Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 14 — Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or the exit price in an orderly transaction between market participants on the measurement date. A three-level hierarchy is used for fair value measurements based upon the observability of the inputs to the valuation of an asset or liability as of the measurement date. Level 1 measurements consist of unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 measurements include quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 3 measurements include significant unobservable inputs. A financial instrument’s level within the hierarchy is based on the highest level of any input that is significant to the fair value measurement. The Company measures certain assets and liabilities at their estimated fair value on a recurring basis, including cash and cash equivalents and investments in marketable securities.

The following outlines the Company’s financial instruments measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022, respectively (in millions):

	Hierarchy	September 30, 2023		December 31, 2022
Marketable securities	Level 1	$	1.0	$	—
Mortgage servicing rights (1)	Level 3	$	6.1	$	—

(1) The unobservable inputs used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and cost to service, which were 12.5%, 3.88%, and $81.00 per year per loan, respectively, as of September 30, 2023. The high and low end of the range of unobservable inputs used in the valuation did not result in a significant change to the fair value measurement.

The Company’s mortgage servicing rights (“MSRs”) fall under Level 3 measurements as the fair value of the MSRs is calculated using third-party valuations. The key assumptions, which are generally unobservable inputs, used in the valuation of the MSRs include mortgage prepayment rates, discount rates and cost to service.

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements, with gains and losses from the changes in fair value reflected in financial services revenue on our condensed consolidated statements of operations (in millions):

	Three Months Ended September 23,				Nine Months Ended September 23,
Mortgage Servicing Rights	2023		2022		2023		2022
Beginning of Period	$	—	$	—	$	—	$	—
Acquired		6.1		—		6.1		—
Originations		—		—		—		—
Settlements		—		—		—		—
Changes in Fair Value		—		—		—		—
End of Period	$	6.1	$	—	$	6.1	$	—