PennyMac Financial Services, Inc.

Previous wording

Recent actions by the U.S. government administration with respect to trade, tariffs and government cost reduction initiatives have led to significant volatility in financial markets and uncertainty regarding the economic outlook, including inflation and interest rates. Elevated interest rates in recent years have constrained growth in the size of the mortgage origination market, which is currently projected to increase from $1.7 trillion in 2024 to $2.0 trillion in 2025 according to mortgage industry economists.

Current wording

Recent actions by the U.S. government administration with respect to trade, tariffs, government cost reduction initiatives and the shutdown of the federal government have led to significant volatility in financial markets and uncertainty regarding the economic outlook, including inflation and interest rates. Elevated interest rates in recent years have constrained growth in the size of the mortgage origination market, which is currently projected to increase from $1.7 trillion in 2024 to $2.0 trillion in 2025 according to mortgage industry economists.

Previous wording

The opportunity for refinancing has increased in recent periods, driven by interest rate volatility and a greater proportion of outstanding mortgages with note rates near current market rates. If such interest rate volatility continues, it may drive greater mortgage production activity and higher prepayment speeds than we have experienced in recent years. Additionally, reductions in the Federal Reserve’s federal funds rate have reduced the costs of floating rate borrowings and placement fees we receive in relation to custodial funds that we manage as compared to the same periods in the prior year. The current period of economic uncertainty and market volatility may also lead to a reduction in economic activity and slowing home price growth or depreciation, which could lead to increasing mortgage delinquencies or defaults and increase losses from our representations and warranties.

Current wording

The opportunity for refinancing has increased in recent periods, driven by interest rate volatility and a greater proportion of outstanding mortgages with note rates near current market rates. If such interest rate volatility continues, it may drive greater mortgage production activity and higher prepayment speeds than we have experienced in recent years. Additionally, reductions in the Federal Reserve’s federal funds rate have reduced the costs of floating rate borrowings and placement fees we receive in relation to custodial funds that we manage as compared to the same periods in the prior year. The current period of economic uncertainty and market volatility may also lead to a reduction in economic activity and slowing home price growth or depreciation, which could lead to increasing mortgage delinquencies or defaults and increase losses from our representations and warranties. A prolonged federal government shutdown could increase loan delinquencies, delay the processing of government loan applications and make it more difficult for customers in flood-prone areas to procure government-backed insurance.

Previous wording

We expect to sell a portion of the conventional loans and all of the jumbo loans from our correspondent channel to PMT in the third quarter of 2025.

Current wording

We expect to sell a portion of the conventional loans and all of the jumbo loans from our correspondent channel to PMT in the fourth quarter of 2025.

Previous wording

For the quarter ended June 30, 2025, income before income taxes decreased $57.4 million compared to the same quarter in 2024. The decrease was primarily due to a $96.0 million increase in total expenses, a $17.2 million decrease inNet loan servicing fees resulting from increases in net MSR valuation losses in excess of growth in servicing fees, a $10.6 million increase inNet interest expense and a $10.6 million decrease in other income, partially offset by

Current wording

For the quarter ended September 30, 2025, income before income taxes increased $142.4 million compared to the same quarter in 2024. The increase was primarily due to a $165.4 million increase inNet loan servicing fees resulting from growth in servicing fees and decreased net MSR valuation losses, as well as a $64.5 million increase in loan production revenue due to higher volume across all production channels, partially offset by a $9.0 million increase inNet interest (expense) income and a $78.6 million increase in total expenses.

Previous wording

For the six months ended June 30, 2025, income before income taxes increased $2.9 million compared to the same period in 2024. The increase was primarily due to a $147.1 million increase in loan production revenue due to higher volume across all production channels and a $46.1 million increase inNet loan servicing fees resulting from growth in our servicing portfolio, partially offset by a $19.5 million increase inNet interest expense, a $9.9 million decrease in other income and a $160.9 million increase in total expenses.

Current wording

For the nine months ended September 30, 2025, income before income taxes increased $145.4 million compared to the same period in 2024. The increase was primarily due to a $211.7 million increase in loan production revenue due to higher volume across all production channels and a $211.5 million increase inNet loan servicing fees resulting from growth in our servicing portfolio and decreased net MSR valuation losses, partially offset by a $28.5 million increase inNet interest (expense) income and a $239.6 million increase in total expenses.

Previous wording

In our production segment, revenues reflect the effects of larger mortgage market volumes during the quarter and six months ended June 30, 2025 compared to the same periods in 2024. During the quarter and six months ended June 30, 2025, we recognizedNet gains on loans held for sale at fair value totaling $234.7 million and $455.7 million, respectively, representing an increase of $58.6 million and $117.2 million, respectively, compared to the same periods in 2024.

Current wording

In our production segment, revenues reflect the effects of larger mortgage market volumes and increased share in our direct lending channels during the quarter and nine months ended September 30, 2025 compared to the same periods in 2024. During the quarter and nine months ended September 30, 2025, we recognizedNet gains on loans held for sale at fair value totaling $314.5 million and $770.1 million, respectively, representing an increase of $57.6 million and $174.8 million, respectively, compared to the same periods in 2024.

Previous wording

The MSRs, MSLs, and liabilities for representations and warranties we recognize represent our estimate of the fair value of future benefits and costs we will realize for years in the future. These estimates represented approximately 346% and 321% of our gains on sales of loans held for sale at fair value for the quarter and six months ended June 30, 2025, respectively, as compared to 307% and 282% for the same periods in 2024. These estimates change as circumstances change and changes in these estimates are recognized in income in subsequent periods. Subsequent changes in the fair value of our MSRs may significantly affect our income.

Current wording

The MSRs, MSLs, and liabilities for representations and warranties we recognize represent our estimate of the fair value of future benefits and costs we will realize for years in the future. These estimates represented approximately 222% and 280% of our gains on sales of loans held for sale at fair value for the quarter and nine months ended September 30, 2025, respectively, as compared to 225% and 257% for the same periods in 2024. These estimates change as circumstances change and changes in these estimates are recognized in income in subsequent periods. Subsequent changes in the fair value of our MSRs may significantly affect our income.

Previous wording

We recorded provisions for losses under representations and warranties relating to current loan sales as a component ofNet gains on loans held for sale at fair value totaling $4.1 million and $7.6 million for the quarter and six months ended June 30, 2025, respectively, compared to $4.1 million and $8.1 million for the same periods in 2024. The slight decrease in the provision relating to current loan sales was primarily attributable to a lower expectation of future repurchases due to improved collateral quality for the quarter and six months ended June 30, 2025 compared to the same periods in 2024.

Current wording

We recorded provisions for losses under representations and warranties relating to current loan sales as a component ofNet gains on loans held for sale at fair value totaling $4.7 million and $12.3 million for the quarter and nine months ended September 30, 2025, respectively, compared to $4.1 million and $12.2 million for the same periods in 2024. The increases in the provision relating to current loan sales was primarily attributable to an increase in production volume for the quarter and nine months ended September 30, 2025 compared to the same periods in 2024.

Previous wording

We also recorded reductions in the liability of $2.2 million and $3.6 million for the quarter and six months ended June 30, 2025 compared to $4.1 million and $7.4 million for the same periods in 2024. The reductions in the liability resulted from previously sold loans meeting performance criteria established by the Agencies which significantly limit the likelihood of certain repurchase or indemnification claims.

Current wording

We also recorded reductions in the liability of $2.4 million and $6.0 million for the quarter and nine months ended September 30, 2025 compared to $3.5 million and $10.9 million for the same periods in 2024. The reductions in the liability resulted from previously sold loans meeting performance criteria established by the Agencies which significantly limit the likelihood of certain repurchase or indemnification claims.

Previous wording

Following is a summary of loan repurchase activity and the UPB of loans subject to representations and warranties:

Current wording

Following is a summary of loan repurchase and loss activity:

Previous wording

During the quarter and six months ended June 30, 2025, we repurchased loans totaling $25.4 million and $45.4 million, respectively. We charged losses of $845,000 and $1.3 million against the liability during the quarter and six months ended June 30, 2025. Our losses arising from representations and warranties have historically been minimized by our ability to either recover most of the losses from our correspondent sellers or from our ability to profitably refinance and resell repurchased loans.

Current wording

During the quarter and nine months ended September 30, 2025, we repurchased loans totaling $31.7 million and $77.1 million, respectively. We charged losses of $1.1 million and $2.4 million against the liability during the quarter and nine months ended September 30, 2025. Our losses arising from representations and warranties have historically been minimized by our ability to either recover most of the losses from our correspondent sellers or from our ability to profitably refinance and resell repurchased loans.

Previous wording

Elevated interest rate levels may affect certain of our correspondent sellers’ ability to honor their obligations to repurchase defective loans, may increase the level of borrower defaults and may increase the level of repurchases we are required to make, thereby making it more difficult to minimize losses on repurchased loans. We expect these developments may increase the losses we incur in relation to our recorded liability for representations and warranties compared to our historical experience. However, we believe our recorded liability is presently adequate to absorb such losses.

Current wording

Elevated interest rate levels may affect certain of our correspondent sellers’ ability to honor their obligations to repurchase defective loans, may increase the level of borrower defaults and may increase the level of repurchases we are required to make. We expect these developments may increase the losses we incur in relation to our recorded liability for representations and warranties compared to our historical experience. However, we believe our recorded liability is presently adequate to absorb such losses.

Previous wording

Loan origination fees increased $17.0 million and $27.3 million during the quarter and six months ended June 30, 2025, compared to the same periods in 2024 primarily due to an increase in production volume.

Current wording

Loan origination fees increased $12.2 million and $39.5 million during the quarter and nine months ended September 30, 2025, compared to the same periods in 2024 primarily due to an increase in production volume.

Previous wording

Fulfillment fees increased $1.4 million and $2.7 million during the quarter and six months ended June 30, 2025, compared to the same periods in 2024; the increase was primarily due to an increase in the number of loans we fulfilled for PMT during the quarter and six months ended June 30, 2025 compared to the same periods in 2024.

Current wording

Fulfillment fees decreased $5.3 million and $2.7 million during the quarter and nine months ended September 30, 2025, compared to the same periods in 2024; the decrease was primarily due to a decrease in the number of loans we fulfilled for PMT during the quarter and nine months ended September 30, 2025 compared to the same periods in 2024.

Previous wording

Loan servicing fees from non-affiliates and other fees increased during the quarter and six months ended June 30, 2025 compared to the same periods in 2024. The increases were primarily due to growth of our loan servicing portfolio. Other servicing fees increased due to growth in our MSR portfolio combined with increased incentives received for loss mitigation activities.

Current wording

Loan servicing fees from non-affiliates and other fees increased during the quarter and nine months ended September 30, 2025 compared to the same periods in 2024. The increases were primarily due to growth of our loan servicing portfolio. Other servicing fees increased due to growth in our MSR portfolio combined with increased incentives received for loss mitigation activities.

Previous wording

We have elected to carry our servicing assets and liabilities at fair value. Changes in fair value have two components: changes due to realization of the contractual servicing fees and changes due to changes in market inputs used to estimate the fair value of MSRs and MSLs. We endeavor to moderate the effects of changes in fair value by entering into derivatives transactions and holding principal-only stripped mortgage-backed securities.

Current wording

We have elected to carry our servicing assets and liabilities at fair value. Changes in fair value have two components: changes due to realization of cash flows of the MSRs and MSLs and changes due to changes in market inputs used to estimate the fair value of MSRs and MSLs. We endeavor to moderate the effects of changes in fair value by entering into derivatives transactions and holding principal-only stripped mortgage-backed securities.

Previous wording

Changes in fair value of MSRs attributable to changes in fair value inputs decreased during the quarter and six months ended June 30, 2025 compared to the same periods in 2024 due to decreases in interest rates during the quarter and six months ended June 30, 2025 compared to increasing interest rates during the same periods in 2024. Increasing interest rates reduce the rate of prepayments of the underlying loans, which increases the cash flows expected from the servicing rights, while decreasing interest rates have the opposite effect.

Current wording

Changes in fair value of MSRs attributable to changes in fair value inputs did not decline as significantly during the quarter ended September 30, 2025 compared to the same period in 2024 due to less significant decreases in interest rates during the quarter ended September 30, 2025 compared to the same period in 2024. Changes in fair value of MSRs attributable to changes in fair value inputs decreased more significantly during the nine months ended September 30, 2025 compared to the same periods in 2024 due to more significant decreases in interest rates during the nine months ended September 30, 2025 compared to the same period in 2024. Decreasing interest rates increase the rate of prepayments of the underlying loans, which decreases the cash flows expected from the servicing rights, while increasing interest rates have the opposite effect.

Previous wording

Hedging results reflect valuation losses attributable to the effects of interest rate volatility and increased hedging costs on the fair value of the hedging instruments during the quarter and interest rate decreases over the six months ended June 30, 2025 compared with interest rate increases in the same periods in 2024.

Current wording

Hedging results reflect valuation gains offsetting the valuation losses from decreasing interest rates in the quarters ended September 30, 2025 and 2024, and in the nine months ended September 30, 2025. In the nine months ended September 30, 2024, hedging results reflect valuation losses attributable to the effects of interest rate volatility and increased hedging costs on the fair value of the hedging instruments.

Previous wording

Changes in fair value attributable to realization of cash flows are influenced by changes in the level of servicing assets and liabilities and changes in estimates of the remaining cash flows to be realized. During the quarter and six months ended June 30, 2025, realization of cash flows increased compared to the same periods in 2024, primarily due to the growth in our investment in MSRs.

Current wording

Changes in fair value attributable to realization of cash flows are influenced by changes in the level of servicing assets and liabilities and changes in estimates of the remaining cash flows to be realized. During the quarter and nine months ended September 30, 2025, realization of cash flows increased compared to the same periods in 2024, primarily due to the growth in our investment in MSRs and increased realized and projected prepayments.

Previous wording

Following is a summary of net interest expense:

Current wording

Following is a summary of net interest (expense) income:

Previous wording

Net interest expense increased $10.6 million and $19.5 million during the quarter and six months ended June 30, 2025 compared to the same periods in 2024. The increases were primarily due to the Company financing a larger investment in MSRs as well as inventory of loans held for sale and principal-only stripped MBS during 2025 as compared to 2024 and a decrease in interest income from cash and short-term investment due to a decrease in average cash balances, partially offset by increases in interest income from loans held for sale and earnings from custodial funds.

Current wording

Net interest expense increased $9.0 million and $28.5 million during the quarter and nine months ended September 30, 2025 compared to the same periods in 2024. The increases were primarily due to the Company financing a larger investment in MSRs during 2025 as compared to 2024.

Previous wording

Management fees decreased $264,000 and $440,000 during the quarter and six months ended June 30, 2025 compared to the same periods in 2024, due to decreases in PMT’s average shareholders’ equity which is the basis for the base management fees.

Current wording

Management fees decreased $241,000 and $681,000 during the quarter and nine months ended September 30, 2025 compared to the same periods in 2024, due to decreases in PMT’s average shareholders’ equity which is the basis for the base management fees.

Previous wording

June 30, 2025 compared to the same periods in 2024. The increases were primarily due to an increase in head count and increased incentive compensation during the quarter and six months ended June 30, 2025, reflecting higher loan production volume and higher return on equity.

Current wording

Compensation expenses increased $34.0 million and $115.2 million during the quarter and nine months ended September 30, 2025 compared to the same periods in 2024. The increases were primarily due to an increase in head count and increased incentive compensation during the quarter and nine months ended September 30, 2025, reflecting higher loan production volume and increased bonus accruals resulting from higher profitability.

Previous wording

Loan origination expenses increased $28.6 million and $42.1 million for the quarter and six months ended June 30, 2025 compared to the same periods in 2024. The increases were primarily due to higher origination volumes.

Current wording

Loan origination expenses increased $24.2 million and $66.3 million for the quarter and nine months ended September 30, 2025 compared to the same periods in 2024. The increases were primarily due to higher origination volumes.

Previous wording

Technology expenses increased $6.6 million and $10.8 million during the quarter and six months ended June 30, 2025 compared to the same quarter in 2024. The increases were primarily due to increases in virtual desktop and cloud-related expenses.

Current wording

Technology expenses increased $7.7 million and $18.5 million during the quarter and nine months ended September 30, 2025 compared to the same quarter in 2024. The increases were primarily due to increases in virtual desktop and cloud-related expenses and a $4.3 million impairment of capitalized software recorded during the quarter ended September 30, 2025.

Previous wording

Servicing expenses increased $5.4 million and $11.1 million during the quarter and six months ended June 30, 2025 compared to the same periods in 2024. The increases were primarily due to increases in provision for losses on servicing advances resulting from higher delinquent loan balances during the quarter and six months ended June 30, 2025 compared to the same periods in 2024.

Current wording

Servicing expenses increased $220,000 and $11.4 million during the quarter and nine months ended September 30, 2025 compared to the same periods in 2024. The increases were primarily due to increases in provision for losses on servicing advances resulting from higher delinquent loan balances resulting from a larger servicing portfolio during the quarter and nine months ended September 30, 2025 compared to the same periods in 2024.

Previous wording

Marketing and advertising expenses increased $6.9 million and $12.7 million during the quarter and six months ended June 30, 2025 compared to the same periods in 2024. The increases were primarily due to additional marketing expenses incurred as an Official Supporter of Team USA and increased marketing expenses for consumer direct lending.

Current wording

Marketing and advertising expenses increased $8.9 million and $21.6 million during the quarter and nine months ended September 30, 2025 compared to the same periods in 2024. The increases were primarily due to additional marketing expenses incurred as an Official Supporter of Team USA and increased marketing expenses for consumer direct lending.

Previous wording

Our effective income tax rates were (78.5)% and 26.6% for the quarters ended June 30, 2025 and 2024, respectively, and (17.8)% and 22.6% for the six months ended June 30, 2025 and 2024, respectively. The decreases in the effective income tax rates for the quarter and six months ended June 30, 2025 compared to the same periods in 2024 are primarily due to a non-recurring $81.6 million net income tax benefit primarily due to the repricing of deferred tax liabilities resulting from changes to California's apportionment rules with the enactment of California Senate Bill 132, signed into law June 27, 2025 and effective January 1, 2025. The law requires financial institutions to apportion their California income using a single sales factor instead of a factor equally weighted with property, payroll and sales.

Current wording

Our effective income tax rates were 23.2% and 26.1% for the quarters ended September 30, 2025 and 2024, respectively, and 5.5% and 23.8% for the nine months ended September 30, 2025 and 2024, respectively. The decreases in the effective income tax rates for the quarter and nine months ended September 30, 2025 compared to the same periods in 2024 are primarily due to the enactment of California Senate Bill 132, signed into law June 27, 2025 and effective January 1, 2025. The law requires financial institutions to apportion their California income using a single sales factor instead of a factor equally weighted with property, payroll and sales. Our effective income tax rate for the nine months ended September 30, 2025 includes a repricing of deferred tax liabilities resulting from this apportionment rule change.

Previous wording

Total assets decreased $1.9 billion from $26.1 billion at December 31, 2024 to $24.2 billion at June 30, 2025. The decrease was primarily due to a decrease of $1.3 billion in loans held for sale at fair value and a decrease of $1.2 billion of loans eligible for repurchase, partially offset by an increase of $786.7 million of mortgage servicing rights.

Current wording

Total assets decreased $685.8 million from $26.1 billion at December 31, 2024 to $25.4 billion at September 30, 2025. The decrease was primarily due to a decrease of $727.0 million in loans held for sale at fair value and a decrease of $740.2 million of loans eligible for repurchase, partially offset by an increase of $909.4 million of mortgage servicing rights.

Previous wording

Total liabilities decreased $2.1 billion from $22.3 billion at December 31, 2024 to $20.2 billion at June 30, 2025. The decrease was primarily due to a decrease of $838.0 million in borrowings and a decrease of $1.2 billion in liability for loans eligible for repurchase. As a result of our decreased inventory financing requirements, our leverage ratios decreased during the quarter ended June 30, 2025 from December 31, 2024.

Current wording

Total liabilities decreased $1.1 billion from $22.3 billion at December 31, 2024 to $21.0 billion at September 30, 2025. The decrease was primarily due to a decrease of $410.3 million in borrowings and a decrease of $740.2 million in liability for loans eligible for repurchase. As a result of our decreased inventory financing requirements, our leverage ratios decreased during the quarter ended September 30, 2025 from December 31, 2024.

Previous wording

The net decrease in cash of $76.3 million during the six months ended June 30, 2025 is discussed below.

Current wording

The net increase in cash of $383.4 million during the nine months ended September 30, 2025 is discussed below.

Previous wording

Net cash provided by operating activities totaled $934.6 million during the six months ended June 30, 2025 compared with net cash used in operating activities of $2.0 billion during the same period in 2024. Our cash flows from operating activities are primarily influenced by changes in the levels of our inventory of mortgage loans held for sale as shown below:

Current wording

Net cash provided by operating activities totaled $237.3 million during the nine months ended September 30, 2025 compared with net cash used in operating activities of $2.4 billion during the same period in 2024. Our cash flows from operating activities are primarily influenced by changes in the levels of our inventory of mortgage loans held for sale as shown below:

Previous wording

Net cash used in investing activities during the six months ended June 30, 2025 totaled $127.0 million, primarily due to a $140.7 million increase in margin deposits. Net cash used in investing activities during the six months ended June 30, 2024 totaled $1.5 billion, primarily due to $935.4 million in purchase of principal-only stripped MBS, $391.5 million in net settlement of derivative financial instruments used to hedge our investment in MSRs and a $178.5 million increase in short-term investment.

Current wording

Net cash provided by investing activities during the nine months ended September 30, 2025 totaled $626.0 million, primarily due to a $358.3 million decrease in short-term investment, a $185.4 million sale of MSRs and $119.3 million from the repayment of principal-only stripped mortgage-backed securities. Net cash used in investing activities during the nine months ended September 30, 2024 totaled $1.8 billion, primarily due to $935.4 million in purchases of principal-only stripped mortgage-backed securities, a $657.7 million increase in short-term investment and $210.2 million in net settlement of derivative financial instruments used to hedge our investment in MSRs.

Previous wording

Net cash used in financing activities totaled $883.9 million during the six months ended June 30, 2025, primarily due to a decrease of $811.5 million in borrowings. The decrease in borrowings primarily reflects the decrease in inventory of loans held for sale. Net cash provided by financing activities totaled $3.2 billion during the six months ended June 30, 2024, primarily due to an increase of $3.2 billion in borrowings. The increase in borrowings primarily reflects the increase in inventory of loans held for sale and our investment in MSRs.

Current wording

Net cash used in financing activities totaled $479.8 million during the nine months ended September 30, 2025, primarily due to a decrease of $378.0 million in borrowings. The decrease in borrowings primarily reflects the decrease in inventory of loans held for sale. Net cash provided by financing activities totaled $3.4 billion during the nine months ended September 30, 2024, primarily due to an increase of $3.4 billion in borrowings. The increase in borrowings primarily reflects the increase in inventory of loans held for sale, principal-only stripped mortgage-backed securities and our investment in MSRs.

Previous wording

Secured debt facilities for MSRs and servicing advances take various forms. Fannie Mae MSRs, Ginnie Mae MSRs and servicing advances may be pledged to special purpose entities, each of which may issue variable funding notes (“VFNs”) and term notes and term loans that are secured by such Ginnie Mae or Fannie Mae assets. Term notes are issued to qualified institutional buyers under Rule 144A of Securities Act and term loans are syndicated to banking entities, while the VFNs are sold to bank partners under agreements to repurchase. Freddie Mac MSRs are pledged to lenders under a bi-lateral loan and security agreement.

Current wording

Secured debt facilities for MSRs and servicing advances take various forms. Fannie Mae MSRs, Ginnie Mae MSRs and servicing advances may be pledged to special purpose entities, each of which may issue variable funding notes (“VFNs”) and term notes and term loans that are secured by such Ginnie Mae or Fannie Mae assets. Term notes are issued to qualified institutional buyers under Rule 144A of the Securities Act and term loans are syndicated to banking entities, while the VFNs are sold to bank partners under agreements to repurchase. Freddie Mac MSRs are pledged to lenders under a bi-lateral loan and security agreement.

Previous wording

On May 1, 2025, PFSI issued $850 million in 6.875% unsecured senior notes due in 2032 in a private placement to “qualified institutional buyers” under Rule 144A of the Securities Act. On May 12, 2025, PFSI redeemed $650 million in 5.375% unsecured senior notes due in October, 2025. On June 20, 2025, PFSI, through its wholly-owned subsidiaries PNMAC, PLS and the Issuer Trust, redeemed $500 million in 4.25% Term Notes due in May 2027.

Current wording

On August 7, 2025, PFSI issued $650 million in 6.75% unsecured senior notes due in 2034 in a private placement to “qualified institutional buyers” under Rule 144A of the Securities Act. On August 14, 2025, PFSI, through its wholly-owned subsidiaries PNMAC, PLS and the Issuer Trust, issued $300 million in 2.45% Term Notes due in August 2030. On August 25, 2025, PFSI, through its wholly-owned subsidiaries PNMAC, PLS and the Issuer Trust, partially redeemed $200 million of Term Loans due in February 2028.

Previous wording

The differences between the average and maximum daily balances on our repurchase agreements reflect both the effect of increasing loan inventory levels during the six months ended June 30, 2025 and the fluctuations throughout the periods of our inventory as we fund and pool mortgage loans for sale in guaranteed mortgage securitizations.

Current wording

The differences between the average and maximum daily balances on our repurchase agreements reflect both the effect of increasing loan inventory levels during the nine months ended September 30, 2025 and the fluctuations throughout the periods of our inventory as we fund and pool mortgage loans for sale in guaranteed mortgage securitizations.

Previous wording

We are also subject to liquidity and net worth requirements established by the Federal Housing Finance Agency (“FHFA”) for Agency seller/servicers and Ginnie Mae for single-family issuers. FHFA and Ginnie Mae have established minimum liquidity and net worth requirements for their approved non-depository single-family sellers/servicers in the case of Fannie Mae, Freddie Mac, and Ginnie Mae for its approved single-family issuers, and Ginnie Mae has issued risk-based capital requirements. We believe that we are in compliance with the Agency’s pending requirements as of June 30, 2025.

Current wording

We are also subject to liquidity and net worth requirements established by the Federal Housing Finance Agency (“FHFA”) for Agency seller/servicers and Ginnie Mae for single-family issuers. FHFA and Ginnie Mae have established minimum liquidity and net worth requirements for their approved non-depository single-family sellers/servicers in the case of Fannie Mae, Freddie Mac, and Ginnie Mae for its approved single-family issuers, and Ginnie Mae has issued risk-based capital requirements. We believe that we are in compliance with the Agency’s requirements as of September 30, 2025.

Previous wording

described further above in “Liquidity and Capital Resources”. As of June 30, 2025, we believe PLS was in compliance in all material respects with these covenants.

Current wording

PLS is required to comply with financial and other restrictive covenants in certain financing agreements, as described further above in “Liquidity and Capital Resources”. As of September 30, 2025, we believe PLS was in compliance in all material respects with these covenants.