us, or, for Fannie Mae DUS loans, increase the level of risk-sharing on the loan. Our obligation to repurchase the loan is independent of our risk-sharing obligations. The GSEs could require us to repurchase the loan and also reimburse them for legal costs, defaulted interest, and prepayment costs from repurchasing the loans from the securitization trust if representations and warranties are breached, even if the loan is not in default. A significant amount of repurchase or indemnification obligations imposed on us could result in losses upon later sale of the loan or property and also result in operating costs that exceed operating income on any foreclosed property. Additionally, repurchases and indemnifications could increase our liquidity needs either to repurchase loans or post collateral for indemnification obligations.
The Price of Loans in the Secondary Market. Our profitability is determined in part by the price we are paid for the loans we originate. A component of our origination related revenues is the premium we recognize on the sale of a loan. Stronger investor demand typically results in larger premiums while weaker demand results in little to no premium. Prices for new loans have not been materially impacted during this period of rising, and now higher, interest rates.
Market for Servicing Commercial Real Estate Loans. Servicing fee rates for new loans are set at the time we enter into a loan sale commitment based on origination fees, competition, prepayment rates, and any risk-sharing obligations we undertake. Changes in servicing fee rates impact the value of our MSRs and future servicing revenues, which could impact our profit margins and operating results immediately and over time. During the period of rapidly rising interest rates our fees for servicing new loans, particularly Fannie Mae loans, faced downward pressure to reduce the overall cost of borrowing to our clients. As interest rates have stabilized, along with the associated cost of capital, our servicing fees on new loans have also stabilized, albeit at lower levels than prior to this period of higher interest rates.
The Overall Loan Origination Mix. The loan product mix we originate can significantly impact our overall operating results. For example, an increase in loan origination volume for our two highest-margin products, Fannie Mae and HUD loans, without a change in total loan origination volume would increase our overall profitability, while a decrease in the loan origination volume of these two products without a change in total loan origination volume would decrease our overall profitability, all else being equal. The higher profitability for Fannie Mae and HUD loans is largely driven by higher revenues attributable to the fair value of expected net cash flows from servicing, net of guaranty obligation.
The Affordable Housing Market. The profitability of our LIHTC operations is impacted by the demand for and the financial performance of the affordable housing market and the continued existence of federal income tax credits for these properties. For example, we earn syndication fees based on new funds we are able to syndicate for investors and asset management fees based on performance of the underlying LIHTC properties and dispositions of these properties. Strong demand for LIHTC properties typically results in opportunities for syndication of LIHTC funds and high prices for dispositions.
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The Duration and Types of Loans . The fair value of expected net cash flows from our MSRs, net of guaranty obligation is directly impacted by the duration of the loan products originated. For example, an increase in the debt financing volume of five-year loan products at the expense of ten-year loan products directly reduces the expected future net cash flows and therefore the fair value of the expected net cash flows from servicing.
Revenues
Loan Origination and Debt Brokerage Fees, net. Loan origination fee revenue is recognized when we record a derivative asset upon the simultaneous commitments to originate a loan with a borrower and sell to an investor or when a loan that we broker closes with the institutional lender. The commitment asset related to the loan origination fee is recognized at fair value, which reflects the fair value of the contractual loan origination related fees and any sale premiums, net of co-broker fees. Also included in revenues from loan origination activities are changes to the fair value of loan commitments, forward sale commitments, and loans held for sale that occur during their respective holding periods. Upon sale of the loans, no gains or losses are recognized as these loans are recorded at fair value during their holding periods.
Brokered loans tend to have lower origination fees because they often require less time to execute, there is more competition for brokerage assignments, and because the borrower will also have to pay an origination fee to the institutional lender. Loan origination fee revenue for brokered loans is recognized when we have completed the services for the loan to be originated by the institutional lender.
Premiums received on the sale of a loan result when a loan is sold to an investor for more than its face value. There are various reasons investors may pay a premium when purchasing a loan. For example, the fixed rate on the loan may be higher than the rate of return required by an investor or the characteristics of a particular loan may be desirable to an investor. We do not receive premiums on brokered loans, since we are not the lender.
Fair Value of Expected Net Cash Flows from Servicing, net of Guaranty Obligation. Revenue related to expected net cash flows from servicing is recognized at the loan commitment date, similar to the loan origination fees, as described above. The derivative asset is recognized at fair value, which reflects the estimated fair value of the expected net cash flows associated with the servicing of the loan, reduced by the estimated fair value of any guaranty obligations to be assumed. MSRs and guaranty obligations are recognized as assets and liabilities, respectively, upon the sale of the loans.
MSRs are recorded at fair value upon loan sale. The fair value is based on estimates of expected net cash flows associated with the servicing rights. The estimated net cash flows are discounted at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the loan.
The “Critical Accounting Estimates” section above and NOTE 2 of the consolidated financial statements provide additional details of the accounting for these revenues.
Servicing Fees. We service nearly all loans we originate for Fannie Mae, Freddie Mac, HUD, and some loans we broker. We earn servicing fees for performing certain loan servicing functions such as processing loan, tax, and insurance payments and managing escrow balances. Servicing generally also includes asset management functions, such as monitoring the physical condition of the property, analyzing the financial condition and liquidity of the borrower, and performing loss mitigation activities as directed by the Agencies.
Our servicing fees on loans we originate provide a stable revenue stream. They are based on contractual terms, are earned over the life of the loan, and are generally not subject to significant prepayment risk. Our Fannie Mae and Freddie Mac servicing agreements generally provide for prepayment fees in the event of a voluntary prepayment. Accordingly, we currently do not hedge our servicing portfolio for prepayment risk. Any prepayment fees received are included in Other revenues .
HUD has the right to terminate our current servicing engagements for cause. In addition to termination for cause, Fannie Mae and Freddie Mac may terminate our servicing engagements without cause by paying a termination fee. Institutional investors typically may terminate our servicing engagements for brokered loans at any time with or without cause, without paying a termination fee.
Property Sales Broker Fees. We earn property broker sales fee revenue when our investment sales team completes the sale of a multifamily investment property or land real estate. The amount of the property sales brokers fees we earn is based upon a percentage of the final sale price of the investment sold.
Investment Management Fees. We manage invested capital from third-party investors through an investment fund structure. The capital placed into the investment fund is utilized to make investments in commercial real estate investment opportunities, primarily as equity in commercial real estate operating partnerships or LIHTC-generating multifamily properties. Additionally, we may utilize the capital to fund debt financing opportunities through certain investment funds, primarily to multifamily owner-operators. We earn an investment management
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or asset management fee based on a contractual percentage of the invested capital. For market-rate investments, we earn and collect the investment management fees through the returns of the investment funds. For LIHTC investments, we collect the asset management fees (“AMF”) through the combination of current payments and asset dispositions. NOTE 2 of the consolidated financial statements provides additional details of the accounting for AMF revenues. We also are entitled to a set percentage of the sales proceeds for properties in LIHTC funds. We, as general partner, may sell properties in the funds after the tax credits have been fully distributed to the investors in the funds. The proceeds are used to pay the fund’s obligations and provide any excess as a return to the investor(s) in the fund, with a small percentage retained by us for executing the sale. These sales fees are also included as a component of this line item.
Net Warehouse Interest Income (Expense). We earn warehouse interest income net of warehouse interest expense. Warehouse interest income is the interest earned from loans held for sale and loans held for investment. Generally, a substantial portion of our loans is financed with matched borrowings under one of our warehouse facilities. The remaining portion of loans not funded with matched borrowings is financed with our own cash. Occasionally, we also fully fund a small number of loans held for sale or loans held for investment with our own cash. Warehouse interest expense is incurred on borrowings used to fund loans solely while they are held for sale or for investment. Warehouse interest income and expense are earned or incurred on loans held for sale after a loan is closed and before a loan is sold. Warehouse interest income and expense are earned or incurred on loans held for investment after a loan is closed and before a loan is repaid. NOTE 7 of the consolidated financial statements provides additional details regarding our warehouse facilities.
Placement Fees and Other Interest Income. We earn fee income on property-level escrow deposits held on behalf of borrowers in our servicing portfolio, generally based on a fixed or variable placement fee negotiated with the financial institutions that hold the escrow deposits. Placement fees reflect the fees net of interest paid to the borrower, if required. Also included with placement fees and other interest income are interest earnings from our cash and cash equivalents and interest income earned on our pledged securities and other investments.
Other Revenues. Other revenues are comprised of fees for processing loan assumptions, prepayment fee income, application fees, appraisal revenues, income from equity-method investments, syndication, and certain other revenues from our LIHTC operations, and other miscellaneous revenues related to our operations.
Costs and Expenses
Personnel. Personnel expense includes the cost of employee compensation and benefits, which include fixed and discretionary amounts tied to company and individual performance, commissions, severance expense, signing and retention bonuses, and share-based compensation.
Amortization and depreciation. Amortization and depreciation is principally comprised of amortization of our MSRs, net of amortization of our guaranty obligations. The MSRs are amortized using the interest method over the period that servicing income is expected to be received. We amortize the guaranty obligations evenly over their expected lives. When the loan underlying an MSR prepays, we write-off the remaining unamortized balance, net of any related guaranty obligation, and record the write off to Amortization and depreciation . Similarly, when the loan underlying an MSR defaults, we write the MSR off to Amortization and depreciation . We depreciate property, plant, and equipment ratably over their estimated useful lives.
Amortization and depreciation also includes the amortization and write-off of intangible assets, principally related to the amortization of asset management fee contracts, research subscription contracts, intellectual property, and other intangible assets recognized in connection with acquisitions. For the years presented in the Consolidated Statements of Income, the amortization of intangible assets relates primarily to intangible assets associated with our acquisitions in 2021 and 2022.
Provision (benefit) for credit losses. The provision (benefit) for credit losses consists primarily of the provision associated with our risk-sharing loans, including pre-securitized Freddie Mac SBL loans. The provision (benefit) for credit losses associated with risk-sharing loans is estimated on a collective basis when a loan is sold to Fannie Mae and is based on our current expected credit losses on the current portfolio from loan sale to maturity. When a loan is probable of default (in foreclosure) and thus collateral dependent, the loan is taken out of the collective evaluation and individually evaluated for credit losses. Our estimates of property fair value are based on appraisals, broker opinions of value, or net operating income and market capitalization rates, whichever we believe is the best estimate of the net disposition value.
The “Critical Accounting Estimates” section above and NOTE 2 of the consolidated financial statements provide additional details of the accounting for the provision (benefit) for credit losses associated with our at-risk servicing portfolio.
Interest expense on corporate debt. Interest expense on corporate debt includes interest expense from our term debt, which includes the term loan and any additional borrowings under that agreement, and borrowings of a subsidiary associated with our LIHTC operations and amortization of debt discount and deferred debt issuance costs primarily related to our term loan and incremental term loan. NOTE 7 of the consolidated financial statements provides additional details of our term debt.
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Goodwill impairment. Goodwill impairment is the write-down of our goodwill balance resulting from either our annual impairment testing or our quarterly evaluations of recoverability.
The “Critical Accounting Estimates” section above and NOTE 2 of the consolidated financial statements provide additional details of the accounting for this expense.
Fair value adjustments to contingent consideration liabilities. Fair value adjustments to our contingent consideration liabilities are the adjustments to the estimated fair value of our contingent consideration liabilities remeasured at the end of each reporting period. As noted below, the accretion of contingent consideration liabilities is included in other operating expenses.
NOTE 9 of the consolidated financial statements provide additional details of the accounting for this expense.
Indemnified and repurchased loan expenses. Indemnified and repurchased loan expenses include the expected principal losses on loan repurchases (“loan repurchase losses”), the initial loan repurchase costs, and indemnified and repurchased loans operating costs related to repurchased loans. The loan repurchase losses represent the estimated losses of principal from indemnifying the loan. The initial loan repurchase costs are composed of any indemnifiable legal costs, reimbursed interest, and prepayment costs associated with repurchasing a loan. The indemnified and repurchased loans operating costs are expenses we incur in operating and/or maintaining the loan and/or property collateralizing the loan.
NOTE 2 and NOTE 5 of the consolidated financial statements provide additional details of the accounting for this expense.
Asset impairments and other expenses. Asset impairments and other expenses consist of asset impairments of investments, write-offs of unamortized deferred issuance costs associated with repayments of our corporate debt, costs associated with corporate investigations and other professional fees driven by specific individual events.
Other operating expenses. Other operating expenses include facilities costs, travel and entertainment costs, marketing costs, professional fees, accretion of contingent consideration liabilities, corporate insurance premiums, software costs, and other general and administrative expenses.
Income tax expense. The Company is a C-corporation subject to federal, state, and international corporate tax. Our estimated combined statutory federal, state, and international tax rate was 25.1%, 25.1%, and 26.1% for the years ended December 31, 2025, 2024, and 2023, respectively. Except for the effects of the Tax Cuts and Jobs Act of 2017 (“Tax Reform”), our combined statutory tax rate has historically not varied significantly as the only material difference in the calculation of the combined statutory tax rate from year to year is the apportionment of our taxable income among the various states where we are subject to taxation since our foreign operations are (i) insignificant and (ii) taxed at a rate similar to our blended federal and state tax rate. Absent additional significant legislative changes to statutory tax rates (particularly the federal tax rate), we expect low deviation from the 2025 combined statutory tax rate for future years. However, we do expect some variability in the effective tax rate going forward due to excess tax benefits and shortfalls recognized and limitations on the deductibility of certain book expenses as a result of Tax Reform, primarily related to executive compensation.
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Consolidated Results of Operations
The following is a discussion of the comparison of our results of operations for the years ended December 31, 2025 and 2024. The financial results are not necessarily indicative of future results. Our annual results have fluctuated in the past and are expected to fluctuate in the future, reflecting the interest-rate environment, the volume of transactions, business acquisitions, regulatory actions, and general economic conditions. Discussions of our results of operations and comparisons between 2024 and 2023 can be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 10-K for the year ended December 31, 2024.
SUPPLEMENTAL OPERATING DATA
CONSOLIDATED
Transaction Volume (in thousands)
Debt Financing Volume
Property Sales Volume
Total Transaction Volume
Key Performance Metrics (dollars in thousands, except per share data)
Operating margin
Return on equity
Walker & Dunlop net income
Adjusted EBITDA (1)
Diluted EPS
Key Expense Metrics (as a percentage of total revenues)
Personnel expenses
Other operating expenses
As of December 31,
Managed Portfolio (in thousands)
Servicing Portfolio
Assets under management
Total Managed Portfolio
This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section below titled “Non-GAAP Financial Measure.”
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Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
The following table presents a year-over-year comparison of our financial results for the years ended December 31, 2025 and 2024.
FINANCIAL RESULTS –2025 COMPARED TO 2024 CONSOLIDATED
December 31,
Dollar
Percentage
(in thousands)
Change
Change
Revenues
Loan origination and debt brokerage fees, net
Fair value of expected net cash flows from servicing, net of guaranty obligation
Servicing fees
Property sales broker fees
Investment management fees
Net warehouse interest income (expense)
Placement fees and other interest income
Other revenues
Total revenues
Expenses
Personnel
Amortization and depreciation
Provision (benefit) for credit losses
Interest expense on corporate debt
Goodwill impairment
Fair value adjustments to contingent consideration liabilities
Indemnified and repurchased loan expenses
Asset impairments and other expenses
Other operating expenses
Total expenses
Income before taxes
Income tax expense
Net income before noncontrolling interests
Less: net income (loss) from noncontrolling interests
Less: net income (loss) attributable to temporary equity holders
Walker & Dunlop net income
Overview
Total transaction volume growth of 37% was the principal driver of revenue growth in 2025. Transaction related revenues—loan origination and debt brokerage fees, net (“origination fees”) plus the fair value of expected net cash flows from servicing, net of guaranty obligations (“MSR income”) plus property sales broker fees—increased 23% year over year. Revenues grew at a slower pace than transaction volumes principally due to lower non-cash MSR income on our new Fannie Mae loan originations. This was driven by two factors: (i) a portion of our volume in 2025 was driven by larger portfolio transactions which earn lower servicing fees as a percentage of loan volume and (ii) the weighted average servicing fees and loan terms—two key inputs that drive the estimated fair value of MSR income—for new loans were lower year over year. Borrowers have consistently been opting for shorter duration loans since interest rates began rising sharply in 2022, and that trend continued in 2025. Growth in transaction volume supported 6% growth in our loan servicing portfolio, to $144.0 billion at December 31, 2025. Growth in the loan servicing portfolio drove the 4% growth in servicing fees year on year, which was offset, however, by the decline in placement fees and other interest income. Placement fees are closely correlated to short-term interest rates, and the decline in short-term interest rates throughout 2025 drives the 9% in placement fees and other interest income. Other revenues decreased primarily due to a discreet transaction. In 2024, we sold an asset held within our affordable operating subsidiary that generated a in 2024 that was included in Other revenues with no comparable activity in 2025. The in Other revenues was partially offset by an increase in investment banking revenues and prepayment fees, and various other revenue categories.
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The increase in expenses was due to increases in personnel costs, indemnified and repurchased loan expenses, and asset impairments and other expenses, and lower fair value adjustments to contingent consideration liabilities, partially offset by lower goodwill impairment, and a decrease in interest expense on corporate debt. Personnel costs increased, largely due to increases in variable compensation costs for our salespeople as a result of our higher transaction volumes and salaries and benefits due to higher average headcount. Indemnified and repurchased loan expenses increased due to increases in loan repurchase losses and repurchased loan operating costs. Asset impairments and other expenses increased largely due to our strategic decision to sell asset management contracts and interests in assets held within one of our affordable operating subsidiaries. The expected sales prices were below current carrying values in many instances resulting in an impairment loss. There was also an increase in write off of unamortized premium from corporate debt repayment. Interest expense on corporate debt decreased due to lower average interest rates during 2025 compared to 2024, partially offset by an increase in the balance outstanding from the refinancing of our debt. Goodwill impairment decreased due to an in 2024 with no comparable activity in 2025. Fair value adjustments to contingent consideration decreased primarily due to a larger adjustment in 2024 due to the market conditions related to one of our reporting units that impacted the estimated fair value of future earnout payments without a similar adjustment to the earnout for that reporting unit in 2025.
Income Tax Expense. The decrease in income tax expense primarily relates to a 40% decrease in income before taxes, partially offset by a decrease in excess tax benefits. We recognized excess tax shortfalls of $1.4 million in 2025 compared to excess tax benefits of $1.7 million in 2024.
Net Income (Loss) from Noncontrolling Interests. The decrease in losses attributed to noncontrolling interests is largely the result of a change in the ownership of an entity producing losses in 2024. As part of a larger transaction with the noncontrolling interest holder, we regained full control of the entity at the end of 2024. The remaining noncontrolling interests in 2025 are insignificant.
A discussion of the financial results for our segments is included further below.
Non-GAAP Financial Measures
To supplement our financial statements presented in accordance with GAAP, we use adjusted EBITDA, a non-GAAP financial measure. The presentation of adjusted EBITDA is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. When analyzing our operating performance, readers should use adjusted EBITDA in addition to, and not as an alternative for, net income. Adjusted EBITDA represents net income before income taxes, interest expense on our corporate debt, and amortization and depreciation, adjusted for provision (benefit) for credit losses, net write-offs based on the final resolution of the defaulted loans or collateral, loan repurchase losses, stock-based compensation, the fair value of expected net cash flows from servicing, net of guaranty obligation, the write off of unamortized balance of deferred issuance costs associated with the repayment of a portion of our corporate debt, goodwill impairment, and contingent consideration liability fair value adjustments when the fair value adjustment is a triggering event for a goodwill impairment assessment. In cases where the fair value adjustment of contingent consideration liabilities is a trigger for goodwill , the goodwill is netted the fair value adjustment of contingent consideration liabilities and included as a net number. Because not all companies use identical calculations, our presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, adjusted EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not reflect certain cash requirements such as tax and debt service payments. The amounts shown for adjusted EBITDA may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges that are used to determine compliance with financial covenants.
We use adjusted EBITDA to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. We believe that this non-GAAP measure, when read in conjunction with our GAAP financials, provides useful information to investors by offering:
the ability to make more meaningful period-to-period comparisons of our ongoing operating results;
the ability to better identify trends in our underlying business and perform related trend analyses; and
a better understanding of how management plans and measures our underlying business.
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We believe that adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that adjusted EBITDA should only be used to evaluate our results of operations in conjunction with net income on both a consolidated and segment basis. Adjusted EBITDA is reconciled to net income as follows:
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP
CONSOLIDATED
For the year ended
December 31,
(in thousands)
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income
Income tax expense
Interest expense on corporate debt
Amortization and depreciation
Provision (benefit) for credit losses
Loan repurchase losses (1)
Net write-offs
Stock-based compensation expense
Goodwill impairment, net of contingent consideration liability fair value adjustments (2)
Write-off of unamortized issuance costs from corporate debt paydown (3)
MSR income
Adjusted EBITDA
Presented as a component of Indemnified and repurchased loan expenses on the Consolidated Statements of Income.
For the year ended December 31, 2024, includes goodwill impairment of $33.0 million and contingent consideration fair value adjustments of $34.5 million, with no comparable activity for the year ended December 31, 2025.
Presented as a component of Asset impairments and other expenses on the Consolidated Statements of Income.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
The following table presents a year-over-year comparison of the components of our adjusted EBITDA for the year ended December 31, 2025 and 2024:
ADJUSTED EBITDA–2025 COMPARED TO 2024
CONSOLIDATED
For the year ended
December 31,
Dollar
Percentage
(in thousands)
Change
Change
Loan origination and debt brokerage fees, net
Servicing fees
Property sales broker fees
Investment management fees
Net warehouse interest income (expense)
Placement fees and other interest income
Other revenues
Personnel
Net write-offs
Indemnified and repurchased loan expenses
Asset impairments and other expenses
Other operating expenses (1)
Net income (loss) from noncontrolling interests and temporary equity holders
Adjusted EBITDA
Other operating expenses includes a beneficial adjustment for the fair value of contingent consideration liability not related to a goodwill impairment triggering event of $8.2 million and $15.8 million for the years ended December 31, 2025 and 2024, respectively.
The increase in origination fees was primarily related to an increase in the overall debt financing volumes year over year. Servicing fees
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increased mainly due to an increase in the average balance of the servicing portfolio. Property sales broker fees increased largely as a result of an increase in property sales volume year over year. Placement fees and other interest income decreased primarily as a result of lower average fee arrangements with our financial partners. Other revenues decreased primarily due to a decrease in the gain on sale of an asset in our affordable operations in 2024 with no comparable activity in 2025, partially offset by an increase in investment banking revenues, prepayment fees, and various other revenue categories. Personnel costs increased largely due to increases in variable compensation costs for our salespeople as a result of our higher transaction volumes and salaries and benefits due to higher average headcount. Indemnified and repurchased loan expenses increased due to an increase in repurchase costs and repurchased loan operating costs. Asset impairment and other expenses increased due to increases in asset impairments and investment charges. The decrease in losses attributed to noncontrolling interests is largely the result of a change in the ownership of an entity producing losses in 2024. As part of a larger transaction with the noncontrolling interest holder, we regained full control of the entity at the end of 2024. The remaining noncontrolling interests in 2025 are insignificant.
Financial Condition
Cash Flows from Operating Activities
Our cash flows from operating activities are generated from loan sales, servicing fees, placement fees, net warehouse interest income (expense), property sales broker fees, investment management fees, research subscription fees, investment banking advisory fees, and other income, net of loan origination and operating costs. Our cash flows from operating activities are impacted by the fees generated by our loan originations and property sales, the timing of loan closings, and the period of time loans are held for sale in the warehouse loan facility prior to delivery to the investor.
Cash Flows from Investing Activities
We usually lease facilities and equipment for our operations. Our cash flows from investing activities include the funding and repayment of loans held for investment, including repurchased loans, contributions to and distributions from joint ventures, purchases of equity-method investments, cash paid for acquisitions, and the purchase of available-for-sale (“AFS”) securities pledged to Fannie Mae.
Cash Flows from Financing Activities
We use our warehouse loan facilities and, when necessary, our corporate cash to fund loan closings, both for loans held for sale and loans held for investment. We believe that our current warehouse loan facilities are adequate to meet our loan origination needs. Historically, we used a combination of long-term debt and cash flows from operating activities to fund large acquisitions. Additionally, we repurchase shares, pay cash dividends, make long-term debt principal payments, and repay short-term borrowings on a regular basis. We issue stock primarily in connection with the exercise of stock options and occasionally for acquisitions (non-cash transactions).
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Years Ended December 31, 2025 Compared to Years Ended December 31, 2024
The following table presents a year-over-year comparison of the significant components of cash flows for the year ended December 31, 2025 and 2024.
SIGNIFICANT COMPONENTS OF CASH FLOWS – 2025 COMPARED TO 2024
CONSOLIDATED
For the year ended December 31,
Dollar
Percentage
(in thousands)
Change
Change
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Total of cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period ("Total cash")
Cash flows from (used in) operating activities
Net receipt (use) of cash for loan origination activity
Net cash provided by (used in) operating activities, excluding loan origination activity
Cash flows from (used in) investing activities
Capital invested in equity-method investments
Principal collected on loans held for investment
Purchases of pledged AFS securities, net of proceeds from prepayments
Originations and repurchase of loans held for investment
Other investing activities, net
Cash flows from (used in) financing activities
Borrowings (repayments) of warehouse notes payable, net
Repayments of interim warehouse notes payable
Borrowings of corporate notes payable
Repayments of corporate notes payable
Payment of contingent consideration
Debt issuance costs
Operating Activities
Cash provided by (used in) operating activities changed due to:
Loan origination activity . Agency loans originated are held for short periods of time, generally less than 60 days, and impact cash flows presented as of a point in time due to the timing difference between the date of origination and date of delivery. The increase in net cash used in loan origination activities is primarily attributable to originations outpacing sales by $833.8 million in 2025 compared to $23.6 million in 2024.
Other activities . Cash flows provided by other operating activities were $169.5 million in 2025, up from $153.0 million in 2024. The primary reasons for the change were a smaller reduction in cash from changes in other assets and receivables of $58.1 million, a decrease in the adjustments for fair value adjustments to contingent consideration liabilities of $42.1 million and an increase in the adjustment for loan repurchase losses of $20.1 million, partially offset by a $44.0 million decrease in net income before noncontrolling interests and temporary equity holders, a $26.1 million increase in adjustments for MSR income, and a $33.0 million decrease in the adjustment for goodwill impairment.
Investing Activities
Cash provided by (used in) investing activities changed due to:
Capital invested in equity-method investments: Capital invested in equity-method investments increased as we received more capital calls on our equity method investments in 2025 than in 2024.
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Principal collected on loans held for investment. The principal collected on loans held for investment decreased, as we have been winding down our Interim Loan Program (“ILP”) loans over the past several years as our transitional lending opportunities have been funded using third-party capital raised by our investment management business, WDIP. As of the beginning of 2025, we had no ILP loans on our balance sheet, compared to two loans as of the beginning of 2024.
(iii)
Other investing activities, net. The decrease in cash provided was primarily due to a decrease in distributions from our Interim Program JV as the JV is winding down.
Partially offsetting the aforementioned changes that decreased cash were the following activities that increased cash:
AFS securities . Prepayment of AFS securities increased in 2025, while purchases declined slightly during the year.
Originations and repurchase of loans held for investment. The decrease was primarily due to the origination of a short-term bridge loan in 2024 with no comparable activity in 2025.
Financing Activities
Cash provided by (used in) financing activities changed due to:
Net borrowings of warehouse notes payable. The increase was due to the aforementioned increase in net cash used in loan origination activity.
Repayments of interim warehouse notes payable. The change in repayments of interim warehouse notes payable was related to the aforementioned decrease in principal collected on loans held for investment as we use borrowings to fund interim loan program loans held for investment. Due to no loans held for investment under our interim loan program outstanding in 2025, we also had no outstanding borrowings to repay.
(iii)
Borrowings of corporate notes payable. The increase was attributable to the issuance of our Senior Notes in 2025 to pay down our Term Loan, with no comparable activity in 2024.
Payment of contingent consideration. The decrease was due to lower achievement of performance-based earnouts related to historical acquisitions in 2025 compared to 2024.
Partially offsetting the aforementioned changes that increased cash were the following activities that decreased cash:
Repayments of corporate notes payable. The increase was largely due to using $328.5 million of the $400.0 million proceeds from the issuance of our Senior Notes to pay down our Term Loan in 2025, with no comparable activity in 2024.
Debt issuance costs. The increase in debt issuance costs paid was driven by the aforementioned issuance of the Senior Notes and amendment of the Term Loan, with no comparable activity in 2 024.
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Segment Results
The Company is managed based on our three reportable segments: (i) Capital Markets (“CM”), (ii) Servicing & Asset Management (“SAM”), and (iii) Corporate. The segment results below are intended to present each of the reportable segments on a stand-alone basis.
Capital Markets
Our CM segment provides a comprehensive range of commercial real estate finance products to our customers, including Agency lending, debt brokerage, property sales, and appraisal and valuation services. The Company’s long-established relationships with the Agencies and institutional investors enable our CM segment to offer a broad range of loan products and services to the Company’s customers, including first mortgage, second trust, supplemental, construction, mezzanine, preferred equity, and small-balance loans. This segment also provides property sales services to owners and developers of multifamily properties and commercial real estate and multifamily property appraisals for various lenders and investors. The CM segment also provides real estate-related investment banking and advisory services, including housing market research.
SUPPLEMENTAL OPERATING DATA
CAPITAL MARKETS
For the year ended
Transaction Volume (in thousands)
December 31,
Dollar
Percentage
Components of Debt Financing Volume
Change
Change
Fannie Mae
Freddie Mac
Ginnie Mae ̶ HUD
Brokered (1)
Total Debt Financing Volume
Property sales volume
Total Transaction Volume
Key Performance Metrics (dollars in thousands, except per share data)
Net income
Adjusted EBITDA (2)
Diluted EPS
Operating margin
Key Revenue Metrics (as a percentage of debt financing volume)
Origination fees
MSR income, as a percentage of Agency debt financing volume
Brokered transactions for life insurance companies, commercial banks, and other capital sources.
This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section below titled “Non-GAAP Financial Measure.”
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FINANCIAL RESULTS–2025 COMPARED TO 2024
CAPITAL MARKETS
For the year ended
(in thousands)
December 31,
Dollar
Percentage
Revenues
Change
Change
Origination fees
MSR income
Property sales broker fees
Net warehouse interest income (expense), loans held for sale
Other revenues
Total revenues
Expenses
Personnel
Amortization and depreciation
Interest expense on corporate debt
Goodwill impairment
Fair value adjustments to contingent consideration liabilities
Asset impairments and other expenses
Other operating expenses
Total expenses
Income (loss) before taxes
Income tax expense (benefit)
Net income (loss) before noncontrolling interests
Less: net income (loss) from noncontrolling interests
Less: net income (loss) attributable to temporary equity holders
Net income (loss)
Revenues
Origination fees and MSR Income. The following tables provide additional information that helps explain changes in origination fees and MSR income year over year:
For the year ended December 31,
Debt Financing Volume by Product Type
Fannie Mae
Freddie Mac
Ginnie Mae - HUD
Brokered
For the year ended December 31,
Basis Point
Percentage
Mortgage Banking Details (basis points)
Change
Change
Origination Fee Rate (1)
Agency MSR Rate (2)
Origination fees as a percentage of total debt financing volume.
MSR Income as a percentage of Agency debt financing volume.
The increase in origination fees was primarily the result of the 38% increase in debt financing volume, partially offset by a nine-basis-point decrease in our origination fee rate. The decrease in the origination fee rate was primarily attributable to our Freddie Mac debt financing volume, which had a 25% decline in origination fee rate year over year. During 2025, 52% of Freddie Mac debt financing volume was for loans with balances of $50 million or greater compared to 31% in 2024. Additionally, we originated a large Fannie Mae portfolio during the second quarter of 2025, with no comparable activity in 2024, contributing to the decline in origination fee rates. Large portfolios typically have lower origination fee rates than non-portfolio transactions.
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The increase in our MSR income was similarly primarily driven by the increase in Agency debt financing volume, partially offset by a 15% decrease in the weighted-average servicing fee (“WASF”), and a 7% decrease in the weighted average loan term on Fannie Mae debt financing volume. The WASF and weighted average loan term are two key inputs into the estimated fair value of MSR income. The decrease in the WASF was driven by (i) a competitive environment, and (ii) the aforementioned large Fannie Mae portfolio originated during the second quarter of 2025 as large portfolios typically have lower servicing fees than non-portfolio transactions. The decrease in the weighted average loan term is driven by our borrowers are opting for shorter loan terms for several reasons: (i) shorter duration loans have lower coupon rates than longer duration loans, all else equal, (ii) a lower cost of funds generally results in higher loan proceeds, and (iii) more institutional borrowers are matching loan duration with the duration of their limited partner equity capital, which is generally less than ten years. We expect loan terms to remain at the shorter end of historical ranges for the foreseeable future.
Property sales broker fees. The increase in property sales broker fees was driven principally by the 37% increase in the property sales volumes period over period.
Other revenues. The increase was principally due to a $5.8 million increase in investment banking revenues. Investment banking revenues increased primarily due to more M&A transactions in 2025 compared to 2024.
Expenses
Personnel. T he increase was primarily due to (i) a $64.3 million increase in commission costs resulting from increased origination fees, property sales broker fees, and investment banking revenues, (ii) a $10.1 million increase in salaries and benefits largely related to a 5% increase in average segment headcount, and (iii) a $3.2 million increase in severance expense largely as a result of the separation of several underperforming producers.
Interest expense on corporate debt. Interest expense on corporate debt is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s use of that corporate debt. The discussion of our consolidated results above has additional information related to the increase in interest expense on corporate debt.
Goodwill impairment. Goodwill impairment decreased as an impairment was recorded in 2024 without a similar impairment in 2025, due to improved performance of the reporting unit.
Fair value adjustments to contingent consideration liabilities . The decrease was driven by a decrease in the fair value adjustment to contingent consideration liabilities (“CCL”) related to an impaired reporting unit. In 2024, we wrote down to zero the CCL related to a large acquisition due to performance that lagged far behind the earnout targets. There was no comparable activity in 2025, and the earnout period expired on December 31, 2025 for that transaction so there will be no further adjustments to the CCL.
Income tax expense . Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income before taxes, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity.
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Non-GAAP Financial Measure
A reconciliation of adjusted EBITDA for our Capital Markets segment is presented below. Our segment level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided above in our Consolidated Results of Operations—Non-GAAP Financial Measure. CM adjusted EBITDA is reconciled to net income as follows:
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP
CAPITAL MARKETS
For the year ended
December 31,
(in thousands)
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Net income (loss)
Income tax expense (benefit)
Interest expense on corporate debt
Amortization and depreciation
Stock-based compensation expense
Goodwill impairment, net of contingent consideration liability fair value adjustments (1)
Write-off of unamortized issuance costs from corporate debt paydown (2)
MSR income
Adjusted EBITDA
For the year ended December 31, 2024, included goodwill impairment of $33.0 million and contingent consideration fair value adjustment of $34.5 million, with no comparable activity for the year ended December 31, 2025.
Presented as a component of Asset impairments and other expenses on the Consolidated Statements of Income
The following table presents a year-over-year comparison of the components of CM adjusted EBITDA for the years ended December 31, 2025 and 2024.
ADJUSTED EBITDA – 2025 COMPARED TO 2024
CAPITAL MARKETS
For the year ended
December 31,
Dollar
Percentage
(in thousands)
Change
Change
Origination fees
Property sales broker fees
Net warehouse interest income (expense), loans held for sale
Other revenues
Personnel
Asset impairments and other expenses
Other operating expenses (1)
Net income (loss) from noncontrolling interests and temporary equity holders
Adjusted EBITDA
Other operating expenses included a beneficial adjustment for the fair value of contingent consideration liability not related to a goodwill impairment triggering event of $5.0 million for the year ended December 31, 2024, with no comparable activity for the year ended December 31, 2025.
Origination fees increased due to an increase in our overall debt financing volume, partially offset by a decrease in our origination fee rate. Property sales broker fees increased largely as a result of the growth in property sales volumes. Other revenues increased primarily due to an increase in investment banking revenues. The increase in personnel expense was primarily due to increased commission and other production incentive costs due to the increase in origination fees combined with an increase in salaries and benefits due to higher average headcount for the segment and increased severance expense. Other operating expenses decreased due to a beneficial adjustment to contingent consideration liabilities in 2024 with no comparable activity in 2025.
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Servicing & Asset Management
The SAM segment activities include: (i) servicing and asset-managing the portfolio of loans we (a) originate and sell to the Agencies, (b) broker to certain life insurance companies, and (c) originate through our principal lending and investing activities, and (ii) managing third-party capital invested in tax credit equity funds focused on the affordable housing sector and other commercial real estate.
SUPPLEMENTAL OPERATING DATA
SERVICING & ASSET MANAGEMENT
As of December 31,
Dollar
Percentage
Managed Portfolio (in thousands)
Change
Change
Components of Servicing Portfolio
Fannie Mae
Freddie Mac
Ginnie Mae–HUD
Brokered (1)
Total Servicing Portfolio
Assets under management
Total Managed Portfolio
For the year ended
(dollars in thousands, except per share data)
December 31,
Dollar
Percentage
Key Volume and Performance Metrics
Change
Change
Equity syndication volume (2)
Principal Lending and Investing debt financing volume (3)
Net income
Adjusted EBITDA (4)
Diluted EPS
Operating margin
As of December 31,
Key Servicing Portfolio Metrics
Custodial escrow deposit balance (in billions)
Weighted-average servicing fee rate (basis points)
Weighted-average remaining servicing portfolio term (years)
As of December 31,
(in thousands)
Components of equity and assets under management
Equity under management
Assets under management
Equity under management
Assets under management
LIHTC
Equity funds
Debt funds (5)
Total
Brokered loans serviced primarily for life insurance companies.
Amount of equity called and syndicated into LIHTC funds.
Comprised solely of WDIP separate account originations.
This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section below titled “Non-GAAP Financial Measure”.
As of December 31, 2025, included $36.5 million and $33.0 million of equity under management and assets under management, respectively, of Interim program JV loans. The remainder was composed of WDIP debt funds. As of December 31, 2024, includes $46.0 million and $173.0 million of equity under management and assets under management, respectively, of Interim program JV loans. The remainder was composed of WDIP debt funds.
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FINANCIAL RESULTS – 2025 COMPARED TO 2024
SERVICING & ASSET MANAGEMENT
For the year ended
December 31,
Dollar
Percentage
(in thousands)
Change
Change
Revenues
Origination fees
Servicing fees
Investment management fees
Net warehouse interest income, loans held for investment
Placement fees and other interest income
Other revenues
Total revenues
Expenses
Personnel
Amortization and depreciation
Provision (benefit) for credit losses
Interest expense on corporate debt
Fair value adjustments to contingent consideration liabilities
Indemnified and repurchased loan expenses
Asset impairments and other expenses
Other operating expenses
Total expenses
Income (loss) before taxes
Income tax expense (benefit)
Net income (loss) before noncontrolling interests
Less: net income (loss) from noncontrolling interests
Net income (loss)
Revenues
Servicing fees. The increase was entirely attributable to an increase in the average balance of the servicing portfolio period over period as shown below. The increase in the average servicing portfolio was driven primarily by the $4.5 billion and $3.4 billion increase in Fannie Mae and Freddie Mac loans serviced, respectively.
Servicing Fees Details (in thousands)
Change
Change
Average Servicing Portfolio
Average Servicing Fee (basis points)
Placement fees and other interest income. The decrease was driven primarily by a decrease in our placement fees on escrow deposits of $23.9 million, partially offset by a $7.8 million increase in interest income from short-term loans to our affordable joint ventures due to an increase in the balance of loans outstanding year over year. The primary driver in the decrease in placement fees was a decline in the placement fee rates on escrow deposits as a result of lower short-term interest rate environment in 2025 compared to 2024, partially offset by a slight increase in the average escrow balance year over year.
Other revenues. T he decrease was primarily due to a $23.2 million decrease from the sale of an asset in our affordable subsidiary in 2024 with no comparable activity in 2025, partially offset by a $5.6 million increase in prepayment fees. The increase in prepayment fees was primarily attributable to the higher refinancing volume within our servicing portfolio in 2025 compared to 2024 due to the more stable interest rate environment and macroeconomic environment for multifamily properties.
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Expenses
Personnel. The increase was primarily the result of increases in salaries and benefits and subjective bonuses of $3.8 million combined with a $1.7 million increase in severance expense. The increase in salaries, benefits and bonus were due to normal annual adjustments and an increase in the average segment headcount. Severance expenses increased primarily due to the separation of several underperforming producers.
Interest expense on corporate debt. Interest expense on corporate debt is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s use of that corporate debt. The discussion of our consolidated results above has additional information related to the increase in interest expense on corporate debt.
Indemnified and repurchased loan expenses. The increase was primarily driven by a $20.1 million increase in loan repurchase losses combined with a $10.2 million increase in repurchase costs and operating costs. As discussed in NOTE 5 of the consolidated financial statements, we received repurchase requests for two loan portfolios with an aggregate UPB of $100.0 million, and we believe that it is probable that we will receive an additional repurchase request for another $34.3 million of loans. In 2024, our repurchase requests were for an aggregate UPB that was less than 2025, resulting in smaller loan repurchase losses in 2024. Similarly, repurchase costs and repurchased loan operating costs increased due to the increase in repurchase request UPB.
Asset impairments and other expenses. The increase was primarily driven by (i) $26.1 million in investment impairments at one of our LIHTC subsidiaries due to continuing underperformance in the investments and (ii) a $2.5 million write off of unamortized debt issuance costs associated with the paydown of our corporate debt in 2025. The $26.1 million of investment impairments consisted of (i) $13.6 million of impairment of real estate held for use, (ii) $5.0 million of impairment of an equity-method investment, and (iii) a $7.5 million accrual for losses expected on disposition of certain affordable assets. All of the 2025 activity had minimal or no comparable activity in 2024.
Other operating expenses. The decrease was due to a $5.9 million decrease and a $3.0 million decrease in professional fees and miscellaneous expenses, respectively. The decrease in professional fees was driven by a decline in legal costs at our LIHTC subsidiary that are correlated with the declines in equity syndication volumes.
Income tax expense . Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income before taxes, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity.
Net Income (Loss) from Noncontrolling Interests. The decrease in losses attributed to noncontrolling interests is the result of a change in the ownership of an entity producing losses in 2024. As part of a larger transaction with the noncontrolling interest holder, we regained full control of the entity at the end of 2024. The remaining noncontrolling interests in 2025 are insignificant.
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Non-GAAP Financial Measure
A reconciliation of adjusted EBITDA for our SAM segment is presented below. Our segment level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided above in our Consolidated Results of Operations—Non-GAAP Financial Measure. SAM adjusted EBITDA is reconciled to net income as follows:
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP
SERVICING & ASSET MANAGEMENT
For the year ended
December 31,
(in thousands)
Reconciliation of Net Income (loss) to Adjusted EBITDA
Net income (loss)
Income tax expense (benefit)
Interest expense on corporate debt
Amortization and depreciation
Provision (benefit) for credit losses
Loan repurchase losses (1)
Net write-offs
Stock-based compensation expense
Write-off of unamortized issuance costs from corporate debt paydown (2)
Adjusted EBITDA
Presented as a component of Indemnified and repurchased loan expenses on the Consolidated Statements of Income.
Presented as a component of Asset impairments and other expenses on the Consolidated Statements of Income.
The following table presents a year-over-year comparison of the components of SAM adjusted EBITDA for the years ended December 31, 2025 and 2024.
ADJUSTED EBITDA – 2025 COMPARED TO 2024
SERVICING & ASSET MANAGEMENT
For the year ended
December 31,
Dollar
Percentage
(in thousands)
Change
Change
Origination fees
Servicing fees
Investment management fees
Net warehouse interest income (expense), loans held for investment
Placement fees and other interest income
Other revenues
Personnel
Net write-offs
Indemnified and repurchased loan expenses
Asset impairments and other expenses
Other operating expenses (1)
Net income (loss) from noncontrolling interests
Adjusted EBITDA
Other operating expenses includes a beneficial adjustment for the fair value of contingent consideration liability not related to a goodwill impairment triggering event of $8.2 million and $10.8 million for the year ended December 31, 2025 and 2024, respectively.
Servicing fees increased due to growth in the average balance of the servicing portfolio period over period as a result of loan originations. Placement fees and other interest income decreased primarily due to decrease in the placement fee rate due to the interest rate environment, partially offset by an increase in interest income from short-term loans to our affordable joint ventures. Other revenues decreased primarily due to the gain on equity method investments from the sale of a property in a fund in 2024 with no comparable activity in 2025. Personnel increased primarily due to an increase in salaries and benefit costs and subjective bonus compensation due primarily to an increase in average segment
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headcount. Indemnified and repurchased loan expenses increased due to an increase in repurchase costs and operating costs. Asset impairments and other expenses increased primarily due to investment impairments taken in 2025.
Corporate
The Corporate segment consists primarily of the Company’s treasury operations and other corporate-level activities. Our treasury activities include monitoring and managing liquidity and funding requirements, including corporate debt. Other corporate-level activities include equity-method investments, accounting, information technology, legal, human resources, marketing, internal audit, and various other corporate groups (“support functions”). We do not allocate costs from these support functions to its other segments in presenting segment operating results. We do allocate interest expense and income tax expense. Corporate debt and the related interest expense are allocated first based on specific acquisitions where debt was directly used to fund the acquisition, such as the acquisition of Alliant, and then based on the remaining segment assets. Income tax expense is allocated proportionally based on income before taxes at each segment, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity.
FINANCIAL RESULTS – 2025 COMPARED TO 2024
CORPORATE
For the year ended
December 31,
Dollar
Percentage
(in thousands)
Change
Change
Revenues
Other interest income
Other revenues
Total revenues
Expenses
Personnel
Amortization and depreciation
Interest expense on corporate debt
Asset impairments and other expenses
Other operating expenses
Total expenses
Income (loss) before taxes
Income tax expense (benefit)
Net income (loss)
Diluted EPS
Adjusted EBITDA
Revenues
Other revenues. The increase was primarily due to a change to income from equity method investments in 2025 compared to loss from equity method investments in 2024.
Expenses
Personnel. T he increase was primarily the result of a $10.7 million increase in salaries and benefits, partially offset by a $4.5 million decrease in subjective bonuses. The increase in salaries and benefits was mostly driven by the 11% increase in average segment headcount year over year to support the growth of the business, particularly in emerging markets, and our technology strategy. The decrease in subjective bonus compensation was primarily due to our financial performance.
Asset impairments and other expenses. The increase was driven by increased legal and other professional fees related to company investigations into repurchased or indemnified loans, and third-party due diligence costs associated with an acquisition that did not close.
Other operating expenses. The increase was driven by a $2.6 million increase in software expense to support the Company’s growth in 2025, a $1.2 million increase in travel and entertainment, and a $1.0 million increase in marketing costs.
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Income tax expense. Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income before taxes, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity.
Non-GAAP Financial Measure
A reconciliation of adjusted EBITDA for our Corporate segment is presented below. Our segment level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided above in our Consolidated Results of Operations—Non-GAAP Financial Measure. Corporate adjusted EBITDA is reconciled to net income as follows:
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP
CORPORATE
For the year ended
December 31,
(in thousands)
Reconciliation of Net Income (loss) to Adjusted EBITDA
Net income (loss)
Income tax expense (benefit)
Interest expense on corporate debt
Amortization and depreciation
Stock-based compensation expense
Write-off of unamortized issuance costs from corporate debt paydown (1)
Adjusted EBITDA
Presented as a component of Asset impairments and other expenses on the Consolidated Statements of Income.
The following table presents a year-over-year comparison of the components of Corporate adjusted EBITDA for the years ended December 31, 2025 and 2024.
ADJUSTED EBITDA – 2025 COMPARED TO 2024
CORPORATE
For the year ended
December 31,
Dollar
Percentage
(in thousands)
Change
Change
Other interest income
Other revenues
Personnel
Asset impairments and other expenses
Other operating expenses
Adjusted EBITDA
Other revenues increased due to an increase in income from equity method investments. The increase in personnel expense was primarily due to increased salaries and benefits expense due to an increase in average segment headcount during 2025, partially offset by a decrease in subjective bonuses due to our financial performance. Asset impairments and other expenses increased due to increased legal and professional fees. Other operating expenses increased largely as a result of increased software costs and travel and entertainment expense.
Liquidity and Capital Resources
Uses of Liquidity, Cash and Cash Equivalents
Our significant recurring cash flow requirements consist of liquidity to (i) fund loans held for sale; (ii) pay cash dividends; (iii) fund our portion of the equity necessary to support equity-method investments; (iv) fund investments in properties to be syndicated to LIHTC investment funds that we will asset-manage; (v) make payments related to earnouts from acquisitions, (vi) meet working capital needs to support our day-to-day operations, including debt service payments, joint venture development partnership contributions, advances for servicing, loan repurchases, and payments for salaries, commissions, and income taxes, and (vii) meet working capital to satisfy collateral requirements for
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our Fannie Mae DUS risk-sharing obligations and to meet the operational liquidity requirements of Fannie Mae, Freddie Mac, HUD, Ginnie Mae, and our warehouse facility lenders.
Fannie Mae has established benchmark standards for capital adequacy and reserves the right to terminate our servicing authority for all or some of the portfolio if, at any time, it determines that our financial condition is not adequate to support our obligations under the DUS agreement. We are required to maintain acceptable net worth as defined in the standards, and we satisfied the requirements as of December 31, 2025. The net worth requirement is derived primarily from unpaid balances on Fannie Mae loans and the level of risk-sharing. As of December 31, 2025, the net worth requirement was $350.4 million, and our net worth was $1.0 billion, as measured at our wholly owned operating subsidiary, Walker & Dunlop, LLC. As of December 31, 2025, we were required to maintain at least $69.7 million of liquid assets to meet our operational liquidity requirements for Fannie Mae, Freddie Mac, HUD, Ginnie Mae, and our warehouse facility lenders. As of December 31, 2025, we had operational liquidity of $290.6 million, as measured at our wholly owned operating subsidiary, Walker & Dunlop, LLC.
We paid a cash dividend of $0.67 per share each quarter of 2025, which is 3% higher than the quarterly dividend paid in each quarter of 2024. Over the past three years, we have returned $265.3 million to investors through cash dividend payments. In February 2026, the Company’s Board of Directors declared a dividend of $0.68 per share for the first quarter of 2026, a 1.5% increase over the 2025 quarterly dividend. The dividend will be paid on March 27, 2026 to all holders of record of our restricted and unrestricted common stock as of March 13, 2026.
Additionally, over the past three years, we have invested $72.8 million in acquisitions, primarily through the payment of earnouts related to acquisitions that closed in 2021 and 2022. We continually seek opportunities to complete additional acquisitions if we believe the economics are favorable. Over the past two years, we have also used $75.2 million to fund loan repurchases with the GSEs.
In February 2025, our Board of Directors approved a stock repurchase program that permitted the repurchase of up to $75.0 million of shares of our common stock over a 12-month period beginning February 21, 2025. Through December 31, 2025, we did not repurchase any shares under the 2025 stock repurchase program and had $75.0 million of remaining capacity under that program. In February 2026, our Board of Directors again approved a stock repurchase program that permits the repurchase of up to $75.0 million shares of our common stock over a 12-month period beginning February 26, 2026.
We have contractual obligations to make future cash payments on lease agreements on our various offices of $127.4 million over the next 11 years as of December 31, 2025. NOTE 15 in the consolidated financial statements contains additional details related to future lease payments. We have contractual obligations to repay short-term and long-term debt. The total principal balance for such debt was $2.3 billion as of December 31, 2025, of which $1.4 billion will be repaid with the proceeds from the sale of loans held for sale. NOTE 7 in the consolidated financial statements contains additional details related to these future debt payments. The expected interest associated with long-term debt obligations is $62.2 million in 2026, $51.6 million in 2027, $51.3 million in 2028, $51.1 million in 2029, and $50.9 million in 2030. The future interest for long-term debt is based on a variable rate; therefore, the preceding interest payments are calculated based on the effective interest rate as of December 31, 2025.
Historically, our cash flows from operations and warehouse facilities have been sufficient to enable us to meet our short-term liquidity needs and other funding requirements. We believe that cash flows from operations will continue to be sufficient for us to meet our current obligations for the foreseeable future.
Restricted Cash and Pledged Securities
Restricted cash consists primarily of good faith deposits held on behalf of borrowers between the time we enter into a loan commitment with the borrower and the investor purchases the loan. We are generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program, which is an off-balance sheet arrangement. We are required to secure this obligation by assigning collateral to Fannie Mae. We meet this obligation by assigning pledged securities to Fannie Mae. The amount of collateral required by Fannie Mae is a formulaic calculation at the loan level and considers the balance of the loan, the risk level of the loan, the age of the loan, and the level of risk-sharing. Fannie Mae requires collateral for Tier 2 loans of 75 basis points, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. Collateral held in the form of money market funds holding U.S. Treasuries is discounted 5%, and Agency mortgage-backed securities (“MBS”) are discounted 4% for purposes of calculating compliance with the collateral requirements. As of December 31, 2025, we held substantially all of our restricted liquidity in Agency MBS in the aggregate amount of $202.7 million. Additionally, the majority of the loans for which we have risk-sharing are Tier 2 loans. We fund any growth in our Fannie Mae required operational liquidity and collateral requirements from our working capital.
We are in compliance with the December 31, 2025 collateral requirements as outlined above. As of December 31, 2025, reserve requirements for the December 31, 2025 DUS loan portfolio will require us to fund $99.7 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at-risk portfolio. Fannie Mae has assessed the DUS
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Capital Standards in the past and may make changes to these standards in the future. We generate sufficient cash flows from our operations to meet these capital standards and do not expect any future changes to have a material impact on our future operations; however, any future changes to collateral requirements may adversely impact our available cash.
Under the provisions of the DUS agreement, we must also maintain a certain level of liquid assets referred to as the operational and unrestricted portions of the required reserves each year. We satisfied these requirements as of December 31, 2025.
Sources of Liquidity: Warehouse Facilities and Corporate Notes Payable
Warehouse Facilities
We utilize a combination of warehouse facilities and notes payable to provide funding for our operations. We utilize warehouse facilities to fund our Agency Lending. Our ability to originate Agency mortgage loans depends upon our ability to secure and maintain these types of financing agreements on acceptable terms. For a detailed description of the terms of each warehouse agreement including the affirmative and negative covenants, refer to “Warehouse Facilities” in NOTE 7 of the consolidated financial statements.
Corporate Notes Payable
For a detailed description of the terms of our various corporate debt instruments and related amendments , refer to “Corporate notes payable” in NOTE 7 of the consolidated financial statements.
The warehouse notes payable and corporate notes payable are subject to various financial covenants. The Company is in compliance with all of these financial covenants as of December 31, 2025.
Credit Quality, Allowance for Risk-Sharing Obligations, and Loan Repurchases
The following table sets forth certain information useful in evaluating our credit performance.
December 31,
Key Credit Metrics (in thousands)
Risk-sharing servicing portfolio:
Fannie Mae Full Risk
Fannie Mae Modified Risk
Freddie Mac Modified Risk
Total risk-sharing servicing portfolio
Non-risk-sharing servicing portfolio:
Freddie Mac No Risk
GNMA - HUD No Risk
Brokered
Total non-risk-sharing servicing portfolio
Total loans serviced for others
Loans held for investment (full risk)
Indemnification reserves
Interim Program JV Managed Loans (1)
At-risk servicing portfolio (2)
Maximum exposure to at-risk portfolio (3)
Defaulted loans (4)
Defaulted loans as a percentage of the at-risk portfolio
Allowance for risk-sharing as a percentage of the at-risk portfolio
Allowance for risk-sharing as a percentage of maximum exposure
As of December 31, 2025 and 2024, this balance consisted entirely of Interim Program JV managed loans. We indirectly share in a portion of the risk of loss associated with Interim Program JV managed loans through our 15% equity ownership in the Interim Program JV which was $5.5 million and $6.9 million at December 31, 2025 and 2024, respectively. We have no exposure to risk of loss for the loans serviced directly for the Interim Program JV partner. The balance of this line is included as a component of assets under management in the Supplemental Operating Data table above.
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At-risk servicing portfolio is defined as the balance of Fannie Mae DUS loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio.
For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk sharing. Accordingly, if the $15 million loan with 50% risk-sharing were to default, we would view the overall loss as a percentage of the at-risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, substantially all of the risk-sharing obligations that we have settled have been from full risk-sharing loans.
Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur.
Defaulted loans represent loans in our Fannie Mae at-risk portfolio or Freddie Mac SBL pre-securitized portfolio that are probable of foreclosure or that have foreclosed and for which the Company has recorded a collateral-based reserve (i.e., loans where we have assessed a probable loss). Other loans that are delinquent but not foreclosed or that are not probable of foreclosure are not included here. Additionally, loans that have foreclosed or are probable of foreclosure but are not expected to result in a loss to the Company are not included here.
Fannie Mae DUS risk-sharing obligations are based on a tiered formula and represent substantially all of our risk-sharing activities. The risk-sharing tiers and the amount of the risk-sharing obligations we absorb under full risk-sharing are provided below. Except as described in the following paragraph, the maximum amount of risk-sharing obligations we absorb at the time of default is generally 20% of the origination UPB of the loan.
Risk-Sharing Losses
Percentage Absorbed by Us
First 5% of UPB at the time of loss settlement
Next 20% of UPB at the time of loss settlement
Losses above 25% of UPB at the time of loss settlement
Maximum loss
20% of origination UPB
Fannie Mae can double or triple our risk-sharing obligation if the loan does not meet specific underwriting criteria or if a loan defaults within 12 months of its sale to Fannie Mae. We may request modified risk-sharing at the time of origination, which reduces our potential risk-sharing obligation from the levels described above. At times, we have, and may in the future, agree to a higher risk-sharing percentage (up to 100% of UPB) after origination and under limited circumstances.
We have a loss-sharing arrangement with Freddie Mac related to SBL loans that is only applicable to SBL loans that are pre-securitized and outstanding for more than 12 months. If a loan defaults prior to securitization, we are required to share the losses with Freddie Mac. Our loss-sharing arrangement is a 10% top loss, meaning that we are responsible for the first 10% of the losses incurred on such defaulted loans. We had three defaulted loans with allowances in our portfolio that were awaiting final resolution as of December 31, 2025. We received an insignificant loss settlement notice from Freddie Mac in the first quarter of 2026 and paid the loss settlement accordingly.
We use several techniques to manage our risk exposure under the Fannie Mae DUS risk-sharing program. These techniques include maintaining a strong underwriting and approval process, evaluating and modifying our underwriting criteria given the underlying multifamily housing market fundamentals, limiting our geographic market and borrower exposures, and electing the modified risk-sharing option under the Fannie Mae DUS program.
The “Business” section of “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains a discussion of the risk-sharing caps we have with Fannie Mae.
We regularly monitor the credit quality of all loans for which we have a risk-sharing obligation. Loans with indicators of underperforming credit are placed on a watch list, assigned a numerical risk rating based on our assessment of the relative credit weakness, and subjected to additional evaluation or loss mitigation. Indicators of underperforming credit include poor financial performance, poor physical condition, poor management, and delinquency. A collateral-based reserve is recorded when it is probable that a risk-sharing loan will foreclose or has foreclosed and it is expected to result in a loss for the Company, and a reserve for estimated credit losses and a guaranty obligation are recorded for all other risk-sharing loans. We do not record a collateral-based reserve when it is probable that a risk sharing loan will or has , and the disposition proceeds are expected to be higher than the UPB, resulting in no for the Company.
The allowance for risk-sharing obligations related to our $67.5 billion at-risk Fannie Mae servicing portfolio and our Freddie Mac SBL defaulted loans as of December 31, 2025 was $25.0 million compared to $24.2 million as of December 31, 2024.
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As of December 31, 2025, 14 loans (11 Fannie Mae loans and three Freddie Mac SBL loans) were in default with an aggregate UPB of $158.8 million compared to six loans (three Fannie Mae loans and three Freddie Mac SBL loans) with an aggregate UPB of $41.7 million that were in default as of December 31, 2024. The collateral-based reserve on defaulted loans was $12.6 million and $4.0 million as of December 31, 2025 and December 31, 2024, respectively. We had a provision for risk-sharing obligations of $9.4 million for the year ended December 31, 2025 and a benefit for risk-sharing obligations of $974 thousand for the year ended December 31, 2024.
For the ten-year period from January 1, 2016 through December 31, 2025, we recognized net write-offs of risk-sharing obligations of $9.2 million, or an average of less than one basis point annually of the average at risk Fannie Mae portfolio balance.
We are obligated to repurchase loans that are originated for the GSEs’ programs if certain representations and warranties that we provide in connection with the sale of the loans through these programs are breached. In lieu of repurchasing a loan directly from the GSEs, we have entered into Indemnification and Repurchase Agreements. These indemnification agreements delay the requirement to repurchase the loan for periods of up to two years, and in exchange we fund a collateral reserve generally equal to 20% of the unpaid principal balance of the loan and pay a financing fee to the GSE for the uncollateralized portion of the unpaid principal balance. When we agree to repurchase or indemnify the GSEs, we are required to report the loan or underlying collateral as an asset and the related obligation to repurchase the loans or indemnification liability to the GSE as a liability on our Consolidated Balance Sheets. NOTE 5 in the consolidated financial statements provides additional details related to our repurchase and indemnification activity over the past two years. NOTE 2 contains additional details related to our accounting policy for repurchased and indemnified loans.
Over the past two years, we have repurchased, indemnified or expect to indemnify the GSEs for $221.6 million of loans. The uncollateralized portion of the indemnification agreements was $60.7 million, and $46.9 million at December 31, 2025 and 2024, respectively. These loans in 2025 and 2024 are the only repurchase obligations in our history, and we have not yet realized any credit losses associated with these repurchase obligations.
New/Recent Accounting Pronouncements
NOTE 2 in the consolidated financial statements in Item 15 of Part IV in this 10-K contains a description of the accounting pronouncements that the Financial Accounting Standards Board has issued and that have the potential to impact us but have not yet been adopted by us. There were no other accounting pronouncements issued during 2025 that have the potential to impact our consolidated financial statements.
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