PennyMac Financial Services, Inc.

Previous wording

Our investment management subsidiary is Pennymac Capital Management, LLC (“PCM”), a Delaware limited liability company registered with the Securities Exchange Commission (“SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended. PCM has an investment management contract with PMT.

Current wording

Our investment management subsidiary is Pennymac Capital Management, LLC (“PCM”), a Delaware limited liability company registered with the Securities and Exchange Commission (“SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended. PCM has an investment management contract with PMT.

Previous wording

Recent macroeconomic trend and U.S. federal government administration actions with respect to trade, tariffs, government cost reduction efforts and foreign military action 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 the mortgage origination market, which is currently projected to increase from $1.9 trillion in 2025 to $2.2 trillion in 2026 according to mortgage industry economists, although recent increases in interest rates may lead to a reduction in origination estimates for 2026.

Current wording

Recent macroeconomic trends and U.S. federal government administration actions with respect to trade, tariffs, government cost reduction efforts and foreign military action 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 the mortgage origination market, which is currently projected to increase from $1.9 trillion in 2025 to $2.1 trillion in 2026 according to mortgage industry economists, although recent increases in interest rates may lead to a reduction in origination estimates for 2026.

Previous wording

Recent increases in interest and mortgage rates have limited consumers’ opportunity for refinancing. If mortgage rates remain at recent levels or continue to increase, mortgage production activity and prepayment speeds will decrease from levels observed in late 2025 and early 2026. 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 prior periods; however, market indicators currently suggest that the Federal Reserve could begin increasing short-term interest rates later in 2026. 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 the representations and warranties we provide in our loan sales transactions.

Current wording

Recent increases in interest and mortgage rates have significantly limited consumers’ opportunity for refinancing. If mortgage rates remain at recent levels or continue to increase, mortgage production activity and prepayment speeds will continue to decrease from levels observed in late 2025 and early 2026. Increases in the Federal Reserve’s federal funds rate have increased the costs of floating rate borrowings and placement fees we receive in relation to custodial funds that we manage as compared to prior periods. Market indicators currently suggest that the Federal Reserve will continue increasing short-term interest rates. 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 the representations and warranties we provide in our loan sales transactions.

Previous wording

Due to declining mortgage production volumes and improving technology, we implemented cost reduction measures in the third quarter of 2026 to reduce expenses. However, despite our expectation that mortgage production volumes will decline, we expect our volumes of non-qualified mortgage production to increase as we continue to expand our presence in that market. We also expect to sell all of our non-agency correspondent loans and none of our conventional conforming correspondent loans to PMT in the third quarter of 2026.

Current wording

Due to decreasing mortgage production volumes and improving process efficiencies due to technology enhancements, we implemented cost reduction measures in the third quarter of 2026 to reduce expenses, and expect to continue to reduce expenses through early 2027.

Previous wording

We define “Adjusted EBITDA” as net income plus provision for income taxes, depreciation and amortization, excluding decrease (increase) in fair value of mortgage servicing rights (“MSRs”) net of mortgage servicing liabilities (“MSLs”) due to changes in the valuation inputs we use in our valuation models, hedging (gains) losses associated with MSRs, principal-only stripped mortgage-backed securities (“MBS”) valuation-related accretion changes, provision for (reversal of) losses on active loans, stock-based compensation, interest expense on corporate debt or corporate revolving credit facilities and capital lease and certain unusual or non-recurring items.

Current wording

We define “Adjusted EBITDA” as net income plus provision for income taxes, depreciation and amortization, excluding decrease (increase) in fair value of mortgage servicing rights (“MSRs”) net of mortgage servicing liabilities (“MSLs”) due to changes in the valuation inputs we use in our valuation models, hedging (gains) losses associated with MSRs, principal-only stripped mortgage-backed securities (“MBS”) valuation-related accrual changes, provision for (reversal of) losses on active loans, stock-based compensation, interest expense on corporate debt or corporate revolving credit facilities and capital lease and certain unusual or non-recurring items.

Previous wording

For the quarter ended June 30, 2026, income before income taxes decreased $44.9 million compared to the same quarter in 2025. The decrease was primarily due to increases in compensation expense of $35.3 million, origination expense of $25.0 million, servicing expense of $14.2 million and other expense of $16.0 million, partially offset by a $55.3 million increase in loan production revenue due to higher volume in the broker and consumer direct channels and a $12.1 million increase in other income.

Current wording

For the quarter ended September 30, 2026, income before income taxes decreased $193.8 million compared to the same quarter in 2025. The decrease was primarily due to a $142.0 million decrease in loan production revenue due to lower volume across all production channels and a $42.3 million increase in net interest expense.

Previous wording

For the six months ended June 30, 2026, income before income taxes decreased $44.4 million compared to the same period in 2025. The decrease was primarily due to increases in compensation expense of $69.7 million, origination expense of $60.6 million, servicing expense of $30.6 million and other expense of $25.6 million, partially offset by a $205.5 million increase in loan production revenue due to higher volume in the broker and consumer direct channels and a $10.8 million increase in other income.

Current wording

For the nine months ended September 30, 2026, income before income taxes decreased $238.2 million compared to the same period in 2025. The decrease was primarily due to increases in compensation expense of $77.8 million, origination expense of $60.5 million, servicing expense of $40.7 million, other expense of $29.4 million and net interest expense of $76.3 million, partially offset by a $63.6 million increase in loan production revenue due to higher volume in the broker and consumer direct channels and a $10.3 million increase in other income.

Previous wording

In our production segment, revenues reflect the effects of larger mortgage market volumes and increased share in our broker and consumer direct lending channels during the quarter and six months ended June 30, 2026 compared to the same periods in 2025. During the quarter and six months ended June 30, 2026, we recognizedNet gains on loans held for sale at fair value totaling $280.3 million and $625.3 million, respectively, representing an increase of $45.7 million and $169.6 million, respectively, compared to the same periods in 2025.

Current wording

In our production segment, revenues reflect the effects of higher mortgage market volumes and increased share in our broker direct lending channel during the nine months ended September 30, 2026 compared to the same period in 2025. During the quarter and nine months ended September 30, 2026, we recognizedNet gains on loans held for sale at fair value totaling $190.2 million and $815.5 million, respectively, representing a decrease of $124.2 million during the quarter ended September 30, 2026 compared to the same period in 2025, and an increase of $45.4 million during the nine month ended September 30, 2026 compared to the same period in 2025.

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 231% and 218% of our gains on sales of loans held for sale at fair value for the quarter and six months ended June 30, 2026, respectively, as compared to 346% and 321% for the same periods in 2025. 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 207% and 216% of our gains on sales of loans held for sale at fair value for the quarter and nine months ended September 30, 2026, respectively, as compared to 222% and 280% for the same periods in 2025. 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 $5.8 million and $10.3 million for the quarter and six months ended June 30, 2026, respectively, compared to $4.1 million and $7.6 million for the same periods in 2025. The increases in the provision relating to current loan sales was primarily attributable to a change in the mix of loans sold for the quarter and six months ended June 30, 2026 compared to the same periods in 2025

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 $5.4 million and $15.7 million for the quarter and nine months ended September 30, 2026, respectively, compared to $4.7 million and $12.3 million for the same periods in 2025. The increases in the provision relating to current loan sales were primarily attributable to a change in the mix of loans sold for the quarter and nine months ended September 30, 2026 compared to the same periods in 2025.

Previous wording

We also recorded reductions in the liability of $3.7 million and $6.7 million for the quarter and six months ended June 30, 2026, respectively, compared to $2.2 million and $3.6 million for the same periods in 2025. 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 $3.5 million and $10.2 million for the quarter and nine months ended September 30, 2026, respectively, compared to $2.4 million and $6.0 million for the same periods in 2025. 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

During the quarter and six months ended June 30, 2026, we repurchased loans totaling $31.5 million and $56.4 million, respectively. We charged losses of $659,000 and $1.2 million against the liability during the quarter and six months ended June 30, 2026, respectively. 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, 2026, we repurchased loans totaling $31.6 million and $88.0 million, respectively. We charged losses of $895,000 and $2.1 million against the liability during the quarter and nine months ended September 30, 2026, respectively. 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

Loan origination fees increased $10.4 million and $36.2 million during the quarter and six months ended June 30, 2026, respectively, compared to the same periods in 2025 primarily due to an increase in production volumes in the broker and consumer direct lending channels.

Current wording

Loan origination fees decreased $14.8 million during the quarter ended September 30, 2026 compared to the same period in 2025 primarily due to a decrease in production volumes across all lending channels. Loan origination fees increased $21.5 million during the nine months ended September 30, 2026 compared to the same period in 2025 primarily due to an increase in production volumes in the broker and consumer direct lending channels.

Previous wording

Fulfillment fees from PMT represent fees we collect for services we perform on behalf of PMT in connection with the acquisition, packaging, sale and securitization of loans. The fulfillment fees are calculated based on the number of loans we fulfill for PMT and an increase in the number of loans included in PMT’s non-Agency securitization and loan sales.

Current wording

Fulfillment fees from PMT represent fees we collect for services we perform on behalf of PMT in connection with the acquisition, packaging, sale and securitization of loans. The fulfillment fees are calculated based on the number of loans we fulfill for PMT.

Previous wording

Fulfillment fees decreased $791,000 and $344,000 during the quarter and six months ended June 30, 2026, respectively, compared to the same periods in 2025; the decrease was primarily due to a decrease in correspondent loan production volumes for PMT’s account.

Current wording

Fulfillment fees decreased $3.0 million and $3.3 million during the quarter and nine months ended September 30, 2026, respectively, compared to the same periods in 2025; the decrease was primarily due to a decrease in correspondent loan production volumes for PMT’s account.

Previous wording

Loan servicing fees from non-affiliates generally relate to our MSRs which are primarily related to servicing we provide for loans included in Agency securitizations. These fees are contractually established at an annualized percentage of the UPB of the loan serviced and we collect these fees from borrower payments. Loan servicing fees from PMT are primarily related to PMT’s MSRs and are established at monthly per-loan amounts based on whether the loan is a fixed-rate or adjustable-rate loan and the loan’s delinquency or foreclosure status as detailed in Note 5*–Transactions with Related Parties*to the consolidated financial statements included in this Quarterly Report. Subservicing fees from non-affiliates are based upon rates negotiated between the Company and the owner of the servicing rights at the time a subservicing agreement is entered into. Other loan servicing fees are comprised primarily of borrower-contracted fees such as late charges and reconveyance fees.

Current wording

Loan servicing fees from owned servicing generally relate to our MSRs which are primarily related to servicing we provide for loans included in Agency securitizations. These fees are contractually established at an annualized percentage of the UPB of the loan serviced and we collect these fees from borrower payments. Loan servicing fees from subservicing are primarily related to PMT’s MSRs and are established at monthly per-loan amounts based on whether the loan is a fixed-rate or adjustable-rate loan and the loan’s delinquency or foreclosure status as detailed in Note 5*– Related Party Transactions*to the consolidated financial statements included in this Quarterly Report. Subservicing fees from non-affiliates are based upon rates negotiated between the Company and the owner of the servicing rights at the time a subservicing agreement is entered into. Other loan servicing fees are comprised primarily of borrower-contracted fees such as late charges and reconveyance fees.

Previous wording

Loan servicing fees from non-affiliates increased during the quarter and six months ended June 30, 2026 compared to the same periods in 2025. The increases were primarily due to growth of our loan servicing portfolio. Other servicing fees decreased primarily due to decreased incentives received for loss mitigation activities.

Current wording

Loan servicing fees from owned servicing increased during the quarter and nine months ended September 30, 2026 compared to the same periods in 2025. The increases were primarily due to growth of our loan servicing portfolio. Other servicing fees decreased primarily due to decreased incentives received for loss mitigation activities.

Previous wording

Changes in fair value of MSRs attributable to changes in fair value inputs increased during the quarter and six months ended June 30, 2026 compared to the same periods in 2025 due to increases in interest rates during the quarter and six months ended June 30, 2026 as compared to flat to decreasing interest rates during the same periods in 2025. 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 increased during the quarter and nine months ended September 30, 2026 compared to the same periods in 2025 due to increases in interest rates during the quarter and nine months ended September 30, 2026 as compared to flat to decreasing interest rates during the same periods in 2025. 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.

Previous wording

Hedging results reflect valuation losses offsetting the valuation gains from increasing interest rates in the quarter and six months ended June 30, 2026 and in the same periods in 2025.

Current wording

Hedging results reflect valuation losses offsetting the valuation gains from increasing interest rates in the quarter and nine months ended September 30, 2026 compared with interest rate decreases in the same periods in 2025.

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, 2026, realization of cash flows increased compared to the same periods in 2025, primarily due to higher prepayment speeds in the 2026 periods and 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. Realization of cash flows decreased during the quarter ended September 30, 2026 compared to the period in 2025, primarily due to slower prepayment speeds, and increased during the nine months ended September 30, 2026 compared to the same period in 2025, primarily due to faster average prepayment speeds and the growth in our investment in MSRs.

Previous wording

Net interest expense increased $10.6 million and $33.9 million during the quarter and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The increases were primarily due to an increase in interest expense on borrowings attributable to the Company financing a larger investment in MSRs and increased interest shortfalls on repayments of loans serviced for Agency securitizations during 2026, partially offset by an increase in interest income from loans held for sale and placement fees.

Current wording

Net interest expense increased $42.3 million and $76.3 million during the quarter and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. The increase for the quarter ended September 30, 2026 compared to the same period in 2025 was primarily due to a decrease in interest income on principal-only stripped MBS, a decrease in placement fees related to custodial funds and an increase in interest expense on borrowings. The increase for the nine months ended September 30, 2026 compared to the same period in 2025 was primarily due to a decrease in interest income on principal-only stripped MBS, an increase in interest on borrowings attributable to the Company financing a larger investment in MSRs and increased interest shortfalls on repayments of loans serviced for Agency securitizations during 2026, partially offset by an increase in interest income from loans held for sale.

Previous wording

Management fees decreased $59,000 and $309,000 during the quarter and six months ended June 30, 2026, respectively, compared to the same periods in 2025, due to decreases in PMT’s average shareholders’ equity which is the basis for the base management fees.

Current wording

Management fees decreased $150,000 and $459,000 during the quarter and nine months ended September 30, 2026, respectively, compared to the same periods in 2025, due to decreases in PMT’s average shareholders’ equity which is the basis for the base management fees.

Previous wording

Loan origination expenses increased $25.0 million and $60.6 million for the quarter and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The increases were primarily due to higher origination volumes in the broker and consumer direct lending channels.

Current wording

Loan origination expenses decreased $144,000 during the quarter ended September 30, 2026 and increased $60.5 million for the nine months ended September 30, 2026, respectively, compared to the same periods in 2025. The increase for the nine months ended September 30, 2026 compared to the same period in 2025 was primarily due to higher origination volumes in the broker and consumer direct lending channel during the first six months of 2026.

Previous wording

Technology expenses increased $2.2 million and $8.1 million during the quarter and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The increases were primarily due to an increase in software license expenses and a $1.2 million and $1.5 million impairment of capitalized software recorded during the quarter and six months ended June 30, 2026, respectively.

Current wording

Technology expenses increased $7.7 million and $15.8 million during the quarter and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. The increases were primarily due to an increase in software license and artificial intelligence related expenses intended to enhance process efficiencies.

Previous wording

Servicing expenses increased $14.2 million and $30.6 million during the quarter and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The increase was primarily due to increases in provision for losses on servicing advances resulting from higher delinquent loan balances reflecting a larger servicing portfolio and a larger proportion of delinquencies of 90 days or greater.

Current wording

Servicing expenses increased $10.1 million and $40.7 million during the quarter and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. The increases were primarily due to increases in provision for losses on servicing advances resulting from higher delinquent loan balances.

Previous wording

Marketing and advertising expenses increased $4.5 million and $16.2 million during the quarter and six months ended June 30, 2026, respectively, compared to the same periods in 2025. The increases were primarily due to additional marketing expenses incurred as an Official Supporter of Team USA, including marketing during the 2026 winter Olympics.

Current wording

Marketing and advertising expenses increased $172,000 and $16.3 million during the quarter and nine months ended September 30, 2026, respectively, compared to the same periods in 2025. The increases were primarily due to additional marketing expenses incurred as an Official Supporter of Team USA, including marketing during the 2026 Winter Olympics.

Previous wording

Our effective income tax rates were 31.1% and (78.5)% for the quarters ended June 30, 2026 and 2025, respectively, and 23.6% and (17.8)% for the six months ended June 30, 2026 and 2025, respectively. The increase in the effective income tax rates for the quarter and six months ended June 30, 2026 compared to the same periods ended in 2025 is primarily due the non-recurrence of a $81.6 million net income tax benefit recognized in the prior year period, due to the repricing of deferred tax liabilities resulting from changes to California’s apportionment rules enacted into law in June 2025 requiring the Company to apportion income to California using a single sales factor instead of a factor equally weighted among property, payroll and sales.

Current wording

Our effective income tax rates were 32.7% and 23.2% for the quarters ended September 30, 2026 and 2025, respectively, and 25.8% and 5.5% for the nine months ended September 30, 2026 and 2025, respectively. The increase in the effective income tax rates for the quarter ended September 30, 2026, compared to the same quarter in 2025, results from a lower tax deduction recognized for stock option exercises compared to the prior period along with a decrease in pre-tax book income that magnified the impact of our recurring permanent tax adjustments. The increase for the nine months ended September 30, 2026, compared to the same period in 2025, is primarily due to the non-recurrence of a $81.6 million net income tax benefit recognized in the prior year period, due to the repricing of deferred tax liabilities resulting from changes to California’s apportionment rules enacted into law in June 2025 requiring the Company to apportion income to California using a single sales factor instead of a factor equally weighted among property, payroll and sales.

Previous wording

Total assets increased $470.8 million from $29.4 billion at December 31, 2025 to $29.9 billion at June 30, 2026. The increase was primarily due to an increase of $987.9 million of mortgage servicing rights and an increase of $880.9 million of loans eligible for repurchase, partially offset by a decrease of $1.3 billion in loans held for sale at fair value.

Current wording

Total assets increased $523.4 million from $29.4 billion at December 31, 2025 to $29.9 billion at September 30, 2026. The increase was primarily due to an increase of $2.0 billion of mortgage servicing rights at fair value and an increase of $815.9 million of loans eligible for repurchase, partially offset by a decrease of $2.2 billion in loans held for sale at fair value.

Previous wording

Total liabilities increased $442.9 million from $25.1 billion at December 31, 2025 to $25.5 billion at June 30, 2026. The increase was primarily due to an increase of $880.9 million in liability for loans eligible for repurchase, partially offset by a decrease of $358.8 million in short-term borrowings due to a decrease in loans held for sale. As a result of our decreased inventory financing requirements, our leverage ratios slightly decreased during the period ended June 30, 2026 from December 31, 2025.

Current wording

Total liabilities increased $475.8 million from $25.1 billion at December 31, 2025 to $25.6 billion at September 30, 2026. The increase was primarily due to an increase of $815.8 million in liability for loans eligible for repurchase and an increase of $323.0 million in long-term MSR financing, partially offset by a decrease of $724.3 million in short-term borrowings due to a decrease in loans held for sale. As a result of our decreased inventory financing requirements, our leverage ratios slightly decreased during the period ended September 30, 2026 from December 31, 2025.

Previous wording

The net decrease in cash of $87.4 million during the six months ended June 30, 2026 is discussed below.

Current wording

The net decrease in cash of $68.3 million during the nine months ended September 30, 2026 is discussed below.

Previous wording

Net cash provided by operating activities totaled $801.1 million during the six months ended June 30, 2026 compared with net cash provided by operating activities of $934.6 million during the same period in 2025. 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 $1.7 billion during the nine months ended September 30, 2026 compared with net cash provided by operating activities of $237.3 million during the same period in 2025. 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

The decrease in cash flows from other operating sources was primarily driven by an increase in servicing advances and the payment of several large accrued liabilities during the six months ended June 30, 2026, compared to the same period in 2025

Current wording

The decrease in cash flows from other operating sources was primarily driven by an increase in servicing advances and the payment of several large accrued liabilities during the nine months ended September 30, 2026, compared to the same period in 2025.

Previous wording

Net cash used in investing activities during the six months ended June 30, 2026 totaled $533.6 million, primarily due to $262.9 million in net settlement of derivative financial instruments used to hedge our investment in MSRs, a $229.8 million increase in margin deposit and a $124.3 million increase in short-term investment. 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.

Current wording

Net cash used in investing activities during the nine months ended September 30, 2026 totaled $1.2 billion, primarily due to $1.3 billion in net settlement of derivative financial instruments used to hedge our investment in MSRs, partially offset by a $146.4 million repayment of principal-only stripped MBS. 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, $167.1 million in sales of MSRs and $119.3 million from the repayment of principal-only stripped MBS.

Previous wording

Net cash used in financing activities totaled $354.9 million during the six months ended June 30, 2026, primarily due to a decrease of $261.7 million in borrowings and a $50.0 million repurchase of common shares. The decrease in borrowings primarily reflects the decrease in inventory of loans held for sale. 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 during the six months ended June 30, 2026 and 2025.

Current wording

Net cash used in financing activities totaled $527.3 million during the nine months ended September 30, 2026, primarily due to a decrease of $406.8 million in borrowings, a $50.0 million repurchase of common shares and a $47.4 million common stock dividend paid. 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 decreases in borrowings primarily reflects the decrease in inventory of loans held for sale for the nine months ended September 30, 2026 and 2025.

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 quarter ended June 30, 2026 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 the effect of fluctuations throughout the periods of our inventory as we fund and pool mortgage loans for sale in guaranteed mortgage securitizations.