10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-35000

Walker & Dunlop, Inc.

(Exact name of registrant as specified in its charter)

Maryland	80-0629925
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7501 Wisconsin Avenue, Suite 1200E

Bethesda, Maryland 20814

(301) 215-5500

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

Not Applicable

(Former name, former address, and former fiscal year if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 31, 2014 there were 32,592,605 total shares of common stock outstanding.

Walker & Dunlop, Inc.

Form  10-Q

INDEX

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements		1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		34
Item 4.	Controls and Procedures		35
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		35
Item 1A.	Risk Factors		36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 3.	Defaults Upon Senior Securities		36
Item 4.	Mine Safety Disclosures		36
Item 5.	Other Information		36
Item 6.	Exhibits		36
	Signatures
	Exhibit Index

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

June 30, 2014 and December 31, 2013

(In thousands, except share and per share data)

	June 30, 2014		December 31, 2013
	(unaudited)
Assets
Cash and cash equivalents	$	66,275	$	170,563
Restricted cash		9,111		5,427
Pledged securities, at fair value		58,551		49,651
Loans held for sale, at fair value		662,969		281,477
Loans held for investment, net		192,706		134,656
Servicing fees and other receivables, net		23,522		27,592
Derivative assets		18,505		19,563
Mortgage servicing rights		349,167		353,024
Goodwill and other intangible assets		61,232		61,777
Other assets		23,540		25,236
Total assets	$	1,465,578	$	1,128,966
Liabilities and stockholders’ equity
Liabilities
Accounts payable and other liabilities	$	142,200	$	143,452
Performance deposits from borrowers		8,814		5,234
Derivative liabilities		3,019		222
Guaranty obligation, net of accumulated amortization		23,234		23,489
Allowance for risk-sharing obligations		4,806		7,363
Warehouse notes payable		719,855		373,107
Note payable		172,512		173,258
Total liabilities	$	1,074,440	$	726,125
Stockholders’ equity
Preferred shares, Authorized 50,000,000, none issued.	$	—	$	—
Common stock, $0.01 par value. Authorized 200,000,000; issued and outstanding 31,773,223 shares at June 30, 2014 and 33,999,551 shares at December 31, 2013		318		340
Additional paid-in capital		213,215		244,954
Retained earnings		177,605		157,547
Total stockholders’ equity	$	391,138	$	402,841
Commitments and contingencies		—		—
Total liabilities and stockholders’ equity	$	1,465,578	$	1,128,966

See accompanying notes to condensed consolidated financial statements.

1

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(In thousands, except share and per share data)

(Unaudited)

	For the three months ended June 30,				For the six months ended June 30,
	2014		2013		2014		2013
Revenues
Gains from mortgage banking activities	$	52,241	$	63,076	$	86,827	$	106,007
Servicing fees		23,962		22,370		47,305		43,511
Net warehouse interest income		3,896		1,760		6,132		3,383
Escrow earnings and other interest income		1,120		916		2,195		1,858
Other		4,067		2,612		7,660		5,160
Total revenues	$	85,286	$	90,734	$	150,119	$	159,919
Expenses
Personnel	$	34,053	$	37,308	$	58,588	$	65,591
Amortization and depreciation		19,097		18,176		37,556		36,728
Provision for credit losses		279		751		108		1,152
Interest expense on corporate debt		2,621		870		5,194		1,838
Other operating expenses		8,305		9,827		15,832		18,478
Total expenses	$	64,355	$	66,932	$	117,278	$	123,787
Income from operations	$	20,931	$	23,802	$	32,841	$	36,132
Income tax expense		8,017		9,259		12,783		13,863
Net income	$	12,914	$	14,543	$	20,058	$	22,269
Basic earnings per share	$	0.41	$	0.43	$	0.61	$	0.66
Diluted earnings per share	$	0.40	$	0.42	$	0.61	$	0.65
Basic weighted average shares outstanding		31,710,759		33,699,944		32,624,372		33,635,472
Diluted weighted average shares outstanding		31,950,576		34,485,750		32,897,162		34,330,639

See accompanying notes to condensed consolidated financial statements.

2

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2014			2013
Cash flows from operating activities:
Net income	$	20,058		$	22,269
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Gains attributable to fair value of future servicing rights, net of guaranty obligation		(36,634	)		(49,154	)
Change in fair value of premium and origination fees		(1,174	)		7,619
Provision for credit losses		108			1,152
Amortization and depreciation		37,556			36,728
Other operating activities, net		(374,898	)		625,557
Net cash (used in) provided by operating activities	$	(354,984	)	$	644,171
Cash flows from investing activities:
Capital expenditures	$	(694	)	$	(2,100	)
Originations of loans held for investment		(147,056	)		(37,920	)
Principal collected on loans held for investment		88,356			—
Net cash used in investing activities	$	(59,394	)	$	(40,020	)
Cash flows from financing activities:
Borrowings (repayments) of warehouse notes payable, net	$	306,043		$	(627,083	)
Borrowings of interim warehouse notes payable		106,214			28,440
Repayments of interim warehouse notes payable		(65,630	)		—
Repayments of note payable		(875	)		(4,150	)
Proceeds from issuance of common stock		1,717			539
Repurchase of common stock		(37,296	)		(1,524	)
Tax (expense) benefit from vesting of equity awards		(83	)		889
Net cash provided by (used in) financing activities	$	310,090		$	(602,889	)
Net (decrease) increase in cash and cash equivalents	$	(104,288	)	$	1,262
Cash and cash equivalents at beginning of period		170,563			65,027
Cash and cash equivalents at end of period	$	66,275		$	66,289
Supplemental Disclosure of Cash Flow Information:
Cash paid to third parties for interest	$	11,064		$	8,237
Cash paid for taxes	$	6,407		$	235

See accompanying notes to condensed consolidated financial statements.

3

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION

These financial statements represent the condensed consolidated financial position and results of operations of Walker & Dunlop, Inc. and its subsidiaries. Unless the context otherwise requires, references to “we,” “us,” “our,” “Walker & Dunlop” and the “Company” mean the Walker & Dunlop consolidated companies. The statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Because the accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP, they should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (“2013 Form 10-K”). In the opinion of management, all adjustments (consisting only of normal recurring accruals except as otherwise noted herein) considered necessary for a fair presentation of the results for the Company in the interim periods presented have been included. Results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014, or thereafter.

Walker & Dunlop is one of the leading commercial real estate finance companies in the United States, with a primary focus on multifamily lending. The Company originates, sells, and services a range of multifamily and other commercial real estate financing products. The Company’s clients are owners and developers of commercial real estate across the country. The Company originates and sells loans pursuant to the programs of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac,” and together with Fannie Mae, the government-sponsored enterprises, or the “GSEs”), the Government National Mortgage Association (“Ginnie Mae”) and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, “HUD”), with which Walker & Dunlop has long-established relationships. The Company retains servicing rights and asset management responsibilities on nearly all loans that it sells to the GSEs and HUD. Walker & Dunlop is approved as a Fannie Mae Delegated Underwriting and Servicing (“DUS”^TM) lender nationally, a Freddie Mac Program Plus lender in 22 states and the District of Columbia, a Freddie Mac targeted affordable housing seller/servicer, a HUD Multifamily Accelerated Processing (“MAP”) lender nationally, a HUD Section 232 LEAN lender nationally, and a Ginnie Mae issuer. The Company also acts as a loan broker for a number of life insurance companies and other institutional investors, in which cases it does not fund the loan but rather acts as a loan broker. The Company retains the servicing rights on some of the loans where it acts as a broker.

The Company offers an interim loan program offering floating-rate loans with original principal balances of generally up to $25.0 million, for terms of up to two years, to experienced borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent GSE or HUD financing (the “Interim Program”). The Company underwrites all loans originated through the Interim Program using similar underwriting standards used to underwrite loans it originates and sells. During the time they are outstanding, the Company assumes the full risk of loss on the loans. In addition, the Company services and asset-manages loans originated through the Interim Program, with the ultimate goal of providing permanent financing on the properties. These loans are classified as held for investment on the Company’s consolidated balance sheet during such time that they are outstanding.

The Company offers a large loan bridge program (the “Bridge Program”). Similar to the Interim Program, the Bridge Program offers floating-rate loans to experienced borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent financing but are good candidates for future permanent financing. The Bridge Program is offered for loans of generally $25.0 million or more and for terms of up to three years. The Bridge Program was established through a partnership with third-party investors (“Bridge Partnership”). The loans in the Bridge Program are approved for funding by unanimous consent of the limited partners, funded by the Bridge Partnership, and underwritten by the Company pursuant to service agreements. The Bridge Partnership assumes the full risk of loss on the loans while it holds the loans. The Company accounts for its five-percent ownership interest as an equity-method investment. The balances and activities of the Bridge Program were immaterial as of and for the three and six months ended June 30, 2014.

The Company offers a Commercial Mortgage Backed Securities (“CMBS”) lending program (“CMBS Program”) through a partnership with an affiliate of Fortress Investment Group, LLC, the Company’s largest stockholder, in which the Company owns a 20 percent interest (“CMBS Partnership”). The CMBS program offers financing for all commercial property types throughout the United States. The loans in the CMBS Program are selected and funded by the CMBS Partnership and underwritten by the Company. The Company receives a fee for servicing the loans. The CMBS Partnership assumes the full risk of loss on the loans while it holds the loans. The Company accounts for the 20 percent interest using the equity method of accounting. No loans have been originated through the CMBS Program as of June 30, 2014.

In 2013, the Company transferred a participating interest in a financial asset to a third party. The Company accounted for the transfer as a secured borrowing. The entire financial asset is presented as a component of the Loans held for investment line item within the Condensed Consolidated Balance Sheets, and the secured borrowing of $22.1 million is included within the Accounts payable and other liabilities line item in the Condensed Consolidated Balance Sheets. During the third quarter of 2014, the financial asset paid off, and the secured borrowing and warehouse advance were repaid. In connection with the payoff, the maximum amount of the corresponding committed warehouse facility was reduced from $57.4 million to $35.5 million.

4

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation—The condensed consolidated financial statements include the accounts of the Company and all of its consolidated entities. All material intercompany transactions have been eliminated. The Company has evaluated all subsequent events.

Use of Estimates—The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including guaranty obligations, allowance for risk-sharing obligations, allowance for loan losses, capitalized mortgage servicing rights, derivative instruments, and the disclosure of contingent assets and liabilities. Actual results may vary from these estimates.

Comprehensive Income—For the three and six months ended June 30, 2014 and 2013, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying condensed consolidated financial statements.

Loans Held for Investment, net— Loans held for investment are multifamily loans originated by the Company through the Interim Program for properties that currently do not qualify for permanent GSE or HUD financing. These loans typically have a maximum term of two years and original principal balances of $25.0 million or less. The loans are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs, and net of any allowance for loan losses. Interest income is accrued based on the actual coupon rate, adjusted for the amortization of net deferred fees and costs, and is recognized as revenue when earned and deemed collectible. All loans held for investment are multifamily loans with similar risk characteristics. As of June 30, 2014, the Loans held for investment, net balance consists of $194.3 million of unpaid principal balance less $1.1 million of net unamortized deferred fees and costs and $0.5 million of allowance for loan losses.

The allowance for loan losses is the Company’s estimate of credit losses inherent in the loan portfolio at the balance sheet date. The Company has established a process to determine the appropriateness of the allowance for loan losses that assesses the losses inherent in our portfolio. That process includes assessing the credit quality of each of the loans held for investment by monitoring the financial condition of the borrower and the financial trends of the underlying property. The allowance levels are influenced by loan volumes, delinquency status, historic loss experience, and other conditions influencing loss expectations, such as economic conditions. The allowance for loan losses is estimated collectively for loans with similar characteristics and for which there is no indication of impairment. The allowance for loan losses recorded as of June 30, 2014 and December 31, 2013 is based on the Company’s collective assessment of the portfolio.

Loans are placed on non-accrual status when full and timely collection of interest or principal is not probable. Loans held for investment are considered past due when contractually required principal or interest payments have not been made on the due dates and are charged off when the loan is considered uncollectible. The Company evaluates all loans held for investment for impairment. A loan is considered impaired when the Company believes that the facts and circumstances of the loan suggest that the Company will not be able to collect all contractually due principal and interest. Delinquency status and borrower financial condition are key components of the Company’s consideration of impairment status.

None of the loans held for investment was delinquent, impaired, or on non-accrual status as of June 30, 2014 or December 31, 2013. Additionally, we have not experienced any delinquencies related to these loans or charged off any loan held for investment since the inception of the Interim Program.

Net Warehouse Interest Income— The Company presents warehouse interest income net of warehouse interest expense. Warehouse interest income is the interest earned from loans that are held for sale and loans held for investment. Substantially all loans that are held for sale are financed with matched borrowings under our warehouse facilities incurred to fund a specific loan held for sale. Warehouse interest expense is incurred on borrowings used to fund loans solely while they are held for sale or for investment. Warehouse interest income and expense are earned or incurred on loans held for sale after a loan is closed and before a loan is sold. Warehouse interest income and expense are earned or incurred on loans held for investment after a loan is closed and before a loan is repaid. Included in net warehouse interest income for the three and six months ended June 30, 2014 and 2013 are the following components (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Warehouse interest income - loans held for sale	$	5,112		$	4,355		$	8,278		$	9,670
Warehouse interest expense - loans held for sale		(2,817	)		(2,793	)		(4,592	)		(6,495	)
Net warehouse interest income - loans held for sale	$	2,295		$	1,562		$	3,686		$	3,175
Warehouse interest income - loans held for investment	$	3,227		$	403		$	5,403		$	535
Warehouse interest expense - loans held for investment		(1,626	)		(205	)		(2,957	)		(327	)
Net warehouse interest income - loans held for investment	$	1,601		$	198		$	2,446		$	208
Total net warehouse interest income	$	3,896		$	1,760		$	6,132		$	3,383

Goodwill—The Company recorded no additions to or impairments of goodwill during the three and six months ended June 30, 2014.

Reclassifications—The Company has made certain immaterial reclassifications to prior-year balances to conform to current-year presentation.

5

Recently Issued Accounting Pronouncements—During the second quarter of 2014, Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“the guidance”), was issued. ASU 2014-09 represents a comprehensive reform of many of the revenue recognition requirements in GAAP. The ASU creates a new topic within the Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers. Additionally, the guidance in the ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and supersedes or amends much of the industry-specific revenue recognition guidance found throughout the ASC.

The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those good and services. The ASU creates a five-step process for achieving the core principle: 1) identifying the contract with the customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations, and 5) recognizing revenue when an entity has completed the performance obligations. The ASU also requires additional disclosures that allow users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows resulting from contracts with customers. The guidance in the ASU is effective for the Company on January 1, 2017. The guidance permits the use of the retrospective or cumulative effect transition methods. It appears that substantially all of the Company’s contracts with customers do not fall within the scope of the guidance; however, the Company is in the process of selecting a transition method and determining whether the ASU will have a material impact on the Company’s reported financial results.

There have been no material changes to the accounting policies discussed in Note 2 of the Company’s 2013 Form 10-K, filed with the SEC on March 7, 2014.

NOTE 3—GAINS FROM MORTGAGE BANKING ACTIVITIES

The gains from mortgage banking activities consisted of the following activity for the three and six months ended June 30, 2014 and 2013 (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Contractual loan origination related fees, net	$	29,495		$	34,593		$	50,193		$	56,853
Fair value of expected cash flows from servicing recognized at commitment		24,538			29,946			39,123			51,817
Fair value of expected guaranty obligation recognized at commitment		(1,792	)		(1,463	)		(2,489	)		(2,663	)
Total gains from mortgage banking activities	$	52,241		$	63,076		$	86,827		$	106,007

The origination fees shown in the table above are net of co-broker fees of $3.9 million and $8.6 million for the three months ended June 30, 2014 and 2013, and $7.7 million and $11.9 million for the six months ended June 30, 2014 and 2013, respectively.

NOTE 4—MORTGAGE SERVICING RIGHTS

Mortgage Servicing Rights (MSRs) represent the fair value of the servicing rights retained by the Company for mortgage loans originated and sold. The initial capitalized amount is equal to the estimated fair value of the expected net cash flows associated with the servicing rights. The following describes the key assumptions used in calculating each loan’s MSR:

Discount rate—Depending upon loan type, the discount rate used is management’s best estimate of market discount rates. The rates used for loans originated were 10% to 15% for each of the three- and six-month periods presented.

Estimated Life—The estimated life of the MSRs is derived based upon the stated yield maintenance and/or prepayment protection term of the underlying loan and may be reduced by 6 to 12 months based upon the expiration of various types of prepayment penalty and/or lockout provisions prior to that stated maturity date.

Servicing Cost—The estimated future cost to service the loan for the estimated life of the MSR is subtracted from the estimated future cash flows.

The fair values of the MSRs at June 30, 2014 and December 31, 2013 were $432.0 million and $414.9 million, respectively. The Company uses a discounted static cash flow valuation approach and the key economic assumption is the discount rate. For example, see the following sensitivities:

The impact of a 100 basis point increase in the discount rate at June 30, 2014, is a decrease in the fair value of $13.8 million.

6

The impact of a 200 basis point increase in the discount rate at June 30, 2014, is a decrease in the fair value of $26.6 million.

Activity related to capitalized MSRs for the three and six months ended June 30, 2014 and 2013 was as follows (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Beginning balance	$	347,976		$	336,397		$	353,024		$	315,524
Additions, following the sale of loan		20,694			23,502			34,369			62,295
Amortization		(17,028	)		(15,838	)		(33,729	)		(30,943	)
Pre-payments and write-offs		(2,475	)		(2,291	)		(4,497	)		(5,106	)
Ending balance	$	349,167		$	341,770		$	349,167		$	341,770

The following summarizes the components of the net carrying value of the Company’s acquired and originated MSRs, as of June 30, 2014 (in thousands):

	As of June 30, 2014
	Gross carrying value		Accumulated amortization			Net carrying value
Acquired MSRs	$	124,629	$	(45,879	)	$	78,750
Originated MSRs		385,200		(114,783	)		270,417
Total	$	509,829	$	(160,662	)	$	349,167

The expected amortization of MSRs recorded as of June 30, 2014 is shown in the table below (in thousands). Actual amortization may vary from these estimates.

	Originated MSRs		Acquired MSRs		Total MSRs
	Amortization		Amortization		Amortization
Six Months Ending December 31,
2014	$	24,460	$	8,806	$	33,266
Year Ending December 31,
2015		45,199		16,540		61,739
2016		41,565		15,395		56,960
2017		38,174		13,656		51,830
2018		33,763		9,950		43,713
2019		28,054		8,118		36,172
Thereafter		59,202		6,285		65,487
Total	$	270,417	$	78,750	$	349,167

NOTE 5—GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS

When a loan is sold under the Fannie Mae DUS program, the Company typically agrees to guarantee a portion of the ultimate loss incurred on the loan should the borrower fail to perform. The compensation for this risk is a component of the servicing fee on the loan. No guaranty is provided for loans sold under the Freddie Mac or HUD loan programs.

Activity related to the guaranty obligation for the three and six months ended June 30, 2014 and 2013 follows (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Beginning balance	$	22,909		$	22,352		$	23,489		$	21,155
Additions, following the sale of loan		1,296			1,271			1,780			3,425
Amortization		(971	)		(888	)		(2,035	)		(1,845	)
Ending balance	$	23,234		$	22,735		$	23,234		$	22,735

7

The Company evaluates the allowance for risk-sharing obligations by monitoring the performance of each loan for triggering events or conditions that may signal a potential default. In situations where payment under the guaranty is probable and estimable on a specific loan, the Company records an allowance for the estimated risk-sharing loss through a charge to the provision for risk-sharing obligations, which is a component of the Provision for credit losses line item in the Condensed Consolidated Statements of Income, along with a write-off of the loan-specific MSR and guaranty obligation. The amount of the provision reflects our assessment of the likelihood of payment by the borrower, the estimated disposition value of the underlying collateral, and the level of risk sharing. Historically, the loss recognition occurs at or before the loan becomes 60 days delinquent. Activity related to the allowance for risk-sharing obligations for the three and six months ended June 30, 2014 and 2013 follows (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Beginning balance	$	5,662		$	16,071		$	7,363		$	15,670
Provision for risk-sharing obligations		408			751			68			1,152
Write-offs		(1,264	)		(4,500	)		(2,625	)		(4,500	)
Ending balance	$	4,806		$	12,322		$	4,806		$	12,322

As of June 30, 2014, the maximum quantifiable contingent liability associated with the Company’s guarantees under the Fannie Mae DUS agreement was $3.7 billion. The maximum quantifiable contingent liability is not representative of the actual loss the Company would incur. The Company would be liable for this amount only if all of the loans it services for Fannie Mae, for which the Company retains some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement.

NOTE 6—SERVICING

The total unpaid principal balance of loans the Company was servicing for various institutional investors was $39.8 billion as of June 30, 2014 compared to $38.9 billion as of December 31, 2013.

NOTE 7—WAREHOUSE NOTES PAYABLE

At June 30, 2014, to provide financing to borrowers under GSE and HUD programs, the Company has arranged for warehouse lines of credit in the amount of $1.5 billion with certain national banks and a $400.0 million uncommitted facility with Fannie Mae. In support of these credit facilities, the Company has pledged substantially all of its loans held for sale and loans held for investment under the Company’s approved programs.

The maximum amount and outstanding borrowings under the warehouse notes payable at June 30, 2014 follow (in thousands):

	June 30, 2014
Facility	Maximum Amount		Outstanding Balance		Interest rate
Committed warehouse facility #1	$	575,000	$	286,420		Average 30-day LIBOR plus 1.50	%
Committed warehouse facility #2		650,000		221,859		Average 30-day LIBOR plus 1.50	%
Committed warehouse facility #3		57,400		45,500		Average 30-day LIBOR plus 2.00	%
Committed warehouse facility #4		135,000		88,173		Average 30-day LIBOR plus 2.00	%
Committed warehouse facility #5		50,000		—		Average 30-day LIBOR plus 2.00% to 2.50	%
Fannie Mae Repurchase agreement, uncommited line and open maturity		400,000		77,903		Average 30-day LIBOR plus 1.15	%
Total	$	1,867,400	$	719,855

On June 17, 2014, the Company executed the second amendment to the amended and restated warehousing credit and security agreement related to warehouse facility #2 that extended the maturity date of the facility to June 23, 2015. No other material modifications were made to the agreement.

On May 19, 2014, the Company executed a Master Repurchase and Securities Contract (“Repurchase Agreement”) that established warehouse facility #5. The Repurchase Agreement provides for a maximum borrowing amount of $50.0 million and is scheduled to mature on May 19, 2016. The borrowings under the agreement bear interest at a rate of average 30-day London Interbank Offered Rate (LIBOR) plus 2.00% to 2.50% (“the spread”). The spread varies according to the type of asset the borrowing finances.

On April 15, 2014, the Company executed the first amendment to the amended and restated warehousing credit and security agreement related to warehouse facility #4 that increased the borrowing capacity to $135.0 million. No other material modifications were made to the agreement.

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In March 2014, Fannie Mae informed the Company it was reducing the uncommitted facility from $500.0 million to $400.0 million as part of an initiative to reduce its exposure to such uncommitted lines with all DUS lenders and not specific to the Company. The Company does not believe that the reduction in the uncommitted amount will have a significant impact on its operations or financial results.

The warehouse notes payable and the note payable are subject to various financial covenants, all of which the Company was in compliance with as of June 30, 2014.

NOTE 8—FAIR VALUE MEASUREMENTS

The Company uses valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach to measure assets and liabilities that are measured at fair value. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

• Level 1—Financial assets and liabilities whose values are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

• Level 2—Financial assets and liabilities whose values are based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

• Level 3—Financial assets and liabilities whose values are based on inputs that are both unobservable and significant to the overall valuation.

The Company’s MSRs are measured at fair value on a nonrecurring basis. That is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company’s MSRs do not trade in an active, open market with readily observable prices. While sales of MSRs do occur, precise terms and conditions vary with each transaction and are not readily available. Accordingly, the estimated fair value of MSRs was developed using discounted cash flow models that calculate the present value of estimated future net servicing income. The model considers contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service, and other economic factors. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the model to reflect observable market conditions and assumptions that a market participant would consider in valuing an MSR asset. MSRs are carried at the lower of amortized cost or estimated fair value.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s assets and liabilities carried at fair value:

• Derivative Instruments—The derivative positions consist of interest rate lock commitments and forward sale agreements. These instruments are valued using a discounted cash flow model developed based on changes in the U.S. Treasury rate and other observable market data. The value was determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company, and are classified within Level 3 of the valuation hierarchy.

• Loans held for sale—The loans held for sale are reported at fair value. The Company determines the fair value of the loans held for sale using discounted cash flow models that incorporate quoted observable prices from market participants. Therefore, the Company classifies these loans held for sale as Level 2.

• Pledged Securities—The pledged securities are valued using quoted market prices from recent trades. Therefore, the Company classifies pledged securities as Level 1.

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The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2014, and December 31, 2013, segregated by the level of the valuation inputs within the fair value hierarchy used to measure fair value (in thousands):

	Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Balance as of Period End
June 30, 2014
Assets
Loans held for sale	$	—	$	662,969	$	—	$	662,969
Pledged securities		58,551		—		—		58,551
Derivative assets		—		—		18,505		18,505
Total	$	58,551	$	662,969	$	18,505	$	740,025
Liabilities
Derivative liabilities	$	—	$	—	$	3,019	$	3,019
Total	$	—	$	—	$	3,019	$	3,019
December 31, 2013
Assets
Loans held for sale	$	—	$	281,477	$	—	$	281,477
Pledged securities		49,651		—		—		49,651
Derivative assets		—		—		19,563		19,563
Total	$	49,651	$	281,477	$	19,563	$	350,691
Liabilities
Derivative liabilities	$	—	$	—	$	222	$	222
Total	$	—	$	—	$	222	$	222

There were no transfers between any of the levels within the fair value hierarchy during the six months ended June 30, 2014 and 2013.

Derivative instruments (Level 3) are outstanding for short periods of time (generally less than 60 days) and are not outstanding for more than one period. A roll forward of derivative instruments which require valuations based upon significant unobservable inputs, is presented below for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs: Derivative Instruments
	Three Months Ended						Six Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Derivative assets and liabilities, net
Beginning balance	$	13,559		$	4,370		$	19,341		$	20,391
Settlements		(50,314	)		(33,110	)		(90,682	)		(92,062	)
Realized gains recorded in earnings (1)		36,755			28,740			71,341			71,671
Unrealized gains recorded in earnings (1)		15,486			34,336			15,486			34,336
Ending balance	$	15,486		$	34,336		$	15,486		$	34,336

(1) Realized and unrealized gains from derivatives are recognized in the Gains from mortgage banking activities line item in the Condensed Consolidated Statements of Income.

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The following table presents information about significant unobservable inputs used in the measurement of the fair value of the Company’s Level 3 assets and liabilities (in thousands):

	Quantitative Information about Level 3 Measurements
	Fair Value		Valuation Technique	Unobservable Input (1)	Input Value (1)
Derivative assets	$	18,505	Discounted cash flow	Counterparty credit risk		—
Derivative liabilities		3,019	Discounted cash flow	Counterparty credit risk		—

(1) Significant increases (decreases) in this input may lead to significantly lower (higher) fair value measurements.

The carrying amounts and the fair values of the Company’s financial instruments as of June 30, 2014, and December 31, 2013, are presented below (in thousands):

	June 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial Assets:
Cash and cash equivalents	$	66,275	$	66,275	$	170,563	$	170,563
Restricted cash		9,111		9,111		5,427		5,427
Pledged securities		58,551		58,551		49,651		49,651
Loans held for sale		662,969		662,969		281,477		281,477
Loans held for investment, net		192,706		194,320		134,656		135,620
Derivative assets		18,505		18,505		19,563		19,563
Total financial assets	$	1,008,117	$	1,009,731	$	661,337	$	662,301
Financial Liabilities:
Derivative liabilities	$	3,019	$	3,019	$	222	$	222
Warehouse notes payable		719,855		719,855		373,107		373,107
Note payable		172,512		174,125		173,258		173,258
Total financial liabilities	$	895,386	$	896,999	$	546,587	$	546,587

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Cash Equivalents and Restricted Cash—The carrying amounts, at face value or cost plus accrued interest, approximate fair value because of the short maturity of these instruments (Level 1).

Pledged Securities—Consist of highly liquid investments in commercial paper of AAA rated entities and investments in money market accounts invested in government securities. Investments typically have maturities of 90 days or less, and are valued using quoted market prices from recent trades.

Loans Held For Sale—Consist of originated loans that are generally transferred or sold within 60 days from the date that a mortgage loan is funded, and are valued using discounted cash flow models that incorporate observable prices from market participants.

Loans Held For Investment, net— Consist of originated interim loans which the Company expects to hold for investment for the term of the loan, which is generally two years, and are valued using discounted cash flow models that incorporate primarily observable inputs from market participants and also credit-related adjustments, if applicable (Level 2). As of June 30, 2014 and December 31, 2013, no credit-related adjustments were required.

Derivative Instruments—Consist of interest rate lock commitments and forward sale agreements. These instruments are valued using discounted cash flow models developed based on changes in the U.S. Treasury rate and other observable market data. The value is determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company.

Warehouse Notes Payable— Consist of borrowings outstanding under warehouse line agreements. The borrowing rates on the warehouse lines are based upon average 30-day LIBOR plus a margin. The carrying amounts approximate fair value because of the short maturity of these instruments and the monthly resetting of the index rate to prevailing market rates (Level 2).

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Note Payable—Consist of borrowings outstanding under a term note agreement. The borrowing rate on the note payable is based upon average 30-day LIBOR plus an applicable margin. The Company estimates the fair value by discounting the future cash flows at market rates (Level 2).

Fair Value of Derivative Instruments and Loans Held for Sale—In the normal course of business, the Company enters into contractual commitments to originate (purchase) and sell multifamily mortgage loans at fixed prices with fixed expiration dates. The commitments become effective when the borrowers “lock-in” a specified interest rate within time frames established by the Company. All mortgagors are evaluated for creditworthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the “lock-in” of rates by the borrower and the sale date of the loan to an investor.

To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company’s policy is to enter into a sale commitment with the investor simultaneous with the rate lock commitment with the borrower. The sale contract with the investor locks in an interest rate and price for the sale of the loan. The terms of the contract with the investor and the rate lock with the borrower are matched in substantially all respects, with the objective of eliminating interest rate risk to the extent practical. Sale commitments with the investors have an expiration date that is longer than our related commitments to the borrower to allow, among other things, for the closing of the loan and processing of paperwork to deliver the loan into the sale commitment.

Both the rate lock commitments to borrowers and the forward sale contracts to buyers are undesignated derivatives and, accordingly, are marked to fair value through the Gains on mortgage banking activities line item in the Condensed Consolidated Statements of Income. The fair value of the Company’s rate lock commitments to borrowers and loans held for sale and the related input levels includes, as applicable:

• the assumed gain/loss of the expected resultant loan sale to the investor;

• the expected net cash flows associated with servicing the loan (Level 2);

• the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and

• the nonperformance risk of both the counterparty and the Company (Level 3).

The fair value of the Company’s forward sales contracts to investors considers effects of interest rate movements between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

The assumed gain/loss considers the amount that the Company has discounted the price to the borrower from par for competitive reasons, if at all, and the expected net cash flows from servicing to be received upon securitization of the loan. The fair value of the expected net cash flows associated with servicing the loan is calculated pursuant to the valuation techniques described previously for mortgage servicing rights.

To calculate the effects of interest rate movements, the Company uses applicable published U.S. Treasury prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount.

The fair value of the Company’s forward sales contracts to investors considers the market price movement of the same type of security between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

The fair value of the Company’s interest rate lock commitments and forward sales contracts is adjusted to reflect the risk that the agreement will not be fulfilled. The Company’s exposure to nonperformance in rate lock and forward sale contracts is represented by the contractual amount of those instruments. Given the credit quality of our counterparties, the short duration of interest rate lock commitments and forward sale contracts, and the Company’s historical experience with the agreements, the risk of nonperformance by the Company’s counterparties is not significant.

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	Fair Value Adjustment Components										Balance Sheet Location
(in thousands)	Notional or Principal Amount		Assumed Gain (Loss) on Sale		Interest Rate Movement Effect			Total Fair Value Adjustment			Derivative Assets		Derivative Liabilities			Fair Value Adjustment To Loans Held for Sale
June 30, 2014
Rate lock commitments	$	412,481	$	15,720	$	1,506		$	17,226		$	17,226	$	—		$	—
Forward sale contracts		1,043,146		—		(1,740	)		(1,740	)		1,279		(3,019	)		—
Loans held for sale		652,184		10,551		234			10,785			—		—			10,785
Total			$	26,271	$	—		$	26,271		$	18,505	$	(3,019	)	$	10,785
December 31, 2013
Rate lock commitments	$	235,616	$	12,331	$	(6,253	)	$	6,078		$	6,299	$	(221	)	$	—
Forward sale contracts		515,755		—		13,263			13,263			13,264		(1	)
Loans held for sale		280,139		8,348		(7,010	)		1,338			—		—			1,338
Total			$	20,679	$	—		$	20,679		$	19,563	$	(222	)	$	1,338

NOTE 9—LITIGATION, COMMITMENTS, AND CONTINGENCIES

Fannie Mae DUS Related Commitments—Commitments for the origination and subsequent sale and delivery of loans to Fannie Mae represent those mortgage loan transactions where the borrower has locked an interest rate and scheduled closing and the Company has entered into a mandatory delivery commitment to sell the loan to Fannie Mae. As discussed in Note 8, the Company accounts for these commitments as derivatives recorded at fair value.

The Company is generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program (the DUS risk-sharing obligations). The Company is required to secure this obligation by assigning restricted cash balances and securities to Fannie Mae. The amount of collateral required by Fannie Mae is a formulaic calculation at the loan level and considers the balance of the loan, the risk level of the loan, the age of the loan, and the level of risk-sharing. Fannie Mae requires restricted liquidity for Tier 2 loans of 75 basis points, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. Restricted liquidity held in the form of money market funds holding US Treasuries is discounted 5% for purposes of calculating compliance with the restricted liquidity requirements. As of June 30, 2014, the Company held all of its restricted liquidity in money market funds holding US Treasuries. Additionally, substantially all of the loans for which the Company has risk sharing are Tier 2 loans.

The Company is in compliance with the June 30, 2014 collateral requirements as outlined above. As of June 30, 2014, reserve requirements for the June 30, 2014 DUS loan portfolio will require the Company to fund $36.5 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at risk portfolio. Fannie Mae periodically reassesses the DUS Capital Standards and may make changes to these standards in the future. The Company generates sufficient cash flow from its operations to meet these capital standards and does not expect any future changes to have a material impact on its future operations; however, any future changes to collateral requirements may adversely impact the Company’s available cash.

Fannie Mae has established benchmark standards for capital adequacy, and reserves the right to terminate the Company’s servicing authority for all or some of the portfolio if at any time it determines that the Company’s financial condition is not adequate to support its obligation under the DUS agreement. The Company is required to maintain acceptable net worth as defined in the agreement, and the Company satisfied the requirements as of June 30, 2014. The net worth requirement is derived primarily from unpaid balances on Fannie Mae loans and the level of risk-sharing. At June 30, 2014, the net worth requirement was $91.9 million and the Company’s net worth was $287.5 million, as measured at our wholly owned subsidiary, Walker & Dunlop, LLC. As of June 30, 2014, the Company was required to maintain at least $17.7 million of liquid assets to meet operational liquidity requirements for Fannie Mae, Freddie Mac, HUD, and Ginnie Mae. As of June 30, 2014, the Company had operational liquidity of $137.3 million, as measured at our wholly owned subsidiary, Walker & Dunlop, LLC.

Litigation—Capital Funding litigation—On February 17, 2010, Capital Funding Group, Inc. (“Capital Funding”) filed a lawsuit in the Circuit Court for Montgomery County, Maryland against Walker & Dunlop, LLC, our wholly owned subsidiary, for alleged breach of contract, unjust enrichment and unfair competition arising out of an alleged agreement that Capital Funding had with Column Guaranteed, LLC (“Column”) to refinance a large portfolio of senior healthcare facilities located throughout the United States (the “Golden Living Facilities”). Capital Funding alleges that a contract existed between it and Column (and its affiliates) whereby Capital Funding allegedly had the right to perform the HUD refinancing for the Golden Living Facilities and according to which Capital Funding provided certain alleged proprietary information to Column and its affiliates relating to the acquisition of the Golden Living Facilities on a confidential basis. Capital Funding further alleges that Walker & Dunlop, LLC, as the alleged successor by merger to Column, is bound by Column’s alleged agreement with Capital Funding, and breached the agreement by taking for itself the opportunity to perform the HUD refinancing for the Golden Living Facilities.

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On November 17, 2010, Capital Funding filed an amended complaint adding Credit Suisse Securities (USA) LLC (“Credit Suisse”), Column Financial, Inc. and Column as defendants. In the amended complaint, Capital Funding further claims that Credit Suisse and its affiliates and Walker & Dunlop, LLC breached the contract, were unjustly enriched, and committed unfair competition by using Capital Funding’s alleged proprietary information for certain allegedly unauthorized purposes. Capital Funding also asserts a separate unfair competition claim against Walker & Dunlop, LLC in which it alleges that Walker & Dunlop, LLC is improperly “taking credit” on its website for certain work actually performed by Capital Funding. Capital Funding seeks damages in excess of $30 million on each of the three claims asserted against all defendants, and an unspecified amount of damages on the separate claim for unfair competition against Walker & Dunlop, LLC. Capital Funding also seeks injunctive relief in connection with its unjust enrichment and unfair competition claims.

Pursuant to an agreement, dated January 30, 2009 (the “Column Transaction Agreement”), among Column, Walker & Dunlop, LLC, W&D, Inc. and Green Park Financial Limited Partnership, Column generally agreed to indemnify Walker & Dunlop, LLC against liability arising from Column’s conduct prior to Column’s transfer of the assets to Walker & Dunlop, LLC. However, pursuant to the Column Transaction Agreement, Column’s indemnification obligation arises only after Column receives a claim notice following the resolution of the litigation that specifies the amount of Walker & Dunlop, LLC’s claim.

To provide for greater certainty regarding Column’s indemnification obligations before the resolution of this litigation and to cap our total loss exposure, the Company secured a further agreement from Column in November 2010 confirming that it will indemnify the Company for any liabilities that arise as a result of this litigation. As part of this further indemnification agreement, in the event Column is required to pay the Company for any liabilities under the Capital Funding litigation that it otherwise would not have been obligated to pay under the Column Transaction Agreement, the Company will indemnify Column for an amount up to $3.0 million. Also as part of this further indemnification agreement, William Walker, our Chairman, President and Chief Executive Officer, and Mallory Walker, former Chairman and current stockholder, in their individual capacities, agreed that if Column is required to indemnify the Company under this agreement and otherwise would not have been obligated to pay such amounts under the Column Transaction Agreement, Messrs. William Walker and Mallory Walker will pay any such amounts in excess of $3.0 million but equal to or less than $6.0 million. As a result of this agreement, the Company will have no liability or other obligation for any damage amounts in excess of $3.0 million arising out of this litigation. Although Column has assumed defense of the case for all defendants, and is paying applicable counsel fees, as a result of the indemnification claim procedures described above, the Company could be required to bear the significant costs of the litigation and any adverse judgment unless and until the Company is able to prevail on our indemnification claim. The Company believes that it will fully prevail on its indemnification claims against Column, and that the Company ultimately will incur no material loss as a result of this litigation, although there can be no assurance that this will be the case. Accordingly, we have not recorded a loss contingency for this litigation.

On July 19, 2011, the Circuit Court for Montgomery County, Maryland issued an order granting the defendants’ motion to dismiss the case without prejudice. After the initial case was dismissed without prejudice, Capital Funding filed an amended complaint. In November 2011, the Circuit Court for Montgomery County, Maryland rejected the defendants’ motion to dismiss the amended complaint. Capital Funding filed a Second Amended Complaint that did not alter the claims at issue but revised their alleged damages. Defendants moved for summary judgment on all claims, including two counts of breach of contract, two counts of promissory estoppel, two counts of unjust enrichment, and two counts of unfair competition. On April 30, 2013, the Court issued an Opinion and Order which granted the motion as to the promissory estoppel counts and one count of unjust enrichment. The Court denied the motion as to all remaining claims.

A two-week jury trial was held in July 2013. In the course of the trial, all but two of Capital Funding’s remaining claims were dismissed. Following the trial, the Court entered (i) a $1.8 million judgment against Credit Suisse and its affiliates on Capital Funding’s breach of contract claim and (ii) a $10.4 million judgment against Credit Suisse and its affiliates on Capital Funding’s unjust enrichment claim. Because the two claims arise from the same facts, Capital Funding agreed it may only collect on one of the judgments; following the verdict, Capital Funding “elected” to collect the $10.4 million judgment. The defendants filed a post judgment motion to reduce or set aside the judgment. On January 31, 2014 the Court ruled that the $10.4 million unjust enrichment judgment is vacated, and awarded Capital Funding the $1.8 million breach of contract judgment. On February 10, 2014, Capital Funding filed a motion with the Court seeking a new trial. On March 13, 2014, the Court denied Capital Funding’s motion for a new trial. Capital Funding has filed an appeal with Maryland’s Court of Special Appeals. Oral arguments in the appeal are scheduled for December 2014.

Litigation—CA Funds Group Litigation—In March 2012, the Company’s wholly owned subsidiary, Walker & Dunlop Investment Advisory Services, LLC (“IA Services”) engaged CA Funds Group, Inc. (“CAFG”) to provide, among other things, consulting services in connection with expanding the Company’s investment advisory services business. The engagement letter was supplemented in June 2012 to retain CAFG to engage in certain capital raising activities, primarily with respect to a potential commingled, open-ended Fund (“Fund”). The Fund was never launched by the Company. However, the Company independently formed the Bridge Program, which is focused primarily on making floating-rate loans of up to three years of $25.0 million or more to experienced owners of multifamily properties. CAFG filed a breach of contract action captioned CA Funds Group, Inc. v. Walker & Dunlop Investment Advisory Services, LLC and Walker & Dunlop, LLC in the United States District Court for the Northern District of Illinois, Eastern Division, seeking a placement fee in the amount of $5.1 million (plus interest and the costs of the suit) based upon the $380.0 million allegedly obtained for the Bridge Program. The Company filed a motion to dismiss the complaint on January 3, 2014, CAFG filed a response to the motion on January 31, 2014, and on March 21, 2014, the Court denied the Company’s motion to dismiss the complaint. The Company intends to vigorously defend the matter. Discovery is ongoing.

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The Company has not recorded a loss reserve for the aforementioned litigation as the Company does not believe that a loss is probable in either case. The Company cannot predict the outcome of any pending litigation and may be subject to consequences that could include fines, penalties, and other costs, and the Company’s reputation and business may be impacted. The Company believes that any liability that could be imposed on the Company in connection with the disposition of any pending lawsuits would not have a material adverse effect on its business, results of operations, liquidity or financial condition.

In the normal course of business, the Company may be party to various other claims and litigation, none of which the Company believes is material.

NOTE 10—EARNINGS PER SHARE

The following weighted average shares and share equivalents are used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2014 and 2013:

	For the three months ended June 30,				For the six months ended June 30,
	2014		2013		2014		2013
Weighted average number of shares outstanding used to calculate basic earnings per share		31,710,759		33,699,944		32,624,372		33,635,472
Dilutive securities
Unvested restricted shares		239,817		785,806		272,790		695,167
Weighted average number of shares and share equivalents outstanding used to calculate diluted earnings per share		31,950,576		34,485,750		32,897,162		34,330,639

The assumed proceeds used for calculating the dilutive impact of restricted stock awards under the treasury method includes the unrecognized compensation costs and excess tax benefits associated with the awards. Average options issued under the 2010 Equity Incentive Plan to purchase 655,818 and 63,667 shares of common stock were outstanding during the three months ended June 30, 2014 and 2013, respectively, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive. During the three months ended June 30, 2014 and 2013, 211,342 and 0 average restricted shares were outstanding, respectively, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.

Average options issued under the 2010 Equity Incentive Plan to purchase 515,867 and 100,196 shares of common stock were outstanding during the six months ended June 30, 2014 and 2013, respectively, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive. During the six months ended June 30, 2014 and 2013, no restricted shares were excluded from the computation of diluted earnings per share.

NOTE 11—STOCKHOLDERS’ EQUITY

A summary of changes in stockholders’ equity is presented below (dollars in thousands):

							Additional					Total
	Common Stock						Paid-In			Retained		Stockholders’
	Shares			Amount			Capital			Earnings		Equity
Balances at December 31, 2013		33,999,551		$	340		$	244,954		$	157,547	$	402,841
Net income		—			—			—			20,058		20,058
Stock-based compensation		—			—			3,901			—		3,901
Issuance of common shares in connection with equity incentive plans		333,403			3			1,714			—		1,717
Repurchase and retirement of common stock		(2,559,731	)		(25	)		(37,271	)		—		(37,296	)
Tax benefit from vesting of restricted shares		—			—			(83	)		—		(83	)
Balances at June 30, 2014		31,773,223		$	318		$	213,215		$	177,605	$	391,138

15

In the first quarter of 2014, the Company repurchased 2,450,451 shares of the Company’s common stock from one of its largest stockholders at a price of $14.50 per share, which was below the market price at the time, and immediately retired the shares, reducing stockholders’ equity by approximately $35.5 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the historical financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains, in addition to historical information, forward-looking statements that include risks and uncertainties. Our actual results may differ materially from those expressed or contemplated in those forward looking statements as a result of certain factors, including those set forth under the headings “Forward-Looking Statements” and “Risk Factors” elsewhere in this Quarterly Report on Form 10-Q and in the 2013 Form 10-K.

Forward-Looking Statements

Some of the statements in this quarterly report on Form 10-Q of Walker & Dunlop, Inc. and subsidiaries (the “Company,” “Walker & Dunlop,” “we,” “us”), may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans, or intentions.

The forward-looking statements contained in this Form 10-Q reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking statement. Statements regarding the following subjects, among others, may be forward-looking:

• the future of the GSEs and their impact on our business;

• the future funding level of HUD, including whether such funding level will be sufficient to support future firm commitment requests, and its impact on our business;

• changes to the interest rate environment and its impact on our business;

• our growth strategy;

• our projected financial condition, liquidity and results of operations;

• our ability to obtain and maintain warehouse and other loan funding arrangements;

• availability of and our ability to retain qualified personnel and our ability to develop and retain relationships with borrowers, key principals and lenders;

• degree and nature of our competition;

• the outcome of pending litigation;

• changes in governmental regulations and policies, tax laws and rates, and similar matters and the impact of such regulations, policies, and actions;

• our ability to comply with the laws, rules and regulations applicable to us;

• trends in the commercial real estate finance market, interest rates, commercial real estate values, the credit and capital markets or the general economy; and

• general volatility of the capital markets and the market price of our common stock.

While forward-looking statements reflect our good faith projections, assumptions, and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law. For a further discussion of these and other factors that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements, see “Risk Factors.”

Business

We are one of the leading commercial real estate finance companies in the United States, with a primary focus on multifamily lending. We originate, sell, and service a range of multifamily and other commercial real estate financing products. Our clients are owners and developers of commercial real estate across the country. We originate and sell loans through the programs of Fannie Mae, Freddie Mac, Ginnie Mae, and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development, with which we have long-established relationships. We retain servicing rights and asset management responsibilities on nearly all loans that we originate for GSE and HUD programs. We are approved as a Fannie Mae Delegated Underwriting and Servicing (“DUS” ™) lender nationally, a Freddie Mac Program Plus™ lender in 22 states and the District of Columbia, a HUD Multifamily Accelerated Processing (“MAP”) lender nationally, a HUD LEAN lender nationally, and a Ginnie Mae issuer. We also broker loans for a number of life insurance companies, commercial banks, and other institutional investors, in which cases we do not fund the loan but rather act as a loan broker. We service some of the loans for which we act as a loan broker. Additionally, through our subsidiary entities, we provide asset management and investment management services specializing in debt, structured debt, and equity financing for commercial real estate.

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We fund loans for GSE and HUD programs, generally through warehouse facility financings, and sell them to investors in accordance with the related loan sale commitment, which we obtain prior to loan closing. Proceeds from the sale of the loan are used to pay off the warehouse facility. The sale of the loan is typically completed within 60 days after the loan is closed, and we retain the right to service nearly all of these loans.

We recognize gains from mortgage banking activities when we commit to both make a loan to a borrower and sell that loan to an investor. The gains from mortgage banking activities reflect the fair value attributable to loan origination fees, premiums or losses on the sale of loans, net of any co-broker fees, and the fair value of the expected net cash flows associated with servicing the loans, net of any guaranty obligations retained. We also generate revenue from net warehouse interest income we earn while the loan is held for sale through one of our warehouse facilities.

We retain servicing rights on substantially all of the loans we originate and sell and generate revenues from the fees we receive for servicing the loans, from the interest income on escrow deposits held on behalf of borrowers, from late charges, and from other ancillary fees. Servicing fees are set at the time an investor agrees to purchase the loan and are generally paid monthly for the duration of the loan. Our Fannie Mae and Freddie Mac servicing arrangements generally provide for prepayment penalties to the Company in the event of a voluntary prepayment. For loans serviced outside of Fannie Mae and Freddie Mac, we typically do not share in any such payments.

We are currently not exposed to interest rate risk during the loan commitment, closing, and delivery process. The sale or placement of each loan to an investor is negotiated prior to establishing the coupon rate for the loan. We also seek to mitigate the risk of a loan not closing. We have agreements in place with the GSEs and HUD that specify the cost of a failed loan delivery, also known as a pair off fee, in the event we fail to deliver the loan to the investor. To protect us against such pair off fees, we require a deposit from the borrower at rate lock that is typically more than the potential pair off fee. The deposit is returned to the borrower only once the loan is closed. Any potential loss from a catastrophic change in the property condition while the loan is held for sale using warehouse facility financing is mitigated through property insurance equal to replacement cost. We are also protected contractually from an investor’s failure to purchase the loan. We have experienced only two failed deliveries in our history and have not incurred a loss.

In cases where we do not fund the loan, we act as a loan broker and retain the right to service some of the loans. Our originators who focus on loan brokerage are engaged by borrowers to work with a variety of institutional lenders to find the most appropriate loan instrument for the borrowers’ needs. These loans are then funded directly by the institutional lender, and we receive an origination fee for placing the loan and a servicing fee for any loans we service.

We have risk-sharing obligations on substantially all loans we originate under the Fannie Mae DUS program. When a Fannie Mae DUS loan is subject to full risk-sharing, we absorb losses on the first 5% of the unpaid principal balance of a loan at the time of loss settlement, and above 5% we share a percentage of the loss with Fannie Mae, with our maximum loss capped at 20% of the original unpaid principal balance of the loan (subject to doubling or tripling if the loan does not meet specific underwriting criteria or if the loan defaults within 12 months of its sale to Fannie Mae). We may, however, request modified risk-sharing at the time of origination, which reduces our potential risk-sharing losses from the levels described above. We occasionally request modified risk-sharing based on the size of the loan. We may also request modified risk-sharing on large transactions if we do not believe that we are being fully compensated for the risks of the transactions or to manage overall risk levels. Our current credit management policy is to cap each loan balance subject to full risk-sharing at $60 million. Accordingly, we generally elect to use modified risk-sharing for loans of more than $60 million in order to limit our maximum loss exposure on any one loan to $12 million (such exposure would occur in the event that the underlying collateral is determined to be completely without value at the time of loss). However, we may on occasion elect to originate a loan with full risk sharing even when the loan balance is greater than $60 million if we believe the loan characteristics support such an approach.

Our servicing fees for risk-sharing loans include compensation for the risk-sharing obligations and are larger than the servicing fees we receive from Fannie Mae for loans with no risk-sharing obligations. We receive a lower servicing fee for modified risk-sharing than for full risk-sharing.

We have an interim loan program offering floating-rate debt with original principal balances of generally up to $25.0 million, for terms of up to two years, to experienced borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent financing (the “Interim Program”). We underwrite all loans originated through the Interim Program. During the time that they are outstanding, we assume the full risk of loss on the loans. In addition, we service and asset-manage loans originated through the Interim Program, with the ultimate goal of providing permanent financing on the properties.

Through a partnership in which we own a 5% interest (the “Bridge Partnership”), we offer large floating-rate loans to experienced borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent financing (the “Bridge Program”). The Bridge Program is generally offered for loans of $25.0 million or more and for terms of up to three years. The loans in the Bridge Program are selected and funded by the partnership and underwritten by us. We receive an asset management fee on the invested capital for managing the Bridge Program and servicing the loans. The Bridge Partnership assumes the full risk of loss on the loans while it holds the loans.

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We own a 20% interest in a partnership with an affiliate of our largest stockholder, Fortress Investment Group, LLC (the “CMBS Partnership”), through which we offer financing through a commercial mortgage backed securities (“CMBS”) platform for all commercial property types throughout the United States. The CMBS Partnership expects to sell all loans originated by it into secondary securitization offerings within 90 days of origination. The loans in the CMBS Partnership are selected and funded by the CMBS Partnership and underwritten by us. We receive a fee for servicing the loans. The CMBS Partnership assumes the full risk of loss on the loans while it holds the loans.

Basis of Presentation

The accompanying condensed consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiaries, and all material intercompany transactions have been eliminated.

Critical Accounting Policies

Our condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which require management to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and other factors management believes to be reasonable. Actual results may differ from those estimates and assumptions. We believe the following critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements.

Mortgage Servicing Rights (MSRs) and Guaranty Obligations. MSRs are recorded at fair value at loan sale. The fair value is based on estimates of expected net cash flows associated with the servicing rights. The estimated net cash flows are discounted at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan. We only recognize MSRs for GSE and HUD originations. We do not recognize MSRs for brokered transactions since we do not originate and sell the loan.

In addition to the MSR, for all Fannie Mae DUS loans with risk-sharing obligations, upon sale we record the greater of (1) the fair value of the obligation to stand ready to perform over the term of the guaranty (non-contingent obligation) and (2) the fair value of the expected loss from the risk-sharing obligations in the event of a borrower default (contingent obligation). In determining the fair value of the guaranty obligation, we consider the risk profile of the collateral, historical loss experience, and various market indicators. Generally, the estimated fair value of the guaranty obligation is based on the present value of the cash flows expected to be paid under the guaranty over the life of the loan (historically three to five basis points annually), discounted using a 12-15% discount rate. Historically, the contingent obligation has been de minimis upon loan sale and thus not recognized at that time. The estimated life and discount rate used to calculate the guaranty obligation are consistent with those used to calculate the corresponding MSR.

The MSR and associated guaranty obligation are amortized into expense over the estimated life of the loan and presented as a component of the Amortization and depreciation line item in the Condensed Consolidated Statements of Income. The MSR is amortized using the interest method over the period that servicing income is expected to be received. The guaranty obligation is amortized evenly over the same period. If a loan defaults and is not expected to become current or pays off prior to the estimated life, the unamortized MSR and guaranty obligation balances are written off through the Amortization and depreciation line item in the Condensed Consolidated Statements of Income.

We carry MSRs at the lower of amortized cost or fair value and evaluate the carrying value for impairment on a portfolio basis quarterly. We engage a third party to assist in determining an estimated fair value of our MSRs on a semi-annual basis.

Allowance for Risk-sharing Obligations and Allowance for Loan Losses. The allowance for risk-sharing obligations relates to our at risk servicing portfolio and is presented as a separate liability within the Condensed Consolidated Balance Sheets. The allowance for loan losses relates to our loans held for investment and is included as a component of Loans held for investment, net within the Condensed Consolidated Balance Sheets. The amount of each of these allowances considers our assessment of the likelihood of repayment by the borrower or key principal(s), the risk characteristics of the loan, the loan’s risk rating, historical loss experience, adverse situations affecting individual loans, the estimated disposition value of the underlying collateral, and the level of risk sharing, which for loans held for investment is 100 percent. Historically, initial loss recognition occurs at or before a loan becomes 60 days delinquent. We regularly monitor each allowance on all applicable loans and update loss estimates as current information is received. The Provision for credit losses line item in the Condensed Consolidated Statements of Income reflects the income statement impact of changes to both the allowance for risk-sharing obligations and allowance for loan losses.

Overview of Current Business Environment

Throughout the first half of 2014, the fundamentals of the commercial and multifamily real estate market continued their improvement from the recent economic downturn. Multifamily occupancy rates and effective rents increased based upon strengthening rental market demand, both of which aid loan performance due to their importance to the cash flows of the underlying properties. Most other commercial real estate asset classes saw similar improvements. The increased demand and cash flows have boosted the value of many commercial and multifamily properties and improved the performance of those mortgages, driving delinquency rates to the low end of the historical ranges for commercial and multifamily mortgages and driving property values to the high end of the historical ranges.

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In addition to the improved property fundamentals, for the last several years, the U.S. mortgage market has experienced historically low interest rates, leading many borrowers to seek refinancing prior to the scheduled maturity date of their loans. As borrowers have sought to take advantage of the interest rate environment and improved property fundamentals, the number of lenders and amount of capital available to lend have increased dramatically. In addition, according to the Mortgage Bankers Association, commercial and multifamily loan maturities are at their lowest point since 2009 and expected to be 23% less than 2013, in advance of a significant “wall of maturities” expected from 2015 through 2017, as the loans originated at the height of the CMBS market begin maturing a decade later. With significantly fewer mortgage maturities in 2014 and an abundant supply of capital from CMBS, banks, life insurance companies, and the Agencies, competition for new loans is fierce. Consequently, we do not anticipate significant growth in refinance activity for commercial and multifamily borrowing and lending in 2014.

Property values for many fully leased commercial and multifamily assets have continued to increase and are at their highest point in recent years with near historic lows in capitalization rates and greatly improved property fundamentals, making it difficult for borrowers to generate the desired returns. As a result, many of our borrowers are seeking higher returns by identifying and acquiring the transitional properties that our interim loan program is designed to address. The growth in transitional lending was evident in the first two quarters of 2014, as we originated $147.1 million of interim loans for our balance sheet, compared to $37.9 million in the first two quarters of 2013. In 2013, we grew our interim lending by 444%, to $192.0 million, and we expect to see continued growth in transitional mortgages throughout 2014. The demand for transitional lending has brought increased competition from lenders, specifically banks and life insurance companies. Both are actively pursuing transitional properties by leveraging their low cost of capital and desire for short-term, high-yield commercial real estate investments.

In March 2013, the GSEs’ regulator, the Federal Housing Finance Agency (“FHFA”), communicated a goal to reduce the GSEs’ 2013 multifamily origination volumes 10% from 2012 levels. The reduction in lending capacity during a period of increased competition from banks, life insurance companies, and CMBS adversely impacted the GSEs’ ability to compete for new multifamily mortgages. In addition, because the GSEs were operating uncapped for the first quarter of 2013, by the time the GSEs implemented changes to their 2013 business plan following the release of the scorecard, they were well ahead of the pace needed to stay within the newly established caps. As a result, the GSEs were not competing for new loans by the middle of Q2 2013 as they looked to manage their remaining allocations under the lending caps for the rest of the year. In May 2014, FHFA announced the 2014 multifamily scorecard for the GSEs, stating that the 2013 origination volume limits would remain unchanged in 2014. FHFA also announced that loans for affordable or manufactured housing communities would not count towards the limits.

Through June 30, 2014, we originated $2.4 billion of multifamily mortgages with the GSEs, down $281.5 million, or 11% year over year. The decrease is largely due to the trough in mortgage maturities and partly due to the changes in the GSEs regulatory environment year over year. We expect the GSEs to be challenged to reach their lending caps in 2014, as they will continue to have to actively compete against banks, life insurance companies, and CMBS throughout the year. This competition could lead to lower GSE volumes and/or reduced profitability on GSE loans we originate. Our originations with the GSEs are some of our most profitable executions as they provide significant non-cash gains from mortgage servicing rights. A decline in GSE originations would negatively impact our financial results as our non-cash revenues will decrease disproportionately with origination volumes.

In response to increased demand from life insurance companies, banks, and CMBS for long-term, fixed-rate commercial and multifamily loans, and in preparation for the wall of maturities, we have significantly grown our Capital Markets platform over the past few years, adding origination talent in Wisconsin, Florida, Arizona, California, Illinois, and Georgia. As we have grown our Capital Markets origination team, we have also expanded our network of life insurance companies and banks into which those originators can deliver new commercial and multifamily mortgages. As the demand from banks and life insurance companies has increased in recent years, our investments in this business have resulted in significant growth in brokered originations in the past few years. In 2013 we experienced significant growth in our brokered originations as banks, life insurance companies, and CMBS took advantage of the uncertainty surrounding Fannie Mae and Freddie Mac following the release of the FHFA 2013 multifamily scorecard that required a reduction in the GSEs origination volumes. However, the release of the FHFA’s 2014 multifamily scorecard did not contain similar reductions; consequently, the GSEs are competing for new deals at pre-2013 levels. As the GSEs have become more active and competitive in 2014, the growth in originations through our brokerage channels (i.e., banks, life insurance companies, and CMBS) has slowed and our Capital Markets origination team has originated more GSE loans. We expect this trend to continue as the GSEs are expected to remain competitive for new originations throughout the remainder of 2014.

In addition to banks and life insurance companies, there has been a recent increase in demand for CMBS bonds backed by commercial and multifamily mortgages. The peak of the CMBS market was between 2005 and 2007, and after its collapse in 2008, CMBS originations were close to zero. However, in recent years, the demand for commercial and multifamily bonds has increased and we have experienced increased competition from an ever-growing CMBS mortgage origination market. There are close to 40 CMBS lenders today, and originations from commercial and multifamily CMBS lenders have grown from almost zero five years ago to $22.0 billion in 2011 and to $49.0 billion in 2013. It is the increased demand for CMBS bonds backed by commercial and multifamily mortgages and the expected wave of refinancing activity upcoming in the next three years that led us to form the CMBS Partnership. We expect to begin originating loans for the CMBS Partnership this year.

Finally, with respect to our HUD activities, Congress was successful in passing a Federal budget for fiscal 2014 and allocating $30.0 billion of capital to HUD to finance new multifamily mortgages. This is in contrast to 2013 when the government was operating under a continuing resolution and HUD twice ran out of commitment authority. We anticipate that HUD will effectively compete for higher leverage, affordable housing deals, but they will also experience the same increase in competition that the GSEs have been experiencing for the last twelve to eighteen months for lower leverage multifamily properties. Year to date, our HUD originations are down 26% from the same period last year.

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Results of Operations

Following is a discussion of our results of operations for the three and six months ended June 30, 2014 and 2013. The financial results are not necessarily indicative of future results. Our quarterly results have fluctuated in the past and are expected to fluctuate in the future, reflecting the interest-rate environment, the volume of transactions, regulatory actions, and general economic conditions. Please refer to the table below, which provides supplemental data regarding our financial performance.

	For the three months ended June 30,						For the six months ended June 30,
(Dollars in thousands)	2014			2013			2014			2013
Origination Data:
Fannie Mae	$	942,504		$	771,766		$	1,401,785		$	1,534,739
Freddie Mac		613,347			615,783			981,784			1,130,378
Ginnie Mae - HUD		157,251			413,719			415,034			561,152
Brokered (1)		606,507			720,226			1,022,332			1,026,577
Interim Loans		65,805			37,920			147,055			37,920
Total	$	2,385,414		$	2,559,414		$	3,967,990		$	4,290,766
Key Metrics (as a percentage of total revenues):
Personnel expenses		40	%		41	%		39	%		41	%
Other operating expenses		10	%		11	%		11	%		12	%
Total expenses		75	%		74	%		78	%		77	%
Adjusted total expenses (2)		75	%		72	%		78	%		76	%
Operating margin		25	%		26	%		22	%		23	%
Adjusted operating margin (2)		25	%		28	%		22	%		24	%
Key Origination Metrics (as a percentage of origination volume):
Origination related fees		1.24	%		1.35	%		1.26	%		1.32	%
Fair value of MSRs created, net		0.95	%		1.11	%		0.92	%		1.15	%
Fair value of MSRs created, net as a percentage of GSE and HUD origination volume (3)		1.33	%		1.58	%		1.31	%		1.52	%

	As of June 30,
	2014			2013
Servicing Portfolio by Product:
Fannie Mae	$	19,524,654		$	19,541,380
Freddie Mac		10,922,884			10,017,202
Ginnie Mae - HUD		5,012,368			4,650,472
Brokered (1)		4,139,507			3,628,796
Interim Loans		194,320			47,420
Total	$	39,793,733		$	37,885,270
Key Servicing Metrics (end of period):
Weighted-average servicing fee rate		0.24	%		0.24	%

(1) Brokered transactions for commercial mortgage backed securities, life insurance companies, and commercial banks.

(2) This is a non-GAAP financial measure. For more information on our non-GAAP financial measures, refer to the section below titled “Non-GAAP Financial Measures.”

(3) The fair value of the expected net cash flows associated with the servicing of the loan, net of any guaranty obligations retained, as a percentage of GSE and HUD volume. No MSRs are recorded for “brokered” transactions or interim loan program originations.

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Overview

Our consolidated income from operations was $20.9 million for the three months ended June 30, 2014 compared to $23.8 million for the three months ended June 30, 2013, a 12% decrease. Our consolidated income from operations was $32.8 million for the six months ended June 30, 2014 compared to $36.1 million for the six months ended June 30, 2013, a 9% decrease. Our total revenues were $85.3 million for the three months ended June 30, 2014 compared to $90.7 million for the three months ended June 30, 2013, a 6% decrease. Our total revenues were $150.1 million for the six months ended June 30, 2014 compared to $159.9 million for the six months ended June 30, 2013, a 6% decrease. Our total expenses were $64.4 million for the three months ended June 30, 2014 compared to $66.9 million for the three months ended June 30, 2013, a 4% decrease. Our total expenses were $117.3 million for the six months ended June 30, 2014 compared to $123.8 million for the six months ended June 30, 2013, a 5% decrease. Our operating margins were 25% and 22% for the three and six months ended June 30, 2014, respectively, compared to 26% and 23% for the three and six months ended June 30, 2013, respectively.

The decreases in revenues were primarily attributable to decreases in loan origination volumes and the fair value of the expected net cash flows associated with servicing loans, net of any guaranty obligation retained (“MSR income”). The lower loan origination volumes and MSR income led to lower gains from mortgage banking activities for the three and six months ended June 30, 2014 compared to the same periods in 2013. Partially offsetting the lower gains from mortgage banking activities were increases in servicing fees, net warehouse interest income, and other revenues for the three and six months ended June 30, 2014 compared to the same periods in 2013. The decreases in loan origination volumes were largely attributable to the delay in the establishment of the GSEs’ multifamily lending caps and increased competition for multifamily and commercial real estate loan originations. The GSEs reduced their loan origination volumes year over year as they were uncertain whether there would be further reductions in their multifamily lending caps in 2014. The increased competition was the result of a smaller supply of loans due to the low number of multifamily and commercial real estate maturities in 2014, as discussed more fully above in the Overview of Current Business Environment section. The decreases in expenses were primarily attributable to reductions in compensation costs, which decreased as a result of lower commission costs due to lower loan origination volumes year over year and lower salaries and benefits expenses due to a cost reduction effort implemented in 2013, which decreased headcount.

Our net income was $12.9 million and $20.1 million for the three and six months ended June 30, 2014, respectively, compared to $14.5 and $22.3 million for the three and six months ended June 30, 2013, respectively, decreases of 11% and 10%, respectively.

Revenues

Gains from Mortgage Banking Activities. Gains from mortgage banking activities were $52.3 million for the three months ended June 30, 2014 compared to $63.1 million for the three months ended June 30, 2013, a 17% decrease. For the six months ended June 30, 2014, gains from mortgage banking activities were $86.8 million, compared to $106.0 million for the same period in 2013, an 18% decrease. Gains from mortgage banking activities reflect the fair value of loan origination fees, the fair value of loan premiums, net of any co-broker fees, and MSR income. The decreases were primarily attributable to the decreases in the volumes of loans originated year over year and MSR income as a percentage of loan origination volumes (“MSR rate”). The decreases in MSR rates were primarily the result of the aforementioned increased competition and an increase in the number of large loans originated that generally carry lower servicing fees, which reduced the weighted average servicing fee on loans originated during the three and six months ended June 30, 2014 compared to the same periods in 2013.

Loan origination volume decreased to $2.4 billion for the three months ended June 30, 2014 from $2.6 billion for the three months ended June 30, 2013, a 7% decrease. For the three months ended June 30, 2014 compared to the three months ended June 30, 2013, the MSR rate decreased 14%, while origination related fees as a percentage of loan origination volume (“origination fee rate”) decreased 8%. The primary contributor to the decrease in the origination fee rate was lower HUD origination volume period over period.

Loan origination volumes decreased to $4.0 billion for the six months ended June 30, 2014 from $4.3 billion for the six months ended June 30, 2013, an 8% decrease. For the six months ended June 30, 2014, the origination fee rate decreased 5% year over year, and we experienced a 20% decrease in the MSR rate.

Servicing Fees. Servicing fees were $24.0 million for the three months ended June 30, 2014 compared to $22.4 million for the three months ended June 30, 2013, a 7% increase. For the six months ended June 30, 2014, servicing fees were $47.3 million, compared to $43.5 million for the same period in 2013, a 9% increase. The increase was primarily attributable to an increase in the servicing portfolio due to new loan originations. The average servicing portfolio for the three months ended June 30, 2014 was $39.4 billion compared to $37.3 billion for the three months ended June 30, 2013, while the average servicing portfolio for the six months ended June 30, 2014 was $39.2 billion compared to $36.7 billion for the six months ended June 30, 2013.

Net Warehouse Interest Income. Net warehouse interest income was $3.9 million and $6.1 million for the three and six months ended June 30, 2014, respectively, compared to $1.8 and $3.4 million for the three and six months ended June 30, 2013, respectively, increases of 121% and 81%, respectively. The increases are principally the result of increases in net warehouse interest income from loans held for investment, which was due to higher average balances outstanding of loans held for investment year over year. The components of net warehouse interest income are (in thousands):

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	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Warehouse interest income - loans held for sale	$	5,112		$	4,355		$	8,278		$	9,670
Warehouse interest expense - loans held for sale		(2,817	)		(2,793	)		(4,592	)		(6,495	)
Net warehouse interest income - loans held for sale	$	2,295		$	1,562		$	3,686		$	3,175
Warehouse interest income - loans held for investment	$	3,227		$	403		$	5,403		$	535
Warehouse interest expense - loans held for investment		(1,626	)		(205	)		(2,957	)		(327	)
Net warehouse interest income - loans held for investment	$	1,601		$	198		$	2,446		$	208
Total net warehouse interest income	$	3,896		$	1,760		$	6,132		$	3,383

Other. Other revenues were $4.1 million and $7.7 million for the three and six months ended June 30, 2014, respectively, compared to $2.6 million and $5.2 million for the three and six months ended June 30, 2013, respectively, increases of 56% and 48%, respectively. The increases were primarily attributable to increases in prepayment penalty fees of $1.4 million and $2.3 million for the three and six months ended June 30, 2014, respectively, compared to the same periods in 2013.

Expenses

Personnel. Personnel expense was $34.1 million for the three months ended June 30, 2014 compared to $37.3 million for the three months ended June 30, 2013, a 9% decrease. For the six months ended June 30, 2014, personnel expense was $58.6 million compared to $65.6 million for the same period in 2013, an 11% decrease. The decreases were principally the result of lower commission costs due to lower loan origination volumes year over year and lower salaries and benefits expenses due to the 2013 cost reduction effort, which reduced headcount.

Amortization and Depreciation. Amortization and depreciation expense was $19.1 million and $37.6 million for the three and six months ended June 30, 2014, respectively, compared to $18.2 million and $36.7 million for the three and six months ended June 30, 2013, respectively, increases of 5% and 2%, respectively. The increases are principally related to increases in the average MSR portfolio year over year.

Provision for Credit Losses. The provision for credit losses was $0.3 million for the three months ended June 30, 2014 compared to $0.8 million for the three months ended June 30, 2013, a 63% decrease. The provision for credit losses was $0.1 million for the six months ended June 30, 2014, compared to $1.2 million for the six months ended June 30, 2013, a 91% decrease. The decreases are primarily attributable to the overall improvement in credit quality of the at risk portfolio, as evidenced by no loans delinquent 60 days or more as of June 30, 2014 compared to $9.1 million delinquent 60 days or more as of June 30, 2013. We regularly monitor our risk-sharing obligations on all loans and update our loss estimates as current information is received.

Interest Expense on Corporate Debt. The interest expense on corporate debt was $2.6 million and $5.2 million for the three and six months ended June 30, 2014, respectively, compared to $0.9 million and $1.8 million for the three and six months ended June 30, 2013, respectively, increases of 201% and 183%, respectively. The increases were primarily attributable to increases in the average principal balance of corporate debt outstanding year over year. During the three months ended June 30, 2014, the average principal balance of corporate debt outstanding increased 123% from the same period in 2013. During the six months ended June 30, 2014, the average principal balance of corporate debt outstanding increased 120% from the same period in 2013. In addition, the average interest rate spread on our corporate debt outstanding increased 75 basis points for the three and six months ended June 30, 2014 compared to the same periods in 2013.

Other Operating Expenses. Other operating expenses were $8.3 million for the three months ended June 30, 2014 compared to $9.8 million for the three months ended June 30, 2013, a 15% decrease. For the six months ended June 30, 2014, other operating expenses were $15.8 million, compared to $18.5 million for the six months ended June 30, 2013, a 14% decrease. The decreases were primarily attributable to decreases in rent expense and travel and entertainment expense. The decreases in rent expense were due to decreased annual rent as a result of a reduction in the office space associated with our Needham, MA office during the second quarter of 2013. Additionally, we incurred a modification fee of $0.8 million associated with the lease for our Needham, MA office in the second quarter of 2013 with no comparable expense in 2014. The decreases in travel and entertainment expense relate to the decrease in headcount

Income Tax Expense. Income tax expense for the three months ended June 30, 2014 was $8.0 million compared to $9.3 million for the three months ended June 30, 2013, a 13% decrease. For the six months ended June 30, 2014, income tax expense was $12.8 million compared to $13.9 million for the same period in 2013, an 8% decrease. The decreases in income tax expense were primarily due to decreases in income from operations and a slight decrease in the effective tax rate from 38.9% to 38.3% year over year.

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Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with GAAP, we use the following non-GAAP financial measures:

• Adjusted net income

• Adjusted diluted earnings per share

• Adjusted total expenses

• Adjusted income from operations

• Adjusted operating margin

• Adjusted EBITDA

The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The adjusted metrics exclude significant activities that are not part of our ongoing operations.

In addition, we present adjusted EBITDA, which is not a recognized measurement under GAAP. When analyzing our operating performance, readers should use adjusted EBITDA in addition to, and not as an alternative for, GAAP net income. Adjusted EBITDA represents GAAP net income before income taxes, adjusted for interest expense on our term loan facility, amortization and depreciation, provision for credit losses net of write-offs, stock-based incentive compensation charges, and non-cash revenues such as gains attributable to MSRs. In addition, adjusted EBITDA further excludes the impact of significant activities that are not part of our ongoing operations. Because not all companies use identical calculations, our presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, adjusted EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not reflect certain cash requirements such as tax and debt service payments. The amounts shown for adjusted EBITDA may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges that are used to determine compliance with financial covenants.

We believe that adjusted net income, adjusted diluted earnings per share, adjusted total expenses, adjusted income from operations, and adjusted operating margin facilitate a review of the comparability of our operating performance on a period-to-period basis because such costs are not, in our view, related to our ongoing operational performance. We use these non-GAAP measures, including adjusted EBITDA, to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by offering:

• the ability to make more meaningful period-to-period comparisons of our on-going operating results;

• the ability to better identify trends in our underlying business and perform related trend analyses; and

• a better understanding of how management plans and measures our underlying business.

These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

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Adjusted net income, adjusted diluted earnings per share, adjusted total expenses, adjusted operating income, adjusted operating margin, and adjusted EBITDA are calculated as follows:

ADJUSTED FINANCIAL METRICS RECONCILIATION TO GAAP

	For the three months ended June 30,						For the six months ended June 30,
(in thousands, except per share amounts)	2014			2013			2014			2013
Reconciliation of GAAP Net Income and GAAP Diluted Earnings Per Share to Adjusted Net Income and Adjusted Diluted Earnings Per Share
GAAP net income	$	12,914		$	14,543		$	20,058		$	22,269
Shares (1)		31,951			34,486			32,897			34,331
GAAP diluted earnings per share	$	0.40		$	0.42		$	0.61		$	0.65
GAAP net income	$	12,914		$	14,543		$	20,058		$	22,269
Adjustments:
Amortization of intangibles		—			430			509			1,709
Lease modification		—			825			—			825
Income tax impact of adjustments		—			(488	)		(195	)		(986	)
Adjusted net income	$	12,914		$	15,310		$	20,372		$	23,817
Shares (1)		31,951			34,486			32,897			34,331
Adjusted diluted earnings per share	$	0.40		$	0.44		$	0.62		$	0.69
Reconciliation of GAAP Income from Operations and GAAP Operating Margin to Adjusted Income from Operations and Adjusted Operating Margin
GAAP income from operations	$	20,931		$	23,802		$	32,841		$	36,132
Total revenues		85,286			90,734			150,119			159,919
GAAP operating margin		25	%		26	%		22	%		23	%
GAAP income from operations	$	20,931		$	23,802		$	32,841		$	36,132
Adjustments:
Amortization of intangibles		—			430			509			1,709
Lease modification		—			825			—			825
Adjusted income from operations	$	20,931		$	25,057		$	33,350		$	38,666
Total revenues		85,286			90,734			150,119			159,919
Adjusted operating margin		25	%		28	%		22	%		24	%
Reconciliation of GAAP Total Expenses to Adjusted Total Expenses
GAAP total expenses	$	64,355		$	66,932		$	117,278		$	123,787
Adjustments:
Amortization of intangibles		—			(430	)		(509	)		(1,709	)
Lease modification		—			(825	)		—			(825	)
Adjusted total expenses	$	64,355		$	65,677		$	116,769		$	121,253

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ADJUSTED FINANCIAL METRICS RECONCILIATION TO GAAP (continued)

	For the three months ended						For the six months ended
	June 30,						June 30,
	2014			2013			2014			2013
Reconciliation of GAAP Net Income to Adjusted EBITDA
GAAP net income	$	12,914		$	14,543		$	20,058		$	22,269
Recurring Adjustments:
Income tax expense		8,017			9,259			12,783			13,863
Interest expense		2,621			870			5,194			1,838
Amortization and depreciation		19,097			18,176			37,556			36,728
Provision for credit losses		279			751			108			1,152
Net write-offs		(1,264	)		(4,500	)		(2,625	)		(4,500	)
Stock compensation expense		2,003			2,544			4,274			4,704
Gains attributable to mortgage servicing rights (2)		(22,746	)		(28,483	)		(36,634	)		(49,154	)
Other Adjustments:
Lease modification		—			825			—			825
Adjusted EBITDA	$	20,921		$	13,985		$	40,714		$	27,725

(1) Diluted weighted average shares outstanding.

(2) Represents the fair value of the expected net cash flows from servicing recognized at commitment, net of the expected guaranty obligation.

Adjusted Net Income and Adjusted Income from Operations. Adjusted net income was $12.9 million for the three months ended June 30, 2014 compared to $15.3 million for the three months ended June 30, 2013, a 16% decrease. For the six months ended June 30, 2014, adjusted net income was $20.4 million, compared to $23.8 million for the same period in 2013, a 14% decrease.

Adjusted income from operations was $20.9 million for the three months ended June 30, 2014 compared to $25.1 million for the three months ended June 30, 2013, a 16% decrease. The decrease was primarily attributable to a $10.8 million decrease in gains from mortgage banking activities, partially offset by increases in servicing fees of $1.6 million, other revenues of $1.5 million, and net warehouse income of $2.1 million. The decrease in gains on mortgage banking activities is primarily related to the decrease in the volume of loans originated and a decrease in the origination fee rate year over year. Servicing fees increased due to an increase in the average servicing portfolio year over year as a result of new loan originations. Net warehouse interest income increased primarily due to an increase in the average outstanding balance of loans held for investment year over year. An increase in prepayment penalty fees was the primary contributor to the increase in other revenues year over year.

For the six months ended June 30, 2014, adjusted income from operations was $33.4 million compared to $38.7 million for the same period in 2013, a 14% decrease. The decrease was primarily a result of a $19.2 million decrease in gains from mortgage banking activities and an increase in interest expense on corporate debt of $3.4 million, partially offset by increases in servicing fees of $3.8 million, net warehouse interest income of $2.7 million, and other revenues of $2.5 million and a decrease in personnel expense of $7.0 million. The decrease in gains on mortgage banking activities is primarily related to the decrease in the volume of loans originated and a decrease in the origination fee rate year over year. Interest expense on corporate debt increased mainly due to an increase in the average corporate debt outstanding year over year. Servicing fees increased due to an increase in the average servicing portfolio year over year as a result of new loan originations. Net warehouse interest income increased primarily due to an increase in the average outstanding balance of loans held for investment year over year. An increase in prepayment penalty fees year over year was the primary contributor to the increase in other revenues. The decrease in personnel expense was principally a result of lower commission costs due to lower loan origination volume year over year and lower salaries and benefits expense due to the 2013 cost reduction effort, which reduced headcount.

Adjusted Diluted Earnings per Share. Adjusted diluted earnings per share was $0.40 for the three months ended June 30, 2014 compared to $0.44 for the three months ended June 30, 2013, a 9% decrease. For the six months ended June 30, 2014, adjusted diluted earnings per share was $0.62 compared to $0.69 for the same period in 2013, a 10% decrease. The decreases were primarily attributable to decreases in adjusted net income year over year, partially offset by decreases in the diluted weighted average shares outstanding for the three and six months ended June 30, 2014 compared to the same periods in 2013.

Adjusted Operating Margin. Adjusted operating margin was 25% for the three months ended June 30, 2014 compared to 28% for the three months ended June 30, 2013, an 11% decrease. Adjusted operating margin was 22% for the six months ended June 30, 2014 compared to 24% for the six months ended June 30, 2013, an 8% decrease.

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Adjusted Total Expenses. Adjusted total expenses were $64.4 million for the three months ended June 30, 2014 compared to $65.7 million for the three months ended June 30, 2013, a 2% decrease. Adjusted total expenses were $116.8 million for the six months ended June 30, 2014 compared to $121.3 million for the six months ended June 30, 2013, a 4% decrease. The decreases were primarily the result of decreases in personnel expense, partially offset by increases in interest expense on corporate debt. Personnel expense was lower as a result of lower commission costs due to lower loan origination volumes year over year and lower salaries and benefits expense due to the 2013 cost reduction effort, which reduced headcount. Interest expense on corporate debt was higher principally due to an increase in the average corporate debt outstanding year over year.

Adjusted EBITDA. Adjusted EBITDA was $20.9 million for the three months ended June 30, 2014 compared to $14.0 million for the three months ended June 30, 2013, a 50% increase. The increase was primarily attributable to decreases in personnel expense of $2.7 million and net write offs of $3.2 million. Personnel expense was lower as a result of lower commission costs due to lower loan origination volumes year over year and lower salaries and benefits expense due to the 2013 cost reduction effort, which reduced headcount. The decrease in net write offs was due to a decrease in the volume of risk-sharing losses settled with Fannie Mae. During the three months ended June 30, 2014, we settled the losses related to two risk-sharing loans that had previously defaulted. During the three months ended June 30, 2013, we settled the losses related to six such loans.

Adjusted EBITDA was $40.7 million for the six months ended June 30, 2014 compared to $27.7 million for the six months ended June 30, 2013, a 47% increase. The increase was primarily attributable to decreases in personnel expense of $6.6 million, net write offs of $1.9 million, and other operating expenses of $1.8 million. Personnel expense was lower as a result of lower commission costs due to lower loan origination volumes year over year and lower salaries and benefits expense due to the 2013 cost reduction effort, which reduced headcount. The decrease in net write offs was due to a decrease in the volume of risk-sharing losses settled with Fannie Mae. During the six months ended June 30, 2014, we settled the losses related to five risk-sharing loans that had previously defaulted. During the six months ended June 30, 2013, we settled the losses related to six such loans. The decrease in other operating expenses was primarily attributable to decreases in rent expense and travel and entertainment expense. The decrease in rent expense was due to decreased annual rent as a result of a reduction in the office space associated with our Needham, MA office during the second quarter of 2013. The decrease in travel and entertainment expense relates to the decrease in headcount.

Financial Condition

Cash Flows from Operating Activities

Our cash flows from operations are generated from loan sales, servicing fees, escrow earnings, net warehouse interest income and other income, net of loan purchases and operating costs. Our cash flows from operations are impacted by the fees generated by our loan originations, the timing of loan closings and the period of time loans are held for sale in the warehouse loan facility, prior to delivery to the investor.

Cash Flow from Investing Activities

We usually lease facilities and equipment for our operations. However, when necessary and cost effective, we invest cash in property, plant and equipment.

Cash Flow from Financing Activities

We use our warehouse loan facilities and our corporate cash to fund loan closings. We believe that our current warehouse loan facilities are adequate to meet our increasing loan origination needs. Historically we have used long-term debt to fund acquisitions.

We currently have no intention to pay dividends on our common stock in the foreseeable future.

Six Months Ended June 30, 2014 Compared to Six Months Ended June 30, 2013

Our unrestricted cash balance was $66.3 million as of June 30, 2014 and 2013.

Changes in cash flows from operations were driven primarily by loans acquired and sold. Such loans are held for short periods of time, generally less than 60 days, and impact cash flows presented as of a point in time. Cash used in operating activities was $355.0 million for the six months ended June 30, 2014 compared to cash provided by operations of $644.2 million for the six months ended June 30, 2013. The decrease in cash flows from operations for the six months ended June 30, 2014 is primarily attributable to the net use of $372.1 million for the funding of loan originations, net of sales of loans to third parties during the six months ended June 30, 2014 compared to the net receipt of $627.1 million from funding loan originations, net of sales to third parties during the six months ended June 30, 2013. Excluding cash provided by and used for the sale and purchase of loans, cash flows provided by operations was $17.1 million for the six months ended June 30, 2014 and 2013.

We invested $59.4 million and $40.0 million for the six months ended June 30, 2014, and 2013, respectively, a $19.4 million increase from 2013 to 2014. The increase is primarily attributable to the net investment of $58.7 million in loans held for investment during the six months ended June 30, 2014 compared to $37.9 million during the six months ended June 30, 2013. Of the $58.7 million net investment in

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loans held for investment during the six months ended June 30, 2014, $40.6 million was funded using interim warehouse borrowings, with the other $18.1 funded using corporate cash. Of the $37.9 million net investment in loans held for investment during the six months ended June 30, 2013, $28.4 million was funded using interim warehouse borrowings, with the other $9.5 funded using corporate cash.

Cash provided by financing activities was $310.1 million for the six months ended June 30, 2014 compared to $602.9 million cash used in financing activities for the six months ended June 30, 2013. This increase was primarily attributable to the decreased repayments of warehouse notes payable and the increased net borrowings of interim warehouse notes payable, partially offset by an increase of $35.8 million in cash used to repurchase and retire shares of our common stock. Substantially all of the increase in cash used to repurchase and retire shares of our common stock was related to the repurchase of 2,450,451 shares of our common stock from one of our largest stockholders during the six months ended June 30, 2014; there was no comparable transaction during the six months ended June 30, 2013.

During the six months ended June 30, 2014, we used $66.0 million of corporate cash to fund loans held for sale that remained outstanding at period end. During the six months ended June 30, 2013, all loans held for sale were funded with warehouse borrowings.

Liquidity and Capital Resources

Uses of Liquidity, Cash and Cash Equivalents

Our cash flow requirements consist of (i) short-term liquidity necessary to fund mortgage loans, and (ii) working capital to support our day-to-day operations, including debt service payments, servicing advances consisting of principal and interest advances for Fannie Mae or HUD loans that become delinquent and advances on insurance and tax payments if the escrow funds are insufficient. In December 2013, we secured a $175.0 million term note and used a portion of the proceeds to pay off the remaining unpaid principal balance of the existing term note.

We also require working capital to satisfy collateral requirements for our Fannie Mae DUS risk-sharing obligations and to meet the operational liquidity requirements of Fannie Mae, Freddie Mac, HUD, Ginnie Mae, and our warehouse facility lenders. Congress and other governmental authorities have also suggested that lenders may be required to retain on their balance sheet a portion of the loans that they originate, although no regulation has yet been implemented.

Fannie Mae has established benchmark standards for capital adequacy, and reserves the right to terminate the Company’s servicing authority for all or some of the portfolio if at any time it determines that the Company’s financial condition is not adequate to support its obligation under the DUS agreement. The Company is required to maintain acceptable net worth as defined in the standards, and the Company satisfied the requirements as of June 30, 2014. The net worth requirement is derived primarily from unpaid balances on Fannie Mae loans and the level of risk-sharing. At June 30, 2014, the net worth requirement was $91.9 million and the Company’s net worth was $287.5 million, as measured at our wholly owned subsidiary, Walker & Dunlop, LLC. As of June 30, 2014, we were required to maintain at least $17.7 million of liquid assets to meet our operational liquidity requirements for Fannie Mae, Freddie Mac, HUD, Ginnie Mae and our warehouse facility lenders. As of June 30, 2014, we had operational liquidity of $137.3 million, as measured at our wholly owned subsidiary, Walker & Dunlop, LLC.

We opportunistically use available corporate cash to fund some loans held for sale instead of using warehouse lending sources (“self-funding”). Such self-funding allows us to maximize the returns on available cash. During the six months ended June 30, 2014, the average balance of loans held for sale that we self-funded was $33.8 million. As of June 30, 2014, we had loans held for sale with an aggregate unpaid principal balance of $66.0 million that were self-funded.

We currently intend to retain all future earnings for the operation and expansion of our business and, therefore, do not anticipate declaring or paying cash dividends on our common stock in the foreseeable future. We may opportunistically repurchase additional stock if we believe market conditions support such activity.

Historically, our cash flows from operations and warehouse facilities have been sufficient to enable us to meet our short-term liquidity needs and other funding requirements. We believe that cash flows from operations will continue to be sufficient for us to meet our current obligations for the foreseeable future.

Restricted Cash and Pledged Securities

Restricted cash and pledged securities and cash consist primarily of good faith deposits held on behalf of borrowers between the time we enter into a loan commitment with the borrower and the investor purchases the loan and collateral for our risk-sharing obligations. The Company is generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program (the DUS risk-sharing obligations). The Company is required to secure this obligation by assigning restricted cash balances and securities to Fannie Mae. The amount of collateral required by Fannie Mae and Freddie Mac (whenever loss sharing is applicable) is a formulaic calculation at the loan level and considers the balance of the loan, the risk level of the loan, the age of the loan, and the level of risk-sharing. Fannie Mae requires restricted liquidity for Tier 2 loans of 75 basis points, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. Restricted liquidity held in the form of money market funds holding US Treasuries is discounted 5% for purposes of calculating

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compliance with the restricted liquidity requirements. As of June 30, 2014, the Company held all of its restricted liquidity in money market funds holding US Treasuries. Additionally, substantially all of the loans for which the Company has risk sharing are Tier 2 loans. As of June 30, 2014, we pledged securities and cash to collateralize our risk-sharing obligations of $58.6 million, which was in excess of current requirements. We fund any growth in our Fannie Mae required operational liquidity and collateral requirements from our working capital.

We are in compliance with the June 30, 2014 collateral requirements as outlined above. As of June 30, 2014, reserve requirements for the June 30, 2014 DUS loan portfolio will require us to fund $36.5 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at risk portfolio. Fannie Mae periodically reassesses the DUS Capital Standards and may make changes to these standards in the future. We generate sufficient cash flow from our operations to meet these capital standards and do not expect any future changes to have a material impact on our future operations; however, any future changes to collateral requirements may adversely impact our available cash.

Under the provisions of the DUS agreement, the Company must also maintain a certain level of liquid assets referred to as the operational and unrestricted portions of the required reserves each year. These requirements were satisfied by the Company as of June 30, 2014.

Warehouse Facilities

To provide financing to borrowers under GSE and HUD programs and to assist in funding interim loans, we have five warehouse facilities that we use to fund substantially all of our loan originations. As of June 30, 2014, we had five committed warehouse lines of credit in the aggregate amount of $1.5 billion with certain national banks and a $400.0 million uncommitted facility with Fannie Mae. Consistent with industry practice, three of these facilities are revolving commitments we expect to renew annually, two are revolving commitments we expect to renew every two years, and the last facility is provided on an uncommitted basis without a specific maturity date. Our ability to originate mortgage loans depends upon our ability to secure and maintain these types of short-term financings on acceptable terms.

Warehouse Facility #1:

We are a party to a Warehousing Credit and Security Agreement, as amended, with a national bank for a $575.0 million committed warehouse line that is scheduled to mature on September 2, 2014. The Warehousing Credit and Security Agreement, as amended, provides us with the ability to fund our Fannie Mae, Freddie Mac, HUD and FHA loans. Advances are made at 100% of the loan balance, and borrowings under this line bear interest at the average 30-day London Interbank Offered Rate (“LIBOR”) plus a spread of 150 basis points. No material modifications have been made to the agreement during 2014.

As of June 30, 2014, we had $286.4 million of borrowings outstanding under this line with a corresponding unpaid principal balance of loans held for sale.

Warehouse Facility #2:

We are also a party to a $650.0 million committed warehouse facility that was scheduled to mature on June 24, 2014. This committed warehouse facility provides us with the ability to fund our Fannie Mae, Freddie Mac, HUD and FHA loans. Advances are made at 100% of the loan balance, and borrowings under this line bear interest at the average 30-day LIBOR plus a spread of 150 basis points. On June 17, 2014, the Company executed the second amendment to the amended and restated warehousing credit and security agreement that extended the maturity date of the facility to June 23, 2015. No other material modifications were made to the agreement.

As of June 30, 2014, we had $221.9 million of borrowings outstanding under this line with a corresponding unpaid principal balance of loans held for sale.

Warehouse Facility #3:

We have a $57.4 million committed warehouse line agreement that is scheduled to mature on September 21, 2014. The facility provides us with the ability to fund first mortgage loans on multifamily real estate properties for periods of up to two years, using available cash in combination with advances under the facility. Borrowings under the facility are full recourse to us, and interest for advances under the agreement accrues at a rate of 30-day LIBOR plus a spread of 200 basis points. No material modifications have been made to the agreement during 2014.

As of June 30, 2014, there were $45.5 million of borrowings outstanding under this line with one corresponding loan classified as held for investment. During the third quarter of 2014, the financial asset financed by warehouse facility #3 paid off, and the warehouse advance was repaid. In connection with the payoff, the maximum amount of warehouse facility #3 was reduced from $57.4 million to $35.5 million.

Warehouse Facility #4:

We are a party to a $135.0 million committed warehouse line agreement that is scheduled to mature on December 13, 2015. The agreement provides us with the ability to fund first mortgage loans on multifamily real estate properties for periods of up to two years, using available cash in combination with advances under the facility. The lender retains a first priority security interest in all mortgages funded by

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such advances on a cross-collateralized basis. Repayments under the credit agreement are interest-only, with principal repayments made upon the earlier of the refinancing of an underlying mortgage or the maturity of an advance under the credit agreement. Borrowings under the facility are full recourse to us, and interest for advances under the agreement accrues at a rate of 30-day LIBOR plus a spread of 200 basis points. In April 2014, we executed an amendment to this agreement to increase the borrowing capacity from $100.0 million to $135.0 million. No other material modifications have been made to the agreement during 2014.

As of June 30, 2014, there were $88.2 million of borrowings outstanding under this line with eight corresponding loans classified as held for investment.

Warehouse Facility #5:

On May 19, 2014, the Company executed a Master Repurchase and Securities Contract (“Repurchase Agreement”) that established warehouse facility #5. The Repurchase Agreement provides for a maximum borrowing amount of $50.0 million and is scheduled to mature on May 19, 2016. The borrowings under the agreement bear interest at a rate of average 30-day LIBOR plus 2.00% to 2.50% (“the spread”). The spread varies according to the type of asset the borrowing finances.

As of June 30, 2014, there were no borrowings outstanding under this line.

Uncommitted Warehouse Facility:

We have an uncommitted facility with Fannie Mae under its ASAP funding program. After approval of certain loan documents, Fannie Mae will fund loans after closing and the advances are used to repay the primary warehouse line. Fannie Mae will advance 99% of the loan balance, and borrowings under this program bear interest at the average 30-day LIBOR, with a minimum LIBOR rate of 35 basis points, plus 115 basis points. In March 2014, the uncommitted amount was lowered from $500.0 million to $400.0 million as part of an initiative by Fannie Mae to reduce its exposure to such uncommitted amounts for all of its DUS lenders.

As of June 30, 2014, we had $77.9 million of borrowings outstanding under this program with a corresponding unpaid principal balance of loans held for sale. There is no expiration date for this facility.

The agreements above contain cross-default provisions, such that if a default occurs under any of our debt agreements, generally the lenders under our other debt agreements could also declare a default. As of June 30, 2014, we were in compliance with all of our warehouse line covenants.

We believe that the combination of our capital and warehouse facilities is adequate to meet our current loan origination needs.

Debt Obligations

On December 20, 2013, we entered into a senior secured term loan credit agreement (the “Term Loan Agreement”). The Term Loan Agreement provides for a $175.0 million term loan (the “Term Loan”). At any time, we may also elect to request the establishment of one or more incremental term loan commitments to make up to three additional term loans (any such additional term loan, an “Incremental Term Loan”) in an aggregate principal amount for all such Incremental Term Loans not to exceed $60.0 million.

The Term Loan was issued at a discount of 1.0%, and we used approximately $77.5 million of the Term Loan proceeds to repay in full the prior term loan and to pay certain transaction costs incurred in connection with the Term Loan.

We are obligated to repay the aggregate outstanding principal amount of the Term Loan in consecutive quarterly installments equal to $0.4 million on the last business day of each of March, June, September and December commencing on March 31, 2014. The term loan also requires other prepayments in certain circumstances pursuant to the terms of the Term Loan Agreement. The final principal installment of the Term Loan is required to be paid in full on December 20, 2020 (or, if earlier, the date of acceleration of the Term Loan pursuant to the terms of the Term Loan Agreement) and will be in an amount equal to the aggregate outstanding principal of the Term Loan on such date (together with all accrued interest thereon).

At our election, the Term Loan will bear interest at either (i) the “Base Rate” plus an applicable margin or (ii) the London Interbank Offered Rate (“LIBOR Rate”) plus an applicable margin, subject to adjustment if an event of default under the Term Loan Agreement has occurred and is continuing with a minimum LIBOR Rate of 1.0%. The “Base Rate” means the highest of (a) the administrative agent’s “prime rate,” (b) the federal funds rate plus 0.50% and (c) LIBOR for an interest period of one month plus 1%. In each case, the applicable margin is determined by our Consolidated Corporate Leverage Ratio (as defined in the Term Loan Agreement). If such Consolidated Corporate Leverage Ratio is greater than 2.50 to 1.00, the applicable margin will be 4.50% for LIBOR Rate loans and 3.50% for Base Rate loans, and if such Consolidated Corporate Leverage Ratio is less than or equal to 2.50 to 1.00, the applicable margin will be 4.25% for LIBOR Rate loans and 3.25% for Base Rate loans. The Term Loan currently bears interest at the LIBOR Rate plus an applicable margin of 4.50%.

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Our obligations under the Term Loan Agreement are guaranteed by Walker & Dunlop Multifamily, Inc., Walker & Dunlop, LLC, and Walker & Dunlop Capital, LLC, each of which is a direct or indirect wholly owned subsidiary of the Company (together with the Company, the “Loan Parties”), pursuant to a Guarantee and Collateral Agreement entered into on December 20, 2013 among the Loan Parties and the Agent (the “Guarantee and Collateral Agreement”).

As of June 30, 2014, the outstanding principal balance of the note payable was $174.1 million.

The note payable and the warehouse facilities are senior obligations of the Company. The Term Loan Agreement contains affirmative and negative covenants, including financial covenants. As of June 30, 2014, we were in compliance with all such covenants.

Credit Quality and Allowance for Risk-Sharing Obligations

The following table sets forth certain information useful in evaluating our credit performance.

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	As of and for the three months ended						As of and for the six months ended
	June 30,						June 30,
(Dollars in thousands)	2014			2013			2014			2013
Key Credit Metrics
Risk-sharing servicing portfolio:
Fannie Mae Full Risk	$	13,629,747		$	12,725,049		$	13,629,747		$	12,725,049
Fannie Mae Modified Risk		4,392,372			4,282,776			4,392,372			4,282,776
Freddie Mac Modified Risk		53,752			68,790			53,752			68,790
GNMA - HUD Full Risk		4,797			4,926			4,797			4,926
Total risk-sharing servicing portfolio	$	18,080,668		$	17,081,541		$	18,080,668		$	17,081,541
Non risk-sharing servicing portfolio:
Fannie Mae No Risk	$	1,502,535		$	2,533,555		$	1,502,535		$	2,533,555
Freddie Mac No Risk		10,869,132			9,948,412			10,869,132			9,948,412
GNMA - HUD No Risk		5,007,571			4,645,546			5,007,571			4,645,546
Brokered		4,139,507			3,628,796			4,139,507			3,628,796
Total non risk-sharing servicing portfolio	$	21,518,745		$	20,756,309		$	21,518,745		$	20,756,309
Total loans serviced for others	$	39,599,413		$	37,837,850		$	39,599,413		$	37,837,850
Interim loans (full risk) servicing portfolio	$	194,320		$	47,420		$	194,320		$	47,420
Total servicing portfolio unpaid principal balance	$	39,793,733		$	37,885,270		$	39,793,733		$	37,885,270
At risk servicing portfolio (1)	$	15,698,224		$	14,624,757		$	15,698,224		$	14,624,757
Maximum exposure to at risk portfolio (2)		3,735,832			2,924,951			3,735,832			2,924,951
60+ Day delinquencies, within at risk portfolio		—			9,115			—			9,115
At risk loan balances associated with allowance for risk-sharing obligations	$	40,381		$	112,958		$	40,381		$	112,958
Allowance for risk-sharing obligations:
Beginning balance	$	5,662		$	16,071		$	7,363		$	15,670
Provision for risk-sharing obligations		408			751			68			1,152
Net write-offs		(1,264	)		(4,500	)		(2,625	)		(4,500	)
Ending balance	$	4,806		$	12,322		$	4,806		$	12,322
60+ Day delinquencies as a percentage of the at risk portfolio		0.00	%		0.06	%		0.00	%		0.06	%
Allowance for risk-sharing as a percentage of the at risk portfolio		0.03	%		0.08	%		0.03	%		0.08	%
Net write-offs as a percentage of the at risk portfolio		0.01	%		0.03	%		0.02	%		0.03	%
Allowance for risk-sharing as a percentage of the specifically identified at risk balances		11.90	%		10.91	%		11.90	%		10.91	%
Allowance for risk-sharing as a percentage of maximum exposure		0.13	%		0.42	%		0.13	%		0.42	%
Allowance for risk-sharing and guaranty obligation as a percentage of maximum exposure		0.75	%		1.20	%		0.75	%		1.20	%

(1) At risk servicing portfolio is defined as the balance of Fannie Mae DUS loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac and GNMA/HUD loans on which we share in the risk of loss. Use of the at risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at risk portfolio.

For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk-sharing. Accordingly, if the $15 million loan with 50% risk-sharing was to default, the Company would view the overall loss as a percentage of the at risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, all of the Company’s risk-sharing obligations that we have settled have been from full risk-sharing loans.

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(2) Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur.

Fannie Mae DUS risk-sharing obligations are based on a tiered formula and represent substantially all of our risk-sharing activities. The risk-sharing tiers and amount of the risk-sharing obligations we absorb under full risk-sharing are provided below. Except as described in the following paragraph, the maximum amount of risk-sharing obligations we absorb at the time of default is 20% of the original unpaid principal balance (“UPB”) of the loan.

Risk-Sharing Tier	Percentage Absorbed by Us
First 5% of UPB at the time of loss settlement	100%
Next 20% of UPB at the time of loss settlement	25%
Losses above 25% of UPB at the time of loss settlement	10%
Maximum lender loss	20% of original UPB

Fannie Mae can double or triple our risk-sharing obligation if the loan does not meet specific underwriting criteria or if a loan defaults within 12 months of its sale to Fannie Mae. We may request modified risk-sharing at the time of origination, which reduces our potential risk-sharing obligation from the levels described above.

We use several tools to manage our risk exposure under the Fannie Mae DUS risk-sharing program. These tools include maintaining a strong underwriting and approval process, evaluating and modifying our underwriting criteria given the underlying multifamily housing market fundamentals, limiting our geographic market and borrower exposures and electing the modified risk-sharing option under the Fannie Mae DUS program.

We monitor our underwriting criteria in light of changing economic and market conditions. In 2006, when we believed the CMBS issuers relaxed their underwriting criteria, we did not mirror those changes. Furthermore, in 2008, we strengthened our underwriting criteria in response to deteriorating market conditions. We believe these actions reduced our risk exposure under the Fannie Mae DUS risk-sharing program; however, these actions also restricted growth in our origination volumes.

We may request modified risk-sharing based on such factors as the size of the loan, market conditions and loan pricing. Except for the Fannie Mae DUS loans acquired in the Column transaction, which were acquired subject to their existing Fannie Mae DUS risk-sharing levels, our current credit management policy is to cap the loan balance subject to full risk-sharing at $60.0 million. Accordingly, we currently elect to use modified risk-sharing for loans of more than $60.0 million in order to limit our maximum loss on any loan to $12.0 million (such exposure would occur in the event that the underlying collateral is determined to be completely without value at the time of loss). However, we occasionally elect to originate a loan with full risk sharing even when the loan balance is greater than $60.0 million if we believe the loan characteristics support such an approach.

A provision for risk-sharing obligations is recorded, and the allowance for risk-sharing obligations is increased, when it is probable that we have incurred risk-sharing obligations. We regularly monitor the credit quality of all loans for which we have a risk-sharing obligation. Loans with indicators of underperforming credit are placed on watch lists, assigned a numerical risk rating based on our assessment of the relative credit weakness, and subjected to additional evaluation or loss mitigation. Indicators of underperforming credit include poor financial performance, poor physical condition, and delinquency.

The provisions have been primarily for Fannie Mae loans with full risk-sharing. The amount of the provision considers our assessment of the likelihood of payment by the borrower, the value of the underlying collateral and the level of risk-sharing. Historically, the loss recognition occurs at or before the loan becoming 60 days delinquent. Our estimates of value are determined considering broker opinions and other sources of market value information relevant to underlying property and collateral. Risk-sharing obligations are written off against the allowance at final settlement with Fannie Mae.

As of June 30, 2014, none of our at risk balances was more than 60 days delinquent, while $9.1 million of our at risk balances were more than 60 days delinquent as of June 30, 2013. For the six months ended June 30, 2014, the provision for risk-sharing obligations was $0.1 million compared to $1.2 million for the six months ended June 30, 2013.

As of June 30, 2014 and June 30, 2013, our allowance for risk-sharing obligations was $4.8 million and $12.3 million, respectively, or 3 basis points and 8 basis points of the at risk balance, respectively. Our risk-sharing obligation with Fannie Mae requires, in the event of delinquency or default, that we advance principal and interest payments to Fannie Mae on behalf of the borrower. Advances made by us are used to reduce the proceeds required to settle any ultimate loss incurred. As of June 30, 2014, we have advanced $1.5 million of principal and interest payments on the loans associated with our $4.8 million allowance. Accordingly, if the $4.8 million in estimated losses is ultimately realized, we would be required to fund an additional $3.3 million. As of June 30, 2013, we had advanced $4.2 million of principal and interest payments on the loans associated with our $12.3 million allowance at that time.

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We have never been required to repurchase a loan.

Off-Balance Sheet Risk

We do not have any off-balance sheet arrangements.

New/Recent Accounting Pronouncements

During the second quarter of 2014, Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“the guidance”), was issued. ASU 2014-09 represents a comprehensive reform of many of the revenue recognition requirements in GAAP. The ASU creates a new topic within the Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers. Additionally, the guidance in the ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and supersedes or amends much of the industry-specific revenue recognition guidance found throughout the ASC.

The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those good and services. The ASU creates a five-step process for achieving the core principle: 1) identifying the contract with the customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations, and 5) recognizing revenue when an entity has completed the performance obligations. The ASU also requires additional disclosures that allow users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows resulting from contracts with customers. The guidance in the ASU is effective for us on January 1, 2017. The guidance permits the use of the retrospective or cumulative effect transition methods. It appears that substantially all of our contracts with customers do not fall within the scope of the guidance; however, we are in the process of selecting a transition method and determining whether the ASU will have a material impact on our reported financial results.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

We are not currently exposed to interest rate risk during the loan commitment, closing and delivery process. The sale or placement of each loan to an investor is negotiated prior to closing on the loan with the borrower, and the sale or placement is typically effectuated within 60 days of closing. The coupon rate for the loan is set after we have established the interest rate with the investor.

Some of our assets and liabilities are subject to changes in interest rates. Earnings from escrows are generally based on LIBOR. Average 30-day LIBOR as of June 30, 2014 and 2013 was 15 basis points and 20 basis points, respectively. A 100 basis point increase in the average 30-day LIBOR would increase our annual earnings by approximately $7.7 million based on our escrow balance as of June 30, 2014 compared to $6.9 million based on our escrow balance as of June 30, 2013. A decrease in the average 30-day LIBOR to zero would decrease our annual earnings by approximately $1.2 million based on the escrow balance as of June 30, 2014 compared to $1.3 million based on our escrow balance as of June 30, 2013.

The borrowing cost of our warehouse facilities used to fund loans held for sale and loans held for investment is based on LIBOR. The interest income on our loans held for investment is based on LIBOR. A 100 basis point increase in the average 30-day LIBOR would decrease our annual net warehouse interest income by approximately $2.1 million based on our outstanding warehouse balance as of June 30, 2014 compared to $2.6 million based on our outstanding warehouse balance as of June 30, 2013. A decrease in the average 30-day LIBOR to zero would increase our annual earnings by approximately $0.3 million based on our outstanding warehouse balance as of June 30, 2014 compared to $0.5 million based on our outstanding warehouse balance as of June 30, 2013.

All of our corporate debt is based on the average 30-day LIBOR. A 100 basis point increase in the average 30-day LIBOR would decrease our annual earnings by approximately $0.3 million based on our outstanding corporate debt as of June 30, 2014 compared to $0.8 million based on our outstanding corporate debt as of June 30, 2013. A decrease in the average 30-day LIBOR to zero would not have an impact on our 2014 annual earnings as our corporate debt outstanding as of June 30, 2014 had a LIBOR floor of 100 bps. A decrease in the average 30-day LIBOR to zero would increase our 2013 annual earnings by approximately $0.1 million based on the outstanding corporate debt as of June 30, 2013.

The fair value of our MSRs is subject to market risk. A 100 basis point increase or decrease in the weighted average discount rate would decrease or increase, respectively, the fair value of our MSRs by approximately $13.8 million as of June 30, 2014, compared to $26.6 million as of June 30, 2013. Our Fannie Mae and Freddie Mac servicing engagements provide for make-whole payments in the event of a voluntary prepayment prior to the expiration of the prepayment protection period. Our servicing contracts with institutional investors and HUD do not require payment of a make-whole amount. As of June 30, 2014 and 2013, 84% of the servicing fees are protected from the risk of prepayment through make-whole requirements; given this significant level of prepayment protection, we do not hedge our servicing portfolio for prepayment risk.

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Item 4. Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and 15d-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective. There have been no changes in our internal controls over financial reporting in the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Capital Funding Litigation— On February 17, 2010, Capital Funding Group, Inc. (“Capital Funding”) filed a lawsuit in the Circuit Court for Montgomery County, Maryland against Walker & Dunlop, LLC, our wholly owned subsidiary, for alleged breach of contract, unjust enrichment and unfair competition arising out of an alleged agreement that Capital Funding had with Column Guaranteed, LLC (“Column”) to refinance a large portfolio of senior healthcare facilities located throughout the United States. Capital Funding further alleged that Walker & Dunlop, LLC, as the alleged successor by merger to Column, is bound by Column’s alleged agreement with Capital Funding. Capital Funding sought damages in excess of $30 million on each of the three claims asserted against all defendants, and an unspecified amount of damages on a separate claim for unfair competition against Walker & Dunlop, LLC. Capital Funding also sought injunctive relief in connection with its unjust enrichment and unfair competition claims.

On July 19, 2011, the Circuit Court for Montgomery County, Maryland issued an order granting the defendants’ motion to dismiss the case, without prejudice. After the initial case was dismissed without prejudice, Capital Funding filed an amended complaint. In November 2011, the Circuit Court for Montgomery County, Maryland rejected the defendants’ motion to dismiss the amended complaint. Capital Funding filed a Second Amended Complaint that did not alter the claims at issue but revised their alleged damages. Defendants moved for summary judgment on all claims, including two counts of breach of contract, two counts of promissory estoppel, two counts of unjust enrichment, and two counts of unfair competition. On April 30, 2013, the Court issued an Opinion and Order which granted the motion as to the promissory estoppel counts and one count of unjust enrichment. The Court denied the motion as to all remaining claims.

A two-week jury trial was held in July 2013. In the course of the trial, all but two of Capital Funding’s remaining claims were dismissed. Following the trial, the Court entered (i) a $1.8 million judgment against Credit Suisse Securities (USA) LLC (“Credit Suisse”) and its affiliates on Capital Funding’s breach of contract claim and (ii) a $10.4 million judgment against Credit Suisse and its affiliates on Capital Funding’s unjust enrichment claim. Because the two claims arise from the same facts, Capital Funding agreed it may only collect on one of the judgments; following the verdict, Capital Funding “elected” to collect the $10.4 million judgment. The defendants filed a post judgment motion to reduce or set aside the judgment. On January 31, 2014 the Court ruled that the $10.4 million unjust enrichment judgment is vacated, and awarded Capital Funding the $1.8 million breach of contract judgment. On February 10, 2014, Capital Funding filed a motion with the Court seeking a new trial. On March 13, 2014, the Court denied Capital Funding’s motion for a new trial. Capital Funding has filed an appeal with Maryland’s Court of Special Appeals. Oral arguments in the appeal are scheduled for December 2014.

CA Funds Group Litigation—In March 2012, our wholly owned subsidiary, Walker & Dunlop Investment Advisory Services, LLC (“IA Services”) engaged CA Funds Group, Inc. (“CAFG”) to provide, among other things, consulting services in connection with expanding our investment advisory services business. The engagement letter was supplemented in June 2012 to retain CAFG to engage in certain capital raising activities, primarily with respect to a potential commingled, open-ended Fund (“Fund”). The Fund was never launched by us. However, we independently formed the Bridge Program, which is focused primarily on making floating-rate loans of up to three years of $25.0 million or more to experienced owners of multifamily properties. CAFG filed a breach of contract action captioned CA Funds Group, Inc. v. Walker & Dunlop Investment Advisory Services, LLC and Walker & Dunlop, LLC in the United States District Court for the Northern District of Illinois, Eastern Division, seeking a placement fee in the amount of $5.1 million (plus interest and the costs of the suit) based upon the $380.0 million allegedly obtained for the Bridge Program. We filed a motion to dismiss the complaint on January 3, 2014, CAFG filed a response to the motion on January 31, 2014, and on March 21, 2014, the Court denied our motion to dismiss the complaint. We intend to vigorously defend the matter. Discovery is ongoing.

We cannot predict the outcome of any pending litigation and may be subject to consequences that could include fines, penalties and other costs, and our reputation and business may be impacted. Our management believes that any liability that could be imposed on us in connection with the disposition of any pending lawsuits would not have a material adverse effect on our business, results of operations, liquidity or financial condition.

In the normal course of business, we may be party to various other claims and litigation, none of which we believe is material.

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Item 1A. Risk Factors

We have included in Part I, Item 1A of our 2013 Form 10-K descriptions of certain risks and uncertainties that could affect our business, future performance or financial condition (the “Risk Factors”). Except as described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, there have been no material changes from the disclosures provided in the 2013 Form 10-K with respect to the Risk Factors. Investors should consider the Risk Factors prior to making an investment decision with respect to the Company’s stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Under the 2010 Equity Incentive Plan, subject to the Company’s approval, grantees have the option of electing to satisfy minimum tax withholding obligations at the time of vesting or exercise by allowing the Company to withhold and purchase the shares of stock otherwise issuable to the grantee. During the quarter ended June 30, 2014, we repurchased and retired 89,917 shares of restricted stock at market prices, upon grantee vesting. The following table provides information regarding common stock repurchases for the quarter ended June 30, 2014:

					Total Number of		Maximum Number
					Shares Purchased		(or Approximate
	Total Number of				as Part of Publicly		Dollar Value) of
	Shares		Average Price		Announced Plans or		Shares that May Yet
Period	Purchased		Paid per Share		Programs		Be Purchased
April 1 - 30, 2014		50,685	$	16.36		50,685		N/A
May 1 - 31, 2014		—		—		—		N/A
June 1 - 30, 2014		39,232		14.54		39,232		N/A
		89,917				89,917

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits:

2.1	Contribution Agreement, dated as of October 29, 2010, by and among Mallory Walker, Howard W. Smith, William M. Walker, Taylor Walker, Richard C. Warner, Donna Mighty, Michael Yavinsky, Edward B. Hermes, Deborah A. Wilson and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 2.1 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 1, 2010)
2.2	Contribution Agreement, dated as of October 29, 2010, between Column Guaranteed LLC and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 2.2 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 1, 2010)
2.3	Amendment No. 1 to Contribution Agreement, dated as of December 13, 2010, by and between Walker & Dunlop, Inc. and Column Guaranteed LLC. (incorporated by reference to Exhibit 2.3 to Amendment No. 6 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 13, 2010)
2.4	Purchase Agreement, dated June 7, 2012, by and among Walker & Dunlop, Inc., Walker & Dunlop, LLC, CW Financial Services LLC and CWCapital LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 15, 2012)
3.1	Articles of Amendment and Restatement of Walker & Dunlop, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 1, 2010)
3.2	Amended and Restated Bylaws of Walker & Dunlop, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on September 10, 2012)

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4.1	Specimen Common Stock Certificate of Walker & Dunlop, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on September 30, 2010)
4.2	Registration Rights Agreement, dated December 20, 2010, by and among Walker & Dunlop, Inc. and Mallory Walker, Taylor Walker, William M. Walker, Howard W. Smith, III, Richard C. Warner, Donna Mighty, Michael Yavinsky, Ted Hermes, Deborah A. Wilson and Column Guaranteed LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 20, 2010)
4.3	Stockholders Agreement, dated December 20, 2010, by and among William M. Walker, Mallory Walker, Column Guaranteed LLC and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 27, 2010)
4.4	Piggy Back Registration Rights Agreement, dated June 7, 2012, by and among Column Guaranteed, LLC, William M. Walker, Mallory Walker, Howard W. Smith, III, Deborah A. Wilson, Richard C. Warner, CW Financial Services LLC and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2012)
4.5	Voting Agreement, dated as of June 7, 2012, by and among Walker & Dunlop, Inc., Mallory Walker, William M. Walker, Richard Warner, Deborah Wilson, Richard M. Lucas, and Howard W. Smith, III, and CW Financial Services LLC (incorporated by reference to Annex C of the Company’s proxy statement filed on July 26, 2012)
4.6	Voting Agreement, dated as of June 7, 2012, by and among Walker & Dunlop, Inc., Walker & Dunlop, LLC, Column Guaranteed, LLC and CW Financial Services LLC (incorporated by reference to Annex D of the Company’s proxy statement filed on July 26, 2012)
10.1†*	Management Deferred Stock Unit Purchase Plan
10.2†*	Management Deferred Stock Unit Purchase Matching Program
10.3	Second Amendment to Amended and Restated Warehousing Credit and Security Agreement, dated as of June 17, 2014, by and among Walker & Dunlop, LLC, Walker & Dunlop, Inc., the lenders party thereto and PNC Bank, National Association as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 19, 2014)
31.1*	Certification of Walker & Dunlop, Inc.‘s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Walker & Dunlop, Inc.‘s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*	Certification of Walker & Dunlop, Inc.‘s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.1*	XBRL Instance Document
101.2*	XBRL Taxonomy Extension Schema Document
101.3*	XBRL Taxonomy Extension Calculation Linkbase Document
101.4*	XBRL Taxonomy Extension Definition Linkbase Document
101.5*	XBRL Taxonomy Extension Label Linkbase Document
101.6*	XBRL Taxonomy Extension Presentation Linkbase Document

†: Denotes a management contract or compensation plan, contract or arrangement.

*: Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 6, 2014	By:	/s/ William M. Walker
		William M. Walker
		Chairman, President and Chief Executive Officer
	By:	/s/ Stephen P. Theobald
		Stephen P. Theobald
		Executive Vice President, Chief Financial Officer and Treasurer

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Exhibit Index

2.1	Contribution Agreement, dated as of October 29, 2010, by and among Mallory Walker, Howard W. Smith, William M. Walker, Taylor Walker, Richard C. Warner, Donna Mighty, Michael Yavinsky, Edward B. Hermes, Deborah A. Wilson and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 2.1 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 1, 2010)
2.2	Contribution Agreement, dated as of October 29, 2010, between Column Guaranteed LLC and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 2.2 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 1, 2010)
2.3	Amendment No. 1 to Contribution Agreement, dated as of December 13, 2010, by and between Walker & Dunlop, Inc. and Column Guaranteed LLC. (incorporated by reference to Exhibit 2.3 to Amendment No. 6 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 13, 2010)
2.4	Purchase Agreement, dated June 7, 2012, by and among Walker & Dunlop, Inc., Walker & Dunlop, LLC, CW Financial Services LLC and CWCapital LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 15, 2012)
3.1	Articles of Amendment and Restatement of Walker & Dunlop, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 1, 2010)
3.2	Amended and Restated Bylaws of Walker & Dunlop, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on September 10, 2012)
4.1	Specimen Common Stock Certificate of Walker & Dunlop, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on September 30, 2010)
4.2	Registration Rights Agreement, dated December 20, 2010, by and among Walker & Dunlop, Inc. and Mallory Walker, Taylor Walker, William M. Walker, Howard W. Smith, III, Richard C. Warner, Donna Mighty, Michael Yavinsky, Ted Hermes, Deborah A. Wilson and Column Guaranteed LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 20, 2010)
4.3	Stockholders Agreement, dated December 20, 2010, by and among William M. Walker, Mallory Walker, Column Guaranteed LLC and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 27, 2010)
4.4	Piggy Back Registration Rights Agreement, dated June 7, 2012, by and among Column Guaranteed, LLC, William M. Walker, Mallory Walker, Howard W. Smith, III, Deborah A. Wilson, Richard C. Warner, CW Financial Services LLC and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2012)
4.5	Voting Agreement, dated as of June 7, 2012, by and among Walker & Dunlop, Inc., Mallory Walker, William M. Walker, Richard Warner, Deborah Wilson, Richard M. Lucas, and Howard W. Smith, III, and CW Financial Services LLC (incorporated by reference to Annex C of the Company’s proxy statement filed on July 26, 2012)
4.6	Voting Agreement, dated as of June 7, 2012, by and among Walker & Dunlop, Inc., Walker & Dunlop, LLC, Column Guaranteed, LLC and CW Financial Services LLC (incorporated by reference to Annex D of the Company’s proxy statement filed on July 26, 2012)
10.1†*	Management Deferred Stock Unit Purchase Plan
10.2†*	Management Deferred Stock Unit Purchase Matching Program
10.3	Second Amendment to Amended and Restated Warehousing Credit and Security Agreement, dated as of June 17, 2014, by and among Walker & Dunlop, LLC, Walker & Dunlop, Inc., the lenders party thereto and PNC Bank, National Association as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 19, 2014)
31.1*	Certification of Walker & Dunlop, Inc.‘s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Walker & Dunlop, Inc.‘s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*	Certification of Walker & Dunlop, Inc.‘s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.1*	XBRL Instance Document
101.2*	XBRL Taxonomy Extension Schema Document
101.3*	XBRL Taxonomy Extension Calculation Linkbase Document
101.4*	XBRL Taxonomy Extension Definition Linkbase Document
101.5*	XBRL Taxonomy Extension Label Linkbase Document
101.6*	XBRL Taxonomy Extension Presentation Linkbase Document

†: Denotes a management contract or compensation plan, contract or arrangement.

*: Filed herewith.

EX-10.1

Exhibit 10.1

WALKER & DUNLOP, INC.

MANAGEMENT DEFERRED STOCK UNIT PURCHASE PLAN

AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2014

1. INTRODUCTION

(a) Adoption of the Plan. The Board of Directors (the “Board”) of Walker & Dunlop, Inc. (the “Company”) adopted the Company’s Management Deferred Stock Unit Purchase Plan (the “Plan”), effective January 10, 2013 (the “Effective Date”), to facilitate the purchase of shares of common stock of the Company, par value $0.01 per share (the “Stock”), by eligible executives of the Company and its Affiliates. “Affiliate” means, with respect to the Company, any company or other trade or business that contracts, is controlled by or is under common control with the Company within the meaning of Regulation 405 of Regulation C under the Securities Act of 1933, as amended (the “Securities Act”).

(b) Overview of the Plan. Eligible executives are given the opportunity to purchase shares of Stock with all or a portion of their annual incentive bonus and/or Eligible Sales Commissions (the “Bonus”). “Eligible Sales Commissions” are the sales commissions for the calendar year that exceed the minimum established by the Company in an individual’s Election Agreement (as defined below) and include only sales commissions the individual actually receives by December 31 of the calendar year in which the sales commissions are earned. Delivery of the Stock is delayed to the payment date elected by the eligible executives, as further described below, but the executive’s right to receive the Stock is fully vested and non-forfeitable. It is intended that the portion of the Bonus used to purchase Stock would not be taxable for income tax purposes when the purchase is made. Instead, income taxation would be deferred to the date of delivery of the Stock, as elected by the executive. Each eligible executive who makes a purchase would therefore receive Deferred Stock Units (as defined below) in lieu of a portion of his or her Bonus. Each “Deferred Stock Unit” is a right to receive one share of Stock, which provides for delivery of the underlying share of Stock at a future date consistent with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and all regulations, guidance and other interpretive authority issued thereunder (collectively, “Section 409A”).

(c) Summary. This document is the Plan document and part of the prospectus for the Plan.

(d) Applicable Law. The Plan is not a qualified retirement plan under Section 401(a) of the Code and it is not subject to any provision of the Employee Retirement Income Security Act of 1974.

2. ADMINISTRATION; AMENDMENT AND TERMINATION

(a) The Committee. The Plan will be administered under the supervision of the Compensation Committee of the Board (the “Committee”). The Committee will prescribe guidelines and forms for the implementation and administration of the Plan, interpret the terms of the Plan, and make all other substantive decisions regarding the operation of the Plan. The Committee’s decisions in its administration of the Plan are conclusive and binding on all persons.

(b) Amendment and Termination. The Board may amend, suspend or terminate the Plan at any time and for any reason. No amendment, suspension or termination will, without the consent of the Participant (as defined below), impair rights or obligations under any Deferred Stock Units previously awarded to the Participant under the Plan.

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3. PARTICIPATION

An employee of the Company or an Affiliate is eligible to participate in the Plan if (a) the employee is designated as an “officer” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, or (b) the employee is both (i) a member of a select group of management or a highly compensated employee under Section 201 of the Employee Retirement Income Security Act of 1974, as amended, and (ii) designated by the Company’s Chief Executive Officer as eligible to participate in the Plan. An eligible executive of the Company or an Affiliate becomes a participant in the Plan (a “Participant”) if the Company notifies the executive of his or her eligibility to participate in the Plan and the executive properly files a completed Bonus Deferral Election Agreement or Sales Commission Deferral Election Agreement (each, an “Election Agreement”) with the Company, on a form prescribed by the Committee, during the Open Enrollment Period. For purposes of the Plan, “Open Enrollment Period” means (i) the period of time beginning on December 1 and ending on December 31 of the calendar year preceding the calendar year for which a Bonus is earned, or (ii) if otherwise determined by the Committee or an officer of the Company designated by the Committee, a period of 30 consecutive days ending no later than December 31 of the calendar year preceding the calendar year for which a Bonus is earned. For purposes of a Bonus that consists of Eligible Sales Commissions, the Bonus is treated as earned in the calendar year in which the transaction giving rise to the sales commission is rate locked and delivered to the investor. The “Election Date” is the last day of the Open Enrollment Period of the applicable calendar year.

4. SHARE RESERVE

(a) Number of Shares Available. Subject to adjustment as provided in Section 4(b), the number of shares of Stock available for issuance under the Plan is 530,000. Shares of Stock to be issued under the Plan will be shares acquired on the open market or newly issued shares of the Company.

(b) Changes in Stock. If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number or kind of stock or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of stock, exchange of stock, stock dividend or other distribution payable in capital stock, or other increase or decrease in such stock effected without receipt of consideration by the Company occurring after the Effective Date, the Committee will make appropriate adjustments to (i) the number and kind of shares of Stock for which Deferred Stock Units may be granted under the Plan, (ii) the number and kind of shares of Stock for which Deferred Stock Units are outstanding, and (iii) the number of Deferred Stock Units credited to each Participant’s Account (as defined below).

5. DEFERRAL ELECTIONS

(a) Deferrals. Subject to Section 5(c) of this Plan, each Participant may voluntarily elect to receive up to 100% of his or her Bonus in Deferred Stock Units, subject to any conditions and limitations the Committee determines, including, but not limited to, a cap on deferrals under the Plan. The Participant will make the election to receive all or a portion of his or her Bonus in Deferred Stock Units by filing a completed Election Agreement on or before the Election Date of the calendar year for which a Bonus is earned. A Participant’s election to defer all or a portion of his or her Bonus and receive Deferred Stock Units is irrevocable and may not be changed.

(b) New Participants. If the Participant was not previously eligible to participate in the Plan or any plan that must be aggregated with the Plan for purposes of Section 409A, the Participant may elect to defer all or a portion of his or her Bonus for the calendar year. The Participant’s initial Election

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Agreement must be filed with the Company within 30 days after the date on which the Participant is notified that he or she is eligible to participate in the Plan. The initial deferral election will be, for the remainder of the then-current calendar year, prorated based on the number of days remaining in the calendar year after the date the Election Agreement is filed with the Company, compared to the total number of days in the calendar year.

(c) Deferral Limitation. Notwithstanding anything contrary in the Plan, in the event that the Participant’s actual Bonus (i) for purposes of a Bonus that consists of an annual incentive bonus, is less than 51% of such Participant’s target annual incentive bonus for a calendar year under the applicable incentive arrangement with the Company or any Affiliate or (ii) for purposes of a Bonus that consists of Eligible Sales Commissions, is equal to or less than the Eligible Sales Commissions threshold (as that threshold is set by the Company or an Affiliate in the applicable agreement designating the individual as eligible to participate in the Plan), the Participant shall not be permitted to defer any portion of his or her Bonus for such calendar year. In this case, the Participant’s previously-filed Election Agreement with respect to such Bonus and such calendar year shall be cancelled, and no deferrals will be made with respect to such Election Agreement.

6. AWARD OF DEFERRED STOCK UNITS

(a) Crediting Participant Accounts. If the executive elects to purchase Stock under the Purchase Plan, on the date that the annual incentive bonus is paid or the Eligible Sales Commissions are treated as paid (generally in the first quarter of the calendar year after the calendar year in which the Bonus is earned, referred to as the “Award Date”), the Company will credit a bookkeeping account established and maintained for each Participant (an “Account”) with the number of Deferred Stock Units determined by dividing (i) the portion of the Bonus that the Participant elected to defer (up to 100% of such Bonus), by (ii) the Fair Market Value (as defined below) of a share of Stock on such date, rounded down to the nearest whole Deferred Stock Unit. For purposes of the Plan, “Fair Market Value” will be determined under the same methodology reflected in the Company’s 2010 Equity Incentive Plan, as may be amended from time to time (the “2010 Plan”). For purposes of a Bonus that consists of Eligible Sales Commissions, the Eligible Sales Commissions shall be treated as paid in the calendar year following the calendar year in which the Eligible Sales Commissions are earned and on the same Award Date as a Bonus that consists of an annual incentive bonus.

(b) Fractional Shares. No fractional Deferred Stock Units will be credited to a Participant’s Account. Unused cash attributable to a fractional Deferred Stock Unit will be refunded to the Participant, in cash, as soon as practicable following the Award Date.

(c) Vesting of Deferred Stock Units. A Participant will be fully vested in each Deferred Stock Unit credited to the Participant’s Account at all times.

(d) Distribution Election; Issuance of Shares. Each Participant may specify a distribution date with respect to the Deferred Stock Units (the “Distribution Date”). The election of such Distribution Date will be specified in the Election Agreement with the Company. Any election of a Distribution Date with respect to the Deferred Stock Units is irrevocable as of the Election Date. The Distribution Date specified in the Election Agreement will be either:

(i) January 31 of the year immediately following the date of the Participant’s “separation from service” from the Company or an Affiliate, as applicable, within the meaning of Section 409A (the “Separation from Service” and this election, the “Termination Date Election”);

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(ii) the first to occur of the following: (A) March 15 of the third calendar year following the Award Date and (B) January 31 of the year immediately following the date of the Participant’s Separation from Service (this election, the “Vesting Date Election”); or

(iii) the first to occur of the following: (A) January 31 of the fifth or tenth, as elected by the Participant, calendar year after the Award Date and (B) January 31 of the year immediately following the date of the Participant’s Separation from Service (this election, the “Deferred Distribution Date Election”).

The Company will issue to the Participant one share of Stock for each Deferred Stock Unit on the Distribution Date. Notwithstanding anything to the contrary in the Plan, if on the date of the Participant’s Separation from Service, the Participant is a “specified employee” within the meaning of Section 409A, the shares will be issued on the later to occur of (A) the scheduled Distribution Date and (B) the first day of the seventh month following the date of the Participant’s Separation from Service or, if earlier, the date of the Participant’s death.

(e) Change in Control.

(i) The Plan and Deferred Stock Units that are outstanding will continue in the manner and under the terms so provided in the event of any Change in Control (as defined below) to the extent that provision is made in writing in connection with such Change in Control for the assumption or continuation of the Deferred Stock Units or for the substitution of the Deferred Stock Units for new common stock units relating to the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number of shares underlying the award (disregarding any consideration that is not common stock).

(ii) Upon the occurrence of a Change in Control (as defined below) in which outstanding Deferred Stock Units are not being assumed or continued, shares of Stock subject to such Deferred Stock Units will be delivered immediately prior to the occurrence of the Change in Control.

For purposes of the Plan, “Change in Control” will have the same meaning as defined in the 2010 Plan. Notwithstanding the foregoing, for purposes of the Plan, in no event will a Change in Control be deemed to have occurred if the transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).

(f) Award Agreements. Each award of Deferred Stock Units granted under the Plan will be evidenced by a written agreement between the Company and the Participant memorializing the terms and conditions of the Deferred Stock Units (an “Award Agreement”).

7. ISSUANCE OF SHARES OF STOCK DUE TO UNFORESEEABLE EMERGENCY

(a) Request for Issuance. If a Participant suffers an Unforeseeable Emergency (as defined below), he or she may submit a written request to the Committee for the issuance of the shares of Stock underlying the Deferred Stock Units in the Participant’s Account. For purposes of the Plan, “Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from (i) an illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent; (ii) a loss of the Participant’s property due to casualty; or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, as determined in the sole discretion of the Committee and in accordance with the requirements of Section 409A.

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(b) No Payment if Other Relief is Available. The Committee will evaluate the Participant’s request for payment due to an Unforeseeable Emergency taking into account the Participant’s hardship and the requirements of Section 409A. In no event will shares of Stock be issued under this Section 7 to the extent the Participant’s hardship can be relieved: (i) through reimbursement or compensation by insurance or otherwise; or (ii) by liquidation of the Participant’s assets, to the extent that liquidation of the Participant’s assets would not itself cause severe financial hardship.

(c) Limitation on Issuance of Shares of Stock. The number of shares of Stock issued on account of an Unforeseeable Emergency will not exceed the amount reasonably necessary to satisfy the Participant’s financial need, including amounts necessary to pay any federal, state, local or foreign taxes or penalties reasonably anticipated to result from the issuance of shares of Stock, as determined by the Committee.

(d) Cancellation of Deferrals. If a Participant receives an issuance of shares of Stock on account of an Unforeseeable Emergency, the Participant’s Election Agreement for the Election Date in the same calendar year as the date of such issuance will be cancelled, and no deferrals will be made with respect to such Election Agreement.

8. BENEFICIARY DESIGNATION

In the event of a Participant’s death, the Company will issue the shares of Stock underlying the Deferred Stock Units in the Participant’s Account to the Participant’s designated beneficiaries. If the Participant fails to complete a valid beneficiary designation, the Participant’s beneficiary will be his or her estate.

9. TRANSFERABILITY

During a Participant’s lifetime, any issuance of shares of Stock under the Plan will be made only to the Participant. Deferred Stock Units may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Deferred Stock Units be made subject to execution, attachment or similar process.

10. WITHHOLDING

In the event that the Company or an Affiliate determines that any federal, state, local or foreign tax or withholding payment is required relating to the award of Deferred Stock Units under the Plan or the issuance of shares with respect to Deferred Stock Units under the Plan, the Company or an Affiliate will have the right to (a) require the Participant to tender a cash payment, (b) deduct from payments of any kind otherwise due to a Participant, (c) permit or require the Participant to enter into a “same day sale” commitment with a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “FINRA Dealer”) whereby the Participant irrevocably elects to sell a portion of the shares of Stock to be delivered in connection with the Deferred Stock Units to satisfy withholding obligations and whereby the FINRA Dealer irrevocably commits to forward the proceeds necessary to satisfy the withholding obligations directly to the Company or an Affiliate, or (d) withhold from the delivery of shares of Stock otherwise deliverable to a Participant under the Plan to meet such obligations; provided, that shares of Stock so withheld will have an aggregate Fair Market Value not exceeding the minimum amount of tax required to be withheld by applicable law.

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11. FORFEITURE; RECOUPMENT; CLAWBACK

(a) The Committee may reserve the right in an Award Agreement to cause a forfeiture of the gain realized by a Participant with respect to Deferred Stock Units on account of actions taken by, or failed to be taken by, the Participant in violation or breach of, or in conflict with, any (i) employment agreement, (ii) non-competition agreement, (iii) agreement prohibiting solicitation of employees or clients of the Company or any Affiliate, (iv) confidentiality obligation with respect to the Company or an Affiliate, (v) Company policy or procedure, (vi) other agreement, or (vii) any other obligation of the Participant to the Company or any Affiliate, as and to the extent specified in the Award Agreement. The Committee may annul an outstanding award of Deferred Stock Units if the Participant is terminated for Cause (as defined below) or for “cause” as defined in any other agreement between the Company or any Affiliate and the Participant, as applicable. For purposes of the Plan, “Cause” means as determined by the Committee or the Board and unless otherwise provided in an applicable agreement with the Company or any Affiliate, (A) gross negligence or willful misconduct in connection with the performance of duties, (B) conviction of a criminal offense (other than minor traffic offenses), (c) a material violation of a Company policy, or (D) a material breach of any term of any employment, consulting or other services, confidentiality, intellectual property or non-competition agreements, if any, between the Participant and the Company or any Affiliate.

(b) Any award of Deferred Stock Units granted under the Plan will be subject to mandatory repayment by the Participant to the Company to the extent the Participant is, or in the future becomes, subject to (i) any Company “clawback” or recoupment policy that is adopted to comply with the requirements of any applicable law, rule or regulation, or otherwise; or (ii) any law, rule or regulation that imposes mandatory recoupment, under circumstances set forth in such law, rule or regulation.

(c) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 and any Participant who knowingly engaged in the misconduct, was grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct or was grossly negligent in failing to prevent the misconduct, will reimburse the Company the amount of any payment in settlement of an award of Deferred Stock Units earned or accrued during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance.

(d) Notwithstanding any other provision of the Plan or any provision of any Award Agreement, if the Company is required to prepare an accounting restatement, then Participants will forfeit any Stock received in connection with an award of Deferred Stock Units (or an amount equal to the Fair Market Value of such Stock on the date of delivery if the Participant no longer holds the shares of Stock) if pursuant to the terms of the Award Agreement for such award of Deferred Stock Units, the Bonus used to purchase Deferred Stock Units was explicitly based on the achievement of pre-established performance goals or other benchmarks set forth in the applicable arrangement governing the Bonus (including earnings, gains, or other criteria) that are later determined, as a result of the accounting restatement, not to have been achieved.

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12. GENERAL PROVISIONS

(a) Requirements of Law. The Company will not be required to sell or issue any shares of Stock with respect to Deferred Stock Units if the sale or issuance of such shares of Stock would constitute a violation by the Participant, any other individual or entity, or the Company or any Affiliate of any provision of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If at any time the Company determines, in its discretion, that the listing, registration or qualification of any shares of Stock with respect to any Deferred Stock Unit upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares of Stock under the Plan, no shares of Stock may be issued or sold to the Participant or any other individual or entity with respect to such Deferred Stock Units unless such listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Company. The Company may, but will in no event be obligated to, register any securities covered by the Plan pursuant to the Securities Act. The Company is not obligated to take any affirmative action to cause the issuance of shares of Stock pursuant to the Plan to comply with any law or regulation of any governmental authority.

(b) No Right to Continued Service. No provision in the Plan, any Award Agreement or in any Election Agreement will be construed to confer upon any individual or entity the right to remain in the employ or service of the Company or any Affiliate, or to interfere in any way with any contractual or other right or authority of the Company or any Affiliate either to increase or decrease the compensation or other payments to any individual or entity at any time, or to terminate any employment or other relationship between any individual or entity and the Company or any Affiliate.

(c) Disclaimer of Rights. The obligation of the Company to pay any benefits pursuant to this Plan will be interpreted as a contractual obligation to pay only those amounts described in the Plan, in the manner and under the conditions prescribed in the Plan. The Plan and the award of Deferred Stock Units under the Plan will in no way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any Participant or beneficiary under the Plan. Participants in the Plan will have no rights under the Plan other than those of a general unsecured creditor of the Company. Deferred Stock Units represent unfunded and unsecured obligations of the Company, subject to the terms and conditions of the Plan, the applicable Award Agreement and the Election Agreement.

(d) No Obligation to Minimize Taxes. The Company has no duty or obligation to minimize the tax consequences of a Deferred Stock Unit award under the Plan and makes no guarantee regarding the tax treatment of any such Deferred Stock Unit award.

(e) Other Provisions. Each award of Deferred Stock Units under the Plan may contain such other terms and conditions not inconsistent with the Plan as the Committee determines, in its sole discretion, and specifies in the applicable Award Agreement.

(f) Severability. If any provision of the Plan, any Award Agreement or any Election Agreement is determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions of the Plan, the Award Agreement and the Election Agreement will be severable and enforceable in accordance with their terms, and all provisions will remain enforceable in any other jurisdiction.

(g) Governing Law. The validity and construction of the Plan and the instruments evidencing the award of Deferred Stock Units granted under the Plan will be governed by the laws of the State of Maryland, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan and the instruments evidencing the award of Deferred Stock Units granted under the Plan to the substantive laws of any other jurisdiction.

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(h) Section 409A. The Plan is intended to comply with Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan will be interpreted and administered to be in compliance with Section 409A. Notwithstanding anything to the contrary in the Plan, neither the Company, its Affiliates, the Board nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Section 409A and neither the Company, its Affiliates, the Board nor the Committee will have any liability to any Participant for such tax or penalty.

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EX-10.2

Exhibit 10.2

WALKER & DUNLOP, INC.

2010 EQUITY INCENTIVE PLAN

MANAGEMENT DEFERRED STOCK UNIT PURCHASE MATCHING PROGRAM

1. INTRODUCTION

(a) Adoption of the Program. The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Walker & Dunlop, Inc. (the “Company”) adopted the Company’s Management Deferred Stock Unit Purchase Matching Program (the “Program”), effective January 10, 2013 (the “Effective Date”), to make matching awards covering shares of common stock, par value $0.01 per share (the “Stock”), in connection with Stock purchases made by eligible executives and its Affiliates under the Walker & Dunlop, Inc. Management Deferred Stock Unit Purchase Plan (the “Purchase Plan”). The Program is established under the Walker & Dunlop, Inc. 2010 Equity Incentive Plan, or any successor plan (the “2010 Plan”). Unless otherwise defined in the Program, capitalized terms will have the meanings set forth in the 2010 Plan.

(b) Purpose of the Program. Eligible executives who purchase shares of Stock under the Purchase Plan will automatically receive an award of Restricted Stock Units or Deferred Stock Units under the Program (as described in Section 4(f)). A “Restricted Stock Unit” is a right to receive one share of Stock subject to terms and conditions, such as a time-based vesting condition. A “Deferred Stock Unit” is a right to receive one share of Stock, which provides for delivery of the underlying share of Stock after the date of vesting, at a time or times consistent with the requirements of Section 409A of the Code and all regulations, guidance and other interpretive authority issued thereunder (collectively, “Section 409A”). Restricted Stock Units and Deferred Stock Units are referred to together as “Stock Units.”

2. ADMINISTRATION; AMENDMENT AND TERMINATION

(a) The Committee. The Program will be administered under the supervision of the Committee. The Committee will prescribe guidelines and forms for the implementation and administration of the Program, interpret the terms of the Program and make all other substantive decisions regarding the operation of the Program. The Committee’s decisions in its administration of the Program are conclusive and binding on all persons.

(b) Amendment and Termination. The Board may amend, suspend or terminate the Program at any time and for any reason. No amendment, suspension or termination will, without the consent of the Participant (as defined below), impair rights or obligations under any Stock Units previously awarded to the Participant under the Program.

3. PARTICIPATION

Each executive of the Company and its Affiliates who is a Participant in the Purchase Plan will be a participant in the Program (the “Participant”) and will also be a Grantee under the 2010 Plan with respect to the award of Stock Units under the Program.

4. PROGRAM AWARDS

(a) Matching Award. Subject to Section 4(b), each Participant will automatically receive an award of Stock Units equal to 50% of the deferred stock units purchased by the Participant under the Purchase Plan, rounded down to the nearest whole Stock Unit (the “Matching Award”). No fractional

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Stock Units will be awarded. The Matching Award will be determined on the date that the Participant’s annual incentive bonus and/or Eligible Sales Commissions (the “Bonus”) are paid (the “Award Date”). “Eligible Sales Commissions” are the sales commissions for the calendar year that exceed the minimum established by the Company in an individual’s Election Agreement (as defined below) and include only sales commissions the individual actually receives by December 31 of the calendar year in which the sales commissions are earned. For purposes of a Bonus that consists of Eligible Sales Commissions, the Eligible Sales Commissions shall be treated as paid in the calendar year following the calendar year in which the Eligible Sales Commissions are earned and on the same Award Date as a Bonus that consists of an annual incentive bonus. Notwithstanding the foregoing, the maximum number of Stock Units with respect to a Matching Award that a Participant will receive on an Award Date equals $500,000 divided by the Fair Market Value of a share of Stock on the Award Date, rounded down to the nearest whole Stock Unit. The Stock Units granted with respect to the Matching Award will be credited to a bookkeeping account established and maintained for the Participant (an “Account”).

(b) Condition to Receipt of Matching Award. Notwithstanding anything to the contrary in the Program, in the event that the Participant’s actual Bonus (i) for purposes of a Bonus that consists of an annual incentive bonus, is less than 51% of such Participant’s target annual incentive bonus for a calendar year under the applicable incentive arrangement with the Company or any Affiliate or (ii) for purposes of a Bonus that consists of Eligible Sales Commissions, is equal to or less than the Eligible Sales Commissions threshold (as that threshold is set by the Company or an Affiliate in the applicable agreement designating the individual as eligible to participate in the Plan), the Participant will not receive a Matching Award with respect to such calendar year.

(c) Vesting of the Matching Award; Forfeiture. Subject to the Participant’s continued Service from the Award Date through the vesting date, the Matching Award will vest in full on March 15 of the third calendar year following the Award Date (the “Vesting Date”). The Participant will automatically forfeit to the Company all of the unvested Stock Units in his or her Account underlying Matching Awards made to the Participant under the Program on the date of the Participant’s termination of Service. Notwithstanding the foregoing vesting schedule, the Stock Units will become 100% vested upon the termination of the Participant’s Service due to the Participant’s death or Disability. In addition, notwithstanding the foregoing vesting schedule and provided that the Participant’s Service continues from the Award Date through the consummation of a Change in Control (as defined in Section 4(g)), the Stock Units will become 100% vested (i) if the Stock Units are not assumed, or equivalent awards are not substituted for the Stock Units, by the Company or its successor, or (ii) if assumed or substituted for, upon the Participant’s involuntary dismissal by the Company or its successor for reasons other than Cause, or the Participant’s voluntary resignation for Good Reason (as defined below), provided that such termination is effective within 24 months following the Change in Control. For purposes of the Program, “Good Reason” will have the meaning assigned to such term in any applicable employment or severance agreement, plan or arrangement between the Company or an Affiliate and the Participant, or if none, means the occurrence of one or more of the following without the Participant’s express written consent: (A) the assignment of substantial duties or responsibilities inconsistent with the Participant’s position at the Company or an Affiliate, or any other action by the Company or an Affiliate that results in a substantial diminution of the Participant’s duties or responsibilities; (B) a requirement that the Participant work principally from a location outside the 20-mile radius from the Company’s or the Affiliate’s principal place of business; or (C) a substantial reduction in the Participant’s aggregate base salary and other compensation taken as a whole, excluding any reductions caused by the failure to achieve performance targets. To qualify as a voluntary resignation for Good Reason, the Participant must (I) provide notice to the Company or the Affiliate of any of the foregoing occurrences within 90 days of the initial occurrence, and the Company or the Affiliate will have 30 days to remedy such occurrence, and (II) terminate the Participant’s Service at a time agreed reasonably with the Company or the Affiliate, but in any event within 120 days from the initial occurrence of any of the foregoing events.

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(d) Election. In connection with the Participant’s purchase of deferred stock units under the Purchase Plan, each Participant will file a completed Bonus Deferral Election Agreement or Sales Commission Deferral Election Agreement (each, an “Election Agreement”) with the Company, on a form prescribed by the Committee, during the Open Enrollment Period. For purposes of the Plan, “Open Enrollment Period” means (i) the period of time beginning on December 1 and ending on December 31 of the calendar year preceding the calendar year for which a Bonus is earned, or (ii) if otherwise determined by the Committee or an officer of the Company designated by the Committee, a period of 30 consecutive days ending no later than December 31 of the calendar year preceding the calendar year for which a Bonus is earned. For purposes of a Bonus that consists of Eligible Sales Commissions, the Bonus is treated as earned in the calendar year in which the transaction giving rise to the sales commission is rate locked and delivered to the investor. The “Election Date” is the last day of the Open Enrollment Period of the applicable calendar year.

(e) Distribution Election; Issuance of Shares. The Election Agreement for each Participant will specify a distribution date for deferred stock units purchased under the Purchase Plan (the “Distribution Date”), which Distribution Date will also apply to the Stock Units awarded under the Program. Any election of a Distribution Date is irrevocable as of the Election Date. The Company will issue to the Participant one share of Stock for each vested Stock Unit on the Distribution Date. Notwithstanding anything to the contrary in the Plan, if the Distribution Date for a Stock Unit is the effective date of the Participant’s “separation from service” from the Company within the meaning of Section 409A (the “Separation from Service”), and on the date of the Participant’s Separation from Service, the Participant is a “specified employee” within the meaning of Section 409A, the shares will be issued on the later to occur of (A) the scheduled Distribution Date and (B) the first day of the seventh month following the date of the Participant’s Separation from Service or, if earlier, the date of the Participant’s death.

(f) Election of Matching Award Type. The type of Matching Award granted to the Participant will be determined based on the Participant’s Distribution Date election under the Purchase Plan. If the Participant elects a Termination Date Election or a Deferred Distribution Date Election (as these terms are defined in the Purchase Plan), the Participant will receive a Matching Award of Deferred Stock Units. If the Participant elects a Vesting Date Election (as defined under the Purchase Plan), the Participant will receive a Matching Award of Restricted Stock Units.

(g) Change in Control.

(i) The Program and Stock Units that are outstanding will continue in the manner and under the terms so provided in the event of any Change in Control (as defined below) to the extent that provision is made in writing in connection with such Change in Control for the assumption or continuation of the Stock Units or for the substitution of the Stock Units for new common stock units relating to the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number of shares underlying the award (disregarding any consideration that is not common stock).

(ii) Upon the occurrence of a Change in Control (as defined below) in which outstanding Stock Units are not being assumed or continued, shares of Stock subject to such Stock Units will be delivered immediately prior to the occurrence of the Change in Control.

For purposes of the Program, “Change in Control” will have the same meaning as defined in the 2010 Plan. Notwithstanding the foregoing, for purposes of the Program, in no event will a Change in Control be deemed to have occurred if the transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).

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(h) Award Agreements. Each award of Stock Units granted under the Program will be evidenced by a written agreement between the Company and the Participant memorializing the terms and conditions of the Stock Units (an “Award Agreement”).

5. ISSUANCE OF SHARES OF STOCK DUE TO UNFORESEEABLE EMERGENCY

(a) Request for Issuance. If a Participant suffers an Unforeseeable Emergency (as defined below), he or she may submit a written request to the Committee for the issuance of the shares of Stock underlying vested Deferred Stock Units in the Participant’s Account. For purposes of the Program, “Unforeseeable Emergency” means a severe financial hardship of the Participant resulting from (i) an illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent; (ii) a loss of the Participant’s property due to casualty; or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, as determined in the sole discretion of the Committee and in accordance with the requirements of Section 409A.

(b) No Payment if Other Relief is Available. The Committee will evaluate the Participant’s request for payment due to an Unforeseeable Emergency taking into account the Participant’s and the requirements of Section 409A. In no event will shares of Stock be issued under this Section 5 to the extent the Participant’s hardship can be relieved: (i) through reimbursement or compensation by insurance or otherwise; or (ii) by liquidation of the Participant’s assets, to the extent that liquidation of the Participant’s assets would not itself cause severe financial hardship.

(c) Limitation on Issuance of Shares of Stock. The number of shares of Stock issued on account of an Unforeseeable Emergency will not exceed the amount reasonably necessary to satisfy the Participant’s financial need, including amounts necessary to pay any federal, state, local or foreign taxes or penalties reasonably anticipated to result from the issuance of shares of Stock, as determined by the Committee.

(d) Cancellation of Deferrals. If a Participant receives an issuance of shares of Stock on account of an Unforeseeable Emergency, the Participant’s Election Agreement for the Election Date in the same calendar year as the date of such issuance will be cancelled, and no deferrals will be made with respect to such Election Agreement.

6. BENEFICIARY DESIGNATION

In the event of a Participant’s death, the Company will issue the shares of Stock underlying the Stock Units in the Participant’s Account to the Participant’s designated beneficiaries. If the Participant fails to complete a valid beneficiary designation, the Participant’s beneficiary will be his or her estate.

7. TRANSFERABILITY

During a Participant’s lifetime, any issuance of shares of Stock under the Program will be made only to the Participant. Stock Units may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the Stock Units be made subject to execution, attachment or similar process.

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8. WITHHOLDING

In the event that the Company or an Affiliate determines that any federal, state, local or foreign tax or withholding payment is required relating to the award of Stock Units under the Program or the issuance of shares with respect to Stock Units under the Program, the Company or an Affiliate will have the right to (a) require the Participant to tender a cash payment, (b) deduct from payments of any kind otherwise due to a Participant, (c) permit or require the Participant to enter into a “same day sale” commitment with a broker-dealer that is a member of the Financial Industry Regulatory Authority (a “FINRA Dealer”) whereby the Participant irrevocably elects to sell a portion of the shares of Stock to be delivered in connection with the Stock Units to satisfy withholding obligations and whereby the FINRA Dealer irrevocably commits to forward the proceeds necessary to satisfy the withholding obligations directly to the Company or an Affiliate, or (d) withhold the delivery of shares of Stock otherwise deliverable to a Participant under the Program to meet such obligations; provided, that the shares of Stock so withheld will have an aggregate Fair Market Value not exceeding the minimum amount of tax required to be withheld by applicable law.

9. FORFEITURE; RECOUPMENT; CLAWBACK

(a) The Committee may reserve the right in an Award Agreement to cause a forfeiture of the gain realized by a Participant with respect to a Matching Award on account of actions taken by, or failed to be taken by, the Participant in violation or breach of or in conflict with any (i) employment agreement, (ii) non-competition agreement, (iii) agreement prohibiting solicitation of employees or clients of the Company or any Affiliate, (iv) confidentiality obligation with respect to the Company or an Affiliate, (v) Company policy or procedure, (vi) other agreement, or (vii) any other obligation of the Participant to the Company or any Affiliate, as and to the extent specified in the Award Agreement. The Committee may annul an outstanding Matching Award if the Participant is terminated for Cause or for “cause” as defined in any other agreement between the Company or any Affiliate and the Participant, as applicable.

(b) Any Matching Award granted under the Program will be subject to mandatory repayment by the Participant to the Company to the extent the Participant is, or in the future becomes, subject to (i) any Company “clawback” or recoupment policy that is adopted to comply with the requirements of any applicable law, rule or regulation, or otherwise; or (ii) any law, rule or regulation that imposes mandatory recoupment, under circumstances set forth in such law, rule or regulation.

(c) If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 and any Participant who knowingly engaged in the misconduct, was grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct or was grossly negligent in failing to prevent the misconduct, will reimburse the Company the amount of any payment in settlement of a Matching Award earned or accrued during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance.

(d) Notwithstanding any other provision of the Program or any provision of any Award Agreement, if the Company is required to prepare an accounting restatement, then Participants will forfeit any Stock received in connection with a Matching Award (or an amount equal to the Fair Market Value of such Stock on the date of delivery if the Participant no longer holds the shares of Stock) if pursuant to the terms of the Award Agreement for such Matching Award, the Bonus used to purchase deferred stock units under the Purchase Plan for which the Matching Award was based was explicitly based on the achievement of pre-established performance goals set forth in the bonus plan governing the Bonus (including earnings, gains, or other criteria) that are later determined, as a result of the accounting restatement, not to have been achieved.

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10. GENERAL PROVISIONS

(a) Requirements of Law. The Company will not be required to sell or issue any shares of Stock with respect to a Matching Award if the sale or issuance of such shares of Stock would constitute a violation by the Participant, any other individual or entity, or the Company or any Affiliate of any provision of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If at any time the Company determines, in its discretion, that the listing, registration or qualification of any shares of Stock with respect to any Matching Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares of Stock under the Program, no shares of Stock may be issued or sold to the Participant or any other individual or entity with respect to such Matching Award unless such listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Company. The Company may, but will in no event be obligated to, register any securities covered by the Program pursuant to the Securities Act. The Company is not obligated to take any affirmative action to cause the issuance of shares of Stock pursuant to the Program to comply with any law or regulation of any governmental authority.

(b) No Right to Continued Service. No provision in the Program, any Award Agreement or in any Election Agreement will be construed to confer upon any individual or entity the right to remain in the employ or service of the Company or any Affiliate, or to interfere in any way with any contractual or other right or authority of the Company or any Affiliate either to increase or decrease the compensation or other payments to any individual or entity at any time, or to terminate any employment or other relationship between any individual or entity and the Company or any Affiliate.

(c) Disclaimer of Rights. The obligation of the Company to pay any benefits pursuant to the Program will be interpreted as a contractual obligation to pay only those amounts described in the Program, in the manner and under the conditions prescribed in the Program. The Program and the award of Stock Units under the Program will in no way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any Participant or beneficiary under the Program. Participants in the Program will have no rights under the Program other than those of a general unsecured creditor of the Company. Stock Units represent unfunded and unsecured obligations of the Company, subject to the terms and conditions of the Program, the applicable Award Agreement and the Election Agreement.

(d) No Obligation to Minimize Taxes. The Company has no duty or obligation to minimize the tax consequences of a Stock Unit award under the Program and makes no guarantee regarding the tax treatment of any such Stock Unit award.

(e) Other Provisions. Each Matching Award under the Program may contain such other terms and conditions not inconsistent with the Program as the Committee determines, in its sole discretion, and specifies in the applicable Award Agreement.

(f) Severability. If any provision of the Program, any Award Agreement or any Election Agreement is determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions of the Program, the Award Agreement and the Election Agreement will be severable and enforceable in accordance with their terms, and all provisions will remain enforceable in any other jurisdiction.

(g) Governing Law. The validity and construction of the Program and the instruments evidencing the Matching Awards granted under the Program will be governed by the laws of the State of Maryland, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Program and the instruments evidencing the Matching Awards granted under the Program to the substantive laws of any other jurisdiction.

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(h) Section 409A. The Program is intended to comply with Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Program will be interpreted and administered to be in compliance with Section 409A. Notwithstanding anything to the contrary in the Program, neither the Company, its Affiliates, the Board nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Section 409A and neither the Company, its Affiliates, the Board nor the Committee will have any liability to any Participant for such tax or penalty.

(i) Governing Plan Document. The Program is subject to all of the provisions of the 2010 Plan and is further subject to all interpretations, amendments, rules and regulations that may from time to time be promulgated and adopted by the Committee, the Board or the Company pursuant to the 2010 Plan. In the event of any conflict between the provisions of the Program and those of the 2010 Plan, the provisions of the 2010 Plan will control.

7

EX-31.1

EXHIBIT 31.1

SARBANES-OXLEY ACT SECTION 302 CERTIFICATIONS

I, William M. Walker, certify that:

1. I have reviewed this report on Form 10-Q of Walker & Dunlop, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2014	By:	/s/ William M. Walker
		William M. Walker
		Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

SARBANES-OXLEY ACT SECTION 302 CERTIFICATIONS

I, Stephen P. Theobald, certify that:

1. I have reviewed this report on Form 10-Q of Walker & Dunlop, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2014	By:	/s/ Stephen P. Theobald
		Stephen P. Theobald
		Executive Vice President, Chief Financial Officer and Treasurer

EX-32

EXHIBIT 32

CERTIFICATION OF THE

CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

OF WALKER & DUNLOP, INC.

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Walker & Dunlop, Inc. for the period ended June 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of Walker & Dunlop, Inc., hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Walker & Dunlop, Inc.

Date: August 6, 2014	By:	/s/ William M. Walker
		William M. Walker
		Chairman, President and Chief Executive Officer
	By:	/s/ Stephen P. Theobald
		Stephen P. Theobald
		Executive Vice President, Chief Financial Officer and Treasurer

XML

Warehouse Notes Payable - Additional Information (Detail) (USD $)					6 Months Ended			0 Months Ended
	Jun. 30, 2014 National Banks [Member]	Jun. 30, 2014 Fannie Mae Repurchase agreement, uncommitted line and open maturity [Member]	Mar. 31, 2014 Fannie Mae Repurchase agreement, uncommitted line and open maturity [Member]	Dec. 31, 2013 Fannie Mae Repurchase agreement, uncommitted line and open maturity [Member]	Jun. 30, 2014 Warehouse Facility #2 [Member]	Jun. 30, 2014 Warehouse Facility #5 [Member]	May 19, 2014 Warehouse Facility #5 [Member]	May 19, 2014 Warehouse Facility #5 [Member] Minimum [Member]	May 19, 2014 Warehouse Facility #5 [Member] Maximum [Member]	Apr. 15, 2014 Warehouse Facility #4 [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 1,500,000,000	$ 400,000,000	$ 400,000,000	$ 500,000,000			$ 50,000,000			$ 135,000,000
Agreement maturity date					Jun. 23, 2015	May 19, 2016
Reference rate for variable interest on the line of credit						The borrowings under the agreement bear interest at a rate of average 30-day London Interbank Offered Rate (LIBOR) plus 2.00% to 2.50% ("the spread").
Basis points added to reference rate								2.00%	2.50%

XML

Earnings Per Share - Schedule of Weighted Average Shares and Share Equivalents that are Used to Calculate Basic and Diluted Earnings Per Share (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings per Share
Weighted average number of shares outstanding used to calculate basic earnings per share	31,710,759	33,699,944	32,624,372	33,635,472
Dilutive securities
Unvested restricted shares	239,817	785,806	272,790	695,167
Weighted average number of shares and share equivalents outstanding used to calculate diluted earnings per share	31,950,576	34,485,750	32,897,162	34,330,639

XML

Fair Value Measurements - Schedule of Fair Value of Derivative Instruments and Loans Held for Sale (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Schedule Of Fair Value Of Derivative Instruments And Loans Held For Sale [Line Items]
Assumed Gain (Loss) on Sale	$ 26,271	$ 20,679
Interest Rate Movement Effect
Total Fair Value Adjustment	26,271	20,679
Derivative assets	18,505	19,563
Derivative Liabilities	(3,019)	(222)
Fair Value Adjustment To Loans Held for Sale	10,785	1,338
Loans Held for Sale [Member]
Schedule Of Fair Value Of Derivative Instruments And Loans Held For Sale [Line Items]
Notional or Principal Amount	652,184	280,139
Assumed Gain (Loss) on Sale	10,551	8,348
Interest Rate Movement Effect	234	(7,010)
Total Fair Value Adjustment	10,785	1,338
Derivative assets
Derivative Liabilities
Fair Value Adjustment To Loans Held for Sale	10,785	1,338
Rate Lock Commitments [Member]
Schedule Of Fair Value Of Derivative Instruments And Loans Held For Sale [Line Items]
Notional or Principal Amount	412,481	235,616
Assumed Gain (Loss) on Sale	15,720	12,331
Interest Rate Movement Effect	1,506	(6,253)
Total Fair Value Adjustment	17,226	6,078
Derivative assets	17,226	6,299
Derivative Liabilities		(221)
Forward Sale Contracts [Member]
Schedule Of Fair Value Of Derivative Instruments And Loans Held For Sale [Line Items]
Notional or Principal Amount	1,043,146	515,755
Interest Rate Movement Effect	(1,740)	13,263
Total Fair Value Adjustment	(1,740)	13,263
Derivative assets	1,279	13,264
Derivative Liabilities	(3,019)	(1)
Fair Value Adjustment To Loans Held for Sale

XML

Mortgage Servicing Rights - Summary of Components of Net Carrying Value of Acquired and Originated MSRs (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Acquired Finite Lived Intangible Assets [Line Items]
Gross carrying value	$ 509,829
Accumulated amortization	(160,662)
Net carrying value	349,167
Acquired MSRs [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Gross carrying value	124,629
Accumulated amortization	(45,879)
Net carrying value	78,750
Originated MSRs [Member]
Acquired Finite Lived Intangible Assets [Line Items]
Gross carrying value	385,200
Accumulated amortization	(114,783)
Net carrying value	$ 270,417

XML

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Summary of Changes in Stockholders' Equity

A summary of changes in stockholders’ equity is presented below (dollars in thousands):

							Additional					Total
	Common Stock						Paid-In			Retained		Stockholders’
	Shares			Amount			Capital			Earnings		Equity
Balances at December 31, 2013		33,999,551		$	340		$	244,954		$	157,547	$	402,841
Net income		—			—			—			20,058		20,058
Stock-based compensation		—			—			3,901			—		3,901
Issuance of common shares in connection with equity incentive plans		333,403			3			1,714			—		1,717
Repurchase and retirement of common stock		(2,559,731	)		(25	)		(37,271	)		—		(37,296	)
Tax benefit from vesting of restricted shares		—			—			(83	)		—		(83	)
Balances at June 30, 2014		31,773,223		$	318		$	213,215		$	177,605	$	391,138

XML

Stockholders' Equity - Summary of Changes in Stockholders' Equity (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement of Stockholders' Equity [Abstract]
Balances at the beginning of the period			$ 402,841
Balances at the beginning of the period (in shares)			33,999,551
Net income	12,914	14,543	20,058	22,269
Stock-based compensation			3,901
Issuance of common shares in connection with equity incentive plans			1,717
Repurchase and retirement of common stock			(37,296)
Tax benefit from vesting of restricted shares			(83)
Balances at the end of the period	391,138		391,138
Balances at the end of the period (in shares)	31,773,223		31,773,223
Common Stock [Member]
Statement of Stockholders' Equity [Abstract]
Balances at the beginning of the period			340
Balances at the beginning of the period (in shares)			33,999,551
Issuance of common shares in connection with equity incentive plans			3
Issuance of common shares in connection with equity incentive plans (in shares)			333,403
Repurchase and retirement of common stock			(25)
Repurchase and retirement of common stock (in shares)			(2,559,731)
Balances at the end of the period	318		318
Balances at the end of the period (in shares)	31,773,223		31,773,223
Additional Paid-In Capital [Member]
Statement of Stockholders' Equity [Abstract]
Balances at the beginning of the period			244,954
Stock-based compensation			3,901
Issuance of common shares in connection with equity incentive plans			1,714
Repurchase and retirement of common stock			(37,271)
Tax benefit from vesting of restricted shares			(83)
Balances at the end of the period	213,215		213,215
Retained Earnings [Member]
Statement of Stockholders' Equity [Abstract]
Balances at the beginning of the period			157,547
Net income			20,058
Balances at the end of the period	$ 177,605		$ 177,605

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Fair Value Measurements - Additional Information (Detail) (USD $)	6 Months Ended
	Jun. 30, 2014 Period	Jun. 30, 2013
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Amount of transfers between any of the levels within the fair value hierarchy	$ 0	$ 0
Higher maturity term	60 days
Maximum number of period for which derivative is outstanding	1
Period of originated loans within which they are transferred or sold	60 days
Maximum [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Maximum term of maturity of investments	90 days

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Guaranty Obligation and Allowance for Risk-Sharing Obligations - Summary of Allowance for Risk-sharing Obligations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Guarantees [Abstract]
Beginning balance	$ 5,662	$ 16,071	$ 7,363	$ 15,670
Provision for risk-sharing obligations	408	751	68	1,152
Write-offs	(1,264)	(4,500)	(2,625)	(4,500)
Ending balance	$ 4,806	$ 12,322	$ 4,806	$ 12,322

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Litigation, Commitments, and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	0 Months Ended	6 Months Ended		6 Months Ended			0 Months Ended		1 Months Ended		0 Months Ended	6 Months Ended		1 Months Ended		6 Months Ended		6 Months Ended
	Jan. 31, 2014	Jun. 30, 2014 Money Market Funds Holding US Treasuries [Member]	Jun. 30, 2014 Minimum [Member]	Jun. 30, 2014 Bridge Loan [Member] Maximum [Member]	Jun. 30, 2014 DUS Risk-Sharing Obligations [Member] Fannie Mae DUS Program [Member]	Jun. 30, 2014 DUS Risk-Sharing Obligations [Member] Fannie Mae DUS Program [Member] New Tier 2 loans [Member]	Apr. 30, 2013 Capital Funding Litigation [Member] Counts	Nov. 17, 2010 Capital Funding Litigation [Member] Claim	Jul. 31, 2013 Capital Funding Litigation [Member] Claim	Nov. 30, 2011 Capital Funding Litigation [Member] Counts	Nov. 17, 2010 Capital Funding Litigation [Member] Minimum [Member]	Jun. 30, 2014 Capital Funding Litigation [Member] Minimum [Member]	Jun. 30, 2014 Capital Funding Litigation [Member] Maximum [Member]	Jul. 31, 2013 Capital Funding Litigation [Member] All Defendants [Member]	Jul. 31, 2013 Capital Funding Litigation [Member] Credit Suisse [Member]	Jun. 30, 2014 CA Fund Group Litigation [Member]	Jun. 30, 2014 CA Fund Group Litigation [Member] Bridge Loan [Member] Minimum [Member]	Jun. 30, 2014 CA Fund Group Litigation [Member] Bridge Loan [Member] Maximum [Member]
Loss Contingencies [Line Items]
Collateral requirements percentage (as a percent)						0.0075%
Period of funding for collateral requirement					48 months	48 months
Restricted liquidity collateral reduction percentage		5.00%
Amount of additional capital required to be funded over the next 48 months					$ 36.5
Net worth requirement					91.9
Net worth					287.5
Minimum liquid assets to be maintained to meet operational liquidity requirements					17.7
Operational liquidity					137.3
Amount of damages sought by plaintiff											30.0					5.1
Number of claims asserted against all defendants								3
Amount up to which the entity will be indemnifying Column													3.0
Amount agreed to be paid by William Walker and Mallory Walker to Column												3.0	6.0
Counts of breach of contract filed for summary judgment by defendants										2
Counts of promissory estoppel filed for summary judgment by defendants										2
Counts of unjust enrichment filed for summary judgment by defendants										2
Counts of unfair competition filed for summary judgment by defendants										2
Counts of unjust enrichment for which court issued Opinion and Order which granted the motion							1
Amount awarded by jury to Capital Funding	1.8													1.8	10.4
Period of jury trial									14 days
Number of claims not dismissed									2
Unjust enrichment judgment amount	10.4
Minimum floating rate loan under bridge program			25.0														25.0
Minimum floating rate loan period under bridge program				3 years														3 years
Amount raised in separate account																$ 380.0

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Mortgage Servicing Rights

6 Months Ended

Jun. 30, 2014

Transfers And Servicing [Abstract]

Mortgage Servicing Rights

NOTE 4—MORTGAGE SERVICING RIGHTS

Mortgage Servicing Rights (MSRs) represent the fair value of the servicing rights retained by the Company for mortgage loans originated and sold. The initial capitalized amount is equal to the estimated fair value of the expected net cash flows associated with the servicing rights. The following describes the key assumptions used in calculating each loan’s MSR:

Discount rate—Depending upon loan type, the discount rate used is management’s best estimate of market discount rates. The rates used for loans originated were 10% to 15% for each of the three- and six-month periods presented.

Estimated Life—The estimated life of the MSRs is derived based upon the stated yield maintenance and/or prepayment protection term of the underlying loan and may be reduced by 6 to 12 months based upon the expiration of various types of prepayment penalty and/or lockout provisions prior to that stated maturity date.

Servicing Cost—The estimated future cost to service the loan for the estimated life of the MSR is subtracted from the estimated future cash flows.

The fair values of the MSRs at June 30, 2014 and December 31, 2013 were $432.0 million and $414.9 million, respectively. The Company uses a discounted static cash flow valuation approach and the key economic assumption is the discount rate. For example, see the following sensitivities:

The impact of a 100 basis point increase in the discount rate at June 30, 2014, is a decrease in the fair value of $13.8 million.

The impact of a 200 basis point increase in the discount rate at June 30, 2014, is a decrease in the fair value of $26.6 million.

Activity related to capitalized MSRs for the three and six months ended June 30, 2014 and 2013 was as follows (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Beginning balance	$	347,976		$	336,397		$	353,024		$	315,524
Additions, following the sale of loan		20,694			23,502			34,369			62,295
Amortization		(17,028	)		(15,838	)		(33,729	)		(30,943	)
Pre-payments and write-offs		(2,475	)		(2,291	)		(4,497	)		(5,106	)
Ending balance	$	349,167		$	341,770		$	349,167		$	341,770

The following summarizes the components of the net carrying value of the Company’s acquired and originated MSRs, as of June 30, 2014 (in thousands):

	As of June 30, 2014
	Gross carrying value		Accumulated amortization			Net carrying value
Acquired MSRs	$	124,629	$	(45,879	)	$	78,750
Originated MSRs		385,200		(114,783	)		270,417
Total	$	509,829	$	(160,662	)	$	349,167

The expected amortization of MSRs recorded as of June 30, 2014 is shown in the table below (in thousands). Actual amortization may vary from these estimates.

	Originated MSRs		Acquired MSRs		Total MSRs
	Amortization		Amortization		Amortization
Six Months Ending December 31,
2014	$	24,460	$	8,806	$	33,266
Year Ending December 31,
2015		45,199		16,540		61,739
2016		41,565		15,395		56,960
2017		38,174		13,656		51,830
2018		33,763		9,950		43,713
2019		28,054		8,118		36,172
Thereafter		59,202		6,285		65,487
Total	$	270,417	$	78,750	$	349,167

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Fair Value Measurements - Schedule of Roll Forward of Derivative Instruments Which Require Valuations Based upon Significant Unobservable Inputs (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Derivative assets and liabilities, net
Beginning balance	$ 13,559	$ 4,370	$ 19,341	$ 20,391
Settlements	(50,314)	(33,110)	(90,682)	(92,062)
Realized gains recorded in earnings	36,755	28,740	71,341	71,671
Unrealized gains recorded in earnings	15,486	34,336	15,486	34,336
Ending balance	$ 15,486	$ 34,336	$ 15,486	$ 34,336

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Gains from Mortgage Banking Activities - Schedule of Gains from Mortgage Banking Activities (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Mortgage Banking [Abstract]
Contractual loan origination related fees, net	$ 29,495	$ 34,593	$ 50,193	$ 56,853
Fair value of expected cash flows from servicing recognized at commitment	24,538	29,946	39,123	51,817
Fair value of expected guaranty obligation recognized at commitment	(1,792)	(1,463)	(2,489)	(2,663)
Total gains from mortgage banking activities	$ 52,241	$ 63,076	$ 86,827	$ 106,007

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Summary of Significant Accounting Policies - Schedule of Net Warehouse Interest Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Interest Income Expense Net Line Items
Total net warehouse interest income	$ 3,896	$ 1,760	$ 6,132	$ 3,383
Loans Held for Sale [Member]
Interest Income Expense Net Line Items
Warehouse interest income	5,112	4,355	8,278	9,670
Warehouse interest expense	(2,817)	(2,793)	(4,592)	(6,495)
Total net warehouse interest income	2,295	1,562	3,686	3,175
Loans Held for Investment [Member]
Interest Income Expense Net Line Items
Warehouse interest income	3,227	403	5,403	535
Warehouse interest expense	(1,626)	(205)	(2,957)	(327)
Total net warehouse interest income	$ 1,601	$ 198	$ 2,446	$ 208

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Fair Value Measurements - Schedule of Significant Unobservable Inputs Used in the Measurement of the Fair Value of Level 3 Assets and Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Mar. 31, 2014 Significant Other Unobservable Inputs (Level 3) [Member] Discounted Cash Flow [Member] Derivative Assets [Member]	Mar. 31, 2014 Significant Other Unobservable Inputs (Level 3) [Member] Derivative Liabilities [Member] Discounted Cash Flow [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Derivative assets	$ 18,505	$ 19,563	$ 18,505
Derivative liabilities	$ 3,019	$ 222		$ 3,019

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Gains from Mortgage Banking Activities - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Mortgage Banking [Abstract]
Co-broker fees from mortgage banking activities	$ 3.9	$ 8.6	$ 7.7	$ 11.9

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Mortgage Servicing Rights - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Minimum [Member]	Jun. 30, 2013 Minimum [Member]	Jun. 30, 2014 Minimum [Member]	Jun. 30, 2013 Minimum [Member]	Jun. 30, 2014 Maximum [Member]	Jun. 30, 2013 Maximum [Member]	Jun. 30, 2014 Maximum [Member]	Jun. 30, 2013 Maximum [Member]
Servicing Assets At Amortized Value [Line Items]
Discount rate used for loans originated (as a percent)			10.00%	10.00%	10.00%	10.00%	15.00%	15.00%	15.00%	15.00%
Reduction in estimated life					6 months				12 months
Fair value of the MSRs	$ 432.0	$ 414.9
Decrease in fair value as a result of 100 basis point increase in discount rate	13.8
Sensitivity Analysis of Fair Value, example 1, impact of percent adverse change in discount rate, percent	0.0100
Decrease in fair value as a result of 200 basis point increase in discount rate	$ 26.6
Sensitivity Analysis of Fair Value, example 2, impact of percent adverse change in discount rate, percent	0.0200

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Gains from Mortgage Banking Activities

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Gains from Mortgage Banking Activities

NOTE 3—GAINS FROM MORTGAGE BANKING ACTIVITIES

The gains from mortgage banking activities consisted of the following activity for the three and six months ended June 30, 2014 and 2013 (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Contractual loan origination related fees, net	$	29,495		$	34,593		$	50,193		$	56,853
Fair value of expected cash flows from servicing recognized at commitment		24,538			29,946			39,123			51,817
Fair value of expected guaranty obligation recognized at commitment		(1,792	)		(1,463	)		(2,489	)		(2,663	)
Total gains from mortgage banking activities	$	52,241		$	63,076		$	86,827		$	106,007

The origination fees shown in the table above are net of co-broker fees of $3.9 million and $8.6 million for the three months ended June 30, 2014 and 2013, and $7.7 million and $11.9 million for the six months ended June 30, 2014 and 2013, respectively.

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Mortgage Servicing Rights - Schedule of Activity Related to Capitalized MSRs (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Mortgage Banking [Abstract]
Beginning balance	$ 347,976	$ 336,397	$ 353,024	$ 315,524
Additions, following the sale of loan	20,694	23,502	34,369	62,295
Amortization	(17,028)	(15,838)	(33,729)	(30,943)
Pre-payments and write-offs	(2,475)	(2,291)	(4,497)	(5,106)
Ending balance	$ 349,167	$ 341,770	$ 349,167	$ 341,770

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Warehouse Notes Payable - Schedule of Debt Obligations (Detail) (USD $)				6 Months Ended					0 Months Ended			6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Apr. 15, 2014 Warehouse Facility #4 [Member]	Jun. 30, 2014 Warehouse Facility #5 [Member]	May 19, 2014 Warehouse Facility #5 [Member]	Jun. 30, 2014 Fannie Mae Repurchase agreement, uncommitted line and open maturity [Member]	Mar. 31, 2014 Fannie Mae Repurchase agreement, uncommitted line and open maturity [Member]	Dec. 31, 2013 Fannie Mae Repurchase agreement, uncommitted line and open maturity [Member]	May 19, 2014 Minimum [Member] Warehouse Facility #5 [Member]	May 19, 2014 Maximum [Member] Warehouse Facility #5 [Member]	Jun. 30, 2014 Warehouse Notes Payable [Member]	Jun. 30, 2014 Warehouse Notes Payable [Member] Warehouse Facility #1 [Member]	Jun. 30, 2014 Warehouse Notes Payable [Member] Warehouse Facility #2 [Member]	Jun. 30, 2014 Warehouse Notes Payable [Member] Warehouse Facility #3 [Member]	Jun. 30, 2014 Warehouse Notes Payable [Member] Warehouse Facility #4 [Member]	Jun. 30, 2014 Warehouse Notes Payable [Member] Warehouse Facility #5 [Member]	Jun. 30, 2014 Warehouse Notes Payable [Member] Fannie Mae Repurchase agreement, uncommitted line and open maturity [Member]	Jun. 30, 2014 Warehouse Notes Payable [Member] Minimum [Member] Warehouse Facility #5 [Member]	Jun. 30, 2014 Warehouse Notes Payable [Member] Maximum [Member] Warehouse Facility #5 [Member]
Line of Credit Facility [Line Items]
Maximum Amount			$ 135,000,000		$ 50,000,000	$ 400,000,000	$ 400,000,000	$ 500,000,000			$ 1,867,400,000	$ 575,000,000	$ 650,000,000	$ 57,400,000	$ 135,000,000	$ 50,000,000	$ 400,000,000
Outstanding Balance	$ 719,855,000	$ 373,107,000									$ 719,855,000	$ 286,420,000	$ 221,859,000	$ 45,500,000	$ 88,173,000		$ 77,903,000
Reference rate for variable interest on the line of credit				The borrowings under the agreement bear interest at a rate of average 30-day London Interbank Offered Rate (LIBOR) plus 2.00% to 2.50% ("the spread").								Average 30-day LIBOR plus 1.50%	Average 30-day LIBOR plus 1.50%	Average 30-day LIBOR plus 2.00%	Average 30-day LIBOR plus 2.00%	Average 30-day LIBOR plus 2.00% to 2.50%	Average 30-day LIBOR plus 1.15%
Basis points added to reference rate									2.00%	2.50%		1.50%	1.50%	2.00%	2.00%		1.15%	2.00%	2.50%

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Assets
Cash and cash equivalents	$ 66,275	$ 170,563
Restricted cash	9,111	5,427
Pledged securities, at fair value	58,551	49,651
Loans held for sale, at fair value	662,969	281,477
Loans held for investment, net	192,706	134,656
Servicing fees and other receivables, net	23,522	27,592
Derivative assets	18,505	19,563
Mortgage servicing rights	349,167	353,024
Goodwill and other intangible assets	61,232	61,777
Other assets	23,540	25,236
Total assets	1,465,578	1,128,966
Liabilities
Accounts payable and other liabilities	142,200	143,452
Performance deposits from borrowers	8,814	5,234
Derivative liabilities	3,019	222
Guaranty obligation, net of accumulated amortization	23,234	23,489
Allowance for risk-sharing obligations	4,806	7,363
Warehouse notes payable	719,855	373,107
Note payable	172,512	173,258
Total liabilities	1,074,440	726,125
Stockholders' equity
Preferred shares, Authorized 50,000,000, none issued.	0	0
Common stock, $0.01 par value. Authorized 200,000,000; issued and outstanding 31,773,223 shares at June 30, 2014 and 33,999,551 shares at December 31, 2013	318	340
Additional paid-in capital	213,215	244,954
Retained earnings	177,605	157,547
Total stockholders' equity	391,138	402,841
Commitments and contingencies
Total liabilities and stockholders' equity	$ 1,465,578	$ 1,128,966

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Fair Value Measurements - Schedule of Carrying Amounts and the Fair Values of the Company's Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Financial Assets:
Cash and cash equivalents	$ 66,275	$ 170,563	$ 66,289	$ 65,027
Restricted cash	9,111	5,427
Pledged securities	58,551	49,651
Loans held for sale	662,969	281,477
Loans held for investment, net	192,706	134,656
Derivative assets	18,505	19,563
Financial Liabilities:
Derivative liabilities	3,019	222
Warehouse notes payable	719,855	373,107
Note payable	172,512	173,258
Carrying Amount [Member]
Financial Assets:
Cash and cash equivalents	66,275	170,563
Restricted cash	9,111	5,427
Pledged securities	58,551	49,651
Loans held for sale	662,969	281,477
Loans held for investment, net	192,706	134,656
Derivative assets	18,505	19,563
Total financial assets	1,008,117	661,337
Financial Liabilities:
Derivative liabilities	3,019	222
Warehouse notes payable	719,855	373,107
Note payable	172,512	173,258
Total financial liabilities	895,386	546,587
Fair Value [Member]
Financial Assets:
Cash and cash equivalents	66,275	170,563
Restricted cash	9,111	5,427
Pledged securities	58,551	49,651
Loans held for sale	662,969	281,477
Loans held for investment, net	194,320	135,620
Derivative assets	18,505	19,563
Total financial assets	1,009,731	662,301
Financial Liabilities:
Derivative liabilities	3,019	222
Warehouse notes payable	719,855	373,107
Note payable	174,125	173,258
Total financial liabilities	$ 896,999	$ 546,587

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Organization and Basis of Presentation

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Organization and Basis of Presentation

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION

These financial statements represent the condensed consolidated financial position and results of operations of Walker & Dunlop, Inc. and its subsidiaries. Unless the context otherwise requires, references to “we,” “us,” “our,” “Walker & Dunlop” and the “Company” mean the Walker & Dunlop consolidated companies. The statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Because the accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP, they should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (“2013 Form 10-K”). In the opinion of management, all adjustments (consisting only of normal recurring accruals except as otherwise noted herein) considered necessary for a fair presentation of the results for the Company in the interim periods presented have been included. Results of operations for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014, or thereafter.

Walker & Dunlop is one of the leading commercial real estate finance companies in the United States, with a primary focus on multifamily lending. The Company originates, sells, and services a range of multifamily and other commercial real estate financing products. The Company’s clients are owners and developers of commercial real estate across the country. The Company originates and sells loans pursuant to the programs of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac,” and together with Fannie Mae, the government-sponsored enterprises, or the “GSEs”), the Government National Mortgage Association (“Ginnie Mae”) and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, “HUD”), with which Walker & Dunlop has long-established relationships. The Company retains servicing rights and asset management responsibilities on nearly all loans that it sells to the GSEs and HUD. Walker & Dunlop is approved as a Fannie Mae Delegated Underwriting and Servicing (“DUS”^TM) lender nationally, a Freddie Mac Program Plus lender in 22 states and the District of Columbia, a Freddie Mac targeted affordable housing seller/servicer, a HUD Multifamily Accelerated Processing (“MAP”) lender nationally, a HUD Section 232 LEAN lender nationally, and a Ginnie Mae issuer. The Company also acts as a loan broker for a number of life insurance companies and other institutional investors, in which cases it does not fund the loan but rather acts as a loan broker. The Company retains the servicing rights on some of the loans where it acts as a broker.

The Company offers an interim loan program offering floating-rate loans with original principal balances of generally up to $25.0 million, for terms of up to two years, to experienced borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent GSE or HUD financing (the “Interim Program”). The Company underwrites all loans originated through the Interim Program using similar underwriting standards used to underwrite loans it originates and sells. During the time they are outstanding, the Company assumes the full risk of loss on the loans. In addition, the Company services and asset-manages loans originated through the Interim Program, with the ultimate goal of providing permanent financing on the properties. These loans are classified as held for investment on the Company’s consolidated balance sheet during such time that they are outstanding.

The Company offers a large loan bridge program (the “Bridge Program”). Similar to the Interim Program, the Bridge Program offers floating-rate loans to experienced borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent financing but are good candidates for future permanent financing. The Bridge Program is offered for loans of generally $25.0 million or more and for terms of up to three years. The Bridge Program was established through a partnership with third-party investors (“Bridge Partnership”). The loans in the Bridge Program are approved for funding by unanimous consent of the limited partners, funded by the Bridge Partnership, and underwritten by the Company pursuant to service agreements. The Bridge Partnership assumes the full risk of loss on the loans while it holds the loans. The Company accounts for its five-percent ownership interest as an equity-method investment. The balances and activities of the Bridge Program were immaterial as of and for the three and six months ended June 30, 2014.

The Company offers a Commercial Mortgage Backed Securities (“CMBS”) lending program (“CMBS Program”) through a partnership with an affiliate of Fortress Investment Group, LLC, the Company’s largest stockholder, in which the Company owns a 20 percent interest (“CMBS Partnership”). The CMBS program offers financing for all commercial property types throughout the United States. The loans in the CMBS Program are selected and funded by the CMBS Partnership and underwritten by the Company. The Company receives a fee for servicing the loans. The CMBS Partnership assumes the full risk of loss on the loans while it holds the loans. The Company accounts for the 20 percent interest using the equity method of accounting. No loans have been originated through the CMBS Program as of June 30, 2014.

In 2013, the Company transferred a participating interest in a financial asset to a third party. The Company accounted for the transfer as a secured borrowing. The entire financial asset is presented as a component of the Loans held for investment line item within the Condensed Consolidated Balance Sheets, and the secured borrowing of $22.1 million is included within the Accounts payable and other liabilities line item in the Condensed Consolidated Balance Sheets. During the third quarter of 2014, the financial asset paid off, and the secured borrowing and warehouse advance were repaid. In connection with the payoff, the maximum amount of the corresponding committed warehouse facility was reduced from $57.4 million to $35.5 million.

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Guaranty Obligation and Allowance for Risk-Sharing Obligations - Schedule of Activity Related to Guaranty Obligation (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Guarantees [Abstract]
Beginning balance	$ 22,909	$ 22,352	$ 23,489	$ 21,155
Additions, following the sale of loan	1,296	1,271	1,780	3,425
Amortization	(971)	(888)	(2,035)	(1,845)
Ending balance	$ 23,234	$ 22,735	$ 23,234	$ 22,735

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Warehouse Notes Payable (Tables)

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Schedule of Debt Obligations

The maximum amount and outstanding borrowings under the warehouse notes payable at June 30, 2014 follow (in thousands):

	June 30, 2014
Facility	Maximum Amount		Outstanding Balance		Interest rate
Committed warehouse facility #1	$	575,000	$	286,420		Average 30-day LIBOR plus 1.50	%
Committed warehouse facility #2		650,000		221,859		Average 30-day LIBOR plus 1.50	%
Committed warehouse facility #3		57,400		45,500		Average 30-day LIBOR plus 2.00	%
Committed warehouse facility #4		135,000		88,173		Average 30-day LIBOR plus 2.00	%
Committed warehouse facility #5		50,000		—		Average 30-day LIBOR plus 2.00% to 2.50	%
Fannie Mae Repurchase agreement, uncommited line and open maturity		400,000		77,903		Average 30-day LIBOR plus 1.15	%
Total	$	1,867,400	$	719,855

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Guaranty Obligation and Allowance for Risk-Sharing Obligations - Additional Information (Detail) (USD $)	6 Months Ended
	Jun. 30, 2014
Guarantees [Abstract]
Maximum delinquency period of loans at which initial loss recognition occurs	60 days
Maximum quantifiable contingent liability associated with guarantees	$ 3,700,000,000

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Schedule of Weighted Average Shares and Share Equivalents that are Used to Calculate Basic and Diluted Earnings Per Share

The following weighted average shares and share equivalents are used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2014 and 2013:

	For the three months ended June 30,				For the six months ended June 30,
	2014		2013		2014		2013
Weighted average number of shares outstanding used to calculate basic earnings per share		31,710,759		33,699,944		32,624,372		33,635,472
Dilutive securities
Unvested restricted shares		239,817		785,806		272,790		695,167
Weighted average number of shares and share equivalents outstanding used to calculate diluted earnings per share		31,950,576		34,485,750		32,897,162		34,330,639

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation—The condensed consolidated financial statements include the accounts of the Company and all of its consolidated entities. All material intercompany transactions have been eliminated. The Company has evaluated all subsequent events.

Use of Estimates—The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including guaranty obligations, allowance for risk-sharing obligations, allowance for loan losses, capitalized mortgage servicing rights, derivative instruments, and the disclosure of contingent assets and liabilities. Actual results may vary from these estimates.

Comprehensive Income—For the three and six months ended June 30, 2014 and 2013, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying condensed consolidated financial statements.

Loans Held for Investment, net— Loans held for investment are multifamily loans originated by the Company through the Interim Program for properties that currently do not qualify for permanent GSE or HUD financing. These loans typically have a maximum term of two years and original principal balances of $25.0 million or less. The loans are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs, and net of any allowance for loan losses. Interest income is accrued based on the actual coupon rate, adjusted for the amortization of net deferred fees and costs, and is recognized as revenue when earned and deemed collectible. All loans held for investment are multifamily loans with similar risk characteristics. As of June 30, 2014, the Loans held for investment, net balance consists of $194.3 million of unpaid principal balance less $1.1 million of net unamortized deferred fees and costs and $0.5 million of allowance for loan losses.

The allowance for loan losses is the Company’s estimate of credit losses inherent in the loan portfolio at the balance sheet date. The Company has established a process to determine the appropriateness of the allowance for loan losses that assesses the losses inherent in our portfolio. That process includes assessing the credit quality of each of the loans held for investment by monitoring the financial condition of the borrower and the financial trends of the underlying property. The allowance levels are influenced by loan volumes, delinquency status, historic loss experience, and other conditions influencing loss expectations, such as economic conditions. The allowance for loan losses is estimated collectively for loans with similar characteristics and for which there is no indication of impairment. The allowance for loan losses recorded as of June 30, 2014 and December 31, 2013 is based on the Company’s collective assessment of the portfolio.

Loans are placed on non-accrual status when full and timely collection of interest or principal is not probable. Loans held for investment are considered past due when contractually required principal or interest payments have not been made on the due dates and are charged off when the loan is considered uncollectible. The Company evaluates all loans held for investment for impairment. A loan is considered impaired when the Company believes that the facts and circumstances of the loan suggest that the Company will not be able to collect all contractually due principal and interest. Delinquency status and borrower financial condition are key components of the Company’s consideration of impairment status.

None of the loans held for investment was delinquent, impaired, or on non-accrual status as of June 30, 2014 or December 31, 2013. Additionally, we have not experienced any delinquencies related to these loans or charged off any loan held for investment since the inception of the Interim Program.

Net Warehouse Interest Income— The Company presents warehouse interest income net of warehouse interest expense. Warehouse interest income is the interest earned from loans that are held for sale and loans held for investment. Substantially all loans that are held for sale are financed with matched borrowings under our warehouse facilities incurred to fund a specific loan held for sale. Warehouse interest expense is incurred on borrowings used to fund loans solely while they are held for sale or for investment. Warehouse interest income and expense are earned or incurred on loans held for sale after a loan is closed and before a loan is sold. Warehouse interest income and expense are earned or incurred on loans held for investment after a loan is closed and before a loan is repaid. Included in net warehouse interest income for the three and six months ended June 30, 2014 and 2013 are the following components (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Warehouse interest income - loans held for sale	$	5,112		$	4,355		$	8,278		$	9,670
Warehouse interest expense - loans held for sale		(2,817	)		(2,793	)		(4,592	)		(6,495	)
Net warehouse interest income - loans held for sale	$	2,295		$	1,562		$	3,686		$	3,175
Warehouse interest income - loans held for investment	$	3,227		$	403		$	5,403		$	535
Warehouse interest expense - loans held for investment		(1,626	)		(205	)		(2,957	)		(327	)
Net warehouse interest income - loans held for investment	$	1,601		$	198		$	2,446		$	208
Total net warehouse interest income	$	3,896		$	1,760		$	6,132		$	3,383

Goodwill—The Company recorded no additions to or impairments of goodwill during the three and six months ended June 30, 2014.

Reclassifications—The Company has made certain immaterial reclassifications to prior-year balances to conform to current-year presentation.

Recently Issued Accounting Pronouncements—During the second quarter of 2014, Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“the guidance”), was issued. ASU 2014-09 represents a comprehensive reform of many of the revenue recognition requirements in GAAP. The ASU creates a new topic within the Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers. Additionally, the guidance in the ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and supersedes or amends much of the industry-specific revenue recognition guidance found throughout the ASC.

The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those good and services. The ASU creates a five-step process for achieving the core principle: 1) identifying the contract with the customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations, and 5) recognizing revenue when an entity has completed the performance obligations. The ASU also requires additional disclosures that allow users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows resulting from contracts with customers. The guidance in the ASU is effective for the Company on January 1, 2017. The guidance permits the use of the retrospective or cumulative effect transition methods. It appears that substantially all of the Company’s contracts with customers do not fall within the scope of the guidance; however, the Company is in the process of selecting a transition method and determining whether the ASU will have a material impact on the Company’s reported financial results.

There have been no material changes to the accounting policies discussed in Note 2 of the Company’s 2013 Form 10-K, filed with the SEC on March 7, 2014.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Statement Of Financial Position [Abstract]
Preferred shares, authorized	50,000,000	50,000,000
Preferred shares, issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, Authorized	200,000,000	200,000,000
Common stock, issued	31,773,223	33,999,551
Common stock, outstanding	31,773,223	33,999,551

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation—The condensed consolidated financial statements include the accounts of the Company and all of its consolidated entities. All material intercompany transactions have been eliminated. The Company has evaluated all subsequent events.

Use of Estimates

Use of Estimates—The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, including guaranty obligations, allowance for risk-sharing obligations, allowance for loan losses, capitalized mortgage servicing rights, derivative instruments, and the disclosure of contingent assets and liabilities. Actual results may vary from these estimates.

Comprehensive Income

Comprehensive Income—For the three and six months ended June 30, 2014 and 2013, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying condensed consolidated financial statements.

Loans Held for Investment, Net

Loans Held for Investment, net— Loans held for investment are multifamily loans originated by the Company through the Interim Program for properties that currently do not qualify for permanent GSE or HUD financing. These loans typically have a maximum term of two years and original principal balances of $25.0 million or less. The loans are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs, and net of any allowance for loan losses. Interest income is accrued based on the actual coupon rate, adjusted for the amortization of net deferred fees and costs, and is recognized as revenue when earned and deemed collectible. All loans held for investment are multifamily loans with similar risk characteristics. As of June 30, 2014, the Loans held for investment, net balance consists of $194.3 million of unpaid principal balance less $1.1 million of net unamortized deferred fees and costs and $0.5 million of allowance for loan losses.

The allowance for loan losses is the Company’s estimate of credit losses inherent in the loan portfolio at the balance sheet date. The Company has established a process to determine the appropriateness of the allowance for loan losses that assesses the losses inherent in our portfolio. That process includes assessing the credit quality of each of the loans held for investment by monitoring the financial condition of the borrower and the financial trends of the underlying property. The allowance levels are influenced by loan volumes, delinquency status, historic loss experience, and other conditions influencing loss expectations, such as economic conditions. The allowance for loan losses is estimated collectively for loans with similar characteristics and for which there is no indication of impairment. The allowance for loan losses recorded as of June 30, 2014 and December 31, 2013 is based on the Company’s collective assessment of the portfolio.

Loans are placed on non-accrual status when full and timely collection of interest or principal is not probable. Loans held for investment are considered past due when contractually required principal or interest payments have not been made on the due dates and are charged off when the loan is considered uncollectible. The Company evaluates all loans held for investment for impairment. A loan is considered impaired when the Company believes that the facts and circumstances of the loan suggest that the Company will not be able to collect all contractually due principal and interest. Delinquency status and borrower financial condition are key components of the Company’s consideration of impairment status.

None of the loans held for investment was delinquent, impaired, or on non-accrual status as of June 30, 2014 or December 31, 2013. Additionally, we have not experienced any delinquencies related to these loans or charged off any loan held for investment since the inception of the Interim Program.

Net Warehouse Interest Income

Net Warehouse Interest Income— The Company presents warehouse interest income net of warehouse interest expense. Warehouse interest income is the interest earned from loans that are held for sale and loans held for investment. Substantially all loans that are held for sale are financed with matched borrowings under our warehouse facilities incurred to fund a specific loan held for sale. Warehouse interest expense is incurred on borrowings used to fund loans solely while they are held for sale or for investment. Warehouse interest income and expense are earned or incurred on loans held for sale after a loan is closed and before a loan is sold. Warehouse interest income and expense are earned or incurred on loans held for investment after a loan is closed and before a loan is repaid. Included in net warehouse interest income for the three and six months ended June 30, 2014 and 2013 are the following components (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Warehouse interest income - loans held for sale	$	5,112		$	4,355		$	8,278		$	9,670
Warehouse interest expense - loans held for sale		(2,817	)		(2,793	)		(4,592	)		(6,495	)
Net warehouse interest income - loans held for sale	$	2,295		$	1,562		$	3,686		$	3,175
Warehouse interest income - loans held for investment	$	3,227		$	403		$	5,403		$	535
Warehouse interest expense - loans held for investment		(1,626	)		(205	)		(2,957	)		(327	)
Net warehouse interest income - loans held for investment	$	1,601		$	198		$	2,446		$	208
Total net warehouse interest income	$	3,896		$	1,760		$	6,132		$	3,383

Goodwill

Goodwill—The Company recorded no additions to or impairments of goodwill during the three and six months ended June 30, 2014.

Reclassifications

Reclassifications—The Company has made certain immaterial reclassifications to prior-year balances to conform to current-year presentation.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements—During the second quarter of 2014, Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“the guidance”), was issued. ASU 2014-09 represents a comprehensive reform of many of the revenue recognition requirements in GAAP. The ASU creates a new topic within the Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers. Additionally, the guidance in the ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and supersedes or amends much of the industry-specific revenue recognition guidance found throughout the ASC.

The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those good and services. The ASU creates a five-step process for achieving the core principle: 1) identifying the contract with the customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations, and 5) recognizing revenue when an entity has completed the performance obligations. The ASU also requires additional disclosures that allow users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows resulting from contracts with customers. The guidance in the ASU is effective for the Company on January 1, 2017. The guidance permits the use of the retrospective or cumulative effect transition methods. It appears that substantially all of the Company’s contracts with customers do not fall within the scope of the guidance; however, the Company is in the process of selecting a transition method and determining whether the ASU will have a material impact on the Company’s reported financial results.

There have been no material changes to the accounting policies discussed in Note 2 of the Company’s 2013 Form 10-K, filed with the SEC on March 7, 2014.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 31, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Entity Registrant Name	Walker & Dunlop, Inc.
Entity Central Index Key	0001497770
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		32,592,605

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Schedule of Net Warehouse Interest Income

Included in net warehouse interest income for the three and six months ended June 30, 2014 and 2013 are the following components (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Warehouse interest income - loans held for sale	$	5,112		$	4,355		$	8,278		$	9,670
Warehouse interest expense - loans held for sale		(2,817	)		(2,793	)		(4,592	)		(6,495	)
Net warehouse interest income - loans held for sale	$	2,295		$	1,562		$	3,686		$	3,175
Warehouse interest income - loans held for investment	$	3,227		$	403		$	5,403		$	535
Warehouse interest expense - loans held for investment		(1,626	)		(205	)		(2,957	)		(327	)
Net warehouse interest income - loans held for investment	$	1,601		$	198		$	2,446		$	208
Total net warehouse interest income	$	3,896		$	1,760		$	6,132		$	3,383

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Condensed Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues
Gains from mortgage banking activities	$ 52,241	$ 63,076	$ 86,827	$ 106,007
Servicing fees	23,962	22,370	47,305	43,511
Net warehouse interest income	3,896	1,760	6,132	3,383
Escrow earnings and other interest income	1,120	916	2,195	1,858
Other	4,067	2,612	7,660	5,160
Total revenues	85,286	90,734	150,119	159,919
Expenses
Personnel	34,053	37,308	58,588	65,591
Amortization and depreciation	19,097	18,176	37,556	36,728
Provision for credit losses	279	751	108	1,152
Interest expense on corporate debt	2,621	870	5,194	1,838
Other operating expenses	8,305	9,827	15,832	18,478
Total expenses	64,355	66,932	117,278	123,787
Income from operations	20,931	23,802	32,841	36,132
Income tax expense	8,017	9,259	12,783	13,863
Net income	$ 12,914	$ 14,543	$ 20,058	$ 22,269
Basic earnings per share	$ 0.41	$ 0.43	$ 0.61	$ 0.66
Diluted earnings per share	$ 0.40	$ 0.42	$ 0.61	$ 0.65
Basic weighted average shares outstanding	31,710,759	33,699,944	32,624,372	33,635,472
Diluted weighted average shares outstanding	31,950,576	34,485,750	32,897,162	34,330,639

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Warehouse Notes Payable

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Warehouse Notes Payable

NOTE 7—WAREHOUSE NOTES PAYABLE

At June 30, 2014, to provide financing to borrowers under GSE and HUD programs, the Company has arranged for warehouse lines of credit in the amount of $1.5 billion with certain national banks and a $400.0 million uncommitted facility with Fannie Mae. In support of these credit facilities, the Company has pledged substantially all of its loans held for sale and loans held for investment under the Company’s approved programs.

The maximum amount and outstanding borrowings under the warehouse notes payable at June 30, 2014 follow (in thousands):

	June 30, 2014
Facility	Maximum Amount		Outstanding Balance		Interest rate
Committed warehouse facility #1	$	575,000	$	286,420		Average 30-day LIBOR plus 1.50	%
Committed warehouse facility #2		650,000		221,859		Average 30-day LIBOR plus 1.50	%
Committed warehouse facility #3		57,400		45,500		Average 30-day LIBOR plus 2.00	%
Committed warehouse facility #4		135,000		88,173		Average 30-day LIBOR plus 2.00	%
Committed warehouse facility #5		50,000		—		Average 30-day LIBOR plus 2.00% to 2.50	%
Fannie Mae Repurchase agreement, uncommited line and open maturity		400,000		77,903		Average 30-day LIBOR plus 1.15	%
Total	$	1,867,400	$	719,855

On June 17, 2014, the Company executed the second amendment to the amended and restated warehousing credit and security agreement related to warehouse facility #2 that extended the maturity date of the facility to June 23, 2015. No other material modifications were made to the agreement.

On May 19, 2014, the Company executed a Master Repurchase and Securities Contract (“Repurchase Agreement”) that established warehouse facility #5. The Repurchase Agreement provides for a maximum borrowing amount of $50.0 million and is scheduled to mature on May 19, 2016. The borrowings under the agreement bear interest at a rate of average 30-day London Interbank Offered Rate (LIBOR) plus 2.00% to 2.50% (“the spread”). The spread varies according to the type of asset the borrowing finances.

On April 15, 2014, the Company executed the first amendment to the amended and restated warehousing credit and security agreement related to warehouse facility #4 that increased the borrowing capacity to $135.0 million. No other material modifications were made to the agreement.

In March 2014, Fannie Mae informed the Company it was reducing the uncommitted facility from $500.0 million to $400.0 million as part of an initiative to reduce its exposure to such uncommitted lines with all DUS lenders and not specific to the Company. The Company does not believe that the reduction in the uncommitted amount will have a significant impact on its operations or financial results.

The warehouse notes payable and the note payable are subject to various financial covenants, all of which the Company was in compliance with as of June 30, 2014.

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Servicing

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Servicing

NOTE 6—SERVICING

The total unpaid principal balance of loans the Company was servicing for various institutional investors was $39.8 billion as of June 30, 2014 compared to $38.9 billion as of December 31, 2013.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Summary of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2014, and December 31, 2013, segregated by the level of the valuation inputs within the fair value hierarchy used to measure fair value (in thousands):

	Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Balance as of Period End
June 30, 2014
Assets
Loans held for sale	$	—	$	662,969	$	—	$	662,969
Pledged securities		58,551		—		—		58,551
Derivative assets		—		—		18,505		18,505
Total	$	58,551	$	662,969	$	18,505	$	740,025
Liabilities
Derivative liabilities	$	—	$	—	$	3,019	$	3,019
Total	$	—	$	—	$	3,019	$	3,019
December 31, 2013
Assets
Loans held for sale	$	—	$	281,477	$	—	$	281,477
Pledged securities		49,651		—		—		49,651
Derivative assets		—		—		19,563		19,563
Total	$	49,651	$	281,477	$	19,563	$	350,691
Liabilities
Derivative liabilities	$	—	$	—	$	222	$	222
Total	$	—	$	—	$	222	$	222

Schedule of Roll Forward of Derivative Instruments Which Require Valuations Based upon Significant Unobservable Inputs

A roll forward of derivative instruments which require valuations based upon significant unobservable inputs, is presented below for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs: Derivative Instruments
	Three Months Ended						Six Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Derivative assets and liabilities, net
Beginning balance	$	13,559		$	4,370		$	19,341		$	20,391
Settlements		(50,314	)		(33,110	)		(90,682	)		(92,062	)
Realized gains recorded in earnings (1)		36,755			28,740			71,341			71,671
Unrealized gains recorded in earnings (1)		15,486			34,336			15,486			34,336
Ending balance	$	15,486		$	34,336		$	15,486		$	34,336

(1) Realized and unrealized gains from derivatives are recognized in the Gains from mortgage banking activities line item in the Condensed Consolidated Statements of Income.

Schedule of Significant Unobservable Inputs Used in the Measurement of the Fair Value of Level 3 Assets and Liabilities

The following table presents information about significant unobservable inputs used in the measurement of the fair value of the Company’s Level 3 assets and liabilities (in thousands):

	Quantitative Information about Level 3 Measurements
	Fair Value		Valuation Technique	Unobservable Input (1)	Input Value (1)
Derivative assets	$	18,505	Discounted cash flow	Counterparty credit risk		—
Derivative liabilities		3,019	Discounted cash flow	Counterparty credit risk		—

(1) Significant increases (decreases) in this input may lead to significantly lower (higher) fair value measurements.

Schedule of Carrying Amounts and the Fair Values of the Company's Financial Instruments

The carrying amounts and the fair values of the Company’s financial instruments as of June 30, 2014, and December 31, 2013, are presented below (in thousands):

	June 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial Assets:
Cash and cash equivalents	$	66,275	$	66,275	$	170,563	$	170,563
Restricted cash		9,111		9,111		5,427		5,427
Pledged securities		58,551		58,551		49,651		49,651
Loans held for sale		662,969		662,969		281,477		281,477
Loans held for investment, net		192,706		194,320		134,656		135,620
Derivative assets		18,505		18,505		19,563		19,563
Total financial assets	$	1,008,117	$	1,009,731	$	661,337	$	662,301
Financial Liabilities:
Derivative liabilities	$	3,019	$	3,019	$	222	$	222
Warehouse notes payable		719,855		719,855		373,107		373,107
Note payable		172,512		174,125		173,258		173,258
Total financial liabilities	$	895,386	$	896,999	$	546,587	$	546,587

Schedule of Fair Value of Derivative Instruments and Loans Held for Sale

	Fair Value Adjustment Components										Balance Sheet Location
(in thousands)	Notional or Principal Amount		Assumed Gain (Loss) on Sale		Interest Rate Movement Effect			Total Fair Value Adjustment			Derivative Assets		Derivative Liabilities			Fair Value Adjustment To Loans Held for Sale
June 30, 2014
Rate lock commitments	$	412,481	$	15,720	$	1,506		$	17,226		$	17,226	$	—		$	—
Forward sale contracts		1,043,146		—		(1,740	)		(1,740	)		1,279		(3,019	)		—
Loans held for sale		652,184		10,551		234			10,785			—		—			10,785
Total			$	26,271	$	—		$	26,271		$	18,505	$	(3,019	)	$	10,785
December 31, 2013
Rate lock commitments	$	235,616	$	12,331	$	(6,253	)	$	6,078		$	6,299	$	(221	)	$	—
Forward sale contracts		515,755		—		13,263			13,263			13,264		(1	)
Loans held for sale		280,139		8,348		(7,010	)		1,338			—		—			1,338
Total			$	20,679	$	—		$	20,679		$	19,563	$	(222	)	$	1,338

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Gains from Mortgage Banking Activities (Tables)

6 Months Ended

Jun. 30, 2014

Text Block [Abstract]

Schedule of Gains from Mortgage Banking Activities

The gains from mortgage banking activities consisted of the following activity for the three and six months ended June 30, 2014 and 2013 (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Contractual loan origination related fees, net	$	29,495		$	34,593		$	50,193		$	56,853
Fair value of expected cash flows from servicing recognized at commitment		24,538			29,946			39,123			51,817
Fair value of expected guaranty obligation recognized at commitment		(1,792	)		(1,463	)		(2,489	)		(2,663	)
Total gains from mortgage banking activities	$	52,241		$	63,076		$	86,827		$	106,007

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Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 10—EARNINGS PER SHARE

The following weighted average shares and share equivalents are used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2014 and 2013:

	For the three months ended June 30,				For the six months ended June 30,
	2014		2013		2014		2013
Weighted average number of shares outstanding used to calculate basic earnings per share		31,710,759		33,699,944		32,624,372		33,635,472
Dilutive securities
Unvested restricted shares		239,817		785,806		272,790		695,167
Weighted average number of shares and share equivalents outstanding used to calculate diluted earnings per share		31,950,576		34,485,750		32,897,162		34,330,639

The assumed proceeds used for calculating the dilutive impact of restricted stock awards under the treasury method includes the unrecognized compensation costs and excess tax benefits associated with the awards. Average options issued under the 2010 Equity Incentive Plan to purchase 655,818 and 63,667 shares of common stock were outstanding during the three months ended June 30, 2014 and 2013, respectively, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive. During the three months ended June 30, 2014 and 2013, 211,342 and 0 average restricted shares were outstanding, respectively, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.

Average options issued under the 2010 Equity Incentive Plan to purchase 515,867 and 100,196 shares of common stock were outstanding during the six months ended June 30, 2014 and 2013, respectively, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive. During the six months ended June 30, 2014 and 2013, no restricted shares were excluded from the computation of diluted earnings per share.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Fair Value Measurements

NOTE 8—FAIR VALUE MEASUREMENTS

The Company uses valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach to measure assets and liabilities that are measured at fair value. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

• Level 1—Financial assets and liabilities whose values are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

• Level 2—Financial assets and liabilities whose values are based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.

• Level 3—Financial assets and liabilities whose values are based on inputs that are both unobservable and significant to the overall valuation.

The Company’s MSRs are measured at fair value on a nonrecurring basis. That is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company’s MSRs do not trade in an active, open market with readily observable prices. While sales of MSRs do occur, precise terms and conditions vary with each transaction and are not readily available. Accordingly, the estimated fair value of MSRs was developed using discounted cash flow models that calculate the present value of estimated future net servicing income. The model considers contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service, and other economic factors. The Company reassesses and periodically adjusts the underlying inputs and assumptions used in the model to reflect observable market conditions and assumptions that a market participant would consider in valuing an MSR asset. MSRs are carried at the lower of amortized cost or estimated fair value.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s assets and liabilities carried at fair value:

• Derivative Instruments—The derivative positions consist of interest rate lock commitments and forward sale agreements. These instruments are valued using a discounted cash flow model developed based on changes in the U.S. Treasury rate and other observable market data. The value was determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company, and are classified within Level 3 of the valuation hierarchy.

• Loans held for sale—The loans held for sale are reported at fair value. The Company determines the fair value of the loans held for sale using discounted cash flow models that incorporate quoted observable prices from market participants. Therefore, the Company classifies these loans held for sale as Level 2.

• Pledged Securities—The pledged securities are valued using quoted market prices from recent trades. Therefore, the Company classifies pledged securities as Level 1.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2014, and December 31, 2013, segregated by the level of the valuation inputs within the fair value hierarchy used to measure fair value (in thousands):

	Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Balance as of Period End
June 30, 2014
Assets
Loans held for sale	$	—	$	662,969	$	—	$	662,969
Pledged securities		58,551		—		—		58,551
Derivative assets		—		—		18,505		18,505
Total	$	58,551	$	662,969	$	18,505	$	740,025
Liabilities
Derivative liabilities	$	—	$	—	$	3,019	$	3,019
Total	$	—	$	—	$	3,019	$	3,019
December 31, 2013
Assets
Loans held for sale	$	—	$	281,477	$	—	$	281,477
Pledged securities		49,651		—		—		49,651
Derivative assets		—		—		19,563		19,563
Total	$	49,651	$	281,477	$	19,563	$	350,691
Liabilities
Derivative liabilities	$	—	$	—	$	222	$	222
Total	$	—	$	—	$	222	$	222

There were no transfers between any of the levels within the fair value hierarchy during the six months ended June 30, 2014 and 2013.

Derivative instruments (Level 3) are outstanding for short periods of time (generally less than 60 days) and are not outstanding for more than one period. A roll forward of derivative instruments which require valuations based upon significant unobservable inputs, is presented below for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Fair Value Measurements Using Significant Unobservable Inputs: Derivative Instruments
	Three Months Ended						Six Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Derivative assets and liabilities, net
Beginning balance	$	13,559		$	4,370		$	19,341		$	20,391
Settlements		(50,314	)		(33,110	)		(90,682	)		(92,062	)
Realized gains recorded in earnings (1)		36,755			28,740			71,341			71,671
Unrealized gains recorded in earnings (1)		15,486			34,336			15,486			34,336
Ending balance	$	15,486		$	34,336		$	15,486		$	34,336

(1) Realized and unrealized gains from derivatives are recognized in the Gains from mortgage banking activities line item in the Condensed Consolidated Statements of Income.

The following table presents information about significant unobservable inputs used in the measurement of the fair value of the Company’s Level 3 assets and liabilities (in thousands):

	Quantitative Information about Level 3 Measurements
	Fair Value		Valuation Technique	Unobservable Input (1)	Input Value (1)
Derivative assets	$	18,505	Discounted cash flow	Counterparty credit risk		—
Derivative liabilities		3,019	Discounted cash flow	Counterparty credit risk		—

(1) Significant increases (decreases) in this input may lead to significantly lower (higher) fair value measurements.

The carrying amounts and the fair values of the Company’s financial instruments as of June 30, 2014, and December 31, 2013, are presented below (in thousands):

	June 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial Assets:
Cash and cash equivalents	$	66,275	$	66,275	$	170,563	$	170,563
Restricted cash		9,111		9,111		5,427		5,427
Pledged securities		58,551		58,551		49,651		49,651
Loans held for sale		662,969		662,969		281,477		281,477
Loans held for investment, net		192,706		194,320		134,656		135,620
Derivative assets		18,505		18,505		19,563		19,563
Total financial assets	$	1,008,117	$	1,009,731	$	661,337	$	662,301
Financial Liabilities:
Derivative liabilities	$	3,019	$	3,019	$	222	$	222
Warehouse notes payable		719,855		719,855		373,107		373,107
Note payable		172,512		174,125		173,258		173,258
Total financial liabilities	$	895,386	$	896,999	$	546,587	$	546,587

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Cash Equivalents and Restricted Cash—The carrying amounts, at face value or cost plus accrued interest, approximate fair value because of the short maturity of these instruments (Level 1).

Pledged Securities—Consist of highly liquid investments in commercial paper of AAA rated entities and investments in money market accounts invested in government securities. Investments typically have maturities of 90 days or less, and are valued using quoted market prices from recent trades.

Loans Held For Sale—Consist of originated loans that are generally transferred or sold within 60 days from the date that a mortgage loan is funded, and are valued using discounted cash flow models that incorporate observable prices from market participants.

Loans Held For Investment, net— Consist of originated interim loans which the Company expects to hold for investment for the term of the loan, which is generally two years, and are valued using discounted cash flow models that incorporate primarily observable inputs from market participants and also credit-related adjustments, if applicable (Level 2). As of June 30, 2014 and December 31, 2013, no credit-related adjustments were required.

Derivative Instruments—Consist of interest rate lock commitments and forward sale agreements. These instruments are valued using discounted cash flow models developed based on changes in the U.S. Treasury rate and other observable market data. The value is determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company.

Warehouse Notes Payable— Consist of borrowings outstanding under warehouse line agreements. The borrowing rates on the warehouse lines are based upon average 30-day LIBOR plus a margin. The carrying amounts approximate fair value because of the short maturity of these instruments and the monthly resetting of the index rate to prevailing market rates (Level 2).

Note Payable—Consist of borrowings outstanding under a term note agreement. The borrowing rate on the note payable is based upon average 30-day LIBOR plus an applicable margin. The Company estimates the fair value by discounting the future cash flows at market rates (Level 2).

Fair Value of Derivative Instruments and Loans Held for Sale—In the normal course of business, the Company enters into contractual commitments to originate (purchase) and sell multifamily mortgage loans at fixed prices with fixed expiration dates. The commitments become effective when the borrowers “lock-in” a specified interest rate within time frames established by the Company. All mortgagors are evaluated for creditworthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the “lock-in” of rates by the borrower and the sale date of the loan to an investor.

To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company’s policy is to enter into a sale commitment with the investor simultaneous with the rate lock commitment with the borrower. The sale contract with the investor locks in an interest rate and price for the sale of the loan. The terms of the contract with the investor and the rate lock with the borrower are matched in substantially all respects, with the objective of eliminating interest rate risk to the extent practical. Sale commitments with the investors have an expiration date that is longer than our related commitments to the borrower to allow, among other things, for the closing of the loan and processing of paperwork to deliver the loan into the sale commitment.

Both the rate lock commitments to borrowers and the forward sale contracts to buyers are undesignated derivatives and, accordingly, are marked to fair value through the Gains on mortgage banking activities line item in the Condensed Consolidated Statements of Income. The fair value of the Company’s rate lock commitments to borrowers and loans held for sale and the related input levels includes, as applicable:

• the assumed gain/loss of the expected resultant loan sale to the investor;

• the expected net cash flows associated with servicing the loan (Level 2);

• the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and

• the nonperformance risk of both the counterparty and the Company (Level 3).

The fair value of the Company’s forward sales contracts to investors considers effects of interest rate movements between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

The assumed gain/loss considers the amount that the Company has discounted the price to the borrower from par for competitive reasons, if at all, and the expected net cash flows from servicing to be received upon securitization of the loan. The fair value of the expected net cash flows associated with servicing the loan is calculated pursuant to the valuation techniques described previously for mortgage servicing rights.

To calculate the effects of interest rate movements, the Company uses applicable published U.S. Treasury prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount.

The fair value of the Company’s forward sales contracts to investors considers the market price movement of the same type of security between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

The fair value of the Company’s interest rate lock commitments and forward sales contracts is adjusted to reflect the risk that the agreement will not be fulfilled. The Company’s exposure to nonperformance in rate lock and forward sale contracts is represented by the contractual amount of those instruments. Given the credit quality of our counterparties, the short duration of interest rate lock commitments and forward sale contracts, and the Company’s historical experience with the agreements, the risk of nonperformance by the Company’s counterparties is not significant.

	Fair Value Adjustment Components										Balance Sheet Location
(in thousands)	Notional or Principal Amount		Assumed Gain (Loss) on Sale		Interest Rate Movement Effect			Total Fair Value Adjustment			Derivative Assets		Derivative Liabilities			Fair Value Adjustment To Loans Held for Sale
June 30, 2014
Rate lock commitments	$	412,481	$	15,720	$	1,506		$	17,226		$	17,226	$	—		$	—
Forward sale contracts		1,043,146		—		(1,740	)		(1,740	)		1,279		(3,019	)		—
Loans held for sale		652,184		10,551		234			10,785			—		—			10,785
Total			$	26,271	$	—		$	26,271		$	18,505	$	(3,019	)	$	10,785
December 31, 2013
Rate lock commitments	$	235,616	$	12,331	$	(6,253	)	$	6,078		$	6,299	$	(221	)	$	—
Forward sale contracts		515,755		—		13,263			13,263			13,264		(1	)
Loans held for sale		280,139		8,348		(7,010	)		1,338			—		—			1,338
Total			$	20,679	$	—		$	20,679		$	19,563	$	(222	)	$	1,338

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Litigation, Commitments, and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments And Contingencies Disclosure [Abstract]

Litigation, Commitments, and Contingencies

NOTE 9—LITIGATION, COMMITMENTS, AND CONTINGENCIES

Fannie Mae DUS Related Commitments—Commitments for the origination and subsequent sale and delivery of loans to Fannie Mae represent those mortgage loan transactions where the borrower has locked an interest rate and scheduled closing and the Company has entered into a mandatory delivery commitment to sell the loan to Fannie Mae. As discussed in Note 8, the Company accounts for these commitments as derivatives recorded at fair value.

The Company is generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program (the DUS risk-sharing obligations). The Company is required to secure this obligation by assigning restricted cash balances and securities to Fannie Mae. The amount of collateral required by Fannie Mae is a formulaic calculation at the loan level and considers the balance of the loan, the risk level of the loan, the age of the loan, and the level of risk-sharing. Fannie Mae requires restricted liquidity for Tier 2 loans of 75 basis points, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. Restricted liquidity held in the form of money market funds holding US Treasuries is discounted 5% for purposes of calculating compliance with the restricted liquidity requirements. As of June 30, 2014, the Company held all of its restricted liquidity in money market funds holding US Treasuries. Additionally, substantially all of the loans for which the Company has risk sharing are Tier 2 loans.

The Company is in compliance with the June 30, 2014 collateral requirements as outlined above. As of June 30, 2014, reserve requirements for the June 30, 2014 DUS loan portfolio will require the Company to fund $36.5 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at risk portfolio. Fannie Mae periodically reassesses the DUS Capital Standards and may make changes to these standards in the future. The Company generates sufficient cash flow from its operations to meet these capital standards and does not expect any future changes to have a material impact on its future operations; however, any future changes to collateral requirements may adversely impact the Company’s available cash.

Fannie Mae has established benchmark standards for capital adequacy, and reserves the right to terminate the Company’s servicing authority for all or some of the portfolio if at any time it determines that the Company’s financial condition is not adequate to support its obligation under the DUS agreement. The Company is required to maintain acceptable net worth as defined in the agreement, and the Company satisfied the requirements as of June 30, 2014. The net worth requirement is derived primarily from unpaid balances on Fannie Mae loans and the level of risk-sharing. At June 30, 2014, the net worth requirement was $91.9 million and the Company’s net worth was $287.5 million, as measured at our wholly owned subsidiary, Walker & Dunlop, LLC. As of June 30, 2014, the Company was required to maintain at least $17.7 million of liquid assets to meet operational liquidity requirements for Fannie Mae, Freddie Mac, HUD, and Ginnie Mae. As of June 30, 2014, the Company had operational liquidity of $137.3 million, as measured at our wholly owned subsidiary, Walker & Dunlop, LLC.

Litigation—Capital Funding litigation—On February 17, 2010, Capital Funding Group, Inc. (“Capital Funding”) filed a lawsuit in the Circuit Court for Montgomery County, Maryland against Walker & Dunlop, LLC, our wholly owned subsidiary, for alleged breach of contract, unjust enrichment and unfair competition arising out of an alleged agreement that Capital Funding had with Column Guaranteed, LLC (“Column”) to refinance a large portfolio of senior healthcare facilities located throughout the United States (the “Golden Living Facilities”). Capital Funding alleges that a contract existed between it and Column (and its affiliates) whereby Capital Funding allegedly had the right to perform the HUD refinancing for the Golden Living Facilities and according to which Capital Funding provided certain alleged proprietary information to Column and its affiliates relating to the acquisition of the Golden Living Facilities on a confidential basis. Capital Funding further alleges that Walker & Dunlop, LLC, as the alleged successor by merger to Column, is bound by Column’s alleged agreement with Capital Funding, and breached the agreement by taking for itself the opportunity to perform the HUD refinancing for the Golden Living Facilities.

On November 17, 2010, Capital Funding filed an amended complaint adding Credit Suisse Securities (USA) LLC (“Credit Suisse”), Column Financial, Inc. and Column as defendants. In the amended complaint, Capital Funding further claims that Credit Suisse and its affiliates and Walker & Dunlop, LLC breached the contract, were unjustly enriched, and committed unfair competition by using Capital Funding’s alleged proprietary information for certain allegedly unauthorized purposes. Capital Funding also asserts a separate unfair competition claim against Walker & Dunlop, LLC in which it alleges that Walker & Dunlop, LLC is improperly “taking credit” on its website for certain work actually performed by Capital Funding. Capital Funding seeks damages in excess of $30 million on each of the three claims asserted against all defendants, and an unspecified amount of damages on the separate claim for unfair competition against Walker & Dunlop, LLC. Capital Funding also seeks injunctive relief in connection with its unjust enrichment and unfair competition claims.

Pursuant to an agreement, dated January 30, 2009 (the “Column Transaction Agreement”), among Column, Walker & Dunlop, LLC, W&D, Inc. and Green Park Financial Limited Partnership, Column generally agreed to indemnify Walker & Dunlop, LLC against liability arising from Column’s conduct prior to Column’s transfer of the assets to Walker & Dunlop, LLC. However, pursuant to the Column Transaction Agreement, Column’s indemnification obligation arises only after Column receives a claim notice following the resolution of the litigation that specifies the amount of Walker & Dunlop, LLC’s claim.

To provide for greater certainty regarding Column’s indemnification obligations before the resolution of this litigation and to cap our total loss exposure, the Company secured a further agreement from Column in November 2010 confirming that it will indemnify the Company for any liabilities that arise as a result of this litigation. As part of this further indemnification agreement, in the event Column is required to pay the Company for any liabilities under the Capital Funding litigation that it otherwise would not have been obligated to pay under the Column Transaction Agreement, the Company will indemnify Column for an amount up to $3.0 million. Also as part of this further indemnification agreement, William Walker, our Chairman, President and Chief Executive Officer, and Mallory Walker, former Chairman and current stockholder, in their individual capacities, agreed that if Column is required to indemnify the Company under this agreement and otherwise would not have been obligated to pay such amounts under the Column Transaction Agreement, Messrs. William Walker and Mallory Walker will pay any such amounts in excess of $3.0 million but equal to or less than $6.0 million. As a result of this agreement, the Company will have no liability or other obligation for any damage amounts in excess of $3.0 million arising out of this litigation. Although Column has assumed defense of the case for all defendants, and is paying applicable counsel fees, as a result of the indemnification claim procedures described above, the Company could be required to bear the significant costs of the litigation and any adverse judgment unless and until the Company is able to prevail on our indemnification claim. The Company believes that it will fully prevail on its indemnification claims against Column, and that the Company ultimately will incur no material loss as a result of this litigation, although there can be no assurance that this will be the case. Accordingly, we have not recorded a loss contingency for this litigation.

On July 19, 2011, the Circuit Court for Montgomery County, Maryland issued an order granting the defendants’ motion to dismiss the case without prejudice. After the initial case was dismissed without prejudice, Capital Funding filed an amended complaint. In November 2011, the Circuit Court for Montgomery County, Maryland rejected the defendants’ motion to dismiss the amended complaint. Capital Funding filed a Second Amended Complaint that did not alter the claims at issue but revised their alleged damages. Defendants moved for summary judgment on all claims, including two counts of breach of contract, two counts of promissory estoppel, two counts of unjust enrichment, and two counts of unfair competition. On April 30, 2013, the Court issued an Opinion and Order which granted the motion as to the promissory estoppel counts and one count of unjust enrichment. The Court denied the motion as to all remaining claims.

A two-week jury trial was held in July 2013. In the course of the trial, all but two of Capital Funding’s remaining claims were dismissed. Following the trial, the Court entered (i) a $1.8 million judgment against Credit Suisse and its affiliates on Capital Funding’s breach of contract claim and (ii) a $10.4 million judgment against Credit Suisse and its affiliates on Capital Funding’s unjust enrichment claim. Because the two claims arise from the same facts, Capital Funding agreed it may only collect on one of the judgments; following the verdict, Capital Funding “elected” to collect the $10.4 million judgment. The defendants filed a post judgment motion to reduce or set aside the judgment. On January 31, 2014 the Court ruled that the $10.4 million unjust enrichment judgment is vacated, and awarded Capital Funding the $1.8 million breach of contract judgment. On February 10, 2014, Capital Funding filed a motion with the Court seeking a new trial. On March 13, 2014, the Court denied Capital Funding’s motion for a new trial. Capital Funding has filed an appeal with Maryland’s Court of Special Appeals. Oral arguments in the appeal are scheduled for December 2014.

Litigation—CA Funds Group Litigation—In March 2012, the Company’s wholly owned subsidiary, Walker & Dunlop Investment Advisory Services, LLC (“IA Services”) engaged CA Funds Group, Inc. (“CAFG”) to provide, among other things, consulting services in connection with expanding the Company’s investment advisory services business. The engagement letter was supplemented in June 2012 to retain CAFG to engage in certain capital raising activities, primarily with respect to a potential commingled, open-ended Fund (“Fund”). The Fund was never launched by the Company. However, the Company independently formed the Bridge Program, which is focused primarily on making floating-rate loans of up to three years of $25.0 million or more to experienced owners of multifamily properties. CAFG filed a breach of contract action captioned CA Funds Group, Inc. v. Walker & Dunlop Investment Advisory Services, LLC and Walker & Dunlop, LLC in the United States District Court for the Northern District of Illinois, Eastern Division, seeking a placement fee in the amount of $5.1 million (plus interest and the costs of the suit) based upon the $380.0 million allegedly obtained for the Bridge Program. The Company filed a motion to dismiss the complaint on January 3, 2014, CAFG filed a response to the motion on January 31, 2014, and on March 21, 2014, the Court denied the Company’s motion to dismiss the complaint. The Company intends to vigorously defend the matter. Discovery is ongoing.

The Company has not recorded a loss reserve for the aforementioned litigation as the Company does not believe that a loss is probable in either case. The Company cannot predict the outcome of any pending litigation and may be subject to consequences that could include fines, penalties, and other costs, and the Company’s reputation and business may be impacted. The Company believes that any liability that could be imposed on the Company in connection with the disposition of any pending lawsuits would not have a material adverse effect on its business, results of operations, liquidity or financial condition.

In the normal course of business, the Company may be party to various other claims and litigation, none of which the Company believes is material.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2014

Equity [Abstract]

Stockholders' Equity

NOTE 11—STOCKHOLDERS’ EQUITY

A summary of changes in stockholders’ equity is presented below (dollars in thousands):

							Additional					Total
	Common Stock						Paid-In			Retained		Stockholders’
	Shares			Amount			Capital			Earnings		Equity
Balances at December 31, 2013		33,999,551		$	340		$	244,954		$	157,547	$	402,841
Net income		—			—			—			20,058		20,058
Stock-based compensation		—			—			3,901			—		3,901
Issuance of common shares in connection with equity incentive plans		333,403			3			1,714			—		1,717
Repurchase and retirement of common stock		(2,559,731	)		(25	)		(37,271	)		—		(37,296	)
Tax benefit from vesting of restricted shares		—			—			(83	)		—		(83	)
Balances at June 30, 2014		31,773,223		$	318		$	213,215		$	177,605	$	391,138

In the first quarter of 2014, the Company repurchased 2,450,451 shares of the Company’s common stock from one of its largest stockholders at a price of $14.50 per share, which was below the market price at the time, and immediately retired the shares, reducing stockholders’ equity by approximately $35.5 million.

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Mortgage Servicing Rights - Schedule of Expected Amortization of MSRs (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Six Months Ending December 31, 2014	$ 33,266
Year Ending December 31, 2015	61,739
Year Ending December 31, 2016	56,960
Year Ending December 31, 2017	51,830
Year Ending December 31, 2018	43,713
Year Ending December 31, 2019	36,172
Thereafter	65,487
Net carrying value	349,167
Originated MSRs [Member]
Finite-Lived Intangible Assets [Line Items]
Six Months Ending December 31, 2014	24,460
Year Ending December 31, 2015	45,199
Year Ending December 31, 2016	41,565
Year Ending December 31, 2017	38,174
Year Ending December 31, 2018	33,763
Year Ending December 31, 2019	28,054
Thereafter	59,202
Net carrying value	270,417
Acquired MSRs [Member]
Finite-Lived Intangible Assets [Line Items]
Six Months Ending December 31, 2014	8,806
Year Ending December 31, 2015	16,540
Year Ending December 31, 2016	15,395
Year Ending December 31, 2017	13,656
Year Ending December 31, 2018	9,950
Year Ending December 31, 2019	8,118
Thereafter	6,285
Net carrying value	$ 78,750

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Stockholders' Equity - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Statement Of Stockholders Equity [Abstract]
Shares of stock repurchased from large stockholder	2,450,451
Price per share paid to repurchase and retire stock from large stockholder	$ 14.50
Cash paid to repurchase and retire stock from large stockholder	$ 35.5

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Guaranty Obligation and Allowance for Risk-Sharing Obligations (Tables)

6 Months Ended

Jun. 30, 2014

Guarantees [Abstract]

Schedule of Activity Related to Guaranty Obligation

Activity related to the guaranty obligation for the three and six months ended June 30, 2014 and 2013 follows (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Beginning balance	$	22,909		$	22,352		$	23,489		$	21,155
Additions, following the sale of loan		1,296			1,271			1,780			3,425
Amortization		(971	)		(888	)		(2,035	)		(1,845	)
Ending balance	$	23,234		$	22,735		$	23,234		$	22,735

Summary of Allowance for Risk-sharing Obligations

Activity related to the allowance for risk-sharing obligations for the three and six months ended June 30, 2014 and 2013 follows (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Beginning balance	$	5,662		$	16,071		$	7,363		$	15,670
Provision for risk-sharing obligations		408			751			68			1,152
Write-offs		(1,264	)		(4,500	)		(2,625	)		(4,500	)
Ending balance	$	4,806		$	12,322		$	4,806		$	12,322

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Organization and Basis of Presentation - Additional Information (Detail) (USD $)	3 Months Ended	6 Months Ended
	Sep. 30, 2014	Jun. 30, 2014 State
Organization [Line Items]
Number of states in which the entity is approved as a Freddie Mac Program Plus lender		22
Unpaid principal balance of loans held for investment		$ 194,300,000
Commercial mortgage loan receivable originated during period		0
Secured Borrowings		22,100,000
Committed warehouse facility	35,500,000	57,400,000
CMBS [Member]
Organization [Line Items]
Percentage of ownership		20.00%
Maximum [Member]
Organization [Line Items]
Unpaid principal balance of loans held for investment		25,000,000
Minimum [Member]
Organization [Line Items]
Loans for large loan bridge program		25,000,000
Bridge Loan [Member]
Organization [Line Items]
Percentage of ownership		5.00%
Bridge Loan [Member] | Maximum [Member]
Organization [Line Items]
Loan term (in years)		3 years
Interim Loan Program [Member] | Maximum [Member]
Organization [Line Items]
Unpaid principal balance of loans held for investment		$ 25,000,000
Loan term (in years)		2 years

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Earnings Per Share - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Restricted Stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares outstanding excluded from computation of earnings per share	211,342	0	0	0
Stock Option [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Shares outstanding excluded from computation of earnings per share	655,818	63,667	515,867	100,196

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Fair Value Measurements - Summary of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Assets
Loans held for sale	$ 662,969	$ 281,477
Pledged securities and cash	58,551	49,651
Derivative assets	18,505	19,563
Liabilities
Derivative liabilities	3,019	222
Quoted Prices in Active Markets For Identical Assets (Level 1) [Member] | Recurring Basis [Member]
Assets
Pledged securities and cash	58,551	49,651
Total financial assets	58,551	49,651
Significant Other Observable Inputs (Level 2) [Member] | Recurring Basis [Member]
Assets
Loans held for sale	662,969	281,477
Total financial assets	662,969	281,477
Significant Other Unobservable Inputs (Level 3) [Member] | Recurring Basis [Member]
Assets
Derivative assets	18,505	19,563
Total financial assets	18,505	19,563
Liabilities
Derivative liabilities	3,019	222
Total financial liabilities	3,019	222
Fair Value [Member] | Recurring Basis [Member]
Assets
Loans held for sale	662,969	281,477
Pledged securities and cash	58,551	49,651
Derivative assets	18,505	19,563
Total financial assets	740,025	350,691
Liabilities
Derivative liabilities	3,019	222
Total financial liabilities	$ 3,019	$ 222

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income	$ 20,058	$ 22,269
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Gains attributable to fair value of future servicing rights, net of guaranty obligation	(36,634)	(49,154)
Change in fair value of premium and origination fees	(1,174)	7,619
Provision for credit losses	108	1,152
Amortization and depreciation	37,556	36,728
Other operating activities, net	(374,898)	625,557
Net cash (used in) provided by operating activities	(354,984)	644,171
Cash flows from investing activities:
Capital expenditures	(694)	(2,100)
Originations of loans held for investment	(147,056)	(37,920)
Principal collected on loans held for investment	88,356
Net cash used in investing activities	(59,394)	(40,020)
Cash flows from financing activities:
Borrowings (repayments) of warehouse notes payable, net	306,043	(627,083)
Borrowings of interim warehouse notes payable	106,214	28,440
Repayments of interim warehouse notes payable	(65,630)
Repayments of note payable	(875)	(4,150)
Proceeds from issuance of common stock	1,717	539
Repurchase of common stock	(37,296)	(1,524)
Tax (expense) benefit from vesting of equity awards	(83)	889
Net cash provided by (used in) financing activities	310,090	(602,889)
Net (decrease) increase in cash and cash equivalents	(104,288)	1,262
Cash and cash equivalents at beginning of period	170,563	65,027
Cash and cash equivalents at end of period	66,275	66,289
Supplemental Disclosure of Cash Flow Information:
Cash paid to third parties for interest	11,064	8,237
Cash paid for taxes	$ 6,407	$ 235

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Guaranty Obligation and Allowance for Risk-Sharing Obligations

6 Months Ended

Jun. 30, 2014

Guarantees [Abstract]

Guaranty Obligation and Allowance for Risk-Sharing Obligations

NOTE 5—GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS

When a loan is sold under the Fannie Mae DUS program, the Company typically agrees to guarantee a portion of the ultimate loss incurred on the loan should the borrower fail to perform. The compensation for this risk is a component of the servicing fee on the loan. No guaranty is provided for loans sold under the Freddie Mac or HUD loan programs.

Activity related to the guaranty obligation for the three and six months ended June 30, 2014 and 2013 follows (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Beginning balance	$	22,909		$	22,352		$	23,489		$	21,155
Additions, following the sale of loan		1,296			1,271			1,780			3,425
Amortization		(971	)		(888	)		(2,035	)		(1,845	)
Ending balance	$	23,234		$	22,735		$	23,234		$	22,735

The Company evaluates the allowance for risk-sharing obligations by monitoring the performance of each loan for triggering events or conditions that may signal a potential default. In situations where payment under the guaranty is probable and estimable on a specific loan, the Company records an allowance for the estimated risk-sharing loss through a charge to the provision for risk-sharing obligations, which is a component of the Provision for credit losses line item in the Condensed Consolidated Statements of Income, along with a write-off of the loan-specific MSR and guaranty obligation. The amount of the provision reflects our assessment of the likelihood of payment by the borrower, the estimated disposition value of the underlying collateral, and the level of risk sharing. Historically, the loss recognition occurs at or before the loan becomes 60 days delinquent. Activity related to the allowance for risk-sharing obligations for the three and six months ended June 30, 2014 and 2013 follows (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Beginning balance	$	5,662		$	16,071		$	7,363		$	15,670
Provision for risk-sharing obligations		408			751			68			1,152
Write-offs		(1,264	)		(4,500	)		(2,625	)		(4,500	)
Ending balance	$	4,806		$	12,322		$	4,806		$	12,322

As of June 30, 2014, the maximum quantifiable contingent liability associated with the Company’s guarantees under the Fannie Mae DUS agreement was $3.7 billion. The maximum quantifiable contingent liability is not representative of the actual loss the Company would incur. The Company would be liable for this amount only if all of the loans it services for Fannie Mae, for which the Company retains some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement.

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014
Significant Accounting Policies [Line Items]
Unpaid principal balance of loans held for investment	$ 194.3	$ 194.3
Net unamortized deferred fees and costs	1.1	1.1
Allowance for loan losses	0.5	0.5
Goodwill additions	0	0
Goodwill impairments	0	0
Maximum [Member]
Significant Accounting Policies [Line Items]
Unpaid principal balance of loans held for investment	25.0	25.0
Interim Loan Program [Member] | Maximum [Member]
Significant Accounting Policies [Line Items]
Unpaid principal balance of loans held for investment	$ 25.0	$ 25.0
Loan term (in years)		2 years

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Servicing - Additional Information (Detail) (USD $) In Billions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Transfers And Servicing [Abstract]
Unpaid principal balance of loans	$ 39.8	$ 38.9

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Mortgage Servicing Rights (Tables)

6 Months Ended

Jun. 30, 2014

Transfers And Servicing [Abstract]

Schedule of Activity Related to Capitalized MSRs

Activity related to capitalized MSRs for the three and six months ended June 30, 2014 and 2013 was as follows (in thousands):

	For the three months ended June 30,						For the six months ended June 30,
	2014			2013			2014			2013
Beginning balance	$	347,976		$	336,397		$	353,024		$	315,524
Additions, following the sale of loan		20,694			23,502			34,369			62,295
Amortization		(17,028	)		(15,838	)		(33,729	)		(30,943	)
Pre-payments and write-offs		(2,475	)		(2,291	)		(4,497	)		(5,106	)
Ending balance	$	349,167		$	341,770		$	349,167		$	341,770

Summary of Components of Net Carrying Value of Acquired and Originated MSRs

The following summarizes the components of the net carrying value of the Company’s acquired and originated MSRs, as of June 30, 2014 (in thousands):

	As of June 30, 2014
	Gross carrying value		Accumulated amortization			Net carrying value
Acquired MSRs	$	124,629	$	(45,879	)	$	78,750
Originated MSRs		385,200		(114,783	)		270,417
Total	$	509,829	$	(160,662	)	$	349,167

Schedule of Expected Amortization of MSRs

The expected amortization of MSRs recorded as of June 30, 2014 is shown in the table below (in thousands). Actual amortization may vary from these estimates.

	Originated MSRs		Acquired MSRs		Total MSRs
	Amortization		Amortization		Amortization
Six Months Ending December 31,
2014	$	24,460	$	8,806	$	33,266
Year Ending December 31,
2015		45,199		16,540		61,739
2016		41,565		15,395		56,960
2017		38,174		13,656		51,830
2018		33,763		9,950		43,713
2019		28,054		8,118		36,172
Thereafter		59,202		6,285		65,487
Total	$	270,417	$	78,750	$	349,167