We measure certain assets and liabilities in accordance with ASC 820, Fair Value Measurements and Disclosures, which defines fair value as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants on the measurement date. In addition, it establishes a framework for measuring fair value according to the following three-tier fair value hierarchy:

Our financial instruments include Cash and cash equivalents, Trade receivables, Notes and other receivables, Reimbursable receivables, Warehouse receivables, restricted cash, contract assets, Accounts payable, Reimbursable payables, Short-term borrowings, Current portion of long-term debt, contract liabilities, Warehouse facilities, Credit facility, Long-term debt and foreign currency forward contracts. The carrying amounts of Cash and cash equivalents, Trade receivables, Notes and other receivables, Reimbursable receivables, restricted cash, contract assets, Accounts payable, Reimbursable payables, contract liabilities and the Warehouse facilities approximate their estimated fair values due to the short-term nature of these instruments. The carrying values of our Credit facility and Short-term borrowings approximate their estimated fair values given the variable interest rate terms and market spreads.

We estimated the fair value of our long-term debt, including its current portion, as $360.9 million and $687.2 million as of December 31, 2022 and 2021, respectively, using dealer quotes that are Level 2 inputs in the fair value hierarchy. The carrying value of the short-term portion of our long-term debt as of December 31, 2021 was $274.7 million, net of $0.3 million of debt issuance costs. We retired this debt during 2022. The carrying value of the long-term portion was $372.8 million and $395.6 million as of December 31, 2022 and 2021, respectively, which included debt issuance costs of $1.2 million and $1.4 million, respectively. See Note 10, Debt, for additional discussion of the redemption of our long-term debt.

We report a significant portion of our investments at fair value. For such investments, we increase or decrease our investment each reporting period by the change in the fair value, and we report these fair value adjustments in our Consolidated Statements of Comprehensive Income within Equity Earnings.

For a subset of our investments reported at fair value, we estimate the fair value using the NAV per share (or its equivalent) our investees provide. Critical inputs to NAV estimates included valuations of the underlying real estate assets and borrowings, which incorporate investment-specific assumptions such as discount rates, capitalization rates, rental and expense growth rates, and asset-specific market borrowing rates. We did not consider adjustments to NAV estimates provided by investees, including adjustments for any restrictions to the transferability of ownership interests embedded within investment agreements to which we are a party, to be necessary based upon (i) our understanding of the methodology utilized and inputs incorporated to estimate NAV at the investee level, (ii) consideration of market demand for the specific types of real estate assets held by each venture and (iii) contemplation of real estate and capital markets conditions in the localities in which these ventures operate. As of December 31, 2022 and 2021, investments at fair value using NAV were $284.6 million and $251.6 million, respectively. As these investments are not required to be classified in the fair value hierarchy, they have been excluded from the following table.

The following table categorizes by level in the fair value hierarchy the estimated fair value of our assets and liabilities measured at fair value on a recurring basis. For the comparative period, we have reclassified certain investments previously reported as NAV investments to Level 3 to conform with current presentation.


	December 31,
	2022				2021
(in millions)	Level 1		Level 2	Level 3	Level 1	Level 2	Level 3
Assets
Investments - fair value	$	58.3	—	452.0	84.5	—	303.5
Foreign currency forward contracts receivable	—		3.7	—	—	15.9	—
Warehouse receivables	—		463.2	—	—	822.3	—
Deferred compensation plan assets	—		517.9	—	—	528.8	—
Mortgage banking derivative assets	—		—	190.2	—	—	60.4
Total assets at fair value	$	58.3	984.8	642.2	84.5	1,367.0	363.9
Liabilities
Foreign currency forward contracts payable	$	—	4.8	—	—	0.8	—
Deferred compensation plan liabilities	—		485.4	—	—	513.0	—
Earn-out liabilities	—		—	73.2	—	—	84.1
Mortgage banking derivative liabilities	—		—	169.5	—	—	38.5
Total liabilities at fair value	$	—	490.2	242.7	—	513.8	122.6

We classify one investment as Level 1 in the fair value hierarchy as a quoted price is readily available. We increase or decrease our investment each reporting period by the change in the fair value of the investment. We report the fair value adjustments in the Consolidated Statements of Comprehensive Income within Equity earnings.

Investments classified as Level 3 in the fair value hierarchy represent investments in early-stage non-public entities where we elected the fair value option. The carrying value was deemed to approximate fair value for the majority of these investments due to the proximity of the investment date or date of most recent financing raise to the balance sheet date as well as consideration of investee-level performance updates. To the extent there are changes in fair value, a result of pricing in subsequent funding rounds or changes in business strategy, for example, we recognize such changes through Equity earnings.

We regularly use foreign currency forward contracts to manage our currency exchange rate risk related to intercompany lending and cash management practices. These contracts are on the Consolidated Balance Sheets as current assets and current liabilities. We determine the fair values of these contracts based on current market rates. The inputs for these valuations are Level 2 in the fair value hierarchy. As of December 31, 2022 and 2021, these contracts had a gross notional value of $1.81 billion ($1.02 billion on a net basis) and $2.61 billion ($1.51 billion on a net basis), respectively.

We record the asset and liability positions for our foreign currency forward contracts based on the net payable or net receivable position with the financial institutions from which we purchase these contracts. The $3.7 million asset as of December 31, 2022 was composed of gross contracts with receivable positions of $7.7 million and payable positions of $4.0 million. The $4.8 million liability position as of December 31, 2022 was composed of gross contracts with receivable positions of $1.6 million and payable positions of $6.4 million. As of December 31, 2021, the $15.9 million asset was composed of gross contracts with receivable positions of $19.2 million and payable positions of $3.3 million. The $0.8 million liability position as of December 31, 2021, was composed of gross contracts with receivable positions of $0.2 million and payable positions of $1.0 million.

The fair value of the Warehouse receivables is based on already locked-in security-buy prices. As of December 31, 2022 and 2021, all of our Warehouse receivables included in the Consolidated Balance Sheets were under commitment to be purchased by government-sponsored enterprises ("GSEs") or by a qualifying investor as part of a U.S. government or GSE mortgage-backed security program. The Warehouse receivables are classified as Level 2 in the fair value hierarchy as all significant inputs are readily observable.

We maintain a deferred compensation plan for certain of our U.S. employees that allows them to defer portions of their compensation. We invest directly in insurance contracts which yield returns to fund these deferred compensation obligations. We recognize an asset for the amount that could be realized under these insurance contracts as of the balance sheet date, and we adjust the deferred compensation obligation to reflect the changes in the fair value of the amount owed to the employees. The inputs for this valuation are Level 2 in the fair value hierarchy. We recorded this plan on the Consolidated Balance Sheets as of December 31, 2022 as Deferred compensation plan assets of $517.9 million, long-term deferred compensation plan liabilities of $485.4 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $9.8 million. We recorded this plan on the Consolidated Balance Sheets as of December 31, 2021 as Deferred compensation plan assets of $528.8 million, long-term deferred compensation plan liabilities of $513.0 million, included in Deferred compensation, and as a reduction of equity, Shares held in trust, of $5.2 million.

We classify our Earn-out liabilities within Level 3 in the fair value hierarchy because the inputs we use to develop the estimated fair value include unobservable inputs. We base the fair value of our Earn-out liabilities on the present value of probability-weighted future cash flows related to the earn-out performance criteria on each reporting date. We determine the probabilities of achievement we assign to the performance criteria based on the due diligence we performed at the time of acquisition as well as actual performance achieved subsequent to acquisition. An increase to a probability of achievement would result in a higher fair value measurement. See Note 4, Business Combinations, Goodwill and Other Intangible Assets, for additional discussion of our Earn-out liabilities.

In the normal course of business, we enter into simultaneous contractual commitments to originate and sell multi-family mortgage loans at fixed prices with fixed expiration dates. Commitments to borrowers become effective when the borrowers "lock-in" a specified interest rate and maximum principal balance for an established time frame (hereinafter referred to as an interest rate lock commitment or "IRLC"). All mortgagors are evaluated for creditworthiness prior to execution of an IRLC.

We are exposed to market interest risk (the risk of movement in market interest rates following the execution of an IRLC) until a loan is funded and onwards through delivery. To mitigate the effect of the interest rate risk inherent in providing IRLCs to borrowers, we simultaneously enter into a forward commitment to sell the eventual loan associated with the IRLC to a GSE or other investor. Similar to the IRLC, the forward sale commitment locks in an interest rate, maximum principal balance, and price for the sale of the loan. Ultimately, the terms of the forward sale commitment and the IRLC are matched in substantially all respects, with the objective of eliminating market interest rate and other balance sheet risk to the extent practical. As an additional element of protection, forward sale commitments extend for a longer period of time as compared to IRLCs to allow, among other things, for the closing of the loan and processing of paperwork to deliver the loan in accordance with the terms of the sale commitment.

The fair value of our IRLCs to prospective borrowers and the related inputs primarily include, as applicable, the expected net cash flows associated with servicing the loan and the effects of interest rate movements between the date of the IRLC and the balance sheet date based on applicable published U.S. Treasury rates.

The fair value of our forward sales contracts to prospective investors considers the market price movement of a similar security between the trade date and the balance sheet date. The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

Both the rate lock commitments to prospective borrowers and the forward sale contracts to prospective investors are undesignated derivatives and considered Level 3 valuations due to significant unobservable inputs related to counterparty credit risk. An increase in counterparty credit risk assumptions would result in a lower fair value measurement. The fair valuation is determined using discounted cash flow techniques, and the derivatives are marked to fair value through Revenue in the Consolidated Statements on Comprehensive Income.


(in millions)	Balance as of December 31, 2021		Net change in fair value	Foreign CTA(1)	Purchases / Additions	Settlements	Transfers Out	Balance as of December 31, 2022
Investments	$	303.5	62.1	(1.7)	99.3	—	(11.2)		$	452.0
Mortgage banking derivative assets and liabilities, net	21.9		60.8	—	165.8	(227.8)	—		20.7
Earn-out liabilities	84.1		(3.3)	(0.4)	5.3	(12.5)	—		73.2


(in millions)	Balance as of December 31, 2020		Net change in fair value	Foreign CTA(1)	Purchases / Additions	Settlements	Transfers Out	Balance as of December 31, 2021
Investments	$	59.3	125.0	0.2	120.9	—	(1.9)		$	303.5
Mortgage banking derivative assets and liabilities, net	13.7		19.1	—	187.4	(198.3)	—		21.9
Earn-out liabilities	85.7		3.0	(0.4)	70.2	(74.4)	—		84.1


Category of Assets/Liabilities using Unobservable Inputs			Consolidated Statements of Comprehensive Income Account Caption
Earn-out liabilities (short-term and long-term)			Restructuring and acquisition charges
Investments			Equity earnings
Other current assets - Mortgage banking derivative assets			Revenue
Other current liabilities - Mortgage banking derivative liabilities			Revenue

We review our investments, except those investments otherwise reported at fair value, on a quarterly basis, or as otherwise deemed necessary, for indications of whether we may be unable to recover the carrying value of our investments and whether such investments are other than temporarily impaired. When the carrying amount of the investment is in excess of the estimated future undiscounted cash flows, we use a discounted cash flow approach or other acceptable method to determine the fair value of the investment in computing the amount of the impairment. Our determination of fair value primarily relies on Level 3 inputs.

During the year ended December 31, 2022, we recognized an investment-level impairment charge on one investment accounted for under the equity method of accounting, as further described in Note 5, Investments. We did not recognize any additional significant investment-level impairment losses during the three-year period ended December 31, 2022.