BETR 10-K & 10-Q changes, risk factors and insider trading
Better Home & Finance Holding Co (also BETRW) · Nasdaq · Loan Brokers · CIK 1835856 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our business and results of operations are highly sensitive to interest rate levels and volatility.”
New heading “Our expansion into platform-based services for third-party originators may not be successful and could adversely affect our results.”
New heading “Our business depends heavily on our mortgage loan production business, and our ability to develop, refine, and successfully scale new and existing products.”
New heading “Conditions-Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates, which could materially and adversely affect our earnings.””
New heading “Failure to comply with fair lending laws and regulations could lead to a wide variety of costs and penalties.”
New heading “Future sales, or the perception of future sales, of our Class A common stock in the public market or other financings could cause our stock price to decline.”
New heading “The market price of our Class A common stock has been extremely volatile and may continue to be volatile due to numerous circumstances beyond our control.”
Removed heading “RISK FACTORS SUMMARY”
Removed heading “Risks relating to our history, business model, growth and financial condition, including:”
Removed heading “Risks relating to our market, industry, and general economic conditions, including:”
Removed heading “Risks relating to our global operations, including:”
Removed heading “Risks relating to our products and customers, including:”
Removed heading “Risks relating to our technology and intellectual property, including:”
Removed heading “Risks relating to our indebtedness and warehouse lines of credit, including:”
Removed heading “Risks relating to the regulatory environment, including:”
Removed heading “Risks related to ownership of Common Stock and Better Home & Finance operating as a public company, including:”
Removed heading “Our business is significantly impacted by interest rates. Changes in prevailing interest rates or U.S. monetary policies that affect interest rates may have a material adverse effect on our business, financial condition, results of operations, and prospects.”
Removed heading “Substantial changes in the market and operating environment have put significant strain on our business and have resulted in significant reductions to our workforce and scale, which we have had limited success in managing.”
Removed heading “Our CEO, in his personal capacity, has entered into a side letter with SB Northstar, pursuant to which he may be liable for realized losses or receive payments in certain circumstances from SB Northstar in connection with the Convertible Note, which could divert the resources and attention of our CEO from our business, have a negative impact on his personal financial situation, and negatively impact the trading price of our Class A Common Stock.”
Removed heading “We have expanded our business and operations through acquisitions in the United Kingdom and will face challenges in continuing to develop operations in a cross-border market where we have limited operating experience.”
Removed heading “Federal and state laws regulate our strategic relationships with third parties and affiliates; a determination that we have failed to comply with such laws could require restructuring of the relationships, result in material financial liabilities and exposure to regulatory enforcement and litigation risk, and/or diminish the value of these relationships.”
Removed heading “Regulatory agencies and consumer advocacy groups are becoming more aggressive in asserting claims that the practices of lenders and loan servicers result in a disparate impact on or unfair treatment of protected classes. We could suffer reputational damage and could be fined or otherwise penalized if our practices are found to have a discriminatory effect or to be unfair.”
Removed heading “Government regulation of the internet and sales and marketing on the internet is evolving, and we may experience unfavorable changes in or failure to comply with existing or future regulations and laws.”
Removed heading “We continue to incur increased costs and are subject to additional regulations and requirements as a public company.”
Removed heading “Certain data and information in this Annual Report were obtained from third-party sources and were not independently verified by us.”
Largest changes
“We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. …”see in full comparison
“We must comply with a number of federal and state laws including, among others, RESPA, TILA and HMDA. Because our business relies on strategic relationships with third parties and affiliates, it is particularly important that we comply with RESPA, which requires lenders to make certain disclosures to mortgage loan borrowers regarding their settlement costs and affiliate relationships with other settlement service providers, and prohibits kickbacks, referral fees, and unearned fees associated with settlement service business. …”see in full comparison
“Several legal challenges in the courts and by governmental authorities have been made disputing MERS’s ownership and enforceability of mortgage loans registered in its name, and accordingly its legal standing to initiate foreclosures or act as nominee for lenders in loans and deeds of trust recorded in local land records. Currently, MERS is the primary defendant in several class action lawsuits in various state jurisdictions, where the plaintiffs allege improper mortgage assignment and the failure to pay recording fees in violation of state recording statutes. …”see in full comparison
“Federal and state laws regulate our strategic relationships with third parties and affiliates; a determination that we have failed to comply with such laws could require restructuring of the relationships, result in material financial liabilities and exposure to regulatory enforcement and litigation risk, and/or diminish the value of these relationships.”see in full comparison
“In addition, from time to time, we are subject to civil claims or investigations asserting that some employees are improperly classified under applicable law. For example, we are currently party to pending civil legal claims alleging that we failed to pay certain employees for overtime in violation of the Fair Labor Standards Act and labor laws of the State of California. …”see in full comparison
“Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. …”see in full comparison
Full comparison: every changed paragraph (213)
We are subject to numerous risks and uncertainties that you should be aware of in evaluating our business. If any such risks and uncertainties actually occur, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks described below reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future. References to past events are provided by way of example only and are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deemintended to be immaterial,a maycomplete alsolisting materiallyor adverselya affectrepresentation ouras business,to prospects,whether financialor conditionnot andsuch resultsfactors ofhave operations.occurred in the past. The risk factors described below should also be read together with the other information set forth in this Annual Report, including our consolidated financial statements and the related notes, as well as in other documents that we file with the SEC.
RISK FACTORS SUMMARY
Our business is subject to a number of risks, which are discussed more fully below and include, but are not limited to, the following:
Risks relating to our history, business model, growth and financial condition, including:
•We have a history of operating losses, including very significant losses, have not been able to maintain profitability achieved in 2020 and early 2021, and may not achieve and maintain profitability in the future.
•We may be unable to effectively manage our growth, including being able to fill certain senior management roles with suitable candidates, which could have a material adverse effect on our business, financial condition and results of operations.
•We may be unable to effectively maintain and develop certain relationships with third-party vendors and key commercial partners, which could have a material adverse effect on our ability to attract customers and grow our business.
•We depend on our ability to sell loans and MSRs in the secondary market to a limited number of loan purchasers, including GSEs and other secondary market participants for each relevant product.
•We have identified three ongoing material weaknesses in internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to implement or maintain an effective system of internal control, which may result in material misstatements in our financial statements.
•Our compliance and risk management policies, procedures, and techniques may not be sufficient to identify all of the financial, legal, regulatory, and other risks to which we are exposed, and failure to identify and address such risks could result in substantial losses and materially and adversely disrupt our business operations.
•Our CEO is involved in litigation that could have a material adverse effect on our revenues, financial condition, cash flows, results of operations and prospects.
Risks relating to our market, industry, and general economic conditions, including:
•Our business is significantly impacted by interest rates. Changes in prevailing interest rates or U.S. monetary policies that affect interest rates have and may in the future have a material adverse effect on our revenues, financial condition, cash flows, results of operations and prospects.
•We operate in a heavily regulated industry, and our loan production and servicing activities, real estate brokerage activities, title and settlement services activities and homeowners insurance agency activities expose us to risks of noncompliance with a large and increasing body of complex laws and regulations at the U.S. federal, state and local levels, which, at times, may be inconsistent.
•Our business is highly dependent on the GSEs, including Fannie Mae and Freddie Mac, and certain other U.S. government agencies, and any changes in these entities or agencies or their current roles could have a material adverse effect on our business.
Risks relating to our global operations, including:
•We have operations in the United Kingdom (including our acquisition of Birmingham Bank) and India, which subject us to certain operational challenges, laws and regulations, and political or economic risks that we have limited experience in navigating.
Risks relating to our products and customers, including:
•We face intense competition from other companies with more well established brands, and may not be able to retain or expand our customer base.
•We may fail to accurately predict demand or growth of new or existing product lines which could have a material adverse effect on our revenues, financial condition, cash flows, results of operations and prospects.
Risks relating to our technology and intellectual property, including:
•Our products use third-party software, hardware and services that may be difficult to replace or cause errors or failures of our products that could have a material adverse effect on our revenues, financial condition, cash flows results of operations and prospects.
•We may not be able to effectively maintain and enforce our intellectual property and proprietary rights and may face allegations of infringement of the intellectual property rights of third parties, which could have a material adverse effect on our revenues, financial condition, cash flows, results of operations and prospects.
Risks relating to our indebtedness and warehouse lines of credit, including:
•We rely on our warehouse lines to fund loans and otherwise operate our business. If one or more facilities are terminated or otherwise become unavailable to use, we may be unable to find replacement financing at commercially favorable terms, or at all, which could have a material adverse effect on our business.
•Fluctuations in the interest rate of our facilities or the value of the collateral underlying certain of these facilities could have a material adverse effect on our liquidity.
Risks relating to the regulatory environment, including:
•The laws and regulations to which we are subject are constantly evolving, together with the scope of supervision, and we may be unable to comply with new laws and regulations effectively or in a timely manner, which could have a material adverse effect on our business.
•We are, and may in the future be, subject to litigation and regulatory enforcement matters from time to time. If the outcomes of these matters are adverse to us, it could have a material adverse effect on our revenues, financial condition, cash flows, results of operations and prospects.
Risks related to ownership of Common Stock and Better Home & Finance operating as a public company, including:
•Our management team has limited experience managing a public company and international or banking operations
•The existence of multiple classes of common stock may materially and adversely impact the value and liquidity of Class A Common Stock.
•Because we became a public reporting company by means other than a traditional underwritten initial public offering, our stockholders may face additional risks and uncertainties.
Our business and results of operations are highly sensitive to interest rate levels and volatility.
Changes in interest rates and U.S. monetary policy materially affect mortgage origination demand, gain-on-sale margins, and the value of mortgage-related assets. Elevated or volatile interest rates reduce housing affordability and refinancing incentives, suppressing both purchase and refinance origination volumes and increasing revenue volatility. Sustained elevated interest rates, particularly when combined with higher home prices, further reduce housing affordability and borrower demand, which can intensify competitive pressure on pricing and margins. Because loan production represents a significant portion of our revenues and we historically sell most MSRs, our results are particularly sensitive to changes in origination volumes and margins compared to mortgage originators that retain servicing rights.
Interest rate movements also affect the fair value of our interest rate lock commitments, loans held for sale, and MSRs. Rising rates generally reduce origination volumes and the market value of loans held for sale, while declining rates may reduce the value of MSRs due to higher expected prepayment speeds. Although we employ hedging strategies to manage interest rate exposure, such strategies may not fully offset the impact of adverse or rapid rate movements. Prolonged periods of elevated or volatile interest rates could continue to materially adversely affect our revenues, profitability, and financial condition.
Our business is significantly impacted by interest rates. Changes in prevailing interest rates or U.S. monetary policies that affect interest rates may have a material adverse effect on our business, financial condition, results of operations, and prospects.
Interest rate fluctuations have a significant effect on our results of operations and cash flows. Our financial performance is directly affected by changes in prevailing interest rates, which may subject our financial performance to substantial volatility. We are particularly affected by the policies of the U.S. Federal Reserve, which influence interest rates and impact the size of the loan production market. In 2021, the U.S. Federal Reserve ended its quantitative easing program and started its balance sheet reduction plan. The U.S. Federal Reserve’s balance sheet consists of U.S. Treasuries and mortgage-backed securities (“MBS”) issued by Fannie Mae, Freddie Mac and Ginnie Mae. In 2022, the U.S. Federal Reserve increased significantly its primary policy rate, which has and may continue to result in increased interest rates in the future. Since origination volumes tend to increase in declining interest rate environments and decrease in increasing rate environments, mortgage originators are exposed to cyclical changes as a result of shifts in interest rates, and there has been an overall compression in the mortgage market as a result of fluctuations in interest rates. Fluctuations in interest rates significantly impact every aspect of our operations:
•Increases in interest rates beginning in April 2021 have led to a sizable reduction of the refinance market as fewer consumers are incentivized to refinance their loans. This has had a material adverse effect on revenues from our Refinance Loans as the market for these loans became more competitive. Higher interest rates have a similarly negative impact on our purchase mortgage loan business, as homeownership becomes more expensive and demand for homeownership loans fall.
•Historically, we have sold the vast majority of our loans with servicing rights released, which means that we do not retain servicing rights and the income stream associated with such MSRs. Accordingly, since loan production comprises a relatively greater share of our revenue than other home mortgage originators who retain MSRs, our revenues would be more sensitive to rising interest rates, since the value of MSRs generally increase in a rising interest rate environment and that tends to offset, in part, the decline in refinancing and purchase loan production.
•Interest rate lock commitments represent an agreement to extend credit to a customer where the interest rate is set prior to (and conditioned on) fully underwriting and funding the loan. When loans are funded, they are classified as held for sale until they are sold. During the origination and sale process, the value of interest rate lock commitments and loans held for sale inventory rises and falls with changes in interest rates; for example, if we enter into interest rate lock commitments at low interest rates followed by an increase in interest rates in the market, the value of our interest rate lock commitment will decrease. The market value of a loan held for sale generally declines as interest rates rise, and fixed-rate loans, which make up a substantial portion of our loans, are more sensitive to changes in market interest rates than adjustable-rate loans. Such changes in the value of interest rate lock commitments and loans held for sale are recognized as a reduction in gain on loans, net, and accordingly affect our Gain on Sale Margin. We employ hedging practices designed to mitigate the effects of any fluctuations in interest rates on our financial position related to interest rate lock commitments and loans held for sale. We hedge our interest rate lock commitments and loans held for sale with forward to-be-announced securities.
•Changes in interest rates are also a key driver of the revenue we receive from the sale of MSRs, particularly because our portfolio is composed primarily of MSRs related to high-quality loans, the values of which are highly sensitive to changes in interest rates. Historically, the value of MSRs has increased when interest rates rise as higher interest rates lead to decreased prepayment rates, and has decreased when interest rates decline as lower interest rates lead to increased prepayment rates. As a result, decreases in interest rates could materially and adversely affect our business, financial condition, results of operations, and prospects.
Substantial changes in the market and operating environment have put significant strain on our business and have resulted in significant reductions to our workforce and scale, which we have had limited success in managing.
In response to the prevailing interest rate environment and changes in macroeconomic conditions and our industry, as described in more detail elsewhere in this Annual Report, we significantly reduced our workforce to seek to align our headcount with demand for our loan production. As of December 31, 2024, we had approximately 1,250 team members, compared to approximately 10,400 team members at our peak in the fourth quarter of 2021. In total, this represents an approximately 88% reduction in our workforce over an approximately thirty-six month period, which has had other detrimental effects on our business, financial condition, and results of operations as described elsewhere in this Annual Report.
As Refinance Loan Volume declined starting in the second half of 2021 and continuing through 2024 due to prevailing interest rates, we experienced a decline in Funded Loan Volume, particularly in Refinance Loan Volume, as well as a corresponding increase in the proportion of our Funded Loan Volume that is comprised of Purchase Loan Volume, which is more labor intensive than Refinance Loan Volume. As a result, we experienced and expect to continue to experience meaningfully higher labor costs required to convert leads into Purchase Loan Volume and more customer service required to support such purchase transactions, leading to higher labor costs per loan.
These changes in our business and operations have resulted in significant challenges, with negative effects on our results of operations, employee morale, relationships with business partners and customers, and increased unplanned employee turnover in areas of our business relating to legal, compliance, finance, and accounting. In addition, further corrective actions to our workforce may be necessary to manage our business in a challenging environment, and if we take such corrective actions, such action may result in renewed negative media coverage that could have a detrimental impact on our business and employee morale. If we are unable to effectively address these challenges, our business, results of operations, and financial condition could be further negatively impacted. Similarly, to the extent that, in the future, we seek to grow various areas of our business, failure to manage future growth or declines in growth effectively could result in increased costs, materially and adversely affect our customers’ satisfaction with our product offerings, and materially and adversely affect our business, financial condition, results of operations, and prospects.
As a result of employee attrition, we have lost certain institutional knowledge and capabilities that has necessitated additional hiring, notwithstanding our decreased headcount, and there can be no assurance that we will be able to fill these roles with suitable candidates, or at all.hiring.
Loss of our key leadership could result inhave a material adverse effect on our business.
Our future success depends to a significant extent on the continued services of our senior management, including Vishal Garg, our CEO, Kevin Ryan, our Chief Financial Officer, Chad Smith, President of wholly owned subsidiary, Better Mortgage Corporation,management and our ability to maintain morale, minimize internal distraction, recruit and retain employees, management and directors, and make changes to our organizational structure in response to the foregoing events. We believe Mr. Garg has been critical to our operations and key to setting our vision, strategic direction, and execution priorities. The experience of our other senior management, including Mr. Ryan and Mr. Smith,management is a valuable asset to us and would be difficult to replace. A failure to recruit and retain employees, including members of our senior management team, while preserving and improving our mission-based culture to adapt to the challenges and requirements of becoming a public company could materially and adversely affect our future success.
Our loan production business primarily consists of providing loans to home buyers, refinancing existing loans and providing HELOC loans. Loan production for home buyers is greatly influenced by traditional participants in the home buying process such as real estate agents and home builders. As a result, our ability to offer competitive financing options to these traditional participants’ customers will influence our ability to maintain or further develop our loan production business. Loan production for refinancing customers’ existing loans is almost entirely driven by interest rates and our ability to maintain or further develop that portion of our business is primarily dependent on the interest rates we offer relative to market interest rates and customers’ current interest rates. Our HELOC loan originations are similarly dependent on interest rates, as well as available homeowner equity, and typically decline if interest rates increase or residential real estate values decline. For more information on the impact of interest rates on our business, see “—Risks Related to Our Operating History, Business Model, Growth and Financial Condition—Our business is significantly impacted by interest rates. Changes in prevailing interest rates or U.S. monetary policies that affect interest rates may have a material adverse effect on our business, financial condition, results of operations, and prospects.”
We have a history of operating losses and expectmay tonot incurachieve significantor lossesmaintain forprofitability in the foreseeable future.
We have experienced net losses and negative cash flows from operations for the majoritymost of our operating history. The year ended December 31, 2020 was the only year that we have achieved an annual operating profit,profit. butSince that yeartime, washowever, followedwe withhave incurred net losses, including a net loss of $301.1$165.9 million for the year ended December 31, 2021, a net loss of $888.8 million for the year ended December 31, 2022, a net loss of $536.4 for the year ended December 31, 2023, as well as a net loss of $206.3 million for the year ended December 31, 2024. Our recent financial performance has been adversely affected as a result of numerous factors, including:2025.
•persistent elevated interest rates, which have the effect of reducing industry mortgage origination volume, increasing competition for customers, and reducing revenue;
•continued investments in our business (including investments to expand our product offerings); and
•outsized costs relative to our Funded Loan Volume and revenue resulting from changes in the macroeconomic environment and our business (as described elsewhere in this Annual Report), including sales and operations compensation expense to support higher Purchase Loan Volumes, expenses associated with non-mortgage business lines including Better Real Estate, legal and professional service expenses associated with our litigation, and technology and product development expenses resulting from continued investment in our platform.
Our recent financial performance has been adversely affected because of numerous factors, including persistent elevated interest rates and outsized costs relative to our Funded Loan Volume and revenue resulting from changes in the macroeconomic environment and our business. Additionally, certain of our historical costs and expenses may continue to remain elevated in future periods, which could materially and adversely affect our future operating results if our revenue does not increase. We may also face increased regulatory compliance costs associated with growth and the expansion of our customer base. Our efforts to grow our business, including our previously announced plan to expand our operations to include physical locations,business and offer new products have been and may continue to be more costly than we expect,expect. weWe may not be able to increase our revenue enough to offset our increased operating expenses and the investments we need to make in our business, and new products may not succeed. We may continue to incur significant losses in the future for several reasons, including as a result of the other risks described herein, and unforeseen expenses, difficulties, complications, delays, and other presently unknown events or risks. If we continue to be unable to achieve and maintain consistent profitability, this would materially and adversely affect the value of our business and Commoncommon Stock.stock.
Our period of rapid growth and subsequent losses makes it difficult to evaluate our future prospectsprospects, and we may not be able to grow our revenues or regain profitability in the future.
We are also subject to regulatory risk associated with all of the above relationships, including changes in law or interpretations of law that could result in increased scrutiny of these relationships, require restructuring of these relationships, and/or diminish the value of these relationships. For a discussion of regulatory risks associated with partner and affiliate relationships, see “—Risks Related to Our Regulatory Environment—Federal and state laws regulate our strategic relationships with third parties and affiliates; a determination that we have failed to comply with such laws could require restructuring of the relationships, result in material financial liabilities and exposure to regulatory enforcement and litigation risk, and/or diminish the value of these relationships.”
Substantially all of our loan production and related MSRs are sold to a limited number of purchasers in the secondary market. Accordingly, our business depends on our ability to sell our loan production. The gain recognized from sales of our loan production in the secondary market represents a significant portion of our revenues and net earnings. Our ability to sell and the prices we receive for our loans vary from time to time and may be materially adversely affected by several factors, including, without limitation: (i) an increase in the number of similar loans available for sale; (ii) conditions in the loan securitization market or in the secondary market for loans in general or for our loans in particular, which could make our loans less desirable to potential purchasers; (iii) defaults under loans in general; (iv) loan-level pricing adjustments imposed by Fannie Mae and Freddie Mac, including adjustments for the purchase of loans in forbearance or refinancing loans; (v) the types and volume of loans being originated or sold by us; (vi) the level and volatility of interest rates; and (vii) unease in the banking industry caused by, among other things, recent bank failures. An inability to sell or a decrease in the prices paid to us upon sale of our loans and MSRs would be detrimental to our business, as we are dependent on the cash generated from such sales to fund our future loan production and repay borrowings under our warehouse lines of credit. If we lack liquidity to continue to fund future loans, our revenues on new loan productions would be materially and adversely affected, which in turn would materially and adversely affect our potential to again achieve profitability. The severity of the impact would be most significant to the extent we were unable to sell conforming home loans to the GSEs or sell MSRs to private purchasers.
The vast majority of the loans we produce are sold servicing released (with associated MSRs). During periods of market dislocation, we may choose to retain MSRs and enter into sub-servicing arrangements with third parties to perform the servicing on our behalf. The value of our MSRs is based on numerous factors including: (i) the present value of estimated future net servicing cash flows; (ii) prepayment speeds; (iii) delinquency rates; and (iv) interest rates. The models we use to value our MSRs for sale or otherwise are complex and use asset-specific collateral data to estimate prepayment rates, future servicing costs and other factors and market inputs for interest and discount rates. The value we attribute to our MSRs is highly dependent on our models and therefore the assumptions incorporated into our models, and we cannot provide any assurance as to the accuracy of our models and their ability to predict the value of our MSRs on sale or other realization. For further discussion, see “—Risks Related to Our Market, Industry, and General Economic Conditions—Our business is highly dependent on Fannie Mae and Freddie Mac and certain other U.S. government agencies, and any changes in these entities or their current roles could have a material adverse effect on our business.”
Management's Discussion & Analysis (MD&A)
New heading “Mortgage Interest Income —Net interest income”
New heading “International Interest Income —Net interest income”
New heading “Convertible Notes and Note Exchange Agreement”
New heading “New Notes Indenture”
New heading “At-the-Market Offering Program”
New heading “Fair Value of Mortgage Loans Held for Sale and Related Derivatives”
New heading “Loan Repurchase Reserve”
New heading “Allowance for Credit Losses on Loans Held for Investment”
New heading “Goodwill Impairment”
New heading “Valuation of Deferred Tax Assets”
Removed heading “Issuance of Convertible Note”
Removed heading “Nasdaq Compliance Requirements”
Largest changes
“Beginning in April 2021, the United States began experiencing a significant rise in interest rates, which increased for a variety of reasons, including inflation, increases to the federal funds rate and other monetary policy tightening, market capacity constraints and other factors, which continued in 2023 and 2024, resulting in a decrease in overall funding activities in the mortgage market generally. As interest rates rise, the population of customers who can save money by refinancing, because their existing mortgage rate is higher than current mortgage rates, declines. …”see in full comparison
“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.”see in full comparison
“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.”see in full comparison
“As previously reported, on October 12, 2023, the Company was notified by the Listing Qualifications Staff (the “Staff”) of Nasdaq that the Company’s common stock failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by the Listing Rules of Nasdaq. …”see in full comparison
“In August 2023 in connection with the Closing of the Business Combination, we issued to SB Northstar LP the Convertible Note pursuant to an Indenture, dated as of August 22, 2023 (the “Indenture”), in the aggregate principal amount of $528.6 million. The Convertible Note bears 1% interest per annum and matures on August 22, 2028, unless earlier converted or redeemed. Per the Indenture, we may elect to pay all or any portion of interest in kind by issuing to the holder of such note an additional note or in cash. …”see in full comparison
Full comparison: every changed paragraph (139)
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, 20242025 and 2023,2024, in each case, together with related notes thereto, included elsewhere in this Annual Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. 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.
We are buildinga technology-enabled homeownership company that offers mortgage, home equity, and other homeownership products through a next-generationdigital platform that we believe can revolutionize the world’s largest, oldest and most tangible asset class, the home.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 enhanceenable us to deliver on what we believe is most important for our customers: a seamless experience, time saved, and higher certainty on the automationsingle biggest financial decision of thetheir home finance process.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, through both our direct-to-consumer (“D2C”) channel and our partner relationship (“B2B”) channel, 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.
Home Finance Mortgage Model—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.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 B2BPlatform channel, we generate revenue from integratedvarious relationshipspartnerships with mortgage originators and advertisingtechnology relationships.companies, Throughas well as our advertisingin-market relationships,loan officer teams, which ramped over the course of 2025. These partnerships come in different structures. For some, we generateaccess gainour partners’ customer base and originate loans on loans,our netplatform and in other arrangements, the samepartner way we do in our D2C channel, by selling loans to our loan purchaser network. Through our integrated relationships, we generate a fixed fee per loan originated, which we recognize as revenue upon the funding oforiginates the loan byand we provide the partner.technology, Weunderwriting, mayand also purchase certain of the loans from our integrated relationship partner, which we may subsequently sell to our loan purchaser network at our discretion. For loans subsequently sold to our loan purchaser network, the partner receives a portion of the sale proceeds. Although we aim to expand our B2B relationships, as of December 31, 2024, this channel was primarily comprised of our integrated relationship with Ally Bank, which we are currently winding down.fulfillment.
Better Plus Model—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.
Better Plus revenue consists of revenue from non-mortgage product offerings including real estate services (Better Real Estate) and insurance services, which includes title insurance (Better Cover).
Through Better Real Estate services, we offer settlement services during the mortgage transaction, which include wire services, document preparation, and other mortgage settlement services. As part of Better Real Estate we offer real estate services through our national network of real estate agents, primarily third-party partner real estate agents. Our technology matches prospective buyers with local agents, who help them identify houses, see houses, and navigate the purchase process. In the partner agent model, we refer customers to a network of external agents that assist them with searching for a home for which we receive a cooperative brokerage fee.
Through Better Cover we offer customers access to a range of homeowners insurance policy options through our digital marketplace of third-party insurance partners. We act as an agent to insurance carriers and receive an agency fee from the insurance carriers for policies sold and renewed. We also offer title insurance primarily as an agent and work with third-party providers that fulfill and underwrite the title insurance policies.
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 the fourth quarter of 2024, management enacted a plan to sell several entities in the U.K., whichone managementof expectsthose sales completing in Q3 2025, with the remaining expected to completebe thecompleted salesin within2026. one year, asAs such the revenue from our non-core international lending activitiesoperations is winding down.
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 at lowerhigher interest 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 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.
Beginning in April 2021, the United States began experiencing a significant rise in interest rates, which increased for a variety of reasons, including inflation, increases to the federal funds rate and other monetary policy tightening, market capacity constraints and other factors, which continued in 2023 and 2024, resulting in a decrease in overall funding activities in the mortgage market generally. As interest rates rise, the population of customers who can save money by refinancing, because their existing mortgage rate is higher than current mortgage rates, declines. In addition, higher prevailing market rates both reduce the propensity of new home buyers to enter the market and reduce those willing to sell their homes or take existing equity out of their homes through a cash-out refinance. This creates a supply-demand imbalance where mortgage lenders are competing for fewer customers, and become increasingly price competitive to win business, thereby accepting lower potential Gain on Sale Margin. This competition manifests in industry-wide gain on sale compression and decreased industry origination volume in higher rate environments.
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 rate fluctuations,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 recent increaseschanges to interest rates and inflationary macroeconomic conditions significantly affect our financial performance.
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 B2Bour partners, market participants and loan purchaser networks.
We expect to continue to add new types of Home Finance mortgage loans and integrated Better Plus marketplace offerings to our platform over time,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.
Funded Loan Volume represents 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 $3,594 million for the year ended December 31, 2024 increased by approximately 19% from $3,015 million for the year ended December 31, 2023. Beginning in 2023, we also include HELOC and closed-end second lien loans in our Funded Loan Volume. For the year ended December 31, 2024, purchase and refinance loans comprised $3,115 million and HELOC and closed-end second lien loans comprised $479 million of Funded Loan Volume.
Purchase Loan Volume represents 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 decreased by approximately 3% from $2,745 million for the year ended December 31, 2023.2024.
HELOC Loan Volume represents the aggregate dollar amount of HELOC and closed-end second lien loans funded in a given period based on the principal amount of the loan at funding. The HELOC product was launched during the first half of 2023, and the closed-end second lien product was launched towards the end of 2023, with volume becoming material in the first half of 2024. 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 from $67 million for the year ended December 31, 2023.2024.
D2C Loan Volume represents 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 $2,562 million for the year ended December 31, 2024 increased by approximately 55% from $1,649 million for the year ended December 31, 2023.
B2BFunded Loan Volume represents the aggregate dollar amount of all loans funded in a given period based on the principal amount of the loan at funding that have been generated through one of our B2B partner relationships.funding. Our B2BFunded Loan Volume of $1,032$4,744 million for the year ended December 31, 20242025 decreasedincreased by approximately 24%32% from $1,366$3,594 million for the year ended December 31, 2023.2024. 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 Volume represents 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 Volume represents 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 Volume represents 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.
Average Loan Amount represents Funded Loan Volume divided by Total Loans in a period. Our Average Loan Amount decreasedincreased by approximately 13%1% to $308,321 for the year ended December 31, 2025 from $305,757 for the year ended December 31, 2024 from $351,877 for the year ended December 31, 2023.2024. In general, average loan amount remained flat as the increase in HELOC and closed-end second lien loansloans, which have lower average loan amountsamounts, thanwas offset by the increase of purchase orand refinance loans, andwhich thereforehave Averagehigher Loanaverage Amountloan hasamounts decreased as a result of the growth ofthan HELOC and closed-end second lien growth as a percentage of our fundings.loans.
Gain on Sale Margin represents 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 11%32% year-over-year to 2.87% for the year ended December 31, 2025 from 2.17% for the year ended December 31, 2024 from 1.95% for the year ended December 31, 2023.2024. We saw an increase in our Gain on Sale Margin for the year ended December 31, 20242025 compared to the year ended December 31, 2024, as a result of improved pricing on loans funded.funded and an increased mix of higher margin products and channels.
Total Market Share represents 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, 20242025 remained substantially the same as 0.2% for the year ended December 31, 2023.2024. 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 and seek to avoid growing through highly unprofitable channels..us.
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 mortgage loans held for sale (“LHFS”),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.
ii.Integratedii.Broker Partnership Feesrevenue–Includes fees that wethe receiveCompany receives for originating loans on behalf of an integrated partner, which are recognized as revenue upon the integrated partner’s funding of the loan.third-parties.
We generate other revenue through our Better Plus offerings, which includes Better Real Estate (real estate services),services, Betterinsurance, Coversettlement (insurance),services, and international lending revenue.
For Betterreal Realestate 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 Betterinsurance Cover,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.
For international lending revenue, we generate revenue primarily from broker fees earned via our digital mortgage broker in the U.K. During the fourth quarter of 2024, management enacted a plan to sell several entities in the U.K.U.K., whichone areof beingthose activelysales marketed,was ascompleted suchin Q3 2025, with the remaining expected to be completed in 2026. As such, the revenue from our non-core international lending activitiesoperations is winding down. We do not expect to generate material revenue from these non-core international operations in future periods.
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 loansLoans heldHeld for investment,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 thecorporate convertible note, a senior subordinated convertible note in the aggregate principal amount of $528.6 million issued to SB Northstar LP, a related party (the “Convertible Note”).debt.
Compensation and benefits expenses includes salaries, wages, and incentive pay as well as stockstock-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.
Gain on sale of loans, net increased $12.6$69.0 million or 27%116% to $59,242 for the year ended December 31, 2024 compared to $46,678 for the year ended December 31, 2023. The increase was largely driven by increases in revenue related to HELOC loan volume which increased to $479$128.2 million for the year ended December 31, 20242025 fromcompared $67to $59.2 million for the year ended December 31, 2023.2024. The increase in gain on sale of loans, net was largely driven by the increase of Funded Loan Volume and loan pricing.
IntegratedBroker partnershiprevenue fees decreased $1.4$1.8 million, or 13%20% to $7.1 million for the year ended December 31, 2025, compared to $8.9 million for the year ended December 31, 2024, compared to $10.3 million for the year ended December 31, 2023.2024. The decrease in integratedbroker partnership feesrevenue was primarily driven by the reductionconclusion inof B2B Loan Volume. Ourour integrated relationship ispartnership inwith theAlly. processThis ofwas windingpartially downoffset dueby tobroker arevenue shift in strategic directionearned for theoriginating integratedloans partner.for third-parties in-market originations operations.
Loan repurchase reserve recovery increaseddecreased $8.1$9.1 million or 444%,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, 2024,2024. compared to a recovery of $1.8 million for the year ended December 31, 2023. This recovery is a component of theThe loan repurchase reserve liability, whichhas decreased because of the reduction inas our estimate offor potential loss exposure duringhas 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.
International lending revenue increased $0.6$1.2 million, or 17%30% to $5.2 million for the year ended December 31, 2025 compared to $4.0 million for the year ended December 31, 2024 compared to $3.4 million for the year ended December 31, 2023.2024. The increase in international lending revenue was primarily driven by increased operationsactivity in the U.K. brokeragelending businesses.business.
Insurance services increased $0.4 million, or 15% to $3.5 million for the year ended December 31, 2024 compared to $3.0 million for the year ended December 31, 2023. The minimal increase in insurance services revenue was driven by increases in revenue per policy due to increases in policy values, increased title insurance premiums due to an increase in originations, and a small amount of growth in U.K. insurance products.
Real estateInsurance services decreased $4.9$0.9 million, or 67%27% to $2.5 million for the year ended December 31, 20242025 compared to $7.4$3.5 million for the year ended December 31, 2023.2024. The decrease in real estateinsurance services was primarily driven by a reductiondecrease in Betterinsurance Real Estate Transaction Volume as well as earning lowerrelated revenue per transaction for the year ended December 31, 2024 as we no longer employed any in-house real estate agents and all activity was throughfrom our networkBetter ofCover third party real estate agents, which results in lower revenue per transaction.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 increaseddecreased by $0.7$1.3 million, or 30%43% to $1.7 million for the year ended December 31, 2025 compared to $3.0 million for the year ended December 31, 2024 compared to $2.3 million for the year ended December 31, 2023.2024. The changedecrease in other revenue was primarily driven by changes in mortgage and non-mortgage loan servicing activities in the U.S. and U.K. as well as other miscellaneous income.
Mortgage interest income increased $4.5$8.9 million, or 30%45% to $28.8 million for the year ended December 31, 2025 compared to $19.8 million for the year ended December 31, 2024 compared from $15.3 million of the year ended December 31, 2023.2024. The increase in Mortgagemortgage interest income was primarily driven by increasedthe Fundedincrease Loanin Volumeorigination volume and Totalthe Loansmortgage originated.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 from investments increased $5.4 million, or 40% to $19.2 million for the year ended December 31, 2024 compared to $13.7 million for the year ended December 31, 2023. The increase in interest income from investment was primarily driven by increased investments in 2024 in securities with maturities less than 1 year, driven by our cash management strategies and increased available liquidity resulting from the capital raised in August 2023 through the closing of the Business Combination.
WarehouseInterest interestincome expenseon loans held for investment increased $2.1$18.5 million, or 18%804% to $13.8$20.8 million for the year ended December 31, 20242025 compared to $11.7$2.3 million for the year ended December 31, 2023.2024. The increase in warehouse interest expenseincome wason primarilyloans driven by carrying a higher average warehouse balance over the year ended December 31, 2024 compared to year ended December 31, 2023. The increaseheld for the yearinvestment was driven by higherincreased fundedoriginations loanof volume.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.
Other interest expense decreased $12.2 million, or 61% to $7.7 million for the year ended December 31, 2024 compared to $19.9 million for the year ended December 31, 2023. Other interest expense for the year ended December 31, 2024 is related to interest expense on the Convertible Note, which is at a lower interest rate of 1% in kind interest. Interest expense for the year ended December 31, 2023 is related to interest expense on our corporate line of credit, which was at a higher interest rate, with one tranche incurring a fixed rate of 8.5% and a second tranche incurring at the 30-day term SOFR plus 9.5%, and was subsequently paid off in full in August 2023.
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.
Compensation and benefits expenses were $141.1 million for the year ended December 31, 2024, a decrease of $40.6 million or 22% as compared with $181.7 million for the year ended December 31, 2023. We reduced our headcount between the two periods, which lead to a decrease in compensation and benefits. Further, we had a significantly higher stock based compensation expense during year ended December 31, 2023 of $54.2 million compared to $26.8 million during the year ended December 31, 2024, which was primarily due to awards that had met the liquidity event criteria with the Closing of the Business Combination in August 2023 as well as service based conditions during that period.
What changed in the latest 10-Q
Risk Factors
New heading “Our recent leadership transition may create uncertainty and could adversely affect our business.”
New heading “We are not currently in compliance with Nasdaq’s requirement that a majority of our Board of Directors be comprised of independent directors, which could ultimately result in the delisting of our Class A common stock.”
Removed heading “Our business is subject to the risks of catastrophic events such as earthquakes, fires, floods and other natural catastrophic events, interruption by man-made issues such as strikes, terrorist attacks and geopolitical unrest.”
Removed heading “Risks Related to the Planned Divestiture of Birmingham Bank”
Removed heading “We cannot be sure that we will be able to sell Birmingham Bank on terms and conditions that are satisfactory to us or at all.”
Largest changes
“Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, strikes, health pandemics, terrorist attacks, and similar events. Disease outbreaks have occurred in the past (including severe acute respiratory syndrome, avian flu, H1N1/09 flu, and COVID-19) and any prolonged occurrence of infectious disease or other adverse public health developments could have a material adverse effect on the macro economy and/or our business operations. …”see in full comparison
“We are not currently in compliance with Nasdaq’s requirement that a majority of our Board of Directors be comprised of independent directors, which could ultimately result in the delisting of our Class A common stock.”see in full comparison
“Accordingly, on August 4, 2026, the Company notified the Staff of the Listing Qualifications Department of Nasdaq that the Company is currently not in compliance with the Majority Independent Requirement. We expect that, under Nasdaq rules, the Company will be eligible for a cure period to regain compliance with the Majority Independent Requirement. We intend to take the actions necessary to restore compliance with the Majority Independent Requirement. …”see in full comparison
“Our business is subject to the risks of catastrophic events such as earthquakes, fires, floods and other natural catastrophic events, interruption by man-made issues such as strikes, terrorist attacks and geopolitical unrest.”see in full comparison
“Additionally, if such events lead to a prolonged economic slowdown, recession or declining real estate values, they could impair the performance of our investments and materially and adversely affect our business, financial condition, results of operations, and prospects, increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. …”see in full comparison
“We cannot be sure that we will be able to sell Birmingham Bank on terms and conditions that are satisfactory to us or at all.”see in full comparison
Full comparison: every changed paragraph (16)
We are subject to various risks and uncertainties in the course of our business. For a discussion of these risks, please see the section entitled “Risk Factors” in Part I, Item 1A. in the 2025 Annual Report. Other than as described below,below and in Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2026, which risk factors are incorporated herein by reference, there have been no material changes to the risk factors disclosed therein.
Risks Related to Our Market,Operating Industry,History, Business Model, Growth and GeneralFinancial Economic ConditionsCondition
Our recent leadership transition may create uncertainty and could adversely affect our business.
On August 3, 2026, our founder, Vishal Garg, stepped down as Chief Executive Officer, and our Board of Directors appointed Daniel Lewis as Interim Chief Executive Officer. Because Mr. Garg founded the Company and played a central role in shaping its strategy, operations and culture, his transition from the Chief Executive Officer role may create uncertainty regarding our strategic direction, business priorities and operational execution. The appointment of an interim Chief Executive Officer may also create uncertainty regarding our long-term leadership until a permanent successor is appointed. The transition could also result in the loss of key personnel, disrupt execution of our business strategy, affect relationships with customers, business partners, employees and other stakeholders, or divert management’s attention from our business and operations.
We are not currently in compliance with Nasdaq’s requirement that a majority of our Board of Directors be comprised of independent directors, which could ultimately result in the delisting of our Class A common stock.
Nasdaq Listing Rule 5605(b)(1) requires that a majority of our Board of Directors be comprised of independent directors (the “Majority Independent Requirement”). On August 3, 2026, Vishal Garg stepped down as our Chief Executive Officer but remained a member of our Board of Directors, and the Board of Directors appointed Daniel Lewis, who had previously served as an independent director, as our Interim Chief Executive Officer. As a result, only four (4) of the eight (8) members of our Board of Directors currently qualify as independent directors.
Accordingly, on August 4, 2026, the Company notified the Staff of the Listing Qualifications Department of Nasdaq that the Company is currently not in compliance with the Majority Independent Requirement. We expect that, under Nasdaq rules, the Company will be eligible for a cure period to regain compliance with the Majority Independent Requirement. We intend to take the actions necessary to restore compliance with the Majority Independent Requirement. If we are unable to regain compliance, including within any cure period that Nasdaq may grant, Nasdaq could take action that could ultimately result in the delisting of our Class A common stock, which could adversely affect its liquidity and market price and our access to the capital markets.
Our business is subject to the risks of catastrophic events such as earthquakes, fires, floods and other natural catastrophic events, interruption by man-made issues such as strikes, terrorist attacks and geopolitical unrest.
Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, strikes, health pandemics, terrorist attacks, and similar events. Disease outbreaks have occurred in the past (including severe acute respiratory syndrome, avian flu, H1N1/09 flu, and COVID-19) and any prolonged occurrence of infectious disease or other adverse public health developments could have a material adverse effect on the macro economy and/or our business operations. In addition, strikes, terrorist attacks, and other geopolitical unrest, including the ongoing conflict in the Middle East, could cause disruptions in our business and lead to interruptions, delays, or loss of critical data. These types of catastrophic events could also affect our loan servicing costs, increase our recoverable and our non-recoverable servicing advances, increase servicing defaults, and negatively affect the value of our MSRs. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters or terrorist attacks affecting areas where our operations are located, and our business interruption insurance may be insufficient to compensate us for losses that may occur.
Additionally, if such events lead to a prolonged economic slowdown, recession or declining real estate values, they could impair the performance of our investments and materially and adversely affect our business, financial condition, results of operations, and prospects, increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. For example, recent geopolitical conflicts, including the ongoing conflict in the Middle East, have contributed to volatility in global energy markets and broader financial markets, which have impacted U.S. interest rates and housing market activity. As a result, such conditions have materially affected, and may continue to materially affect, our results of operations and financial condition.
Finally, geopolitical conflicts as well as natural disasters and other catastrophic events, and their impacts, have had, and may continue to have, the effect of heightening other risks described in “Risk Factors” in Part I, Item 1A in the 2025 Annual Report, such as contributing to elevated inflation, elevated or volatile interest rates, macroeconomic uncertainty and the possibility of a decline in economic conditions.
Risks Related to the Planned Divestiture of Birmingham Bank
We cannot be sure that we will be able to sell Birmingham Bank on terms and conditions that are satisfactory to us or at all.
We previously announced our intention to sell Birmingham Bank, which represents the Company’s reportable banking segment and has been classified in our financial statements as an asset held for sale. Any potential sale would be subject to risks and uncertainties, including our ability to identify and negotiate with a buyer, agree on acceptable pricing and other terms, obtain any required regulatory, contractual, third-party or other approvals, and satisfy any conditions that may be included in definitive transaction documents, if executed.
The sale process may also create uncertainty and disrupt our business and operations. For example, the announcement may divert management and employee attention, increase costs, create uncertainty among employees, customers, vendors, business partners and other counterparties, or adversely affect relationships related to the asset or business proposed to be sold. We may also incur expenses in connection with evaluating, negotiating or pursuing a potential transaction, regardless of whether any definitive agreement is executed or any sale is completed.
Even if we enter into a definitive agreement and complete a sale, we may not realize the anticipated benefits of such transaction. Any failure to enter into or complete a transaction on favorable terms, any disruption resulting from the announcement or pursuit of a potential sale, or failure to realize the anticipated benefits of such transaction, could have a material adverse effect on our business, financial condition and results of operations.
Management's Discussion & Analysis (MD&A)
Removed heading “Recent Developments”
Removed heading “Note Exchange Agreement”
Largest changes
“Mortgage rates remained elevated throughout the quarter, although they exhibited periodic volatility driven by changing inflation expectations, treasury yield movements, and geopolitical developments. The continuation of conflict in the Middle East, including disruptions affecting the Strait of Hormuz, contributed to volatility in oil prices and financial markets, creating additional uncertainty around the interest rate outlook and mortgage financing conditions.”see in full comparison
“In addition, geopolitical uncertainty, including the ongoing conflict in the Middle East, has contributed to volatility in financial markets, impacting U.S. Treasury yields, inflation expectations, and mortgage rate movements. These factors, combined with affordability constraints driven by rising home prices and borrowing costs, have created a more challenging operating environment for mortgage originators. …”see in full comparison
Other expenses weresee in full comparison$5.4a credit of $0.5 million for the three months endedMarchJune31,30, 2026,anaincreasedecrease of$4.5$2.4 million or515%,124%, as compared with$0.9$1.9 million in the three months endedMarchJune31,30, 2025. Theincreasedecrease in other expenses was primarily driventhe changes in the fair value of the warrant issuedbythe Company in connection withaprivatedecreaseplacementontransaction,liabilitywhich provided the holder the right to purchase up to 211,312 shares of the Company’s Class A common stock prior to its exercise, as well as increases in liability-classifiedclassified warrants andotherequity related liabilitiesdueastoa result of thehigherdecreased trading price ofthe Company’sour commonstock,stock. The decrease was partially offset byaangainincreaseonin impairment charges in thedisposalsecond quarter ofthe BHO disposal group.2026.
“Other expenses were $16.3 million for the six months ended June 30, 2026, an increase of $14.9 million or 1062%, as compared with $1.4 million for the six months ended June 30, 2025. The increase was primarily driven by a net $16.0 million impairment charge recorded to write down the Birmingham Bank disposal group to its estimated fair value less costs to sell in connection with its classification as held for sale.”see in full comparison
Full comparison: every changed paragraph (100)
The following discussion and analysis of Better Home & Finance Holding Company’s (together with its consolidated subsidiaries, the “Company,” “we” “our” or “us”) financial condition and results of operations should be read together with our audited consolidated financial statements as of December 31, 2025 and for the years ended December 31, 2025 and 2024, in each case, together with related notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), and our condensed consolidated financial statements and related notes as of and for the quarterly period ended MarchJune 31,30, 2026, included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”).
Designed to scale across products, channels, and market conditions, Tinman® is not just the engine behind Better; it is how we are modernizing the broader mortgage industry. Through Tinman,Tinman®, we partner with lenders, banks, and financial institutions to bring AI-driven efficiency and savings to their own customers, helping transform an industry long overdue for change.
The mortgage industry continuescontinued to beoperate influenced byin a dynamic macroeconomic and geopolitical environment.environment Induring the firstsecond quarter of 2026. In June 2026, the U.S. Federal Reserve maintained the federal funds rate within a target range ofat approximately 3.50% to 3.75%.3.75%, Thiscontinuing sustainedits restrictive monetary policy stance,stance implemented to addressas inflation remained above the Federal Reserve’sReserve's long-term 2% target, hasdespite contributedshowing tosigns mortgageof rates remaining elevated relative to recent historical levels, limiting refinance activity and moderating overall borrower demand, particularly in rate-sensitive segments.moderation.
Mortgage rates remained elevated throughout the quarter, although they exhibited periodic volatility driven by changing inflation expectations, treasury yield movements, and geopolitical developments. The continuation of conflict in the Middle East, including disruptions affecting the Strait of Hormuz, contributed to volatility in oil prices and financial markets, creating additional uncertainty around the interest rate outlook and mortgage financing conditions.
Elevated borrowing costs continued to constrain overall mortgage origination activity, with refinance activity and demand among rate-sensitive consumers particularly affected, as prevailing rate levels limited the incentive to refinance. Ongoing home affordability challenges, resulting from higher home prices and limited housing inventory, represented a further headwind to origination volumes broadly. Despite these pressures, purchase mortgage demand remained comparatively durable, reflecting the extent to which purchase activity is driven by non-discretionary, life-event factors such as relocation, household formation and job changes that occur independent of the rate environment, making it less cyclical than refinance activity. At the same time, lenders with diversified product offerings, including home equity products, continued to be better positioned to address evolving consumer financing needs and benefit from demand that tends to increase in higher-rate environments.
In addition, geopolitical uncertainty, including the ongoing conflict in the Middle East, has contributed to volatility in financial markets, impacting U.S. Treasury yields, inflation expectations, and mortgage rate movements. These factors, combined with affordability constraints driven by rising home prices and borrowing costs, have created a more challenging operating environment for mortgage originators. At the same time, lenders with diversified product offerings across purchase and non-mortgage products, such as home equity, are better positioned to capture baseline purchase activity and benefit from the counter-cyclical demand for home equity products that typically increases in higher-rate environments.
Recent Developments
As previously announced, the Company determined to dispose of Birmingham Bank, which represents the Company’s reportable banking segment. The sale process is underway and is expected to conclude during 2026; and, therefore, the assets related to this business have been classified as held for sale. The timing and ultimate outcome of the sale of Birmingham Bank remains subject to market conditions and required regulatory approvals. The results of operations, financial condition, and cash flows for Birmingham Bank are presented herein as discontinued operations. Except where noted, any tables, percentages or metrics included within this filing exclude the results of Birmingham Bank.
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 three and six months ended MarchJune 31,30, 2026 and 2025 is as follows:
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. Historically, the Company utilized three primary channels for customer acquisition; however, our current operations have been streamlined to focus on two key sourcing channels: our D2C channel and our Platform channel. Through these channels, we generate gain on loans, net by selling loans and MSRs to our loan purchaser network, recognizing 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 platformplatform. and inIn other arrangements, the partner originates the loan and we provide the technology, underwriting, and fulfillment.
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 was completed in Q3the three months ended September 30, 2025, with the remaining expected to be completed in 2026. As such, the revenue from our non-core international operations is winding down.
Refinance Loan Volume represents the aggregate dollar amount of refinance loans funded or processed in a given period based on the principal amount of the loan at refinancing date.
Purchase Loan Volume represents the aggregate dollar amount of purchase loans funded or processed in a given period based on the principal amount of the loan at purchase date.
HELOC Loan Volume represents the aggregate dollar amount of HELOC and closed-end lien loans funded or processed in a given period based on the principal amount of the loan at funding.
Funded Loan Volume represents the aggregate dollar amount of all loans funded or processed in a given period based on the principal amount of the loan at funding.
D2C Loan Volume represents the aggregate dollar amount of loans funded or processed 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 partner relationships and our Tinman® AI Platform channel.
B2B Loan Volume represents the aggregate dollar amount of loans funded or processed 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. This channel was discontinued upon the wind-down of the relationship with Ally Financial Inc. (“Ally”); the Company has not reported B2B Loan Volume since Q4 2025.
Platform Loan Volume represents the aggregate dollar amount of loans funded or processed in a given period based on the principal amount of the loan at funding that have been generated through one of our distributedplatform retailpartnership channels.
Total Loans represents the total number of loans funded or processed in a given period, including purchase loans, refinance loans and HELOC loans and closed-end second lien loans.
Average Loan Amount represents Funded Loan Volume divided by Total Loans in a period.
Gain on Sale Margin represents gain on loans, net, as presented on our condensed consolidated statements of operations and comprehensive loss, divided by Funded Loan Volume.
Total Market Share represents Funded Loan Volume in a period divided by total value of loans funded or processed in the industry for the same period, as presented by FNMA.
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 LHFS, 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 as 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.
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 Q3the three months ended September 30, 2025, with an additional sale completed in Q1the three months ended March 31, 2026, and any remaining dispositions are expected to be completed during 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.
Three and Six Months Ended MarchJune 31,30, 2026 as Compared to Three and Six Months Ended MarchJune 31,30, 2025
Gain on sale of loans, net increased $22.8$16.8 million or 107%50% to $44.1$50.9 million for the three months ended MarchJune 31,30, 2026 compared to $21.3$34.0 million for the three months ended MarchJune 31,30, 2025. The increase in gain on sale of loans, net was largely driven by the increase of Funded Loan Volume, which was driven by increases in refinancepurchase, refinance, and home equity products.
BrokerGain revenueon sale of loans, net increased $0.2$39.6 million,million or 17%72% to $1.4$94.9 million for the threesix months ended MarchJune 31,30, 2026,2026 compared to $1.2$55.3 million for the threesix months ended MarchJune 31,30, 2025. The increase in brokergain revenueon sale of loans, net was primarilylargely driven by brokerthe revenueincrease earnedof forLoan originatingVolume, loanswhich forwas third-partiesdriven throughby in-marketincreases originationsin operations.purchase, refinance, and home equity products.
LoanBroker repurchase reserve recoveryrevenue decreased $2.8$0.8 millionmillion, or 130%,35% to a provision of $0.6$1.5 million for the three months ended MarchJune 31,30, 2026, compared to a recovery of $2.1$2.3 million for the three months ended MarchJune 31,30, 2025. The prior-year recoverydecrease was drivenprimarily bydue decliningto estimatedlower lossbroker exposurerevenue associatedgenerated withfrom historicalthird-party loan originations through in-market origination vintages, while the current-year provision reflects updated estimates of expected losses and loan-specific activity during the period.operations.
Broker revenue decreased $0.6 million, or 18% to $2.9 million for the six months ended June 30, 2026, compared to $3.5 million for the six months ended June 30, 2025. The decrease was primarily due to lower broker revenue generated from third-party loan originations through in-market origination operations.
Loan repurchase reserve recovery decreased $1.3 million or 307%, to a provision of $0.9 million for the three months ended June 30, 2026, compared to a recovery of $0.4 million for the three months ended June 30, 2025. The prior-year recovery was driven by declining estimated loss exposure associated with historical origination vintages, while the current-year provision reflects updated estimates of expected losses and loan-specific activity during the period.
Loan repurchase reserve recovery decreased $4.1 million or 159%, to a provision of $1.5 million for the six months ended June 30, 2026, compared to a recovery of $2.5 million for the six months ended June 30, 2025. The prior-year recovery was driven by declining estimated loss exposure associated with historical origination vintages, while the current-year provision reflects updated estimates of expected losses and loan-specific activity during the period.
International lending revenue decreased $1.5$1.8 million, or 96.9%99.2% to an immaterial amount for the three months ended MarchJune 31,30, 2026 compared to $1.5$1.9 million for the three months ended MarchJune 31,30, 2025. The decrease in international lending revenue was primarily driven by the sale of the Trussle disposal group in the third quarter of 2025.
InsuranceInternational serviceslending revenue decreased $0.1$3.3 million, or 14.1%98.2% to $0.6$0.1 million for the threesix months ended MarchJune 31,30, 2026 compared to $0.7$3.4 million for the threesix months ended MarchJune 31,30, 2025. The decrease in insuranceinternational serviceslending revenue was primarily driven by the sale of the Trussle disposal group in the third quarter of 2025 offset slightly by an increase in insurance related revenue from our Better Cover business.2025.
Real estate services decreased $0.7 million, or 77% to $0.2 million for the three months ended March 31, 2026 compared to $0.9 million the three months ended March 31, 2025 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.
OtherInsurance revenueservices decreased by $0.2$0.3 million, or 31.5%30.8% to $0.3$0.6 million for the three months ended MarchJune 31,30, 2026 compared to $0.5$0.8 million for the three months ended MarchJune 31,30, 2025. The decrease in otherinsurance services revenue was primarily driven by lowerthe ancillarysale of the Trussle disposal group in the third quarter of 2025 offset slightly by an increase in insurance related revenue activities.from our Better Cover business.
Insurance services decreased $0.4 million, or 23.4% to $1.1 million for the six months ended June 30, 2026 compared to $1.5 million for the six months ended June 30, 2025. The decrease in insurance services revenue was primarily driven by the sale of the Trussle disposal group in the third quarter of 2025 offset slightly by an increase in insurance related revenue from our Better Cover business.
Real estate services increased $0.2 million, or 116% to $0.3 million for the three months ended June 30, 2026 compared to $0.2 million for the three months ended June 30, 2025 due to an increase in real estate transaction volume in the second quarter of 2026.
Real estate services decreased $0.6 million, or 54.7% to $0.5 million for the six months ended June 30, 2026 compared to $1.1 million for the six months ended June 30, 2025 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 $0.1 million, or 27.7% to $0.2 million for the three months ended June 30, 2026 compared to $0.2 million for the three months ended June 30, 2025. The decrease in other revenue was primarily driven by lower ancillary revenue activities.
Other revenue decreased by $0.2 million, or 28.7% to $0.5 million for the six months ended June 30, 2026 compared to $0.7 million for the six months ended June 30, 2025. The decrease in other revenue was primarily driven by lower ancillary revenue activities.
Mortgage interest income increaseddecreased $0.5$0.1 million, or 8%1% to $6.9$7.7 million for the three months ended MarchJune 31,30, 2026 compared fromto $6.4$7.8 million offor the three months ended MarchJune 31,30, 2025. The increasedecrease 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.
InterestMortgage interest income fromincreased investments decreased $0.8$0.4 million, or 70%3% to $0.3$14.6 million for the threesix months ended MarchJune 31,30, 2026 compared to $1.2$14.2 million for the threesix months ended MarchJune 31,30, 2025. The decreaseincrease in mortgage interest income from investments was primarily driven by decreasedthe holdingsincrease 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 investmentsthe withloan maturitiesand lessits thansale 90on days.the secondary market.
WarehouseInterest interestincome expensefrom increasedinvestments $2.9decreased $0.1 million, or 106%16% to $5.7$0.6 million for the three months ended MarchJune 31,30, 2026 compared to $2.8$0.8 million for the three months ended MarchJune 31,30, 2025. The increasedecrease in warehouse interest expenseincome from investments was primarily driven by increaseddecreased borrowingsholdings onof fundinginvestments facilitieswith usedmaturities inless thethan mortgage90 production process to meet the increased origination volume.days.
Interest income from investments decreased $0.9 million, or 49% to $1.0 million for the six months ended June 30, 2026 compared to $1.9 million for the six months ended June 30, 2025. The decrease in interest income from investments was primarily driven by decreased holdings of investments with maturities less than 90 days.
OtherWarehouse interest expense decreasedincreased $1.7$0.5 million, or 100%8% to none for the three months ended March 31, 2026 compared to $1.7$6.2 million for the three months ended MarchJune 31,30, 2026 compared to $5.7 million for the three months ended June 30, 2025. OtherThe increase in warehouse interest expense iswas relatedprimarily driven by increased borrowings on funding facilities used in the mortgage production process to interest expense on our Convertible Notes which were extinguished as part ofmeet the Exchangeincreased perorigination Note 10 in April 2025. As part of the TDR accounting, the interest on the Senior Notes has been recognized up front as part of the new carrying value.volume.
Warehouse interest expense increased $3.4 million, or 40% to $11.9 million for the six months ended June 30, 2026 compared to $8.5 million for the six months ended June 30, 2025. The increase in warehouse interest expense was primarily driven by increased borrowings on funding facilities used in the mortgage production process to meet the increased origination volume.
Other interest expense remained immaterial for both the three months ended June 30, 2026 and 2025.
Other interest expense decreased $1.7 million, or 99% to an immaterial amount for the six months ended June 30, 2026 compared to $1.7 million for the six months ended June 30, 2025. The decrease was primarily due to the extinguishment of the Convertible Notes in April 2025. See Note 10 for additional information.
Compensation and benefits expenses were $55.7$51.6 million for the three months ended MarchJune 31,30, 2026, an increase of $11.8$13.7 million or 27%36% compared with $43.9$37.8 million for the three months ended MarchJune 31,30, 2025. The increase in compensation and benefits was primarily driven by higher expense recognized for performance-based equity awards, reflecting changes in the probability of achieving specified performance metrics.
General and administrative expenses were $8.9 million for the three months ended March 31, 2026, a decrease of $1.8 million or 17% as compared with $10.8 million in the three months ended March 31, 2025. The decrease in general and administrative expenses was driven primarily by reductions in insurance premiums and professional services.
Technology expenses were $8.4 million for the three months ended March 31, 2026, an increase of $1.7 million or 26% as compared with $6.6 million in the three months ended March 31, 2025. The increase in technology expenses was driven primarily by the increase in costs related to software vendors.
MarketingCompensation and advertisingbenefits expenses were $9.2$107.3 million for the threesix months ended MarchJune 31,30, 2026, an increase of $0.5$25.6 million or 6% as31% compared with $8.7$81.7 million infor the threesix months ended MarchJune 31,30, 2025. The increase in compensation and benefits was primarily driven by higher advertisingexpense spendrecognized tofor generate homeperformance-based equity lineawards, reflecting changes in the probability of creditachieving andspecified refinancingperformance leads.metrics.
LoanGeneral originationand administrative expenses wereremained $7.7relatively consistent at $10.3 million for the three months ended MarchJune 31,30, 2026, an increase of $5.2 million or 209%, as compared with $2.5$10.5 million in the three months ended MarchJune 31,30, 2025. The increasedecrease in loangeneral originationand administrative expenses was driven primarily by an increasereductions in originationprofessional volume.services.
General and administrative expenses were $19.3 million for the six months ended June 30, 2026, a decrease of $2.0 million or 9% as compared with $21.3 million in the six months ended June 30, 2025. The decrease in general and administrative expenses was driven primarily by reductions in professional services.
Technology expenses were $8.8 million for the three months ended June 30, 2026, an increase of $2.4 million or 37% as compared with $6.4 million in the three months ended June 30, 2025. The increase in technology expenses was driven primarily by the increase in costs related to software and data warehouse vendors.
Technology expenses were $17.1 million for the six months ended June 30, 2026, an increase of $4.1 million or 31% as compared with $13.1 million in the six months ended June 30, 2025. The increase in technology expenses was driven primarily by the increase in costs related to software and data warehouse vendors.
Marketing and advertising expenses were $9.4 million for the three months ended June 30, 2026, a decrease of $1.7 million or 15% as compared with $11.1 million in the three months ended June 30, 2025. The decrease was primarily driven by lower advertising spend to generate mortgage and home equity leads.
Marketing and advertising expenses were $18.7 million for the six months ended June 30, 2026, a decrease of $1.1 million or 6% as compared with $19.8 million in the six months ended June 30, 2025. The decrease was primarily driven by lower advertising spend to generate mortgage and home equity leads.
Loan origination expenses were $3.5 million for the three months ended June 30, 2026, a decrease of $0.5 million or 12%, as compared with $3.9 million in the three months ended June 30, 2025. The decrease in loan origination expenses was driven by a reduction in the estimated liability for the potential TRID defects.
Loan origination expenses were $11.2 million for the six months ended June 30, 2026, an increase of $4.8 million or 74%, as compared with $6.4 million in the six months ended June 30, 2025. The increase in loan origination expenses was driven by an increase in origination volume. The increase was offset by a reduction in the estimated liability for potential TRID defects.
BETR insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 8 Form 4 filings (4 insiders, 9 trade dates, 67,033 shares, about $1.7M) and open-market sales in 3 filings (2 insiders, 3 trade dates, 8,870 shares, about $155.0K; 1 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: 58,163 (purchases minus sales); net value about $1.6M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-17 | Tuffin Paula |
Open-market sale | 3,108 | $12.36 | $38.4K |
| 2026-09-04 | Feierstein Barry |
Option exercise | 18,750 | — | — |
| 2026-09-01 | Tuffin Paula |
Grant/award | 6,132 | — | — |
| 2026-09-01 | Smith Chad M. |
Option exercise | 10,000 | — | — |
| 2026-09-01 | Smith Chad M. |
Grant/award | 11,243 | — | — |
| 2026-08-19 | Smith Chad M. |
Open-market sale | 3,307 | $12.85 | $42.5K |
| 2026-08-06 | Smith Chad M. |
Option exercise | 5,000 | — | — |
| 2026-08-01 | Orn Jonsson Sigurgeir |
Shares withheld for tax | 1,995 | $23.50 | $46.9K |
| 2026-08-01 | Orn Jonsson Sigurgeir |
Option exercise | 3,906 | — | — |
| 2026-07-01 | Advani Loveen |
Option exercise | 9,167 | — | — |
| 2026-07-01 | Advani Loveen |
Shares withheld for tax | 2,510 | $30.19 | $75.8K |
| 2026-06-30 | Advani Loveen |
Shares withheld for tax | 2,510 | $27.48 | $69.0K |
| 2026-06-30 | Advani Loveen |
Option exercise | 9,167 | — | — |
| 2026-06-11 | Frater Hugh R |
Open-market purchase | 5,150 | $24.34 | $125.4K |
| 2026-06-09 | Talwar Harit |
Option exercise | 20,191 | — | — |
| 2026-06-09 | Farello Michael J. |
Option exercise | 11,327 | — | — |
| 2026-06-09 | Barse David Michael |
Option exercise | 10,389 | — | — |
| 2026-06-09 | Menon Bhaskar |
Option exercise | 12,388 | — | — |
| 2026-06-09 | Narasimhan Prabhu |
Option exercise | 11,327 | — | — |
| 2026-06-09 | Massenet Arnaud |
Option exercise | 11,327 | — | — |
| 2026-06-09 | Frater Hugh R |
Option exercise | 1,176 | — | — |
| 2026-05-22 | Talwar Harit |
Open-market purchase | 5,000 | $25.34 | $126.7K |
| 2026-05-21 | Garg Vishal |
Open-market purchase |
15,600 | $24.89 | $388.3K |
| 2026-05-20 | Garg Vishal |
Open-market purchase | 15,000 | $25.00 | $375.0K |
| 2026-05-20 | Garg Vishal |
Open-market purchase | 600 | $24.99 | $15.0K |
| 2026-05-18 | Garg Vishal |
Open-market purchase |
3,333 | $24.71 | $82.4K |
| 2026-05-18 | Garg Vishal |
Open-market purchase |
3,900 | $24.74 | $96.5K |
| 2026-05-18 | Garg Vishal |
Open-market purchase |
6,510 | $25.00 | $162.8K |
| 2026-05-18 | Garg Vishal |
Open-market purchase |
1,257 | $24.99 | $31.4K |
| 2026-05-18 | Garg Vishal |
Open-market purchase |
600 | $24.97 | $15.0K |
| 2026-05-12 | Advani Loveen |
Open-market purchase | 400 | $30.55 | $12.2K |
| 2026-05-11 | Advani Loveen |
Open-market purchase | 100 | $31.25 | $3.1K |
| 2026-05-08 | Talwar Harit |
Open-market purchase | 3,000 | $30.43 | $91.3K |
| 2026-05-08 | Smith Chad M. |
Open-market sale |
118 | $31.38 | $3.7K |
| 2026-05-08 | Smith Chad M. |
Open-market sale |
971 | $30.51 | $29.6K |
| 2026-05-08 | Smith Chad M. |
Open-market sale |
1,366 | $29.81 | $40.7K |
| 2026-05-07 | Garg Vishal |
Open-market purchase |
100 | $29.95 | $3.0K |
| 2026-05-07 | Garg Vishal |
Open-market purchase |
6,483 | $30.00 | $194.5K |
| 2026-05-06 | Smith Chad M. |
Shares withheld for tax |
2,545 | $42.69 | $108.6K |
| 2026-05-06 | Smith Chad M. |
Option exercise |
5,000 | — | — |
| 2026-05-01 | Orn Jonsson Sigurgeir |
Option exercise | 3,907 | — | — |
| 2026-05-01 | Orn Jonsson Sigurgeir |
Shares withheld for tax | 1,409 | $44.38 | $62.5K |
Well-known investors holding BETR (13F)
None of the 59 investors we track reported a position in their latest 13F.