10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2022

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: 001-39183

Velocity Financial, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	46-0659719
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
30699 Russell Ranch Road, Suite 295 Westlake Village, California	91362
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 532-3700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	VEL	The New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of August 1, 2022, the registrant had 32,415,860 shares of common stock outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Income	3
	Consolidated Statements of Changes in Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	5
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	50
SIGNATURES		52

i

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

VELOCITY FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS

($ in thousands, except par value amounts)

	June 30, 2022			December 31, 2021
	(Unaudited)
ASSETS
Cash and cash equivalents	$	46,250		$	35,965
Restricted cash		9,217			11,639
Loans held for sale, net		—			87,908
Loans held for investment, net		3,118,799			2,527,564
Loans held for investment, at fair value		1,351			1,359
Total loans, net		3,120,150			2,616,831
Accrued interest receivables		15,820			13,159
Receivables due from servicers		75,688			74,330
Other receivables		1,320			1,812
Real estate owned, net		19,218			17,557
Property and equipment, net		3,632			3,830
Deferred tax asset		15,195			16,604
Mortgage servicing rights, at fair value		8,438			7,152
Goodwill		6,775			6,775
Other assets		11,036			6,824
Total assets	$	3,332,739		$	2,812,478
LIABILITIES
Accounts payable and accrued expenses	$	78,384		$	92,195
Secured financing, net		209,227			162,845
Securitizations, net		2,477,226			1,911,879
Warehouse and repurchase facilities, net		208,390			301,069
Total liabilities		2,973,227			2,467,988
Commitments and contingencies
EQUITY
Common stock ($0.01 par value, 100,000,000 shares authorized at June 30, 2022 and December 31, 2021; 32,415,860 and 32,293,042 shares issued and outstanding, respectively)		325			323
Treasury stock, at cost (33,647 common shares at June 30, 2022 and none at December 31, 2021)		(458	)		—
Additional paid-in capital		297,840			296,364
Retained earnings		58,188			44,422
Total Velocity Financial Inc. stockholders' equity		355,895			341,109
Noncontrolling interest in subsidiary		3,617			3,381
Total equity		359,512			344,490
Total liabilities and equity	$	3,332,739		$	2,812,478

The following table represents the assets and liabilities of our consolidated variable interest entities as follows:

ASSETS
Restricted cash	$	2,976	$	4,713
Loans held for investment, net		2,730,516		2,202,010
Accrued interest and other receivables		86,896		83,493
Real estate owned, net		16,135		9,861
Other assets		92		9
Total assets	$	2,836,615	$	2,300,086
LIABILITIES
Accounts payable and accrued expenses	$	46,883	$	45,705
Securities issued		2,477,226		1,911,879
Total liabilities	$	2,524,109	$	1,957,584

See accompanying Notes to Consolidated Financial Statements.

2

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Interest income	$	59,243		$	44,978		$	111,292		$	85,685
Interest expense — portfolio related		28,752			20,566			52,308			41,399
Net interest income — portfolio related		30,491			24,412			58,984			44,286
Interest expense — corporate debt		4,182			4,309			21,322			11,658
Net interest income		26,309			20,103			37,662			32,628
Provision for (reversal of) loan losses		279			(1,000	)		1,009			(895	)
Net interest income after provision for (reversal of) loan losses		26,030			21,103			36,653			33,523
Other operating income
Gain on disposition of loans		1,776			2,391			6,317			5,230
Unrealized gain on fair value loans		6			20			16			18
Other income (expense)		1,257			21			2,354			(15	)
Total other operating income		3,039			2,432			8,687			5,233
Operating expenses
Compensation and employee benefits		6,553			4,546			11,876			9,732
Rent and occupancy		426			430			868			893
Loan servicing		3,290			1,922			5,741			3,788
Professional fees		1,062			795			2,423			1,329
Real estate owned, net		(251	)		1,039			(426	)		1,548
Other operating expenses		3,199			1,918			6,047			3,977
Total operating expenses		14,279			10,650			26,529			21,267
Income before income taxes		14,790			12,885			18,811			17,489
Income tax expense		4,019			3,432			4,809			4,640
Net income	$	10,771		$	9,453		$	14,002		$	12,849
Net income attributable to noncontrolling interest		126			—			236			—
Net income attributable to Velocity Financial, Inc.	$	10,645		$	9,453		$	13,766		$	12,849
Less undistributed earnings attributable to participating securities		164			3,571			212			4,854
Net earnings attributable to common stockholders	$	10,481		$	5,882		$	13,554		$	7,995
Earnings per common share
Basic	$	0.33		$	0.29		$	0.42		$	0.40
Diluted	$	0.31		$	0.28		$	0.40		$	0.38
Weighted average common shares outstanding
Basic		31,917			20,087			31,904			20,087
Diluted		34,057			33,960			34,130			33,684

See accompanying Notes to Consolidated Financial Statements.

3

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

($ in thousands)

(Unaudited)

	Common Stock								Treasury Stock
	Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Shares			Amount			Total Stockholders' Equity			Noncontrolling Interest		Total Equity
Balance – December 31, 2020		20,087,494	$	201	$	204,190	$	15,198		—		$	—		$	219,589			—	$	219,589
Restricted stock awarded and earned stock compensation		480,000		5		226		—		—			—			231			—		231
Stock-based compensation - Options		—		—		254		—		—			—			254			—		254
Net income		—		—		—		3,396		—			—			3,396			—		3,396
Balance – March 31, 2021		20,567,494	$	206	$	204,670	$	18,594		—		$	—		$	223,470			—	$	223,470
Restricted stock awarded and earned stock compensation		26,511		—		291		—		—			—			291			—		291
Stock-based compensation - Options		—		—		254		—		—			—			254			—		254
Net income		—		—		—		9,453		—			—			9,453			—		9,453
Balance – June 30, 2021		20,594,005	$	206	$	205,215	$	28,047		—		$	—		$	233,468		$	—	$	233,468
Balance – December 31, 2021		32,293,042	$	323	$	296,364	$	44,422		—		$	—		$	341,109		$	3,381	$	344,490
Purchase of treasury stock, at cost		—		—		—		—		(33,647	)		(458	)		(458	)		—		(458	)
Restricted stock awarded and earned stock compensation		125,250		2		416		—		—			—			418			—		418
Stock-based compensation - Options		—		—		251		—		—			—			251			—		251
Net income		—		—		—		3,121		—			—			3,121			110		3,231
Balance – March 31, 2022		32,418,292	$	325	$	297,031	$	47,543		(33,647	)	$	(458	)	$	344,441		$	3,491	$	347,932
Restricted stock awarded and earned stock compensation		31,215		—		555		—		—			—			555			—		555
Stock-based compensation - Options		—		—		254		—		—			—			254			—		254
Net income		—		—		—		10,645		—			—			10,645			126		10,771
Balance – June 30, 2022		32,449,507	$	325	$	297,840	$	58,188		(33,647	)	$	(458	)	$	355,895		$	3,617	$	359,512

See accompanying Notes to Consolidated Financial Statements.

4

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in thousands)

	Six Months Ended June 30,
	2022			2021
	(Unaudited)
Cash flows from operating activities:
Net income	$	14,002		$	12,849
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		401			603
Amortization of right-of-use assets		664			565
Provision for (reversal of) loan losses		1,009			(895	)
Provision for repurchase of loans		235			—
Purchase of held for sale loans		—			(755	)
Repayments on loans held for sale		—			11
Net accretion of discount on purchased loans and deferred loan origination costs		3,981			3,092
(Reversal of) provision for uncollectible borrower advances		(14	)		47
Gain on disposition of loans		(4,809	)		(4,598	)
Real estate acquired through foreclosure in excess of recorded investment		(1,508	)		(632	)
Amortization of debt issuance discount and costs		16,956			10,156
Loss on disposal of property and equipment		14			18
Change in valuation of real estate owned		(93	)		1,235
Change in valuation of fair value loans		(16	)		(18	)
Change in valuation of mortgage servicing rights		(1,286	)		—
Change in valuation of held for sale loans		—			(2	)
Gain on sale of real estate owned		(1,620	)		(162	)
Stock-based compensation		1,479			1,030
Deferred tax expense (benefit)		1,408			(6,542	)
(Increase) decrease in operating assets and liabilities:
Accrued interest and other receivables		(1,680	)		(476	)
Other assets		(4,882	)		(1,081	)
Accounts payable and accrued expenses		(11,141	)		6,451
Net cash provided by operating activities		13,100			20,896
Cash flows from investing activities:
Purchase of loans held for investment		(5,021	)		(3,490	)
Origination of loans held for investment		(1,033,277	)		(496,497	)
Proceeds from sales of loans originally classified as held for investment		224,060			82,856
Payoffs of loans held for investment and loans at fair value		302,098			274,042
Proceeds from sale of real estate owned		9,294			4,076
Purchase of real estate owned		(2,250	)		—
Capitalized real estate owned improvements		—			(29	)
Change in advances		1,338			(667	)
Change in impounds and deposits		(3,904	)		167
Purchase of property and equipment		(217	)		(102	)
Net cash used in investing activities		(507,879	)		(139,644	)
Cash flows from financing activities:
Warehouse repurchase facilities advances		951,071			414,030
Warehouse repurchase facilities repayments		(1,043,666	)		(337,332	)
Proceeds from secured financing		215,000			175,000
Repayment of secured financing		(170,844	)		(79,969	)
Proceeds of securitizations, net		879,136			251,274
Repayment of securitizations		(308,298	)		(273,810	)
Purchase of treasury stock		(458	)		—
Debt issuance costs		(19,299	)		(15,076	)
Net cash provided by financing activities		502,642			134,117
Net increase in cash, cash equivalents, and restricted cash		7,863			15,369
Cash, cash equivalents, and restricted cash at beginning of period		47,604			20,293
Cash, cash equivalents, and restricted cash at end of period	$	55,467		$	35,662

See accompanying Notes to Consolidated Financial Statements.

5

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in thousands)

	Six Months Ended June 30,
	2022		2021
	(Unaudited)
Supplemental cash flow information:
Cash paid during the period for interest	$	49,779	$	42,898
Cash paid during the period for income taxes		21,579		4,682
Noncash transactions from investing and financing activities:
Transfer of loans held for investment to held for sale		206,319		80,498
Transfer of loans held for investment to real estate owned		5,485		8,767
Transfer of accrued interest to loans held for investment		816		618
Discount on issuance of securitizations		17,136		27
Transfer of loans held for sale to held for investment		73,598		4,615

See accompanying Notes to Consolidated Financial Statements

6

VELOCITY FINANCIAL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

Note 1 — Organization and Description of Business

Velocity Financial, LLC (VF or the Company) was a Delaware limited liability company formed on July 9, 2012 for the purpose of acquiring all membership units in Velocity Commercial Capital, LLC (VCC). On January 16, 2020, Velocity Financial, LLC converted from a Delaware limited liability company to a Delaware corporation and changed its name to Velocity Financial, Inc. Upon completion of the conversion, Velocity Financial, LLC’s Class A equity units of 97,513,533 and Class D equity units of 60,193,989 were converted to 11,749,994 shares of Velocity Financial, Inc. common stock. On January 22, 2020, the Company completed its initial public offering of 7,250,000 shares of common stock at a price to the public of $13.00 per share. On January 28, 2020, the Company completed the sale of an additional 1,087,500 shares of its common stock, representing the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $13.00 per share. The Company’s stock trades on The New York Stock Exchange under the symbol “VEL”.

VCC, a California LLC formed on June 2, 2004, is a mortgage lender that originates and acquires commercial investor real estate loans, providing capital to the investor real estate loan market. The Company is licensed as a California Finance Lender and, as such, is required to maintain a minimum net worth of $250 thousand. The Company does not believe there is any potential risk of not being able to meet this regulatory requirement. The Company uses its equity capital and borrowed funds to originate and invest in investor real estate loans and seeks to generate income based primarily on the difference between the yield on its investor real estate loan portfolio and the cost of its borrowings. The Company may also sell loans from time to time. The Company does not originate or acquire investments outside of the United States of America.

The Company, through its wholly owned subsidiaries, is the sole beneficial owner of the Velocity Commercial Capital Loan Trusts, from the 2015-1 Trust through and including the 2022-3 Trust, all of which are New York common law trusts, with the exceptions of the VCC 2020-MC1 Trust and the VCC 2022-MC1 Trust which are Delaware statutory trusts. The Trusts are bankruptcy remote, variable interest entities (VIE) formed for the purpose of providing secured borrowings to the Company and are consolidated with the accounts of the Company.

On December 28, 2021, the Company acquired an 80% ownership interest in Century Health & Housing Capital, LLC (“Century”), paying a cash purchase price of $12.8 million. Century is a licensed “Ginnie Mae” issuer/servicer that provides government-insured Federal Housing Administration (FHA) mortgage financing for multifamily housing, senior housing and long-term care/assisted living facilities. Century originates loans through its borrower-direct origination channel and services the loans through its in-house servicing platform, which enables the formation of long-term relationships with its clients and drives strong portfolio retention. Century is a consolidated subsidiary of the Company as of completion of the acquisition.

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited Consolidated Financial Statements as of and for the six months ended June 30, 2022 and 2021 have been prepared on a basis that is substantially consistent with the accounting principles applied to the Company’s audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal, recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter for the full year. The interim financial information should be read in conjunction with the Company’s audited Consolidated Financial Statements.

(a)Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of consolidated income and expenses during the reporting period.

(b)Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 — Basis of Presentation and Summary of Significant Accounting Policies, of its audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission.

There have been no significant changes to the Company’s significant accounting policies as described in its 2021 Annual Report.

7

(c)Principles of Consolidation

The principles of consolidation require management to determine and reassess the requirement to consolidate VIEs each reporting period, and therefore, the determination may change based on new facts and circumstances pertaining to each VIE. This could result in a material impact to the Company’s consolidated financial statements in subsequent reporting periods.

The Company consolidates the assets, liabilities, and remainder interests of the Trusts as management determined that VCC is the primary beneficiary of these entities. The Company’s ongoing asset management responsibilities provide the Company with the power to direct the activities that most significantly impact the VIE’s economic performance, and the remainder interests provide the Company with the right to receive benefits and the obligation to absorb losses, limited to its investment in the remainder interest of the Trusts.

The consolidated financial statements as of June 30, 2022 and December 31, 2021 include only those assets, liabilities, and results of operations related to the business of the Company, its subsidiaries, and VIEs.

Note 3 — Current Accounting Developments

(a)Recently Issued Accounting Standards

ASU 2022-2, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." The amendments in this ASU eliminate the recognition and measurement guidance for troubled debt restructuring by Creditors, and require enhanced disclosures for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. ASU 2022-4 requires that an entity disclose current-period gross write-offs by year of origination for financing receivables. This ASU is effective January 1, 2023 for the Company. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

(b) Treasury Shares

The Company separately presents treasury shares, which represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. Treasury shares are carried at cost.

Note 4 — Cash, Cash Equivalents, and Restricted Cash

The Company is required to hold cash for potential future advances due to certain borrowers. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 (in thousands):

	Six Months Ended June 30,
	2022		2021
Cash and cash equivalents	$	46,250	$	27,741
Restricted cash		9,217		7,921
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	55,467	$	35,662

Note 5 — Loans Held for Sale, Net

The following table summarizes loans held for sale as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022		December 31, 2021
Unpaid principal balance	$	—	$	87,422
Valuation adjustments		—		—
Deferred loan origination costs		—		486
Ending balance	$	—	$	87,908

8

Note 6 — Loans Held for Investment and Loans Held for Investment at Fair Value

The following tables summarize loans held for investment as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Loans held for investment, net			Loans held for investment, at fair value		Total loans held for investment
Unpaid principal balance	$	3,088,950		$	1,308	$	3,090,258
Valuation adjustments on FVO loans		—			43		43
Deferred loan origination costs		34,754			—		34,754
		3,123,704			1,351		3,125,055
Allowance for loan losses		(4,905	)		—		(4,905	)
Total loans held for investment and loans held for investment at    fair value, net	$	3,118,799		$	1,351	$	3,120,150

	December 31, 2021
	Loans held for investment, net			Loans held for investment, at fair value		Total loans held for investment
Unpaid principal balance	$	2,498,466		$	1,332	$	2,499,798
Valuation adjustments on FVO loans		—			27		27
Deferred loan origination costs		33,360			—		33,360
		2,531,826			1,359		2,533,185
Allowance for loan losses		(4,262	)		—		(4,262	)
Total loans held for investment and loans held for investment at    fair value, net	$	2,527,564		$	1,359	$	2,528,923

The following tables summarize the Unpaid Principal Balance (“UPB”) and amortized cost basis of loans in the Company's COVID-19 forbearance program for the three and six months ended June 30, 2022 and the year ended December 31, 2021 ($ in thousands):

	Three Months Ended June 30, 2022								Six Months Ended June 30, 2022
	UPB			%	Amortized Cost			%	UPB			%	Amortized Cost			%
Beginning balance	$	260,709			$	263,860			$	292,429			$	295,990
Foreclosures		(1,427	)			(1,438	)			(1,427	)			(1,438	)
Repayments		(22,968	)			(23,349	)			(54,688	)			(55,479	)
Ending balance	$	236,314			$	239,073			$	236,314			$	239,073
Performing/Accruing	$	187,872		79.5%	$	190,101		79.5%	$	187,872		79.5%	$	190,101		79.5%
Nonperforming/Nonaccrual	$	48,442		20.5%	$	48,972		20.5%	$	48,442		20.5%	$	48,972		20.5%

	December 31, 2021
	UPB			%	Amortized Cost			%
Beginning balance	$	392,073			$	396,918
Additions		2,616				2,615
Foreclosures		(402	)			(408	)
Repayments		(101,858	)			(103,135	)
Ending balance	$	292,429			$	295,990
Performing/Accruing	$	233,307		79.8%	$	236,076		79.8%
Nonperforming/Nonaccrual	$	59,122		20.2%	$	59,914		20.2%

9

Since April 1, 2020, the inception of the COVID-19 forbearance program, the Company has modified $409.0 million in UPB of loans, which includes capitalized interest of $10.9 million. As of June 30, 2022, $188.8 million in UPB of modified loans has been paid down, which includes $3.8 million of capitalized interest received and the Company has not forgiven any capitalized interest.

Approximately 79.5% and 79.8% of the COVID forbearance loans in UPB were performing, and 20.5% and 20.2% were on nonaccrual status as of June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022 and December 31, 2021, the gross unpaid principal balance of loans held for investment pledged as collateral for the Company’s warehouse facilities, and securitizations issued were as follows (in thousands):

	June 30, 2022		December 31, 2021
The 2013 repurchase agreement	$	105,783	$	202,511
The 2021 repurchase agreement		101,570		114,072
The Bank credit agreement		33,962		30,959
The 2021 term repurchase agreement		29,828		53,217
The July 2021 term repurchase agreement		875		—
Total pledged loans	$	272,018	$	400,759
2015-1 Trust	$	—	$	31,931
2016-1 Trust		44,917		52,623
2017-2 Trust		75,129		94,809
2018-1 Trust		58,384		71,051
2018-2 Trust		122,113		154,974
2019-1 Trust		116,326		144,727
2019-2 Trust		107,197		132,358
2019-3 Trust		87,283		103,266
2020-1 Trust		162,582		189,547
2020-2 Trust		86,339		98,403
2020-MC1 Trust		—		134,957
2021-1 Trust		224,063		249,396
2021-2 Trust		186,540		198,039
2021-3 Trust		195,199		202,138
2021-4 Trust		293,146		314,547
2022-1 Trust		269,025		—
2022-2 Trust		250,812		—
2022-MC1 Trust		108,055		—
2022-3 Trust		310,432		—
Total	$	2,697,542	$	2,172,766

(a) Nonaccrual Loans

The following tables present the amortized cost basis, or recorded investment, of the Company’s loans held for investment that were nonperforming and on nonaccrual status as of June 30, 2022 and December 31, 2021. There were no loans accruing interest that were greater than 90 days past due as of June 30, 2022 and December 31, 2021.

	June 30, 2022
	Total Nonaccrual		Nonaccrual with No Allowance for Loan Loss		Nonaccrual with Allowance for Loan Loss		Allowance for Loans Individually Evaluated		% of Allowance to Total Nonaccrual Loans with Allowance
	($ in thousands)
Commercial - Purchase	$	14,911	$	14,647	$	264	$	6		0.1	%
Commercial - Refinance		80,442		76,077		4,365		434		3.7
Residential 1-4 Unit - Purchase		22,885		22,542		343		52		0.4
Residential 1-4 Unit - Refinance		96,649		94,594		2,055		196		1.7
Short Term 1-4 Unit - Purchase		2,302		2,302		—		—		—
Short Term 1-4 Unit - Refinance		38,013		33,268		4,745		476		4.0
Total	$	255,202	$	243,430	$	11,772	$	1,164		9.9	%
Troubled Debt Restructuring included in nonaccrual loans:	$	160	$	—	$	—	$	25		—

10

	December 31, 2021
	Total Nonaccrual		Nonaccrual with No Allowance for Loan Loss		Nonaccrual with Allowance for Loan Loss		Allowance for Loans Individually Evaluated		% of Allowance to Total Nonaccrual Loans with Allowance
	($ in thousands)
Commercial - Purchase	$	17,260	$	16,501	$	759	$	9		0.1	%
Commercial - Refinance		85,935		79,131		6,804		826		6.2
Residential 1-4 Unit - Purchase		17,385		17,128		257		96		0.7
Residential 1-4 Unit - Refinance		107,552		105,515		2,037		138		1.0
Short Term 1-4 Unit - Purchase		2,986		2,881		105		31		0.2
Short Term 1-4 Unit - Refinance		45,300		41,870		3,430		306		2.3
Total	$	276,418	$	263,026	$	13,392	$	1,406		10.5	%
Troubled Debt Restructuring included in nonaccrual loans:	$	165	$	—	$	—	$	25		—

The Company has made the accounting policy election not to measure an allowance for credit losses for accrued interest receivables. The Company has also made the accounting policy election to write off accrued interest receivables by reversing interest income when loans are placed on nonaccrual status, or 90 days or more past due.

The Company will continue to evaluate the COVID-19 forbearance-granted loans on an individual basis to determine if a reserve should be established on the collectability of the accrued interest and whether any loans should be placed on nonaccrual status at a future date.

The following tables present the amortized cost basis in the loans held for investment, excluding loans held for investment at fair value, as of June 30, 2022 and 2021, and the amount of accrued interest receivables written off by reversing interest income by portfolio segment for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,
	2022				2021
	Amortized Cost		Interest Reversal		Amortized Cost		Interest Reversal
Commercial - Purchase	$	677,491	$	77	$	366,737	$	53
Commercial - Refinance		912,774		335		690,964		225
Residential 1-4 Unit - Purchase		529,796		61		276,896		63
Residential 1-4 Unit - Refinance		887,720		269		608,543		281
Short Term 1-4 Unit - Purchase		57,973		4		40,205		639
Short Term 1-4 Unit - Refinance		57,950		132		104,371		117
Total	$	3,123,704	$	878	$	2,087,716	$	1,378

	Six Months Ended June 30,
	2022				2021
	Amortized Cost		Interest Reversal		Amortized Cost		Interest Reversal
Commercial - Purchase	$	677,491	$	192	$	366,737	$	192
Commercial - Refinance		912,774		587		690,964		693
Residential 1-4 Unit - Purchase		529,796		281		276,896		121
Residential 1-4 Unit - Refinance		887,720		566		608,543		801
Short Term 1-4 Unit - Purchase		57,973		25		40,205		685
Short Term 1-4 Unit - Refinance		57,950		371		104,371		358
Total	$	3,123,704	$	2,022	$	2,087,716	$	2,850

The cash basis interest income recognized on nonaccrual loans was $8.7 million and $9.9 million for the three months ended June 30, 2022 and 2021, respectively, and $16.0 million and $16.7 million for the six months ended June 30, 2022 and 2021, respectively. No accrued interest income was recognized on nonaccrual loans for the three and six months ended June 30, 2022. The average recorded investment of individually evaluated loans, computed using month-end balances, was $260.8 million and $337.9 million for the three months ended June 30, 2022 and 2021, and $271.3 million and $337.5 million for the six months ended June 30, 2022 and 2021, respectively. There were no commitments to lend additional funds to debtors whose loans have been modified in troubled debt restructuring as of June 30, 2022 and 2021.

11

(b)Allowance for Credit Losses

The allowance for credit losses is maintained at a level deemed adequate by management to provide for expected losses in the portfolio at the balance sheet date. The allowance for credit losses is measured using two components. A component that measures expected credit losses on a collective (pool) basis when similar risk characteristics exist and a component that measures expected credit losses on an individual loan basis. To estimate the allowance for credit losses in the loans held for investment portfolio, management follows a detailed internal process, considering a number of different factors including, but not limited to, the ongoing analyses of loans, historical loss rates, relevant environmental factors, relevant market research, trends in delinquencies, effects and changes in credit concentrations, and ongoing evaluation of fair values.

The Company uses an open pool loss rate methodology to model expected credit losses on a collective basis. To determine the loss rates for the open pool method, the Company starts with its historical database of losses, segmenting the loans by loan purpose, product type and repayment period. A third-party model applying the open pool method is used to estimate an annual average loss rates by dividing the respective pool's quarterly historical losses by the pool's respective prior quarter’s ending unamortized loan cost balance and deriving an annual average loss rate from the historical quarterly loss rates. The model then adjusts the annual average loss rates based upon macroeconomic forecasts over a reasonable and supportable period, followed by a straight-line reversion to the historical loss rates. The adjusted annual average loss rates are applied to the forecasted pool balance within each segment. The forecasted balances in the loan pool segments are calculated based on a principal amortization using contractual maturity, factoring in further principal reductions from estimated prepayments. For the June 30, 2022 estimate, the Company considered a severe stress scenario with a six-quarter reasonable and supportable forecast period followed by a four-quarter straight-line reversion period. Management concluded that applying the severe stress scenario was appropriate given the uncertainty around future COVID cases, the war between Russia and Ukraine, spike in inflation, continued disruption in the supply chain, and concerns of a recession.

Once a loan becomes nonperforming (90 or more days past due), it no longer shares the same risk characteristics of the other loans within its segment of homogeneous loans (pool). Nonperforming loans are considered collateral dependent by the Company. These loans are evaluated individually using the practical expedient to determine the credit exposure.

The following tables present the activity in the allowance for credit losses for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30, 2022
						Residential		Residential		Short Term			Short Term
	Commercial		Commercial			1-4 Unit		1-4 Unit		1-4 Unit			1-4 Unit
	Purchase		Refinance			Purchase		Refinance		Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - April 1, 2022	$	518	$	2,140		$	389	$	1,029	$	50		$	537		$	4,663
Provision for loan losses		94		(125	)		51		241		(16	)		34			279
Charge-offs		—		(19	)		—		—		—			(18	)		(37	)
Ending balance	$	612	$	1,996		$	440	$	1,270	$	34		$	553		$	4,905
Allowance related to:
Loans individually evaluated	$	6	$	434		$	52	$	196	$	—		$	476		$	1,164
Loans collectively evaluated		606		1,562			388		1,074		34			77			3,741
Amortized cost related to:
Loans individually evaluated	$	14,911	$	80,442		$	22,885	$	96,649	$	2,302		$	38,013		$	255,202
Loans collectively evaluated		662,580		832,332			506,911		791,071		55,671			19,937			2,868,502

	Three Months Ended June 30, 2021
							Residential			Residential			Short Term			Short Term
	Commercial			Commercial			1-4 Unit			1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase			Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - April 1, 2021	$	328		$	1,990		$	322		$	1,227		$	386		$	1,628		$	5,881
Provision for loan losses		48			28			(41	)		(229	)		(313	)		(493	)		(1,000	)
Charge-offs		(114	)		(95	)		—			(151	)		—			(558	)		(918	)
Ending balance	$	262		$	1,923		$	281		$	847		$	73		$	577		$	3,963
Allowance related to:
Loans individually evaluated	$	57		$	1,005		$	120		$	342		$	56		$	369		$	1,949
Loans collectively evaluated		205			918			161			507			16			207			2,014
Amortized cost related to:
Loans individually evaluated	$	19,314		$	92,397		$	21,084		$	112,294		$	23,883		$	50,002		$	318,974
Loans collectively evaluated		347,423			598,567			255,812			496,249			16,322			54,369			1,768,742

12

	Six Months Ended June 30, 2022
							Residential		Residential			Short Term			Short Term
	Commercial			Commercial			1-4 Unit		1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase		Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - January 1, 2022	$	385		$	2,144		$	400	$	948		$	43		$	342		$	4,262
Provision for loan losses		374			(123	)		40		427			(9	)		300			1,009
Charge-offs		(147	)		(25	)		—		(105	)		—			(89	)		(366	)
Ending balance	$	612		$	1,996		$	440	$	1,270		$	34		$	553		$	4,905
Allowance related to:
Loans individually evaluated	$	6		$	434		$	52	$	196		$	—		$	476		$	1,164
Loans collectively evaluated		606			1,562			388		1,074			34			77			3,741
Amortized cost related to:
Loans individually evaluated	$	14,911		$	80,442		$	22,885	$	96,649		$	2,302		$	38,013		$	255,202
Loans collectively evaluated		662,580			832,332			506,911		791,071			55,671			19,937			2,868,502

	Six Months Ended June 30, 2021
							Residential			Residential			Short Term			Short Term
	Commercial			Commercial			1-4 Unit			1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase			Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - January 1, 2021	$	373		$	2,093		$	333		$	1,216		$	595		$	1,235		$	5,845
Provision for loan losses		3			(76	)		(15	)		(218	)		(508	)		(81	)		(895	)
Charge-offs		(114	)		(94	)		(37	)		(151	)		(14	)		(577	)		(987	)
Ending balance	$	262		$	1,923		$	281		$	847		$	73		$	577		$	3,963
Allowance related to:
Loans individually evaluated	$	57		$	1,005		$	120		$	342		$	56		$	369		$	1,949
Loans collectively evaluated		205			918			161			507			16			207			2,014
Amortized cost related to:
Loans individually evaluated	$	19,314		$	92,397		$	21,084		$	112,294		$	23,883		$	50,002		$	318,974
Loans collectively evaluated		347,423			598,567			255,812			496,249			16,322			54,369			1,768,742

(c)Credit Quality Indicator

A credit quality indicator is a statistic used by the Company to monitor and assess the credit quality of loans held for investment, excluding loans held for investment at fair value. The Company monitors its charge-off rate in relation to its nonperforming loans as a credit quality indicator. Nonperforming loans are loans that are 90 or more days past due, in bankruptcy, in foreclosure, or not accruing interest. As of June 30, 2022, the annualized charge-off rate was 0.27% of average nonperforming loans. The charge-off rate was 0.42% for the year ended December 31, 2021.

13

Other credit quality indicators include aging status and accrual status. The following table presents the aging status of the amortized cost basis in the loans held for investment portfolio, excluding loans held for investment at fair value, which include $239.1 million and $296.0 million loans in the Company’s COVID-19 forbearance program as of June 30, 2022 and December 31, 2021, respectively (in thousands):

	30–59 days		60–89 days		90+days		Total				Total
June 30, 2022	past due		past due		past due(1)		past due		Current		loans
Loans individually evaluated
Commercial - Purchase	$	310	$	1,875	$	12,726	$	14,911	$	—	$	14,911
Commercial - Refinance		3,551		6,314		70,417		80,282		160		80,442
Residential 1-4 Unit - Purchase		325		672		21,888		22,885		—		22,885
Residential 1-4 Unit - Refinance		1,029		2,701		92,919		96,649		—		96,649
Short Term 1-4 Unit - Purchase		—		—		2,302		2,302		—		2,302
Short Term 1-4 Unit - Refinance		—		247		37,766		38,013		—		38,013
Total loans individually evaluated	$	5,215	$	11,809	$	238,018	$	255,042	$	160	$	255,202
Loans collectively evaluated
Commercial - Purchase	$	13,431	$	9,952	$	—	$	23,383	$	639,197	$	662,580
Commercial - Refinance		30,249		14,483		—		44,732		787,600		832,332
Residential 1-4 Unit - Purchase		14,855		3,805		—		18,660		488,251		506,911
Residential 1-4 Unit - Refinance		42,227		10,519		—		52,746		738,325		791,071
Short Term 1-4 Unit - Purchase		3,052		677		—		3,729		51,942		55,671
Short Term 1-4 Unit - Refinance		3,476		570		—		4,046		15,891		19,937
Total loans collectively evaluated	$	107,290	$	40,006	$	—	$	147,296	$	2,721,206	$	2,868,502
Ending balance	$	112,505	$	51,815	$	238,018	$	402,338	$	2,721,366	$	3,123,704

	30–59 days		60–89 days		90+days		Total				Total
December 31, 2021	past due		past due		past due(1)		past due		Current		loans
Loans individually evaluated
Commercial - Purchase	$	700	$	2,314	$	14,246	$	17,260	$	—	$	17,260
Commercial - Refinance		4,464		6,818		74,488		85,770		165		85,935
Residential 1-4 Unit - Purchase		—		682		16,703		17,385		—		17,385
Residential 1-4 Unit - Refinance		807		1,088		105,657		107,552		—		107,552
Short Term 1-4 Unit - Purchase		1,224		—		1,762		2,986		—		2,986
Short Term 1-4 Unit - Refinance		615		1,010		43,675		45,300		—		45,300
Total loans individually evaluated	$	7,810	$	11,912	$	256,531	$	276,253	$	165	$	276,418
Loans collectively evaluated
Commercial - Purchase	$	17,319	$	4,034	$	—	$	21,353	$	470,808	$	492,161
Commercial - Refinance		31,769		7,025		—		38,794		658,532		697,326
Residential 1-4 Unit - Purchase		14,905		5,580		—		20,485		370,900		391,385
Residential 1-4 Unit - Refinance		39,045		9,548		—		48,593		574,175		622,768
Short Term 1-4 Unit - Purchase		21,412		217		—		21,629		4,374		26,003
Short Term 1-4 Unit - Refinance		4,060		5,561		—		9,621		16,144		25,765
Total loans collectively evaluated	$	128,510	$	31,965	$	—	$	160,475	$	2,094,933	$	2,255,408
Ending balance	$	136,320	$	43,877	$	256,531	$	436,728	$	2,095,098	$	2,531,826

(1)Includes loans in bankruptcy and foreclosure less than 90 days past due.

14

In addition to the aging status, the Company also evaluates credit quality by accrual status. The following tables present the amortized cost in loans held for investment, excluding loans held for investment at fair value, based on accrual status and by loan origination year as of June 30, 2022 and December 31, 2021 (in thousands).

	Term Loans Amortized Cost Basis by Origination Year
June 30, 2022:	2022		2021		2020		2019		2018		Pre-2018		Total
Commercial - Purchase
Payment performance
Performing	$	215,509	$	268,001	$	41,591	$	64,227	$	39,948	$	33,304	$	662,580
Nonperforming		—		1,212		186		6,540		1,535		5,438		14,911
Total Commercial - Purchase	$	215,509	$	269,213	$	41,777	$	70,767	$	41,483	$	38,742	$	677,491
Commercial - Refinance
Payment performance
Performing	$	224,064	$	225,103	$	58,086	$	124,285	$	100,753	$	100,041	$	832,332
Nonperforming		540		8,266		3,857		21,462		20,646		25,671		80,442
Total Commercial - Refinance	$	224,604	$	233,369	$	61,943	$	145,747	$	121,399	$	125,712	$	912,774
Residential 1-4 Unit - Purchase
Payment performance
Performing	$	162,492	$	242,544	$	11,541	$	39,733	$	22,505	$	28,096	$	506,911
Nonperforming		985		8,063		2,169		3,042		3,474		5,152		22,885
Total Residential 1-4    Unit - Purchase	$	163,477	$	250,607	$	13,710	$	42,775	$	25,979	$	33,248	$	529,796
Residential 1-4 Unit - Refinance
Payment performance
Performing	$	247,970	$	314,865	$	26,150	$	95,470	$	44,360	$	62,256	$	791,071
Nonperforming		509		14,566		7,111		28,920		24,066		21,477		96,649
Total Residential 1-4    Unit - Purchase	$	248,479	$	329,431	$	33,261	$	124,390	$	68,426	$	83,733	$	887,720
Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	29,097	$	7,493	$	15,037	$	4,044	$	—	$	—	$	55,671
Nonperforming		—		—		995		1,202		105		—		2,302
Total Short Term 1-4    Unit - Purchase	$	29,097	$	7,493	$	16,032	$	5,246	$	105	$	—	$	57,973
Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	13,024	$	1,582	$	2,543	$	2,788	$	—	$	—	$	19,937
Nonperforming		—		244		12,464		20,264		5,041		—		38,013
Total Short Term 1-4    Unit - Refinance	$	13,024	$	1,826	$	15,007	$	23,052	$	5,041	$	—	$	57,950
Total Portfolio	$	894,190	$	1,091,939	$	181,730	$	411,977	$	262,433	$	281,435	$	3,123,704

15

	Term Loans Amortized Cost Basis by Origination Year
December 31, 2021	2021		2020		2019		2018		2017		Pre-2017		Total
Commercial - Purchase
Payment performance
Performing	$	277,618	$	45,836	$	81,541	$	46,637	$	24,164	$	16,365	$	492,161
Nonperforming		288		1,781		5,541		4,180		3,539		1,931		17,260
Total Commercial - Purchase	$	277,906	$	47,617	$	87,082	$	50,817	$	27,703	$	18,296	$	509,421
Commercial - Refinance
Payment performance
Performing	$	239,688	$	64,966	$	144,017	$	118,735	$	62,374	$	67,545	$	697,325
Nonperforming		2,482		3,949		26,012		26,869		16,492		10,131		85,935
Total Commercial - Refinance	$	242,170	$	68,915	$	170,029	$	145,604	$	78,866	$	77,676	$	783,260
Residential 1-4 Unit - Purchase
Payment performance
Performing	$	263,180	$	12,878	$	48,930	$	29,544	$	12,863	$	23,990	$	391,385
Nonperforming		1,372		2,749		3,896		3,736		3,487		2,145		17,385
Total Residential 1-4    Unit - Purchase	$	264,552	$	15,627	$	52,826	$	33,280	$	16,350	$	26,135	$	408,770
Residential 1-4 Unit - Refinance
Payment performance
Performing	$	343,199	$	31,334	$	114,145	$	59,825	$	31,774	$	42,491	$	622,768
Nonperforming		11,646		6,040		31,816		30,626		16,677		10,747		107,552
Total Residential 1-4    Unit - Purchase	$	354,845	$	37,374	$	145,961	$	90,451	$	48,451	$	53,238	$	730,320
Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	1,890	$	15,582	$	8,531	$	—	$	—	$	—	$	26,003
Nonperforming		—		1,565		1,316		105		—		—		2,986
Total Short Term 1-4    Unit - Purchase	$	1,890	$	17,147	$	9,847	$	105	$	—	$	—	$	28,989
Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	1,448	$	11,991	$	12,326	$	—	$	—	$	—	$	25,765
Nonperforming		1,038		15,819		22,618		5,825		—		—		45,300
Total Short Term 1-4    Unit - Refinance	$	2,486	$	27,810	$	34,944	$	5,825	$	—	$	—	$	71,065
Total Portfolio	$	1,143,849	$	214,490	$	500,689	$	326,082	$	171,370	$	175,345	$	2,531,825

Note 7 — Receivables Due From Servicers

The following tables summarize receivables due from servicers as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Securitizations		Warehouse and repurchase facilities and other		Total
Loan principal payments due from servicers	$	41,347	$	1,855	$	43,202
Other loan servicing receivables		13,024		1,414		14,438
Loan servicing receivables		54,371		3,269		57,640
Corporate and escrow advances receivable		17,985		63		18,048
Total receivables due from servicers	$	72,356	$	3,332	$	75,688

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	December 31, 2021
	Securitizations		Warehouse and repurchase facilities and other		Total
Loan principal payments due from servicers	$	42,344	$	1,165	$	43,509
Other loan servicing receivables		10,718		730		11,448
Loan servicing receivables		53,062		1,895		54,957
Corporate and escrow advances receivable		17,884		1,489		19,373
Total receivables due from servicers	$	70,946	$	3,384	$	74,330

Note 8 — Mortgage Servicing Rights

Mortgage loans serviced are related to the Century business and not included in the consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others amounted to $505.1 million and $520.6 million as of June 30, 2022 and December 31, 2021, respectively. The Company has elected to record its mortgage servicing rights using the fair value measurement method. Significant assumptions used in determining the fair value of servicing rights as of June 30, 2022 and December 31, 2021 include: 1) Weighted average discount rate of 8.1% and 8.0%, respectively. 2) Weighted average conditional prepayment rate of 2.2% and 3.2%, respectively. The following table presents the Company's mortgage servicing rights (in thousands):

	June 30, 2022		December 31, 2021
Balance at the beginning of year	$	7,152	$	—
Mortgage servicing rights acquired, at fair value		—		7,152
Additions		—		—
Fair value adjustments		1,286		—
Balance at end of period	$	8,438	$	7,152

Note 9 — Securitizations, Net

From May 2011 through June 2022, the Company completed twenty-three securitizations, issuing $4.9 billion of securities to third parties through twenty-three respective Trusts. The Company is the sole beneficial interest holder of the remaining Trusts, which are variable interest entities included in the consolidated financial statements. The transactions are accounted for as secured borrowings under U.S. GAAP. The securities are subject to redemption by the Company when the stated principal balance is less than a certain percentage, ranging from 5%–30% of the original stated principal balance of loans at issuance. As a result, the actual maturity dates of the securities issued could be earlier than their respective stated maturity dates, ranging from July 2045 through May 2052.

The following table summarizes the outstanding balance, net of discounts and deal costs, of the securities and the effective interest rate for the six months ended June 30, 2022 and 2021 ($ in thousands):

	Six Months Ended June 30,
Securitizations:	2022			2021
Securitizations, net	$	2,477,226		$	1,558,163
Interest expense		44,428			37,333
Average outstanding balance		2,175,263			1,545,969
Effective interest rate (1)		4.08	%		4.83	%

(1)Represents annualized interest expense divided by average gross outstanding balance and includes average rate of 3.38% and debt issuance cost amortization of 0.70% and average rate of 4.12% and debt issuance cost amortization of 0.71% for the six months ended June 30, 2022 and 2021, respectively.

Note 10 — Other Debt

Secured financings and warehouse facilities were utilized to finance the origination and purchase of commercial real estate mortgage loans. Warehouse facilities are designated to fund mortgage loans that are purchased and originated within specified underwriting guidelines. Most of these lines of credit fund less than 100% of the principal balance of the mortgage loans originated and purchased, requiring the use of working capital to fund the remaining portion.

(a)Secured Financing, Net (Corporate Debt)

On February 5, 2021, the Company entered into a five-year $175.0 million syndicated corporate debt agreement, the (“the 2021 Term Loan”). The 2021 Term Loan had an interest rate equal to one-month LIBOR plus 8.00% with a 1.00% LIBOR floor, and matures on February 4, 2026. A portion of the net proceeds from the 2021 Term Loan was used to redeem all the amounts owed pursuant to the 2019 debt agreement (“2019 Term Loan”). The remaining portion of the net proceeds from the 2021 Term Loan was used for loan originations and general corporate purposes. The 2021 Term Loan was paid off in March 2022.

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On March 15, 2022, the Company entered into a five-year $215.0 million syndicated corporate debt agreement, the (“the 2022 Term Loan”). The 2022 Term Loan bears interest at a fixed rate of 7.125% and matures on March 15, 2027. Interest on the 2022 Term Loan is paid every six months. A portion of the net proceeds from the 2022 Term Loan was used to redeem all the amounts owed pursuant to the 2021 Term Loan. The remaining portion of the net proceeds from the 2022 Term Loan is used for loan originations and general corporate purposes. As of June 30, 2022, the balance of the 2022 Term Loan was $215.0 million. The balance in the consolidated balance sheets is net of debt issuance costs of $5.8 million as of June 30, 2022 . The 2022 Term Loan is secured by substantially all assets of the Company not otherwise pledged under a securitization or warehouse facility and contains certain reporting and financial covenants. Should the Company fail to adhere to those covenants, the lenders have the right to demand immediate repayment that may require the Company to sell the collateral at less than the carrying amounts. As of June 30, 2022, the Company was in compliance with these covenants.

(b)Warehouse Repurchase and Revolving Loan Facilities, Net

On January 4, 2011, Century entered into a Master Participation and Facility Agreement with a bank (“Facility Agreement”). The Facility Agreement has a current extended maturity date of July 31, 2023, and is a short-term borrowing facility, collateralized by performing loans, with a maximum capacity of $60.0 million, and bears interest at one-month Secured Overnight Financing Rate (“SOFR”) plus 1.60% with a 0.25% floor.

On August 8, 2016, Century entered a Promissory Note Revolving Credit Line with a bank (“Revolving Credit Line”). The Revolving Credit Line has a current extended maturity date of July 31, 2023, and is a short-term unsecured borrowing line, with a maximum capacity of $3.0 million, and bears interest at SOFR plus 2.00% with a 0.25% floor.
 

On May 17, 2013, the Company entered into a Repurchase Agreement (“the 2013 Repurchase Agreement”) with a warehouse lender. The 2013 Repurchase Agreement is a modified mark-to-market agreement and has a current maturity date of September 29, 2023, and is a short-term borrowing facility, collateralized by a pool of performing loans, with a maximum capacity of $300.0 million, and bears interest at SOFR plus 3.25%. All borrower payments on loans financed under the warehouse repurchase facility are first used to pay interest on the facility. The effective interest rates were 5.0% and 4.2% as of June 30, 2022 and December 31, 2021, respectively.

On September 12, 2018, the Company entered into a three-year non-mark-to-market secured revolving loan facility agreement (“the Bank Credit Agreement”) with a bank. The Bank Credit Agreement has a current extended maturity date of November 10, 2023. During the borrowing period, the Company can take loan advances from time to time subject to availability. Each loan advance bears interest at the lesser of the one-month LIBOR Rate with a 0.75% floor, plus 3.5% per annum and the maximum rate, which is the highest lawful and non-usurious rate of interest applicable to the loan. The maximum capacity under this facility is $50.0 million. The effective interest rates were 4.2% and 7.3% as of June 30, 2022 and December 31, 2021, respectively.

On December 26, 2019, the Company entered into a $3.0 million loan agreement (“the 2019 Loan”) with a lender. The 2019 Loan was secured by five real properties acquired by the Company through foreclosure or by deed-in lieu of foreclosure. This loan was paid off in March 2022. The effective interest rate was 0.0% as of June 30, 2022 and 10.5% December 31, 2021.

On January 29, 2021, the Company entered into a non-mark-to-market Repurchase Agreement (“the 2021 Repurchase Agreement”) with a warehouse lender. The 2021 Repurchase Agreement has a maturity date of February 28, 2023, and is a short-term borrowing facility, collateralized by a pool of loans, with a maximum capacity of $200.0 million, and bears interest at one-month LIBOR plus a margin of 3.50% during the availability period and 4.50% during the amortization period. All borrower payments on loans financed under the warehouse repurchase facility are first used to pay interest on the facility. The effective interest rates were 5.6% and 5.9% as of June 30, 2022 and December 31, 2021, respectively.

On April 16, 2021, the Company entered into a non-mark-to-market Term Repurchase Agreement (“the 2021 Term Repurchase Agreement”) with a warehouse lender. The 2021 Term Repurchase Agreement has a maturity date of April 16, 2024, with a borrowing period through April 16, 2023. During the borrowing period, the Company can take loan advances from time to time subject to availability. Each loan advance bears interest at one-month LIBOR plus 3.0% per annum. The maximum capacity under this facility is $100.0 million. The effective interest rates were 3.4% and 3.5% as of June 30, 2022 and December 31, 2021, respectively.

On July 29, 2021, the Company entered into a non-mark-to-market Term Repurchase Agreement (“the July 2021 Term Repurchase Agreement”) with a warehouse lender. The July 2021 Term Repurchase Agreement has a maturity date of July 29, 2024, with an option to extend the term to July 29, 2025. During the borrowing period, the Company can take loan advances from time to time subject to availability. Each loan advance bears interest at one-month LIBOR with a 0.5% floor plus 4.5% per annum. The maximum capacity under this facility is $100.0 million. The effective interest rate was 4.2% as of June 30, 2022 and there was no balance outstanding as of December 31, 2021.

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Certain of the Company’s loans are pledged as security under the warehouse repurchase facilities and the revolving loan facility, which contain covenants. Should the Company fail to adhere to those covenants or otherwise default under the facilities, the lenders have the right to terminate the facilities and demand immediate repayment that may require the Company to sell the collateral at less than the carrying amounts. As of June 30, 2022 and December 31, 2021, the Company was in compliance with these covenants.

The following table summarizes the maximum borrowing capacity and current gross balances outstanding of the Company’s warehouse facilities and loan agreements as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022				December 31, 2021
	Period end balance (1)		Maximum borrowing capacity		Period end balance (1)		Maximum borrowing capacity
The 2021 term repurchase agreement	$	21,632	$	100,000	$	41,636	$	100,000
The 2021 repurchase agreement		78,608		200,000		82,580		200,000
The July 2021 term repurchase agreement		454		100,000		—		100,000
The 2013 repurchase agreement		83,923		300,000		153,499		200,000
The Bank credit agreement		25,587		50,000		22,385		50,000
The 2019 loan agreement		—		—		2,700		3,000
Total	$	210,204	$	750,000	$	302,800	$	653,000

(1)Warehouse repurchase facilities amounts in the consolidated balance sheets are net of debt issuance costs amounting to $1.8 million and $1.7 million as of June 30, 2022 and December 31, 2021, respectively.

The following table provides an overview of the activity and effective interest rate for the three and six months ended June 30, 2022 and 2021 ($ in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Warehouse and repurchase facilities:
Average outstanding balance	$	318,960		$	166,981		$	328,603		$	140,254
Highest outstanding balance at any month-end		379,169			250,927			426,959			250,927
Effective interest rate (1)		5.16	%		5.65	%		4.80	%		5.80	%

(1)Effective interest rate represents annualized interest expense divided by average gross outstanding balance. The rate includes average rate of 4.59% and debt issuance cost amortization of 0.57%, and average rate of 4.44% and debt issuance cost amortization of 1.21%, for the three months ended June 30, 2022 and 2021, respectively, and includes average rate of 4.23% and debt issuance cost amortization of 0.57%, and average rate 4.58% and debt issuance cost amortization 1.22% for the six months ended June 30, 2022 and 2021, respectively.

The following table provides a summary of interest expense that includes debt issuance cost amortization, interest, amortization of discount, and deal cost amortization for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Warehouse and repurchase facilities	$	4,115	$	2,361	$	7,880	$	4,067
Securitizations		24,637		18,205		44,428		37,332
Interest expense — portfolio related		28,752		20,566		52,308		41,399
Interest expense — corporate debt		4,182		4,309		21,322		11,658	(1)
Total interest expense	$	32,934	$	24,875	$	73,630	$	53,057

(1)Included in the $11.7 million of interest expense – corporate debt for the six months ended June 30, 2021 was the one-time debt issuance costs write-off of $2.9 million and prepayment fee of $1.6 million associated with the payoff of $78.0 million in outstanding principal amount in February 2021.

Note 11 — Commitments and Contingencies

(a)Repurchase Liability

When the Company sells loans, it is required to make normal and customary representations and warranties about the loans to the purchaser. The loan sale agreements generally require the Company to repurchase loans if the Company breaches a representation or warranty given to the loan purchaser. In addition, the Company may be required to repurchase loans as a result of borrower fraud or if a payment default occurs on a loan shortly after its sale.

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The Company records a repurchase liability relating to representations and warranties and early payment defaults. The method used to estimate the liability for repurchase is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults. The Company establishes a liability at the time loans are sold and continually updates the estimated repurchase liability. The level of the repurchase liability for representations and warranties and early payment default requires considerable management judgment. As of June 30, 2022 and December 31, 2021, the balance of repurchase liability was $376 thousand and $141 thousand, respectively, and it is included in accounts payable and accrued expenses in the consolidated balance sheets.

(b)Legal Proceedings

The Company is a party to various legal proceedings in the normal course of business. The Company, after consultation with legal counsel, believes the disposition of all pending litigation will not have a material effect on the Company’s consolidated financial condition or results of operations.

Note 12 — Stock-Based Compensation

The Company’s Amended and Restated 2020 Omnibus Incentive Plan, or the 2020 Plan, authorizes grants of stock‑based compensation instruments to purchase or issue up to 2,770,000 shares of Company common stock. In connection with its IPO in January 2020, the Company granted stock options to non-employee directors and certain employees, including named executive officers to purchase approximately 782,500 shares of common stock with an exercise price per share equal to the initial public offering price of $13.00. On December 24, 2020, the Company granted stock options to a non-employee director to purchase 12,500 shares of common stock with an exercise price per share equal to the grant date market price of $6.28.

In January 2021, the Company issued 480,000 shares of restricted stock awards to certain employees, including named executive officers at no cost to employees. In May 2021, the Company issued 26,511 shares of restricted stock awards to certain non-employee directors.

In February 2022, the Company issued 125,250 shares of restricted stock awards and 102,750 shares of performance stock unit awards to certain employees, including named executive officers at no cost to employees.

In May 2022, the Company issued 31,215 shares of restricted stock awards to certain non-employee directors.

Restricted stock-based awards vest ratably over a service period of three years from the date of the grant. Performance-based stock unit awards are linked to the average core net income annual growth over the three-year period of 2022 – 2024. Settlement of vested performance-based stock units will be made on the date that the Compensation Committee certifies the average core net income annual growth for the three-year period. Compensation expense related to restricted stock-based awards is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using the straight-line method. Compensation expense related to performance-based stock unit awards is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using an estimate of the probability of achieving the performance target. The estimates will be reviewed quarterly and the expense adjusted accordingly. The Company recognized $0.8 million and $0.5 million compensation expense related to the outstanding stock options, unvested restricted stock awards, and unvested performance-based stock unit awards granted to employees for the three months ended June 30, 2022 and 2021, respectively. Such amount is included in “Compensation and employee benefits” on the Consolidated Statement of Income. The amount of unrecognized compensation expense related to unvested stock options, restricted stock awards and performance-based stock unit awards totaled $5.3 million and $4.7 million as of June 30, 2022 and 2021, respectively.

Treasury share purchases represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. No share was purchased during the three months ended June 30, 2022. During the three months ended March 31, 2022, the Company purchased treasury shares of 33,647 at an average price of $13.61 per share.

Note 13 — Earnings Per Share

The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock and resulted in the issuance of common stock that shared in earnings.

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The following table presents the basic and diluted earnings per share calculations for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands, except per share data)				(In thousands, except per share data)
Basic EPS:
Net income attributable to common stockholders	$	10,645	$	9,453	$	13,766	$	12,849
Less: undistributed earnings attributable to participating securities		164		3,571		212		4,854
Net earnings attributable to common stock	$	10,481	$	5,882	$	13,554	$	7,995
Weighted average common shares outstanding		31,917		20,087		31,904		20,087
Basic earnings per common share	$	0.33	$	0.29	$	0.42	$	0.40
Diluted EPS:
Net income attributable to common stockholders	$	10,645	$	9,453	$	13,766	$	12,849
Weighted average common shares outstanding		31,917		20,087		31,904		20,087
Add dilutive effects for assumed conversion of Series A preferred stock		—		11,688		—		11,688
Add dilutive effects for warrants		1,986		1,985		2,057		1,786
Add dilutive effects for stock options		4		3		4		2
Add dilutive effects of unvested restricted stock awards		150		197		165		121
Weighted average diluted common shares outstanding		34,057		33,960		34,130		33,684
Diluted income per common share	$	0.31	$	0.28	$	0.40	$	0.38

The following table sets forth the number of shares excluded from the computation of diluted earnings per share, as their inclusion would have been anti-dilutive (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Stock options		773		773		773		773
Unvested restricted stock awards		125		—		125		—
Unvested performance-based stock units		103		—		103		—
Share equivalents excluded from EPS		1,001		773		1,001		773

Note 14 — Convertible Preferred Stock

On April 7, 2020, the Company issued and sold in a private placement Series A Convertible Preferred Stock plus warrants (the “Warrants”) to purchase additional shares of the Company’s common stock to funds affiliated with Snow Phipps and a fund affiliated with Pacific Investment Management Company LLC (TOBI). Snow Phipps and TOBI are considered affiliates and, therefore, are related parties to the Company. On October 8, 2021, the Company exercised its option to convert all of its Series A Convertible Preferred Stock into common stock.

The Warrants are exercisable at the warrant holder’s option at any time and from time to time, in whole or in part, until April 7, 2025 at an exercise price of $2.96 per share of common stock, with respect to 2,008,749 of the Warrants, and at an exercise price of $4.94 per share of common stock, with respect to 1,004,375 of the Warrants. The exercise price and the number of shares of common stock issuable upon exercise of the Warrants are subject to customary antidilution adjustments and certain issuances of common stock (or securities convertible into or exercisable for common stock) at a price (or having a conversion or exercise price) that is less than the then current exercise price. The Company is not required to affect an exercise of Warrants, if after giving effect to the issuance of common stock upon exercise of such Warrants such warrant holder together with its affiliates would beneficially own 49% or more of the Company’s outstanding common stock.

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Note 15 — Fair Value Measurements

Fair Value Determination

ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and requires disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

oLevel 1 - Valuation is based on quoted prices for identical instruments traded in active markets.

oLevel 2 - Valuation is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable and can be corroborated by market data.

oLevel 3 - Valuation is based on significant unobservable inputs for determining the fair value of assets or liabilities. These significant unobservable inputs reflect assumptions that market participants may use in pricing the assets or liabilities.

Given the nature of some of the Company’s assets and liabilities, clearly determinable market-based valuation inputs are often not available; therefore, these assets and liabilities are valued using internal estimates. As subjectivity exists with respect to the valuation estimates used, the fair values disclosed may not equal prices that can ultimately be realized if the assets are sold or the liabilities are settled with third parties.

Below is a description of the valuation methods for the assets and liabilities recorded at fair value on either a recurring or nonrecurring basis and for estimating fair value of financial instruments not recorded at fair value for disclosure purposes. While management believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the measurement date.

Cash and Cash Equivalents and Restricted Cash

Cash and restricted cash are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities and interest rates that approximate market, a Level 1 measurement.

Loans Held for Investment

Loans held for investment are recorded at their outstanding principal balance, net of purchase discounts, deferred loan origination fees/costs, and allowance for credit losses.

The Company determined the fair value estimate of loans held for investment using a third-party loan valuation model, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s mortgage loans held for investment are discount rates, prepayment speeds, loss severity, and default rates. Significant changes in any of those inputs could result in a significant change to the loans’ fair value measurement.

Collateral Dependent or Loans Individually Evaluated

Nonaccrual loans held for investment are evaluated individually and are adjusted to the fair value of the collateral when the fair value of the collateral is below the carrying value of the loan. To the extent a loan is collateral dependent, the Company determines the allowance for credit losses based on the estimated fair value of the underlying collateral. The fair value of each loan’s collateral is generally based on appraisals or broker price opinions obtained, less estimated costs to sell, a Level 3 measurement.

Loans Held for Sale

Loans held for sale are carried at the lower of cost or fair value, with fair value adjustments recorded on a nonrecurring basis. The Company uses a discounted cash flow model to estimate the fair value of loans held for sale, a Level 3 measurement.

Interest-Only Strips

The Company retains an interest-only strip on certain sales of held for sale loans. The interest-only strips are classified as trading securities under FASB ASC Topic 320, Investments-Debt Securities. The interest-only strips are measured based on their estimated fair values using a discounted cash flow model, a Level 3 measurement. Changes in fair value are reflected in income as they occur.

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Loans Held for Investment, at Fair Value

The Company has elected to account for certain purchased distressed loans held for investment, at fair value (the FVO Loans) using FASB ASC Topic 825, Financial Instruments (ASC 825). The FVO loans are measured based on their estimated fair values. Management identified all of these loans to be accounted for at estimated fair value at the instrument level. Changes in fair value are reflected in income as they occur.

The Company uses a third-party loan valuation model to estimate the fair value at instrument level, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s mortgage loans held for investment, at fair value are discount rate, property values, prepayment speeds, loss severity, and default rates. Significant changes in any of those inputs in isolation could result in a significant change to the loans’ fair value measurement.

Real Estate Owned, Net (REO)

Real estate owned, net is initially recorded at the property’s estimated fair value, based on appraisals or broker price opinions obtained, less estimated costs to sell, at the acquisition date, a Level 3 measurement. From time to time, nonrecurring fair value adjustments are made to real estate owned, net based on the current updated appraised value of the property, or management’s judgment and estimation of value based on recent market trends or negotiated sales prices with potential buyers.

Mortgage Servicing Rights

The Company determined the fair values based on a third-party valuation model that calculates the present value of estimated future net servicing income, a Level 3 measurement.

Secured Financing, Net (Corporate Debt)

The Company determined the fair values estimate of the secured financing using the estimated cash flows discounted at an appropriate market rate, a Level 3 measurement.

Warehouse Repurchase Facilities, Net

Warehouse repurchase facilities are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities of one-year or less and interest rates that approximate market plus a spread, a Level 2 measurement.

Securitizations, Net

The fair value estimate of securities issued is based on third-party valuation models that calculate estimated cash flows discounted at an appropriate market rate, a Level 3 measurement.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amounts of accrued interest receivable and accrued interest payable approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.

The Company does not have any off-balance sheet financial instruments.

Receivables Due From Servicers

The carrying amounts of receivables due from servicers approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.

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Fair Value Disclosures

The following tables present information on assets measured and recorded at fair value as of June 30, 2022 and December 31, 2021, by level, in the fair value hierarchy (in thousands):

	Fair value measurements using						Total at
June 30, 2022	Level 1		Level 2		Level 3		fair value
Recurring fair value measurements:
Loans held for investment, at fair value	$	—	$	—	$	1,351	$	1,351
Mortgage servicing rights		—		—		8,438		8,438
Total recurring fair value measurements		—		—		9,789		9,789
Nonrecurring fair value measurements:
Real estate owned, net		—		—		19,218		19,218
Individually evaluated loans requiring specific allowance, net		—		—		10,608		10,608
Total nonrecurring fair value measurements		—		—		29,826		29,826
Total assets	$	—	$	—	$	39,615	$	39,615

	Fair value measurements using						Total at
December 31, 2021	Level 1		Level 2		Level 3		fair value
Recurring fair value measurements:
Loans held for investment, at fair value	$	—	$	—	$	1,359	$	1,359
Mortgage servicing rights		—		—		7,152		7,152
Total recurring fair value measurements		—		—		8,511		8,511
Nonrecurring fair value measurements:
Loans held for sale, net		—		—		87,422		87,422
Real estate owned, net		—		—		17,557		17,557
Impaired loans requiring specific allowance, net		—		—		11,987		11,987
Total nonrecurring fair value measurements		—		—		116,966		116,966
Total assets	$	—	$	—	$	125,477	$	125,477

The following table presents gains and losses recognized on assets measured on a nonrecurring basis for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
Gain (loss) on assets measured on a nonrecurring basis	2022			2021			2022		2021
Loans held for sale, net	$	—		$	(15	)	$	—	$	2
Real estate held for sale, net		(143	)		(800	)		93		(1,235	)
Individually evaluated loans requiring specific allowance, net		434			1,029			242		720
Total net gain (loss)	$	291		$	214		$	335	$	(513	)

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The following tables present the primary valuation techniques and unobservable inputs related to Level 3 assets as of June 30, 2022 and December 31, 2021 ($ in thousands):

	June 30, 2022
Asset category	Fair value		Primary valuation technique	Unobservable input	Range	Weighted average
Individually evaluated    loans requiring specific    allowance, net	$	10,608	Market comparables	Selling costs	8.0%	8.0%
Real estate owned, net		19,218	Market comparables	Selling costs	8.0%	8.0%
Loans held for investment,    at fair value		1,351	Discounted cash flow	Discount rate	5.8%	5.8%
				Collateral value (% of UPB)	97% to 120.0%	107.0%
				Timing of resolution/payoff (months)	1.0 to 40.0	38.0
				Prepayment rate	1.0% to 30.0%	30.0%
				Default rate	0.0% to 6.3%	0.6%
				Loss severity rate	0.0% to 21.0%	4.0%
Mortgage servicing rights		8,438	Discounted cash flow	Discount rate	8% to 12.0%	8.1%
				Prepayment rate	0.8% to 6.0%	2.2%

	December 31, 2021
Asset category	Fair value		Primary valuation technique	Unobservable input	Range	Weighted average
Individually evaluated    loans requiring specific    allowance, net	$	11,987	Market comparables	Selling costs	8.0%	8.0%
Real estate owned, net		17,557	Market comparables	Selling costs	8.0%	8.0%
Loans held for investment,    at fair value		1,359	Discounted cash flow	Discount rate	5.8%	5.8%
				Collateral value (% of UPB)	95.0% to 120.0%	106.0%
				Timing of resolution/payoff (months)	1 to 38	34.8
				Prepayment rate	19.2% to 50%	30.0%
				Default rate	0.0% to 6.7%	1.0%
				Loss severity rate	0.0% to 13.4%	3.0%
Loans held for sale		87,422	Discounted cash flow	Discount rate	5.8%	5.8%
				Timing of resolution/payoff (months)	3 to 37	13.0
Mortgage servicing rights		7,152	Discounted cash flow	Discount rate	8.0% to 12.0%	8.0%
				Prepayment rate	2.4% to 3.5%	3.2%

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The following is a rollforward of loans that are measured at estimated fair value on a recurring basis for the periods indicated (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Beginning balance	$	1,352		$	1,364		$	1,359		$	1,539
Loans liquidated		—			—			—			(163	)
Principal paydowns		(7	)		(14	)		(24	)		(24	)
Total unrealized gain included in net income		6			20			16			18
Ending balance	$	1,351		$	1,370		$	1,351		$	1,370

The following is a rollforward of interest-only strips that are measured at estimated fair value on a recurring basis for the periods indicated (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021			2022		2021
Beginning balance	$	—	$	125		$	—	$	238
Interest-only strip additions		—		—			—		—
Interest-only strip write-offs		—		(44	)		—		(157	)
Total unrealized loss included in net income		—		—			—		—
Ending balance	$	—	$	81		$	—	$	81

The Company estimates the fair value of certain financial instruments on a quarterly basis. These instruments are recorded at fair value through the use of a valuation allowance only if they are individually evaluated. As described above, these adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. As of June 30, 2022 and December 31, 2021, the only financial assets measured at fair value, or lower of cost or fair value, were certain individually evaluated loans held for investment, loans held for sale, mortgage servicing rights, interest-only strips, REO and FVO loans, which were measured using unobservable inputs, including appraisals and broker price opinions on the values of the underlying collateral. Individually evaluated loans requiring an allowance were carried at approximately $10.6 million and $12.0 million as of June 30, 2022 and December 31, 2021, net of specific allowance for credit losses of approximately $1.2 million and $1.4 million, respectively.

A financial instrument is cash, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity on potentially favorable terms. The methods and assumptions used in estimating the fair values of the Company’s financial instruments are described above.

The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated (in thousands):

	June 30, 2022
	Carrying								Estimated
Asset category	Value		Level 1		Level 2		Level 3		Fair Value
Assets:
Cash	$	46,250	$	46,250	$	—	$	—	$	46,250
Restricted cash		9,217		9,217		—		—		9,217
Loans held for investment, net		3,118,799		—		—		3,295,277		3,295,277
Loans held for investment, at fair value		1,351		—		—		1,351		1,351
Accrued interest receivables		15,820		15,820		—		—		15,820
Mortgage servicing rights		8,438		—		—		8,438		8,438
Liabilities:
Secured financing, net	$	209,227	$	—	$	—	$	212,827	$	212,827
Warehouse repurchase facilities, net		208,390		—		208,390		—		208,390
Securitizations, net		2,477,226		—		—		2,312,506		2,312,506
Accrued interest payable		13,074		13,074		—		—		13,074

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	December 31, 2021
	Carrying								Estimated
Asset category	Value		Level 1		Level 2		Level 3		Fair Value
Assets:
Cash	$	35,965	$	35,965	$	—	$	—	$	35,965
Restricted cash		11,639		11,639		—		—		11,639
Loans held for sale, net		87,908		—		—		87,908		87,908
Loans held for investment, net		2,527,564		—		—		2,655,357		2,655,357
Loans held for investment, at fair value		1,359		—		—		1,359		1,359
Accrued interest receivable		13,159		13,159		—		—		13,159
Mortgage servicing rights		7,152		—		—		7,152		7,152
Liabilities:
Secured financing, net	$	162,845	$	—	$	—	$	170,843	$	170,843
Warehouse repurchase facilities, net		301,069		—		301,069		—		301,069
Securitizations, net		1,911,879		—		—		1,931,002		1,931,002
Accrued interest payable		6,254		6,254		—		—		6,254

Note 16 — Subsequent Events

On May 19, 2022, at the Company's annual meeting of stockholders, stockholders approved the Velocity Financial Employee Stock Purchase Plan (the “ESPP”) which authorizes 568,182 shares of Common Stock for issuance under the ESPP. The number of shares of Common Stock authorized for issuance under the ESPP shall automatically increase on the first day of each fiscal year, beginning with January 1, 2023, and continuing until (and including) January 1, 2032, with such annual increase equal to the lesser of (i) 568,182 shares, (ii) 1% of the number of shares of Common Stock issued and outstanding on December 31 of the immediately preceding fiscal year and (iii) an amount determined by the board of directors of the Company. The ESPP consists of two 6-month Offering Periods each year, with the stock purchases made at the end of each Offering Period. The ESPP’s first Offering Period started on July 1, 2022.

The Company has evaluated events that have occurred subsequent to June 30, 2022 through the issuance of the accompanying consolidated financial statements and has concluded there are no other subsequent events that would require recognition or disclosure in the accompanying consolidated financial statements.

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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 information included in our Annual Report on Form 10-K for the year ended December 31, 2021, as well as the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”).

In addition, the statements and assumptions in this Quarterly Report that are not statements of historical fact are forward-looking statements within the meaning of federal securities laws. In particular, statements about our plans, strategies and prospects as well as estimates of industry growth for the next quarter and beyond are forward-looking statements. For important information regarding these forward-looking statements, please see the discussion below under the caption “Cautionary Note on Forward-Looking Statements.”

References to “the Company,” “Velocity,” “we,” “us” and “our” refer to Velocity Financial, Inc. and include all of its consolidated subsidiaries, unless otherwise indicated or the context requires otherwise.

Business

We are a vertically integrated real estate finance company founded in 2004. We primarily originate and manage investor loans secured by 1-4 unit residential rental and commercial properties, which we refer to collectively as investor real estate loans. We originate loans nationwide across our extensive network of independent mortgage brokers which we have built and refined over the 18 years since our inception. Our objective is to be the preferred and one of the most recognized brands in our core market, particularly within our network of mortgage brokers.

We operate in a large and highly fragmented market with substantial demand for financing and limited supply of institutional financing alternatives. We have developed the highly-specialized skill set required to effectively compete in this market, which we believe has afforded us a durable business model. We offer competitive pricing to our borrowers by pursuing low-cost financing strategies and by driving front- end process efficiencies through customized technology designed to control the cost of originating a loan. Furthermore, by originating loans through our efficient and scalable network of approved mortgage brokers, we are able to maintain a wide geographical presence and nimble operating infrastructure capable of reacting quickly to changing market environments.

Our primary source of revenue is interest income earned on our loan portfolio. Our typical loan is secured by a first lien on the underlying property with a personal guarantee and, based on all loans in our portfolio as of June 30, 2022, has an average balance of approximately $397,000. As of June 30, 2022, our loan portfolio totaled $3.1 billion of UPB on properties in 45 states and the District of Columbia. The total portfolio had a weighted average loan-to-value ratio, or LTV at origination, of 68.2%, of which the 1-4 unit residential rental loans, which we refer to as investor 1-4 loans, represented 49.1% of the UPB. For the three months ended June 30, 2022, the annualized yield on our total portfolio was 7.97%.

We fund our portfolio primarily through a combination of committed and uncommitted secured warehouse facilities, securitizations, corporate debt and equity. The securitization market is our primary source of long-term financing. We have successfully executed twenty-three securitizations, resulting in a total of over $4.9 billion in gross debt proceeds from May 2011 through June 2022. We may also continue to sell loans from time to time for cash in lieu of holding the loans in our loan portfolio.

One of our core profitably measurements is our portfolio related net interest margin, which measures the difference between interest income earned on our loan portfolio and interest expense paid on our portfolio-related debt, relative to the amount of loans outstanding over the period. Our portfolio-related debt consists of our warehouse facilities and securitizations and excludes our corporate debt. For the three months ended June 30, 2022, our annualized portfolio related net interest margin was 4.10%, a slight decrease compared to the 4.25% for the quarter ended March 31, 2022, mainly as a result of rising interest rates during the three months ended June 30, 2022. We generate profits to the extent that our portfolio related net interest income exceeds our interest expense on corporate debt, provision for loan losses and operating expenses. For the three months ended June 30, 2022, we generated pre-tax income and net income of $14.7 million and $10.6 million, respectively.

On December 28, 2021, the Company acquired an 80% ownership interest in Century Health & Housing Capital, LLC (“Century”), paying a cash purchase price of $12.8 million. Century is a licensed “Ginnie Mae” issuer/servicer that provides government-insured Federal Housing Administration (FHA) mortgage financing for multifamily housing, senior housing and long-term care/assisted living facilities. Century originates loans through its borrower-direct origination channel and services the loans through its in-house servicing platform, which enables the formation of long-term relationships with its clients and drives strong portfolio retention. Century manages a servicing portfolio of $505.1 million and $520.6 million in UPB as of June 30, 2022 and December 31, 2021, respectively. Century’s pre-tax income for the six months ended June 30, 2022 and year ended December 31, 2021 was approximately $1.2 million and $2.3 million, respectively.

Items Affecting Comparability of Results

Due to a number of factors, our historical financial results may not be comparable, either from period to period, or to our financial results in future periods. We have summarized the key factors affecting the comparability of our financial results below.

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Recent Developments

Securitizations

During the quarter ended June 30, 2022, we completed three securitizations totaling $682.5 million of investor real estate loans.
 

At-The-Market Equity Offering Program

On September 3, 2021, we entered into separate Equity Distribution Agreements with JMP Securities LLC and Virtu Americas LLC to establish an at-the-market equity offering program (“ATM Program”) where we may issue and sell, from time to time, shares of our common stock. Our ATM Program allows for aggregate gross sales of our common stock of up to $50,000,000 provided that the number of shares sold under the ATM Program does not exceed 4,000,000. For the three months and six months ended June 30, 2022, no common stock was issued under our ATM Program.

Uncertainties Caused by COVID-19 and Other Events

The COVID-19 outbreak has caused significant disruption in business activity and the financial markets both globally and in the United States. The extent of the impact of COVID-19 on our operational and financial performance continued to depend on certain developments, including the duration and spread of the outbreak and impact on our customers, employees and vendors, impact of new variant strains of the virus and a new Monkey Pox virus, and the long-term success of the vaccines, some of which remained uncertain at this time and cannot be predicted. The Russia and Ukraine war that started in February 2022 has been impacting the global economy and adding fuel to high inflation and the US economy may be facing a recession given a decline in the gross domestic product for the last two quarters.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires certain judgments and assumptions, based on information available at the time of preparation of the consolidated financial statements, in determining accounting estimates used in preparation of the consolidated financial statements. The following discussion addresses the accounting policies that we believe apply to us based on the nature of our operations. Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all of the decisions and assessments used to prepare our financial statements are based upon reasonable assumptions given the information available at that time.

These polices and estimates relate to the allowance for loan losses and deferred income tax assets and liabilities. Our critical accounting policies and estimates are described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC.

How We Assess Our Business Performance

Net income is the primary metric by which we assess our business performance. Accordingly, we closely monitor the primary drivers of net income which consist of the following:

Net Interest Income

Net interest income is the largest contributor to our net income and is monitored on both an absolute basis and relative to provisions for loan losses and operating expenses. We generate net interest income to the extent that the rate at which we lend in our portfolio exceeds the cost of financing our portfolio, which we primarily achieve through long-term securitizations. Accordingly, we closely monitor the financing markets and maintain consistent dialogue with investors and financial institutions as we evaluate our financing sources and cost of funds.

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To evaluate net interest income, we measure and monitor: (1) the yields on our loans, (2) the costs of our funding sources, (3) our net interest spread and (4) our net interest margin. Net interest spread measures the difference between the rates earned on our loans and the rates paid on our funding sources. Net interest margin measures the difference between our annualized interest income and annualized interest expense, or net interest income, as a percentage of average loans outstanding over the specified time period.

Periodic changes in net interest income are primarily driven by: (1) origination volume and changes in average outstanding loan balances and (2) interest rates and changes in interest earned on our portfolio or paid on our debt. Historically, origination volume and portfolio size have been the largest contributors to the growth in our net interest income. We measure net interest income before and after interest expense related to our corporate debt and before and after our provisions for loan losses.

Credit Losses

We strive to minimize actual credit losses through our rigorous screening and underwriting process and life of loan portfolio management and special servicing practices. We closely monitor the credit performance of our loan portfolio, including delinquency rates and expected and actual credit losses, as a key factor in assessing our overall business performance.

Operating Expenses

We incur operating expenses from compensation and benefits related to our employee base, rent and other occupancy costs associated with our leased facilities, our third-party primary loan servicing vendors, professional fees to the extent we utilize third-party legal, consulting and advisory firms, and costs associated with the resolution and disposition of real estate owned, among other items. We monitor and strive to prudently manage operating expenses and to balance current period profitability with investment in the continued development of our platform. Because volume and portfolio size determine the magnitude of the impact of each of the above factors on our earnings, we also closely monitor origination volume along with all key terms of new loan originations, such as interest rates, loan-to-value ratios, estimated credit losses and expected duration.

Factors Affecting Our Results of Operations

Our results of operations depend on, among other things, the level of our net interest income, the credit performance of our loan portfolio and the efficiency of our operating platform. These measures are affected by a number of factors, including the demand for investor real estate loans, the competitiveness of the market for originating or acquiring investor real estate loans, the cost of financing our portfolio, the availability of funding sources and the underlying performance of the collateral supporting our loans. While we have been successful at managing these elements in the past, there are certain circumstances beyond our control, including the lingering impact of the COVID-19 pandemic, the Russia/Ukraine war, fears of a recession, and macroeconomic conditions and market fundamentals, which can all affect each of these factors and potentially impact our business performance.

Competition

The investor real estate loan market is highly competitive which could affect our profitability and growth. We believe we compete favorably through diversified borrower access driven by our extensive network of mortgage brokers and by emphasizing a high level of real estate and financial expertise, customer service, and flexibility in structuring transactions, as well as by attracting and retaining experienced managerial and marketing personnel. However, some of our competitors may be better positioned to market their services and financing programs because of their ability to offer more favorable rates and terms and other services.

Availability and Cost of Funding

Our primary funding sources have historically included cash from operations, warehouse facilities, term securitizations, corporate debt and equity. We believe we have an established brand in the term securitization market and that this market will continue to support our portfolio growth with long-term financing. Changes in macroeconomic conditions can adversely impact our ability to issue securitizations and, thereby, limit our options for long-term financing. In consideration of this potential risk, we have entered into a credit facility for longer-term financing that will provide us with capital resources to fund loan growth in the event we are not able to issue securitizations.

Four of our five warehouse facilities and our corporate debt have interest payment obligations tied to the one-month USD London Interbank Offered Rate, or LIBOR. One of our warehouse facilities has interest payment obligations tied to the Secured Overnight Offering Rate ("SOFR"). The authorized administrator of LIBOR confirmed during March 2021 that it intended to cease the publication or loss of representativeness of LIBOR. In particular, the last date of publication or representativeness of one-month USD LIBOR will be June 30, 2023. We expect that the index used in the calculation of the interest rate for our warehouse facilities and corporate debt will transition from LIBOR to a Secured Overnight Financing Rate (“SOFR”) or a suitable replacement index prior to June 20, 2023. As we renew our financing agreements with our warehouse facilities, we are working with our warehouse facilities to include language on the transition to SOFR. We do not expect the cessation of LIBOR nor the transition to a replacement index to have a material adverse effect on our cost of funding, results of operations or financial condition.

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Loan Performance

We underwrite and structure our loans to minimize potential losses. We believe our fully amortizing loan structures and avoidance of large balloon payments, coupled with meaningful borrower equity in properties, limit the probability of losses and that our proven in-house asset management capability allows us to minimize potential losses in situations where there is insufficient equity in the property. Our income is highly dependent upon borrowers making their payments and resolving delinquent loans as favorably as possible. Macroeconomic conditions can, however, impact credit trends in our core market and have an adverse impact on financial results.

Macroeconomic Conditions

The investor real estate loan market may be impacted by a wide range of macroeconomic factors such as interest rates, residential and commercial real estate prices, home ownership and unemployment rates, and availability of credit, among others. We believe our prudent underwriting, conservative loan structures and interest rate protections, and proven in-house asset management capability leave us well positioned to manage changing macroeconomic conditions.

Portfolio and Asset Quality

Key Portfolio Statistics

	June 30, 2022				December 31, 2021				June 30, 2021
	($ in thousands)
Total loans	$	3,090,258			$	2,587,221			$	2,070,186
Loan count		7,779				6,964				6,125
Average loan balance	$	397			$	372			$	338
Weighted average loan-to-value		68.2	%			67.7	%			66.7	%
Weighted average coupon		7.53	%			7.76	%			8.29	%
Nonperforming loans (UPB)	$	252,253		(A)	$	273,100		(A)	$	315,542		(A)
Nonperforming loans (% of total)		8.16	%	(A)		10.56	%	(A)		15.24	%	(A)

(A) Reflects the UPB of loans 90 days or more past due or placed on nonaccrual status. Includes $45.9 million of COVID-19 forbearance-granted loans placed on nonaccrual status as of June 30, 2022.

Total Loans. Total loans reflects the aggregate UPB at the end of the period. It excludes deferred origination costs, acquisition discounts, fair value adjustments and allowance for credit losses.

Loan Count. Loan count reflects the number of loans at the end of the period. It includes all loans with an outstanding principal balance.

Average Loan Balance. Average loan balance reflects the average UPB at the end of the period (i.e., total loans divided by loan count).

Weighted Average Coupon. Weighted average coupon reflects the weighted average loan rate at the end of the period.

Weighted Average Loan-to-Value. Loan-to-value, or LTV, reflects the ratio of the original loan amount to the appraised value of the underlying property at the time of origination. In instances where the LTV at origination is not available for an acquired loan, the LTV reflects our best estimate of value at the time of acquisition. Weighted average LTV is calculated for the population of loans outstanding at the end of each specified period using the original loan amounts and appraised LTVs at the time of origination of each loan. LTV is a key statistic because requiring the borrower to invest more equity in the collateral minimizes our exposure for future credit losses.

Nonperforming Loans. Loans that are 90 or more days past due, except for certain loans in our COVID-19 forbearance program, in bankruptcy, in foreclosure, or not accruing interest are considered nonperforming loans. The dollar amount of nonperforming loans presented in the table above reflects the UPB of all loans that meet this definition.

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Originations and Acquisitions

The following table presents new loan originations and acquisitions and includes average loan size, weighted average coupon and weighted average loan-to-value for the periods indicated:

($ in thousands)	Loan Count		Loan Balance		Average Loan Size		Weighted Average Coupon			Weighted Average LTV
Three Months Ended June 30, 2022:
Loan originations — held for investment		1,072	$	445,424	$	416		7.75	%		69.7	%
Loan originations — held for sale		—		—		—		(—	)%		(—	)%
Total loan originations		1,072	$	445,424	$	416		7.75	%		69.7	%
Loan acquisitions — held for investment		1		492		492		7.74	%		60.0	%
Total loans originated and acquired		1,073	$	445,916	$	416		7.75	%		69.7	%
Three Months Ended March 31, 2022:
Loan originations — held for investment		1,167	$	581,369	$	498		6.29	%		69.2	%
Loan originations — held for sale		—		—		—		(—	)%		(—	)%
Total loan originations		1,167	$	581,369	$	498		6.29	%		69.2	%
Loan acquisitions — held for investment		2		3,954		1,977		6.34	%		57.0	%
Total loans originated and acquired		1,169	$	585,323	$	501		6.30	%		69.1	%
Three Months Ended June 30, 2021:
Loan originations — held for investment		683	$	256,512	$	376		7.32	%		69.7	%
Loan originations — held for sale		—		—		—		(—	)%		(—	)%
Total loan originations		683	$	256,512	$	376		7.32	%		69.7	%
Loan acquisitions — held for investment		1		1,072		1,072		6.75	%		47.9	%
Total loans originated and acquired		684	$	257,584	$	377		7.32	%		69.6	%

During the second quarter of 2022, we originated $445.4 million of loans, which was a decrease of $136.0 million from $581.4 million primarily as a result of lower average loan balances from the quarter ended March 31, 2022, and an increase of $189.0 million, or 73.6%, from $256.5 million from the quarter ended June 30, 2021.

Loans Held for Investment and Loans Held for Investment at Fair Value

Our total portfolio of loans held for investment consists of both loans held for investment at amortized cost, which are presented in the consolidated balance sheet as loans held for investment, net, and loans held for investment at fair value, which are presented in the consolidated balance sheets as loans held for investment at fair value. The following tables show the various components of loans held for investment as of the dates indicated:

(in thousands)	June 30, 2022			March 31, 2022			June 30, 2021
Unpaid principal balance	$	3,090,258		$	2,799,947		$	2,062,362
Valuation adjustments on FVO loans		43			37			16
Deferred loan origination costs		34,754			34,334			26,708
Total loans held for investment, gross		3,125,055			2,834,318			2,089,086
Allowance for credit losses		(4,905	)		(4,664	)		(3,963	)
Loans held for investment, net	$	3,120,150		$	2,829,654		$	2,085,123

The following table illustrates the contractual maturities for our loans held for investment in aggregate UPB and as a percentage of our total held for investment loan portfolio as of the dates indicated:

	June 30, 2022					December 31, 2021					June 30, 2021
($ in thousands)	UPB		%			UPB		%			UPB		%
Loans due in less than one year	$	89,251		2.9	%	$	96,502		3.9	%	$	131,576		6.4	%
Loans due in one to five years		28,264		0.9			5,023		0.2			14,588		0.7
Loans due in more than five years		2,972,743		96.2			2,398,273		95.9			1,916,198		92.9
Total loans held for investment	$	3,090,258		100.0	%	$	2,499,798		100.0	%	$	2,062,362		100.0	%

Allowance for Loan Losses

For the December 31, 2021 CECL estimate, we used the COVID-19 severe stress scenario with a five-quarter reasonable and supportable forecast period followed by a four-quarter straight-line reversion period. We considered the potential impact of the Omicron variant and the effect of the variant on further supply chain disruptions. We also considered lower than forecasted employment numbers, expiring unemployment benefits, and an upcoming flu season.

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For the June 30, 2022 estimate, we considered a severe stress scenario with a six-quarter reasonable and supportable forecast period followed by a four-quarter straight-line reversion period. Management concluded that applying the severe stress scenario was appropriate given the uncertainty around future COVID cases, the war between Russia and Ukraine, spike in inflation, continued disruption in the supply chain, and concerns of a recession.

Our allowance for loan losses as of June 30, 2022 was $4.9 million compared to $4.7 million as of March 31, 2022 and $4.0 million as of June 30, 2021. The increase in allowance for credit losses from March 31, 2022 and from June 30, 2021 was primarily due to the growth in our loan portfolio. We strive to minimize actual credit losses through our rigorous screening and underwriting process, life of loan portfolio management and special servicing practices. Additionally, we believe borrower equity of 25% to 40% provides significant protection against credit losses. The various scenarios, the weighting of scenarios, as well as the forecast period and reversion to historical loss, is subject to change as conditions in the market change and the Company’s ability to forecast economic events evolves.

To estimate the allowance for credit losses in our loans held for investment portfolio, we follow a detailed internal review process, considering a number of different factors including, but not limited to, our ongoing analyses of loans, historical loss rates, relevant environmental factors, relevant market research, trends in delinquencies, effects and changes in credit concentrations, and ongoing evaluation of fair values.

The following table illustrates the activity in our allowance for credit losses over the periods indicated:

	Three Months Ended June 30,						Six Months Ended June 30,
($ in thousands)	2022			2021			2022			2021
Allowance for credit losses:
Beginning balance	$	4,663		$	5,881		$	4,262		$	5,845
Provision for loan losses		279			(1,000	)		1,009			(895	)
Charge-offs		(37	)		(918	)		(366	)		(987	)
Ending balance	$	4,905		$	3,963		$	4,905		$	3,963
Total loans held for investment (UPB), excluding FVO (1)	$	3,088,950		$	2,061,008		$	3,088,950		$	2,061,008
Allowance for credit losses / loans held for investment, excluding FVO		0.16	%		0.19	%		0.16	%		0.19	%

(1)Reflects the UPB of loans held for investment excluding loans held for investment at fair value (FVO). Loans held for investment, net on the consolidated balance sheets is net of allowance for credit losses of $4.9 million, and net deferred loan origination fees/costs of $34.8 million as of June 30, 2022.

Credit Quality – Loans Held for Investment and Loans Held for Investment at Fair Value

The following table provides delinquency information on our loans held for investment and loans held for investment at fair value by UPB as of the dates indicated:

($ in thousands)	June 30, 2022 (A)				COVID-19 Forbearance		December 31, 2021 (A)				COVID-19 Forbearance		June 30, 2021 (A)				COVID-19 Forbearance
Performing/Accruing:
Current	$	2,692,799	87.1	%	$	168,774	$	2,068,023	82.7	%	$	188,466	$	1,645,019	79.8	%	$	227,682
30-59 days past due		105,808	3.4			15,741		127,046	5.1			36,579		69,165	3.4			14,947
60-89 days past due		39,398	1.3			3,357		31,629	1.3			8,262		32,484	1.6			9,148
90+ days past due		—	—			—		—	—			—		152	0.0			152
Total Performing Loans		2,838,005	91.8			187,872		2,226,698	89.1			233,307		1,746,820	84.7			251,929
Nonperforming/Nonaccrual:
<90 days past due		16,878	0.6			2,545		19,533	0.8			5,325		20,740	1.0			4,622
90+ days past due		20,341	0.7			5,853		35,787	1.4			8,510		50,637	2.4			19,330
Bankruptcy		19,560	0.6			3,551		20,038	0.8			6,242		17,659	0.9			6,560
In foreclosure		195,474	6.3			36,493		197,742	7.9			39,045		226,506	11.0			60,001
Total nonperforming loans		252,253	8.2			48,442		273,100	10.9			59,122		315,542	15.3			90,513
Total loans held for investment	$	3,090,258	100.0	%	$	236,314	$	2,499,798	100.0	%	$	292,429	$	2,062,362	100.0	%	$	342,442

(A)Balance includes $236.3 million UPB of loans held for investment as of June 30, 2022, $292.4 million as of December 31, 2021, and $342.4 million as of June 30, 2021 in our COVID-19 forbearance program.

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Other than loans in the COVID-19 forbearance program, loans that are 90+ days past due, in bankruptcy, in foreclosure, or not accruing interest are considered nonperforming loans. Nonperforming loans were $252.3 million, or 8.2% of our held for investment loan portfolio as of June 30, 2022, compared to $273.1 million, or 10.9% as of December 31, 2021, and $315.5 million, or 15.3% of the held for investment loan portfolio as of June 30, 2021. The decrease in nonperforming loans to total loans held for investment was primarily attributed to loan resolutions by our Special Servicing department, along with improvement in the U.S. economy. We believe the significant equity cushion at origination and the active management of loans will continue to minimize credit losses on the resolution of defaulted loans and disposition of REO properties.

Historically, most loans that become nonperforming resolve prior to converting to REO. This is due to low LTVs at origination and our active management of the portfolio. The following tables summarize the resolution activities of loans that became nonperforming prior to the beginning of the periods indicated or became nonperforming and subsequently resolved during the periods indicated. We resolved $47.1 million of long-term and short-term non-performing loans during the quarter ended June 30, 2022 as compared to $58.2 million during the quarter ended June 30, 2021. Including REO resolutions, we realized net gains of $5.7 million and $2.3 million during the quarter ended June 30, 2022 and 2021, respectively. This is largely the result of collecting default interest and prepayment penalties in excess of the contractual principal and interest due on loans.

The table below includes nonperforming loan resolutions for our long-term loans.

	Three Months Ended
Long-Term Loans	June 30, 2022					March 31, 2022					June 30, 2021
($ in thousands)	UPB		Gain / (Loss)			UPB		Gain / (Loss)			UPB		Gain / (Loss)
Resolved — paid in full	$	16,934	$	3,303		$	9,144	$	474		$	21,925	$	1,446
Resolved — paid current		17,407		129			7,597		117			14,949		219
Resolved — REO sold		2,107		816			2,522		469			947		(2	)
Total resolutions	$	36,448	$	4,248		$	19,263	$	1,060		$	37,821	$	1,663
Recovery rate on resolved    nonperforming UPB				111.7	%				105.5	%				104.4	%

The table below includes nonperforming loan resolutions for our short-term loans, now being held for investment, and also includes loans that were granted a COVID-19 forbearance in 2020. Prior to January 1, 2021, nonperforming loan resolutions presented only consisted of long-term nonperforming loans held for investment since the short-term loans, or loans with a maturity of two-year or less, were being held for sale until later in 2020. The short-term loans do not require prepayment fees and usually result in a lower gain when paid in full, as compared to long term loans.

	Three Months Ended
Short-Term and Forbearance Loans	June 30, 2022					March 31, 2022					June 30, 2021
($ in thousands)	UPB		Gain / (Loss)			UPB		Gain / (Loss)			UPB		Gain / (Loss)
Resolved — paid in full	$	9,913	$	976		$	13,820	$	646		$	13,517	$	682
Resolved — paid current		2,877		22			3,783		39			7,794		59
Resolved — REO sold		1,262		500			503		35			164		(73	)
Total resolutions	$	14,052	$	1,498		$	18,106	$	720		$	21,475	$	668
Recovery rate on resolved    nonperforming UPB				110.7	%				104.0	%				103.1	%

Our charge-offs incurred have been small as a percentage of nonperforming loans held for investment. The table below shows our actual loan losses for the periods indicated.

	Six Months Ended				Three Months Ended				Six Months Ended
($ in thousands)	June 30, 2022				March 31, 2022				June 30, 2021
Average nonperforming loans for the period (1)	$	267,998			$	278,349			$	334,120
Charge-offs		366				328				987
Charge-offs / Average nonperforming loans for the period (1)		0.27	%	(2)		0.47	%	(2)		0.59	%	(2)

(1)Reflects the monthly average of nonperforming loans held for investment during the period.

(2)Reflects annualized year-to-date charge-offs to average nonperforming loans for the period.

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Concentrations – Loans Held for Investment

As of June 30, 2022, our held for investment loan portfolio was concentrated in investor 1-4 loans, representing 49.1% of the UPB. Mixed used properties represented 13.3% of the UPB. No other property type represented more than 10.0% of our held for investment loan portfolio. By geographically, the principal balance of our loans held for investment were concentrated 23.6% in California, 20.8% in New York, 13.4% in Florida, and 7.6% in New Jersey.

Property Type	June 30, 2022
($ in thousands)	Loan Count		UPB		% of Total UPB
Investor 1-4		4,440	$	1,517,337		49.1	%
Mixed use		979		409,874		13.3
Retail		599		298,239		9.7
Multifamily		526		289,281		9.4
Warehouse		324		216,716		7.0
Office		423		186,202		6.0
Other(1)		488		172,609		5.5
Total loans held for investment		7,779	$	3,090,258		100.0	%

(1)All other properties individually comprise less than 5.0% of the total unpaid principal balance.

Geography (State)	June 30, 2022
($ in thousands)	Loan Count		UPB		% of Total UPB
California		1,144	$	729,722		23.6	%
New York		1,165		643,716		20.8
Florida		1,117		414,676		13.4
New Jersey		776		234,383		7.6
Other(1)		3,577		1,067,761		34.6
Total loans held for investment		7,779	$	3,090,258		100.0	%

(1)All other states individually comprise less than 5.0% of the total unpaid principal balance.

Loans Held for Sale

The following tables show the various components of loans held for sale as of the dates indicated:

($ in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
UPB	$	—	$	87,422	$	7,823
Valuation adjustments		—		—		(15	)
Deferred loan origination fees, net		—		486		109
Total loans held for sale, net	$	—	$	87,908	$	7,917

Real Estate Owned (REO)

REO includes real estate we acquire through foreclosure or by deed-in-lieu of foreclosure. REO assets are initially recorded at fair value, less estimated costs to sell, on the date of foreclosure. Adjustments that reduce the carrying value of the loan to the fair value of the real estate at the time of foreclosure are recognized as charge-offs in the allowance for credit losses. Positive adjustments at the time of foreclosure are recognized in other operating income. Subsequent to foreclosure, we periodically obtain new valuations, reduction in fair value are reflected as valuation adjustments.

As of June 30, 2022, our REO included 39 properties with a lower of cost or estimated fair value of $19.2 million compared to 38 properties with a lower of cost or estimated fair value of $16.2 million as of March 31, 2022.

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Key Performance Metrics

	Three Months Ended
($ in thousands)	June 30, 2022 (1)			March 31, 2022 (1)				June 30, 2021 (1)
Average loans	$	2,973,680		$	2,682,851			$	2,022,486
Portfolio yield		7.97	%		7.76	%			8.90	%
Average debt — portfolio related		2,651,300			2,356,433				1,710,276
Average debt — total company		2,866,300			2,535,348				1,876,611
Cost of funds — portfolio related		4.34	%		4.00	%			4.81	%
Cost of funds — total company		4.60	%		6.42	%	(2)		5.30	%
Net interest margin — portfolio related		4.10	%		4.25	%			4.83	%
Net interest margin — total company		3.54	%		1.69	%	(2)		3.98	%
Charge-offs/Average loans held for investment		0.27	%		0.05	%			0.05	%
Pre-tax return on equity		16.42	%		4.42	%	(2)		22.57	%
Return on equity		12.06	%		3.65	%	(2)		16.56	%

(1)Percentages are annualized.

(2)Excluding the one-time debt issuance cost write-off of $7.7 million and prepayment penalties of $5.1 million associated with the $170.8 million payoff
of our corporate debt in March 2022, key performance metrics for the three months ended March 31, 2022 are as follows: Costs of funds – total
company 4.40%; Net interest margin – total company 3.60%; Pre-tax return on equity 18.90%; and Return on equity 14.16%.

Average Loans

Average loans reflects the daily average of total outstanding loans, including both loans held for investment and loans held for sale, as measured by UPB, over the specified time period.

Portfolio Yield

Portfolio yield is an annualized measure of the total interest income earned on our loan portfolio as a percentage of average loans over the given period. Interest income includes interest earned on performing loans, cash interest received on nonperforming loans, default interest and prepayment fees. The fluctuations in our portfolio yield over the periods shown was primarily driven by loans placed on non-accrual status during the periods.

Average Debt — Portfolio Related and Total Company

Portfolio-related debt consists of borrowings related directly to financing our loan portfolio, which includes our warehouse facilities and securitizations. Total company debt consists of portfolio- related debt and corporate debt. The measures presented here reflect the monthly average of all portfolio- related and total company debt, as measured by outstanding principal balance, over the specified time period.

Cost of Funds — Portfolio Related and Total Company

Portfolio related cost of funds is an annualized measure of the interest expense incurred on our portfolio-related debt as a percentage of average portfolio-related debt outstanding over the given period. Total company cost of funds is an annualized measure of the interest expense incurred on our portfolio-related debt and corporate debt outstanding over the given period. Interest expense includes the amortization of expenses incurred in connection with our portfolio related financing activities and corporate debt. Through the issuance of long-term securitizations, we have been able to fix a significant portion of our borrowing costs over time. The strong credit performance on our securitizations has allowed us to issue debt at attractive rates.

Our portfolio related cost of funds increased to 4.34% for the three months ended June 30, 2022 from 4.00% for the three months ended March 31, 2022 and decreased from 4.81% for the three months ended June 30, 2021.

Net Interest Margin — Portfolio Related and Total Company

Portfolio related net interest margin measures the difference between the interest income earned on our loan portfolio and the interest expense paid on our portfolio-related debt as a percentage of average loans over the specified time period. Total company net interest margin measures the difference between the interest income earned on our loan portfolio and the interest expense paid on our portfolio-related debt and corporate debt as a percentage of average loans over the specified time period.

Over the periods shown below, our portfolio related net interest margin of 4.10% for the three months ended June 30, 2022 decreased from 4.25% for the three months ended March 31, 2022, and decreased from 4.83% for the three months ended June 30, 2021 primarily due to the decrease in average loan yield during the six months ended June 30, 2022.

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Our total company net interest margin decreased to 3.54% for the three months ended June 30, 2022 from 3.98% for the three months ended June 30, 2021 and increased from 1.69% for the three months ended March 31, 2022, respectively. The decrease in total company net interest margin during the three months ended June 30, 2022 from the three months ended June 30, 2021 was primarily due to the decrease in average loan yield. The increase in total company net interest margin from March 31, 2022 was primarily due to the prepayment fees paid and the unamortized debt issuance write-off associated with the payoff of our corporate debt in March 2022.

The following tables show the average outstanding balance of our loan portfolio and portfolio-related debt, together with interest income and the corresponding yield earned on our portfolio, and interest expense and the corresponding rate paid on our portfolio-related debt for the periods indicated:

	Three Months Ended
	June 30, 2022							March 31, 2022								June 30, 2021
			Interest		Average					Interest		Average						Interest		Average
	Average		Income /		Yield /			Average		Income /		Yield /				Average		Income /		Yield /
($ in thousands)	Balance		Expense		Rate (1)			Balance		Expense		Rate (1)				Balance		Expense		Rate (1)
Loan portfolio:
Loans held for sale	$	62,987						$	69,092							$	11,524
Loans held for investment		2,910,693							2,613,759								2,010,962
Total loans	$	2,973,680	$	59,243		7.97	%	$	2,682,851	$	52,049		7.76	%		$	2,022,486	$	44,978		8.90	%
Debt:
Warehouse facilities	$	318,960	$	4,115		5.16	%	$	338,247	$	3,765		4.45	%		$	166,981	$	2,361		5.66	%
Securitizations		2,332,340		24,637		4.23	%		2,018,186		19,791		3.92	%			1,543,295		18,205		4.72	%
Total debt - portfolio related		2,651,300		28,752		4.34	%		2,356,433		23,556		4.00	%			1,710,276		20,566		4.81	%
Corporate debt		215,000		4,182		7.78	%		178,915		17,140		38.32	%	(4)		166,335		4,309		10.36	%
Total debt	$	2,866,300	$	32,934		4.60	%	$	2,535,348	$	40,696		6.42	%		$	1,876,611	$	24,875		5.30	%
Net interest spread -    portfolio related (2)						3.63	%						3.76	%							4.08	%
Net interest margin -    portfolio related						4.10	%						4.25	%							4.83	%
Net interest spread -    total company (3)						3.37	%						1.34	%	(4)						3.59	%
Net interest margin -    total company						3.54	%						1.69	%	(4)						3.98	%

(1)Annualized.

(2)Net interest spread — portfolio related is the difference between the rate earned on our loan portfolio and the interest rates paid on our portfolio-related debt.

(3)Net interest spread — total company is the difference between the rate earned on our loan portfolio and the interest rates paid on our total debt.

(4)Excluding the one-time debt issuance costs write-off of $7.7 million and prepayment penalties of $5.1 million associated with the $170.8 million repayment of our corporate debt in March 2022, the Corporate debt average rate would have been 9.70%; Net interest spread — total company would have been 3.36%; and Net interest margin — total company would have been 3.60% for the three months ended March 31, 2022.

Charge-Offs

Our annualized charge-off rate for the three months ended June 30, 2022 remained low at 0.27% compared to 0.47% for the three months ended March 31, 2022 and 0.05% for the three months ended June 30, 2021. The charge-offs rate reflects year-to-date annualized charge-offs as a percentage of average loans held for investment for the respective quarter. We do not record charge-offs on our loans held for sale which are carried at the lower of cost or estimated fair value.

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Pre-Tax Return on Equity and Return on Equity

Pre-tax return on equity and return on equity reflect income before income taxes and net income, respectively, as a percentage of the monthly average stockholders’ equity over the specified period. Pre-tax return on equity and return on equity were higher during the quarter ended June 30, 2022 compared to the quarter ended March 31, 2022 due to the prepayment fees and write-off of unamortized debt issuance cost of approximately $12.8 million associated with the payoff of our corporate debt during the quarter ended March 31, 2022. Pre-tax return on equity and return on equity were lower during the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021 due to the conversion of Series A Preferred Stock to common stock in October 2021.

	Three Months Ended
($ in thousands)	June 30, 2022			March 31, 2022 (2)			June 30, 2021
Income before income taxes (A)	$	14,664		$	3,911		$	12,885
Net income (B)		10,771			3,231			9,453
Monthly average balance:
Stockholders' equity (C)		357,218			353,635			228,314
Pre-tax return on equity (A)/(C) (1)		16.4	%		4.4	%		22.6	%
Return on equity (B)/(C) (1)		12.1	%		3.7	%		16.6	%

(1)Annualized.

(2)Excluding the one-time debt issuance cost write-off of $7.7 million and prepayment penalties of $5.1 million associated with the $170.8 million payoff of our corporate debt in March 2022, income before income taxes would have been $16.7 million; net income would have been $16.0 million; pre-tax return on equity would have been 18.90%; and return on equity would have been 14.16% for the three months ended March 31, 2022.

Components of Results of Operations

Interest Income

We accrue interest on the UPB of our loans in accordance with the individual terms and conditions of each loan, discontinuing interest and reversing previously accrued interest once a loan becomes 90 days or more past due (nonaccrual status). When a loan is placed on nonaccrual status, the accrued and unpaid interest is reversed as a reduction to interest income and accrued interest receivable. Interest income is subsequently recognized only to the extent that cash payments are received or when the loan has returned to accrual status. Payments received on nonaccrual loans are first applied to interest due, then principal. Interest accrual resumes once a borrower has made all principal and interest payments due, bringing the loan back to current status.

Interest income on loans held for investment is comprised of interest income on loans and prepayment fees less the amortization of deferred net costs related to the origination of loans. Interest income on loans held for sale is comprised of interest income earned on loans prior to their sale. The net fees and costs associated with loans held for sale are deferred as part of the carrying value of the loan and recognized as a gain or loss on the sale of the loan.

Interest Expense — Portfolio Related

Portfolio related interest expense is incurred on the debt we incur to fund our loan origination and portfolio activities and consists of our warehouse facilities and securitizations. Portfolio related interest expense also includes the amortization of expenses incurred as a result of issuing the debt, which are amortized using the level yield method. Key drivers of interest expense include the debt amounts outstanding, interest rates, and the mix of our securitizations and warehouse liabilities.

Net Interest Income — Portfolio Related

Portfolio related net interest income represents the difference between interest income and portfolio related interest expense.

Interest Expense — Corporate Debt

Interest expense on corporate debt primarily consists of interest expense paid with respect to the 2021 Term Loan and the 2022 Term Loan, as reflected on our consolidated balance sheets, and the related amortization of deferred debt issuance costs.

Net Interest Income

Net interest income represents the difference between portfolio related net interest income and interest expense on corporate debt.

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Provision for Loan Losses

Effective January 1, 2020, we adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments replacing the incurred loss accounting approach with the current expected credit loss (CECL) approach. Under the CECL methodology, the allowance for credit losses is calculated using a third-party model with our historical loss rates by segment, loans position as of the balance sheet date, and assumptions from us.

Other Operating Income

Gain on Disposition of Loans. When we sell a loan held for sale, we record a gain or loss that reflects the difference between the proceeds received for the sale of the loans and their respective carrying values. The gain or loss that we ultimately realize on the sale of our loans held for sale is primarily determined by the terms of the originated loans, current market interest rates and the sales price of the loans. In addition, when we transfer a loan to REO, we record the REO at its fair value at the time of the transfer. The difference between the fair value of the real estate and the carrying value of the loan is recorded as a gain or a loan charge-off.

Unrealized Gain/(Loss) on Fair Value Loans. We have elected to account for certain purchased distressed loans at fair value using FASB ASC Topic 825, Financial Instruments (ASC 825). We regularly estimate the fair value of these loans as discussed more fully in the notes to our consolidated financial statements. Changes in fair value subsequent to initial recognition of fair value loans are reported as unrealized gain/(loss) on fair value loans, a component of other operating income within the consolidated statements of income.

Other Income. Other income includes the following:

Unrealized Gains/(Losses) on Retained Interest Only Securities. As part of the proceeds received for the sale of our held for sale loans, we may receive an interest only security. Changes in fair value subsequent to initial recognition are reported as unrealized gains/(losses) on interest-only securities.

Valuation Allowance on Loans Held for Sale. Loans held for sale are carried at the lower of cost or estimated fair value. Adjustments to the carrying value of loans held for sale to estimate fair value are reported as valuation allowance.

Fee Income. In certain situations, we collect fee income by originating loans and realizing miscellaneous fees.

Operating Expenses

Compensation and Employee Benefits. Costs related to employee compensation, commissions and related employee benefits, such as health, retirement, and payroll taxes.

Rent and Occupancy. Costs related to occupying our locations, including rent, maintenance and property taxes.

Loan Servicing. Costs related to our third-party servicers.

Professional Fees. Costs related to professional services, such as external audits, legal fees, tax, compliance and outside consultants.

Real Estate Owned, Net. Costs related to our real estate owned, net, including gains/(losses) on disposition of REO, maintenance of REO properties, and taxes and insurance.

Other Operating Expenses. Other operating expenses consist of general and administrative costs such as, travel and entertainment, marketing, data processing, insurance and office equipment.

Provision for Income Taxes

The provision for income taxes consists of the current and deferred U.S. federal and state income taxes we expect to pay, currently and in future years, with respect to the net income for the year. The amount of the provision is derived by adjusting our reported net income with various permanent differences. The tax- adjusted net income amount is then multiplied by the applicable federal and state income tax rates to arrive at the provision for income taxes.

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Consolidated Results of Operations

The following table summarizes our consolidated results of operations for the periods indicated:

	Three Months Ended June 30,					Six Months Ended June 30,
($ in thousands)	2022		2021			2022		2021
Interest income	$	59,243	$	44,978		$	111,292	$	85,685
Interest expense - portfolio related		28,752		20,566			52,308		41,399
Net interest income - portfolio related		30,491		24,412			58,984		44,286
Interest expense - corporate debt		4,182		4,309			21,322		11,658
Net interest income		26,309		20,103			37,662		32,628
Provision for (reversal of) loan losses		279		(1,000	)		1,009		(895	)
Net interest income after provision for loan losses		26,030		21,103			36,653		33,523
Other operating income		3,039		2,432			8,687		5,233
Total operating expenses		14,279		10,650			26,529		21,267
Income before income taxes		14,790		12,885			18,811		17,489
Less net income attributable to noncontrolling interests		126		—			236		—
Income tax expense		4,019		3,432			4,809		4,640
Net income	$	10,645	$	9,453		$	13,766	$	12,849

Net Interest Income — Portfolio Related

	Three Months Ended June 30,						Six Months Ended June 30,
($ in thousands)	2022		2021		$ Change		2022		2021		$ Change
Interest income	$	59,243	$	44,978	$	14,265	$	111,292	$	85,685	$	25,607
Interest expense - portfolio related		28,752		20,566		8,186		52,308		41,399		10,909
Net interest income - portfolio related	$	30,491	$	24,412	$	6,079	$	58,984	$	44,286	$	14,698

Portfolio related net interest income is the largest contributor to our net income. Our portfolio related net interest income increased by 24.9% or $6.1 million from $24.4 million for the three months ended June 30, 2021 to $30.5 million for the three months ended June 30, 2022. The increase was driven by a combination of higher portfolio balance, increased recoveries from delinquent loans, and a decrease in nonperforming loans.

Interest Income. Interest income increased by $14.3 million to $59.2 million for the three months ended June 30, 2022, compared to $45.0 million for the three months ended June 30, 2021. The increase was primarily attributable to higher portfolio balances offset by a decrease in the average loan yield, which decreased from 8.90% for the three months ended June 30, 2021 to 7.97% for the three months ended June 30, 2022.

The following tables distinguish between the change in interest income attributable to change in volume and the change in interest income attributable to change in rate for the three and six months ended June 30, 2022 and 2021, respectively. The effect of changes in volume is determined by multiplying the change in average loan balance (i.e., $951.2 million) by the previous period’s average yield (i.e., 8.90%). The effect of rate changes is calculated by multiplying the change in average yield (i.e., (0.93)%) by the current period’s average loan balance (i.e., $3.0 billion).

	Three Months Ended June 30, 2022 and 2021
($ in thousands)	Average Loans		Interest Income			Average Yield (1)
Three months ended June 30, 2022	$	2,973,680	$	59,243			7.97	%
Three months ended June 30, 2021		2,022,486		44,978			8.90	%
Volume variance		951,194		21,154
Rate variance				(6,889	)		(0.93	)%
Total interest income variance			$	14,265
(1) Annualized.

	Six Months Ended June 30, 2022 and 2021
($ in thousands)	Average Loans		Interest Income			Average Yield (1)
Six Months Ended June 30, 2022	$	2,828,266	$	111,292			7.87	%
Six Months Ended June 30, 2021		1,979,575		85,685			8.66	%
Volume variance		848,691		36,735
Rate variance				(11,128	)		(0.79	)%
Total interest income variance			$	25,607
(1) Annualized.

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Interest Expense — Portfolio Related. Portfolio related interest expense, which consists of interest incurred on our warehouse facilities and securitizations, increased from $20.6 million for the three months ended June 30, 2021 to $28.8 million for the three months ended June 30, 2022. Portfolio related interest expense increased from $41.4 million for the six months ended June 30, 2021 to $52.3 million for the six months ended June 30, 2022, primarily attributable to a higher loan portfolio being financed partially offset by a significantly lower cost of funds.

The following tables present the information regarding the portfolio related interest expense and distinguishes between the change in interest expense attributable to changes in the average outstanding debt balance (volume) versus changes in cost of funds (rate) for the three and six months ended June 30, 2022 and 2021, respectively.

	Three Months Ended June 30, 2022 and 2021
($ in thousands)	Average Debt (1)		Interest Expense			Cost of Funds (2)
Three months ended June 30, 2022	$	2,651,300	$	28,752			4.34	%
Three months ended June 30, 2021		1,710,276		20,567			4.81	%
Volume variance		941,024		11,316
Rate variance				(3,131	)		(0.47	)%
Total interest expense variance			$	8,185

(1)Includes securitizations and warehouse agreements.

(2)Annualized.

	Six Months Ended June 30, 2022 and 2021
($ in thousands)	Average Debt (1)		Interest Expense			Cost of Funds (2)
Six Months Ended June 30, 2022	$	2,503,866	$	52,308			4.18	%
Six Months Ended June 30, 2021		1,686,223		41,399			4.91	%
Volume variance		817,643		20,074
Rate variance				(9,165	)		(0.73	)%
Total interest expense variance			$	10,909

(1)Includes securitizations and warehouse agreements.

(2)Annualized.

Net Interest Income After Provision for Loan Losses

	Three Months Ended June 30,								Six Months Ended June 30,
($ in thousands)	2022		2021			$ Change			2022		2021			$ Change
Net interest income - portfolio related	$	30,491	$	24,412		$	6,079		$	58,984	$	44,286		$	14,698
Interest expense - corporate debt		4,182		4,309			(127	)		21,322		11,658			9,664
Net interest income		26,309		20,103			6,206			37,662		32,628			5,034
Provision for (reversal of) loan losses		279		(1,000	)		1,279			1,009		(895	)		1,904
Net interest income after provision for loan losses	$	26,030	$	21,103		$	4,927		$	36,653	$	33,523		$	3,130

Interest Expense — Corporate Debt. Corporate debt interest expense remained relatively flat at $4.2 million for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. Corporate debt interest expense increased by $9.7 million to $21.3 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due to the $12.8 million prepayment fee and write-off of unamortized debt issuance costs associate with the payoff of our corporate debt in March 2022.

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Provision for Loan Losses. Our provision for loan losses increased from a reversal of $1.0 million for the three months ended June 30, 2021 to a provision of $0.3 million for the three months ended June 30, 2022, primarily due to an increase in our loans held for investment portfolio during the three months ended June 30, 2022. Our provision for loan losses increased from a reversal of $0.9 million for the three months ended June 30, 2021 to the provision of $1.0 million for the three months ended June 30, 2022, primarily due to the increase in our loans held for investment portfolio.

Other Operating Income

The $0.6 million increase in other operating income during the three months ended June 30, 2022 was mainly due to the increase in servicing fee income and mortgage servicing rights ("MSR") valuation gain on the Century servicing portfolio, offset by the decrease in gain on disposition of loans. The $3.5 million increase in other operating income during the six months ended June 30, 2022 was mainly due to the increase in gain on disposition of loans and the increase in MSR valuation gain which is included in other income (expense).

	Three Months Ended June 30,							Six Months Ended June 30,
($ in thousands)	2022		2021		$ Change			2022		2021			$ Change
Gain on disposition of loans	$	1,776	$	2,391	$	(615	)	$	6,317	$	5,230		$	1,087
Unrealized gain/(loss) on fair value loans		6		20		(14	)		16		18			(2	)
Other income (expense)		1,257		21		1,236			2,354		(15	)		2,369
Total other operating income	$	3,039	$	2,432	$	607		$	8,687	$	5,233		$	3,454

Operating Expenses

Total operating expenses increased by $3.6 million to $14.3 million for three months ended June 30, 2022 from $10.7 million for three months ended June 30, 2021, primarily due to the $2.0 million increase in compensation and employee benefits.

	Three Months Ended June 30,								Six Months Ended June 30,
($ in thousands)	2022			2021		$ Change			2022			2021		$ Change
Compensation and employee benefits	$	6,553		$	4,546	$	2,007		$	11,876		$	9,732	$	2,144
Rent and occupancy		426			430		(4	)		868			893		(25	)
Loan servicing		3,290			1,922		1,368			5,741			3,788		1,953
Professional fees		1,062			795		267			2,423			1,329		1,094
Real estate owned, net		(251	)		1,041		(1,292	)		(426	)		1,550		(1,976	)
Other operating expenses		3,199			1,916		1,283			6,047			3,975		2,072
Total operating expenses	$	14,279		$	10,650	$	3,629		$	26,529		$	21,267	$	5,262

Compensation and Employee Benefits. Compensation and employee benefits increased by $2.0 million to $6.6 million for the three months ended June 30, 2022 compared to $4.5 million for the three months ended June 30, 2021. Compensation and employee benefits increased to $11.9 million for the six months ended June 30, 2022 from $9.7 million for the six months ended June 30, 2021. The increase was mainly due to the increase in commission expense driven by the increase in loan originations.

Rent and Occupancy. Rent and occupancy expenses remained consistent at $0.4 million for the three months ended June 30, 2022 and 2021 and $0.9 million for the six months ended June 30, 2022 and 2021.

Loan Servicing. Loan servicing expenses increased from $1.9 million for the three months ended June 30, 2021 to $3.3 million for the three months ended June 30, 2022, and increased from $3.8 million for the six months ended June 30, 2021 to $5.7 million for the six months ended June 30, 2022, primarily attributable to the increase in our loan portfolio.

Professional Fees. Professional fees increased from $0.8 million for the three months ended June 30, 2021 to $1.1 million for the three months ended June 30, 2022, and increased from $1.3 million for the six months ended June 30, 2021 to $2.4 million for the six months ended June 30, 2022, mainly due to higher consulting fees in 2022.

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Net Expenses of Real Estate Owned. Net expenses of real estate owned decreased from $1.0 million of expense for the three months ended June 30, 2021 to income of $0.3 million for the three months ended June 30, 2022, and decreased from $1.6 million of expense for the six months ended June 30, 2021 to income of $0.4 million for the six months ended June 30, 2022, mainly due to the increase in gain on sale of REOs as property values have improved.

Other Operating Expenses. Other operating expenses increased from $1.9 million for the for the three months ended June 30, 2021 to $3.2 million three months ended June 30, 2022, and increased from $4.0 million for the six months ended June 30, 2021 to $6.0 million for the six months ended June 30, 2022, mainly attributable to increases in data processing costs and write-off of expenses related to loan applications in process where loans did not fund.

Income Tax Expense. Income tax expense was $4.0 million and $3.4 million for three months ended June 30, 2022 and 2021, and $4.8 million and $4.6 million for six months ended June 30, 2022 and 2021, respectively. Our annual consolidated effective tax rates are 27.4% and 26.5% for the years 2022 and 2021, respectively.

Quarterly Results of Operations

The following table sets forth certain financial information for each completed fiscal quarter since the quarter ended September 30, 2020. The quarterly information has been prepared on the same basis as the consolidated financial statements and includes all adjustments (consisting of normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the information presented. This information should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year.

The following tables set for our unaudited quarterly results for the periods indicated:

	Three Months Ended
	June 30, 2022			March 31, 2022				December 31, 2021			September 30, 2021			June 30, 2021			March 31, 2021				December 31, 2020			September 30, 2020
($ in thousands)	(unaudited)
Interest income	$	59,243		$	52,049			$	49,360		$	46,923		$	44,978		$	40,707			$	41,556		$	41,374
Interest expense - portfolio related		28,752			23,556				23,666			20,321			20,566			20,832				21,442			22,347
Net interest income - portfolio related		30,491			28,493				25,694			26,602			24,412			19,875				20,114			19,027
Net interest margin - portfolio related		4.10	%		4.25	%			4.27	%		4.97	%		4.83	%		4.10	%			4.07	%		3.77	%
Interest expense - corporate debt		4,182			17,140				4,462			4,488			4,309			7,350				1,900			1,913
Net interest income		26,309			11,353				21,232			22,114			20,103			12,525				18,214			17,114
Net interest margin - total company		3.54	%		1.69	%			3.53	%		4.13	%		3.98	%		2.59	%			3.68	%		3.39	%
Provision for (reversal of) loan losses		279			730				377			228			(1,000	)		105				406			1,573
Net interest income after provision    for loan losses		26,030			10,623				20,855			21,886			21,103			12,420				17,808			15,541
Other operating income (expense)		3,039			5,648				2,617			339			2,432			2,801				4,691			1,349
Operating expenses		14,279			12,250				12,095			11,298			10,650			10,617				10,746			11,865
Income before income taxes		14,790			4,021				11,377			10,927			12,885			4,604				11,753			5,025
Less income attributable to noncontrolling interest		126			110				—			—			—			—				—			—
Income tax expense		4,019			790				3,024			2,905			3,432			1,208				2,177			1,544
Net income	$	10,645		$	3,121		(1)	$	8,353		$	8,022		$	9,453		$	3,396		(2)	$	9,576		$	3,481

(1)Net income for the three months ended March 31, 2022 includes a write-off of deferred deal costs and prepayment fees related to the refinancing of the corporate debt. Excluding the one-time write-off, net income for the period is $12.4 million.

(2)Net income for the three months ended March 31, 2021 includes a write-off of deferred deal costs and prepayment fees related to the refinancing of the corporate debt. Excluding the one-time write-off, net income for the period is $6.7 million.
 

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Liquidity and Capital Resources

Sources and Uses of Liquidity

We fund our lending activities primarily through borrowings under our warehouse facilities, securitizations, other corporate-level debt, equity, debt securities, and net cash provided by operating activities to manage our business. We use cash to originate and acquire investor real estate loans, repay principal and interest on our borrowings, fund our operations and meet other general business needs. Our total liquidity was $134.1 million as of June 30, 2022 comprised of $46.3 million in cash and $87.8 million of available borrowings for unencumbered loans.

Cash and Cash Equivalents

We had cash of $46.3 million and $27.7 million, excluding restricted cash of $9.2 million and $7.9 million as of June 30, 2022 and 2021, respectively. The following table summarizes the net cash provided by (used in) operating activities, investing activities and financing activities as of the periods indicated:

	Six Months Ended
($ in thousands)	June 30, 2022			June 30, 2021
Cash provided by (used in):
Operating activities	$	13,100		$	20,896
Investing activities		(507,879	)		(139,644	)
Financing activities		502,642			134,117
Net change in cash, cash equivalents, and restricted cash	$	7,863		$	15,369

Cash flows from operating activities primarily includes net income adjusted for (1) cash used for origination and purchase of held for sale loans and the related cash proceeds from the sales of such loans, (2) non-cash items including depreciation, provision for loan loss, discount accretion, and valuation changes, and (3) changes in the balances of operating assets and liabilities.

For the six months ended June 30, 2022, our net cash provided by operating activities consisted mainly of $14.0 million in net income, $17.0 million add-back of noncash debt issuance discounts and costs amortization.

For the six months ended June 30, 2022, our net cash used in investing activities consisted mainly of $1.0 billion in cash used to originate held for investment loans, partially offset by $224.1 million proceeds from sales of loans and $302.1 million in cash received in payoffs of loans held for investment.

For the six months ended June 30, 2022, our net cash provided by financing activities consisted mainly of $951.1 million in borrowings from our warehouse and repurchase facilities, $879.1 million in proceeds of asset-backed securities issued, and $215.0 million in proceeds from secured financing. The cash generated was offset by repayments of $1.0 billion on our warehouse and repurchase facilities, repayments of $170.8 million on secured financing, and repayments of $308.3 million on asset-backed securities issued.

During the six months ended June 30, 2022, we generated approximately $7.9 million of net cash and cash equivalents from operations, investing and financing activities. During the six months ended June 30, 2021, we generated approximately $15.4 million of net cash and cash equivalents in operations, investing and financing activities.

Warehouse Facilities

As of June 30, 2022, we had four non-mark-to-market warehouse facilities and one modified mark-to-market warehouse facility to support our loan origination and acquisition facilities. One agreement is a two-year warehouse repurchase facility, two agreements are one-year warehouse repurchase facilities and two agreements are three-year warehouse facilities. The borrowings are collateralized by primarily performing loans, four of the warehouse facilities, bear interest at one-month LIBOR and one warehouse facility at SOFR, all a margin that ranges from 2.75% to 4.50%. Borrowing under these facilities was $210.2 million with $539.8 million of available capacity under our warehouse and repurchase facilities as of June 30, 2022.

All warehouse facilities fund less than 100% of the principal balance of the mortgage loans we own requiring us to use working capital to fund the remaining portion. We may need to use additional working capital if loans become delinquent, because the amount permitted to be financed by the facilities may change based on the delinquency performance of the pledged collateral.

All borrower payments on loans financed under the warehouse agreements are segregated into pledged accounts with the loan servicer. All principal amounts in excess of the interest due are applied to reduce the outstanding borrowings under the warehouse facilities. The warehouse facilities also contain customary covenants, including financial covenants that require us to maintain minimum liquidity, a minimum net worth, a maximum debt-to- net worth ratio and a ratio of a minimum earnings before interest, taxes, depreciation and amortization to interest expense. If we fail to meet any of the covenants or otherwise default under the facilities, the lenders have the right to terminate their facility and require immediate repayment, which may require us to sell our loans at less than optimal terms. As of June 30, 2022, we were in compliance with these covenants.

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Securitizations

From May 2011 through June 2022, we have completed twenty-three securitizations, issuing $4.9 billion in principal amount of securities to third parties through twenty-three respective transactions. All borrower payments are segregated into remittance accounts at the primary servicer and remitted to the trustee of each trust monthly. We are the sole beneficial interest holder of the applicable trusts, which are variable interest entities included in our consolidated financial statements. The transactions are accounted for as secured borrowings under U.S. GAAP. The following table summarizing the investor real estate loans securitized, securities issued, securities retained by us at the time of the securitization, and as of June 30, 2022 and December 31, 2021, and the stated maturity for each securitization. The securities are callable by us when the stated principal balance is less than a certain percentage, ranging from 5%—30%, of the original stated principal balance of loans at issuance. As a result, the actual maturity date of the securities issued will likely be earlier than their respective stated maturity date.

($ in thousands)			Securities Retained as of
Trusts	Securities Issued		Issuance Date		June 30, 2022		December 31, 2021		Stated Maturity Date
2015-1 Trust	$	285,457	$	27,372	$	—	$	15,526	July 2045
2016-1 Trust		319,809		38,792		17,633		17,633	April 2046
2017-2 Trust		245,601		12,927		3,145		4,064	October 2047
2018-1 Trust		176,816		9,308		2,460		2,849	April 2048
2018-2 Trust		307,988		16,210		4,990		6,608	October 2048
2019-1 Trust		235,580		12,399		4,801		6,180	March 2049
2019-2 Trust		207,020		10,901		4,760		5,922	July 2049
2019-3 Trust		154,419		8,127		4,087		4,799	October 2049
2020-1 Trust		248,700		13,159		7,702		8,678	February 2050
2020-2 Trust		96,352		32,118		12,847		12,847	June 2050
2020-MC1 Trust		179,371		96,585		—		108,891	July 2050
2021-1 Trust		251,301		13,227		11,134		12,518	May 2051
2021-2 Trust		194,918		10,260		—		—	August 2051
2021-3 Trust		204,205		—		—		—	October 2051
2021-4 Trust		319,116		—		—		—	December 2051
2022-1 Trust		273,594		5,015		4,845		—	February 2052
2022-2 Trust		241,388		11,202		11,170		—	March 2052
2022-MC1 Trust		84,967		40,911		41,415		—	May 2047
2022-3 Trust		296,323		18,914		18,815		—	May 2052
Total	$	4,322,925	$	377,427	$	149,804	$	206,515

The following table summarizes outstanding bond balances for each securitization as of June 30, 2022 and December 31, 2021:

($ in thousands)	June 30, 2022		December 31, 2021
2015-1 Trust	$	—	$	17,536
2016-1 Trust		28,021		36,401
2017-2 Trust		68,749		86,497
2018-1 Trust		52,281		62,375
2018-2 Trust		108,845		143,152
2019-1 Trust		103,860		132,306
2019-2 Trust		98,792		122,205
2019-3 Trust		81,996		95,521
2020-1 Trust		149,646		174,550
2020-2 Trust		67,446		80,676
2020-MC1 Trust		—		35,711
2021-1 Trust		214,835		236,190
2021-2 Trust		185,448		197,744
2021-3 Trust		195,308		202,793
2021-4 Trust		291,181		315,489
2022-1 Trust		264,936		—
2022-2 Trust		240,076		—
2022-MC1 Trust		80,931		—
2022-3 Trust		294,768		—
	$	2,527,119	$	1,939,146

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As of June 30, 2022 and December 31, 2021, the weighted average rate on the securities and certificates for the Trusts were as follows:

	June 30, 2022			December 31, 2021
2015-1 Trust		—			7.22	%
2016-1 Trust		8.24	%		8.22	%
2017-2 Trust		3.59	%		3.37	%
2018-1 Trust		3.95	%		4.04	%
2018-2 Trust		4.36	%		4.39	%
2019-1 Trust		3.92	%		4.02	%
2019-2 Trust		3.37	%		3.44	%
2019-3 Trust		3.10	%		3.26	%
2020-1 Trust		2.84	%		2.82	%
2020-2 Trust		4.59	%		4.45	%
2020-MC1 Trust		0.00	%		4.42	%
2021-1 Trust		1.74	%		1.73	%
2021-2 Trust		2.01	%		2.28	%
2021-3 Trust		2.46	%		2.45	%
2021-4 Trust		3.14	%		3.11	%
2022-1 Trust		3.91	%		—
2022-2 Trust		5.08	%		—
2022-MC1 Trust		6.94	%		—
2022-3 Trust		5.67	%		—

Our intent is to use the proceeds from the issuance of new securities primarily to repay our warehouse borrowings and originate new investor real estate loans in accordance with our underwriting guidelines, as well as for general corporate purposes. Our financing sources may include borrowings in the form of additional bank credit facilities (including term loans and revolving credit facilities), agreements, warehouse facilities and other sources of private financing. We also plan to continue using securitization as long-term financing for our portfolio, and we do not plan to structure any securitizations as sales or utilize off-balance-sheet vehicles. We believe any financing of assets and/or securitizations we may undertake will be sufficient to fund our working capital requirements.

Secured Financing (Corporate Debt)

On March 15, 2022, the Company entered into a five-year $215.0 million syndicated corporate debt agreement, the (“the 2022 Term Loan”). The 2022 Term Loan bears interest at a fixed rate of 7.125% and matures on March 15, 2027. A portion of the net proceeds from the 2022 Term Loan was used to redeem all the amounts owed pursuant to the 2021 Term Loan. The remaining portion of the net proceeds from the 2022 Term Loan is used for loan originations and general corporate purposes.

At-The-Market Equity Offering Program

On September 3, 2021, we entered into separate Equity Distribution Agreements with JMP Securities LLC and Virtu Americas LLC to establish an at-the-market equity offering program (“ATM Program”) where we may issue and sell, from time to time, shares of our common stock. Our ATM Program allows for aggregate gross sales of our common stock of up to $50,000,000 provided that the number of shares sold under the ATM Program does not exceed 4,000,000. For the three months ended June 30, 2022, no common stock was issued under our ATM Program.

Contractual Obligations and Commitments

On March 15, 2022, the Company entered into a five-year $215.0 million syndicated corporate debt agreement, the (“the 2022 Term Loan”). The 2022 Term Loan bears interest at a fixed rate of 7.125% and matures on March 15, 2027. Interest on the 2022 Term Loan is paid every six months.

As of June 30, 2022, we maintained warehouse facilities to finance our investor real estate loans and had approximately $210.2 million in outstanding borrowings with $539.8 million of available capacity under our warehouse and repurchase facilities.

Off-Balance-Sheet Arrangements

At no time have we maintained any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance, or special-purpose or variable interest entities, established for the purpose of facilitating off-balance-sheet arrangements or other contractually narrow or limited purposes. Further, we have never guaranteed any obligations of unconsolidated entities or entered into any commitment or intent to provide funding to any such entities.

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Forward-Looking Statements

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. All statements (other than statements of historical facts) in this Quarterly Report regarding the prospects of the industry and our prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “plan,” “believe,” “predict,” “potential” or “continue” or the negatives of these terms or variations of them or similar terminology. Forward-looking statements may contain expectations regarding our operations, including the resumption of loan originations, our ability to resolve non-performing loans and avoid losses on non-performing loans and the disposition of REOs and other results, and may include statements of future performance, plans and objectives. Forward looking statements also include statements pertaining to our strategies for future funding and development of our business and products, including the future results of our recently initiated at-the-market equity offering program. Although we believe that the expectations reflected in these forward-looking statements have a reasonable basis, we cannot provide any assurance that these expectations will prove to be correct. Such statements reflect the current views of our management with respect to our operations, results of operations and future financial performance. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in this Quarterly Report and other documents we file. You should read and interpret any forward-looking statement together with these documents, including the following:

•the description of our business contained in our Annual Report on Form 10-K for the year ended December 31, 2021 and filed with the Securities and Exchange Commission (“SEC”) on March 15, 2022

•the discussion of our analysis of financial condition and results of operations contained in this Quarterly Report under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

•the notes to the consolidated financial statements contained in this Quarterly Report

•cautionary statements we make in our public documents, reports and announcements

Any forward-looking statement speaks only as of the date on which that statement is made. We will not update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as required by applicable law.

47

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the our management, including the our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In accordance with Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report and has concluded that our disclosure controls and procedures, as of such date, were effective to accomplish their objectives at a reasonable assurance level. Management concluded that the consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Changes in Internal Control over Financial Reporting.

During the period to which this report relates, there have not been any changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or that are reasonably likely to materially affect, such controls.

48

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, in the ordinary course of business, we are involved in various judicial, regulatory or administrative claims, proceedings and investigations. These proceedings and actions may include, among other things, allegations of violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort. Although occasional adverse decisions or settlements may occur, our management does not believe that the final disposition of any currently pending or threatened matter will have a material adverse effect on our business, financial position, results of operations or cash flows.

Item 1A. Risk Factors.

Intentionally omitted pursuant to smaller reporting company reduced disclosure requirements.

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

No common stock purchases were made by us during the three months ended June 30, 2022.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

49

Item 6. Exhibits.

The exhibits below are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

		Incorporated by Reference
Exhibit Number	Exhibit Title	Form	File No.	Exhibit	Filing Date
3.1	Certificate of Conversion	8-K	001-39183	3.1	1/22/2020
3.2	Restated Certificate of Incorporation of Velocity Financial, Inc.	8-K	001-39183	3	5/23/2022
3.3	Amended and Restated Bylaws of Velocity Financial, Inc.	8-K	001-39183	3.2	3/25/2022
4.1	Form of Stock Certificate for Common Stock	S-1	333-234250	4.1	10/18/2019
4.2	Form of Warrant to Purchase Common Stock	8-K	001-39183	4.1	4/7/2020
4.3	Description of the Registrant’s Securities	10K	001-39183	4.3	4/7/2020
10.1	Stockholders Agreement, dated as of January 16, 2020	10-K	001-39183	10.1	4/7/2020
10.2	Registration Rights Agreement, dated as of January 16, 2020	10-K	001-39183	10.2	4/7/2020
10.3	Registration Rights Agreement, dated as of April 7, 2020	8-K	333-234250	10.1	4/7/2020
10.4	Securities Purchase Agreement among Velocity Financial, Inc. and the Purchasers Party thereto dated April 5, 2020	8-K	001-39183	10.1	4/6/2020
10.5	Velocity Financial, Inc. Employee Stock Purchase Plan*	DEF 14A	001-39183	AII	4/08/2022
10.6	Amended and Restated Velocity Financial, Inc. 2020 Omnibus Incentive Plan*	DEF 14A	001-39183	AI	4/8/2022
10.7	Form of Nonqualified Stock Option Award Notice and Agreement under the 2020 Omnibus Incentive Plan*	S-1/A	333-234250	10.6	1/6/2020
10.8	Form of Nonqualified Stock Option Award Notice and Agreement (Director Grant-IPO) under the 2020 Omnibus Incentive Plan*	S-1/A	333-234250	10.7	1/6/2020
10.9	Form of Nonqualified Stock Option Award Notice and Agreement (Executive Officer Grant-IPO) under the 2020 Omnibus Incentive Plan*	S-1/A	333-234250	10.8	1/6/2020
10.10	Form of Restricted Stock Unit Grant and Agreement (Director Grant) under the 2020 Omnibus Incentive Plan*	S-1/A	333-234250	10.9	1/6/2020
10.11	Form of Restricted Stock Unit Grant and Agreement (Standard Grant) under the 2020 Omnibus Incentive Plan*	S-1/A	333-234250	10.10	1/6/2020
10.12	Form of Restricted Stock Grant and Agreement under the 2020 Omnibus Incentive Plan*	S-1/A	333-234250	10.11	1/6/2020
10.13	Velocity Financial 2022 Annual Incentive Program for Messrs. Farrar, Szczepaniak and Taylor*	8-K	001-39183	-	2/15/2022
10.14	Form of Equity Distribution Agreement, dated September 3, 2021	8-K	001-39183	1.1	9/7/2021
10.15	Form of Officer and Director Indemnity Agreement*	S-1/A	333-234250	10.37	11/6/2019
10.16	Form of Performance Stock Unit Grant and Agreement*
10.17	Note Purchase Agreement Dated as of March 15, 2022, among Velocity Financial, Inc., Velocity Commercial Capital, LLC, U.S. Bank Trust Company, National Association, as collateral agent, and the respective purchasers of the Notes.	8-K	001-39183	10.1	3/16/2022
10.18	Security Agreement, dated as of March 15, 2022, among Velocity Financial, Inc., Velocity Commercial Capital, LLC and U.S. Bank Trust Company, National Association, as collateral agent.	8-K	001-39183	10.2	3/16/2022
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

50

31.2	Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+
32.2	Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 (ii) the Consolidated Statements of Income for the quarter ended March 31, 2022 and March 31, 2021, (iii) the Consolidated Statements of Changes in Stockholders’ Equity for the quarter ended March 31, 2022 and March 31, 2021, (iv) the Consolidated Statements of Cash Flows for the quarter ended March 31, 2022 and March 31, 2021 and (v) the Notes to unaudited Consolidated Financial Statements.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

* Management contract or compensatory plan or arrangement.

+ This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act

51

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	VELOCITY FINANCIAL, INC.
Date: August 4, 2022	By:	/s/ Christopher D. Farrar
		Christopher D. Farrar
		Chief Executive Officer
Date: August 4, 2022	By:	/s/ Mark R. Szczepaniak
		Mark R. Szczepaniak
		Chief Financial Officer

52

EX-10.16

Exhibit 10.16

Velocity Financial, Inc.

Performance Stock Unit Grant and Agreement

This Performance Stock Unit Grant and Agreement (this "Agreement"), is made effective as of the Grant Date between Velocity Financial, Inc., a Delaware corporation (the "Company"), and [ ] ("Participant").

The Company adopted the Velocity Financial, Inc. 2020 Omnibus Incentive Plan (as it may be amended, the "Plan"), the terms of which are incorporated herein by reference and made a part of this Agreement. Capitalized terms not otherwise defined herein shall have the same meaning as in the Plan.

The Compensation Committee of the Board of Directors of the Company (the "Committee") has determined that it would be in the best interests of the Company and its stockholders to grant the Performance Stock Units to Participant pursuant to the Plan and the terms set forth herein.

The Company desires to confirm the following grant of Performance Stock Units to Participant:

Grant Date: [ ]

Grant Type: Performance Stock Units ("PSUs")

Grant Amount: $[ ]

Grant Price: $[ ]

Target PSUs Granted: [ ]

Potential PSUs: 0 to [ ]

Performance Metric: [Average Core Net Income Annual Growth]

Measurement Period: Fiscal Years [ ]

1.The PSUs.

(a)Subject to Participant’s continued service with the Company or a Company subsidiary ("Company Group") through the date that the Committee certifies the [Average Core Net Income Annual Growth] following [ ] ("Committee Certification Date"), the PSUs shall vest as is set forth on Exhibit A attached hereto. Subject to subsections (b) and (c) below, upon the date that the Participant is no longer employed by the Company Group, all unvested PSUs shall automatically and immediately be forfeited and canceled.

(b)If Participant dies or if Participant is no longer employed by the Company Group by reason of Participant's Disability (as defined in the Plan), then the Target Number of PSUs shall vest and become nonforfeitable shares of Common Stock upon such death or termination of employment.

(c)If Participant's termination of employment is due to Participant's Retirement and Participant has provided the Company with at least two years' prior written notice of the date of such Retirement, then the PSUs shall not automatically and immediately be forfeited and canceled but instead shall be eligible to vest subject to the vesting conditions as set forth on Exhibit A. "Retirement" shall mean a voluntary termination of Participant's employment with the Company Group at a time when Participant is either (i) 60 years of age or older and has been employed by the Company Group for at least five years or (ii) 55 years of age or older and has been employed by the Company Group for at least 20 years.

(d)Settlement of PSUs.

(i)Vested PSUs shall be settled on the Committee Certification Date or within 10 business days following the Committee Certification Date.

(ii)Settlement of each vested PSU shall be made by the Company by delivering to Participant one share of Common Stock for each vested PSU.

(iii)Notwithstanding anything in this Agreement to the contrary, the Company shall not have any obligation to issue or transfer any shares of Common Stock as contemplated by this Agreement unless and until such issuance or transfer complies with all relevant provisions of law. As a condition to the settlement, Participant may be required to deliver certain documentation to the Company.

(e)Clawback. PSUs and Common Shares issuable upon vesting shall be subject to the clawback and repayment terms set forth in Sections 14(v) and 14(w) of the Plan. PSUs and Common Shares issuable upon vesting shall also be subject to reduction, cancellation, forfeiture, clawback or recoupment to comply with any clawback, forfeiture or other similar policy adopted by the Board of Directors or the Committee as in effect from time to time. In addition, PSUs and Common Shares issuable upon vesting shall be subject to reduction, cancellation, forfeiture, clawback or recoupment to comply with applicable law, rules, regulations or regulatory settlements. Decisions and determinations by the Board of Directors or the Committee shall be final and binding on the Participant.

(f)Legend. To the extent applicable, all book entries (or certificates, if any) representing the shares of Common Stock delivered to Participant as contemplated by Section 1(d) above shall be subject to the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such shares of Common Stock are listed, and any applicable Federal or state laws, and the Company may cause notations to be made next to the book entries (or a legend or legends put on certificates, if any) to make appropriate reference to such restrictions. Any such book entry notations (or legends on certificates, if any) shall include a description to the effect of any restrictions.

2.No Right to Continued Engagement. Neither the Plan nor this Agreement nor Participant’s receipt of the PSUs hereunder shall impose any obligation on the Company Group to continue the employment of Participant. Further, the Company Group may at any time terminate the employment of Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein.

3.Restrictions on Transfer. Participant may not assign, alienate, pledge, attach, sell or otherwise transfer or encumber the PSUs, other than to Permitted Transferees as may be permitted by the Committee from time to time in accordance with applicable laws and Section 14(b) of the Plan. Except as otherwise provided herein, no assignment or transfer of the PSUs, or of the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise, shall vest in the assignee or transferee any interest or right herein whatsoever.

4.Withholding. Participant may be required to pay to the Company or any Affiliate and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the PSUs, their grant or vesting or any payment or transfer with respect to the PSUs at the applicable statutory rates, and to take such action as may be necessary in the opinion of the Committee to satisfy all obligations for the payment of such withholding taxes.

5.Securities Laws; Cooperation. Upon the vesting of any PSUs, Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws, the Plan or this Agreement. Participant further agrees to cooperate with the Company in taking any action reasonably necessary or advisable to consummate the transactions contemplated by this Agreement.

6.Notices. Any notice necessary under this Agreement shall be addressed to the Company in care of its Corporate Secretary at the principal executive office of the Company and to Participant at the address appearing in the personnel records of the Company for such Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

7.Choice of Law; Jurisdiction; Venue.This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of Delaware or the State of California, and each of Participant, the Company, and any Permitted Transferees who hold PSUs pursuant to a valid assignment, hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of Participant, the Company, and any Permitted Transferees who hold PSUs pursuant to a valid assignment hereby irrevocably waives (a) any objections which it may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of Delaware or the State of California, (b) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum and (c) any right to a jury trial.

8.PSU Award Subject to Plan; Amendment. By accepting the PSUs, Participant agrees and acknowledges that Participant has received and read a copy of the Plan. The PSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate this Agreement, but no such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination shall materially adversely affect the rights of Participant hereunder without the consent of Participant.

9.Section 409A. It is intended that the PSUs granted hereunder shall be exempt from Section 409A of the Code pursuant to the "short-term deferral" rule applicable to such section, as set forth in the regulations or other guidance published by the Internal Revenue Service thereunder.

Velocity Financial, Inc.

____________________________________

Roland T. Kelly

Chief Legal Officer and General Counsel

Exhibit A

The actual number of PSUs that will vest (the "Actual Award") will be determined by the Committee based on the [Average Core Net Income Annual Growth] (as defined below) for fiscal years [ ], as follows:

•[ ]

•if the [Average Core Net Income Annual Growth] is between Threshold and Target or between Target and Maximum, the Actual Award will be equal to an amount linearly interpolated between such points

The determinations of [Average Core Net Income Annual Growth] and Actual Awards will be certified by the Committee following [ ]. Each of the [Average Core Net Income Annual Growth] percentages above may be equitably adjusted by the Committee for any of the adjustments factors set forth in Section 12(a) of the Plan and as otherwise determined by the Committee in its reasonable discretion to be necessary to prevent enlargement or diminution of the benefits or potential benefits intended to be provided to Participant.

["Average Core Net Income Growth" is defined as] [ ], each as equitably adjusted by the Committee for any of the adjustments factors set forth in Section 12(a) of the Plan and as otherwise determined by the Committee in its reasonable discretion.

PSUs that remain unvested following such determinations by the Committee shall be forfeited and Participant shall have no further right, title or interest in or to the unvested PSUs or the shares of Common Stock underlying such unvested PSUs.

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Christopher D. Farrar, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Velocity Financial, 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 4, 2022	By:	/s/ Christopher D. Farrar
			Christopher D. Farrar
			Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Mark R. Szczepaniak, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Velocity Financial, 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 4, 2022	By:	/s/ Mark R. Szczepaniak
			Mark R. Szczepaniak
			Chief Financial Officer
			(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION 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 of Velocity Financial, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher D. Farrar, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 4, 2022	By:	/s/ Christopher D. Farrar
			Christopher D. Farrar
			Chief Executive Officer
			(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION 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 of Velocity Financial, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark R. Szczepaniak, certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 4, 2022	By:	/s/ Mark R. Szczepaniak
			Mark R. Szczepaniak
			Chief Financial Officer
			(Principal Financial Officer)

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Aug. 01, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Trading Symbol	VEL
Entity Registrant Name	Velocity Financial, Inc.
Entity Central Index Key	0001692376
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding		32,415,860
Entity File Number	001-39183
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-0659719
Entity Address, Address Line One	30699 Russell Ranch Road
Entity Address, Address Line Two	Suite 295
Entity Address, City or Town	Westlake Village
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91362
City Area Code	818
Local Phone Number	532-3700
Title of 12(b) Security	Common stock, par value $0.01 per share
Security Exchange Name	NYSE
Document Quarterly Report	true
Document Transition Report	false

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
ASSETS
Cash and cash equivalents	$ 46,250	$ 35,965
Restricted cash	9,217	11,639
Loans held for sale, net	0	87,908
Loans held for investment, net	3,118,799	2,527,564
Loans held for investment, at fair value	1,351	1,359
Total loans, net	3,120,150	2,616,831
Accrued interest receivables	15,820	13,159
Receivables due from servicers	75,688	74,330
Other receivables	1,320	1,812
Real estate owned, net	19,218	17,557
Property and equipment, net	3,632	3,830
Deferred tax asset	15,195	16,604
Mortgage servicing rights, at fair value	8,438	7,152
Goodwill	6,775	6,775
Other assets	11,036	6,824
Total assets	3,332,739	2,812,478
LIABILITIES
Accounts payable and accrued expenses	78,384	92,195
Secured financing, net	209,227	162,845
Securitizations, net	2,477,226	1,911,879
Warehouse and repurchase facilities, net	208,390	301,069
Total liabilities	2,973,227	2,467,988
Commitments and contingencies
EQUITY
Common stock ($0.01 par value, 100,000,000 shares authorized at June 30, 2022 and December 31, 2021; 32,415,860 and 32,293,042 shares issued and outstanding, respectively)	325	323
Treasury stock, at cost (33,647 common shares at June 30, 2022 and none at December 31, 2021)	(458)
Additional paid-in capital	297,840	296,364
Retained earnings	58,188	44,422
Total Velocity Financial Inc. stockholders' equity	355,895	341,109
Noncontrolling interest in subsidiary	3,617	3,381
Total equity	359,512	344,490
Total liabilities and equity	$ 3,332,739	$ 2,812,478

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Class Of Stock [Line Items]
Common stock, par or stated value per share	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	32,415,860	32,293,042
Common stock, shares, outstanding	32,415,860	32,293,042
Treasury stock, common shares	33,647	33,647
ASSETS
Restricted cash	$ 9,217	$ 11,639
Loans held for investment, net	3,118,799	2,527,564
Real estate owned, net	19,218	17,557
Other assets	11,036	6,824
Total assets	3,332,739	2,812,478
LIABILITIES
Accounts payable and accrued expenses	78,384	92,195
Total liabilities	2,973,227	2,467,988
Variable Interest Entity Primary Beneficiary
ASSETS
Restricted cash	2,976	4,713
Loans held for investment, net	2,730,516	2,202,010
Accrued interest and other receivables	86,896	83,493
Real estate owned, net	16,135	9,861
Other assets	92	9
Total assets	2,836,615	2,300,086
LIABILITIES
Accounts payable and accrued expenses	46,883	45,705
Securities issued	2,477,226	1,911,879
Total liabilities	$ 2,524,109	$ 1,957,584

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CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Interest income	$ 59,243	$ 44,978	$ 111,292	$ 85,685
Interest expense — portfolio related	28,752	20,566	52,308	41,399
Net interest income — portfolio related	30,491	24,412	58,984	44,286
Interest expense — corporate debt	4,182	4,309	21,322	11,658
Net interest income	26,309	20,103	37,662	32,628
Provision for (reversal of) loan losses	279	(1,000)	1,009	(895)
Net interest income after provision for (reversal of) loan losses	26,030	21,103	36,653	33,523
Other operating income
Gain on disposition of loans	1,776	2,391	6,317	5,230
Unrealized gain on fair value loans	6	20	16	18
Other income (expense)	1,257	21	2,354	(15)
Total other operating income	3,039	2,432	8,687	5,233
Operating expenses
Compensation and employee benefits	6,553	4,546	11,876	9,732
Rent and occupancy	426	430	868	893
Loan servicing	3,290	1,922	5,741	3,788
Professional fees	1,062	795	2,423	1,329
Real estate owned, net	(251)	1,039	(426)	1,548
Other operating expenses	3,199	1,918	6,047	3,977
Total operating expenses	14,279	10,650	26,529	21,267
Income before income taxes	14,790	12,885	18,811	17,489
Income tax expense	4,019	3,432	4,809	4,640
Net income	10,771	9,453	14,002	12,849
Net income attributable to noncontrolling interest	126		236
Net income attributable to Velocity Financial, Inc.	10,645	9,453	13,766	12,849
Less: undistributed earnings attributable to participating securities	164	3,571	212	4,854
Net earnings attributable to common stockholders	$ 10,481	$ 5,882	$ 13,554	$ 7,995
Earnings per common share
Basic	$ 0.33	$ 0.29	$ 0.42	$ 0.40
Diluted	$ 0.31	$ 0.28	$ 0.40	$ 0.38
Weighted average common shares outstanding
Basic	31,917	20,087	31,904	20,087
Diluted	34,057	33,960	34,130	33,684

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock	Parent	Noncontrolling Interest
Beginning balance at Dec. 31, 2020	$ 219,589	$ 201	$ 204,190	$ 15,198		$ 219,589
Beginning balance, shares at Dec. 31, 2020		20,087,494
Restricted stock awarded and earned stock compensation	231	$ 5	226			231
Restricted stock awarded and earned stock compensation, shares		480,000
Stock-based compensation	254		254			254
Net income	3,396			3,396		3,396
Ending balance at Mar. 31, 2021	223,470	$ 206	204,670	18,594		223,470
Ending balance, shares at Mar. 31, 2021		20,567,494
Beginning balance at Dec. 31, 2020	219,589	$ 201	204,190	15,198		219,589
Beginning balance, shares at Dec. 31, 2020		20,087,494
Net income	12,849
Ending balance at Jun. 30, 2021	233,468	$ 206	205,215	28,047		233,468
Ending balance, shares at Jun. 30, 2021		20,594,005
Beginning balance at Mar. 31, 2021	223,470	$ 206	204,670	18,594		223,470
Beginning balance, shares at Mar. 31, 2021		20,567,494
Restricted stock awarded and earned stock compensation	291		291			291
Restricted stock awarded and earned stock compensation, shares		26,511
Stock-based compensation	254		254			254
Net income	9,453			9,453		9,453
Ending balance at Jun. 30, 2021	233,468	$ 206	205,215	28,047		233,468
Ending balance, shares at Jun. 30, 2021		20,594,005
Beginning balance at Dec. 31, 2021	344,490	$ 323	296,364	44,422		341,109	$ 3,381
Beginning balance, shares at Dec. 31, 2021		32,293,042
Purchase of treasury stock, at cost	(458)				$ (458)	(458)
Purchase of treasury stock, at cost, shares					(33,647)
Restricted stock awarded and earned stock compensation	418	$ 2	416			418
Restricted stock awarded and earned stock compensation, shares		125,250
Stock-based compensation	251		251			251
Net income	3,231			3,121		3,121	110
Ending balance at Mar. 31, 2022	347,932	$ 325	297,031	47,543	$ (458)	344,441	3,491
Ending balance, shares at Mar. 31, 2022		32,418,292			(33,647)
Beginning balance at Dec. 31, 2021	344,490	$ 323	296,364	44,422		341,109	3,381
Beginning balance, shares at Dec. 31, 2021		32,293,042
Net income	14,002
Ending balance at Jun. 30, 2022	359,512	$ 325	297,840	58,188	$ (458)	355,895	3,617
Ending balance, shares at Jun. 30, 2022		32,449,507			(33,647)
Beginning balance at Mar. 31, 2022	347,932	$ 325	297,031	47,543	$ (458)	344,441	3,491
Beginning balance, shares at Mar. 31, 2022		32,418,292			(33,647)
Restricted stock awarded and earned stock compensation	555		555			555
Restricted stock awarded and earned stock compensation, shares		31,215
Stock-based compensation	254		254			254
Net income	10,771			10,645		10,645	126
Ending balance at Jun. 30, 2022	$ 359,512	$ 325	$ 297,840	$ 58,188	$ (458)	$ 355,895	$ 3,617
Ending balance, shares at Jun. 30, 2022		32,449,507			(33,647)

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net income	$ 14,002	$ 12,849
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	401	603
Amortization of right-of-use assets	664	565
Provision for (reversal of) loan losses	1,009	(895)
Provision for repurchase of loans	235
Purchase of held for sale loans		(755)
Repayments on loans held for sale		11
Net accretion of discount on purchased loans and deferred loan origination costs	3,981	3,092
(Reversal of) provision for uncollectible borrower advances	(14)	47
Gain on disposition of loans	(4,809)	(4,598)
Real estate acquired through foreclosure in excess of recorded investment	(1,508)	(632)
Amortization of debt issuance discount and costs	16,956	10,156
Loss on disposal of property and equipment	14	18
Change in valuation of real estate owned	(93)	1,235
Change in valuation of fair value loans	(16)	(18)
Change in valuation of mortgage servicing rights	(1,286)
Change in valuation of held for sale loans		(2)
Gain on sale of real estate owned	(1,620)	(162)
Stock-based compensation	1,479	1,030
Deferred tax expense (benefit)	1,408	(6,542)
(Increase) decrease in operating assets and liabilities:
Accrued interest and other receivables	(1,680)	(476)
Other assets	(4,882)	(1,081)
Accounts payable and accrued expenses	(11,141)	6,451
Net cash provided by operating activities	13,100	20,896
Cash flows from investing activities:
Purchase of loans held for investment	(5,021)	(3,490)
Origination of loans held for investment	(1,033,277)	(496,497)
Proceeds from sales of loans originally classified as held for investment	224,060	82,856
Payoffs of loans held for investment and loans at fair value	302,098	274,042
Proceeds from sale of real estate owned	9,294	4,076
Purchase of real estate owned	(2,250)
Capitalized real estate owned improvements		(29)
Change in advances	1,338	(667)
Change in impounds and deposits	(3,904)	167
Purchase of property and equipment	(217)	(102)
Net cash used in investing activities	(507,879)	(139,644)
Cash flows from financing activities:
Warehouse repurchase facilities advances	951,071	414,030
Warehouse repurchase facilities repayments	(1,043,666)	(337,332)
Proceeds from secured financing	215,000	175,000
Repayment of secured financing	(170,844)	(79,969)
Proceeds of securitizations, net	879,136	251,274
Repayment of securitizations	(308,298)	(273,810)
Purchase of treasury stock	(458)
Debt issuance costs	(19,299)	(15,076)
Net cash provided by financing activities	502,642	134,117
Net increase in cash, cash equivalents, and restricted cash	7,863	15,369
Cash, cash equivalents, and restricted cash at beginning of period	47,604	20,293
Cash, cash equivalents, and restricted cash at end of period	55,467	35,662
Supplemental cash flow information:
Cash paid during the period for interest	49,779	42,898
Cash paid during the period for income taxes	21,579	4,682
Noncash transactions from investing and financing activities:
Transfer of loans held for investment to held for sale	206,319	80,498
Transfer of loans held for investment to real estate owned	5,485	8,767
Transfer of accrued interest to loans held for investment	816	618
Discount on issuance of securitizations	17,136	27
Transfer of loans held for sale to held for investment	$ 73,598	$ 4,615

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Organization and Description of Business

6 Months Ended

Jun. 30, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization And Description of Business

Note 1 — Organization and Description of Business

Velocity Financial, LLC (VF or the Company) was a Delaware limited liability company formed on July 9, 2012 for the purpose of acquiring all membership units in Velocity Commercial Capital, LLC (VCC). On January 16, 2020, Velocity Financial, LLC converted from a Delaware limited liability company to a Delaware corporation and changed its name to Velocity Financial, Inc. Upon completion of the conversion, Velocity Financial, LLC’s Class A equity units of 97,513,533 and Class D equity units of 60,193,989 were converted to 11,749,994 shares of Velocity Financial, Inc. common stock. On January 22, 2020, the Company completed its initial public offering of 7,250,000 shares of common stock at a price to the public of $13.00 per share. On January 28, 2020, the Company completed the sale of an additional 1,087,500 shares of its common stock, representing the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $13.00 per share. The Company’s stock trades on The New York Stock Exchange under the symbol “VEL”.

VCC, a California LLC formed on June 2, 2004, is a mortgage lender that originates and acquires commercial investor real estate loans, providing capital to the investor real estate loan market. The Company is licensed as a California Finance Lender and, as such, is required to maintain a minimum net worth of $250 thousand. The Company does not believe there is any potential risk of not being able to meet this regulatory requirement. The Company uses its equity capital and borrowed funds to originate and invest in investor real estate loans and seeks to generate income based primarily on the difference between the yield on its investor real estate loan portfolio and the cost of its borrowings. The Company may also sell loans from time to time. The Company does not originate or acquire investments outside of the United States of America.

The Company, through its wholly owned subsidiaries, is the sole beneficial owner of the Velocity Commercial Capital Loan Trusts, from the 2015-1 Trust through and including the 2022-3 Trust, all of which are New York common law trusts, with the exceptions of the VCC 2020-MC1 Trust and the VCC 2022-MC1 Trust which are Delaware statutory trusts. The Trusts are bankruptcy remote, variable interest entities (VIE) formed for the purpose of providing secured borrowings to the Company and are consolidated with the accounts of the Company.

On December 28, 2021, the Company acquired an 80% ownership interest in Century Health & Housing Capital, LLC (“Century”), paying a cash purchase price of $12.8 million. Century is a licensed “Ginnie Mae” issuer/servicer that provides government-insured Federal Housing Administration (FHA) mortgage financing for multifamily housing, senior housing and long-term care/assisted living facilities. Century originates loans through its borrower-direct origination channel and services the loans through its in-house servicing platform, which enables the formation of long-term relationships with its clients and drives strong portfolio retention. Century is a consolidated subsidiary of the Company as of completion of the acquisition.

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Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited Consolidated Financial Statements as of and for the six months ended June 30, 2022 and 2021 have been prepared on a basis that is substantially consistent with the accounting principles applied to the Company’s audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal, recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter for the full year. The interim financial information should be read in conjunction with the Company’s audited Consolidated Financial Statements.

(a)Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of consolidated income and expenses during the reporting period.

(b)Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 — Basis of Presentation and Summary of Significant Accounting Policies, of its audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission.

There have been no significant changes to the Company’s significant accounting policies as described in its 2021 Annual Report.

(c)Principles of Consolidation

The principles of consolidation require management to determine and reassess the requirement to consolidate VIEs each reporting period, and therefore, the determination may change based on new facts and circumstances pertaining to each VIE. This could result in a material impact to the Company’s consolidated financial statements in subsequent reporting periods.

The Company consolidates the assets, liabilities, and remainder interests of the Trusts as management determined that VCC is the primary beneficiary of these entities. The Company’s ongoing asset management responsibilities provide the Company with the power to direct the activities that most significantly impact the VIE’s economic performance, and the remainder interests provide the Company with the right to receive benefits and the obligation to absorb losses, limited to its investment in the remainder interest of the Trusts.

The consolidated financial statements as of June 30, 2022 and December 31, 2021 include only those assets, liabilities, and results of operations related to the business of the Company, its subsidiaries, and VIEs.

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Current Accounting Developments

6 Months Ended

Jun. 30, 2022

Accounting Changes And Error Corrections [Abstract]

Current Accounting Developments

Note 3 — Current Accounting Developments

(a)Recently Issued Accounting Standards

ASU 2022-2, "Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." The amendments in this ASU eliminate the recognition and measurement guidance for troubled debt restructuring by Creditors, and require enhanced disclosures for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. ASU 2022-4 requires that an entity disclose current-period gross write-offs by year of origination for financing receivables. This ASU is effective January 1, 2023 for the Company. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

(b) Treasury Shares

The Company separately presents treasury shares, which represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. Treasury shares are carried at cost.

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Cash, Cash Equivalents, and Restricted Cash

6 Months Ended

Jun. 30, 2022

Cash And Cash Equivalents [Abstract]

Cash, Cash Equivalents, and Restricted Cash

Note 4 — Cash, Cash Equivalents, and Restricted Cash

The Company is required to hold cash for potential future advances due to certain borrowers. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 (in thousands):

	Six Months Ended June 30,
	2022		2021
Cash and cash equivalents	$	46,250	$	27,741
Restricted cash		9,217		7,921
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	55,467	$	35,662

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Loans Held for Sale, Net

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Loans Held for Sale, Net

Note 5 — Loans Held for Sale, Net

The following table summarizes loans held for sale as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022		December 31, 2021
Unpaid principal balance	$	—	$	87,422
Valuation adjustments		—		—
Deferred loan origination costs		—		486
Ending balance	$	—	$	87,908

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Loans Held for Investment and Loans Held for Investment at Fair Value

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Loans Held for Investment and Loans Held for Investment at Fair Value

Note 6 — Loans Held for Investment and Loans Held for Investment at Fair Value

The following tables summarize loans held for investment as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Loans held for investment, net			Loans held for investment, at fair value		Total loans held for investment
Unpaid principal balance	$	3,088,950		$	1,308	$	3,090,258
Valuation adjustments on FVO loans		—			43		43
Deferred loan origination costs		34,754			—		34,754
		3,123,704			1,351		3,125,055
Allowance for loan losses		(4,905	)		—		(4,905	)
Total loans held for investment and loans held for investment at    fair value, net	$	3,118,799		$	1,351	$	3,120,150

	December 31, 2021
	Loans held for investment, net			Loans held for investment, at fair value		Total loans held for investment
Unpaid principal balance	$	2,498,466		$	1,332	$	2,499,798
Valuation adjustments on FVO loans		—			27		27
Deferred loan origination costs		33,360			—		33,360
		2,531,826			1,359		2,533,185
Allowance for loan losses		(4,262	)		—		(4,262	)
Total loans held for investment and loans held for investment at    fair value, net	$	2,527,564		$	1,359	$	2,528,923

The following tables summarize the Unpaid Principal Balance (“UPB”) and amortized cost basis of loans in the Company's COVID-19 forbearance program for the three and six months ended June 30, 2022 and the year ended December 31, 2021 ($ in thousands):

	Three Months Ended June 30, 2022								Six Months Ended June 30, 2022
	UPB			%	Amortized Cost			%	UPB			%	Amortized Cost			%
Beginning balance	$	260,709			$	263,860			$	292,429			$	295,990
Foreclosures		(1,427	)			(1,438	)			(1,427	)			(1,438	)
Repayments		(22,968	)			(23,349	)			(54,688	)			(55,479	)
Ending balance	$	236,314			$	239,073			$	236,314			$	239,073
Performing/Accruing	$	187,872		79.5%	$	190,101		79.5%	$	187,872		79.5%	$	190,101		79.5%
Nonperforming/Nonaccrual	$	48,442		20.5%	$	48,972		20.5%	$	48,442		20.5%	$	48,972		20.5%

	December 31, 2021
	UPB			%	Amortized Cost			%
Beginning balance	$	392,073			$	396,918
Additions		2,616				2,615
Foreclosures		(402	)			(408	)
Repayments		(101,858	)			(103,135	)
Ending balance	$	292,429			$	295,990
Performing/Accruing	$	233,307		79.8%	$	236,076		79.8%
Nonperforming/Nonaccrual	$	59,122		20.2%	$	59,914		20.2%

Since April 1, 2020, the inception of the COVID-19 forbearance program, the Company has modified $409.0 million in UPB of loans, which includes capitalized interest of $10.9 million. As of June 30, 2022, $188.8 million in UPB of modified loans has been paid down, which includes $3.8 million of capitalized interest received and the Company has not forgiven any capitalized interest.

Approximately 79.5% and 79.8% of the COVID forbearance loans in UPB were performing, and 20.5% and 20.2% were on nonaccrual status as of June 30, 2022 and December 31, 2021, respectively.

As of June 30, 2022 and December 31, 2021, the gross unpaid principal balance of loans held for investment pledged as collateral for the Company’s warehouse facilities, and securitizations issued were as follows (in thousands):

	June 30, 2022		December 31, 2021
The 2013 repurchase agreement	$	105,783	$	202,511
The 2021 repurchase agreement		101,570		114,072
The Bank credit agreement		33,962		30,959
The 2021 term repurchase agreement		29,828		53,217
The July 2021 term repurchase agreement		875		—
Total pledged loans	$	272,018	$	400,759
2015-1 Trust	$	—	$	31,931
2016-1 Trust		44,917		52,623
2017-2 Trust		75,129		94,809
2018-1 Trust		58,384		71,051
2018-2 Trust		122,113		154,974
2019-1 Trust		116,326		144,727
2019-2 Trust		107,197		132,358
2019-3 Trust		87,283		103,266
2020-1 Trust		162,582		189,547
2020-2 Trust		86,339		98,403
2020-MC1 Trust		—		134,957
2021-1 Trust		224,063		249,396
2021-2 Trust		186,540		198,039
2021-3 Trust		195,199		202,138
2021-4 Trust		293,146		314,547
2022-1 Trust		269,025		—
2022-2 Trust		250,812		—
2022-MC1 Trust		108,055		—
2022-3 Trust		310,432		—
Total	$	2,697,542	$	2,172,766

(a) Nonaccrual Loans

The following tables present the amortized cost basis, or recorded investment, of the Company’s loans held for investment that were nonperforming and on nonaccrual status as of June 30, 2022 and December 31, 2021. There were no loans accruing interest that were greater than 90 days past due as of June 30, 2022 and December 31, 2021.

	June 30, 2022
	Total Nonaccrual		Nonaccrual with No Allowance for Loan Loss		Nonaccrual with Allowance for Loan Loss		Allowance for Loans Individually Evaluated		% of Allowance to Total Nonaccrual Loans with Allowance
	($ in thousands)
Commercial - Purchase	$	14,911	$	14,647	$	264	$	6		0.1	%
Commercial - Refinance		80,442		76,077		4,365		434		3.7
Residential 1-4 Unit - Purchase		22,885		22,542		343		52		0.4
Residential 1-4 Unit - Refinance		96,649		94,594		2,055		196		1.7
Short Term 1-4 Unit - Purchase		2,302		2,302		—		—		—
Short Term 1-4 Unit - Refinance		38,013		33,268		4,745		476		4.0
Total	$	255,202	$	243,430	$	11,772	$	1,164		9.9	%
Troubled Debt Restructuring included in nonaccrual loans:	$	160	$	—	$	—	$	25		—

	December 31, 2021
	Total Nonaccrual		Nonaccrual with No Allowance for Loan Loss		Nonaccrual with Allowance for Loan Loss		Allowance for Loans Individually Evaluated		% of Allowance to Total Nonaccrual Loans with Allowance
	($ in thousands)
Commercial - Purchase	$	17,260	$	16,501	$	759	$	9		0.1	%
Commercial - Refinance		85,935		79,131		6,804		826		6.2
Residential 1-4 Unit - Purchase		17,385		17,128		257		96		0.7
Residential 1-4 Unit - Refinance		107,552		105,515		2,037		138		1.0
Short Term 1-4 Unit - Purchase		2,986		2,881		105		31		0.2
Short Term 1-4 Unit - Refinance		45,300		41,870		3,430		306		2.3
Total	$	276,418	$	263,026	$	13,392	$	1,406		10.5	%
Troubled Debt Restructuring included in nonaccrual loans:	$	165	$	—	$	—	$	25		—

The Company has made the accounting policy election not to measure an allowance for credit losses for accrued interest receivables. The Company has also made the accounting policy election to write off accrued interest receivables by reversing interest income when loans are placed on nonaccrual status, or 90 days or more past due.

The Company will continue to evaluate the COVID-19 forbearance-granted loans on an individual basis to determine if a reserve should be established on the collectability of the accrued interest and whether any loans should be placed on nonaccrual status at a future date.

The following tables present the amortized cost basis in the loans held for investment, excluding loans held for investment at fair value, as of June 30, 2022 and 2021, and the amount of accrued interest receivables written off by reversing interest income by portfolio segment for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,
	2022				2021
	Amortized Cost		Interest Reversal		Amortized Cost		Interest Reversal
Commercial - Purchase	$	677,491	$	77	$	366,737	$	53
Commercial - Refinance		912,774		335		690,964		225
Residential 1-4 Unit - Purchase		529,796		61		276,896		63
Residential 1-4 Unit - Refinance		887,720		269		608,543		281
Short Term 1-4 Unit - Purchase		57,973		4		40,205		639
Short Term 1-4 Unit - Refinance		57,950		132		104,371		117
Total	$	3,123,704	$	878	$	2,087,716	$	1,378

	Six Months Ended June 30,
	2022				2021
	Amortized Cost		Interest Reversal		Amortized Cost		Interest Reversal
Commercial - Purchase	$	677,491	$	192	$	366,737	$	192
Commercial - Refinance		912,774		587		690,964		693
Residential 1-4 Unit - Purchase		529,796		281		276,896		121
Residential 1-4 Unit - Refinance		887,720		566		608,543		801
Short Term 1-4 Unit - Purchase		57,973		25		40,205		685
Short Term 1-4 Unit - Refinance		57,950		371		104,371		358
Total	$	3,123,704	$	2,022	$	2,087,716	$	2,850

The cash basis interest income recognized on nonaccrual loans was $8.7 million and $9.9 million for the three months ended June 30, 2022 and 2021, respectively, and $16.0 million and $16.7 million for the six months ended June 30, 2022 and 2021, respectively. No accrued interest income was recognized on nonaccrual loans for the three and six months ended June 30, 2022. The average recorded investment of individually evaluated loans, computed using month-end balances, was $260.8 million and $337.9 million for the three months ended June 30, 2022 and 2021, and $271.3 million and $337.5 million for the six months ended June 30, 2022 and 2021, respectively. There were no commitments to lend additional funds to debtors whose loans have been modified in troubled debt restructuring as of June 30, 2022 and 2021.

(b)Allowance for Credit Losses

The allowance for credit losses is maintained at a level deemed adequate by management to provide for expected losses in the portfolio at the balance sheet date. The allowance for credit losses is measured using two components. A component that measures expected credit losses on a collective (pool) basis when similar risk characteristics exist and a component that measures expected credit losses on an individual loan basis. To estimate the allowance for credit losses in the loans held for investment portfolio, management follows a detailed internal process, considering a number of different factors including, but not limited to, the ongoing analyses of loans, historical loss rates, relevant environmental factors, relevant market research, trends in delinquencies, effects and changes in credit concentrations, and ongoing evaluation of fair values.

The Company uses an open pool loss rate methodology to model expected credit losses on a collective basis. To determine the loss rates for the open pool method, the Company starts with its historical database of losses, segmenting the loans by loan purpose, product type and repayment period. A third-party model applying the open pool method is used to estimate an annual average loss rates by dividing the respective pool's quarterly historical losses by the pool's respective prior quarter’s ending unamortized loan cost balance and deriving an annual average loss rate from the historical quarterly loss rates. The model then adjusts the annual average loss rates based upon macroeconomic forecasts over a reasonable and supportable period, followed by a straight-line reversion to the historical loss rates. The adjusted annual average loss rates are applied to the forecasted pool balance within each segment. The forecasted balances in the loan pool segments are calculated based on a principal amortization using contractual maturity, factoring in further principal reductions from estimated prepayments. For the June 30, 2022 estimate, the Company considered a severe stress scenario with a six-quarter reasonable and supportable forecast period followed by a four-quarter straight-line reversion period. Management concluded that applying the severe stress scenario was appropriate given the uncertainty around future COVID cases, the war between Russia and Ukraine, spike in inflation, continued disruption in the supply chain, and concerns of a recession.

Once a loan becomes nonperforming (90 or more days past due), it no longer shares the same risk characteristics of the other loans within its segment of homogeneous loans (pool). Nonperforming loans are considered collateral dependent by the Company. These loans are evaluated individually using the practical expedient to determine the credit exposure.

The following tables present the activity in the allowance for credit losses for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30, 2022
						Residential		Residential		Short Term			Short Term
	Commercial		Commercial			1-4 Unit		1-4 Unit		1-4 Unit			1-4 Unit
	Purchase		Refinance			Purchase		Refinance		Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - April 1, 2022	$	518	$	2,140		$	389	$	1,029	$	50		$	537		$	4,663
Provision for loan losses		94		(125	)		51		241		(16	)		34			279
Charge-offs		—		(19	)		—		—		—			(18	)		(37	)
Ending balance	$	612	$	1,996		$	440	$	1,270	$	34		$	553		$	4,905
Allowance related to:
Loans individually evaluated	$	6	$	434		$	52	$	196	$	—		$	476		$	1,164
Loans collectively evaluated		606		1,562			388		1,074		34			77			3,741
Amortized cost related to:
Loans individually evaluated	$	14,911	$	80,442		$	22,885	$	96,649	$	2,302		$	38,013		$	255,202
Loans collectively evaluated		662,580		832,332			506,911		791,071		55,671			19,937			2,868,502

	Three Months Ended June 30, 2021
							Residential			Residential			Short Term			Short Term
	Commercial			Commercial			1-4 Unit			1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase			Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - April 1, 2021	$	328		$	1,990		$	322		$	1,227		$	386		$	1,628		$	5,881
Provision for loan losses		48			28			(41	)		(229	)		(313	)		(493	)		(1,000	)
Charge-offs		(114	)		(95	)		—			(151	)		—			(558	)		(918	)
Ending balance	$	262		$	1,923		$	281		$	847		$	73		$	577		$	3,963
Allowance related to:
Loans individually evaluated	$	57		$	1,005		$	120		$	342		$	56		$	369		$	1,949
Loans collectively evaluated		205			918			161			507			16			207			2,014
Amortized cost related to:
Loans individually evaluated	$	19,314		$	92,397		$	21,084		$	112,294		$	23,883		$	50,002		$	318,974
Loans collectively evaluated		347,423			598,567			255,812			496,249			16,322			54,369			1,768,742

	Six Months Ended June 30, 2022
							Residential		Residential			Short Term			Short Term
	Commercial			Commercial			1-4 Unit		1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase		Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - January 1, 2022	$	385		$	2,144		$	400	$	948		$	43		$	342		$	4,262
Provision for loan losses		374			(123	)		40		427			(9	)		300			1,009
Charge-offs		(147	)		(25	)		—		(105	)		—			(89	)		(366	)
Ending balance	$	612		$	1,996		$	440	$	1,270		$	34		$	553		$	4,905
Allowance related to:
Loans individually evaluated	$	6		$	434		$	52	$	196		$	—		$	476		$	1,164
Loans collectively evaluated		606			1,562			388		1,074			34			77			3,741
Amortized cost related to:
Loans individually evaluated	$	14,911		$	80,442		$	22,885	$	96,649		$	2,302		$	38,013		$	255,202
Loans collectively evaluated		662,580			832,332			506,911		791,071			55,671			19,937			2,868,502

	Six Months Ended June 30, 2021
							Residential			Residential			Short Term			Short Term
	Commercial			Commercial			1-4 Unit			1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase			Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - January 1, 2021	$	373		$	2,093		$	333		$	1,216		$	595		$	1,235		$	5,845
Provision for loan losses		3			(76	)		(15	)		(218	)		(508	)		(81	)		(895	)
Charge-offs		(114	)		(94	)		(37	)		(151	)		(14	)		(577	)		(987	)
Ending balance	$	262		$	1,923		$	281		$	847		$	73		$	577		$	3,963
Allowance related to:
Loans individually evaluated	$	57		$	1,005		$	120		$	342		$	56		$	369		$	1,949
Loans collectively evaluated		205			918			161			507			16			207			2,014
Amortized cost related to:
Loans individually evaluated	$	19,314		$	92,397		$	21,084		$	112,294		$	23,883		$	50,002		$	318,974
Loans collectively evaluated		347,423			598,567			255,812			496,249			16,322			54,369			1,768,742

(c)Credit Quality Indicator

A credit quality indicator is a statistic used by the Company to monitor and assess the credit quality of loans held for investment, excluding loans held for investment at fair value. The Company monitors its charge-off rate in relation to its nonperforming loans as a credit quality indicator. Nonperforming loans are loans that are 90 or more days past due, in bankruptcy, in foreclosure, or not accruing interest. As of June 30, 2022, the annualized charge-off rate was 0.27% of average nonperforming loans. The charge-off rate was 0.42% for the year ended December 31, 2021.

Other credit quality indicators include aging status and accrual status. The following table presents the aging status of the amortized cost basis in the loans held for investment portfolio, excluding loans held for investment at fair value, which include $239.1 million and $296.0 million loans in the Company’s COVID-19 forbearance program as of June 30, 2022 and December 31, 2021, respectively (in thousands):

	30–59 days		60–89 days		90+days		Total				Total
June 30, 2022	past due		past due		past due(1)		past due		Current		loans
Loans individually evaluated
Commercial - Purchase	$	310	$	1,875	$	12,726	$	14,911	$	—	$	14,911
Commercial - Refinance		3,551		6,314		70,417		80,282		160		80,442
Residential 1-4 Unit - Purchase		325		672		21,888		22,885		—		22,885
Residential 1-4 Unit - Refinance		1,029		2,701		92,919		96,649		—		96,649
Short Term 1-4 Unit - Purchase		—		—		2,302		2,302		—		2,302
Short Term 1-4 Unit - Refinance		—		247		37,766		38,013		—		38,013
Total loans individually evaluated	$	5,215	$	11,809	$	238,018	$	255,042	$	160	$	255,202
Loans collectively evaluated
Commercial - Purchase	$	13,431	$	9,952	$	—	$	23,383	$	639,197	$	662,580
Commercial - Refinance		30,249		14,483		—		44,732		787,600		832,332
Residential 1-4 Unit - Purchase		14,855		3,805		—		18,660		488,251		506,911
Residential 1-4 Unit - Refinance		42,227		10,519		—		52,746		738,325		791,071
Short Term 1-4 Unit - Purchase		3,052		677		—		3,729		51,942		55,671
Short Term 1-4 Unit - Refinance		3,476		570		—		4,046		15,891		19,937
Total loans collectively evaluated	$	107,290	$	40,006	$	—	$	147,296	$	2,721,206	$	2,868,502
Ending balance	$	112,505	$	51,815	$	238,018	$	402,338	$	2,721,366	$	3,123,704

	30–59 days		60–89 days		90+days		Total				Total
December 31, 2021	past due		past due		past due(1)		past due		Current		loans
Loans individually evaluated
Commercial - Purchase	$	700	$	2,314	$	14,246	$	17,260	$	—	$	17,260
Commercial - Refinance		4,464		6,818		74,488		85,770		165		85,935
Residential 1-4 Unit - Purchase		—		682		16,703		17,385		—		17,385
Residential 1-4 Unit - Refinance		807		1,088		105,657		107,552		—		107,552
Short Term 1-4 Unit - Purchase		1,224		—		1,762		2,986		—		2,986
Short Term 1-4 Unit - Refinance		615		1,010		43,675		45,300		—		45,300
Total loans individually evaluated	$	7,810	$	11,912	$	256,531	$	276,253	$	165	$	276,418
Loans collectively evaluated
Commercial - Purchase	$	17,319	$	4,034	$	—	$	21,353	$	470,808	$	492,161
Commercial - Refinance		31,769		7,025		—		38,794		658,532		697,326
Residential 1-4 Unit - Purchase		14,905		5,580		—		20,485		370,900		391,385
Residential 1-4 Unit - Refinance		39,045		9,548		—		48,593		574,175		622,768
Short Term 1-4 Unit - Purchase		21,412		217		—		21,629		4,374		26,003
Short Term 1-4 Unit - Refinance		4,060		5,561		—		9,621		16,144		25,765
Total loans collectively evaluated	$	128,510	$	31,965	$	—	$	160,475	$	2,094,933	$	2,255,408
Ending balance	$	136,320	$	43,877	$	256,531	$	436,728	$	2,095,098	$	2,531,826

(1)Includes loans in bankruptcy and foreclosure less than 90 days past due.

In addition to the aging status, the Company also evaluates credit quality by accrual status. The following tables present the amortized cost in loans held for investment, excluding loans held for investment at fair value, based on accrual status and by loan origination year as of June 30, 2022 and December 31, 2021 (in thousands).

	Term Loans Amortized Cost Basis by Origination Year
June 30, 2022:	2022		2021		2020		2019		2018		Pre-2018		Total
Commercial - Purchase
Payment performance
Performing	$	215,509	$	268,001	$	41,591	$	64,227	$	39,948	$	33,304	$	662,580
Nonperforming		—		1,212		186		6,540		1,535		5,438		14,911
Total Commercial - Purchase	$	215,509	$	269,213	$	41,777	$	70,767	$	41,483	$	38,742	$	677,491
Commercial - Refinance
Payment performance
Performing	$	224,064	$	225,103	$	58,086	$	124,285	$	100,753	$	100,041	$	832,332
Nonperforming		540		8,266		3,857		21,462		20,646		25,671		80,442
Total Commercial - Refinance	$	224,604	$	233,369	$	61,943	$	145,747	$	121,399	$	125,712	$	912,774
Residential 1-4 Unit - Purchase
Payment performance
Performing	$	162,492	$	242,544	$	11,541	$	39,733	$	22,505	$	28,096	$	506,911
Nonperforming		985		8,063		2,169		3,042		3,474		5,152		22,885
Total Residential 1-4    Unit - Purchase	$	163,477	$	250,607	$	13,710	$	42,775	$	25,979	$	33,248	$	529,796
Residential 1-4 Unit - Refinance
Payment performance
Performing	$	247,970	$	314,865	$	26,150	$	95,470	$	44,360	$	62,256	$	791,071
Nonperforming		509		14,566		7,111		28,920		24,066		21,477		96,649
Total Residential 1-4    Unit - Purchase	$	248,479	$	329,431	$	33,261	$	124,390	$	68,426	$	83,733	$	887,720
Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	29,097	$	7,493	$	15,037	$	4,044	$	—	$	—	$	55,671
Nonperforming		—		—		995		1,202		105		—		2,302
Total Short Term 1-4    Unit - Purchase	$	29,097	$	7,493	$	16,032	$	5,246	$	105	$	—	$	57,973
Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	13,024	$	1,582	$	2,543	$	2,788	$	—	$	—	$	19,937
Nonperforming		—		244		12,464		20,264		5,041		—		38,013
Total Short Term 1-4    Unit - Refinance	$	13,024	$	1,826	$	15,007	$	23,052	$	5,041	$	—	$	57,950
Total Portfolio	$	894,190	$	1,091,939	$	181,730	$	411,977	$	262,433	$	281,435	$	3,123,704

	Term Loans Amortized Cost Basis by Origination Year
December 31, 2021	2021		2020		2019		2018		2017		Pre-2017		Total
Commercial - Purchase
Payment performance
Performing	$	277,618	$	45,836	$	81,541	$	46,637	$	24,164	$	16,365	$	492,161
Nonperforming		288		1,781		5,541		4,180		3,539		1,931		17,260
Total Commercial - Purchase	$	277,906	$	47,617	$	87,082	$	50,817	$	27,703	$	18,296	$	509,421
Commercial - Refinance
Payment performance
Performing	$	239,688	$	64,966	$	144,017	$	118,735	$	62,374	$	67,545	$	697,325
Nonperforming		2,482		3,949		26,012		26,869		16,492		10,131		85,935
Total Commercial - Refinance	$	242,170	$	68,915	$	170,029	$	145,604	$	78,866	$	77,676	$	783,260
Residential 1-4 Unit - Purchase
Payment performance
Performing	$	263,180	$	12,878	$	48,930	$	29,544	$	12,863	$	23,990	$	391,385
Nonperforming		1,372		2,749		3,896		3,736		3,487		2,145		17,385
Total Residential 1-4    Unit - Purchase	$	264,552	$	15,627	$	52,826	$	33,280	$	16,350	$	26,135	$	408,770
Residential 1-4 Unit - Refinance
Payment performance
Performing	$	343,199	$	31,334	$	114,145	$	59,825	$	31,774	$	42,491	$	622,768
Nonperforming		11,646		6,040		31,816		30,626		16,677		10,747		107,552
Total Residential 1-4    Unit - Purchase	$	354,845	$	37,374	$	145,961	$	90,451	$	48,451	$	53,238	$	730,320
Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	1,890	$	15,582	$	8,531	$	—	$	—	$	—	$	26,003
Nonperforming		—		1,565		1,316		105		—		—		2,986
Total Short Term 1-4    Unit - Purchase	$	1,890	$	17,147	$	9,847	$	105	$	—	$	—	$	28,989
Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	1,448	$	11,991	$	12,326	$	—	$	—	$	—	$	25,765
Nonperforming		1,038		15,819		22,618		5,825		—		—		45,300
Total Short Term 1-4    Unit - Refinance	$	2,486	$	27,810	$	34,944	$	5,825	$	—	$	—	$	71,065
Total Portfolio	$	1,143,849	$	214,490	$	500,689	$	326,082	$	171,370	$	175,345	$	2,531,825

XML

Receivables Due From Servicers

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Receivables Due From Servicers

Note 7 — Receivables Due From Servicers

The following tables summarize receivables due from servicers as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Securitizations		Warehouse and repurchase facilities and other		Total
Loan principal payments due from servicers	$	41,347	$	1,855	$	43,202
Other loan servicing receivables		13,024		1,414		14,438
Loan servicing receivables		54,371		3,269		57,640
Corporate and escrow advances receivable		17,985		63		18,048
Total receivables due from servicers	$	72,356	$	3,332	$	75,688

	December 31, 2021
	Securitizations		Warehouse and repurchase facilities and other		Total
Loan principal payments due from servicers	$	42,344	$	1,165	$	43,509
Other loan servicing receivables		10,718		730		11,448
Loan servicing receivables		53,062		1,895		54,957
Corporate and escrow advances receivable		17,884		1,489		19,373
Total receivables due from servicers	$	70,946	$	3,384	$	74,330

XML

Mortgage Servicing Rights

6 Months Ended

Jun. 30, 2022

Transfers And Servicing [Abstract]

Mortgage Servicing Rights

Note 8 — Mortgage Servicing Rights

Mortgage loans serviced are related to the Century business and not included in the consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others amounted to $505.1 million and $520.6 million as of June 30, 2022 and December 31, 2021, respectively. The Company has elected to record its mortgage servicing rights using the fair value measurement method. Significant assumptions used in determining the fair value of servicing rights as of June 30, 2022 and December 31, 2021 include: 1) Weighted average discount rate of 8.1% and 8.0%, respectively. 2) Weighted average conditional prepayment rate of 2.2% and 3.2%, respectively. The following table presents the Company's mortgage servicing rights (in thousands):

	June 30, 2022		December 31, 2021
Balance at the beginning of year	$	7,152	$	—
Mortgage servicing rights acquired, at fair value		—		7,152
Additions		—		—
Fair value adjustments		1,286		—
Balance at end of period	$	8,438	$	7,152

XML

Securitizations Net

6 Months Ended

Jun. 30, 2022

Transfers And Servicing [Abstract]

Securitization, Net

Note 9 — Securitizations, Net

From May 2011 through June 2022, the Company completed twenty-three securitizations, issuing $4.9 billion of securities to third parties through twenty-three respective Trusts. The Company is the sole beneficial interest holder of the remaining Trusts, which are variable interest entities included in the consolidated financial statements. The transactions are accounted for as secured borrowings under U.S. GAAP. The securities are subject to redemption by the Company when the stated principal balance is less than a certain percentage, ranging from 5%–30% of the original stated principal balance of loans at issuance. As a result, the actual maturity dates of the securities issued could be earlier than their respective stated maturity dates, ranging from July 2045 through May 2052.

The following table summarizes the outstanding balance, net of discounts and deal costs, of the securities and the effective interest rate for the six months ended June 30, 2022 and 2021 ($ in thousands):

	Six Months Ended June 30,
Securitizations:	2022			2021
Securitizations, net	$	2,477,226		$	1,558,163
Interest expense		44,428			37,333
Average outstanding balance		2,175,263			1,545,969
Effective interest rate (1)		4.08	%		4.83	%

(1)Represents annualized interest expense divided by average gross outstanding balance and includes average rate of 3.38% and debt issuance cost amortization of 0.70% and average rate of 4.12% and debt issuance cost amortization of 0.71% for the six months ended June 30, 2022 and 2021, respectively.

XML

Other Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Other Debt

Note 10 — Other Debt

Secured financings and warehouse facilities were utilized to finance the origination and purchase of commercial real estate mortgage loans. Warehouse facilities are designated to fund mortgage loans that are purchased and originated within specified underwriting guidelines. Most of these lines of credit fund less than 100% of the principal balance of the mortgage loans originated and purchased, requiring the use of working capital to fund the remaining portion.

(a)Secured Financing, Net (Corporate Debt)

On February 5, 2021, the Company entered into a five-year $175.0 million syndicated corporate debt agreement, the (“the 2021 Term Loan”). The 2021 Term Loan had an interest rate equal to one-month LIBOR plus 8.00% with a 1.00% LIBOR floor, and matures on February 4, 2026. A portion of the net proceeds from the 2021 Term Loan was used to redeem all the amounts owed pursuant to the 2019 debt agreement (“2019 Term Loan”). The remaining portion of the net proceeds from the 2021 Term Loan was used for loan originations and general corporate purposes. The 2021 Term Loan was paid off in March 2022.

On March 15, 2022, the Company entered into a five-year $215.0 million syndicated corporate debt agreement, the (“the 2022 Term Loan”). The 2022 Term Loan bears interest at a fixed rate of 7.125% and matures on March 15, 2027. Interest on the 2022 Term Loan is paid every six months. A portion of the net proceeds from the 2022 Term Loan was used to redeem all the amounts owed pursuant to the 2021 Term Loan. The remaining portion of the net proceeds from the 2022 Term Loan is used for loan originations and general corporate purposes. As of June 30, 2022, the balance of the 2022 Term Loan was $215.0 million. The balance in the consolidated balance sheets is net of debt issuance costs of $5.8 million as of June 30, 2022 . The 2022 Term Loan is secured by substantially all assets of the Company not otherwise pledged under a securitization or warehouse facility and contains certain reporting and financial covenants. Should the Company fail to adhere to those covenants, the lenders have the right to demand immediate repayment that may require the Company to sell the collateral at less than the carrying amounts. As of June 30, 2022, the Company was in compliance with these covenants.

(b)Warehouse Repurchase and Revolving Loan Facilities, Net

On January 4, 2011, Century entered into a Master Participation and Facility Agreement with a bank (“Facility Agreement”). The Facility Agreement has a current extended maturity date of July 31, 2023, and is a short-term borrowing facility, collateralized by performing loans, with a maximum capacity of $60.0 million, and bears interest at one-month Secured Overnight Financing Rate (“SOFR”) plus 1.60% with a 0.25% floor.

On August 8, 2016, Century entered a Promissory Note Revolving Credit Line with a bank (“Revolving Credit Line”). The Revolving Credit Line has a current extended maturity date of July 31, 2023, and is a short-term unsecured borrowing line, with a maximum capacity of $3.0 million, and bears interest at SOFR plus 2.00% with a 0.25% floor.
 

On May 17, 2013, the Company entered into a Repurchase Agreement (“the 2013 Repurchase Agreement”) with a warehouse lender. The 2013 Repurchase Agreement is a modified mark-to-market agreement and has a current maturity date of September 29, 2023, and is a short-term borrowing facility, collateralized by a pool of performing loans, with a maximum capacity of $300.0 million, and bears interest at SOFR plus 3.25%. All borrower payments on loans financed under the warehouse repurchase facility are first used to pay interest on the facility. The effective interest rates were 5.0% and 4.2% as of June 30, 2022 and December 31, 2021, respectively.

On September 12, 2018, the Company entered into a three-year non-mark-to-market secured revolving loan facility agreement (“the Bank Credit Agreement”) with a bank. The Bank Credit Agreement has a current extended maturity date of November 10, 2023. During the borrowing period, the Company can take loan advances from time to time subject to availability. Each loan advance bears interest at the lesser of the one-month LIBOR Rate with a 0.75% floor, plus 3.5% per annum and the maximum rate, which is the highest lawful and non-usurious rate of interest applicable to the loan. The maximum capacity under this facility is $50.0 million. The effective interest rates were 4.2% and 7.3% as of June 30, 2022 and December 31, 2021, respectively.

On December 26, 2019, the Company entered into a $3.0 million loan agreement (“the 2019 Loan”) with a lender. The 2019 Loan was secured by five real properties acquired by the Company through foreclosure or by deed-in lieu of foreclosure. This loan was paid off in March 2022. The effective interest rate was 0.0% as of June 30, 2022 and 10.5% December 31, 2021.

On January 29, 2021, the Company entered into a non-mark-to-market Repurchase Agreement (“the 2021 Repurchase Agreement”) with a warehouse lender. The 2021 Repurchase Agreement has a maturity date of February 28, 2023, and is a short-term borrowing facility, collateralized by a pool of loans, with a maximum capacity of $200.0 million, and bears interest at one-month LIBOR plus a margin of 3.50% during the availability period and 4.50% during the amortization period. All borrower payments on loans financed under the warehouse repurchase facility are first used to pay interest on the facility. The effective interest rates were 5.6% and 5.9% as of June 30, 2022 and December 31, 2021, respectively.

On April 16, 2021, the Company entered into a non-mark-to-market Term Repurchase Agreement (“the 2021 Term Repurchase Agreement”) with a warehouse lender. The 2021 Term Repurchase Agreement has a maturity date of April 16, 2024, with a borrowing period through April 16, 2023. During the borrowing period, the Company can take loan advances from time to time subject to availability. Each loan advance bears interest at one-month LIBOR plus 3.0% per annum. The maximum capacity under this facility is $100.0 million. The effective interest rates were 3.4% and 3.5% as of June 30, 2022 and December 31, 2021, respectively.

On July 29, 2021, the Company entered into a non-mark-to-market Term Repurchase Agreement (“the July 2021 Term Repurchase Agreement”) with a warehouse lender. The July 2021 Term Repurchase Agreement has a maturity date of July 29, 2024, with an option to extend the term to July 29, 2025. During the borrowing period, the Company can take loan advances from time to time subject to availability. Each loan advance bears interest at one-month LIBOR with a 0.5% floor plus 4.5% per annum. The maximum capacity under this facility is $100.0 million. The effective interest rate was 4.2% as of June 30, 2022 and there was no balance outstanding as of December 31, 2021.

Certain of the Company’s loans are pledged as security under the warehouse repurchase facilities and the revolving loan facility, which contain covenants. Should the Company fail to adhere to those covenants or otherwise default under the facilities, the lenders have the right to terminate the facilities and demand immediate repayment that may require the Company to sell the collateral at less than the carrying amounts. As of June 30, 2022 and December 31, 2021, the Company was in compliance with these covenants.

The following table summarizes the maximum borrowing capacity and current gross balances outstanding of the Company’s warehouse facilities and loan agreements as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022				December 31, 2021
	Period end balance (1)		Maximum borrowing capacity		Period end balance (1)		Maximum borrowing capacity
The 2021 term repurchase agreement	$	21,632	$	100,000	$	41,636	$	100,000
The 2021 repurchase agreement		78,608		200,000		82,580		200,000
The July 2021 term repurchase agreement		454		100,000		—		100,000
The 2013 repurchase agreement		83,923		300,000		153,499		200,000
The Bank credit agreement		25,587		50,000		22,385		50,000
The 2019 loan agreement		—		—		2,700		3,000
Total	$	210,204	$	750,000	$	302,800	$	653,000

(1)Warehouse repurchase facilities amounts in the consolidated balance sheets are net of debt issuance costs amounting to $1.8 million and $1.7 million as of June 30, 2022 and December 31, 2021, respectively.

The following table provides an overview of the activity and effective interest rate for the three and six months ended June 30, 2022 and 2021 ($ in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Warehouse and repurchase facilities:
Average outstanding balance	$	318,960		$	166,981		$	328,603		$	140,254
Highest outstanding balance at any month-end		379,169			250,927			426,959			250,927
Effective interest rate (1)		5.16	%		5.65	%		4.80	%		5.80	%

(1)Effective interest rate represents annualized interest expense divided by average gross outstanding balance. The rate includes average rate of 4.59% and debt issuance cost amortization of 0.57%, and average rate of 4.44% and debt issuance cost amortization of 1.21%, for the three months ended June 30, 2022 and 2021, respectively, and includes average rate of 4.23% and debt issuance cost amortization of 0.57%, and average rate 4.58% and debt issuance cost amortization 1.22% for the six months ended June 30, 2022 and 2021, respectively.

The following table provides a summary of interest expense that includes debt issuance cost amortization, interest, amortization of discount, and deal cost amortization for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Warehouse and repurchase facilities	$	4,115	$	2,361	$	7,880	$	4,067
Securitizations		24,637		18,205		44,428		37,332
Interest expense — portfolio related		28,752		20,566		52,308		41,399
Interest expense — corporate debt		4,182		4,309		21,322		11,658	(1)
Total interest expense	$	32,934	$	24,875	$	73,630	$	53,057

(1)Included in the $11.7 million of interest expense – corporate debt for the six months ended June 30, 2021 was the one-time debt issuance costs write-off of $2.9 million and prepayment fee of $1.6 million associated with the payoff of $78.0 million in outstanding principal amount in February 2021.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 11 — Commitments and Contingencies

(a)Repurchase Liability

When the Company sells loans, it is required to make normal and customary representations and warranties about the loans to the purchaser. The loan sale agreements generally require the Company to repurchase loans if the Company breaches a representation or warranty given to the loan purchaser. In addition, the Company may be required to repurchase loans as a result of borrower fraud or if a payment default occurs on a loan shortly after its sale.

The Company records a repurchase liability relating to representations and warranties and early payment defaults. The method used to estimate the liability for repurchase is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults. The Company establishes a liability at the time loans are sold and continually updates the estimated repurchase liability. The level of the repurchase liability for representations and warranties and early payment default requires considerable management judgment. As of June 30, 2022 and December 31, 2021, the balance of repurchase liability was $376 thousand and $141 thousand, respectively, and it is included in accounts payable and accrued expenses in the consolidated balance sheets.

(b)Legal Proceedings

The Company is a party to various legal proceedings in the normal course of business. The Company, after consultation with legal counsel, believes the disposition of all pending litigation will not have a material effect on the Company’s consolidated financial condition or results of operations.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 12 — Stock-Based Compensation

The Company’s Amended and Restated 2020 Omnibus Incentive Plan, or the 2020 Plan, authorizes grants of stock‑based compensation instruments to purchase or issue up to 2,770,000 shares of Company common stock. In connection with its IPO in January 2020, the Company granted stock options to non-employee directors and certain employees, including named executive officers to purchase approximately 782,500 shares of common stock with an exercise price per share equal to the initial public offering price of $13.00. On December 24, 2020, the Company granted stock options to a non-employee director to purchase 12,500 shares of common stock with an exercise price per share equal to the grant date market price of $6.28.

In January 2021, the Company issued 480,000 shares of restricted stock awards to certain employees, including named executive officers at no cost to employees. In May 2021, the Company issued 26,511 shares of restricted stock awards to certain non-employee directors.

In February 2022, the Company issued 125,250 shares of restricted stock awards and 102,750 shares of performance stock unit awards to certain employees, including named executive officers at no cost to employees.

In May 2022, the Company issued 31,215 shares of restricted stock awards to certain non-employee directors.

Restricted stock-based awards vest ratably over a service period of three years from the date of the grant. Performance-based stock unit awards are linked to the average core net income annual growth over the three-year period of 2022 – 2024. Settlement of vested performance-based stock units will be made on the date that the Compensation Committee certifies the average core net income annual growth for the three-year period. Compensation expense related to restricted stock-based awards is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using the straight-line method. Compensation expense related to performance-based stock unit awards is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using an estimate of the probability of achieving the performance target. The estimates will be reviewed quarterly and the expense adjusted accordingly. The Company recognized $0.8 million and $0.5 million compensation expense related to the outstanding stock options, unvested restricted stock awards, and unvested performance-based stock unit awards granted to employees for the three months ended June 30, 2022 and 2021, respectively. Such amount is included in “Compensation and employee benefits” on the Consolidated Statement of Income. The amount of unrecognized compensation expense related to unvested stock options, restricted stock awards and performance-based stock unit awards totaled $5.3 million and $4.7 million as of June 30, 2022 and 2021, respectively.

Treasury share purchases represent shares surrendered to the Company equal in value to the statutory payroll tax withholding obligations arising from the vesting of employee restricted stock awards. No share was purchased during the three months ended June 30, 2022. During the three months ended March 31, 2022, the Company purchased treasury shares of 33,647 at an average price of $13.61 per share.

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Earnings Per Share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share

Note 13 — Earnings Per Share

The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock and resulted in the issuance of common stock that shared in earnings.

The following table presents the basic and diluted earnings per share calculations for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands, except per share data)				(In thousands, except per share data)
Basic EPS:
Net income attributable to common stockholders	$	10,645	$	9,453	$	13,766	$	12,849
Less: undistributed earnings attributable to participating securities		164		3,571		212		4,854
Net earnings attributable to common stock	$	10,481	$	5,882	$	13,554	$	7,995
Weighted average common shares outstanding		31,917		20,087		31,904		20,087
Basic earnings per common share	$	0.33	$	0.29	$	0.42	$	0.40
Diluted EPS:
Net income attributable to common stockholders	$	10,645	$	9,453	$	13,766	$	12,849
Weighted average common shares outstanding		31,917		20,087		31,904		20,087
Add dilutive effects for assumed conversion of Series A preferred stock		—		11,688		—		11,688
Add dilutive effects for warrants		1,986		1,985		2,057		1,786
Add dilutive effects for stock options		4		3		4		2
Add dilutive effects of unvested restricted stock awards		150		197		165		121
Weighted average diluted common shares outstanding		34,057		33,960		34,130		33,684
Diluted income per common share	$	0.31	$	0.28	$	0.40	$	0.38

The following table sets forth the number of shares excluded from the computation of diluted earnings per share, as their inclusion would have been anti-dilutive (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Stock options		773		773		773		773
Unvested restricted stock awards		125		—		125		—
Unvested performance-based stock units		103		—		103		—
Share equivalents excluded from EPS		1,001		773		1,001		773

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Convertible Preferred Stock

6 Months Ended

Jun. 30, 2022

Convertible Preferred Stock [Abstract]

Convertible Preferred Stock

Note 14 — Convertible Preferred Stock

On April 7, 2020, the Company issued and sold in a private placement Series A Convertible Preferred Stock plus warrants (the “Warrants”) to purchase additional shares of the Company’s common stock to funds affiliated with Snow Phipps and a fund affiliated with Pacific Investment Management Company LLC (TOBI). Snow Phipps and TOBI are considered affiliates and, therefore, are related parties to the Company. On October 8, 2021, the Company exercised its option to convert all of its Series A Convertible Preferred Stock into common stock.

The Warrants are exercisable at the warrant holder’s option at any time and from time to time, in whole or in part, until April 7, 2025 at an exercise price of $2.96 per share of common stock, with respect to 2,008,749 of the Warrants, and at an exercise price of $4.94 per share of common stock, with respect to 1,004,375 of the Warrants. The exercise price and the number of shares of common stock issuable upon exercise of the Warrants are subject to customary antidilution adjustments and certain issuances of common stock (or securities convertible into or exercisable for common stock) at a price (or having a conversion or exercise price) that is less than the then current exercise price. The Company is not required to affect an exercise of Warrants, if after giving effect to the issuance of common stock upon exercise of such Warrants such warrant holder together with its affiliates would beneficially own 49% or more of the Company’s outstanding common stock.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 15 — Fair Value Measurements

Fair Value Determination

ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and requires disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

oLevel 1 - Valuation is based on quoted prices for identical instruments traded in active markets.

oLevel 2 - Valuation is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable and can be corroborated by market data.

oLevel 3 - Valuation is based on significant unobservable inputs for determining the fair value of assets or liabilities. These significant unobservable inputs reflect assumptions that market participants may use in pricing the assets or liabilities.

Given the nature of some of the Company’s assets and liabilities, clearly determinable market-based valuation inputs are often not available; therefore, these assets and liabilities are valued using internal estimates. As subjectivity exists with respect to the valuation estimates used, the fair values disclosed may not equal prices that can ultimately be realized if the assets are sold or the liabilities are settled with third parties.

Below is a description of the valuation methods for the assets and liabilities recorded at fair value on either a recurring or nonrecurring basis and for estimating fair value of financial instruments not recorded at fair value for disclosure purposes. While management believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the measurement date.

Cash and Cash Equivalents and Restricted Cash

Cash and restricted cash are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities and interest rates that approximate market, a Level 1 measurement.

Loans Held for Investment

Loans held for investment are recorded at their outstanding principal balance, net of purchase discounts, deferred loan origination fees/costs, and allowance for credit losses.

The Company determined the fair value estimate of loans held for investment using a third-party loan valuation model, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s mortgage loans held for investment are discount rates, prepayment speeds, loss severity, and default rates. Significant changes in any of those inputs could result in a significant change to the loans’ fair value measurement.

Collateral Dependent or Loans Individually Evaluated

Nonaccrual loans held for investment are evaluated individually and are adjusted to the fair value of the collateral when the fair value of the collateral is below the carrying value of the loan. To the extent a loan is collateral dependent, the Company determines the allowance for credit losses based on the estimated fair value of the underlying collateral. The fair value of each loan’s collateral is generally based on appraisals or broker price opinions obtained, less estimated costs to sell, a Level 3 measurement.

Loans Held for Sale

Loans held for sale are carried at the lower of cost or fair value, with fair value adjustments recorded on a nonrecurring basis. The Company uses a discounted cash flow model to estimate the fair value of loans held for sale, a Level 3 measurement.

Interest-Only Strips

The Company retains an interest-only strip on certain sales of held for sale loans. The interest-only strips are classified as trading securities under FASB ASC Topic 320, Investments-Debt Securities. The interest-only strips are measured based on their estimated fair values using a discounted cash flow model, a Level 3 measurement. Changes in fair value are reflected in income as they occur.

Loans Held for Investment, at Fair Value

The Company has elected to account for certain purchased distressed loans held for investment, at fair value (the FVO Loans) using FASB ASC Topic 825, Financial Instruments (ASC 825). The FVO loans are measured based on their estimated fair values. Management identified all of these loans to be accounted for at estimated fair value at the instrument level. Changes in fair value are reflected in income as they occur.

The Company uses a third-party loan valuation model to estimate the fair value at instrument level, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s mortgage loans held for investment, at fair value are discount rate, property values, prepayment speeds, loss severity, and default rates. Significant changes in any of those inputs in isolation could result in a significant change to the loans’ fair value measurement.

Real Estate Owned, Net (REO)

Real estate owned, net is initially recorded at the property’s estimated fair value, based on appraisals or broker price opinions obtained, less estimated costs to sell, at the acquisition date, a Level 3 measurement. From time to time, nonrecurring fair value adjustments are made to real estate owned, net based on the current updated appraised value of the property, or management’s judgment and estimation of value based on recent market trends or negotiated sales prices with potential buyers.

Mortgage Servicing Rights

The Company determined the fair values based on a third-party valuation model that calculates the present value of estimated future net servicing income, a Level 3 measurement.

Secured Financing, Net (Corporate Debt)

The Company determined the fair values estimate of the secured financing using the estimated cash flows discounted at an appropriate market rate, a Level 3 measurement.

Warehouse Repurchase Facilities, Net

Warehouse repurchase facilities are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities of one-year or less and interest rates that approximate market plus a spread, a Level 2 measurement.

Securitizations, Net

The fair value estimate of securities issued is based on third-party valuation models that calculate estimated cash flows discounted at an appropriate market rate, a Level 3 measurement.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amounts of accrued interest receivable and accrued interest payable approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.

The Company does not have any off-balance sheet financial instruments.

Receivables Due From Servicers

The carrying amounts of receivables due from servicers approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.

Fair Value Disclosures

The following tables present information on assets measured and recorded at fair value as of June 30, 2022 and December 31, 2021, by level, in the fair value hierarchy (in thousands):

	Fair value measurements using						Total at
June 30, 2022	Level 1		Level 2		Level 3		fair value
Recurring fair value measurements:
Loans held for investment, at fair value	$	—	$	—	$	1,351	$	1,351
Mortgage servicing rights		—		—		8,438		8,438
Total recurring fair value measurements		—		—		9,789		9,789
Nonrecurring fair value measurements:
Real estate owned, net		—		—		19,218		19,218
Individually evaluated loans requiring specific allowance, net		—		—		10,608		10,608
Total nonrecurring fair value measurements		—		—		29,826		29,826
Total assets	$	—	$	—	$	39,615	$	39,615

	Fair value measurements using						Total at
December 31, 2021	Level 1		Level 2		Level 3		fair value
Recurring fair value measurements:
Loans held for investment, at fair value	$	—	$	—	$	1,359	$	1,359
Mortgage servicing rights		—		—		7,152		7,152
Total recurring fair value measurements		—		—		8,511		8,511
Nonrecurring fair value measurements:
Loans held for sale, net		—		—		87,422		87,422
Real estate owned, net		—		—		17,557		17,557
Impaired loans requiring specific allowance, net		—		—		11,987		11,987
Total nonrecurring fair value measurements		—		—		116,966		116,966
Total assets	$	—	$	—	$	125,477	$	125,477

The following table presents gains and losses recognized on assets measured on a nonrecurring basis for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
Gain (loss) on assets measured on a nonrecurring basis	2022			2021			2022		2021
Loans held for sale, net	$	—		$	(15	)	$	—	$	2
Real estate held for sale, net		(143	)		(800	)		93		(1,235	)
Individually evaluated loans requiring specific allowance, net		434			1,029			242		720
Total net gain (loss)	$	291		$	214		$	335	$	(513	)

The following tables present the primary valuation techniques and unobservable inputs related to Level 3 assets as of June 30, 2022 and December 31, 2021 ($ in thousands):

	June 30, 2022
Asset category	Fair value		Primary valuation technique	Unobservable input	Range	Weighted average
Individually evaluated    loans requiring specific    allowance, net	$	10,608	Market comparables	Selling costs	8.0%	8.0%
Real estate owned, net		19,218	Market comparables	Selling costs	8.0%	8.0%
Loans held for investment,    at fair value		1,351	Discounted cash flow	Discount rate	5.8%	5.8%
				Collateral value (% of UPB)	97% to 120.0%	107.0%
				Timing of resolution/payoff (months)	1.0 to 40.0	38.0
				Prepayment rate	1.0% to 30.0%	30.0%
				Default rate	0.0% to 6.3%	0.6%
				Loss severity rate	0.0% to 21.0%	4.0%
Mortgage servicing rights		8,438	Discounted cash flow	Discount rate	8% to 12.0%	8.1%
				Prepayment rate	0.8% to 6.0%	2.2%

	December 31, 2021
Asset category	Fair value		Primary valuation technique	Unobservable input	Range	Weighted average
Individually evaluated    loans requiring specific    allowance, net	$	11,987	Market comparables	Selling costs	8.0%	8.0%
Real estate owned, net		17,557	Market comparables	Selling costs	8.0%	8.0%
Loans held for investment,    at fair value		1,359	Discounted cash flow	Discount rate	5.8%	5.8%
				Collateral value (% of UPB)	95.0% to 120.0%	106.0%
				Timing of resolution/payoff (months)	1 to 38	34.8
				Prepayment rate	19.2% to 50%	30.0%
				Default rate	0.0% to 6.7%	1.0%
				Loss severity rate	0.0% to 13.4%	3.0%
Loans held for sale		87,422	Discounted cash flow	Discount rate	5.8%	5.8%
				Timing of resolution/payoff (months)	3 to 37	13.0
Mortgage servicing rights		7,152	Discounted cash flow	Discount rate	8.0% to 12.0%	8.0%
				Prepayment rate	2.4% to 3.5%	3.2%

The following is a rollforward of loans that are measured at estimated fair value on a recurring basis for the periods indicated (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Beginning balance	$	1,352		$	1,364		$	1,359		$	1,539
Loans liquidated		—			—			—			(163	)
Principal paydowns		(7	)		(14	)		(24	)		(24	)
Total unrealized gain included in net income		6			20			16			18
Ending balance	$	1,351		$	1,370		$	1,351		$	1,370

The following is a rollforward of interest-only strips that are measured at estimated fair value on a recurring basis for the periods indicated (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021			2022		2021
Beginning balance	$	—	$	125		$	—	$	238
Interest-only strip additions		—		—			—		—
Interest-only strip write-offs		—		(44	)		—		(157	)
Total unrealized loss included in net income		—		—			—		—
Ending balance	$	—	$	81		$	—	$	81

The Company estimates the fair value of certain financial instruments on a quarterly basis. These instruments are recorded at fair value through the use of a valuation allowance only if they are individually evaluated. As described above, these adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. As of June 30, 2022 and December 31, 2021, the only financial assets measured at fair value, or lower of cost or fair value, were certain individually evaluated loans held for investment, loans held for sale, mortgage servicing rights, interest-only strips, REO and FVO loans, which were measured using unobservable inputs, including appraisals and broker price opinions on the values of the underlying collateral. Individually evaluated loans requiring an allowance were carried at approximately $10.6 million and $12.0 million as of June 30, 2022 and December 31, 2021, net of specific allowance for credit losses of approximately $1.2 million and $1.4 million, respectively.

A financial instrument is cash, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity on potentially favorable terms. The methods and assumptions used in estimating the fair values of the Company’s financial instruments are described above.

The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated (in thousands):

	June 30, 2022
	Carrying								Estimated
Asset category	Value		Level 1		Level 2		Level 3		Fair Value
Assets:
Cash	$	46,250	$	46,250	$	—	$	—	$	46,250
Restricted cash		9,217		9,217		—		—		9,217
Loans held for investment, net		3,118,799		—		—		3,295,277		3,295,277
Loans held for investment, at fair value		1,351		—		—		1,351		1,351
Accrued interest receivables		15,820		15,820		—		—		15,820
Mortgage servicing rights		8,438		—		—		8,438		8,438
Liabilities:
Secured financing, net	$	209,227	$	—	$	—	$	212,827	$	212,827
Warehouse repurchase facilities, net		208,390		—		208,390		—		208,390
Securitizations, net		2,477,226		—		—		2,312,506		2,312,506
Accrued interest payable		13,074		13,074		—		—		13,074

	December 31, 2021
	Carrying								Estimated
Asset category	Value		Level 1		Level 2		Level 3		Fair Value
Assets:
Cash	$	35,965	$	35,965	$	—	$	—	$	35,965
Restricted cash		11,639		11,639		—		—		11,639
Loans held for sale, net		87,908		—		—		87,908		87,908
Loans held for investment, net		2,527,564		—		—		2,655,357		2,655,357
Loans held for investment, at fair value		1,359		—		—		1,359		1,359
Accrued interest receivable		13,159		13,159		—		—		13,159
Mortgage servicing rights		7,152		—		—		7,152		7,152
Liabilities:
Secured financing, net	$	162,845	$	—	$	—	$	170,843	$	170,843
Warehouse repurchase facilities, net		301,069		—		301,069		—		301,069
Securitizations, net		1,911,879		—		—		1,931,002		1,931,002
Accrued interest payable		6,254		6,254		—		—		6,254

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Subsequent Events

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

Note 16 — Subsequent Events

On May 19, 2022, at the Company's annual meeting of stockholders, stockholders approved the Velocity Financial Employee Stock Purchase Plan (the “ESPP”) which authorizes 568,182 shares of Common Stock for issuance under the ESPP. The number of shares of Common Stock authorized for issuance under the ESPP shall automatically increase on the first day of each fiscal year, beginning with January 1, 2023, and continuing until (and including) January 1, 2032, with such annual increase equal to the lesser of (i) 568,182 shares, (ii) 1% of the number of shares of Common Stock issued and outstanding on December 31 of the immediately preceding fiscal year and (iii) an amount determined by the board of directors of the Company. The ESPP consists of two 6-month Offering Periods each year, with the stock purchases made at the end of each Offering Period. The ESPP’s first Offering Period started on July 1, 2022.

The Company has evaluated events that have occurred subsequent to June 30, 2022 through the issuance of the accompanying consolidated financial statements and has concluded there are no other subsequent events that would require recognition or disclosure in the accompanying consolidated financial statements.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Use of Estimates

(a)Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of consolidated income and expenses during the reporting period.

Significant Accounting Policies

(b)Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 — Basis of Presentation and Summary of Significant Accounting Policies, of its audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission.

There have been no significant changes to the Company’s significant accounting policies as described in its 2021 Annual Report.

Principles of Consolidation

(c)Principles of Consolidation

The principles of consolidation require management to determine and reassess the requirement to consolidate VIEs each reporting period, and therefore, the determination may change based on new facts and circumstances pertaining to each VIE. This could result in a material impact to the Company’s consolidated financial statements in subsequent reporting periods.

The Company consolidates the assets, liabilities, and remainder interests of the Trusts as management determined that VCC is the primary beneficiary of these entities. The Company’s ongoing asset management responsibilities provide the Company with the power to direct the activities that most significantly impact the VIE’s economic performance, and the remainder interests provide the Company with the right to receive benefits and the obligation to absorb losses, limited to its investment in the remainder interest of the Trusts.

The consolidated financial statements as of June 30, 2022 and December 31, 2021 include only those assets, liabilities, and results of operations related to the business of the Company, its subsidiaries, and VIEs.

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Cash, Cash Equivalents, and Restricted Cash (Tables)

6 Months Ended

Jun. 30, 2022

Cash And Cash Equivalents [Abstract]

Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 (in thousands):

	Six Months Ended June 30,
	2022		2021
Cash and cash equivalents	$	46,250	$	27,741
Restricted cash		9,217		7,921
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	55,467	$	35,662

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Loans Held for Sale, Net (Tables)

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Summary of Loans Held for Sale

The following table summarizes loans held for sale as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022		December 31, 2021
Unpaid principal balance	$	—	$	87,422
Valuation adjustments		—		—
Deferred loan origination costs		—		486
Ending balance	$	—	$	87,908

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Loans Held for Investment and Loans Held for Investment at Fair Value (Tables)

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Summary of Loans Held for Investment

The following tables summarize loans held for investment as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Loans held for investment, net			Loans held for investment, at fair value		Total loans held for investment
Unpaid principal balance	$	3,088,950		$	1,308	$	3,090,258
Valuation adjustments on FVO loans		—			43		43
Deferred loan origination costs		34,754			—		34,754
		3,123,704			1,351		3,125,055
Allowance for loan losses		(4,905	)		—		(4,905	)
Total loans held for investment and loans held for investment at    fair value, net	$	3,118,799		$	1,351	$	3,120,150

	December 31, 2021
	Loans held for investment, net			Loans held for investment, at fair value		Total loans held for investment
Unpaid principal balance	$	2,498,466		$	1,332	$	2,499,798
Valuation adjustments on FVO loans		—			27		27
Deferred loan origination costs		33,360			—		33,360
		2,531,826			1,359		2,533,185
Allowance for loan losses		(4,262	)		—		(4,262	)
Total loans held for investment and loans held for investment at    fair value, net	$	2,527,564		$	1,359	$	2,528,923

Summary of UPB and Amortized Cost Basis of Loans in COVID-19 Forbearance Program

The following tables summarize the Unpaid Principal Balance (“UPB”) and amortized cost basis of loans in the Company's COVID-19 forbearance program for the three and six months ended June 30, 2022 and the year ended December 31, 2021 ($ in thousands):

	Three Months Ended June 30, 2022								Six Months Ended June 30, 2022
	UPB			%	Amortized Cost			%	UPB			%	Amortized Cost			%
Beginning balance	$	260,709			$	263,860			$	292,429			$	295,990
Foreclosures		(1,427	)			(1,438	)			(1,427	)			(1,438	)
Repayments		(22,968	)			(23,349	)			(54,688	)			(55,479	)
Ending balance	$	236,314			$	239,073			$	236,314			$	239,073
Performing/Accruing	$	187,872		79.5%	$	190,101		79.5%	$	187,872		79.5%	$	190,101		79.5%
Nonperforming/Nonaccrual	$	48,442		20.5%	$	48,972		20.5%	$	48,442		20.5%	$	48,972		20.5%

	December 31, 2021
	UPB			%	Amortized Cost			%
Beginning balance	$	392,073			$	396,918
Additions		2,616				2,615
Foreclosures		(402	)			(408	)
Repayments		(101,858	)			(103,135	)
Ending balance	$	292,429			$	295,990
Performing/Accruing	$	233,307		79.8%	$	236,076		79.8%
Nonperforming/Nonaccrual	$	59,122		20.2%	$	59,914		20.2%

Schedule of Loans Held for Investment Pledged as Collateral for Warehouse Facilities and Securitizations Issued

As of June 30, 2022 and December 31, 2021, the gross unpaid principal balance of loans held for investment pledged as collateral for the Company’s warehouse facilities, and securitizations issued were as follows (in thousands):

	June 30, 2022		December 31, 2021
The 2013 repurchase agreement	$	105,783	$	202,511
The 2021 repurchase agreement		101,570		114,072
The Bank credit agreement		33,962		30,959
The 2021 term repurchase agreement		29,828		53,217
The July 2021 term repurchase agreement		875		—
Total pledged loans	$	272,018	$	400,759
2015-1 Trust	$	—	$	31,931
2016-1 Trust		44,917		52,623
2017-2 Trust		75,129		94,809
2018-1 Trust		58,384		71,051
2018-2 Trust		122,113		154,974
2019-1 Trust		116,326		144,727
2019-2 Trust		107,197		132,358
2019-3 Trust		87,283		103,266
2020-1 Trust		162,582		189,547
2020-2 Trust		86,339		98,403
2020-MC1 Trust		—		134,957
2021-1 Trust		224,063		249,396
2021-2 Trust		186,540		198,039
2021-3 Trust		195,199		202,138
2021-4 Trust		293,146		314,547
2022-1 Trust		269,025		—
2022-2 Trust		250,812		—
2022-MC1 Trust		108,055		—
2022-3 Trust		310,432		—
Total	$	2,697,542	$	2,172,766

Schedule of Nonaccrual With No Allowance for Loan Loss and Total Nonaccrual of Loans Held for Investment

The following tables present the amortized cost basis, or recorded investment, of the Company’s loans held for investment that were nonperforming and on nonaccrual status as of June 30, 2022 and December 31, 2021. There were no loans accruing interest that were greater than 90 days past due as of June 30, 2022 and December 31, 2021.

	June 30, 2022
	Total Nonaccrual		Nonaccrual with No Allowance for Loan Loss		Nonaccrual with Allowance for Loan Loss		Allowance for Loans Individually Evaluated		% of Allowance to Total Nonaccrual Loans with Allowance
	($ in thousands)
Commercial - Purchase	$	14,911	$	14,647	$	264	$	6		0.1	%
Commercial - Refinance		80,442		76,077		4,365		434		3.7
Residential 1-4 Unit - Purchase		22,885		22,542		343		52		0.4
Residential 1-4 Unit - Refinance		96,649		94,594		2,055		196		1.7
Short Term 1-4 Unit - Purchase		2,302		2,302		—		—		—
Short Term 1-4 Unit - Refinance		38,013		33,268		4,745		476		4.0
Total	$	255,202	$	243,430	$	11,772	$	1,164		9.9	%
Troubled Debt Restructuring included in nonaccrual loans:	$	160	$	—	$	—	$	25		—

	December 31, 2021
	Total Nonaccrual		Nonaccrual with No Allowance for Loan Loss		Nonaccrual with Allowance for Loan Loss		Allowance for Loans Individually Evaluated		% of Allowance to Total Nonaccrual Loans with Allowance
	($ in thousands)
Commercial - Purchase	$	17,260	$	16,501	$	759	$	9		0.1	%
Commercial - Refinance		85,935		79,131		6,804		826		6.2
Residential 1-4 Unit - Purchase		17,385		17,128		257		96		0.7
Residential 1-4 Unit - Refinance		107,552		105,515		2,037		138		1.0
Short Term 1-4 Unit - Purchase		2,986		2,881		105		31		0.2
Short Term 1-4 Unit - Refinance		45,300		41,870		3,430		306		2.3
Total	$	276,418	$	263,026	$	13,392	$	1,406		10.5	%
Troubled Debt Restructuring included in nonaccrual loans:	$	165	$	—	$	—	$	25		—

Schedule of Accrued Interest Receivables Written Off by Reversing Interest Income by Portfolio Segment

The following tables present the amortized cost basis in the loans held for investment, excluding loans held for investment at fair value, as of June 30, 2022 and 2021, and the amount of accrued interest receivables written off by reversing interest income by portfolio segment for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,
	2022				2021
	Amortized Cost		Interest Reversal		Amortized Cost		Interest Reversal
Commercial - Purchase	$	677,491	$	77	$	366,737	$	53
Commercial - Refinance		912,774		335		690,964		225
Residential 1-4 Unit - Purchase		529,796		61		276,896		63
Residential 1-4 Unit - Refinance		887,720		269		608,543		281
Short Term 1-4 Unit - Purchase		57,973		4		40,205		639
Short Term 1-4 Unit - Refinance		57,950		132		104,371		117
Total	$	3,123,704	$	878	$	2,087,716	$	1,378

	Six Months Ended June 30,
	2022				2021
	Amortized Cost		Interest Reversal		Amortized Cost		Interest Reversal
Commercial - Purchase	$	677,491	$	192	$	366,737	$	192
Commercial - Refinance		912,774		587		690,964		693
Residential 1-4 Unit - Purchase		529,796		281		276,896		121
Residential 1-4 Unit - Refinance		887,720		566		608,543		801
Short Term 1-4 Unit - Purchase		57,973		25		40,205		685
Short Term 1-4 Unit - Refinance		57,950		371		104,371		358
Total	$	3,123,704	$	2,022	$	2,087,716	$	2,850

Schedule of Activity in Allowance for Credit Losses

The following tables present the activity in the allowance for credit losses for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30, 2022
						Residential		Residential		Short Term			Short Term
	Commercial		Commercial			1-4 Unit		1-4 Unit		1-4 Unit			1-4 Unit
	Purchase		Refinance			Purchase		Refinance		Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - April 1, 2022	$	518	$	2,140		$	389	$	1,029	$	50		$	537		$	4,663
Provision for loan losses		94		(125	)		51		241		(16	)		34			279
Charge-offs		—		(19	)		—		—		—			(18	)		(37	)
Ending balance	$	612	$	1,996		$	440	$	1,270	$	34		$	553		$	4,905
Allowance related to:
Loans individually evaluated	$	6	$	434		$	52	$	196	$	—		$	476		$	1,164
Loans collectively evaluated		606		1,562			388		1,074		34			77			3,741
Amortized cost related to:
Loans individually evaluated	$	14,911	$	80,442		$	22,885	$	96,649	$	2,302		$	38,013		$	255,202
Loans collectively evaluated		662,580		832,332			506,911		791,071		55,671			19,937			2,868,502

	Three Months Ended June 30, 2021
							Residential			Residential			Short Term			Short Term
	Commercial			Commercial			1-4 Unit			1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase			Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - April 1, 2021	$	328		$	1,990		$	322		$	1,227		$	386		$	1,628		$	5,881
Provision for loan losses		48			28			(41	)		(229	)		(313	)		(493	)		(1,000	)
Charge-offs		(114	)		(95	)		—			(151	)		—			(558	)		(918	)
Ending balance	$	262		$	1,923		$	281		$	847		$	73		$	577		$	3,963
Allowance related to:
Loans individually evaluated	$	57		$	1,005		$	120		$	342		$	56		$	369		$	1,949
Loans collectively evaluated		205			918			161			507			16			207			2,014
Amortized cost related to:
Loans individually evaluated	$	19,314		$	92,397		$	21,084		$	112,294		$	23,883		$	50,002		$	318,974
Loans collectively evaluated		347,423			598,567			255,812			496,249			16,322			54,369			1,768,742

	Six Months Ended June 30, 2022
							Residential		Residential			Short Term			Short Term
	Commercial			Commercial			1-4 Unit		1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase		Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - January 1, 2022	$	385		$	2,144		$	400	$	948		$	43		$	342		$	4,262
Provision for loan losses		374			(123	)		40		427			(9	)		300			1,009
Charge-offs		(147	)		(25	)		—		(105	)		—			(89	)		(366	)
Ending balance	$	612		$	1,996		$	440	$	1,270		$	34		$	553		$	4,905
Allowance related to:
Loans individually evaluated	$	6		$	434		$	52	$	196		$	—		$	476		$	1,164
Loans collectively evaluated		606			1,562			388		1,074			34			77			3,741
Amortized cost related to:
Loans individually evaluated	$	14,911		$	80,442		$	22,885	$	96,649		$	2,302		$	38,013		$	255,202
Loans collectively evaluated		662,580			832,332			506,911		791,071			55,671			19,937			2,868,502

	Six Months Ended June 30, 2021
							Residential			Residential			Short Term			Short Term
	Commercial			Commercial			1-4 Unit			1-4 Unit			1-4 Unit			1-4 Unit
	Purchase			Refinance			Purchase			Refinance			Purchase			Refinance			Total
Allowance for credit losses:
Beginning Balance - January 1, 2021	$	373		$	2,093		$	333		$	1,216		$	595		$	1,235		$	5,845
Provision for loan losses		3			(76	)		(15	)		(218	)		(508	)		(81	)		(895	)
Charge-offs		(114	)		(94	)		(37	)		(151	)		(14	)		(577	)		(987	)
Ending balance	$	262		$	1,923		$	281		$	847		$	73		$	577		$	3,963
Allowance related to:
Loans individually evaluated	$	57		$	1,005		$	120		$	342		$	56		$	369		$	1,949
Loans collectively evaluated		205			918			161			507			16			207			2,014
Amortized cost related to:
Loans individually evaluated	$	19,314		$	92,397		$	21,084		$	112,294		$	23,883		$	50,002		$	318,974
Loans collectively evaluated		347,423			598,567			255,812			496,249			16,322			54,369			1,768,742

Schedule of Aging Status of Amortized Cost Basis in Loans Held for Investment Portfolio

The following table presents the aging status of the amortized cost basis in the loans held for investment portfolio, excluding loans held for investment at fair value, which include $239.1 million and $296.0 million loans in the Company’s COVID-19 forbearance program as of June 30, 2022 and December 31, 2021, respectively (in thousands):

	30–59 days		60–89 days		90+days		Total				Total
June 30, 2022	past due		past due		past due(1)		past due		Current		loans
Loans individually evaluated
Commercial - Purchase	$	310	$	1,875	$	12,726	$	14,911	$	—	$	14,911
Commercial - Refinance		3,551		6,314		70,417		80,282		160		80,442
Residential 1-4 Unit - Purchase		325		672		21,888		22,885		—		22,885
Residential 1-4 Unit - Refinance		1,029		2,701		92,919		96,649		—		96,649
Short Term 1-4 Unit - Purchase		—		—		2,302		2,302		—		2,302
Short Term 1-4 Unit - Refinance		—		247		37,766		38,013		—		38,013
Total loans individually evaluated	$	5,215	$	11,809	$	238,018	$	255,042	$	160	$	255,202
Loans collectively evaluated
Commercial - Purchase	$	13,431	$	9,952	$	—	$	23,383	$	639,197	$	662,580
Commercial - Refinance		30,249		14,483		—		44,732		787,600		832,332
Residential 1-4 Unit - Purchase		14,855		3,805		—		18,660		488,251		506,911
Residential 1-4 Unit - Refinance		42,227		10,519		—		52,746		738,325		791,071
Short Term 1-4 Unit - Purchase		3,052		677		—		3,729		51,942		55,671
Short Term 1-4 Unit - Refinance		3,476		570		—		4,046		15,891		19,937
Total loans collectively evaluated	$	107,290	$	40,006	$	—	$	147,296	$	2,721,206	$	2,868,502
Ending balance	$	112,505	$	51,815	$	238,018	$	402,338	$	2,721,366	$	3,123,704

	30–59 days		60–89 days		90+days		Total				Total
December 31, 2021	past due		past due		past due(1)		past due		Current		loans
Loans individually evaluated
Commercial - Purchase	$	700	$	2,314	$	14,246	$	17,260	$	—	$	17,260
Commercial - Refinance		4,464		6,818		74,488		85,770		165		85,935
Residential 1-4 Unit - Purchase		—		682		16,703		17,385		—		17,385
Residential 1-4 Unit - Refinance		807		1,088		105,657		107,552		—		107,552
Short Term 1-4 Unit - Purchase		1,224		—		1,762		2,986		—		2,986
Short Term 1-4 Unit - Refinance		615		1,010		43,675		45,300		—		45,300
Total loans individually evaluated	$	7,810	$	11,912	$	256,531	$	276,253	$	165	$	276,418
Loans collectively evaluated
Commercial - Purchase	$	17,319	$	4,034	$	—	$	21,353	$	470,808	$	492,161
Commercial - Refinance		31,769		7,025		—		38,794		658,532		697,326
Residential 1-4 Unit - Purchase		14,905		5,580		—		20,485		370,900		391,385
Residential 1-4 Unit - Refinance		39,045		9,548		—		48,593		574,175		622,768
Short Term 1-4 Unit - Purchase		21,412		217		—		21,629		4,374		26,003
Short Term 1-4 Unit - Refinance		4,060		5,561		—		9,621		16,144		25,765
Total loans collectively evaluated	$	128,510	$	31,965	$	—	$	160,475	$	2,094,933	$	2,255,408
Ending balance	$	136,320	$	43,877	$	256,531	$	436,728	$	2,095,098	$	2,531,826

(1)Includes loans in bankruptcy and foreclosure less than 90 days past due.

Schedule of Amortized Cost in Loans Held for Investment based on Accrual Status and by Loan Origination Year

The following tables present the amortized cost in loans held for investment, excluding loans held for investment at fair value, based on accrual status and by loan origination year as of June 30, 2022 and December 31, 2021 (in thousands).

	Term Loans Amortized Cost Basis by Origination Year
June 30, 2022:	2022		2021		2020		2019		2018		Pre-2018		Total
Commercial - Purchase
Payment performance
Performing	$	215,509	$	268,001	$	41,591	$	64,227	$	39,948	$	33,304	$	662,580
Nonperforming		—		1,212		186		6,540		1,535		5,438		14,911
Total Commercial - Purchase	$	215,509	$	269,213	$	41,777	$	70,767	$	41,483	$	38,742	$	677,491
Commercial - Refinance
Payment performance
Performing	$	224,064	$	225,103	$	58,086	$	124,285	$	100,753	$	100,041	$	832,332
Nonperforming		540		8,266		3,857		21,462		20,646		25,671		80,442
Total Commercial - Refinance	$	224,604	$	233,369	$	61,943	$	145,747	$	121,399	$	125,712	$	912,774
Residential 1-4 Unit - Purchase
Payment performance
Performing	$	162,492	$	242,544	$	11,541	$	39,733	$	22,505	$	28,096	$	506,911
Nonperforming		985		8,063		2,169		3,042		3,474		5,152		22,885
Total Residential 1-4    Unit - Purchase	$	163,477	$	250,607	$	13,710	$	42,775	$	25,979	$	33,248	$	529,796
Residential 1-4 Unit - Refinance
Payment performance
Performing	$	247,970	$	314,865	$	26,150	$	95,470	$	44,360	$	62,256	$	791,071
Nonperforming		509		14,566		7,111		28,920		24,066		21,477		96,649
Total Residential 1-4    Unit - Purchase	$	248,479	$	329,431	$	33,261	$	124,390	$	68,426	$	83,733	$	887,720
Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	29,097	$	7,493	$	15,037	$	4,044	$	—	$	—	$	55,671
Nonperforming		—		—		995		1,202		105		—		2,302
Total Short Term 1-4    Unit - Purchase	$	29,097	$	7,493	$	16,032	$	5,246	$	105	$	—	$	57,973
Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	13,024	$	1,582	$	2,543	$	2,788	$	—	$	—	$	19,937
Nonperforming		—		244		12,464		20,264		5,041		—		38,013
Total Short Term 1-4    Unit - Refinance	$	13,024	$	1,826	$	15,007	$	23,052	$	5,041	$	—	$	57,950
Total Portfolio	$	894,190	$	1,091,939	$	181,730	$	411,977	$	262,433	$	281,435	$	3,123,704

	Term Loans Amortized Cost Basis by Origination Year
December 31, 2021	2021		2020		2019		2018		2017		Pre-2017		Total
Commercial - Purchase
Payment performance
Performing	$	277,618	$	45,836	$	81,541	$	46,637	$	24,164	$	16,365	$	492,161
Nonperforming		288		1,781		5,541		4,180		3,539		1,931		17,260
Total Commercial - Purchase	$	277,906	$	47,617	$	87,082	$	50,817	$	27,703	$	18,296	$	509,421
Commercial - Refinance
Payment performance
Performing	$	239,688	$	64,966	$	144,017	$	118,735	$	62,374	$	67,545	$	697,325
Nonperforming		2,482		3,949		26,012		26,869		16,492		10,131		85,935
Total Commercial - Refinance	$	242,170	$	68,915	$	170,029	$	145,604	$	78,866	$	77,676	$	783,260
Residential 1-4 Unit - Purchase
Payment performance
Performing	$	263,180	$	12,878	$	48,930	$	29,544	$	12,863	$	23,990	$	391,385
Nonperforming		1,372		2,749		3,896		3,736		3,487		2,145		17,385
Total Residential 1-4    Unit - Purchase	$	264,552	$	15,627	$	52,826	$	33,280	$	16,350	$	26,135	$	408,770
Residential 1-4 Unit - Refinance
Payment performance
Performing	$	343,199	$	31,334	$	114,145	$	59,825	$	31,774	$	42,491	$	622,768
Nonperforming		11,646		6,040		31,816		30,626		16,677		10,747		107,552
Total Residential 1-4    Unit - Purchase	$	354,845	$	37,374	$	145,961	$	90,451	$	48,451	$	53,238	$	730,320
Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	1,890	$	15,582	$	8,531	$	—	$	—	$	—	$	26,003
Nonperforming		—		1,565		1,316		105		—		—		2,986
Total Short Term 1-4    Unit - Purchase	$	1,890	$	17,147	$	9,847	$	105	$	—	$	—	$	28,989
Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	1,448	$	11,991	$	12,326	$	—	$	—	$	—	$	25,765
Nonperforming		1,038		15,819		22,618		5,825		—		—		45,300
Total Short Term 1-4    Unit - Refinance	$	2,486	$	27,810	$	34,944	$	5,825	$	—	$	—	$	71,065
Total Portfolio	$	1,143,849	$	214,490	$	500,689	$	326,082	$	171,370	$	175,345	$	2,531,825

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Receivables Due From Servicers (Tables)

6 Months Ended

Jun. 30, 2022

Receivables [Abstract]

Summary of Receivables Due from Servicers

The following tables summarize receivables due from servicers as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022
	Securitizations		Warehouse and repurchase facilities and other		Total
Loan principal payments due from servicers	$	41,347	$	1,855	$	43,202
Other loan servicing receivables		13,024		1,414		14,438
Loan servicing receivables		54,371		3,269		57,640
Corporate and escrow advances receivable		17,985		63		18,048
Total receivables due from servicers	$	72,356	$	3,332	$	75,688

	December 31, 2021
	Securitizations		Warehouse and repurchase facilities and other		Total
Loan principal payments due from servicers	$	42,344	$	1,165	$	43,509
Other loan servicing receivables		10,718		730		11,448
Loan servicing receivables		53,062		1,895		54,957
Corporate and escrow advances receivable		17,884		1,489		19,373
Total receivables due from servicers	$	70,946	$	3,384	$	74,330

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Mortgage Servicing Rights (Tables)

6 Months Ended

Jun. 30, 2022

Transfers And Servicing [Abstract]

Summary of Mortgage Servicing Rights

The following table presents the Company's mortgage servicing rights (in thousands):

	June 30, 2022		December 31, 2021
Balance at the beginning of year	$	7,152	$	—
Mortgage servicing rights acquired, at fair value		—		7,152
Additions		—		—
Fair value adjustments		1,286		—
Balance at end of period	$	8,438	$	7,152

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Securitizations Net (Tables)

6 Months Ended

Jun. 30, 2022

Transfers And Servicing [Abstract]

Summary of Outstanding Balance Net of Discounts and Deals Costs of Securities and Effective Interest Rate

The following table summarizes the outstanding balance, net of discounts and deal costs, of the securities and the effective interest rate for the six months ended June 30, 2022 and 2021 ($ in thousands):

	Six Months Ended June 30,
Securitizations:	2022			2021
Securitizations, net	$	2,477,226		$	1,558,163
Interest expense		44,428			37,333
Average outstanding balance		2,175,263			1,545,969
Effective interest rate (1)		4.08	%		4.83	%

(1)Represents annualized interest expense divided by average gross outstanding balance and includes average rate of 3.38% and debt issuance cost amortization of 0.70% and average rate of 4.12% and debt issuance cost amortization of 0.71% for the six months ended June 30, 2022 and 2021, respectively.

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Other Debt (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Summary of Maximum Borrowing Capacity and Current Gross Balances Outstanding

The following table summarizes the maximum borrowing capacity and current gross balances outstanding of the Company’s warehouse facilities and loan agreements as of June 30, 2022 and December 31, 2021 (in thousands):

	June 30, 2022				December 31, 2021
	Period end balance (1)		Maximum borrowing capacity		Period end balance (1)		Maximum borrowing capacity
The 2021 term repurchase agreement	$	21,632	$	100,000	$	41,636	$	100,000
The 2021 repurchase agreement		78,608		200,000		82,580		200,000
The July 2021 term repurchase agreement		454		100,000		—		100,000
The 2013 repurchase agreement		83,923		300,000		153,499		200,000
The Bank credit agreement		25,587		50,000		22,385		50,000
The 2019 loan agreement		—		—		2,700		3,000
Total	$	210,204	$	750,000	$	302,800	$	653,000

(1)Warehouse repurchase facilities amounts in the consolidated balance sheets are net of debt issuance costs amounting to $1.8 million and $1.7 million as of June 30, 2022 and December 31, 2021, respectively.

Schedule of Activity and Effective Interest Rate

The following table provides an overview of the activity and effective interest rate for the three and six months ended June 30, 2022 and 2021 ($ in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Warehouse and repurchase facilities:
Average outstanding balance	$	318,960		$	166,981		$	328,603		$	140,254
Highest outstanding balance at any month-end		379,169			250,927			426,959			250,927
Effective interest rate (1)		5.16	%		5.65	%		4.80	%		5.80	%

(1)Effective interest rate represents annualized interest expense divided by average gross outstanding balance. The rate includes average rate of 4.59% and debt issuance cost amortization of 0.57%, and average rate of 4.44% and debt issuance cost amortization of 1.21%, for the three months ended June 30, 2022 and 2021, respectively, and includes average rate of 4.23% and debt issuance cost amortization of 0.57%, and average rate 4.58% and debt issuance cost amortization 1.22% for the six months ended June 30, 2022 and 2021, respectively.

Summary of Interest Expense

The following table provides a summary of interest expense that includes debt issuance cost amortization, interest, amortization of discount, and deal cost amortization for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Warehouse and repurchase facilities	$	4,115	$	2,361	$	7,880	$	4,067
Securitizations		24,637		18,205		44,428		37,332
Interest expense — portfolio related		28,752		20,566		52,308		41,399
Interest expense — corporate debt		4,182		4,309		21,322		11,658	(1)
Total interest expense	$	32,934	$	24,875	$	73,630	$	53,057

(1)Included in the $11.7 million of interest expense – corporate debt for the six months ended June 30, 2021 was the one-time debt issuance costs write-off of $2.9 million and prepayment fee of $1.6 million associated with the payoff of $78.0 million in outstanding principal amount in February 2021.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Earnings Per Share Calculations

The following table presents the basic and diluted earnings per share calculations for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands, except per share data)				(In thousands, except per share data)
Basic EPS:
Net income attributable to common stockholders	$	10,645	$	9,453	$	13,766	$	12,849
Less: undistributed earnings attributable to participating securities		164		3,571		212		4,854
Net earnings attributable to common stock	$	10,481	$	5,882	$	13,554	$	7,995
Weighted average common shares outstanding		31,917		20,087		31,904		20,087
Basic earnings per common share	$	0.33	$	0.29	$	0.42	$	0.40
Diluted EPS:
Net income attributable to common stockholders	$	10,645	$	9,453	$	13,766	$	12,849
Weighted average common shares outstanding		31,917		20,087		31,904		20,087
Add dilutive effects for assumed conversion of Series A preferred stock		—		11,688		—		11,688
Add dilutive effects for warrants		1,986		1,985		2,057		1,786
Add dilutive effects for stock options		4		3		4		2
Add dilutive effects of unvested restricted stock awards		150		197		165		121
Weighted average diluted common shares outstanding		34,057		33,960		34,130		33,684
Diluted income per common share	$	0.31	$	0.28	$	0.40	$	0.38

Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share

The following table sets forth the number of shares excluded from the computation of diluted earnings per share, as their inclusion would have been anti-dilutive (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Stock options		773		773		773		773
Unvested restricted stock awards		125		—		125		—
Unvested performance-based stock units		103		—		103		—
Share equivalents excluded from EPS		1,001		773		1,001		773

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Information on Assets Measured and Recorded at Fair Value

The following tables present information on assets measured and recorded at fair value as of June 30, 2022 and December 31, 2021, by level, in the fair value hierarchy (in thousands):

	Fair value measurements using						Total at
June 30, 2022	Level 1		Level 2		Level 3		fair value
Recurring fair value measurements:
Loans held for investment, at fair value	$	—	$	—	$	1,351	$	1,351
Mortgage servicing rights		—		—		8,438		8,438
Total recurring fair value measurements		—		—		9,789		9,789
Nonrecurring fair value measurements:
Real estate owned, net		—		—		19,218		19,218
Individually evaluated loans requiring specific allowance, net		—		—		10,608		10,608
Total nonrecurring fair value measurements		—		—		29,826		29,826
Total assets	$	—	$	—	$	39,615	$	39,615

	Fair value measurements using						Total at
December 31, 2021	Level 1		Level 2		Level 3		fair value
Recurring fair value measurements:
Loans held for investment, at fair value	$	—	$	—	$	1,359	$	1,359
Mortgage servicing rights		—		—		7,152		7,152
Total recurring fair value measurements		—		—		8,511		8,511
Nonrecurring fair value measurements:
Loans held for sale, net		—		—		87,422		87,422
Real estate owned, net		—		—		17,557		17,557
Impaired loans requiring specific allowance, net		—		—		11,987		11,987
Total nonrecurring fair value measurements		—		—		116,966		116,966
Total assets	$	—	$	—	$	125,477	$	125,477

Schedule of Gains and Losses Recognized on Assets Measured on Nonrecurring Basis

The following table presents gains and losses recognized on assets measured on a nonrecurring basis for the three and six months ended June 30, 2022 and 2021 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
Gain (loss) on assets measured on a nonrecurring basis	2022			2021			2022		2021
Loans held for sale, net	$	—		$	(15	)	$	—	$	2
Real estate held for sale, net		(143	)		(800	)		93		(1,235	)
Individually evaluated loans requiring specific allowance, net		434			1,029			242		720
Total net gain (loss)	$	291		$	214		$	335	$	(513	)

Valuation Techniques and Unobservable Inputs Related to Level 3 Assets

The following tables present the primary valuation techniques and unobservable inputs related to Level 3 assets as of June 30, 2022 and December 31, 2021 ($ in thousands):

	June 30, 2022
Asset category	Fair value		Primary valuation technique	Unobservable input	Range	Weighted average
Individually evaluated    loans requiring specific    allowance, net	$	10,608	Market comparables	Selling costs	8.0%	8.0%
Real estate owned, net		19,218	Market comparables	Selling costs	8.0%	8.0%
Loans held for investment,    at fair value		1,351	Discounted cash flow	Discount rate	5.8%	5.8%
				Collateral value (% of UPB)	97% to 120.0%	107.0%
				Timing of resolution/payoff (months)	1.0 to 40.0	38.0
				Prepayment rate	1.0% to 30.0%	30.0%
				Default rate	0.0% to 6.3%	0.6%
				Loss severity rate	0.0% to 21.0%	4.0%
Mortgage servicing rights		8,438	Discounted cash flow	Discount rate	8% to 12.0%	8.1%
				Prepayment rate	0.8% to 6.0%	2.2%

	December 31, 2021
Asset category	Fair value		Primary valuation technique	Unobservable input	Range	Weighted average
Individually evaluated    loans requiring specific    allowance, net	$	11,987	Market comparables	Selling costs	8.0%	8.0%
Real estate owned, net		17,557	Market comparables	Selling costs	8.0%	8.0%
Loans held for investment,    at fair value		1,359	Discounted cash flow	Discount rate	5.8%	5.8%
				Collateral value (% of UPB)	95.0% to 120.0%	106.0%
				Timing of resolution/payoff (months)	1 to 38	34.8
				Prepayment rate	19.2% to 50%	30.0%
				Default rate	0.0% to 6.7%	1.0%
				Loss severity rate	0.0% to 13.4%	3.0%
Loans held for sale		87,422	Discounted cash flow	Discount rate	5.8%	5.8%
				Timing of resolution/payoff (months)	3 to 37	13.0
Mortgage servicing rights		7,152	Discounted cash flow	Discount rate	8.0% to 12.0%	8.0%
				Prepayment rate	2.4% to 3.5%	3.2%

Rollforward of Loans and Interest Only Strips Measured at Estimated Fair Value on Recurring Basis

The following is a rollforward of loans that are measured at estimated fair value on a recurring basis for the periods indicated (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Beginning balance	$	1,352		$	1,364		$	1,359		$	1,539
Loans liquidated		—			—			—			(163	)
Principal paydowns		(7	)		(14	)		(24	)		(24	)
Total unrealized gain included in net income		6			20			16			18
Ending balance	$	1,351		$	1,370		$	1,351		$	1,370

The following is a rollforward of interest-only strips that are measured at estimated fair value on a recurring basis for the periods indicated (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2022		2021			2022		2021
Beginning balance	$	—	$	125		$	—	$	238
Interest-only strip additions		—		—			—		—
Interest-only strip write-offs		—		(44	)		—		(157	)
Total unrealized loss included in net income		—		—			—		—
Ending balance	$	—	$	81		$	—	$	81

Carrying Amounts and Estimated Fair Values of Financial Instruments

The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated (in thousands):

	June 30, 2022
	Carrying								Estimated
Asset category	Value		Level 1		Level 2		Level 3		Fair Value
Assets:
Cash	$	46,250	$	46,250	$	—	$	—	$	46,250
Restricted cash		9,217		9,217		—		—		9,217
Loans held for investment, net		3,118,799		—		—		3,295,277		3,295,277
Loans held for investment, at fair value		1,351		—		—		1,351		1,351
Accrued interest receivables		15,820		15,820		—		—		15,820
Mortgage servicing rights		8,438		—		—		8,438		8,438
Liabilities:
Secured financing, net	$	209,227	$	—	$	—	$	212,827	$	212,827
Warehouse repurchase facilities, net		208,390		—		208,390		—		208,390
Securitizations, net		2,477,226		—		—		2,312,506		2,312,506
Accrued interest payable		13,074		13,074		—		—		13,074

	December 31, 2021
	Carrying								Estimated
Asset category	Value		Level 1		Level 2		Level 3		Fair Value
Assets:
Cash	$	35,965	$	35,965	$	—	$	—	$	35,965
Restricted cash		11,639		11,639		—		—		11,639
Loans held for sale, net		87,908		—		—		87,908		87,908
Loans held for investment, net		2,527,564		—		—		2,655,357		2,655,357
Loans held for investment, at fair value		1,359		—		—		1,359		1,359
Accrued interest receivable		13,159		13,159		—		—		13,159
Mortgage servicing rights		7,152		—		—		7,152		7,152
Liabilities:
Secured financing, net	$	162,845	$	—	$	—	$	170,843	$	170,843
Warehouse repurchase facilities, net		301,069		—		301,069		—		301,069
Securitizations, net		1,911,879		—		—		1,931,002		1,931,002
Accrued interest payable		6,254		6,254		—		—		6,254

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Organization and Description of Business - Additional Information (Details) - USD ($)				6 Months Ended
	Dec. 28, 2021	Jan. 28, 2020	Jan. 22, 2020	Jun. 30, 2022	Jan. 16, 2020
Class Of Stock [Line Items]
Date of incorporation				Jul. 09, 2012
Minimum net worth required				$ 250,000
Century
Class Of Stock [Line Items]
Payments to acquire businesses	$ 12,800,000
Percentage of voting interests acquired	80.00%
Class A equity units
Class Of Stock [Line Items]
Shares issued upon conversion of equity units					97,513,533
Class D equity units
Class Of Stock [Line Items]
Shares issued upon conversion of equity units					60,193,989
Common Stock
Class Of Stock [Line Items]
Shares issued upon conversion of equity units					11,749,994
Issuance of common stock, shares		1,087,500	7,250,000
Stock price		$ 13.00	$ 13.00

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Cash, Cash Equivalents, and Restricted Cash - Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021	Dec. 31, 2020
Cash And Cash Equivalents [Abstract]
Cash and cash equivalents	$ 46,250	$ 35,965	$ 27,741
Restricted cash	9,217	11,639	7,921
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$ 55,467	$ 47,604	$ 35,662	$ 20,293

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Loans Held for Sale, Net - Summary of Loans Held for Sale (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Loans Held For Sale [Abstract]
Unpaid principal balance	$ 0	$ 87,422
Valuation adjustments	0
Deferred loan origination costs	0	486
Ending balance	$ 0	$ 87,908

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Loans Held for Investment and Loans Held for Investment at Fair Value - Summary of Loans Held for Investment (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020
Accounts Notes And Loans Receivable [Line Items]
Allowance for loan losses	$ (4,905)	$ (4,663)	$ (4,262)	$ (3,963)	$ (5,881)	$ (5,845)
Net Loans Held For Investment
Accounts Notes And Loans Receivable [Line Items]
Unpaid principal balance	3,088,950		2,498,466
Deferred loan origination costs	34,754		33,360
Total loans held for investment and loans held for investment at fair value, gross	3,123,704		2,531,826
Allowance for loan losses	(4,905)		(4,262)
Total loans held for investment and loans held for investment at fair value, net	3,118,799		2,527,564
Loans At Fair Value Held For Investment
Accounts Notes And Loans Receivable [Line Items]
Unpaid principal balance	1,308		1,332
Valuation adjustments on FVO loans	43		27
Total loans held for investment and loans held for investment at fair value, gross	1,351		1,359
Total loans held for investment and loans held for investment at fair value, net	1,351		1,359
Total Loans Held For Investment
Accounts Notes And Loans Receivable [Line Items]
Unpaid principal balance	3,090,258		2,499,798
Valuation adjustments on FVO loans	43		27
Deferred loan origination costs	34,754		33,360
Total loans held for investment and loans held for investment at fair value, gross	3,125,055		2,533,185
Allowance for loan losses	(4,905)		(4,262)
Total loans held for investment and loans held for investment at fair value, net	$ 3,120,150		$ 2,528,923

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Loans Held for Investment and Loans Held for Investment at Fair Value - Summary of UPB and Amortized Cost Basis of Loans in COVID-19 Forbearance Program (Details) - COVID 19 Forbearance Program - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2021	Mar. 31, 2022
Accounts Notes And Loans Receivable [Line Items]
UPB Beginning balance	$ 260,709	$ 292,429	$ 392,073
UPB Additions			2,616
UPB Foreclosures	(1,427)	(1,427)	(402)
UPB Repayments	(22,968)	(54,688)	(101,858)
UPB Ending balance	236,314	236,314	292,429
UPB Performing/Accruing, Amount	187,872	187,872	233,307
UPB Nonperforming/Nonaccrual, Amount	$ 48,442	$ 48,442	$ 59,122
UPB Performing/Accruing, Percentage	79.50%	79.50%	79.80%	79.50%
UPB Nonperforming/Nonaccrual, Percentage	20.50%	20.50%	20.20%	20.50%
Amortized Cost Beginning balance	$ 263,860	$ 295,990	$ 396,918
Amortized Cost Additions			2,615
Amortized Cost Foreclosures	(1,438)	(1,438)	(408)
Amortized Cost Repayments	(23,349)	(55,479)	(103,135)
Amortized Cost Ending balance	239,073	239,073	295,990
Amortized Cost Performing/Accruing, Amount	190,101	190,101	236,076
Amortized Cost Nonperforming/Nonaccrual, Amount	$ 48,972	$ 48,972	$ 59,914
Amortized Cost Performing/Accruing, Percentage	79.50%	79.50%	79.80%	79.50%
Amortized Cost Nonperforming/Nonaccrual, Percentage	20.50%	20.50%	20.20%	20.50%

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Loans Held for Investment and Loans Held for Investment at Fair Value - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended	27 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2020
Accounts Notes And Loans Receivable [Line Items]
Accrued interest income recognized on nonaccrual loans	$ 0		$ 0
Cash basis interest income recognized on nonaccrual loans	8,700,000	$ 9,900,000	16,000,000.0	$ 16,700,000
Average recorded investment of individually evaluated loans, computed using month-end balances	260,800,000	$ 337,900,000	$ 271,300,000	$ 337,500,000
Stress Scenario , Descriptions			For the June 30, 2022 estimate, the Company considered a severe stress scenario with a six-quarter reasonable and supportable forecast period followed by a four-quarter straight-line reversion period. Management concluded that applying the severe stress scenario was appropriate given the uncertainty around future COVID cases, the war between Russia and Ukraine, spike in inflation, continued disruption in the supply chain, and concerns of a recession.
COVID-19
Accounts Notes And Loans Receivable [Line Items]
Loans	239,100,000		$ 239,100,000		$ 296,000,000.0	$ 239,100,000
90+days
Accounts Notes And Loans Receivable [Line Items]
Annualized charge rate of non performing loans			0.27%		0.42%
COVID 19 Forbearance Program
Accounts Notes And Loans Receivable [Line Items]
Amount of loan granted for unusual risk forbearance	$ 188,800,000		$ 188,800,000			188,800,000		$ 409,000,000.0
Accrued interest income recognized on nonaccrual loans			$ 3,800,000			$ 10,900,000
Loans held for investment unpaid principal balance performing and accruing, percentage	79.50%		79.50%		79.80%	79.50%	79.50%
Loans held for investment unpaid principal balance nonperforming and nonaccrual percentage	20.50%		20.50%		20.20%	20.50%	20.50%

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Loans Held for Investment and Loans Held for Investment at Fair Value - Schedule of Loans Held for Investment Pledged as Collateral for Warehouse Facilities and Securitizations Issued (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Accounts Notes And Loans Receivable [Line Items]
Total pledged loans	$ 272,018	$ 400,759
Total	2,697,542	2,172,766
2013 Repurchase Agreement
Accounts Notes And Loans Receivable [Line Items]
Total pledged loans	105,783	202,511
2021 Repurchase Agreement
Accounts Notes And Loans Receivable [Line Items]
Total pledged loans	101,570	114,072
Bank Credit Agreement
Accounts Notes And Loans Receivable [Line Items]
Total pledged loans	33,962	30,959
2021 Term Repurchase Agreement
Accounts Notes And Loans Receivable [Line Items]
Total pledged loans	29,828	53,217
July 2021 Term Repurchase Agreement
Accounts Notes And Loans Receivable [Line Items]
Total pledged loans	875
2015-1 Trust
Accounts Notes And Loans Receivable [Line Items]
Total		31,931
2016-1 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	44,917	52,623
2017-2 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	75,129	94,809
2018-1 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	58,384	71,051
2018-2 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	122,113	154,974
2019-1 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	116,326	144,727
2019-2 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	107,197	132,358
2019-3 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	87,283	103,266
2020-1 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	162,582	189,547
2020-2 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	86,339	98,403
2020-MC1 Trust
Accounts Notes And Loans Receivable [Line Items]
Total		134,957
2021-1 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	224,063	249,396
2021-2 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	186,540	198,039
2021-3 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	195,199	202,138
2021-4 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	293,146	$ 314,547
2022-1 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	269,025
2022-2 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	250,812
2022-MC1 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	108,055
2022-3 Trust
Accounts Notes And Loans Receivable [Line Items]
Total	$ 310,432

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Loans Held for Investment and Loans Held for Investment at Fair Value - Schedule of Nonaccrual With No Allowance for Loan Loss and Total Nonaccrual of Loans Held for Investment (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021
Financing Receivable Impaired [Line Items]
Total Nonaccrual	$ 255,202	$ 276,418
Nonaccrual with No Allowance for Loan Loss	243,430	263,026
Nonaccrual with Allowance for Loan Loss	11,772	13,392
Allowance for Loans Individually Evaluated	$ 1,164	$ 1,406	$ 1,949
Percentage of Allowance to Total Nonaccrual Loans with Allowance	9.90%	10.50%
Troubled Debt Restructuring included in nonaccrual loans:	$ 160	$ 165
Commercial - Purchase
Financing Receivable Impaired [Line Items]
Total Nonaccrual	14,911	17,260
Nonaccrual with No Allowance for Loan Loss	14,647	16,501
Nonaccrual with Allowance for Loan Loss	264	759
Allowance for Loans Individually Evaluated	$ 6	$ 9	57
Percentage of Allowance to Total Nonaccrual Loans with Allowance	0.10%	0.10%
Commercial - Refinance
Financing Receivable Impaired [Line Items]
Total Nonaccrual	$ 80,442	$ 85,935
Nonaccrual with No Allowance for Loan Loss	76,077	79,131
Nonaccrual with Allowance for Loan Loss	4,365	6,804
Allowance for Loans Individually Evaluated	$ 434	$ 826	1,005
Percentage of Allowance to Total Nonaccrual Loans with Allowance	3.70%	6.20%
Residential 1-4 Unit - Purchase
Financing Receivable Impaired [Line Items]
Total Nonaccrual	$ 22,885	$ 17,385
Nonaccrual with No Allowance for Loan Loss	22,542	17,128
Nonaccrual with Allowance for Loan Loss	343	257
Allowance for Loans Individually Evaluated	$ 52	$ 96	120
Percentage of Allowance to Total Nonaccrual Loans with Allowance	0.40%	0.70%
Residential 1-4 Unit - Refinance
Financing Receivable Impaired [Line Items]
Total Nonaccrual	$ 96,649	$ 107,552
Nonaccrual with No Allowance for Loan Loss	94,594	105,515
Nonaccrual with Allowance for Loan Loss	2,055	2,037
Allowance for Loans Individually Evaluated	$ 196	$ 138	342
Percentage of Allowance to Total Nonaccrual Loans with Allowance	1.70%	1.00%
Short Term 1-4 Unit - Purchase
Financing Receivable Impaired [Line Items]
Total Nonaccrual	$ 2,302	$ 2,986
Nonaccrual with No Allowance for Loan Loss	2,302	2,881
Nonaccrual with Allowance for Loan Loss		105
Allowance for Loans Individually Evaluated		$ 31	56
Percentage of Allowance to Total Nonaccrual Loans with Allowance		0.20%
Short Term 1-4 Unit - Refinance
Financing Receivable Impaired [Line Items]
Total Nonaccrual	38,013	$ 45,300
Nonaccrual with No Allowance for Loan Loss	33,268	41,870
Nonaccrual with Allowance for Loan Loss	4,745	3,430
Allowance for Loans Individually Evaluated	$ 476	$ 306	$ 369
Percentage of Allowance to Total Nonaccrual Loans with Allowance	4.00%	2.30%
Individual Loan Evaluation
Financing Receivable Impaired [Line Items]
Troubled Debt Restructuring included in nonaccrual loans:	$ 25	$ 25

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Loans Held for Investment and Loans Held for Investment at Fair Value - Schedule of Accrued Interest Receivables Written Off by Reversing Interest Income by Portfolio Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Financing Receivable Impaired [Line Items]
Financing Receivable, Amortized Cost Basis	$ 3,123,704	$ 2,087,716	$ 3,123,704	$ 2,087,716
Financing Receivable, Accrued Interest, Writeoff	878	1,378	2,022	2,850
Commercial - Purchase
Financing Receivable Impaired [Line Items]
Financing Receivable, Amortized Cost Basis	677,491	366,737	677,491	366,737
Financing Receivable, Accrued Interest, Writeoff	77	53	192	192
Commercial - Refinance
Financing Receivable Impaired [Line Items]
Financing Receivable, Amortized Cost Basis	912,774	690,964	912,774	690,964
Financing Receivable, Accrued Interest, Writeoff	335	225	587	693
Residential 1-4 Unit - Purchase
Financing Receivable Impaired [Line Items]
Financing Receivable, Amortized Cost Basis	529,796	276,896	529,796	276,896
Financing Receivable, Accrued Interest, Writeoff	61	63	281	121
Residential 1-4 Unit - Refinance
Financing Receivable Impaired [Line Items]
Financing Receivable, Amortized Cost Basis	887,720	608,543	887,720	608,543
Financing Receivable, Accrued Interest, Writeoff	269	281	566	801
Short Term 1-4 Unit - Purchase
Financing Receivable Impaired [Line Items]
Financing Receivable, Amortized Cost Basis	57,973	40,205	57,973	40,205
Financing Receivable, Accrued Interest, Writeoff	4	639	25	685
Short Term 1-4 Unit - Refinance
Financing Receivable Impaired [Line Items]
Financing Receivable, Amortized Cost Basis	57,950	104,371	57,950	104,371
Financing Receivable, Accrued Interest, Writeoff	$ 132	$ 117	$ 371	$ 358

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Loans Held for Investment and Loans Held for Investment at Fair Value - Activity in Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Allowance for credit losses:
Beginning balance	$ 4,663	$ 5,881	$ 4,262	$ 5,845
Provision for loan losses	279	(1,000)	1,009	(895)
Charge-offs	(37)	(918)	(366)	(987)
Ending balance	4,905	3,963	4,905	3,963
Allowance for Loans Individually Evaluated	1,164	1,949	1,164	1,949	$ 1,406
Allowance related to Loans collectively evaluated	3,741	2,014	3,741	2,014
Amortized cost related to Loans individually evaluated	255,202	318,974	255,202	318,974
Amortized cost related to Loans collectively evaluated	2,868,502	1,768,742	2,868,502	1,768,742
Commercial - Purchase
Allowance for credit losses:
Beginning balance	518	328	385	373
Provision for loan losses	94	48	374	3
Charge-offs		(114)	(147)	(114)
Ending balance	612	262	612	262
Allowance for Loans Individually Evaluated	6	57	6	57	9
Allowance related to Loans collectively evaluated	606	205	606	205
Amortized cost related to Loans individually evaluated	14,911	19,314	14,911	19,314
Amortized cost related to Loans collectively evaluated	662,580	347,423	662,580	347,423
Commercial - Refinance
Allowance for credit losses:
Beginning balance	2,140	1,990	2,144	2,093
Provision for loan losses	(125)	28	(123)	(76)
Charge-offs	(19)	(95)	(25)	(94)
Ending balance	1,996	1,923	1,996	1,923
Allowance for Loans Individually Evaluated	434	1,005	434	1,005	826
Allowance related to Loans collectively evaluated	1,562	918	1,562	918
Amortized cost related to Loans individually evaluated	80,442	92,397	80,442	92,397
Amortized cost related to Loans collectively evaluated	832,332	598,567	832,332	598,567
Residential 1-4 Unit - Purchase
Allowance for credit losses:
Beginning balance	389	322	400	333
Provision for loan losses	51	(41)	40	(15)
Charge-offs				(37)
Ending balance	440	281	440	281
Allowance for Loans Individually Evaluated	52	120	52	120	96
Allowance related to Loans collectively evaluated	388	161	388	161
Amortized cost related to Loans individually evaluated	22,885	21,084	22,885	21,084
Amortized cost related to Loans collectively evaluated	506,911	255,812	506,911	255,812
Residential 1-4 Unit - Refinance
Allowance for credit losses:
Beginning balance	1,029	1,227	948	1,216
Provision for loan losses	241	(229)	427	(218)
Charge-offs		(151)	(105)	(151)
Ending balance	1,270	847	1,270	847
Allowance for Loans Individually Evaluated	196	342	196	342	138
Allowance related to Loans collectively evaluated	1,074	507	1,074	507
Amortized cost related to Loans individually evaluated	96,649	112,294	96,649	112,294
Amortized cost related to Loans collectively evaluated	791,071	496,249	791,071	496,249
Short Term 1-4 Unit - Purchase
Allowance for credit losses:
Beginning balance	50	386	43	595
Provision for loan losses	(16)	(313)	(9)	(508)
Charge-offs				(14)
Ending balance	34	73	34	73
Allowance for Loans Individually Evaluated		56		56	31
Allowance related to Loans collectively evaluated	34	16	34	16
Amortized cost related to Loans individually evaluated	2,302	23,883	2,302	23,883
Amortized cost related to Loans collectively evaluated	55,671	16,322	55,671	16,322
Short Term 1-4 Unit - Refinance
Allowance for credit losses:
Beginning balance	537	1,628	342	1,235
Provision for loan losses	34	(493)	300	(81)
Charge-offs	(18)	(558)	(89)	(577)
Ending balance	553	577	553	577
Allowance for Loans Individually Evaluated	476	369	476	369	$ 306
Allowance related to Loans collectively evaluated	77	207	77	207
Amortized cost related to Loans individually evaluated	38,013	50,002	38,013	50,002
Amortized cost related to Loans collectively evaluated	$ 19,937	$ 54,369	$ 19,937	$ 54,369

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Loans Held for Investment and Loans Held for Investment at Fair Value - Schedule of Aging Status of Amortized Cost Basis in Loans Held for Investment Portfolio (Details) - COVID19 Pandemic - Aging Status and Accrual Status - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	$ 3,123,704	$ 2,531,826
Loans Individually Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	255,202	276,418
Loans Individually Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	14,911	17,260
Loans Individually Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	80,442	85,935
Loans Individually Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	22,885	17,385
Loans Individually Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	96,649	107,552
Loans Individually Evaluated | Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	2,302	2,986
Loans Individually Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	38,013	45,300
Loans Collectively Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	2,868,502	2,255,408
Loans Collectively Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	662,580	492,161
Loans Collectively Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	832,332	697,326
Loans Collectively Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	506,911	391,385
Loans Collectively Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	791,071	622,768
Loans Collectively Evaluated | Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	55,671	26,003
Loans Collectively Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Total loans	19,937	25,765
30-59 days
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	112,505	136,320
30-59 days | Loans Individually Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	5,215	7,810
30-59 days | Loans Individually Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	310	700
30-59 days | Loans Individually Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	3,551	4,464
30-59 days | Loans Individually Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	325
30-59 days | Loans Individually Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	1,029	807
30-59 days | Loans Individually Evaluated | Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due		1,224
30-59 days | Loans Individually Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due		615
30-59 days | Loans Collectively Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	107,290	128,510
30-59 days | Loans Collectively Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	13,431	17,319
30-59 days | Loans Collectively Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	30,249	31,769
30-59 days | Loans Collectively Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	14,855	14,905
30-59 days | Loans Collectively Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	42,227	39,045
30-59 days | Loans Collectively Evaluated | Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	3,052	21,412
30-59 days | Loans Collectively Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	3,476	4,060
60-89 days
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	51,815	43,877
60-89 days | Loans Individually Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	11,809	11,912
60-89 days | Loans Individually Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	1,875	2,314
60-89 days | Loans Individually Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	6,314	6,818
60-89 days | Loans Individually Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	672	682
60-89 days | Loans Individually Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	2,701	1,088
60-89 days | Loans Individually Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	247	1,010
60-89 days | Loans Collectively Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	40,006	31,965
60-89 days | Loans Collectively Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	9,952	4,034
60-89 days | Loans Collectively Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	14,483	7,025
60-89 days | Loans Collectively Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	3,805	5,580
60-89 days | Loans Collectively Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	10,519	9,548
60-89 days | Loans Collectively Evaluated | Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	677	217
60-89 days | Loans Collectively Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	570	5,561
90+days
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	238,018	256,531
90+days | Loans Individually Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	238,018	256,531
90+days | Loans Individually Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	12,726	14,246
90+days | Loans Individually Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	70,417	74,488
90+days | Loans Individually Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	21,888	16,703
90+days | Loans Individually Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	92,919	105,657
90+days | Loans Individually Evaluated | Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	2,302	1,762
90+days | Loans Individually Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	37,766	43,675
Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	402,338	436,728
Past Due | Loans Individually Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	255,042	276,253
Past Due | Loans Individually Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	14,911	17,260
Past Due | Loans Individually Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	80,282	85,770
Past Due | Loans Individually Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	22,885	17,385
Past Due | Loans Individually Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	96,649	107,552
Past Due | Loans Individually Evaluated | Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	2,302	2,986
Past Due | Loans Individually Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	38,013	45,300
Past Due | Loans Collectively Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	147,296	160,475
Past Due | Loans Collectively Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	23,383	21,353
Past Due | Loans Collectively Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	44,732	38,794
Past Due | Loans Collectively Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	18,660	20,485
Past Due | Loans Collectively Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	52,746	48,593
Past Due | Loans Collectively Evaluated | Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	3,729	21,629
Past Due | Loans Collectively Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	4,046	9,621
Current
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	2,721,366	2,095,098
Current | Loans Individually Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	160	165
Current | Loans Individually Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	160	165
Current | Loans Collectively Evaluated
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	2,721,206	2,094,933
Current | Loans Collectively Evaluated | Commercial - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	639,197	470,808
Current | Loans Collectively Evaluated | Commercial - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	787,600	658,532
Current | Loans Collectively Evaluated | Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	488,251	370,900
Current | Loans Collectively Evaluated | Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	738,325	574,175
Current | Loans Collectively Evaluated | Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	51,942	4,374
Current | Loans Collectively Evaluated | Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment Past Due [Line Items]
Loans, past due	$ 15,891	$ 16,144

XML

Loans Held for Investment and Loans Held for Investment at Fair Value - Schedule of Amortized Cost in Loans Held for Investment based on Accrual Status and by Loan Origination Year (Details) - Accrual Status - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	$ 894,190	$ 1,143,849
Term Loans Amortized Cost Basis by Origination Year, 2021	1,091,939	214,490
Term Loans Amortized Cost Basis by Origination Year, 2020	181,730	500,689
Term Loans Amortized Cost Basis by Origination Year, 2019	411,977	326,082
Term Loans Amortized Cost Basis by Origination Year, 2018	262,433	171,370
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	281,435	175,345
Total	3,123,704	2,531,825
Commercial Purchase Portfolio Segment
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	215,509	277,906
Term Loans Amortized Cost Basis by Origination Year, 2021	269,213	47,617
Term Loans Amortized Cost Basis by Origination Year, 2020	41,777	87,082
Term Loans Amortized Cost Basis by Origination Year, 2019	70,767	50,817
Term Loans Amortized Cost Basis by Origination Year, 2018	41,483	27,703
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	38,742	18,296
Total	677,491	509,421
Commercial Purchase Portfolio Segment | Performing
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	215,509	277,618
Term Loans Amortized Cost Basis by Origination Year, 2021	268,001	45,836
Term Loans Amortized Cost Basis by Origination Year, 2020	41,591	81,541
Term Loans Amortized Cost Basis by Origination Year, 2019	64,227	46,637
Term Loans Amortized Cost Basis by Origination Year, 2018	39,948	24,164
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	33,304	16,365
Total	662,580	492,161
Commercial Purchase Portfolio Segment | Nonperforming
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022		288
Term Loans Amortized Cost Basis by Origination Year, 2021	1,212	1,781
Term Loans Amortized Cost Basis by Origination Year, 2020	186	5,541
Term Loans Amortized Cost Basis by Origination Year, 2019	6,540	4,180
Term Loans Amortized Cost Basis by Origination Year, 2018	1,535	3,539
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	5,438	1,931
Total	14,911	17,260
Commercial Refinance Portfolio Segment
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	224,604	242,170
Term Loans Amortized Cost Basis by Origination Year, 2021	233,369	68,915
Term Loans Amortized Cost Basis by Origination Year, 2020	61,943	170,029
Term Loans Amortized Cost Basis by Origination Year, 2019	145,747	145,604
Term Loans Amortized Cost Basis by Origination Year, 2018	121,399	78,866
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	125,712	77,676
Total	912,774	783,260
Commercial Refinance Portfolio Segment | Performing
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	224,064	239,688
Term Loans Amortized Cost Basis by Origination Year, 2021	225,103	64,966
Term Loans Amortized Cost Basis by Origination Year, 2020	58,086	144,017
Term Loans Amortized Cost Basis by Origination Year, 2019	124,285	118,735
Term Loans Amortized Cost Basis by Origination Year, 2018	100,753	62,374
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	100,041	67,545
Total	832,332	697,325
Commercial Refinance Portfolio Segment | Nonperforming
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	540	2,482
Term Loans Amortized Cost Basis by Origination Year, 2021	8,266	3,949
Term Loans Amortized Cost Basis by Origination Year, 2020	3,857	26,012
Term Loans Amortized Cost Basis by Origination Year, 2019	21,462	26,869
Term Loans Amortized Cost Basis by Origination Year, 2018	20,646	16,492
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	25,671	10,131
Total	80,442	85,935
Residential 1-4 Unit - Purchase
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	163,477	264,552
Term Loans Amortized Cost Basis by Origination Year, 2021	250,607	15,627
Term Loans Amortized Cost Basis by Origination Year, 2020	13,710	52,826
Term Loans Amortized Cost Basis by Origination Year, 2019	42,775	33,280
Term Loans Amortized Cost Basis by Origination Year, 2018	25,979	16,350
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	33,248	26,135
Total	529,796	408,770
Residential 1-4 Unit - Purchase | Performing
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	162,492	263,180
Term Loans Amortized Cost Basis by Origination Year, 2021	242,544	12,878
Term Loans Amortized Cost Basis by Origination Year, 2020	11,541	48,930
Term Loans Amortized Cost Basis by Origination Year, 2019	39,733	29,544
Term Loans Amortized Cost Basis by Origination Year, 2018	22,505	12,863
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	28,096	23,990
Total	506,911	391,385
Residential 1-4 Unit - Purchase | Nonperforming
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	985	1,372
Term Loans Amortized Cost Basis by Origination Year, 2021	8,063	2,749
Term Loans Amortized Cost Basis by Origination Year, 2020	2,169	3,896
Term Loans Amortized Cost Basis by Origination Year, 2019	3,042	3,736
Term Loans Amortized Cost Basis by Origination Year, 2018	3,474	3,487
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	5,152	2,145
Total	22,885	17,385
Residential 1-4 Unit - Refinance
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	248,479	354,845
Term Loans Amortized Cost Basis by Origination Year, 2021	329,431	37,374
Term Loans Amortized Cost Basis by Origination Year, 2020	33,261	145,961
Term Loans Amortized Cost Basis by Origination Year, 2019	124,390	90,451
Term Loans Amortized Cost Basis by Origination Year, 2018	68,426	48,451
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	83,733	53,238
Total	887,720	730,320
Residential 1-4 Unit - Refinance | Performing
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	247,970	343,199
Term Loans Amortized Cost Basis by Origination Year, 2021	314,865	31,334
Term Loans Amortized Cost Basis by Origination Year, 2020	26,150	114,145
Term Loans Amortized Cost Basis by Origination Year, 2019	95,470	59,825
Term Loans Amortized Cost Basis by Origination Year, 2018	44,360	31,774
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	62,256	42,491
Total	791,071	622,768
Residential 1-4 Unit - Refinance | Nonperforming
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	509	11,646
Term Loans Amortized Cost Basis by Origination Year, 2021	14,566	6,040
Term Loans Amortized Cost Basis by Origination Year, 2020	7,111	31,816
Term Loans Amortized Cost Basis by Origination Year, 2019	28,920	30,626
Term Loans Amortized Cost Basis by Origination Year, 2018	24,066	16,677
Term Loans Amortized Cost Basis by Origination Year, Pre-2018	21,477	10,747
Total	96,649	107,552
Short Term 1-4 Unit - Purchase
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	29,097	1,890
Term Loans Amortized Cost Basis by Origination Year, 2021	7,493	17,147
Term Loans Amortized Cost Basis by Origination Year, 2020	16,032	9,847
Term Loans Amortized Cost Basis by Origination Year, 2019	5,246	105
Term Loans Amortized Cost Basis by Origination Year, 2018	105
Total	57,973	28,989
Short Term 1-4 Unit - Purchase | Performing
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	29,097	1,890
Term Loans Amortized Cost Basis by Origination Year, 2021	7,493	15,582
Term Loans Amortized Cost Basis by Origination Year, 2020	15,037	8,531
Term Loans Amortized Cost Basis by Origination Year, 2019	4,044
Total	55,671	26,003
Short Term 1-4 Unit - Purchase | Nonperforming
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2021		1,565
Term Loans Amortized Cost Basis by Origination Year, 2020	995	1,316
Term Loans Amortized Cost Basis by Origination Year, 2019	1,202	105
Term Loans Amortized Cost Basis by Origination Year, 2018	105
Total	2,302	2,986
Short Term 1-4 Unit - Refinance
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	13,024	2,486
Term Loans Amortized Cost Basis by Origination Year, 2021	1,826	27,810
Term Loans Amortized Cost Basis by Origination Year, 2020	15,007	34,944
Term Loans Amortized Cost Basis by Origination Year, 2019	23,052	5,825
Term Loans Amortized Cost Basis by Origination Year, 2018	5,041
Total	57,950	71,065
Short Term 1-4 Unit - Refinance | Performing
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022	13,024	1,448
Term Loans Amortized Cost Basis by Origination Year, 2021	1,582	11,991
Term Loans Amortized Cost Basis by Origination Year, 2020	2,543	12,326
Term Loans Amortized Cost Basis by Origination Year, 2019	2,788
Total	19,937	25,765
Short Term 1-4 Unit - Refinance | Nonperforming
Financing Receivable Recorded Investment [Line Items]
Term Loans Amortized Cost Basis by Origination Year, 2022		1,038
Term Loans Amortized Cost Basis by Origination Year, 2021	244	15,819
Term Loans Amortized Cost Basis by Origination Year, 2020	12,464	22,618
Term Loans Amortized Cost Basis by Origination Year, 2019	20,264	5,825
Term Loans Amortized Cost Basis by Origination Year, 2018	5,041
Total	$ 38,013	$ 45,300

XML

Receivables Due From Servicers - Summary of Receivables Due From Servicers (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Related Party Transaction [Line Items]
Loan principal payments due from servicers	$ 43,202	$ 43,509
Other loan servicing receivables	14,438	11,448
Loan Servicing Receivables Current, Total	57,640	54,957
Corporate and escrow advances receivable	18,048	19,373
Total receivables due from servicers	75,688	74,330
Securitizations
Related Party Transaction [Line Items]
Loan principal payments due from servicers	41,347	42,344
Other loan servicing receivables	13,024	10,718
Loan Servicing Receivables Current, Total	54,371	53,062
Corporate and escrow advances receivable	17,985	17,884
Total receivables due from servicers	72,356	70,946
Warehouse and Repurchase Facilities and Other
Related Party Transaction [Line Items]
Loan principal payments due from servicers	1,855	1,165
Other loan servicing receivables	1,414	730
Loan Servicing Receivables Current, Total	3,269	1,895
Corporate and escrow advances receivable	63	1,489
Total receivables due from servicers	$ 3,332	$ 3,384

XML

Mortgage Servicing Rights - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Transfers And Servicing [Abstract]
Unpaid principal balance of mortgage loans serviced for others, amount	$ 505.1	$ 520.6
Fair value of servicing rights, weighted average discount rate	8.10%	8.00%
Fair value of servicing rights, weighted average constant prepayment rate	2.20%	3.20%

XML

Mortgage Servicing Rights - Summary of Mortgage Servicing Rights (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Transfers And Servicing [Abstract]
Balance at the beginning of year	$ 7,152
Mortgage servicing rights acquired, at fair value		$ 7,152
Fair value adjustments	1,286
Balance at end of year	$ 8,438	$ 7,152

XML

Securitizations, Net - Additional Information (Detail) $ in Billions	6 Months Ended
	Jun. 30, 2022 USD ($) Securities
Securitization Financial Asset For Which Transfer Is Accounted As Sale [Line Items]
Number of securitizations | Securities	23
Issuing of securities to third parties | $	$ 4.9
Minimum
Securitization Financial Asset For Which Transfer Is Accounted As Sale [Line Items]
Securities redemption when principal balance is less than a certain percentage	5.00%
Maturity dates of the securities	2045-07
Maximum
Securitization Financial Asset For Which Transfer Is Accounted As Sale [Line Items]
Securities redemption when principal balance is less than a certain percentage	30.00%
Maturity dates of the securities	2052-05

XML

Securitizations Net - Summary of Outstanding Balance Net of Discounts and Deals Costs of Securities and Effective Interest Rate (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Debt Instrument [Line Items]
Securitizations, net	$ 2,477,226	$ 1,558,163	$ 1,911,879
Average outstanding balance	$ 2,175,263	$ 1,545,969
Effective interest rate	4.08%	4.83%
Securitizations
Debt Instrument [Line Items]
Interest expense - portfolio related	$ 44,428	$ 37,333

XML

Securitizations Net - Summary of Outstanding Balance Net of Discounts and Deals Costs of Securities and Effective Interest Rate (Parenthetical) (Details)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Transfers And Servicing [Abstract]
Average interest rate	3.38%	4.12%
Debt issue cost amortization rate	0.70%	0.71%

XML

Other Debt - Additional Information (Details) - USD ($)							1 Months Ended		6 Months Ended
	Mar. 15, 2022	Feb. 05, 2021	Dec. 26, 2019	Sep. 12, 2018	Aug. 08, 2016	Jan. 04, 2011	Apr. 16, 2021	Jan. 29, 2021	Jun. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Lines of credit fund maximum percentage of principle balance of mortgage loans									100.00%
Line of credit, maximum capacity									$ 750,000,000	$ 653,000,000
Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, term				3 years
Debt instrument, description									one-month LIBOR
Debt Instrument, effective interest rate									4.20%	7.30%
Agreement entered date									Sep. 12, 2018
Debt instrument, maturity date									Nov. 10, 2023
Line of credit, maximum capacity				$ 50,000,000.0
Revolving Credit Line
Debt Instrument [Line Items]
Agreement entered date					Aug. 08, 2016
Debt instrument, maturity date					Jul. 31, 2023
Revolving Credit Line | Short-Term Unsecured Borrowing
Debt Instrument [Line Items]
Line of credit, maximum capacity					$ 3,000,000.0
LIBOR | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, floor rate									0.75%
Debt instrument, spread rate									3.50%
SOFR | Revolving Credit Line | Short-Term Unsecured Borrowing
Debt Instrument [Line Items]
Debt instrument, floor rate									0.25%
Debt instrument, spread rate									2.00%
2022 Term Loan
Debt Instrument [Line Items]
Interest payments, frequency									six months
Corporate Debt Agreement | 2022 Term Loan
Debt Instrument [Line Items]
Debt instrument, term	5 years
Debt instrument, face amount	$ 215,000,000.0
Term loans, balance									$ 215,000,000.0
Debt issuance costs, net									$ 5,800,000
Debt instrument, maturity date	Mar. 15, 2027
Debt instrument, fixed interest rate	7.125%
Corporate Debt Agreement | 2021 Term Loan
Debt Instrument [Line Items]
Debt instrument, term		5 years
Debt instrument, face amount		$ 175,000,000.0
Debt instrument, description									one-month LIBOR
Debt instrument paid off									2022-03
Debt instrument, maturity date		Feb. 04, 2026
Corporate Debt Agreement | 2021 Term Loan | LIBOR
Debt Instrument [Line Items]
Debt instrument, floor rate		1.00%
Debt instrument, spread rate		8.00%
2013 Repurchase Agreement | Secured Debt
Debt Instrument [Line Items]
Debt instrument, spread rate									3.25%
Debt Instrument, effective interest rate									5.00%	4.20%
Agreement entered date									May 17, 2013
Debt instrument, maturity date									Sep. 29, 2023
Line of credit, maximum capacity									$ 300,000,000.0	$ 200,000,000
2019 Term Loan | Secured Debt
Debt Instrument [Line Items]
Debt instrument, face amount			$ 3,000,000.0
Debt Instrument, effective interest rate									0.00%	10.50%
Debt instrument paid off									2022-03
Agreement entered date			Dec. 26, 2019
Line of credit, maximum capacity										$ 3,000,000
2021 Repurchase Agreement | Secured Debt
Debt Instrument [Line Items]
Debt instrument, description								one-month LIBOR
Debt Instrument, effective interest rate									5.60%	5.90%
Agreement entered date								Jan. 29, 2021
Debt instrument, maturity date								Feb. 28, 2023
Line of credit, maximum capacity								$ 200,000,000.0	$ 200,000,000	$ 200,000,000
2021 Repurchase Agreement | Minimum | Secured Debt
Debt Instrument [Line Items]
Debt instrument, spread rate								3.50%
2021 Repurchase Agreement | Maximum | Secured Debt
Debt Instrument [Line Items]
Debt instrument, spread rate								4.50%
2021 Term Repurchase Agreement | Secured Debt
Debt Instrument [Line Items]
Debt instrument, description							one-month LIBOR
Debt Instrument, effective interest rate									3.40%	3.50%
Agreement entered date							Apr. 16, 2021
Debt instrument, maturity date							Apr. 16, 2024
Line of credit, maximum capacity							$ 100,000,000.0		$ 100,000,000	$ 100,000,000
2021 Term Repurchase Agreement | Minimum | Secured Debt
Debt Instrument [Line Items]
Debt instrument, spread rate							3.00%
July 2021 Term Repurchase Agreement
Debt Instrument [Line Items]
Debt instrument, description									one-month LIBOR
Debt Instrument, effective interest rate									4.20%
Line of credit, maximum capacity									$ 100,000,000.0
Line of credit, outstanding amount										0
Interest rate description									Each loan advance bears interest at one-month LIBOR with a 0.5% floor plus 4.5% per annum.
Line of credit , maturity date									Jul. 29, 2024
Line of credit facility, description									The July 2021 Term Repurchase Agreement has a maturity date of July 29, 2024, with an option to extend the term to July 29, 2025
July 2021 Term Repurchase Agreement | Secured Debt
Debt Instrument [Line Items]
Line of credit, maximum capacity									$ 100,000,000	$ 100,000,000
July 2021 Term Repurchase Agreement | LIBOR | Secured Debt
Debt Instrument [Line Items]
Debt instrument, floor rate									0.50%
Debt instrument, spread rate									4.50%
Facility Agreement
Debt Instrument [Line Items]
Agreement entered date						Jan. 04, 2011
Debt instrument, maturity date						Jul. 31, 2023
Facility Agreement | Secured Debt
Debt Instrument [Line Items]
Debt instrument, description									one-month Secured Overnight Financing Rate (“SOFR”)
Line of credit, maximum capacity						$ 60,000,000.0
Facility Agreement | SOFR | Secured Debt
Debt Instrument [Line Items]
Debt instrument, floor rate									0.25%
Debt instrument, spread rate									1.60%

XML

Other Debt - Summary of Maximum Borrowing Capacity and Current Gross Balances Outstanding (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021	Apr. 16, 2021	Jan. 29, 2021	Sep. 12, 2018
Debt Instrument [Line Items]
Period end balance	$ 210,204,000	$ 302,800,000
Maximum borrowing capacity	750,000,000	653,000,000
Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity					$ 50,000,000.0
2021 Term Repurchase Agreement | Secured Debt
Debt Instrument [Line Items]
Period end balance	21,632,000	41,636,000
Maximum borrowing capacity	100,000,000	100,000,000	$ 100,000,000.0
2021 Repurchase Agreement | Secured Debt
Debt Instrument [Line Items]
Period end balance	78,608,000	82,580,000
Maximum borrowing capacity	200,000,000	200,000,000		$ 200,000,000.0
July 2021 Term Repurchase Agreement
Debt Instrument [Line Items]
Maximum borrowing capacity	100,000,000.0
July 2021 Term Repurchase Agreement | Secured Debt
Debt Instrument [Line Items]
Period end balance	454,000
Maximum borrowing capacity	100,000,000	100,000,000
2013 Repurchase Agreement | Secured Debt
Debt Instrument [Line Items]
Period end balance	83,923,000	153,499,000
Maximum borrowing capacity	300,000,000.0	200,000,000
Bank Credit Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Period end balance	25,587,000	22,385,000
Maximum borrowing capacity	$ 50,000,000	50,000,000
2019 Term Loan | Secured Debt
Debt Instrument [Line Items]
Period end balance		2,700,000
Maximum borrowing capacity		$ 3,000,000

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Other Debt - Summary of Maximum Borrowing Capacity and Current Gross Balances Outstanding (Parenthetical) (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Warehouse Repurchase Facilities
Debt Instrument [Line Items]
Debt issuance costs, net	$ 1.8	$ 1.7

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Other Debt - Schedule of Activity and Effective Interest Rate (Details) - Warehouse and Repurchase Facilities - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Debt Instrument [Line Items]
Average outstanding balance	$ 318,960	$ 166,981	$ 328,603	$ 140,254
Highest outstanding balance at any month-end	$ 379,169	$ 250,927	$ 426,959	$ 250,927
Effective interest rate	5.16%	5.65%	4.80%	5.80%

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Other Debt - Schedule of Activity and Effective Interest Rate (Parenthetical) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Debt Disclosure [Abstract]
Debt Instrument, average rate	4.59%	4.44%	4.23%	4.58%
Debt issue cost amortization percentage	0.57%	1.21%	0.57%	1.22%

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Other Debt - Summary of Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Debt Instrument [Line Items]
Interest expense — portfolio related	$ 28,752	$ 20,566	$ 52,308	$ 41,399
Interest expense — corporate debt	4,182	4,309	21,322	11,658
Total interest expense	32,934	24,875	73,630	53,057
Warehouse and Repurchase Facilities
Debt Instrument [Line Items]
Interest expense — portfolio related	4,115	2,361	7,880	4,067
Securitizations
Debt Instrument [Line Items]
Interest expense — portfolio related	$ 24,637	$ 18,205	$ 44,428	$ 37,332

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Other Debt - Summary of Interest Expense (Parenthetical) (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Feb. 28, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Debt Instrument [Line Items]
Interest expense — corporate debt		$ 4,182	$ 4,309	$ 21,322	$ 11,658
Repayment of outstanding principal amount				$ 170,844	79,969
Corporate Debt Agreement | Owl Rock Capital Corporation | 2019 Term Loan
Debt Instrument [Line Items]
Interest expense — corporate debt					11,700
Write off of debt issuance cost					2,900
Prepayment penalties					$ 1,600
Repayment of outstanding principal amount	$ 78,000

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Commitments And Contingencies Disclosure [Abstract]
Repurchase liability	$ 376	$ 141

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Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions			1 Months Ended				3 Months Ended			6 Months Ended
	Dec. 24, 2020	Jan. 31, 2020	May 31, 2022	Feb. 28, 2022	May 31, 2021	Jan. 31, 2021	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock awarded and earned stock compensation, shares				125,250		480,000
Compensation expense related to the outstanding stock options granted							$ 0.8		$ 0.5
Amount of unrecognized compensation expense related to unvested stock options							$ 5.3		$ 4.7	$ 5.3
Treasury shares purchased							0	33,647
Treasury shares, average price per share							$ 13.61
Restricted Stock-based Awards
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Awards granted requisite service period										3 years
Description of compensation expense related to stock options										Compensation expense related to restricted stock-based awards is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using the straight-line method.
Performance Stock Unit
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issued				102,750
Non-Employee Directors
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock awarded and earned stock compensation, shares			31,215		26,511
2020 Omnibus Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares authorized to grant							2,770,000			2,770,000
Stock options granted	12,500	782,500
Exercise price of unvested stock options	$ 6.28
2020 Omnibus Incentive Plan | Initial Public Offering
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise price of unvested stock options		$ 13.00

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Earnings Per Share - Schedule of Basic and Diluted Earnings Per Share Calculations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Basic EPS:
Net income attributable to common stockholders	$ 10,645	$ 9,453	$ 13,766	$ 12,849
Less: undistributed earnings attributable to participating securities	164	3,571	212	4,854
Net earnings attributable to common stockholders	$ 10,481	$ 5,882	$ 13,554	$ 7,995
Weighted average common shares outstanding	31,917	20,087	31,904	20,087
Basic earnings per common share	$ 0.33	$ 0.29	$ 0.42	$ 0.40
Diluted EPS:
Net income attributable to common stockholders	$ 10,645	$ 9,453	$ 13,766	$ 12,849
Weighted average common shares outstanding	31,917	20,087	31,904	20,087
Add dilutive effects for warrants	1,986	1,985	2,057	1,786
Add dilutive effects for stock options	4	3	4	2
Add dilutive effects of unvested restricted stock awards	150	197	165	121
Weighted Average Number of Shares Outstanding, Diluted, Total	34,057	33,960	34,130	33,684
Diluted income per common share	$ 0.31	$ 0.28	$ 0.40	$ 0.38
Series A Preferred Stock
Diluted EPS:
Add dilutive effects for assumed conversion of Series A preferred stock		11,688		11,688

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Earnings Per Share - Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Share equivalents excluded from EPS	1,001	773	1,001	773
Stock options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Share equivalents excluded from EPS	773	773	773	773
Unvested restricted stock awards
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Share equivalents excluded from EPS	125		125
Unvested performance-based stock units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Share equivalents excluded from EPS	103		103

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Convertible Preferred Stock - Additional Information (Details)	Jun. 30, 2022 $ / shares shares
Convertible Redeemable Preferred Stock [Line Items]
Percentage of common stock held by warrant holder and affiliates	49.00%
Exercise Price of $2.96 per Share of Common Stock
Convertible Redeemable Preferred Stock [Line Items]
Exercise price per share | $ / shares	$ 2.96
Warrants to purchase an aggregate shares | shares	2,008,749
Exercise Price of $4.94 per Share of Common Stock
Convertible Redeemable Preferred Stock [Line Items]
Exercise price per share | $ / shares	$ 4.94
Warrants to purchase an aggregate shares | shares	1,004,375

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Fair Value Measurements - Schedule of Information on Assets Measured and Recorded at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	$ 1,351	$ 1,359
Mortgage servicing rights	8,438	7,152
Assets	39,615	125,477
Real estate owned, net	19,218	17,557
Recurring Fair Value Measurements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	1,351	1,359
Mortgage servicing rights	8,438	7,152
Assets	9,789	8,511
Nonrecurring Fair Value Measurements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets	29,826	116,966
Loans held for sale, net		87,422
Real estate owned, net	19,218	17,557
Individually evaluated/Impaired loans requiring specific allowance, net	10,608	11,987
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets	39,615	125,477
Level 3 | Recurring Fair Value Measurements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	1,351	1,359
Mortgage servicing rights	8,438	7,152
Assets	9,789	8,511
Level 3 | Nonrecurring Fair Value Measurements
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets	29,826	116,966
Loans held for sale, net		87,422
Real estate owned, net	19,218	17,557
Individually evaluated/Impaired loans requiring specific allowance, net	$ 10,608	$ 11,987

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Fair Value Measurements - Schedule of Gains and Losses Recognized on Assets Measured on Nonrecurring Basis (Details) - Nonrecurring Fair Value Measurements - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total net gain (loss)	$ 291	$ 214	$ 335	$ (513)
Loans Held for Sale, Net
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total net gain (loss)		(15)		2
Real Estate Held For Sale, Net
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total net gain (loss)	(143)	(800)	93	(1,235)
Individually Evaluated Loans Requiring Specific Allowance, Net
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total net gain (loss)	$ 434	$ 1,029	$ 242	$ 720

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Fair Value Measurements - Valuation Techniques and Unobservable Inputs Related to Level 3 Assets (Details) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total recurring fair value measurements	$ 39,615	$ 125,477
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total recurring fair value measurements	$ 39,615	$ 125,477
Level 3 | Valuation, Market Approach | Measurement Input Selling Cost
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Individually evaluated loans requiring specific allowance, net	0.080	0.080
Real estate owned, net	0.080	0.080
Level 3 | Discounted Cash Flow | Discount rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.058	0.058
Loans held for sale		0.058
Level 3 | Minimum | Discounted Cash Flow | Discount rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Mortgage servicing rights, at fair value	0.08	0.080
Level 3 | Minimum | Discounted Cash Flow | Collateral Value (% of UPB)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.97	0.950
Level 3 | Minimum | Discounted Cash Flow | Timing of Resolution/Payoff
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment,at fair value	1 month	1 month
Loans held for sale		3 months
Level 3 | Minimum | Discounted Cash Flow | Measurement Input, Prepayment Rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.010	0.192
Mortgage servicing rights, at fair value	0.008	0.024
Level 3 | Minimum | Discounted Cash Flow | Default Rate [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.000	0.000
Level 3 | Minimum | Discounted Cash Flow | Loss Severity Rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.000	0.000
Level 3 | Maximum | Discounted Cash Flow | Discount rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Mortgage servicing rights, at fair value	0.120	0.120
Level 3 | Maximum | Discounted Cash Flow | Collateral Value (% of UPB)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	1.200	1.200
Level 3 | Maximum | Discounted Cash Flow | Timing of Resolution/Payoff
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment,at fair value	40 months	38 months
Loans held for sale		37 months
Level 3 | Maximum | Discounted Cash Flow | Measurement Input, Prepayment Rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.300	0.50
Mortgage servicing rights, at fair value	0.060	0.035
Level 3 | Maximum | Discounted Cash Flow | Default Rate [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.063	0.067
Level 3 | Maximum | Discounted Cash Flow | Loss Severity Rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.210	0.134
Level 3 | Weighted Average | Valuation, Market Approach | Measurement Input Selling Cost
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Individually evaluated loans requiring specific allowance, net	0.080	0.080
Real estate owned, net	0.080	0.080
Level 3 | Weighted Average | Discounted Cash Flow | Discount rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.058	0.058
Loans held for sale		0.058
Mortgage servicing rights, at fair value	0.081	0.080
Level 3 | Weighted Average | Discounted Cash Flow | Collateral Value (% of UPB)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	1.070	1.060
Level 3 | Weighted Average | Discounted Cash Flow | Timing of Resolution/Payoff
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment,at fair value	38 months	34 months 24 days
Loans held for sale		13 months
Level 3 | Weighted Average | Discounted Cash Flow | Measurement Input, Prepayment Rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.300	0.300
Mortgage servicing rights, at fair value	0.022	0.032
Level 3 | Weighted Average | Discounted Cash Flow | Default Rate [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.006	0.010
Level 3 | Weighted Average | Discounted Cash Flow | Loss Severity Rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Loans held for investment, at fair value	0.040	0.030
Level 3 | Individually evaluated loans requiring allowance net
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total recurring fair value measurements	$ 10,608	$ 11,987
Level 3 | Real Estate Owned, Net
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total recurring fair value measurements	19,218	17,557
Level 3 | Loans Held for Investment
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total recurring fair value measurements	1,351	1,359
Level 3 | Loans Held For Sale
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total recurring fair value measurements		87,422
Level 3 | Mortgage Servicing Rights
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total recurring fair value measurements	$ 8,438	$ 7,152

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Fair Value Measurements - Rollforward of Loans and Interest Only Strips Measured at Estimated Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Loans
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Beginning balance	$ 1,352	$ 1,364	$ 1,359	$ 1,539
Loans liquidated				163
Principal paydowns	(7)	(14)	(24)	(24)
Total unrealized gain (loss) included in net income	6	20	16	18
Ending balance	$ 1,351	1,370	$ 1,351	1,370
Interest-only Strips
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Beginning balance		125		238
Interest-only strip write-offs		(44)		(157)
Ending balance		$ 81		$ 81

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Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021
Fair Value Disclosures [Abstract]
Loans individually evaluated for allowance	$ 10,600	$ 12,000
Allowance for loan losses	$ 1,164	$ 1,406	$ 1,949

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Fair Value Measurements - Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Jun. 30, 2021
Assets:
Restricted cash	$ 9,217	$ 11,639	$ 7,921
Loans held for investment, net	3,118,799	2,527,564
Loans held for investment, at fair value	1,351	1,359
Mortgage servicing rights	8,438	7,152
Liabilities:
Secured financing, net	209,227	162,845
Securitizations, net	2,477,226	1,911,879	$ 1,558,163
Carrying Value
Assets:
Cash	46,250	35,965
Restricted cash	9,217	11,639
Loans held for sale, net		87,908
Loans held for investment, net	3,118,799	2,527,564
Loans held for investment, at fair value	1,351	1,359
Accrued interest receivables	15,820	13,159
Mortgage servicing rights	8,438	7,152
Liabilities:
Secured financing, net	209,227	162,845
Warehouse repurchase facilities, net	208,390	301,069
Securitizations, net	2,477,226	1,911,879
Accrued interest payable	13,074	6,254
Estimate of Fair Value Measurement
Assets:
Cash	46,250	35,965
Restricted cash	9,217	11,639
Loans held for sale, net		87,908
Loans held for investment, net	3,295,277	2,655,357
Loans held for investment, at fair value	1,351	1,359
Accrued interest receivables	15,820	13,159
Mortgage servicing rights	8,438	7,152
Liabilities:
Secured financing, net	212,827	170,843
Warehouse repurchase facilities, net	208,390	301,069
Securitizations, net	2,312,506	1,931,002
Accrued interest payable	13,074	6,254
Level 1 | Estimate of Fair Value Measurement
Assets:
Cash	46,250	35,965
Restricted cash	9,217	11,639
Accrued interest receivables	15,820	13,159
Liabilities:
Accrued interest payable	13,074	6,254
Level 2 | Estimate of Fair Value Measurement
Liabilities:
Warehouse repurchase facilities, net	208,390	301,069
Level 3 | Estimate of Fair Value Measurement
Assets:
Loans held for sale, net		87,908
Loans held for investment, net	3,295,277	2,655,357
Loans held for investment, at fair value	1,351	1,359
Mortgage servicing rights	8,438	7,152
Liabilities:
Secured financing, net	212,827	170,843
Securitizations, net	$ 2,312,506	$ 1,931,002

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Subsequent Events - Additional Information (Details) - ESPP	May 19, 2022 shares
Subsequent Event [Line Items]
Common stock shares authorized for issuance	568,182
Maximum number of shares authorized for issuance as percentage of common stock issued and outstanding	1.00%