Better Home & Finance Holding Company
03/13/2026 | Press release | Distributed by Public on 03/13/2026 14:51
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with our audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024, in each case, together with related notes thereto, included elsewhere in this Annual Report. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under "Risk Factors" and elsewhere in this Annual Report. See "Cautionary Statement Regarding Forward-Looking Statements." Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. Certain amounts may not foot due to rounding.
Company Overview
We are a technology-enabled homeownership company that offers mortgage, home equity, and other homeownership products through a digital platform. Our holistic solution and marketplace model, enabled by our proprietary technology, allows us to take one of our customers' largest and most complex financial journeys-the process of owning a home-and transform it into a more simple, transparent and ultimately affordable process. Our goal is to do our part in lowering the hurdles to homeownership by offering the lowest prices and the best experience to our customers.
We are a technology-driven organization. We are seeking to disrupt a business model by leveraging our proprietary platform, Tinman, to enable us to deliver on what we believe is most important for our customers: a seamless experience, time saved, and higher certainty on the single biggest financial decision of their lives. Through this process, we aim to reduce the cost to produce a loan and in the future to create a platform with all homeownership products embedded into a highly automated, single flow, allowing us to pass along savings to our customers.
We are focused on improving our platform and plan to continue making investments to build our business and prepare for future growth. We believe that our success will depend on many factors, including our ability to drive customers to our platform, and convert them once they come to us, achieve leverage on our operational expenses, execute on our strategy to fund more purchase loans and diversify our revenue by expanding and enhancing our offerings. We plan to continue to invest in technology to improve customer experience and further drive down labor costs through automation, making our platform more efficient and scalable.
Our Business Model
We generate revenue through the production and sale of loans and other product offerings through our platform. The revenue and mix of revenue as a percentage of total revenue attributable to our sale of loan production (Gain on loans, net) and Better Plus (Other revenue) and net interest income for the years ended December 31, 2025 and 2024 is as follows:
| Year Ended December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
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(Amounts in thousands, except percentage amounts)
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Amounts
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Percentages
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Amounts
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Percentages
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| Gain on loans, net | $ | 136,148 | 82 | % | $ | 78,098 | 72 | % | |||||||||||||||
| Other revenue | 11,299 | 7 | % | 12,888 | 12 | % | |||||||||||||||||
| Net interest income | 17,425 | 11 | % | 17,502 | 16 | % | |||||||||||||||||
| Total net revenues | $ | 164,872 | $ | 108,488 | |||||||||||||||||||
Home Finance-Gain on loans, net
We produce a wide selection of mortgage loans and leverage our platform to quickly sell these loans and related mortgage servicing rights ("MSRs") to our loan purchaser network. We source our customers through two channels: our D2C channel and our Platform channel. In 2025, we wound down our Ally Partnership, previously referred to as "B2B channel," which concluded as of December 31, 2025. Through our D2C channel, we generate gain on loans, net by selling loans and MSRs to our loan purchaser network, recognizing D2C revenue per loan. Through our Platform channel, we generate revenue from various partnerships with mortgage originators and technology companies, as well as our in-market loan officer teams, which ramped over the course of 2025. These partnerships come in different structures. For some, we access our partners' customer base and originate loans on our platform and in other arrangements, the partner originates the loan and we provide the technology, underwriting, and fulfillment.
Better Plus-Other revenue
We complement our residential mortgage loan products through Better Plus, which includes a set of non-mortgage homeownership products and services offered primarily through third-party strategic partners. These offerings include referrals to real estate agents, title insurance and settlement services provided through third-party providers, and access to homeowners insurance policies through a digital marketplace of insurance partners. In these arrangements, we generally act as an agent or referral source and receive fees from third-party providers. Better Plus products are integrated into our platform to support customers throughout the homeownership process.
Mortgage Interest Income -Net interest income
As we originate mortgages, there is a short period between the funding of a loan and its sale into our investor network. During this time, we borrow against our warehouse lines of credit as a source of capital and pay interest on those borrowings. It is not uncommon for a mortgage to be awaiting sale while the borrower's first interest payment is collected. In these instances, Better collects and recognizes that interest as revenue. Once the mortgage is sold to our investor network, the warehouse line of credit is repaid and we do not collect any future interest payments on that loan.
International Interest Income -Net interest income
Through our UK subsidiary, Birmingham Bank conducts typical banking activities, including collecting deposits from customers on which it pays interest, and deploying those deposits as a source of capital to originate mortgages on which it collects interest payments.
International Lending Revenue-Other revenue
International lending revenue consists of revenue from our international lending activities, primarily in the U.K., which has expanded via acquisitions in prior years. International lending activities primarily include broker fees earned via our digital mortgage broker in the U.K. During 2024, management enacted a plan to sell several entities in the U.K., one of those sales completing in Q3 2025, with the remaining expected to be completed in 2026. As such the revenue from our non-core international operations is winding down.
Factors Affecting Our Performance
Fluctuations in Interest Rates
Changes in interest rates influence mortgage loan refinancing volumes and our mortgage loan home purchase volumes, balance sheet and results of operations. In a decreasing interest rate environment, mortgage loan refinance volumes typically increase. Conversely, in an increasing interest rate environment, mortgage loan refinancing volumes and home purchase volumes typically decline, with mortgage loan refinancing volumes being particularly sensitive to increasing interest rates as customers are no longer incentivized to refinance their current mortgage loans athigherinterest rates. However, increasing interest rates are also indicative of overall economic growth and inflation that could generate demand for more cash-out refinancings, purchase mortgage loan transactions and home equity loans, which may partially offset the decline in rate and term refinancings resulting from a rising interest rate environment.
In addition, the majority of our assets are subject to interest rate risk, including (i) loans held for sale ("LHFS"), which consist of mortgage loans and home equity line of credit and closed-end second lien loans held on our consolidated balance sheet for a short period of time after origination until we are able to sell them; (ii) interest rate lock commitments ("IRLCs"); (iii) MSRs, which may be held on our consolidated balance sheet for a period of time after origination until we are able to sell them; and (iv) forward sales contracts that we enter into to manage interest rate risk created by IRLCs and uncommitted LHFS. As interest rates increase, (i) our LHFS and IRLCs generally decrease in value, (ii) the corresponding hedging arrangements that hedge against interest rate risk typically increase in value and (iii) the value of our MSRs (to the extent retained) tend to increase due to a decline in mortgage loan prepayments. Conversely, as interest rates decline, (i) our LHFS and IRLCs generally increase in value, (ii) our hedging arrangements decrease in value and (iii) the value of our MSRs tend to decrease due to borrowers refinancing their mortgage loans. In order to mitigate direct exposure to interest rate risk between the time at which a borrower locks a loan and the sale of the loan into our purchaser network, we enter into IRLCs and other hedging agreements.
In order to manage interest rate risk on our Loans Held for Investment portfolio, we have entered into pay-fixed, receive-floating interest rate swap contracts to hedge against exposure to changes in the fair value of Loans Held for Investment resulting from changes in interest rates. We designate these interest rate swap contracts as fair value hedges that
qualify for hedge accounting under Accounting Standard Codification ("ASC") 815, Derivatives and Hedging. As interest rates increase the value of our Loans Held for Investment generally decrease in value and the corresponding hedging arrangements that hedge against interest rate risk typically increase in value.
We expect that our results will continue to fluctuate based on a variety of factors, including interest rates, and that as we continue to seek to increase our business and our Funded Loan Volume, we may continue to incur net losses in the future.
Market and Economic Environment
The consumer lending market and the associated loan origination volumes for mortgage loans are influenced by general economic conditions, including the interest rate environment, unemployment rates, home price appreciation and consumer confidence. Purchase loan origination volumes are generally affected by a broad range of economic factors, including prevailing interest rates, the overall strength of the economy, unemployment rates and home prices, as well as seasonality, as home sales typically rise in the second and third quarters.
Mortgage loan refinancing volumes are primarily driven by fluctuations in mortgage loan interest rates. While borrower demand for consumer credit has typically remained strong in most economic environments, potential borrowers could defer seeking financing during periods with elevated or unstable interest rates or poor economic conditions. As a result, our revenues can vary significantly from quarter to quarter, and changes to interest rates and inflationary macroeconomic conditions significantly affect our financial performance.
Constrained Home Supply Ultimately Drives Further Construction and Purchase Volume
The supply of homes available for purchase and the market prices for homes on offer are significant drivers of purchase mortgage volume. We believe that constrained home supply contributes to constrained new home sales and purchase mortgage volume. Concurrently, constrained home supply, including as a result of elevated interest rates, and substantial demand has led to higher home prices, which in turn slows both growth of new home sales and purchase mortgage volume. In the longer term, however, we believe that such imbalances of supply and demand could drive greater home building to bring additional home supply into the market and create additional purchase mortgage volume going forward.
Continued Growth and Acceptance of Digital Loan Solutions
Our ability to attract new customers depends, in large part, on our ability to provide a seamless and superior customer experience, maintain competitive pricing and meet and exceed the expectations of our customers. Consumers are increasingly willing to execute large and complex purchases through digital platforms. Over the last few years, we have witnessed increased consumer desire to transact online in larger spend categories, including furniture, travel, and auto. We believe this trend will also impact consumer preferences in loans, particularly as homeownership rates among Millennials and Generation Z rise. Our platform provides a seamless, convenient customer experience that provides us with a significant competitive advantage over legacy platforms.
We also believe legacy financial institutions, real estate brokers, insurance companies, title companies and others in the homeownership ecosystem are increasingly looking for third-party technology solutions that will allow them to compete with digital-native companies and provide their customers with a better experience less expensively than they can build themselves. As a result, we expect the demand for loan technology solutions will continue to grow and support our ecosystem growth across our partners, market participants and loan purchaser networks.
Expanding our Technological Innovation
Our proprietary technology is built to optimize our customers' experiences, increase speed, decrease loan manufacturing cost, and enhance loan production quality. Through our investment in proprietary technology, we are automating and streamlining tasks within the origination process for our consumers, employees and partners. Our customized user interfaces replace paper applications and human interaction, allowing our customers and partners to quickly and efficiently identify, price, apply for and execute mortgage loans. We expect to continue to invest in developing technology, tools and features that further automate the loan manufacturing process, reducing our manufacturing and customer acquisition costs and improving our customer experience.
Expanding Homeownership Product Offerings
We expect to continue to add new types of Home Finance mortgage loans, providing our customers with a one-stop shop for all of their homeownership needs. We have invested significantly and expect to continue to invest in our proprietary technology, which is designed to allow us to seamlessly add new offerings, partners and marketplace participants without incurring significant additional marketing and advertising and product development cost.
Ability to Acquire New Customers and Scale Customer Acquisitions
Our ability to attract new customers and scale customer acquisitions depends, in large part, on our ability to continue to provide seamless and superior customer experiences and competitive pricing. We seek to reach new customers efficiently and at scale across demographics and to provide a high-touch personalized experience across digital interactions throughout the customer lifecycle.
To the extent that our traditional approach to customer acquisitions is not successful in achieving the levels of growth that we seek, including in particular in an environment of rising interest rates or constrained housing capacity, or that we do not remain near the top of lead aggregator sites, we may be required to devote additional financial resources and personnel to our sales and marketing efforts, which would increase the cost base for our services.
Key Business Metrics
In addition to the measures presented in our consolidated financial statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate plans and make strategic decisions. Our key business metrics enable us to monitor our ability to manage our business compared to the broader mortgage origination market, as well as monitor relative performance across key purchase and refinance verticals.
Key measures that we use in assessing our business include the following ($ in millions, except percentage data or as otherwise noted):
| Key Business Metric | Year Ended December 31, 2025 | Year Ended December 31, 2024 | ||||||||||||
| Home Finance | ||||||||||||||
| Refinance Loan Volume | $ | 1,015 | $ | 463 | ||||||||||
| Purchase Loan Volume | 2,875 | 2,652 | ||||||||||||
| HELOC Volume | 854 | 479 | ||||||||||||
| Funded Loan Volume | $ | 4,744 | $ | 3,594 | ||||||||||
| D2C Loan Volume | $ | 2,928 | $ | 2,562 | ||||||||||
| B2B Loan Volume | 95 | 1,032 | ||||||||||||
| Platform Loan Volume | 1,721 | - | ||||||||||||
| Funded Loan Volume | $ | 4,744 | $ | 3,594 | ||||||||||
| Total Loans (number of loans, not millions) | 15,386 | 11,755 | ||||||||||||
| Average Loan Amount ($ value, not millions) | $ | 308,321 | $ | 305,757 | ||||||||||
| Gain on Sale Margin | 2.87 | % | 2.17 | % | ||||||||||
| Total Market Share | 0.2 | % | 0.2 | % | ||||||||||
| Better Plus | ||||||||||||||
| Better Real Estate Transaction Volume | $ | 276 | $ | 367 | ||||||||||
| Insurance Coverage Written | $ | 4,110 | $ | 4,321 | ||||||||||
Home Finance
Refinance Loan Volumerepresents the aggregate dollar amount of refinance loans funded in a given period based on the principal amount of the loan at refinancing date. Our Refinance Loan Volume of$1,015 million for the year ended December 31, 2025 increased by approximately 119% from $463 million for the year ended December 31, 2024.
Purchase Loan Volumerepresents the aggregate dollar amount of purchase loans funded in a given period based on the principal amount of the loan at purchase date. Our Purchase Loan Volume of $2,875 million for the year ended December 31, 2025 increased by approximately 8% from $2,652 million for the year ended December 31, 2024.
HELOC Loan Volumerepresents the aggregate dollar amount of HELOC and closed-end second lien loans funded in a given period based on the principal amount of theloan at funding. Our HELOC Loan volume increased by approximately 78% to $854 million for the year ended December 31, 2025 from $479 million for the year ended December 31, 2024.
Funded Loan Volumerepresents the aggregate dollar amount of all loans funded in a given period based on the principal amount of the loan at funding. Our Funded Loan Volume of $4,744 million for the year ended December 31, 2025 increased by approximately 32% from $3,594 million for the year ended December 31, 2024. We also include HELOC and closed-end second lien loans in our Funded Loan Volume. For the year ended December 31, 2025, purchase and refinance loans comprised $3,890 million and HELOC and closed-end second lien loans comprised $854 million of Funded Loan Volume.
D2C Loan Volumerepresents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that have been generated from direct interactions with customers using all marketing channels other than our B2B partner relationships. Our D2C Loan Volume of $2,928 million for the year ended December 31, 2025 increased by approximately 14% from $2,562 million for the year ended December 31, 2024.
B2B Loan Volumerepresents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that have been generated through our B2B partner relationship with Ally. Our B2B Loan Volume of $95 million for the year ended December 31, 2025 decreased by approximately 91% from $1,032 million for the year ended December 31, 2024.
Platform Loan Volumerepresents the aggregate dollar amount of loans funded in a given period based on the principal amount of the loan at funding that have been generated through one of our distributed retail channels. Our Platform Loan Volume was $1,721 million for the year ended December 31, 2025.
Total Loansrepresents the total number of loans funded in a given period, including purchase loans, refinance loans, HELOC loans and closed-end second lien loans. Our Total Loans of 15,386 for the year ended December 31, 2025 increased by approximately 31% from 11,755 for the year ended December 31, 2024.
Purchase and refinance loans comprised 8,997 of the Total Loans the year ended December 31, 2025 and HELOC and closed-end second lien loans comprised 6,389 of the Total Loans the year ended December 31, 2025.
Average days loans held for sale for the years ended December 31, 2025 and 2024, were approximately 30 and 21 days, respectively. This is defined as the average days between funding and sale for loans funded during each period. As of each such reporting date, we had an immaterial amount of loans either 90 days past due or non-performing, as Better Home & Finance generally aims to sell loans shortly after production.
Average Loan Amountrepresents Funded Loan Volume divided by Total Loans in a period. Our Average Loan Amount increased by approximately 1% to $308,321 for the year ended December 31, 2025 from $305,757 for the year ended December 31, 2024.In general, average loan amount remained flat as the increase in HELOC and closed-end second lien loans, which have lower average loan amounts, was offset by the increase of purchase and refinance loans, which have higher average loan amounts than HELOC and closed-end second lien loans.
Gain on Sale Marginrepresents gain on loans, net, as presented on our consolidated statements of operations and comprehensive loss, divided by Funded Loan Volume. Gain on Sale Margin increased by approximately 32% year-over-year to 2.87% for the year ended December 31, 2025 from 2.17% for the year ended December 31, 2024.We saw an increase in our Gain on Sale Margin for the year ended December 31, 2025 compared to the year ended December 31, 2024, as a result of improved pricing on loans funded and an increased mix of higher margin products and channels.
Total Market Sharerepresents Funded Loan Volume in a period divided by total value of loans funded in the industry for the same period, as presented by FNMA. Our Total Market Share of 0.2% for the year ended December 31, 2025 remained substantially the same as0.2% for the year ended December 31, 2024. The mortgage market remains competitive among lenders, given the interest rate environment, resulting in relatively flat market share on a percentage basis. We continue to focus on originating the most profitable business available to us.
Better Plus
Better Real Estate Transaction Volumerepresents the aggregate dollar amount of real estate volume transacted in a given period across both in-house agents and third-party network agents.
Insurance Coverage Writtenrepresents the aggregate dollar amount of insurance liability coverage provided to customers on behalf of insurance carrier partners across all insurance products on the Company's marketplace, specifically title and homeowners insurance offered through Better Settlement Services and Better Cover. This includes the value of the loan for lender's title insurance and dwelling coverage for homeowners insurance. Insurance Coverage Written amounts for Better Cover have been updated for all periods presented to include both new policies and policy renewals, which in prior periods included only new policies.
Description of Certain Components of Our Financial Data
Components of Revenue
Our sources of revenue include gain on loans, net, other revenue, and net interest income.
Home Finance (Gain on Loans, Net)
Gain on loans, net, includes revenue generated from our mortgage production process. The components of Gain on loans, net, are as follows:
i.Gain on sale of loans, net-This represents the premium we receive in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market. Gain on sale of loans, net includes unrealized changes in the fair value of LFHS, which are recognized on a loan-by-loan basis as part of current period earnings until the loan is sold on the secondary market. The fair value of LHFS is measured based on observable market data. This also includes activity for loans originated on behalf of the integrated partnership that are subsequently purchased by us as well the portion of the sale proceeds to be received by the integrated partner. The portion of the sale proceeds that is to be allocated to the integrated partner is accrued as a reduction of gain on sale of loans, net when the loan is initially purchased by us from the integrated relationship partner.
Gain on sale of loans, net also includes the changes in fair value of IRLCs and forward sale commitments. IRLCs include the fair value upon purchase/issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market. Fair value of forward commitments hedging IRLCs and LHFS are measured based on quoted prices for similar assets.
ii.Broker revenue-Includes fees that the Company receives for originating loans on behalf of third-parties.
iii.Provision for Loan Repurchase Reserve-In connection with our sale of loans on the secondary market, we make customary representations and warranties to the relevant loan purchasers about various characteristics of each loan, such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws. In the event of a breach of its representations and warranties, we may be required to repurchase the loan with the identified defects. The provision for loan repurchase reserve, represents the charge for these potential losses.
Better Plus, International Lending Revenue, and Other (Other Revenue)
We generate other revenue through our Better Plus offerings, which includes real estate services, insurance, settlement services, and international lending revenue.
For real estate services, we generate revenues from fees related to real estate agent services, mainly cooperative brokerage fees from our network of third-party real estate agents, to assist our customers in the purchase or sale of a home. For settlement services, we generate revenues from fees on services, such as policy preparation, title search, wire, and other services, required to close a loan, which were provided by third parties through our platform. We recognize revenues from fees on settlement services upon the completion of the performance obligation, which was when the loan transaction closes.
For insurance services, we generate revenues from agent fees on homeowners insurance policies obtained by our customers through our marketplace of third-party insurance carriers. For title insurance, we generate revenues from agent
fees on title policies written by third parties and sold to our customers in loan transactions. We recognize revenues from agent fees on title policies upon the completion of the performance obligation, which is when the loan transaction closes. As an agent, we do not control the ability to direct the fulfillment of the service, are not primarily responsible for fulfilling the performance of the service, and do not assume the risk in a claim against the policy.
Our performance obligations for settlement services and title insurance are typically completed 40 to 60 days after the commencement of the loan origination process and are recognized in revenue upon the closing of the loan transaction.
For international lending revenue, we generate revenue primarily from broker fees earned via our digital mortgage broker in the U.K. During 2024, management enacted a plan to sell several entities in the U.K., one of those sales was completed in Q3 2025, with the remaining expected to be completed in 2026. As such, the revenue from our non-core international operations is winding down. We do not expect to generate material revenue from these non-core international operations in future periods.
Net Interest Income
Net interest income includes interest income from LHFS, including HELOCs, calculated based on the note rate of the respective loan, interest income from short-term investments, and interest income on Loans Held for Investment, through our U.K. banking operations. Interest expense includes interest expense on warehouse lines of credit, interest expense on customer deposits, through our U.K. banking operations, as well as interest expense on corporate debt.
Components of Our Expenses
Our expenses consist of compensation and benefits, general and administrative, technology expenses, marketing and advertising expenses, loan origination expenses, depreciation and amortization, and other expenses.
Compensation and Benefits Expenses
Compensation and benefits expenses includes salaries, wages, and incentive pay as well as stock-based compensation, employee health benefits, 401(k) plan benefits, and social security and unemployment taxes. Stock-based compensation includes expenses associated with restricted stock unit grants, performance stock unit grants, and stock option grants under our stock plans. We recognize compensation expense for the stock-based payments based on the fair value of the awards on the grant date. The expense is recorded on a straight-line basis over the requisite service period. Compensation and benefits excludes amounts capitalized for internal developed software.
General and Administrative Expenses
General and administrative expenses include rent and occupancy expenses, travel and entertainment expenses, insurance expenses, and external legal, tax and accounting services. General and administrative expenses are expensed as incurred.
Technology Expenses
Technology expenses consist of expenses related to vendors engaged in product management, design, development and testing of our websites and products. Technology and product development expenses are generally expensed as incurred.
Marketing and Advertising Expenses
Marketing and advertising expenses consist of customer acquisition expenses, brand costs, and paid marketing. For customer acquisition expenses, we primarily generate loan origination leads through third-party financial service websites for which we incur "pay-per-click" expenses. A majority of our marketing expenses are incurred from leads that we purchase from these third-party financial service websites. Marketing expenses are generally expensed as incurred.
Loan Origination Expenses
Loan origination expenses consist primarily of origination expenses, appraisal fees, processing expenses, underwriting, closing fees, and servicing costs. These expenses are expensed as incurred.
Other Expenses
Other expenses relate to other non-mortgage homeownership activities, including settlement service expenses, lead generation expenses, expenses incurred in relation to our international lending activities, and gains and losses from the warrant and equity related liabilities. Settlement service expenses consist of fees for transactional services performed by third-party providers for borrowers while lead generation expenses consist of fees for services related to real estate agents. Other expenses are expensed as incurred.
Results of Operations
The following table sets forth certain consolidated financial data for each of the periods indicated:
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Year Ended December 31,
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(Amounts in thousands, except per share amounts)
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2025 | 2024 | |||||||||
| Revenues: | |||||||||||
| Gain on loans, net | $ | 136,148 | $ | 78,098 | |||||||
| Other revenue | 11,299 | 12,888 | |||||||||
| Net interest income | |||||||||||
| Interest income | 60,269 | 38,990 | |||||||||
| Interest expense | (42,844) | (21,488) | |||||||||
| Net interest income | 17,425 | 17,502 | |||||||||
| Total net revenues | 164,872 | 108,488 | |||||||||
| Expenses: | |||||||||||
| Compensation and benefits | 174,226 | 141,089 | |||||||||
| General and administrative | 45,323 | 52,230 | |||||||||
| Technology | 27,874 | 26,110 | |||||||||
| Marketing and advertising | 38,356 | 33,984 | |||||||||
| Loan origination expense | 14,499 | 9,864 | |||||||||
| Depreciation and amortization | 14,069 | 33,227 | |||||||||
| Other expenses/(income) | 16,344 | 17,424 | |||||||||
| Total Expenses | 330,691 | 313,928 | |||||||||
| Loss before income tax expense | (165,819) | (205,440) | |||||||||
| Income tax expense | 53 | 850 | |||||||||
| Net loss | $ | (165,872) | $ | (206,290) | |||||||
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Earnings (loss) per share attributable to common stockholders (Basic)
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$ | (10.80) | $ | (13.65) | |||||||
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Earnings (loss) per share attributable to common stockholders (Diluted)
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$ | (10.80) | $ | (13.65) | |||||||
Year Ended December 31, 2025 as Compared to Year Ended December 31, 2024
Revenues
The components of our revenues for the period were:
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Year Ended December 31,
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(Amounts in thousands)
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2025 | 2024 | |||||||||
| Revenues: | |||||||||||
| Gain on loans, net | $ | 136,148 | $ | 78,098 | |||||||
| Other revenue | 11,299 | 12,888 | |||||||||
| Net interest income | |||||||||||
| Interest income | 60,269 | 38,990 | |||||||||
| Interest expense | (42,844) | (21,488) | |||||||||
| Net interest income | 17,425 | 17,502 | |||||||||
| Total net revenues | 164,872 | 108,488 | |||||||||
Gain on loans, net
The components of our gain on loans, net for the period were:
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Year Ended December 31,
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| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Gain on sale of loans, net | $ | 128,209 | $ | 59,242 | |||||||
| Broker revenue | 7,118 | 8,933 | |||||||||
| Loan repurchase reserve recovery | 821 | 9,923 | |||||||||
| Total gain on loans, net | $ | 136,148 | $ | 78,098 | |||||||
Gain on sale of loans, net increased $69.0 million or 116% to $128.2 million for the year ended December 31, 2025 compared to $59.2 million for the year ended December 31, 2024. The increase in gain on sale of loans, net was largely driven by the increase of Funded Loan Volume and loan pricing.
Broker revenue fees decreased $1.8 million, or 20% to $7.1 million for the year ended December 31, 2025, compared to $8.9 million for the year ended December 31, 2024. The decrease in broker revenue was primarily driven by the conclusion of our integrated relationship partnership with Ally. This was partially offset by broker revenue earned for originating loans for third-parties in-market originations operations.
Loan repurchase reserve recovery decreased $9.1 million or 92%, to $0.8 million for the year ended December 31, 2025, compared to a recovery of $9.9 million for the year ended December 31, 2024. The loan repurchase reserve has decreased as our estimate for potential loss exposure has declined as we no longer have exposure to the historical periods when we had a significantly higher funded loan volume. The reduction in potential loss exposure results in a reduction in the loan repurchase reserve liability which is recognized as a recovery within gain on loans, net.
Other Revenue
The components of other revenue for the period were:
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Year Ended December 31,
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| (Amounts in thousands) | 2025 | 2024 | |||||||||
| International lending revenue | $ | 5,185 | $ | 3,999 | |||||||
| Insurance services | 2,536 | 3,466 | |||||||||
| Real estate services | 1,896 | 2,470 | |||||||||
| Other revenue | $ | 1,682 | $ | 2,953 | |||||||
| Total other revenue | $ | 11,299 | $ | 12,888 | |||||||
International lending revenue increased $1.2 million, or 30% to $5.2 million for the year ended December 31, 2025 compared to $4.0 million for the year ended December 31, 2024. The increase in international lending revenue was primarily driven by increased activity in the U.K. lending business.
Insurance services decreased $0.9 million, or 27% to $2.5 million for the year ended December 31, 2025 compared to $3.5 million for the year ended December 31, 2024.The decrease in insurance services was primarily driven by a decrease in insurance related revenue from our Better Cover business.
Real estate services decreased $0.6 million, or 23% to $1.9 million for the year ended December 31, 2025 compared to $2.5 million for the year ended December 31, 2024 due to a decrease in real estate transaction volume driven by the conclusion of the integrated relationship partnership with Ally and its use as a source of referrals for real estate services.
Other revenue decreased by $1.3 million, or 43% to $1.7 million for the year ended December 31, 2025 compared to $3.0 million for the year ended December 31, 2024. The decrease in other revenue was primarily driven by mortgage and non-mortgage loan servicing activities in the U.S. and U.K.
Net Interest Income
The components of our net interest income for the period were:
|
Year Ended December 31,
|
|||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Mortgage interest income | $ | 28,759 | $ | 19,839 | |||||||
| Interest income on loans held for investment | 20,791 | 2,258 | |||||||||
| Interest income from investments | 10,719 | 16,893 | |||||||||
| Warehouse interest expense | (20,134) | (11,258) | |||||||||
| Interest expense on customer deposits | (20,996) | (2,508) | |||||||||
| Other interest expense | (1,714) | (7,722) | |||||||||
| Total net interest income | $ | 17,425 | $ | 17,502 | |||||||
Mortgage interest income increased $8.9 million, or 45% to $28.8 million for the year ended December 31, 2025 compared to $19.8 million for the year ended December 31, 2024. The increase in mortgage interest income was primarily driven by the increase in origination volume and the mortgage interest income earned on the unpaid principal balance for loans held and serviced during the interim between the origination of the loan and its sale on the secondary market.
Interest income on loans held for investment increased $18.5 million, or 804% to $20.8 million for the year ended December 31, 2025 compared to $2.3 million for the year ended December 31, 2024. The increase in interest income on loans held for investment was driven by increased originations of loans held for investment in our U.K. banking operations. Loans held for investment was $723.3 million and $111.5 million as of December 31, 2025 and 2024, respectively.
Interest income from investments decreased $6.2 million, or 37% to $10.7 million for the year ended December 31, 2025 compared to $16.9 million for the year ended December 31, 2024.The decrease in interest income from investments was primarily driven by decreased holdings of investments with maturities less than 90 days.
Warehouse interest expense increased $8.8 million, or 78% to $20.1 million for the year ended December 31, 2025 compared to $11.3 million for the year ended December 31, 2024. The increase in warehouse interest expense was primarily driven by carrying a higher average warehouse balance over the year ended December 31, 2025 compared to year ended December 31, 2024. The increase for the year was driven by higher funded loan volume.
Interest expense on customer deposits increased $18.5 million, or 737% to $21.0 million for the year ended December 31, 2025 compared to $2.5 million for the year ended December 31, 2024. The increase in interest expense on customer deposits was driven by increased customer deposits which in turn fund our loans held for investment in our U.K. banking operations. The balance of customer deposits was $763.0 million and $134.1 million as of December 31, 2025 and 2024.
Other interest expense decreased $6.0 million, or 78% to $1.7 million for the year ended December 31, 2025 compared to $7.7 million for the year ended December 31, 2024. Other interest expense is related to interest expense on our Convertible Notes (as defined below) which were extinguished as part of the Exchange (as defined below) in April 2025. As part of the troubled debt restructuring ("TDR") under ASC 470-60 accounting, the interest on the Senior Notes (as defined below) has been recognized up front as part of the new carrying value.
Expenses
The components of our expenses for the period were:
|
Year Ended December 31,
|
|||||||||||
| (Amounts in thousands) | 2025 | 2024 | |||||||||
| Compensation and benefits | 174,226 | 141,089 | |||||||||
| General and administrative | 45,323 | 52,230 | |||||||||
| Technology | 27,874 | 26,110 | |||||||||
| Marketing and advertising | 38,356 | 33,984 | |||||||||
| Loan origination expense | 14,499 | 9,864 | |||||||||
| Depreciation and amortization | 14,069 | 33,227 | |||||||||
| Other expenses/(income) | 16,344 | 17,424 | |||||||||
|
Total operating expenses
|
$ | 330,691 | $ | 313,928 | |||||||
Compensation and benefits expenses were $174.2 million for the year ended December 31, 2025, an increase of $33.1 million or 23% as compared with $141.1 million for the year ended December 31, 2024.We increased our headcount between the two periods, and increased incentive compensation as a result of increased production volume, which lead to an increase in compensation and benefits.
General and administrative expenses were $45.3 million for the year ended December 31, 2025, a decrease of $6.9 million or 13% as compared with $52.2 million in the year ended December 31, 2024. The decrease in general and administrative expenses was driven primarily by decreases in rent and occupancy expenses and reductions in insurance premiums.
Technology expenses were $27.9 million for the year ended December 31, 2025, an increase of $1.8 million or 7% as compared with $26.1 million in the year ended December 31, 2024. The increase in technology expenses was driven primarily by an increase in costs associated with software vendors. This was driven by increased headcount, which required the purchase of additional software licenses.
Marketing and advertising expenses were $38.4 million for the year ended December 31, 2025, an increase of $4.4 million or 13% as compared with $34.0 million in the year ended December 31, 2024. The increase is due to higher investment to drive origination volume as well as spend attributed to a pilot program with our newly signed fintech partnership.
Loan origination expenses were $14.5 million for the year ended December 31, 2025, an increase of $4.6 million or 47%, as compared with $9.9 million in the year ended December 31, 2024. The increase in loan origination expenses was driven by an increase in origination volume.
Other expenses/(income) was an expense of $16.3 million for the year ended December 31, 2025, a decrease of $1.1 million or 6%, as compared with expenses of $17.4 million for the year ended December 31, 2024. The decrease in other expenses was primarily driven by a reduction in the allowance for credit losses on our loans held for investment and a decrease in impairments of computers and equipment. These decreases were partially offset by an increase in impairment charges in 2025.
Other Changes in Financial Condition
The following table sets forth material changes to our summary balance sheet between December 31, 2025 and December 31, 2024:
|
(Amounts in thousands, except share and per share amounts)
|
December 31, 2025 |
December 31, 2024 |
Increase/ (Decrease)
|
||||||||||||||
|
Assets
|
|||||||||||||||||
| Cash and cash equivalents | $ | 99,827 | $ | 211,101 | $ | (111,274) | |||||||||||
| Short-term investments | 103,607 | 53,774 | 49,833 | ||||||||||||||
|
Mortgage loans held for sale, at fair value
|
466,681 | 399,241 | 67,440 | ||||||||||||||
| Loans held for investment | 723,333 | 111,477 | 611,856 | ||||||||||||||
| Right-of-use assets | 4,678 | 1,387 | 3,291 | ||||||||||||||
|
Other combined assets
|
107,308 | 136,077 | (28,769) | ||||||||||||||
| Total Assets | $ | 1,505,434 | $ | 913,057 | $ | 592,377 | |||||||||||
| Liabilities and Stockholders' Equity/(Deficit) | |||||||||||||||||
| Liabilities | |||||||||||||||||
| Warehouse lines of credit | $ | 411,862 | $ | 244,070 | $ | 167,792 | |||||||||||
| Convertible note | - | 519,749 | (519,749) | ||||||||||||||
| Senior notes | 198,802 | - | 198,802 | ||||||||||||||
| Customer deposits | 762,984 | 134,130 | 628,854 | ||||||||||||||
| Lease liabilities | 4,629 | 4,081 | 548 | ||||||||||||||
|
Other combined liabilities
|
89,974 | 69,197 | 20,777 | ||||||||||||||
|
Total Liabilities
|
1,468,251 | 971,227 | 497,024 | ||||||||||||||
| Stockholders' Equity/(Deficit) | |||||||||||||||||
| Additional paid-in capital | 2,109,762 | 1,863,288 | 246,474 | ||||||||||||||
| Accumulated deficit | (2,076,238) | (1,910,366) | (165,872) | ||||||||||||||
|
Other combined equity
|
3,659 | (11,092) | 14,751 | ||||||||||||||
| Total Stockholders' Equity/(Deficit) | 37,183 | (58,170) | 95,353 | ||||||||||||||
|
Total Liabilities, Convertible Preferred Stock, and Stockholders' Equity/(Deficit)
|
$ | 1,505,434 | $ | 913,057 | $ | 592,377 | |||||||||||
Total Cash and cash equivalents decreased $111.3 million or 53%, to $99.8 million as of December 31, 2025 compared to $211.1 million as of December 31, 2024. See the liquidity and capital resources section below for further details on cash flows from operating, investing, and financing activities.
Short-term investments increased $49.8 million, or 93%, to $103.6 million as of December 31, 2025 compared to $53.8 million as of December 31, 2024. The increase in short-term investments was driven by our cash management strategies in our U.K. business. Short-term investments consist of fixed income securities, typically U.S. and U.K. government treasury securities with maturities ranging from 91 days to one year.
Mortgage loans held for sale, at fair value increased $67.4 million, or 17%, to $466.7 million as of December 31, 2025 compared to $399.2 million as of December 31, 2024. The increase in Mortgage loans held for sale, at fair value was largely driven by a significant increase in origination volume.
Loans held for investment increased $611.9 million, or 549%, to $723.3 million as of December 31, 2025 compared to $111.5 million as of December 31, 2024.The increase in loans held for investment was driven by our growth efforts in the U.K., namely our banking entity. The majority of the Loans Held for Investment portfolio consists of property - buy to let loans, which increased $625.2 million, or 560%, to $736.8 million as of December 31, 2025 compared to $111.6 million as of December 31, 2024. Loans held for investment are originated with our cash on hand as well as with increases in customer deposits at our U.K. banking entity.
Right-of-use assets increased $3.3 million, or 237%, to $4.7 million as of December 31, 2025 compared to $1.4 million as of December 31, 2024, while lease liabilities increased $0.5 million, or 13%, to $4.6 million as of December 31, 2025 compared to $4.1 million as of December 31, 2024. The increase in right-of-use assets and lease liabilities was primarily driven by the addition of a new lease for our corporate headquarters in 2025. In contrast, during 2024 we shortened the lease term from June 30, 2030 to November 1, 2024, which resulted in a remeasurement and corresponding reduction of the related right-of-use asset.
Funds outstanding under our warehouse lines of credit increased $167.8 million, or 69%, to $412 million as of December 31, 2025 compared to $244.1 million as of December 31, 2024. The increase in loans outstanding under our warehouse lines of credit was commensurate with the increase in mortgage loans held for sale at fair value.
The Convertible Note was extinguished as part of the Exchange in April 2025 and the $519.7 million carrying value as December 31, 2024 was reduced to zero as of December 31, 2025.
Senior Notes carrying value was $198.8 million as of December 31, 2025. On April 12, 2025, we entered into an agreement with SB Northstar LP (the "Investor"), a related party,in which we agreed to exchange all of the $532.5 milliontotal aggregate principal amount outstanding of the existing Convertible Notes held by the Investor for the Senior Notes and a cash payment of $110.0 million(the "Exchange").
Customer deposits increased $628.9 million, or 469%, to $763.0 million, as of December 31, 2025 compared to $134.1 million as of December 31, 2024. The increase is primarily due to growth efforts at our banking entity in the U.K., which customer deposits are used to fund loans held for investment.
Additional paid-in capital increased $246.5 million, or 13%, to $2,109.8 million as of December 31, 2025 compared to $1,863.3 million as of December 31, 2024. The increase in additional paid-in capital was primarily driven by stock-based compensation that was generated over the period, a gain on troubled debt restructuring,as well as issuance of equity under our At-The-Market equity offering, see Note 21 to our Consolidated Financial Statements for further information.
Accumulated deficit increased $165.9 million, or 9%, to $2,076.2 million as of December 31, 2025 compared to $1,910.4 million as of December 31, 2024. The increase in accumulated deficit was driven by the net loss of $165.9 million incurred for the year ended December 31, 2025 as discussed in our results of operations in the section above.
Non-GAAP Financial Measures
We report Adjusted Net Loss and Adjusted EBITDA, which are financial measures not prepared in accordance with generally accepted accounting principles ("non-GAAP") that we use to supplement our financial results presented in accordance with GAAP in the evaluation of our performance. These non-GAAP financial measures should not be considered in isolation and are not intended to be a substitute for any GAAP financial measures. These non-GAAP measures provide supplemental information that we believe helps investors better understand our business, our business model, and how we analyze our performance.
Non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning and are not prepared under any comprehensive set of accounting rules or principles. Accordingly, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
We include reconciliations of Adjusted Net Loss and Adjusted EBITDA to GAAP Net Income (Loss), their most closely comparable GAAP measure. We encourage investors and others to review our consolidated financial statements and notes thereto in their entirety included elsewhere in this Annual Report, not to rely on any single financial measure, and to consider Adjusted Net Loss and Adjusted EBITDA only in conjunction with their respective most closely comparable GAAP financial measure.
We believe these non-GAAP financial measures are useful to investors for supplemental period-to-period comparisons of our business and understanding and evaluating our operating results for the following reasons:
•We use Adjusted Net Loss to assess our overall performance, without regard to items that are considered to be unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations;
•Adjusted EBITDA is widely used by investors and securities analysts to measure a company's operating performance without regard to items such as stock-based compensation expense, depreciation and amortization expense, interest and amortization on non-funding debt, income tax expense, and costs that are unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations, all of which can vary substantially from company to company depending upon their financing and capital structures;
•We use Adjusted Net Loss and Adjusted EBITDA in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance; and
•Adjusted Net Loss and Adjusted EBITDA provide consistency and comparability with our past financial performance, facilitate period-to-period comparisons of our core operating results, and also facilitate comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results.
Further, although we use these non-GAAP measures to assess the financial performance of our business, these measures have limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of our financial results as reported under GAAP. Some of these limitations are, or may in the future be, as follows:
•Although depreciation and amortization expense is a non-cash charge, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
•Adjusted Net Loss and Adjusted EBITDA exclude stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy;
•Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
•Adjusted EBITDA does not reflect (i) interest expense, or the cash requirements necessary to service interest or principal payments on our Convertible Notes, which reduces cash available to us; or (ii) tax accruals or tax payments that represent a reduction in cash available to us; and
•The expenses and other items that we exclude in our calculations of Adjusted Net Loss and Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from similarly titled non-GAAP measures when they report their operating results, and we may, in the future, exclude other significant, unusual or non-recurring expenses or other items from these financial measures.
Because of these limitations, Adjusted Net Loss and Adjusted EBITDA should be considered along with other financial performance measures presented in accordance with GAAP, and not as an alternative or substitute for our financial results prepared and presented in accordance with GAAP.
Adjusted Net Loss and Adjusted EBITDA
We calculate Adjusted Net Loss as net income (loss) adjusted for the impact of stock-based compensation expense, change in the fair value of warrants and equity related liabilities, change in fair value of convertible preferred stock warrants, change in fair value of bifurcated derivative, and restructuring, impairment, and other expenses.
We calculate Adjusted EBITDA as net income (loss) adjusted for the impact of stock-based compensation expense, change in the fair value of warrants and equity related liabilities, change in fair value of convertible preferred stock warrants, change in the fair value of bifurcated derivative, and restructuring, impairment, and other expenses, as well as interest and amortization on non-funding debt (which includes interest on the Convertible Notes), depreciation and amortization expense, and income tax expense.
The following table presents a reconciliation of net income (loss) to Adjusted Net Loss and Adjusted EBITDA for the years indicated:
|
Year Ended December 31,
|
|||||||||||
|
(Amounts in thousands)
|
2025 | 2024 | |||||||||
|
Adjusted Net Loss
|
|||||||||||
|
Net loss
|
$ | (165,872) | $ | (206,290) | |||||||
|
Stock-based compensation expense (1)
|
20,432 | 26,753 | |||||||||
|
Change in fair value of warrants and equity related liabilities (2)
|
69 | (924) | |||||||||
|
Restructuring, impairment, and other expenses (3)
|
13,708 | 17,659 | |||||||||
|
Adjusted Net Loss
|
$ | (131,663) | $ | (162,802) | |||||||
|
Adjusted EBITDA
|
|||||||||||
|
Net loss
|
$ | (165,872) | $ | (206,290) | |||||||
|
Income tax expense
|
53 | 850 | |||||||||
|
Depreciation and amortization expense (4)
|
14,069 | 33,227 | |||||||||
|
Stock-based compensation expense (1)
|
20,432 | 26,753 | |||||||||
|
Interest and amortization on non-funding debt (5)
|
1,714 | 7,722 | |||||||||
|
Restructuring, impairment, and other expenses (3)
|
13,708 | 17,659 | |||||||||
|
Change in fair value of warrants and equity related liabilities (2)
|
69 | (924) | |||||||||
|
Adjusted EBITDA
|
$ | (115,827) | $ | (121,003) | |||||||
__________________
(1)Stock-based compensation represents the non-cash grant date fair value of stock-based instruments utilized to incentivize employees and consultants recognized over the applicable vesting period. This expense is a non-cash expense. We exclude this expense from our internal operating plans and measurement of financial performance (although we consider the dilutive impact to our stockholders when awarding stock-based compensation and value such awards accordingly).
(2)Change in fair value of warrants and equity related liabilities which comprise the Public Warrants and Private Warrants as well as the Sponsor Locked-Up Shares, represents the change in fair value of liability-classified warrants as presented in our Consolidated Statements of Operations and Comprehensive Loss.
(3)Restructuring, impairment, and other expenses are primarily comprised of employee one-time termination benefits, real estate restructuring losses, and impairment of property and equipment.
(4)Depreciation and amortization represents the loss in value of fixed and intangible assets through depreciation and amortization, respectively. These expenses are non-cash expenses, and we believe that they do not correlate to the performance of our business during the periods presented.
(5)Interest and amortization on non-funding debt represents interest and amortization on a corporate line of credit as well as the Convertible Note, both of which are included within net interest income in our Consolidated Statements of Operations and Comprehensive Loss.
Liquidity and Capital Resources
In our normal course of business, excluding HELOCs, we fund substantially all of our Funded Loan Volume on a short-term basis primarily through our warehouse lines of credit. Our borrowings are repaid with the proceeds we receive from the sale of our loans to our loan purchaser network, which includes government-sponsored enterprises ("GSEs"). As of December 31, 2025, we had three warehouse lines of credit in different amounts and with various maturities, with an aggregate available amount of $575.0 million.
As of December 31, 2025 and 2024, we had loans held for investment of $723.3 million and $111.5 million, respectively. The growth in loans held for investment has been primarily funded with customer deposits which are held at the U.K. banking entity. As of December 31, 2025 and 2024, we had customer deposits of $763.0 million and $134.1 million, respectively.
We have also raised capital via the closing of the Business Combination in August 2023, which resulted in gross proceeds of approximately $568 million. Of the total gross proceeds, $528.6 million was in the form of Convertible Notes issued by Better to SB Northstar LP (the "Convertible Notes"). During the second quarter of 2025, we entered into the Note Exchange Agreement to exchange our existing Convertible Notes for $155.0 millionof Senior Notes (the "Senior Notes") and a cash payment of $110.0 million as further discussed below.
We have also raised capital through an at-the-market equity offering program ("ATM Program") for sales of up to $75.0 million of our Class A common stock pursuant to our effective shelf registration statement on Form S-3 and the related prospectus supplement dated September 26, 2025. Further details discussed below.
We believe that funds provided by these sources will be adequate to meet our liquidity and capital resource needs for at least the next 12 months under current operating conditions.
Warehouse Lines of Credit
Our warehouse lines of credit are primarily in the form of master repurchase agreements and loan participation agreements. Loans financed under these facilities are generally financed at approximately 95% to 98% of the principal balance of the loan (although certain types of loans are financed at lower percentages of the principal balance of the loan), which requires us to fund the balance from cash generated from our operations. Once closed, the underlying residential loan that is held for sale is pledged as collateral for the borrowing or advance that was made under our warehouse lines of credit. In most cases, the loans will remain in one of the warehouse lines of credit for only a short time, generally less than one month, until the loans are sold. During the time the loans are held for sale, we earn interest income from the borrower on the underlying loan. This income is partially offset by the interest and fees we pay due to borrowings from the warehouse lines of credit.
As of December 31, 2025 and 2024, we had the following outstanding warehouse lines of credit:
| (Amounts in thousands) |
Maturity
|
Facility Size
|
Amount
Outstanding December 31, 2025
|
Amount
Outstanding December 31, 2024
|
|||||||||||||||||||
|
Funding Facility 1 (1)
|
May 13, 2025 | $ | - | $ | - | $ | 60,747 | ||||||||||||||||
|
Funding Facility 2 (2)
|
March 6, 2026 | 150,000 | 81,423 | 74,472 | |||||||||||||||||||
|
Funding Facility 3 (3)
|
June 30, 2026 | 175,000 | 117,499 | 108,851 | |||||||||||||||||||
|
Funding Facility 4 (4)
|
April 5, 2026 | 250,000 | 212,940 | - | |||||||||||||||||||
| Total warehouse lines of credit | $ | 575,000 | $ | 411,862 | $ | 244,070 | |||||||||||||||||
__________________
(1)Interest charged under the facility is at the 30-day term SOFR plus 2.125%. During the second quarter of 2025, Funding Facility 1 was terminated prior to maturity.
(2)Interest charged under the facility is at the 30-day term SOFR plus 2.10% - 2.25%. Cash collateral deposit of $3.8 million is maintained and included in restricted cash. Subsequent to December 31, 2025, the Company extended the maturity to March 2, 2027.
(3)Interest charged under the facility is at the 30-day term SOFR plus 1.75% - 3.75%. A compensating balance of $15.0 million is maintained and included in cash and cash equivalents. This amount represents a compensating balance arrangement and is not legally restricted. Failure to maintain the required balance may limit the Company's ability to obtain future advances under the facility. As of December 31, 2025, the Company was in compliance with this requirement. Subsequent to December 31, 2025, the Company extended the maturity to January 21, 2027.
(4)Interest charged under the facility is at the daily simple SOFR plus 1.75% - 2.50%. There is no cash collateral deposit maintained as of December 31, 2025.
The amount of financing advanced on each individual loan under our warehouse lines of credit, as determined by agreed-upon advance rates, may be less than the stated advance rate depending, in part, on the market value of the loans securing the financings. Each of our warehouse lines of credit allows the bank providing the funds to evaluate the market value of the loans that are serving as collateral for the borrowings or advances being made and to satisfy certain covenants, including providing information and documentation relating to the underlying loans. If the bank determines that the value of the collateral has decreased or if other conditions are not satisfied, the bank can require us to provide additional collateral or reduce the amount outstanding with respect to those loans (e.g., initiate a margin call). Our inability or unwillingness to satisfy the request could result in the termination of the facilities and possible default under our other warehouse lines of credit. In addition, a large unanticipated margin call could have a material adverse effect on our liquidity.
Our warehouse lines of credit also generally require us to comply with certain operating and financial covenants, and the availability of funds under these facilities is subject to, among other conditions, our continued compliance with these covenants. These financial covenants include, but are not limited to, maintaining (1) a certain minimum tangible net worth and adjusted tangible net worth, (2) minimum liquidity, and (3) a maximum ratio of total liabilities or total debt to adjusted tangible net worth. A breach of these covenants can result in an event of default under these facilities and as such allows the lenders to pursue certain remedies. In addition, each of these facilities includes cross default or cross acceleration provisions that could result in all facilities terminating if an event of default or acceleration of maturity occurs under any facility. As of the date hereof, we are in full compliance with all financial covenants under our warehouse lines of credit. We believe that the covenants required under the warehouse lines of credit currently provide us with sufficient flexibility to operate our business and obtain the financing necessary for that purpose.
Convertible Notes and Note Exchange Agreement
On April 12, 2025, we entered into a privately negotiated Note Exchange Agreement with the Investor, pursuant to which management and the Investor agreed to exchange all of the $532.5 million total aggregate principal amount outstanding of our existing 1.00% Convertible Notes due 2028 held by the Investor for (i) $155.0 million in aggregate principal amount of the Senior Notes, and (ii) a cash payment of $110.0 million. We did not receive any cash proceeds in connection with the Exchange. The Exchange was subsequently consummated on April 28, 2025 (the "Closing Date"), upon which we received and cancelled all Convertible Notes and the Investor forfeited any accrued and unpaid interest in respect of the Convertible Notes to but not including the Closing Date.
Pursuant to the Note Exchange Agreement, we granted the Investor, conditioned on closing of the Exchange, a non-transferrable right to designate one non-voting board observer from June 1, 2025, for so long as the Investor and affiliates of the Investor continue to hold, in the aggregate, either (i) at least 25% of the initial aggregate principal amount of the New Notes or (ii) at least 12% of the sum of the outstanding shares of the Company's Class A common stock, Class B common stock and Class C common stock, calculated on a fully diluted basis.
New Notes Indenture
On the Closing Date, we entered into the New Notes Indenture with GLAS Trust Company LLC, as trustee and notes collateral agent (the "New Notes Indenture"). The Senior Notes represent our senior secured obligations and are secured by substantially all of the Company's and its material domestic subsidiaries' assets. The Senior Notes are (i) senior in right of payment to our existing and future senior, unsecured indebtedness to the extent of the value of the collateral; and (ii) senior in right of payment to ours existing and future indebtedness that is expressly subordinated to the Senior Notes.
Interest on the Senior Notes is payable, at our election, in cash or by payment-in-kind by issuing additional notes in an aggregate principal amount equal to the relevant amount of interest paid in kind. The Senior Notes will accrue interest at a rate of 6.00% per annum, payable semi-annually in arrears on June 30 and December 31 of each year, starting on June 30, 2025. The Senior Notes will mature on December 31, 2028.
The Senior Notes will be redeemable, in whole and not in part, at our option at any time prior to December 31, 2028, at a cash redemption price equal to 106.00% of the principal amount of the Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with an amount not exceeding the net cash proceeds of one or more Equity Offerings (as defined in the New Notes Indenture); provided that at least 60% of the aggregate principal amount of the Senior Notes remains outstanding immediately after the redemption and the redemption occurs within 150 days of the date of the closing of each such Equity Offering. Additionally, prior to December 31, 2028, we may redeem all or part of the Senior Notes at a redemption price equal to the sum of 108% of the principal amount of the Senior Notes to be redeemed, plus the Make Whole Premium (as defined in the New Notes Indenture) at the redemption date, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If certain corporate events that constitute a Change of Control Triggering Event (as defined in the New Notes Indenture) occur, then noteholders may require us to repurchase all or any part of their Senior Notes at a cash repurchase price equal to 101% of the aggregate principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest, if any, to the date of settlement. The definition of Change of Control Triggering Event includes certain business combination transactions involving the Company.
The carrying value of the Senior Notes of $198.8 million as of December 31, 2025 and is made up of the total future undiscounted cash flows which includes principal of $155.0 million and interest make-whole as well as a redemption premium of $45.4 million. In July 2025, the Company made a cash payment of $1.6 millionwhich was applied to reduce the principal on the Senior Notes. See Note 21 to our Consolidated Financial Statements for further information.
At-the-Market Offering Program
On September 26, 2025, the Company implemented the ATM Program for sales of up to $75.0 million of its Class A common stock pursuant to its effective shelf registration statement on Form S-3 (File No. 333-287335) and the related prospectus supplement dated September 26, 2025. The Company entered into separate sales agreements with Cantor Fitzgerald & Co. and BTIG, LLC (each an "Agent" and collectively, the "Agents"), under which it may offer and sell shares of its Class A common stock from time to time through the Agents, either as sales agents or as principals. Each Agent is entitled to a commission of 2.0% of the gross sales price of all shares sold through it as Agent.
During the year ended December 31, 2025, the Company sold 547,260 shares of Class A common stock under the ATM Program for total gross proceeds of $29.8 million. The Company incurred commissions and other offering expenses of $0.6 million. As of December 31, 2025, approximately $45.2 million remained available for issuance under the ATM Program. Subsequent to December 31, 2025 and through January 9, 2026, the Company sold 328,030 shares of Class A
common stock under the ATM Program for total gross proceeds of $11.9 million and net proceeds of approximately $11.7 million, after deducting aggregate commissions and offering expenses of approximately $0.2 million. As of January 9, 2026, approximately $33.3 million remained available for issuance under the ATM Program.
The Company intends to use any net proceeds from the ATM Program for general corporate purposes, including working capital and to increase its warehouse line capacity to finance anticipated growth in loan production and funded loan volume.
Cash Flows
The following table summarizes our cash flows for the periods presented:
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Year Ended December 31,
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(in thousands)
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2025 | 2024 | |||||||||
| Net cash used in operating activities | $ | (166,575) | $ | (379,971) | |||||||
| Net cash used in investing activities | $ | (661,507) | $ | (143,810) | |||||||
| Net cash provided by financing activities | $ | 714,336 | $ | 239,131 | |||||||
Year Ended December 31, 2025 as Compared to Year Ended December 31, 2024
Operating Activities
Net cash used in operating activities was $167 million for the year ended December 31, 2025, a decrease of $213 million, or 56%, compared to net cash used in operating activities of $380 million for the year ended December 31, 2024. The decrease in net cash used in operating activities was primarily by loan originations in excess of proceeds from sale of loans for the year ended December 31, 2024 while loan originations remained relatively even with proceeds from sales of loans for the year ended December 31, 2025. Also contributing to cash used in operating activities were net losses over the period.
Investing Activities
Net cash used in investing activities was $662 million for the year ended December 31, 2025, an increase in cash used of $518 million, or 360%, compared to net cash used in investing activities of $144 million for the year ended December 31, 2024. The increase in cash used in investing activities primarily consists of originations of loans held for investment, namely through our U.K. banking entity. Loans held for investment are funded from our cash on hand as well as growth in customer deposits held by our U.K. banking entity.
Financing Activities
Net cash provided by financing activities was $714 million for the year ended December 31, 2025, an increase of $475 million, or 199%, compared to net cash provided by financing activities of $239 million for the year ended December 31, 2024. The increase in cash provided by financing activities was primarily driven by an increase in customer deposits, namely through our U.K. banking entity and was offset by a $110 million payment against our Convertible Notes as part of the Exchange.
Material Cash Requirements
Operating lease commitments
While we have many small offices across the country for licensing purposes, we lease significant office space under operating leases with various expiration dates through June 2030 in New York, North Carolina, Texas, Michigan, Oklahoma, Vermont, Washington, Colorado, and Florida.
For the years ended December 31, 2025 and 2024, our operating lease costs were $5 million and $10 million, respectively. The decrease in lease costs was primarily driven by our real estate footprint reduction initiatives that began in 2021 in connection with restructuring and headcount reductions, as well as lease expirations and space rationalization efforts. As part of these initiatives, we impaired right-of-use assets associated with office space that is no longer in use or has been fully abandoned. These impairments were non-cash in nature. Although these restructuring initiatives concluded as of December 31, 2024, we continue to assess our cost structure and make adjustments where necessary.
As of December 31, 2025 and 2024, we had lease liabilities of $4.6 million and $4.1 million, respectively, representing our remaining contractual obligations for future lease payments. We expect cash payments under operating leases to decline over time as existing leases mature and no significant new long-term office leases are currently anticipated.
Other Cash Requirements
We also have contractual obligations that are short-term, including:
Repurchase and indemnification obligations
In the ordinary course of business, we are exposed to liability under representations and warranties made to purchasers of loans or MSRs. Under certain circumstances, we may be required to repurchase loans, replace the loan with a substitute loan and/or indemnify secondary market purchasers of such loans for losses incurred.
We also may be subject to claims by purchasers for repayment of all or a portion of the premium we receive from such purchaser on the sale of certain loans or MSRs if such loans or MSRs are repaid in their entirety within a specified time period after the sale of the loan.
Interest rate lock commitments, forward sale commitments and interest rate swaps
We enter into IRLCs to produce loans at specified interest rates and within a specified period of time with potential borrowers who have applied for a loan and meet certain credit and underwriting criteria. IRLCs are binding agreements to lend to a customer at a specified interest rate within a specified period of time as long as there is no violation of conditions established in the contract.
In addition, we enter into forward sales commitment contracts to sell existing LHFS or loans committed but yet to be funded into the secondary market at a specified price on or before a specified date. These contracts are loan sale agreements in which we commit to deliver a mortgage loan of a specified principal amount and quality to a loan purchaser.
In order to manage interest rate risk on our Loans Held for Investment portfolio, we have entered into pay-fixed, receive-floating interest rate swap contracts to hedge against exposure to changes in the fair value of Loans Held for Investment resulting from changes in interest rates.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as described in Item 303 of Regulation S-K that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies and Estimates
Discussion and analysis of our financial condition and results of operations are based on our financial statements which have been prepared in accordance with GAAP. The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management evaluates our estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. While our significant accounting policies are described in "Note 2. Summary of Significant Accounting Policies" to our Consolidated Financial Statements, we consider the following policies to be critical because they involve significant judgment and estimation uncertainty and because different reasonable assumptions could materially affect our results of operations or financial condition.
Fair Value of Mortgage Loans Held for Sale and Related Derivatives
We elect the fair value option for mortgage loans held for sale ("LHFS") and record changes in fair value within gain on loans, net. We also record interest rate lock commitments ("IRLCs"), forward sale commitments, and interest rate swaps at fair value.
Although valuation incorporates observable market inputs, significant judgment is required in estimating certain assumptions, including the pull-through rate for IRLCs (the probability that a locked loan will fund). Pull-through assumptions are based on historical experience and current market conditions and are sensitive to changes in interest rates and borrower behavior.
Changes in interest rates, secondary market spreads, or pull-through assumptions could materially impact gain on loans, net and our reported earnings in a given period.
Loan Repurchase Reserve
We establish a loan repurchase reserve for estimated losses related to representations and warranties made in connection with loan sales. The reserve is based on historical repurchase experience, defect rates identified through quality control reviews, loss severity assumptions, and expectations regarding future claim activity.
The estimation of the repurchase reserve requires significant judgment, particularly with respect to defect frequency and loss severity. Changes in economic conditions, underwriting trends, or investor behavior could result in actual losses differing materially from our estimates.
Allowance for Credit Losses on Loans Held for Investment
Loans held for investment are carried at amortized cost, net of an allowance for credit losses established under the CECL (as defined below) model. The allowance reflects our estimate of expected lifetime credit losses based on historical experience, current conditions, and reasonable and supportable forecasts.
This estimate requires judgment regarding macroeconomic assumptions, borrower performance, collateral values, and portfolio risk characteristics. Changes in economic conditions, including interest rates, property values, or borrower credit performance, could materially impact the allowance and results of operations.
Goodwill Impairment
Goodwill is tested for impairment at least annually and more frequently if events or changes in circumstances indicate potential impairment. The impairment analysis requires management to estimate the fair value of reporting units using assumptions regarding projected cash flows, discount rates, and long-term growth.
These estimates are inherently subjective and sensitive to changes in operating performance and market conditions. If actual results differ from projections or market conditions deteriorate, we may record impairment charges that could be material.
Valuation of Deferred Tax Assets
We recognize deferred tax assets for deductible temporary differences and net operating loss carryforwards and establish a valuation allowance when it is more likely than not that such assets will not be realized.
The assessment of realizability requires significant judgment regarding future taxable income and the reversal of temporary differences. Changes in projected profitability could materially affect the amount of valuation allowance recorded and income tax expense.
Recent Accounting Pronouncements
See "Note 2. Summary of Significant Accounting Policies" to our consolidated financial statements included with this Annual Report, for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Annual Report.
Emerging Growth Company and Smaller Reporting Company Status
We are an emerging growth company ("EGC"), as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups (JOBS) Act. Section 102(b)(1) of the JOBS Act exempts EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an EGC can elect to opt out of the extended transition period and comply with the requirements that apply to non-EGCs but any such election to opt out is irrevocable. The Company has not elected to opt out of such extended transition period which means that when a financial accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an EGC, can adopt the new or revised standard at the time private companies adopt the new or revised standard. The Company will be eligible to use this extended transition period under the JOBS Act until the earlier of the date it (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the Company's financial statements may not be comparable to the financial
statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make comparison of the Company's financials to those of other public companies more difficult.
We will cease to be an EGC on the date that is the earliest of (i) the end of the Company's fiscal year in which its total annual gross revenue exceeds $1.235 billion, (ii) the last day of the Company's fiscal year following March 8, 2026 (the fifth anniversary of the date on which Aurora consummated its initial public offering), (iii) the date on which the Company has issued more than $1.0 billion in non-convertible debt during the preceding three-year period or (iv) the last day of the Company's fiscal year in which the market value of the Company's Class A common stock held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second quarter. We expect to cease to be an EGC on the last day of our fiscal year following March 8, 2026, which is the fifth anniversary of the date on which Aurora consummated its initial public offering.
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