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FAIR VALUE DISCLOSURES
6 Months Ended
Jun. 30, 2018
Fair Value Disclosures [Abstract]  
FAIR VALUE DISCLOSURES
FAIR VALUE DISCLOSURES
We have adopted ASC Topic 820, Fair Value Measurements, for valuation of financial instruments. ASC Topic 820 provides a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows:

Level 1 — Fair value is based on quoted prices for identical assets or liabilities in active markets.

Level 2 — Fair value is determined using quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable.

Level 3 — Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.

The fair value of our mortgage loans held for sale is derived from negotiated rates with partner lending institutions. The fair value of derivative assets includes interest rate lock commitments (“IRLCs”) and mortgage backed securities (“MBS”). The fair value of IRLCs is based on the value of the underlying mortgage loan, quoted MBS prices and the probability that the mortgage loan will fund within the terms of the IRLCs. We estimate the fair value of the forward sales commitments based on quoted MBS prices. The fair value of our mortgage warehouse borrowings, loans payable and other borrowings and the borrowings under our Revolving Credit Facility approximate carrying value due to their short term nature and variable interest rate terms. The fair value of our Senior Notes is derived from quoted market prices by independent dealers in markets that are not active. The fair value of the contingent consideration liability related to previous acquisitions was estimated using a Monte Carlo simulation model under the option pricing method. As the measurement of the contingent consideration is based primarily on significant inputs not observable in the market, it represents a Level 3 measurement. There were no changes to or transfers between the levels of the fair value hierarchy for any of our financial instruments as of June 30, 2018, when compared to December 31, 2017.

The carrying value and fair value of our financial instruments are as follows:
 
 
 
 
June 30, 2018
 
December 31, 2017
(Dollars in thousands)
 
Level in Fair
Value Hierarchy
 
Carrying
Value
 
Estimated
Fair
Value
 
Carrying
Value
 
Estimated
Fair
Value
Description:
 
 
 
 
 
 
 
 
 
 
Mortgage loans held for sale
 
2
 
$
99,606

 
$
99,606

 
$
187,038

 
$
187,038

Derivative assets, net
 
2
 
2,451

 
2,451

 
1,352

 
1,352

Mortgage warehouse borrowings
 
2
 
49,818

 
49,818

 
118,822

 
118,822

Loans payable and other borrowings
 
2
 
136,508

 
136,508

 
139,453

 
139,453

5.25% Senior Notes due 2021 (1)
 
2
 
546,706

 
550,000

 
546,108

 
561,000

5.875% Senior Notes due 2023 (1)
 
2
 
347,282

 
348,250

 
346,998

 
369,705

5.625% Senior Notes due 2024 (1)
 
2
 
346,950

 
342,335

 
346,681

 
366,205

Revolving Credit Facility
 
2
 

 

 

 

Contingent consideration liability(2)
 
3
 

 

 
5,328

 
5,328

(1) Carrying value for Senior Notes, as presented, includes unamortized debt issuance costs. Debt issuance costs are not factored into the fair value calculation for the Senior Notes.
(2) All payments related to our contingent consideration liability were paid during the first quarter of 2018 and no liability exists as of June 30, 2018.