Introduction to Mortgage Servicing Examinations Training - March 2023

Mortgage, LLC Notes to Consolidated Financial Statements (continued) (Dollars in Thousands)

Financing Arrangements

As of December 31, 2021 and 2020, there was $65,000 and zero, respectively, due to

pursuant

. Refer to Note 6, Borrowings for details on unsecured lines of credit

to a line of credit with with Related Parties.

Services, Products and Other Transactions

We have entered into transactions and agreements to provide certain services to Related Parties. We recognized revenue of $6,582 and $13,217 for the years ended December 31, 2021 and 2020, respectively, for the performance of these services, which was included in other income. We have entered into transactions and agreements to purchase certain services, products and other transactions from Related Parties for which we have incurred the following expenses: $867 and $5,770 for the years ended December 31, 2021 and 2020, respectively, which are included in salaries, commissions and employee benefits; $362,336 and $198,254 for the years ended December 31, 2021 and 2020, respectively, which are included in general and administrative expenses; $410,495 and $239,296 for the years ended December 31, 2021 and 2020, respectively, which are included in marketing and advertising expenses; and $59,983 and $82,489 for the years ended December 31, 2021 and 2020, respectively, which are included in other expenses.

We have also entered into agreements with

a related party, to sell

jumbo loans, which subsequently securitizes and sells into the secondary market. We sold loans to with a UPB of $3,975,198 and $364,781, for the years ended December 31, 2021 and 2020, respectively.

Additionally,

, which is a related party, performs title, appraisal and closing services for our clients. In for these services as part of their mortgage transactions. In certain instances

most cases, our clients pay

where appraisal services are incurred from and the clients’ loan does not close, and the amount of the deposit obtained from the client is not sufficient to cover the appraisal fees, we incur the expense for the appraisal service.

Guarantees

Refer to Note 13, Commitments, Contingencies, and Guarantees for a discussion on related party guarantees.

Lease Obligations

Refer to Note 8, Leases for a discussion of related party leases. 8. Leases

The Company enters into lease arrangements with independent third parties as well as with related parties.

The Company’s operating leases, in which the Company is the lessee, include real estate, such as office facilities, and various types of equipment, such as printers, copiers, mail equipment, and vending machines. The Company determines whether an arrangement is or contains a lease at inception. Leases are classified as either finance or operating at the commencement date of the lease, with classification affecting the pattern of expense recognition in the Consolidated Statements of Income. The Company currently does not have any finance leases, and the vast majority of the Company’s operating lease expense is paid to a related party. See below for more information on related party lease transactions. For lease arrangements where the company is the lessee, the Company does not separate non-lease components of a contract from the lease component to which they relate. Per the Company’s election, leases with an initial term of 12 months or less are not recorded on the balance sheet. The lease expense for these leases is recognized on a straight line basis over the lease term. The Company’s leases generally have remaining lease terms of one year to ten years.

26 Confidential Do Not Copy Copy #1