loanDepot, Inc.

Previous wording

Our mortgage loan refinancing volumes (and to a lesser degree, our purchase volumes), balance sheets, and results of operations are influenced by changes in interest rates and how we effectively manage the related interest rate risk. The majority of our assets are subject to interest rate risk, including LHFS, LHFI, IRLCs, trading securities, servicing rights, forward sales contracts, interest rate swap futures and put options. We refer to such forward sales contracts, interest rate swap futures and put options collectively as “Hedging Instruments.” As interest rates increase, our LHFS, LHFI and IRLCs generally decrease in value while our Hedging Instruments utilized to hedge against interest rate risk typically increase in value. Rising interest rates cause our expected mortgage loan servicing revenues to increase due to a decline in mortgage loan prepayments which extends the average life of our servicing portfolio and increases the value of our servicing rights. Conversely, as interest rates decrease, our LHFS, LHFI and IRLCs generally increase in value while our Hedging Instruments decrease in value. In a declining interest rate environment, borrowers tend to refinance their mortgage loans, which increases prepayment speeds and causes expected mortgage loan servicing revenues to decrease, which reduces the average life of our servicing portfolio and decreases the value of our servicing rights. Changes in fair value of our servicing rights are recorded as unrealized gains and losses in change in fair value of servicing rights, net, in our consolidated statements of operations.

Current wording

Our mortgage loan refinancing volumes (and to a lesser degree, our purchase volumes), balance sheets, and results of operations are influenced by changes in interest rates and how we effectively manage the related interest rate risk. The majority of our assets are subject to interest rate risk, including LHFS, LHFI, IRLCs, trading securities, servicing rights, forward sales contracts, interest rate swap futures and put options. We refer to such forward sales contracts, interest rate swap futures and put options collectively as “Hedging Instruments.” As interest rates increase, our LHFS, LHFI and IRLCs generally decrease in value while our Hedging Instruments utilized to hedge against interest rate risk typically increase in value. Rising interest rates cause our expected mortgage loan servicing revenues to increase due to a decline in mortgage loan prepayments which extends the average life of our servicing portfolio and increases the value of our servicing rights. Conversely, as interest rates decrease, our LHFS, LHFI and IRLCs generally increase in value while our Hedging Instruments decrease in value. In a declining interest rate environment, borrowers tend to refinance their mortgage loans, which increases prepayment speeds and causes expected mortgage loan servicing revenues to decrease, which reduces the average life of our servicing portfolio and decreases the value of our servicing rights. Changes in fair value of our servicing rights are recorded as unrealized gains and losses in change in fair value of servicing rights, net, in our consolidated statements of operations. Beginning in early 2022, long-term interest rates began a period of sustained increases. Although the Federal Reserve lowered interest rates by 100 basis points in late 2024, long-term interest rates, which fixed rate mortgages are linked with, have not materially decreased. In addition, continued uncertainty surrounding the impact of recent and potential governmental actions, such as tariffs, trade regulations, reductions of governmental employees and governmental spending, tax reform, and actions taken to address the debt ceiling, may cause long-term interest rates and mortgage rates to remain elevated, adversely impacting consumer sentiment and spending, which may lead to reduced demand for real estate, or have other negative impacts on the mortgage and real estate markets. The sustained increase in mortgage interest rates adversely impacted mortgage loan origination volumes, reducing demand for refinance mortgages and impacting affordability and qualification for homebuyers as well as due to alarge number of existing homeowners benefiting from low-interest rates, adversely impacting purchase transaction supply.

Previous wording

Vision 2025, launched in July of 2022, was a critical factor in our successful navigation of unprecedented and challenging market conditions over the past three years. During the third quarter of 2024, we achieved profitability and successfully completed our Vision 2025 strategic plan. The subsequent launch of Project North Star builds on the strategic pillars of Vision 2025 by focusing on our goal of becoming the lifetime lending partner of choice for homeowners, growing our mortgage reach and capabilities, growing our servicing portfolio over the long-term, and investing in low touch, data-driven mortgage processing workflow to drive operating leverage During 2025, we anticipate continued market challenges, but we believe that the implementation of Project North Star will allow us to capture the benefit of higher market volumes while we continue to capitalize on our ongoing investments in operational efficiency to achieve sustainable profitability in a wide variety of operating environments.

Current wording

Vision 2025, launched in July of 2022, was a critical factor in our successful navigation of unprecedented and challenging market conditions over the past three years. During the third quarter of 2024, we achieved profitability and successfully completed our Vision 2025 strategic plan. Our current strategy builds on the pillars of Vision 2025 by focusing on our goal of becoming the lifetime lending partner of choice for homeowners, growing our mortgage reach and capabilities, growing our servicing portfolio over the long-term, and investing in low touch, data-driven mortgage processing workflow to drive operating leverage. During 2025, we anticipate continued market challenges, but we believe that the implementation of these initiatives will allow us to capture responsible, profitable market share growth while we continue to capitalize on our ongoing investments in technology driven operational efficiencies to achieve sustainable profitability in a wide variety of operating environments.

Previous wording

The decrease in net loss of $30.8 million was primarily due to a $50.8 million increase in total net revenues, offset by a $11.8 million increase in total expenses. The increase in total revenues was primarily due to an increase in gain on origination and sale of loans, net from increased volume and higher gain on sale margins and an increase in origination fee income. The increase in total expenses was driven by an increase in personnel expense as headcount increased, an increase in commission expense, an increase in marketing and advertising expense and an increase in direct origination expense consistent with the increase in funded volume of loans, offset by a decrease in general and administrative expense primarily as the result of expenses related to the Cybersecurity Incident in 2024.

Current wording

The decrease in net loss of $40.6 million was primarily due to a $27.7 million decrease in total expenses, coupled with a $17.1 million increase in total net revenues. The increase in total revenues was primarily due to an increase in gain on origination and sale of loans, net and origination fee income from higher loan origination volume, higher gain on sale margins, and a lower net negative change in fair value of servicing rights, net, partially offset by a decrease in servicing fee income. The decrease in total expenses was driven by a decrease in general and administrative expense primarily as the result of expenses related to the Cybersecurity Incident in 2024 and a decrease in other interest expense, offset by an increase in personnel expense from higher volume-related commission costs.

Previous wording

Net Interest Income. Net interest income primarily represents income earned on LHFS offset by interest expenses on amounts borrowed under warehouse and other lines of credit to finance these loans until sold. Our LHFS are generally tied to longer-term interest rates while our warehouse lines of credit are tied to short-term interest rates. Therefore, our net interest income is impacted by the term structure of market interest rates. The increase in net interest income was due to a $230.8 million increase in the average balance of LHFS and a higher yield on LHFS, in addition to a decrease in cost of funds on warehouse lines, offset by a $214.2 million increase in average balance of warehouse lines.

Current wording

Net Interest Income. Net interest income primarily represents income earned on LHFS offset by interest expenses on amounts borrowed under warehouse and other lines of credit to finance these loans until sold. Our LHFS are generally tied to longer-term interest rates while our warehouse lines of credit are tied to short-term interest rates. Therefore, our net interest income is impacted by the term structure of market interest rates. The increase in net interest income was due to a $456.6 million increase in the average balance of LHFS, and a decrease in cost of funds on warehouse lines as short-term interest rates declined, offset by lower yields on LHFS and $449.6 million increase in average balance of warehouse lines.

Previous wording

Origination Income, Net. Origination income, net, reflects the fees that we earn, net of lender credits we pay, from originating loans. Origination income includes loan origination fees, processing fees, underwriting fees, and other fees collected from the borrower at the time of funding. Lender credits typically include rebates or concessions to borrowers for certain loan origination costs. The $12.3 million, or 90.0%, increase in origination income, net, was the result of a 13.5% increase in loan origination volumes and a 44.4% decrease in lender credits as a result of seasonal declines in JV origination volumes.

Current wording

Origination Income, Net. Origination income, net, reflects the fees that we earn, net of lender credits we pay, from originating loans. Origination income includes loan origination fees, processing fees, underwriting fees, and other fees collected from the borrower at the time of funding. Lender credits typically include rebates or concessions to borrowers for certain loan origination costs. The $15.4 million, or 79.2%, increase in origination income, net, was the result of a 10.6% increase in loan origination volumes and an increase in fees charged on JV origination volumes.

Previous wording

Servicing Fee Income. Servicing fee income reflects contractual servicing fees and ancillary and other fees (including late charges) related to the servicing of mortgage loans. The decrease of $19.8 million or 15.9% reflects a decrease in servicing fee collections due to a decrease of $27.4 billion in the average UPB of our servicing portfolio as the result of bulk sales completed in the first and second quarter of 2024.

Current wording

Servicing Fee Income. Servicing fee income reflects contractual servicing fees and ancillary and other fees (including late charges) related to the servicing of mortgage loans. The decrease of $16.9 million or 13.5% reflects a decrease in servicing fee collections due to a decrease of $14.9 billion in the average UPB of our servicing portfolio as the result of bulk sales completed in the second quarter of 2024.

Previous wording

Change in Fair Value of Servicing Rights, Net. Change in fair value of servicing rights, net includes (i) fair value gains or losses net of Hedging Instrument gains or losses; (ii) collection/realization of cash flows, which includes principal amortization and prepayments; and (iii) realized gains or losses on the sales of servicing rights. The increase of $4.2 million or 9.2% reflects an increased gain of $3.2 million in fair value, net of hedge and a $1.0 million decrease in the provision for losses related to bulk sales in the prior year.

Current wording

Change in Fair Value of Servicing Rights, Net. Change in fair value of servicing rights, net includes (i) fair value gains or losses net of Hedging Instrument gains or losses; (ii) collection/realization of cash flows, which includes principal amortization and prepayments; and (iii) realized gains or losses on the sales of servicing rights. The increase of $8.4 million or 13.8% reflects an increased gain of $3.2 million in fair value, net of hedge and a $4.8 million decrease in the provision for losses related to bulk sales in the prior year.

Previous wording

Personnel Expense. Personnel expense includes salaries, commissions, incentive compensation, benefits, and other employee costs. The $15.8 million or 11.8% increase in personnel expense was attributable to a $10.3 million increase in salaries and benefits related to increased headcount and severance expenses, and a $5.5 million volume-related increase in commissions. As of March 31, 2025, we had 4,547 employees compared to 4,188 employees as of March 31, 2024.

Current wording

Personnel Expense. Personnel expense includes salaries, commissions, incentive compensation, benefits, and other employee costs. The $13.1 million or 9.3% increase in personnel expense was attributable to a $10.6 million volume-related increase in commissions and a $10.7 million increase in salaries and benefits related to increased headcount and capitalized salaries, offset by a $8.2 million reduction in equity compensation expense primarily due to forfeitures. As of June 30, 2025, we had 4,509 employees compared to 4,246 employees as of June 30, 2024.

Previous wording

Marketing and Advertising Expense. The $9.9 million or 34.9% increase in marketing expense is primarily related to an increase in aggregate lead generation as part of our marketing strategy to cultivate online leads for increased purchase and cash-out refinance volume.

Current wording

Marketing and Advertising Expense. The $6.7 million or 21.5% increase in marketing expense is primarily related to an increase in aggregate lead generation as part of our marketing strategy to cultivate online leads for increased purchase and cash-out refinance volume.

Previous wording

General and Administrative Expense. General and administrative expense includes professional fees, data processing expense, communications expense, and other operating expenses. The $13.6 million or 23.6% decrease in general and administrative expense included an $8.3 million decrease in costs related to the Cybersecurity Incident in the prior year, a $2.7 million reduction in loss contingency expense, and a $1.5 million decrease in office and equipment expenses related to software subscriptions.

Current wording

General and Administrative Expense. General and administrative expense includes professional fees, data processing expense, communications expense, and other operating expenses. The $33.4 million or 45.7% decrease in general and administrative expense included an $26.6 million decrease in costs related to the Cybersecurity Incident in the prior year and a $7.6 million decrease in legal fees which included a $5.0 million insurance recovery, partially offset by, a $2.0 million increase in loss contingency expense.

Previous wording

Cash and Cash Equivalents. The $50.1 million or 11.9% decrease in cash and cash equivalents relates to net losses, repurchased loans, and repayment of debt obligations, partially offset by a decrease in restricted cash and proceeds from net warehouse advances.

Current wording

Cash and Cash Equivalents. The $13.0 million or 3.1% decrease in cash and cash equivalents relates to net losses and repurchased loans, partially offset by an increase in debt obligations and a decrease in restricted cash.

Previous wording

Restricted Cash. Restricted cash was $74.2 million as of March 31, 2025 compared to $105.6 million as of December 31, 2024 representing an decrease of $31.4 million or 29.7%. The decrease was primarily the result of decreases in cash collateral associated with derivative activities and warehouse lines.

Current wording

Restricted Cash. Restricted cash was $69.5 million as of June 30, 2025 compared to $105.6 million as of December 31, 2024 representing a decrease of $36.2 million or 34.2%. The decrease was primarily the result of decreases in cash collateral associated with derivative activities and debt obligations, offset by an increase in cash collateral for warehouse lines.

Previous wording

Loans Held for Sale, at Fair Value. Loans held for sale, at fair value, are primarily fixed and variable rate, 15- to 30-year term first-lien loans that are secured by residential property. The $161.7 million or 6.2% increase reflects $5.0 billion in loan originations and $252.6 million in repurchases, partially offset by $5.2 billion in loan sales and $17.4 million in principal payments.

Current wording

Loans Held for Sale, at Fair Value. Loans held for sale, at fair value, are primarily fixed and variable rate, 15- to 30-year term first-lien loans that are secured by residential property. The $19.2 million or 0.7% increase reflects $11.6 billion in loan originations and $490.0 million in repurchases, partially offset by $12.1 billion in loan sales and $35.4 million in principal payments.

Previous wording

Loans Eligible for Repurchase. Loans eligible for repurchase were $1.02 billion as of March 31, 2025, as compared to $995.4 million as of December 31, 2024, representing an increase of $27.5 million or 2.8%. The increase between periods was due to the increase in Ginnie Mae serviced loans that were 90 days or more delinquent at March 31, 2025, and was also attributable to the increase in our Ginnie Mae servicing portfolio.

Current wording

Loans Eligible for Repurchase. Loans eligible for repurchase were $882.3 million as of June 30, 2025, as compared to $995.4 million as of December 31, 2024, representing a decrease of $113.1 million or 11.4%. The decrease between periods was driven by repurchased loans, partially offset by an increase in Ginnie Mae serviced loans that were 90 days or more delinquent at June 30, 2025.

Previous wording

Warehouse and Other Lines of Credit. The increase of $113.3 million or 4.8% is consistent with the increase in loans held for sale, at fair value during the three months ended March 31, 2025.

Current wording

Warehouse and Other Lines of Credit. The increase of $34.3 million or 1.4% is consistent with the increase in loans held for sale, at fair value and an increase in borrowing advances during the six months ended June 30, 2025.

Previous wording

Equity. Total equity was $469.3 million and $506.6 million as of March 31, 2025 and December 31, 2024, respectively. The decrease was primarily attributed to a net loss of $40.7 million and the repurchase of treasury shares at cost of $0.6 million to net settle and withhold tax on vested RSUs, partially offset by stock-based compensation of $5.7 million.

Current wording

Equity. Total equity was $439.1 million and $506.6 million as of June 30, 2025 and December 31, 2024, respectively. The decrease was primarily attributed to a net loss of $66.0 million, the repurchase of treasury shares at cost of $2.2 million to net settle and withhold tax on vested RSUs, and distributions for taxes on behalf of shareholders of $2.6 million, partially offset by stock-based compensation of $3.5 million.

Previous wording

Our liquidity reflects our ability to meet current potential cash requirements. We forecast the need to have adequate liquid funds available to operate and grow our business. As of March 31, 2025, unrestricted cash and cash equivalents were $371.5 million and committed and uncommitted available capacity under our warehouse and other lines of credit was $1.2 billion.

Current wording

Our liquidity reflects our ability to meet current potential cash requirements. We forecast the need to have adequate liquid funds available to operate and grow our business. As of June 30, 2025, unrestricted cash and cash equivalents were $408.6 million and committed and uncommitted available capacity under our warehouse and other lines of credit was $1.6 billion.

Previous wording

We primarily finance mortgage loans through borrowings under our warehouse and other lines of credit. Under these facilities, we transfer specific loans to our counterparties and receive funds from them. Simultaneously, there is an agreement in place where the counterparties commit to transferring the loans back to us, either at the date the loans are sold or upon our request, and we provide the funds in return. We do not recognize these transfers as sales for accounting purposes. During the three months ended March 31, 2025, our loans remained on warehouse lines for an average of 22 days. Our warehouse facilities are generally short-term borrowings with original maturities of one year and our securitization facility is a two year term. We utilize both committed and uncommitted loan funding facilities and we evaluate our needs under these facilities based on forecasted volume of loan originations and sales. Our liquidity could be affected as lenders may reassess their exposure to the mortgage origination industry and potentially limit access to uncommitted mortgage warehouse financing or increase associated costs. Moreover, there may be reduced demand from investors to acquire our mortgage loans in the secondary market, further impacting our liquidity. Approximately 63% of the mortgage loans that we originated during the three months ended March 31, 2025 were sold in the secondary mortgage market either directly to Fannie Mae and Freddie Mac or securitized into MBS guaranteed by Ginnie Mae. We also sell loans to many private investors.

Current wording

We primarily finance mortgage loans through borrowings under our warehouse and other lines of credit. Under these facilities, we transfer specific loans to our counterparties and receive funds from them. Simultaneously, there is an agreement in place where the counterparties commit to transferring the loans back to us, either at the date the loans are sold or upon our request, and we provide the funds in return. We do not recognize these transfers as sales for accounting purposes. During the three months ended June 30, 2025, our loans remained on warehouse lines for an average of 19 days. Our warehouse facilities are generally short-term borrowings with original maturities of one year and our securitization facility is a two year term. We utilize both committed and uncommitted loan funding facilities and we evaluate our needs under these facilities based on forecasted volume of loan originations and sales. Our liquidity could be affected as lenders may reassess their exposure to the mortgage origination industry and potentially limit access to uncommitted mortgage warehouse financing or increase associated costs. Moreover, there may be reduced demand from investors to acquire our mortgage loans in the secondary market, further impacting our liquidity. Approximately 62% of the mortgage loans that we originated during the six months ended June 30, 2025 were sold in the secondary mortgage market either directly to Fannie Mae and Freddie Mac or securitized into MBS guaranteed by Ginnie Mae. We also sell loans to many private investors.

Previous wording

As of March 31, 2025, we maintained revolving lines of credit with nine counterparties providing warehouse and securitization facilities with borrowing capacity totaling $3.7 billion of which $1.0 billion was committed. Our $3.7 billion of capacity as of March 31, 2025 was comprised of $3.4 billion with maturities staggered throughout 2025 and a $300.0 million securitization facility that matures in September 2026. As of March 31, 2025, we had $2.5 billion of borrowings outstanding and $1.2 billion of additional availability under our facilities. Warehouse and other lines of credit are further discussed in Note 9- Warehouse and Other Lines of Credit of the Notes to Consolidated Financial Statements contained in Item 1.

Current wording

As of June 30, 2025, we maintained revolving lines of credit with ten counterparties providing warehouse and securitization facilities with borrowing capacity totaling $4.0 billion of which $1.3 billion was committed. Our $4.0 billion of capacity as of June 30, 2025 was comprised of $3.4 billion with staggered maturities within one year, a $300.0 million securitization facility that matures in September 2026, and a $300.0 million securitization facility that matures in April 2028. As of June 30, 2025, we had $2.4 billion of borrowings outstanding and $1.6 billion of additional availability under our facilities. Warehouse and other lines of credit are further discussed in Note 9- Warehouse and Other Lines of Credit of the Notes to Consolidated Financial Statements contained in Item 1.

Previous wording

When we draw on our warehouse and securitization facilities we must pledge eligible loan collateral. Our warehouse line providers require us to make a capital investment, or “haircut.” upon financing the loan, which is generally based on product types and the market value of the loans. The haircuts are normally recovered from sales proceeds. As of March 31, 2025, we had a total of $8.7 million in restricted cash posted as collateral with our warehouse and securitization facilities, of which $4.8 million was the minimum requirement.

Current wording

When we draw on our warehouse and securitization facilities we must pledge eligible loan collateral. Our warehouse line providers require us to make a capital investment, or “haircut” upon financing the loan, which is generally based on product types and the market value of the loans. The haircuts are normally recovered from sales proceeds. As of June 30, 2025, we had a total of $18.7 million in restricted cash posted as collateral with our warehouse and securitization facilities, of which $3.3 million was the minimum requirement.

Previous wording

MSR facilities and Term Notes provide financing for our servicing portfolio investments. As of March 31, 2025, MSR facilities secured by Fannie Mae and Freddie Mac MSRs had an outstanding balance of $569.6 million, secured by MSRs totaling $905.4 million. As of March 31, 2025, our Ginnie Mae MSR facility had an outstanding balance of $198.9 million in variable funding notes and $200.0 million in Term Notes, secured by Ginnie Mae MSRs totaling $627.5 million.

Current wording

MSR facilities and Term Notes provide financing for our servicing portfolio investments. As of June 30, 2025, MSR facilities secured by Fannie Mae and Freddie Mac MSRs had an outstanding balance of $611.2 million, secured by MSRs totaling $904.6 million. As of June 30, 2025, our Ginnie Mae MSR facility had an outstanding balance of $209.5 million in variable funding notes and $198.0 million in Term Notes, secured by Ginnie Mae MSRs totaling $638.2 million.

Previous wording

Securities financing facilities provide financing for the retained interest securities associated with our securitizations. As of March 31, 2025 there were outstanding securities financing facilities of $81.2 million, secured by trading securities with a fair value of $87.4 million.

Current wording

Securities financing facilities provide financing for the retained interest securities associated with our securitizations. As of June 30, 2025 there were outstanding securities financing facilities of $78.4 million, secured by trading securities with a fair value of $86.1 million.

Previous wording

Servicing advance facilities provide financing for our servicing agreements. As servicer, we are required to fulfill contractual obligations such as principal and interest payments for certain investor as well as taxes, insurance, foreclosure costs, and other necessities to preserve the serviced assets. For GSE-backed mortgages, this obligation extends up to four months, and for other government agency-backed mortgages, it may extend even longer, especially for clients under forbearance plans. The size of servicing advance balances is influenced by delinquency rates and prepayment speeds. As of March 31, 2025 the outstanding balance on our servicing advance facilities was $57.1 million secured by servicing advance receivables totaling $79.7 million.

Current wording

Servicing advance facilities provide financing for our servicing agreements. As servicer, we are required to fulfill contractual obligations such as principal and interest payments for certain investor as well as taxes, insurance, foreclosure costs, and other necessities to preserve the serviced assets. For GSE-backed mortgages, this obligation extends up to four months, and for other government agency-backed mortgages, it may extend even longer, especially for clients under forbearance plans. The size of servicing advance balances is influenced by delinquency rates and prepayment speeds. As of June 30, 2025 the outstanding balance on our servicing advance facilities was $53.1 million secured by servicing advance receivables totaling $72.5 million.

Previous wording

Other secured financings as of March 31, 2025 consisted of securitization debt of $95.0 million, net of $7.1 million in discount and $1.1 million in deferred financing costs and related to the securitization of a pool of residential mortgage loans held by a VIE. Consolidated VIEs are further discussed in Note 8 - Variable Interest Entities of the Notes to Consolidated Financial Statements contained in Item 1.

Current wording

Other secured financings as of June 30, 2025 consisted of securitization debt of $92.4 million, net of $6.4 million in discount and $1.0 million in deferred financing costs and related to the securitization of a pool of residential mortgage loans held by a VIE. Consolidated VIEs are further discussed in Note 8 - Variable Interest Entities of the Notes to Consolidated Financial Statements contained in Item 1.

Previous wording

Unsecured debt obligations as of March 31, 2025 consisted of Senior Notes totaling $815.6 million net of $8.3 million of deferred financing costs and a discount of $35.9 million. Periodically, and in accordance with applicable laws, and regulations, we may take actions to reduce or repurchase our debt. These actions can include redemptions, tender offers, cash purchases, prepayments, refinancing, exchange offers, open market or privately-negotiated transactions. The decision on amount of debt to be reduced or repurchased depends on several factors, including market conditions, trading levels of our debt, our cash positions, compliance with debt covenants, and other relevant considerations. During the second quarter of 2024, we repurchased $478.0 million of 2025 Senior Notes in exchange for $340.6 million of 2027 Senior Notes and cash of $185.0 million resulting in a loss on extinguishment of debt of $5.7 million. Debt obligations are further discussed in Note 10- Debt Obligations of the Notes to Consolidated Financial Statements contained in Item 1.

Current wording

Unsecured debt obligations as of June 30, 2025 consisted of Senior Notes totaling $819.2 million net of $7.6 million of deferred financing costs and a discount of $33.0 million. Periodically, and in accordance with applicable laws, and regulations, we may take actions to reduce or repurchase our debt. These actions can include redemptions, tender offers, cash purchases, prepayments, refinancing, exchange offers, open market or privately-negotiated transactions. The decision on amount of debt to be reduced or repurchased depends on several factors, including market conditions, trading levels of our debt, our cash positions, compliance with debt covenants, and other relevant considerations. During the second quarter of 2024, we repurchased $478.0 million of 2025 Senior Notes in exchange for $340.6 million of 2027 Senior Notes and cash of $185.0 million resulting in a loss on extinguishment of debt of $5.7 million. Debt obligations are further discussed in Note 10- Debt Obligations of the Notes to Consolidated Financial Statements contained in Item 1.

Previous wording

To provide investors with information in addition to our results as determined by GAAP, we disclose certain non-GAAP measures to assist investors in evaluating our financial results. We believe these non-GAAP measures provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting interest expense on non-funding debt), taxation, the age and book depreciation of facilities (affecting relative depreciation expense), and other cost or benefit items which may vary for different companies for reasons unrelated to operating performance. These non-GAAP measures include our Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Weighted Average Shares Outstanding, and Adjusted EBITDA (LBITDA). We exclude from these non-GAAP financial measures the change in fair value of MSRs, gains (losses) from the sale of MSRs, and related hedging gains and losses that represent realized and unrealized adjustments resulting from changes in valuation, mostly due to changes in market interest rates, and are not indicative of the Company’s operating performance or results of operation. Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation. We have excluded expenses directly related to the Cybersecurity Incident, net of insurance recoveries during fiscal 2024, such as costs to investigate and remediate the Cybersecurity Incident, the costs of customer notifications and identity protection, and professional fees, including legal expenses, litigation settlement costs, and commission guarantees. We also exclude stock-based compensation expense, which is a non-cash expense, gains or losses on extinguishment of debt and disposal of fixed assets, non-cash goodwill impairment, and other impairment charges to intangible assets and operating lease right-of-use assets, as well as certain costs associated with our restructuring efforts, as management does not consider these costs to be indicative of our performance or results of operations. Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense),” as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA (LBITDA). Adjustments for income taxes are made to …

Excerpt shortened here; the source contains the full paragraph.

Current wording

To provide investors with information in addition to our results as determined by GAAP, we disclose certain non-GAAP measures to assist investors in evaluating our financial results. We believe these non-GAAP measures provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting interest expense on non-funding debt), taxation, the age and book depreciation of facilities (affecting relative depreciation expense), and other cost or benefit items which may vary for different companies for reasons unrelated to operating performance. These non-GAAP measures include our Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Weighted Average Shares Outstanding, and Adjusted EBITDA (LBITDA). We exclude from these non-GAAP financial measures the change in fair value of MSRs, gains (losses) from the sale of MSRs, and related hedging gains and losses that represent realized and unrealized adjustments resulting from changes in valuation, mostly due to changes in market interest rates, and are not indicative of the Company’s operating performance or results of operation. We have excluded expenses directly related to the cybersecurity incident in January 2024 that resulted from unauthorized access to our systems (the “Cybersecurity Incident”), net of insurance recoveries during fiscal 2024, such as costs to investigate and remediate the Cybersecurity Incident, the costs of customer notifications and identity protection, and professional fees, including legal expenses, litigation settlement costs, and commission guarantees. We also exclude stock-based compensation expense, which is a non-cash expense, gains or losses on extinguishment of debt and disposal of fixed assets, and impairment charges to operating lease right-of-use assets, as well as certain costs associated with our restructuring efforts, as management does not consider these costs to be indicative of our performance or results of operations. Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense),” as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA (LBITDA). Adjustments for income taxes are made to reflect historical results of operations on the basis that it was taxed as a corporation under the Internal Revenue Code, and therefore subject to U.S. federal, state, and local income taxes. Adjustments to Diluted Weighted Average Shares Outstanding assumes the pro forma conversion of weighted…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

(3)Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights, and gains (losses) from the sale of MSRs. Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation. Refer to Note 5 - Servicing Rights, at Fair Value.

Current wording

(3)Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights, and gains (losses) from the sale of MSRs. Refer to Note 5 - Servicing Rights, at Fair Value.

Previous wording

(2)Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights, and gains (losses) from the sale of MSRs. Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation. Refer to Note 5 - Servicing Rights, at Fair Value.

Current wording

(2)Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights, and gains (losses) from the sale of MSRs. Refer to Note 5 - Servicing Rights, at Fair Value.