Introduction to Mortgage Servicing Examinations Training - March 2023

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

The UPB of IRLCs was as follows:

December 31, 2021

December 31, 2020

Fixed Rate

Variable Rate

Fixed Rate

Variable Rate

IRLCs .................................................. $

25,937,777 $

1,239,762 $

53,736,717 $

1,065,936

Commitments to Sell Mortgage Loans

In the ordinary course of business, the Company enters into contracts to sell existing mortgage loans held for sale into the secondary market at specified future dates. The amount of commitments to sell existing loans at December 31, 2021 and 2020 was $2,243,381 and $3,139,816, respectively. Commitments to Sell Loans with Servicing Released In the ordinary course of business, the Company enters into contracts to sell the MSRs of certain newly originated loans on a servicing released basis. In the event that a forward commitment is not filled and there has been an unfavorable market shift from the date of commitment to the date of settlement, the Company is contractually obligated to pay a pair-off fee on the undelivered balance. There were $333,594 and $280,502 of loans committed to be sold servicing released at December 31, 2021 and 2020, respectively. Investor Reserves

The following presents the activity in the investor reserves:

Year Ended December 31, 2021 2020

Balance at beginning of period ................................................................................... $ (Benefit from) provision for investor reserves ........................................................ Premium recapture and indemnification losses paid ............................................... Balance at end of period ............................................................................................. $

85,901 $

53,167 35,814 (3,080) 85,901

(10,385)

1,023

76,539 $

The maximum exposure under the Company’s representations and warranties would be the outstanding principal balance and any premium received on all loans ever sold by the Company, less (i) loans that have already been paid in full by the mortgagee, (ii) loans that have defaulted without a breach of representations and warranties, (iii) loans that have been indemnified via settlement or make-whole, or (iv) loans that have been repurchased. Additionally, the Company may receive relief of certain representation and warranty obligations on loans sold to Fannie Mae or Freddie Mac on or after January 1, 2013 if Fannie Mae or Freddie Mac satisfactorily concludes a quality control loan file review or if the borrower meets certain acceptable payment history requirements within 12 or 36 months after the loan is sold to Fannie Mae or Freddie Mac. Property Taxes, Insurance, and Principal and Interest Payable As a service to its clients, the Company administers escrow deposits representing undisbursed amounts received for payment of property taxes, insurance and principal, and interest on mortgage loans held for sale. Cash held by the Company for property taxes and insurance was $3,348,632 and $2,859,942, and for principal and interest was $8,347,739 and $13,065,549 at December 31, 2021 and 2020, respectively. These amounts are not considered assets of the Company and, therefore, are excluded from the Consolidated Balance Sheets. The Company remains contingently liable for the disposition of these deposits.

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