DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

12 Months Ended

Dec. 31, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Derivative instruments utilized by the Company primarily include interest rate lock commitments, forward sale contracts, MBS put options, put options on treasuries, and interest rate swap futures. Derivative financial instruments are recognized as assets or liabilities and are measured at fair value. The Company accounts for derivatives as free-standing derivatives and does not designate any derivative financial instruments for hedge accounting. All derivative financial instruments are recognized on the consolidated balance sheets at fair value with changes in the fair values being reported in current period earnings. The Company does not use derivative financial instruments for purposes other than in support of its risk management activities. Refer to Note 1- Description of Business, Presentation and Summary of Significant Accounting Policies and Note 2- Fair Value for further details on derivatives.

The following summarizes the Company’s outstanding derivative instruments:

				Fair Value
	Notional		Balance Sheet Location	Asset		Liability
December 31, 2023:
Interest rate lock commitments	$	2,007,175	Derivative asset, at fair value	$	49,112
Interest rate lock commitments	163,161		Derivative liabilities, at fair value	—		1,172
Forward sale contracts	449,419		Derivative asset, at fair value	16,610		—
Forward sale contracts	2,234,930		Derivative liabilities, at fair value	—		83,728
Put options on treasuries	—		Derivative asset, at fair value	—		—
Put options on treasuries	9,730		Derivative liabilities, at fair value	—		62
MBS put options	200,000		Derivative asset, at fair value	1,376		—
MBS put options	—		Derivative liabilities, at fair value	—		—
Interest rate swap futures	3,240		Derivative asset, at fair value	26,476		—
Interest rate swap futures	—		Derivative liabilities, at fair value	—		—
			Total derivative financial instruments	$	93,574	$	84,962

				Fair Value
	Notional		Balance Sheet Location	Asset		Liability
December 31, 2022:
Interest rate lock commitments	$	1,591,807	Derivative asset, at fair value	$	29,374	$	—
Interest rate lock commitments	622,706		Derivative liabilities, at fair value	—		5,784
Forward sale contracts	309,809		Derivative asset, at fair value	6,676		—
Forward sale contracts	2,963,685		Derivative liabilities, at fair value	—		43,482
Put options on treasuries	—		Derivative asset, at fair value	—		—
Put options on treasuries	8,050		Derivative liabilities, at fair value	—		10,831
MBS put options	400,000		Derivative asset, at fair value	3,361		—
MBS put options	—		Derivative liabilities, at fair value	—		—
Interest rate swap futures	—		Derivative asset, at fair value	—		—
Interest rate swap futures	211		Derivative liabilities, at fair value	—		7,395
			Total derivative financial instruments	$	39,411	$	67,492

Because many of the Company’s current derivative agreements are not exchange-traded, the Company is exposed to credit loss in the event of nonperformance by the counterparty to the agreements. The Company controls this risk through credit monitoring procedures including financial analysis, dollar limits and other monitoring procedures. The notional amount of the contracts does not represent the Company’s exposure to credit loss.

The following summarizes the realized and unrealized net gains or losses on derivative financial instruments and the consolidated statements of operations line items where such gains and losses are included:

		Year Ended December 31,
Derivative instrument	Statements of Operations Location	2023		2022		2021
Interest rate lock commitments, net	Gain on origination and sale of loans, net	$	24,350	$	(157,030)	$	(466,425)
Forward sale contracts	Gain on origination and sale of loans, net	6,958		1,195,708		540,811
Interest rate swap futures	Gain on origination and sale of loans, net	(31,328)		(81,259)		(111,300)
Put options	Gain on origination and sale of loans, net	20,221		123,075		75,728
Forward sale contracts	Change in fair value of servicing rights, net	(13,763)		(114,244)		(89,127)
Interest rate swap futures	Change in fair value of servicing rights, net	(22,572)		(201,259)		9,071
Put options	Change in fair value of servicing rights, net	(11,584)		(7,806)		(2,822)
Total realized and unrealized losses on derivative financial instruments		$	(27,718)	$	757,185	$	(44,064)