Better Home & Finance Holding Co 10-Q

Item 1. Financial Statements BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, (Amounts in thousands, except share and per share amounts) 2023 2022 Assets Cash and cash equivalents $ 526,765 $ 317,959 Restricted cash 27,806 28,106 Short-term investments 29,831 — Mortgage loans held for sale, at fair value 160,025 248,826 Other receivables, net 10,449 16,285 Property and equipment, net 17,806 30,504 Right-of-use assets 23,550 41,979 Internal use software and other intangible assets, net 48,406 61,996 Goodwill 32,492 18,525 Derivative assets, at fair value 3,717 3,048 Prepaid expenses and other assets 56,208 66,572 Bifurcated derivative, at fair value — 236,603 Loan commitment asset — 16,119 Total Assets $ 937,055 $ 1,086,522 Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) Liabilities Warehouse lines of credit $ 73,536 $ 144,049 Post-Closing Convertible Notes (issued to a related party. See Note 10) 513,001 — Pre-Closing Bridge Notes — 750,000 Corporate line of credit, net — 144,403 Customer deposits 9,908 — Accounts payable and accrued expenses 103,435 88,983 Escrow payable 3,153 8,001 Derivative liabilities, at fair value 1,678 1,828 Convertible preferred stock warrants — 3,096 Warrant and equity related liabilities, at fair value 1,527 — Lease liabilities 33,307 60,049 Other liabilities (includes $ 460 and $ 440 payable to related parties as of September 30, 2023 and December 31, 2022, respectively) 40,278 59,933 Total Liabilities 779,823 1,260,342 Commitments and contingencies (see Note 12) Convertible preferred stock, $ 0.0001 par value; none as of September 30, 2023; 602,405,839 shares authorized, 332,314,737 shares issued and outstanding and $ 420,742 liquidation preference as of December 31, 2022. — 436,280 Stockholders’ Equity (Deficit) Common stock $ 0.0001 par value; 3,300,000,000 and 1,086,027,188 shares authorized as of September 30, 2023 and December 31, 2022, respectively, and 737,585,438 and 299,783,421 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 74 10 Notes receivable from stockholders ( 10,404 ) ( 53,900 ) Additional paid-in capital 1,826,848 626,628 Accumulated deficit ( 1,656,856 ) ( 1,181,415 ) Accumulated other comprehensive loss ( 2,430 ) ( 1,423 ) Total Stockholders’ Equity (Deficit) 157,232 ( 610,100 ) Total Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit) $ 937,055 $ 1,086,522 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands, except share and per share amounts) 2023 2022 2023 2022 Revenues: Mortgage platform revenue, net $ 14,207 $ 11,087 $ 54,927 $ 106,586 Cash offer program revenue — 9,739 304 226,096 Other platform revenue 1,333 5,688 9,355 35,623 Net interest income Interest income 3,667 4,977 12,527 22,918 Warehouse interest expense ( 2,758 ) ( 2,838 ) ( 9,544 ) ( 14,775 ) Net interest income 909 2,139 2,983 8,143 Total net revenues 16,449 28,653 67,569 376,448 Expenses: Mortgage platform expenses 19,166 55,545 70,809 292,915 Cash offer program expenses — 9,813 398 227,509 Other platform expenses 3,161 8,951 11,787 55,250 General and administrative expenses 59,189 46,499 113,392 161,293 Marketing and advertising expenses 5,128 9,948 17,122 59,801 Technology and product development expenses 20,732 29,414 66,639 100,354 Restructuring and impairment expenses (see Note 5) 679 45,781 11,798 212,490 Total expenses 108,055 205,951 291,945 1,109,612 Loss from operations ( 91,606 ) ( 177,298 ) ( 224,376 ) ( 733,164 ) Interest and other income (expense), net Other income (expense) 977 746 5,187 861 Interest and amortization on non-funding debt ( 11,939 ) ( 3,304 ) ( 18,237 ) ( 10,077 ) Interest on Pre-Closing Bridge Notes — ( 80,099 ) — ( 213,513 ) Change in fair value of warrant liabilities 861 — 861 — Change in fair value of convertible preferred stock warrants — 4,202 266 24,613 Change in fair value of bifurcated derivative ( 237,667 ) 29,089 ( 236,603 ) 306,866 Total interest and other expense, net ( 247,768 ) ( 49,366 ) ( 248,526 ) 108,750 Loss before income tax expense ( 339,374 ) ( 226,664 ) ( 472,902 ) ( 624,414 ) Income tax expense/(benefit) 659 ( 52 ) 2,539 1,450 Net loss ( 340,033 ) ( 226,612 ) ( 475,441 ) ( 625,864 ) Other comprehensive loss: Foreign currency translation adjustment, net of tax ( 698 ) ( 155 ) ( 1,007 ) ( 764 ) Comprehensive loss $ ( 340,731 ) $ ( 226,767 ) $ ( 476,448 ) $ ( 626,628 ) Per share data: Loss per share attributable to common stockholders: Basic $ ( 0.68 ) $ ( 0.77 ) $ ( 1.30 ) $ ( 2.16 ) Diluted $ ( 0.68 ) $ ( 0.77 ) $ ( 1.30 ) $ ( 2.16 ) Weighted average common shares outstanding — basic 496,577,751 292,660,334 364,817,445 289,934,149 Weighted average common shares outstanding — diluted 496,577,751 292,660,334 364,817,445 289,934,149 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) For the Three Months Ended September 30, 2023 Convertible preferred stock Common Stock (Amounts in thousands, except share and per share amounts) Shares Amount Issued and Outstanding Par Value Notes Receivables from Stockholders Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit) Balance - June 30, 2023 108,721,433 $ 436,280 98,370,492 $ 10 $ ( 56,254 ) $ 642,551 $ ( 1,316,823 ) $ ( 1,732 ) $ ( 732,248 ) Recapitalization of shares due to Business Combination (Note 3) 223,593,304 — 202,305,863 20 — ( 20 ) — — — Adjusted Balance as of June 30, 2023 332,314,737 436,280 300,676,355 30 ( 56,254 ) 642,531 ( 1,316,823 ) ( 1,732 ) ( 732,248 ) Conversion of convertible preferred stock to common stock ( 332,314,737 ) ( 436,280 ) 332,314,737 33 — 436,247 — — 436,280 Conversion of pre-closing bridge notes to common stock — — 105,000,000 12 — 749,988 — — 750,000 Issuance of common stock upon Business Combination close — — 10,698,910 1 — 37,966 — — 37,967 Exercise of warrants — — 14,576,174 1 — 4,289 — — 4,290 Transaction costs related to the Business Combination — — — — — ( 21,437 ) — — ( 21,437 ) Recognition of derivative liability related to earnout — — — — — ( 1,112 ) — — ( 1,112 ) Assumption private & public placement warrants — — — — — ( 1,276 ) — — ( 1,276 ) Issuance of common stock for options exercised — — 106,744 — — 2,253 — — 2,253 Cancellation of common stock — — ( 2,865,535 ) — — — — — — Stock-based compensation — — — — — 27,547 — — 27,547 Tax withholding upon vesting of restricted stock units — — — — — ( 4,790 ) — — ( 4,790 ) Vesting of common stock issued via notes receivable from stockholders — — — — ( 1,041 ) — — — ( 1,041 ) Forfeiture of shares — — ( 15,440,633 ) ( 2 ) 30,161 ( 30,159 ) — — — Forgiveness of officer loans — — — — 1,530 — — — 1,530 Shares transferred in settlement of loans — — ( 7,481,314 ) ( 1 ) 15,200 ( 15,199 ) — — — Net loss — — — — — — ( 340,033 ) — ( 340,033 ) Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — — — ( 698 ) ( 698 ) Balance - September 30, 2023 $ — $ — $ 737,585,438 $ 74 $ ( 10,404 ) $ 1,826,848 $ ( 1,656,856 ) $ ( 2,430 ) $ 157,232 The accompanying notes are an integral part of these unaudited consolidated financial statements. 3 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) For the Three Months Ended September 30, 2022 Convertible preferred stock Common Stock (Amounts in thousands, except share and per share amounts) Shares Amount Issued and Outstanding Par Value Notes Receivables from Stockholders Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit) Balance - June 30, 2022 108,721,433 $ 436,280 98,326,436 $ 10 $ ( 48,403 ) $ 601,756 $ ( 691,865 ) $ ( 714 ) $ ( 139,216 ) Recapitalization of shares due to Business Combination (Note 3) 223,593,304 — 202,215,259 — — — — — — Adjusted Balance as of June 30, 2022 332,314,737 436,280 300,541,695 10 ( 48,403 ) 601,756 ( 691,865 ) ( 714 ) ( 139,216 ) Issuance of common stock — — 926,783 — — 5,304 — — 5,304 Repurchase or cancellation of common stock — — ( 649,937 ) — — ( 3,163 ) — — ( 3,163 ) Stock-based compensation — — — — — 11,765 — — 11,765 Vesting of common stock issued via notes receivable from stockholders — — — — ( 3,011 ) — — — ( 3,011 ) Net loss — — — — — — ( 226,612 ) — ( 226,612 ) Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — — — ( 155 ) ( 155 ) Balance - September 30, 2022 332,314,737 $ 436,280 300,818,541 $ 10 $ ( 51,414 ) $ 615,662 $ ( 918,477 ) $ ( 869 ) $ ( 355,088 ) The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) For the Nine Months Ended September 30, 2023 Convertible preferred stock Common Stock (Amounts in thousands, except share and per share amounts) Shares Amount Issued and Outstanding Par Value Notes Receivables from Stockholders Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit) Balance—December 31, 2022 108,721,433 $ 436,280 98,078,356 $ 10 $ ( 53,900 ) $ 626,628 $ ( 1,181,415 ) $ ( 1,423 ) $ ( 610,100 ) Recapitalization of shares due to Business Combination (Note 3) 223,593,304 — 201,705,065 20 — ( 20 ) — — — Adjusted Balance as of December 31, 2022 332,314,737 436,280 299,783,421 30 ( 53,900 ) 626,608 ( 1,181,415 ) ( 1,423 ) ( 610,100 ) Conversion of convertible preferred stock to common stock ( 332,314,737 ) ( 436,280 ) 332,314,737 33 — 436,247 — — 436,280 Conversion of pre-closing bridge notes to common stock — — 105,000,000 12 — 749,988 — 750,000 Issuance of common stock upon Business Combination close — — 10,698,910 1 — 37,966 — — 37,967 Exercise of warrants — — 14,576,174 1 — 4,289 — — 4,290 Transaction costs related to the Business Combination — — — — — ( 21,437 ) — — ( 21,437 ) Recognition of derivative liability related to earnout — — — — — ( 1,112 ) — — ( 1,112 ) Assumption private & public placement warrants — — — — — ( 1,276 ) — — ( 1,276 ) Issuance of common stock for options exercised — — 1,460,854 — — 4,459 — — 4,459 Cancellation of common stock — — ( 3,326,710 ) — — ( 8 ) — — ( 8 ) Stock-based compensation — — — — — 41,272 — — 41,272 Tax withholding upon vesting of restricted stock units — — — — — ( 4,790 ) — — ( 4,790 ) Vesting of common stock issued via notes receivable from stockholders — — — — ( 3,395 ) — — — ( 3,395 ) Forfeiture of shares — — ( 15,440,633 ) ( 2 ) 30,161 ( 30,159 ) — — — Forgiveness of officer loans — — — — 1,530 — — — 1,530 Shares transferred in settlement of loans — — ( 7,481,315 ) ( 1 ) 15,200 ( 15,199 ) — — — Net loss — — — — — — ( 475,441 ) — ( 475,441 ) Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — — — ( 1,007 ) ( 1,007 ) Balance—September 30, 2023 — $ — 737,585,438 $ 74 $ ( 10,404 ) $ 1,826,848 $ ( 1,656,856 ) $ ( 2,430 ) $ 157,232 The accompanying notes are an integral part of these unaudited consolidated financial statements. 5 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) For the Nine Months Ended September 30, 2022 Convertible preferred stock Common Stock (Amounts in thousands, except share and per share amounts) Shares Amount Issued and Outstanding Par Value Notes Receivables from Stockholders Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit) Balance—December 31, 2021 108,721,433 $ 436,280 99,067,159 10 $ ( 38,633 ) $ 571,501 $ ( 292,613 ) $ ( 105 ) $ 240,160 Recapitalization of shares due to Business Combination (Note 3) 223,593,304 — 203,738,608 — — — — — — Adjusted Balance as of December 31, 2021 332,314,737 436,280 302,805,767 10 ( 38,633 ) 571,501 ( 292,613 ) ( 105 ) 240,160 Issuance of common stock — — 4,421,663 — — 14,332 — — 14,332 Cancellation of common stock — — ( 6,408,889 ) — — ( 4,174 ) — — ( 4,174 ) Stock-based compensation — — — — — 34,003 — — 34,003 Vesting of common stock issued via notes receivable from stockholders — — — — ( 12,781 ) — — — ( 12,781 ) Net loss — — — — — — ( 625,864 ) — ( 625,864 ) Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — — — ( 764 ) ( 764 ) Balance—September 30, 2022 332,314,737 $ 436,280 300,818,541 $ 10 $ ( 51,414 ) $ 615,662 $ ( 918,477 ) $ ( 869 ) $ ( 355,088 ) The accompanying notes are an integral part of these unaudited consolidated financial statements. 6 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW Nine Months Ended September 30, (Amounts in thousands) 2023 2022 Cash Flows from Operating Activities: Net loss $ ( 475,441 ) $ ( 625,864 ) Adjustments to reconcile net loss to net cash (used in)/provided by operating activities: Depreciation of property and equipment 4,694 10,767 Impairments 5,208 113,118 Amortization of internal use software and other intangible assets 28,098 26,078 Non-cash interest and amortization of debt issuance costs and discounts 6,043 213,534 Other non-cash adjustments 2,138 1,529 Change in fair value of warrants ( 861 ) — Change in fair value of convertible preferred stock warrants ( 266 ) ( 24,613 ) Change in fair value of bifurcated derivative 236,603 ( 306,866 ) Stock-based compensation 37,398 31,021 Provision for loan repurchase reserve 178 25,125 Change in fair value of derivatives ( 819 ) 291 Change in fair value of mortgage loans held for sale 6,070 81,247 Change in operating lease of right-of-use assets 5,446 10,521 Change in operating assets and liabilities: Originations of mortgage loans held for sale ( 2,607,781 ) ( 9,940,429 ) Proceeds from sale of mortgage loans held for sale 2,685,341 11,390,991 Operating lease obligations ( 11,247 ) ( 11,952 ) Other receivables, net 6,043 22,976 Prepaid expenses and other assets 15,035 ( 4,549 ) Accounts payable and accrued expenses 4,648 ( 26,110 ) Escrow payable ( 4,848 ) ( 5,162 ) Other liabilities ( 17,847 ) ( 2,863 ) Net cash (used in)/provided by operating activities ( 76,167 ) 978,790 Cash Flows from Investing Activities: Purchase of property and equipment ( 332 ) ( 7,798 ) Proceeds from sale of property and equipment 717 — Capitalization of internal use software ( 8,563 ) ( 18,581 ) Acquisitions of businesses, net of cash acquired ( 12,713 ) — Deferred acquisition consideration — ( 3,847 ) Maturities of short-term investments 12,324 — Purchase of short-term investments ( 33,425 ) — Net cash used in investing activities ( 41,992 ) ( 30,226 ) Cash Flows from Financing Activities: Issuance of post-closing convertible notes (issued to a related party. See Note 10) 528,586 — Exercise of convertible preferred stock warrants 1,460 — Proceeds from Business Combination 21,616 — Proceeds from issuance of common stock 16,351 — Borrowings on warehouse lines of credit 2,237,603 9,582,426 Repayments of warehouse lines of credit ( 2,308,116 ) ( 11,072,666 ) Repayments on finance lease liabilities ( 1,062 ) ( 824 ) Net increase (decrease) in customer deposits ( 2,466 ) — Repayments on corporate line of credit ( 146,449 ) ( 5,000 ) Payment of debt issuance costs ( 3,561 ) — Proceeds from exercise of stock options 343 2,440 Payment of equity financing costs ( 16,634 ) — Repurchase or cancellation of common stock — ( 5,570 ) Net cash provided by/(used in) financing activities 327,671 ( 1,499,194 ) Effects of currency translation on cash, cash equivalents, and restricted cash ( 1,006 ) ( 764 ) 7 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW Net Decrease in Cash, Cash Equivalents, and Restricted Cash 208,506 ( 551,394 ) Cash, cash equivalents, and restricted cash—Beginning of period 346,065 978,874 Cash, cash equivalents, and restricted cash—End of period $ 554,571 $ 427,480 The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total of the same such amounts shown on the previous page. Nine Months Ended September 30, (Amounts in thousands) 2023 2022 Cash and cash equivalents, end of period $ 526,765 $ 398,037 Restricted cash, end of period $ 27,806 $ 29,443 Total cash, cash equivalents and restricted cash, end of period $ 554,571 $ 427,480 Supplemental Disclosure of Cash Flow Information: Interest paid $ 12,008 $ 24,941 Income taxes (refunded)/ paid $ ( 5,886 ) $ 1,333 Non-Cash Investing and Financing Activities: Capitalization of stock-based compensation related to internal use software $ 3,874 $ 2,967 Vesting of stock options early exercised in prior periods $ 195 $ 1,152 Vesting of common stock issued via notes receivable from stockholders $ 3,395 $ 12,781 Acquisition earnout $ 3,430 $ — Forgiveness of notes receivable from stockholders $ 46,350 $ — The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 8 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Nature of the Business Better Home & Finance Holding Company, formerly known as Aurora Acquisition Corp. (“Aurora”), together with its subsidiaries (collectively, the “Company”), provides a comprehensive set of homeownership offerings in the United States while expanding in the United Kingdom. The Company’s offerings include mortgage loans, real estate agent services, title and homeowner’s insurance, and other homeownership offerings, such as the Company’s cash offer program. The Company leverages Tinman, its proprietary technology platform, to optimize the mortgage process from the initial application, to the integration of a suite of additional homeownership offerings, to the sale of loans to a network of loan purchasers. Mortgage loans originated within the United States are through the Company’s wholly-owned subsidiary Better Mortgage Corporation (“BMC”). BMC is an approved Title II Single Family Program Lender with the Department of Housing and Urban Development’s (“HUD”) Federal Housing Administration (“FHA”), and is an approved seller and servicer with the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FMCC”). The Company has expanded into the U.K. and offers a multitude of financial products and services to consumers via regulated entities obtained through acquisitions. On August 22, 2023 (the “Closing Date”), the Company consummated the previously announced Business Combination (the “Business Combination”), pursuant to the terms of the Agreement and Plan of Merger, dated as of May 10, 2021, as amended as of October 27, 2021, November 9, 2021, November 30, 2021, August 26, 2022, February 24, 2023 and June 23, 2023 (as amended, the “Merger Agreement”), by and among Aurora, Better Holdco, Inc. (“Better”), and Aurora Merger Sub I, Inc., formerly a wholly owned subsidiary of Aurora (“Merger Sub”). On the Closing Date, Merger Sub merged with and into Better, with Better surviving the merger (the “First Merger”) and Better merged with and into Aurora, with Aurora surviving the merger and changing its name to “Better Home & Finance Holding Company” (referred to as “Better Home & Finance” or the “Company”) (such merger, the “Second Merger,” and together with the First Merger, the “Business Combination” and the completion thereof, the “Closing”). Better Home & Finance Class A common stock and warrants are listed on the Nasdaq Global Market and the Nasdaq Capital Market, respectively, under the ticker symbols “BETR” and “BETRW.” 2. Summary of Significant Accounting Policies Basis of Presentation — The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Business Combination has been accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Aurora was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Better issuing stock for the net assets of Aurora, accompanied by a recapitalization. All share amounts in periods prior to the Business Combination have been retroactively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization. The financials of Better are presented here for all comparative periods. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of its financial position and its results of operations, changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows. The results of operations and other information for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2023. The unaudited condensed consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes of Better thereto for the year ended December 31, 2022. Consolidation — The accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates — The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 9 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Significant items subject to such estimates and assumptions include the fair value of mortgage loans held for sale, the fair value of derivative assets and liabilities, including bifurcated derivatives, interest rate lock commitments and forward sale commitments, the determination of a valuation allowance on the Company’s deferred tax assets, capitalization of internally developed software and its associated useful life, determination of fair value of the Company’s common stock, stock option and RSUs at grant date, the fair value of acquired intangible assets and goodwill, the provision for loan repurchase reserves, the incremental borrowing rate used in determining lease liabilities and warrant liabilities. Business Combinations — The Company includes the financial results of businesses that the Company acquires from the date of acquisition. The Company records all assets acquired and liabilities assumed at fair value, with the excess of the purchase price over the aggregate fair values recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates and selection of comparable companies. During the measurement period the Company may record adjustments to the assets acquired and liabilities assumed. Transaction costs associated with business combinations are expensed as incurred. Short-term investments — Short term investments consist of fixed income securities, typically U.K. government treasury securities and U.K. government agency securities with maturities ranging from 91 days to one year. Management determines the appropriate classification of short-term investments at the time of purchase. Short-term investments reported as held-to-maturity are those investments which the Company has both the positive intent and ability to hold to maturity and are stated at amortized cost on the condensed consolidated balance sheets. All of the Company’s short term investments are classified as held to maturity. The Company has not recognized any impairments on these investments to date and any unrealized gains or losses on these investments are immaterial. Allowance for Credit Losses - Held to Maturity (“HTM”) Short-term Investments—The Company's HTM Short-term investments are also required to utilize the Current Expected Credit Loss (“CECL”) approach to estimate expected credit losses. Management measures expected credit losses on short-term investments on a collective basis by major security types that share similar risk characteristics, such as financial asset type and collateral type adjusted for current conditions and reasonable and supportable forecasts. Management classifies the short term investments portfolio by security types, such as U.K. government agency. The U.K. government treasury securities and U.K. government agency securities are issued by U.K. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.K. government as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of no credit losses. Therefore, credit losses for these securities were immaterial as the Company does not currently expect any material credit losses. Mortgage Loans Held for Sale, at Fair Value — The Company sells its mortgage loans held for sale (“LHFS”) to loan purchasers. These loans can be sold in one of two ways, servicing released, or servicing retained. If a loan is sold servicing released, the Company has sold all the rights to the loan and the associated servicing rights. If a loan is sold servicing retained, the Company has sold the loan and kept the servicing rights, and thus the Company is responsible for collecting monthly principal and interest payments and performing certain escrow services for the borrower. The loan purchaser, in turn, pays a fee for these services. The Company generally sells all of its loans servicing released. For interim servicing, the Company engages a third-party sub-servicer to collect monthly payments and perform associated services. LHFS consists of loans originated for sale by BMC. The Company elects the fair value option, in accordance with Accounting Standard Codification (“ASC”) 825 – Financial Instruments (“ASC 825”), for all LHFS with changes in fair value recorded in mortgage platform revenue, net in the condensed consolidated statements of operations and comprehensive loss. Management believes that the election of the fair value option for LHFS improves financial reporting by presenting the most relevant market indication of LHFS. The fair value of LHFS is based on market prices and yields at period end. The Company accounts for the gains or losses resulting from sales of mortgage loans based on the guidance of ASC 860-20 – Sales of Financial Assets (“ASC 860”). The Company issues interest rate lock commitments (“IRLC”) to originate mortgage loans and the fair value of the IRLC, adjusted for the probability that a given IRLC will close and fund, is recognized within mortgage platform revenue, net. Subsequent changes in the fair value of the IRLC are measured at each reporting period within mortgage platform revenue, net until the loan is funded. When the loan is funded, the IRLC is derecognized and the LHFS is recognized based 10 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS on the fair value of the loan. The LHFS is subsequently remeasured at fair value at each reporting period and the changes in fair value are included within mortgage platform revenue, net until the loan is sold on the secondary market. When the loan is sold on the secondary market, the LHFS is derecognized and the gain/(loss) is included within mortgage platform revenue, net based on the cash settlement. LHFS are considered sold when the Company surrenders control over the loans. Control is considered to have been surrendered when the transferred loans have been isolated from the Company, are beyond the reach of the Company and its creditors, and the loan purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred loans. The Company typically considers the above criteria to have been met upon receipt of sales proceeds from the loan purchaser. Loan Repurchase Reserve — The Company sells LHFS in the secondary market and in connection with those sales, makes customary representations and warranties to the relevant loan purchasers about various characteristics of each loan, such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws. In the event of a breach of its representations and warranties, the Company may be required to repurchase the loan with the identified defects. The loan repurchase reserve on loans sold relates to expenses incurred due to the potential repurchase of loans, indemnification of losses based on alleged violations or representations and warranties, which are customary to the mortgage banking industry. Provisions for potential losses are charged to expenses and are included within mortgage platform expenses on the consolidated statements of operations and comprehensive loss. The loan repurchase reserve represents the Company’s estimate of the total losses expected to occur and is considered to be adequate by management based upon the Company’s evaluation of the potential exposure related to the loan sale agreements over the life of the associated loans sold. The Company records the loan repurchase reserve within other liabilities on the consolidated balance sheets. Fair Value Measurements — Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The price used to measure fair value is not adjusted for transaction costs. The principal market is the market in which the Company would sell or transfer the asset with the greatest volume and level of activity for the asset. In determining the principal market for an asset or liability, it is assumed that the Company has access to the market as of the measurement date. If no market for the asset exists, or if the Company does not have access to the principal market, a hypothetical market is used. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1 —Unadjusted quoted market prices in active markets for identical assets or liabilities; Level 2 —Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value on a recurring basis include LHFS, derivative assets and liabilities, including IRLCs and forward sale commitments, MSRs, bifurcated derivatives, convertible preferred stock warrants and warrant liabilities. Common stock warrants are measured at fair value at issuance only and are classified as equity on the condensed consolidated balance sheets. When developing fair value measurements, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. However, for certain instruments, the Company must utilize unobservable inputs in determining fair value due to the lack of observable inputs in the market, which requires greater judgment in measuring fair value. In instances where there is limited or no observable market data, fair value measurements for assets and liabilities are based primarily upon the Company’s own estimates, and the measurements 11 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS reflect information and assumptions that management believes a market participant would use in pricing the asset or liability. Upon the Closing of the Business Combination and issuance of the Post-Closing Convertible Notes, the Loan commitment asset was reclassified as a discount to the Post-Closing Convertible Notes and was amortized as part of interest expense over the term of the note. Warehouse Lines of Credit — Warehouse lines of credit represent the outstanding balance of the Company’s warehouse borrowings collateralized by mortgage loans held for sale or related borrowings collateralized by restricted cash. Generally, warehouse lines of credit are used as interim, short-term financing which bears interest at a fixed margin over an index rate, such as the Secured Oversight Financing Rate (“SOFR”). The outstanding balance of the Company’s warehouse lines of credit will fluctuate based on its lending volume. The advances received under the warehouse lines of credit are based upon a percentage of the fair value or par value of the mortgage loans collateralizing the advance, depending upon the type of mortgage loan. Should the fair value of the pledged mortgage loans decline, the warehouse provider may require the Company to provide additional cash collateral or mortgage loans to maintain the required collateral level under the relevant warehouse line. The Company did not incur any significant issuance costs related to its warehouse lines of credit. Post-Closing Convertible Notes— As part of the Closing of the Business Combination, the Company issued convertible notes. Upon initial issuance, convertible notes are evaluated for redemption and conversion features that could result in embedded derivatives that require bifurcation from the notes. Upon initial issuance, any embedded derivatives are measured at fair value. Convertible notes proceeds are allocated between the carrying value of the notes and the fair value of embedded derivatives on the initial issuance date. Any portion of proceeds allocated to embedded derivatives are treated as reductions in, or discounts to, the carrying value of the convertible notes on the issuance date. Embedded derivatives are adjusted to fair value at each reporting period, with the change in fair value included within the consolidated statements of operations and comprehensive income (loss). See Note 10 for further details on the Company’s Post-Closing Convertible Notes. Corporate Line of Credit, net of discount and debt issuance costs — The Company had a line of credit arrangement with a third-party lender. Debt and other related issuance costs are deferred and amortized through the maturity date of the line of credit as interest and amortization on non-funding debt expense. Any modifications of the line of credit arrangement are analyzed as to whether they are an extinguishment or modification of debt on a lender-by-lender basis, which is determined by whether (1) the lender remains the same, and (2) the change in the debt terms is considered substantial. Gains and losses on debt modifications that are considered extinguishments are recognized in current earnings. Debt modifications that are not considered extinguishments are accounted for prospectively through yield adjustments, based on the revised terms (see Note 10). Warrant Liabilities — The Company assumed publicly-traded warrants (“Public Warrants”) issued in Aurora’s initial public offering, private placement warrants issued by Aurora in connection with its formation and warrants attached to certain private placement units (collectively, the “Private Warrants” and, together with the Public Warrants, the “Warrants”). Each Warrant issued entitles the holder to purchase one share of Better Home & Finance Holding Company Class A common stock at an exercise price of $ 11.50 per share, subject to certain adjustments, at any time commencing 30 days after the consummation of the Business Combination (which for the avoidance of doubt was September 21, 2023). The Public Warrants are publicly traded and may be exercised on a cashless basis upon the occurrence of certain conditions. The Private Warrants are exercisable on a cashless basis and are not redeemable by the Company so long as they are held by the initial purchasers or their permitted transferees, subject to certain exceptions. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants. The Company evaluated the Public Warrants and Private Warrants and concluded that both meet the definition of a derivative and will be accounted for at fair value in accordance with ASC Topic 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity , as the Public Warrants and Private Warrants are not considered indexed to the Company's stock. Income Taxes — Income taxes are calculated in accordance with ASC 740, Accounting for Income Taxes . An estimated annual effective tax rate is applied to year-to-date income (loss). At the end of each interim period, the estimated effective tax rate expected to be applicable for the full year is calculated. This method differs from that described in the Company’s income taxes policy footnote in the audited consolidated financial statements and related notes thereto for the 12 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS year ended December 31, 2022, which describes the Company’s annual significant income tax accounting policy and related methodology. Revenue Recognition — The Company generates revenue from the following streams: 1) Mortgage platform revenue, net includes revenues generated from the Company's mortgage production process. See Note 4. The components of mortgage platform revenue, net are as follows: 1. Net gain (loss) on sale of loans—This represents the premium or discount the Company receives in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market. Net gain (loss) on sale of loans 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. Also included within net gain (loss) on sale of loans is the day one recognition of the fair value of MSRs and any subsequent changes in the measurement of the fair value of the MSRs for loans sold servicing retained, including any gain or loss on subsequent sales of MSRs. 2. Integrated relationship revenue (loss)—Includes fees that the Company receives for originating loans on behalf of an integrated relationship partner which are recognized as revenue (loss) upon the integrated relationship partner’s funding of the loan. Some of the loans originated on behalf of the integrated relationship partner are purchased by the Company. Subsequent changes in fair value of loans purchased by the Company are included as part of current period earnings. These loans may be sold in the secondary market at the Company’s discretion for which any gain on sale is included in this account. For loans sold on the secondary market, the integrated relationship partner will receive a portion of the execution proceeds. A portion of the execution proceeds that is to be allocated to the integrated relationship partner is accrued as a reduction of integrated relationship revenue (loss) when the loan is initially purchased from the integrated relationship partner. 3. Changes in fair value of IRLCs and forward sale commitments—IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market. Fair value of forward sale commitments hedging IRLC and LHFS are measured based on quoted prices for similar assets. 2) Cash offer program revenue—The Company’s product offering includes a cash offer program (“Better Cash Offer”) where the Company works with a Buyer to identify and purchase a home directly from a property Seller. The Company will then subsequently sell the home to the Buyer. The Buyer may lease the home from the Company while the Buyer and Company go through the customary closing process to transfer ownership of the home to the Buyer. Arrangements where the Buyer leases the home from the Company are accounted for under ASC 842 while arrangements where the Buyer does not lease the home are accounted for under ASC 606. The Buyer does not directly or indirectly contract with the Seller. For arrangements under the Better Cash Offer program that do not involve a lease, upon closing on the sale of the home from the Seller to the Company, the Company holds legal title of the home. The Company is responsible for any obligations related to the home while it holds title and is the legal owner and such is considered the principal in the transaction. The Company holds in inventory any homes where the Buyer does not subsequently purchase from the Company as well as homes held while the Company is waiting to transfer the home to the Buyer. Inventory of homes are included within prepaid expenses and other assets on the condensed consolidated balance sheets. The Company recognizes revenue at the time of the closing of the home sale when title to and possession of the home are transferred to the Buyer. The amount of revenue recognized for each home sale is equal to the full sales price of the home. The contracts with the Buyers contain a single performance obligation that is satisfied upon the closing of the transaction and is typically completed in 1 to 90 days. The Company does not offer warranties for sold homes, and there are no continuing performance obligations following the transaction close date. Also included in Better Cash Offer program revenue is revenue from transactions where the Company purchases the home from the Seller and subsequently leases the home to the Buyer until the title is transferred to the Buyer which is accounted for under ASC 842 in line with the Company’s accounting policy on sales-type leases as described above. 13 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3) Other platform revenue consists of revenue from the Company’s additional homeownership offerings which primarily consist of title insurance, settlement services, and other homeownership offerings. Title insurance, settlement services, and other homeownership offerings—Revenue from title insurance, settlement services, and other homeownership offerings is recognized based on ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”). ASC 606 outlines a single comprehensive model in accounting for revenue arising from contracts with customers. The core principle, involving a five-step process, of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company offers title insurance as an agent and works with third-party providers that underwrite the title insurance policies. For title insurance, the Company recognizes revenue from fees upon the completion of the performance obligation which is when the mortgage transaction closes. For title insurance, the Company is the agent in the transactions as the Company does not control the ability to direct the fulfillment of the service, is not primarily responsible for fulfilling the performance of the service, and does not assume the risk in a claim against a policy. Settlement services revenue includes fees charged for services such as title search fees, wire fees, policy and document preparation, and other mortgage settlement services. The Company recognizes revenues from settlement services upon completion of the performance obligation which is when the mortgage transaction closes. The Company may use a third-party to fulfill these services, but the Company is considered the principal in the transaction as it directs the fulfillment of the services and ultimately bears the risk of nonperformance. As the Company is the principal, revenues from settlement services are presented on a gross basis. Performance obligations for title insurance and settlement services are typically completed 40 to 60 days after the commencement of the loan origination process. Payment for these services is typically settled in cash as part of closing costs to the borrower upon closing of the mortgage transaction. Other homeownership offerings consists primarily of real estate services. For real estate services, the Company generates revenues from fees related to real estate agent services, including cooperative brokerage fees from the Company’s network of third-party real estate agents, as well as brokerage fees earned when the Company provides it’s in-house real estate agents to assist customers in the purchase or sale of a home. The Company recognizes revenues from real estate services upon completion of the performance obligation which is when the mortgage transaction closes. Performance obligations for real estate services are typically completed 40 to 60 days after the commencement of the home search process. Payment for these services is typically settled in cash as part of closing costs to the borrower upon closing of the mortgage transaction. 4) Net interest income (expense)—Includes interest income from LHFS calculated based on the note rate of the respective loan as well as interest expense on warehouse lines of credit. Mortgage Platform Expenses — Mortgage platform expenses consist primarily of origination expenses, appraisal fees, processing expenses, underwriting, closing fees, servicing costs, and sales and operations personnel related expenses. Sales and operations personnel related expenses include compensation and related benefits, stock-based compensation, and allocated occupancy expenses and related overhead based on headcount. These expenses are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period. Cash Offer Program Expenses — Better Cash Offer program expenses include the full cost of the home, including transaction closing costs and costs for maintaining the home before the legal title of the home is transferred to the Buyer. Better Cash Offer program expenses are recognized when title is transferred to the Buyer for arrangements recognized under ASC 606 and when the lease commences for arrangements recognized under ASC 842. Other Platform Expenses — Other platform expenses relate to other non-mortgage homeownership activities, including settlement service expenses, lead generation, and personnel related costs. Settlement service expenses consist of fees for transactional services performed by third-party providers for borrowers while lead generation expenses consist of fees for services related to real estate agents. Personnel related expenses include compensation and related benefits, stock-based compensation, and allocated occupancy expenses and related overhead based on headcount. Other platform expenses 14 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period. General and Administrative Expenses — General and administrative expenses include personnel related expenses, including stock-based compensation and benefits for executive, finance, accounting, legal, and other administrative personnel. In addition, general and administrative expenses include external legal, tax and accounting services, and allocated occupancy expenses and related overhead based on headcount. General and administrative expenses are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period. Marketing and Advertising Expenses — Marketing and advertising expenses consist of customer acquisition expenses, brand costs, paid advertising, and personnel related costs for brand teams. For customer acquisition expenses, the Company primarily generates loan origination leads through third-party financial service websites for which they incur “pay-per-click” expenses. A majority of the Company’s marketing and advertising expenses are incurred from leads purchased from these third-party financial service websites. Personnel related expenses include compensation and related benefits, stock-based compensation, and allocated occupancy expenses and related overhead based on headcount. Marketing and advertising expenses are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period. Technology and Product Development Expenses — Technology and product development expenses consist of employee compensation, amortization of capitalized internal-use software costs related to the Company’s technology platform, and expenses related to vendors engaged in product management, design, development, and testing of the Company’s websites and products. Employee compensation consists of stock-based compensation and benefits related to the Company’s technology team, product and creative team, and engineering team. Technology and product development expenses also include allocated occupancy expenses and related overhead based on headcount. Technology and product development expenses are expensed as incurred with the exception of stock-based compensation, which is recognized over the requisite service period. Segments — The Company has one reportable segment. The Company’s chief operating decision maker, the Chief Executive Officer, reviews financial information presented on a company-wide basis for purposes of allocating resources and evaluating financial performance. Emerging Growth Company and Smaller Reporting Company Status —Under the Jumpstart Our Business Startups Act of 2012 (“ JOBS Act”), emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) it affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Better’s consolidated revenues were below $1.235 billion for the year ended December 31, 2022. Aurora had no consolidated revenues for the year ended December 31, 2022 and qualified as an emerging growth company. As a result, Better Home & Finance qualifies as an emerging growth company and is eligible for relief from regulatory requirements provided to emerging growth companies. The Company also is a smaller reporting company, as defined in the rules under the Securities Exchange Act of 1934 (the “Exchange Act”). Even after the Company no longer qualifies as an emerging growth company, the Company may still qualify as a smaller reporting company, which would allow it to continue taking advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in the Company’s periodic reports and proxy statements. In addition, for so long as the Company continues to qualify as a non-accelerated filer, it will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Recently Adopted Accounting Standards In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . In addition, in January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope , which clarified the scope and application of the original guidance. Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting 15 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS under existing U.S. GAAP, to address the expected phase out of the London Inter-bank Offered Rate (or “LIBOR”) by September 30, 2023. This guidance is effective upon issuance and allows application to contract changes as early as January 1, 2020. The guidance is effective for all companies as of March 12, 2020 and can generally be applied through December 31, 2022. In December 2022, FASB issued ASU 2022-06, Reference Rate Reform ("Topic 848"): Deferral of the Sunset Date of Topic 848 , because the current relief in Topic 848 may not cover a period of time during which a significant number of modifications may take place, the amendments in this Update defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The adoption of the new guidance did not have a material impact on the condensed consolidated financial statements. 3. Business Combination The Business Combination has been accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Aurora was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Better issuing stock for the net assets of Aurora, accompanied by a recapitalization. The net assets of Aurora were recorded at fair value (which approximated historical cost considering the nature of the assets transferred), with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of Better. At the Closing of and in connection with the Business Combination, the following occurred: • Exchange of Legacy Better Stock —Each outstanding share of Better common stock prior to the Business Combination (“Legacy Better Stock”), each warrant to purchase preferred stock was exercised and all series of preferred stock were converted to common stock and exchanged for approximately 3.06 shares (the "Exchange Ratio") of the Company’s common stock. Outstanding options to purchase Legacy Better common stock and restricted stock units ("RSUs") were converted into the right to receive options or warrants to purchase shares of Class B common stock or RSUs representing the right to receive shares of Class B common stock, as applicable, on the same terms and conditions that are in effect with respect to such options or RSUs on the day of the closing of the Business Combination, subject to adjustments using the Exchange Ratio. • Private and Public Warrants — 6,075,047 redeemable public warrants to acquire shares of Aurora (“Public Warrants”), together with 3,733,358 private warrants to acquire shares of Aurora (“Private Warrants” and, together with the Public Warrants, the “Warrants”), have converted into warrants to acquire shares of Better Home & Finance Class A common stock. As contemplated by the Sponsor Agreement, dated as of May 10, 2021, by and among Aurora and Novator Capital Sponsor Ltd. (“Sponsor”) (as amended, the “Sponsor Agreement”), Sponsor forfeited 1,715,014 Private Warrants, effective as of the Closing Date, which comprised 50 % of the Private Warrants held by Sponsor on May 10, 2021. Each Warrant entitles the holder to purchase one share of the Company’s Class A common stock at an exercise price of $ 11.50 per share, subject to certain adjustments. The Warrants became exercisable at any time commencing 30 days after the completion of the Business Combination (which for the avoidance of doubt was September 21, 2023), and will expire five years after the Business Combination or earlier upon redemption or liquidation. • Sponsor locked-up Shares —Pursuant to the Sponsor Agreement, the Sponsor forfeited upon Closing 50 % of the Aurora private warrants and 20 % of the Sponsor’s shares of Better Home & Finance Class A common stock as of the Closing became subject to transfer restrictions, contingent upon the price of Better Home & Finance Class A common stock exceeding certain thresholds (the “Sponsor Locked-Up Shares”). The Sponsor Locked-Up Shares will be released in three tranches if the volume weighted average price (the “VWAP”) of Better Home & Finance Class A common stock exceeds certain price thresholds: (i) one-third of such shares will be released if VWAP for any 20 trading days during any consecutive 30 -trading day period exceeds $ 12.50 per share, (ii) one-third of such shares will be released if the VWAP for any 20 trading days during any consecutive 30 -trading day period exceeds $ 15.00 per share, and (iii) one-third of such shares will be released if the VWAP for any 20 trading days during any consecutive 30 -trading day period exceeds $ 17.50 per share. In addition to the transfer restriction, upon certain change in control events included in the Sponsor Agreement, if there is a change in control event within five years following the Closing, the shares which have not reached the thresholds stated above will be forfeited. If after five years there is no such change in control event, the lock-up period will go on in perpetuity until the price thresholds are met. 16 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS • Aurora Trust Account —The Company received gross cash consideration of $ 21.4 million as a result of the reverse recapitalization as well as $ 0.2 million from Aurora’s operating cash account. • Post-Closing Convertible Notes —The Company received $ 528.6 million from SoftBank as a result of issuing notes, see Note 10 for further details. • Sponsor Share Purchase —The purchase for $ 17.0 million by the Sponsor of 1.7 million shares of Better Home & Finance Class A common stock. • Conversion of Convertible Preferred Stock and Exercise of Convertible Preferred Stock Warrants —See Note 17 for further details. • Conversion of Pre-Closing Bridge Notes —See Note 10 for further details. • Transaction or Exchange costs —The Company incurred $ 21.4 million of equity issuance costs, consisting of financial advisory, legal, share registration, and other professional fees, which are recorded to additional paid-in capital as a reduction of transaction proceeds. The number of shares of common stock issued immediately following the Business Combination was as follows: Number of Shares Class A Class B Class C Legacy Better Stockholders 40,601,825 574,407,420 6,877,283 Legacy Aurora Shareholders 210,098 — — Sponsor and affiliates of Aurora 10,488,812 — — Pre-Closing Bridge Note Investors 40,000,000 — 65,000,000 Total 91,300,735 574,407,420 71,877,283 4. Revenue and Sales-Type Leases Revenue — The Company disaggregates revenue based on the following revenue streams: Mortgage platform revenue, net consisted of the following : Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Net gain (loss) on sale of loans $ 7,120 $ ( 10,125 ) $ 36,689 $ ( 59,105 ) Integrated partnership revenue (loss) 3,067 2,265 9,797 ( 8,526 ) Changes in fair value of IRLCs and forward sale commitments 4,019 18,947 8,441 174,217 Total mortgage platform revenue, net $ 14,207 $ 11,087 $ 54,927 $ 106,586 Cash offer program revenue consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Revenue related to ASC 606 $ — $ 749 $ — $ 11,333 Revenue related to ASC 842 — 8,991 304 214,764 Total cash offer program revenue $ — $ 9,739 $ 304 $ 226,096 17 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Other platform revenue consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Real estate services $ 651 $ 3,983 $ 6,214 $ 20,735 Title insurance 13 220 45 6,975 Settlement services 2 130 15 4,190 Other homeownership offerings 668 1,355 3,082 3,723 Total other platform revenue $ 1,333 $ 5,688 $ 9,355 $ 35,623 Sales-type Leases —The following table presents the revenue and expenses recognized at the commencement date of sales-type leases for the periods indicated: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Cash offer program revenue $ — $ 8,991 $ 304 $ 214,764 Cash offer program expenses $ — $ 8,944 $ 278 $ 215,972 5. Restructuring and Impairments In December 2021, the Company initiated an operational restructuring program that included plans for costs reductions in response to a difficult interest rate environment as well as a slowing housing market. The restructuring program, which continued during the nine months ended September 30, 2023, consists of reductions in headcount and any associated costs which primarily include one-time employee termination benefits. The Company expects the restructuring initiatives to continue at least through the end of 2023. Due to the reduced headcount, the Company has also reduced its real estate footprint. The Company has impaired right-of-use assets related to office space that is no longer in use or has been completely abandoned. Leases where the Company is unable to terminate or amend the lease with the landlord remain on the balance sheet under lease liabilities. In February 2023, the Company entered into a lease amendment with a landlord to surrender an office floor and reassign the lease to a third party. The amendment relieves the Company of the primary obligation under the original lease and as such is considered a termination of the original lease. In February 2023, the Company impaired the right-of-use asset of $ 13.0 million and removed the lease liability of $ 13.0 million related to one of the office spaces and as part of the amendment the Company incurred a loss of $ 5.3 million which included a $ 4.7 million payment in cash to the third party and $ 0.6 million other related fees to terminate the lease early. For the three months ended September 30, 2023 and 2022, the Company impaired property and equipment of none and $ 0.2 million, respectively, which was related to termination of lease agreement and sale of laptops resulting from a reduction in the workforce. For the nine months ended September 30, 2023 and 2022, the Company impaired property and equipment of $ 4.8 million and $ 3.1 million, respectively, which was related to the termination of the lease agreements and sale of laptops resulting from a reduction in the workforce. The Company assessed the loan commitment asset for impairment as there were factors that indicated that it was probable that the asset had been impaired on September 30, 2022 as the probability of the Company meeting the criteria to draw on the Post-Closing Convertible declined. 18 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the three and nine months ended September 30, 2023 and 2022, the Company’s restructuring and impairment expenses consists of the following: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Employee one-time termination benefits $ 765 $ 5,277 $ 2,320 $ 99,291 Impairment of loan commitment asset — 38,330 — 105,604 Impairments of Right-of-Use Assets — 1,897 413 4,391 Real estate restructuring loss — — 5,284 — (Gain) on lease settlement ( 86 ) — ( 1,063 ) — Impairment of property and equipment — 197 4,844 3,124 Other impairments 80 80 Total Restructuring and Impairments $ 679 $ 45,781 $ 11,798 $ 212,490 As of September 30, 2023 and December 31, 2022, respectively, the Company had an immaterial liability related to employee one-time termination benefits that were yet to be paid. The cumulative amount of one-time termination benefits, impairment of loan commitment asset, impairment of right-of-use assets, and impairment of property and equipment as of September 30, 2023 is $ 121.6 million, $ 105.6 million, $ 6.6 million, and $ 8.9 million, respectively. 6. Mortgage Loans Held for Sale and Warehouse Lines of Credit The Company has the following outstanding warehouse lines of credit: (Amounts in thousands) Maturity Facility Size September 30, 2023 December 31, 2022 Funding Facility 1 (1) October 31, 2023 $ 100,000 $ — $ 89,673 Funding Facility 2 (2) August 4, 2023 — — 9,845 Funding Facility 3 (3) December 8, 2023 149,000 73,536 44,531 Funding Facility 4 (4) August 3, 2024 175,000 — — Total warehouse lines of credit $ 424,000 $ 73,536 $ 144,049 __________________ (1) Interest charged under the facility is the greater of i) a) thirty day term SOFR plus three and one-eighth percent for each repurchase and non-qualifying mortgage loans, and b) interest rate charged on the note (“Note Rate”) minus one and one-half percent and ii) a) thirty day term SOFR plus two and one-eight percent for each mortgage loans that is not a non-qualifying or a repurchase mortgage loan, and b) the Note Rate minus one and one-eighth percent. Cash collateral deposit of $ 15.0 million is maintained and included in restricted cash. Subsequent to September 30, 2023, the facility matured on October 31, 2023 and the Company extended the maturity to November 30, 2023. (2) Interest charged under the facility is at the one month SOFR plus 1.77 %. There is no cash collateral deposit maintained as of September 30, 2023. The facility matured on August 4, 2023 and the Company did not extend beyond maturity. (3) Interest charged under the facility is at the one month SOFR plus 1.60 % - 2.25 %. Cash collateral deposit of $ 3.8 million is maintained and included in restricted cash. The Company extended the maturity from September 8, 2023 to December 8, 2023 during the three months ended September 30, 2023. (4) Interest charged under the facility is at the one month SOFR plus 1.75 % - 3.75 %. There is no cash collateral deposit maintained as of September 30, 2023. For the nine months ended September 30, 2023 and 2022, the weighted average interest rate for the warehouse lines of credit was 6.92 % and 4.94 %, respectively. The warehouse lines of credit contain certain restrictive covenants that require the Company to maintain certain minimum net worth, liquid assets, current ratios, liquidity ratios, leverage ratios, and earnings. In addition, these warehouse lines also require the Company to maintain compensating cash balances which aggregated to $ 18.8 million and $ 15.0 million as of September 30, 2023 and December 31, 2022, respectively, and are 19 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS included in restricted cash on the accompanying condensed consolidated balance sheets. The Company was in compliance with all financial covenants under the warehouse lines as of September 30, 2023. The unpaid principal amounts of the Company’s LHFS are also pledged as collateral under the relevant warehouse funding facilities. The Company’s LHFS are summarized below by those pledged as collateral and those fully funded by the Company: (Amounts in thousands) September 30, 2023 December 31, 2022 Funding Facility 1 $ 43,288 $ 101,598 Funding Facility 2 — 10,218 Funding Facility 3 83,582 46,356 Total LHFS pledged as collateral 126,870 158,172 Company-funded LHFS 19,890 136,599 Company-funded Home Equity Line of Credit 19,335 8,320 Total LHFS 166,095 303,091 Fair value adjustment ( 6,070 ) ( 54,265 ) Total LHFS at fair value $ 160,025 $ 248,826 Average days loans held for sale, other than Company-funded LHFS and Company-funded HELOC, for the three and nine months ended September 30, 2023 and 2022 were approximately 21 days, 14 days and 21 days and 17 days, respectively. This is defined as the average days between funding and sale for loans funded during each period. As of September 30, 2023 and December 31, 2022, the Company had $ 1.6 million ( 4 loans) and $ 3.0 million ( 7 loans), respectively, in unpaid principal balance of loans either 90 days past due or non-performing. In July 2023 , the Company sold the majority of Company-funded LHFS in bulk to a single loan purchaser for a total sale price of $ 113.2 million. These Company funded LHFS were pledged as collateral under the Company’s 2023 Credit Facility (see Note 10) and as such of the total sale price, $ 98.4 million of cash was remitted directly to the Lender (as defined in Note 10) and $ 14.8 million of cash was remitted to the Company. 7. Goodwill and Internal Use Software and Other Intangible Assets, Net In January 2023, the Company completed an acquisition of Goodholm Finance Ltd. (“Goodholm”), a regulated U.K. based mortgage lender and servicer, providing outsourced administration of mortgages, loans and collection portfolios. The Company paid a total cash consideration of $ 2.9 million for the acquisition. In connection with this acquisition, the Company recognized the following assets and liabilities: (Amounts in thousands) As of Acquisition Date Cash and cash equivalents $ 283 Property and equipment 20 Indefinite lived intangibles - Licenses 1,186 Goodwill 1,741 Other assets (1) 65 Accounts payable and accrued expenses (1) ( 161 ) Other liabilities (1) ( 193 ) Net assets acquired $ 2,941 __________________ (1) Carrying value approximates fair value given their short-term maturity periods Intangible assets acquired consist of regulatory licenses. The acquisition was not material to the Company's condensed consolidated financial statements. Accordingly, pro forma results of this acquisition have not been presented. 20 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS In April 2023, the Company completed the acquisition of a U.K.-based banking entity after obtaining regulatory approval from the financial control authorities in the U.K. The Company acquired Birmingham Bank Ltd. (“Birmingham”), a regulated bank, offering a range of financial products and services to consumers and small businesses. The acquisition will allow the Company to grow and expand operations in the U.K. by enabling the Company to improve the mortgage process for U.K. mortgage borrowers. The Company acquired 100 % of the equity of Birmingham for a total consideration of $ 19.3 million, which consists of $ 15.9 million in cash and $ 3.4 million in deferred consideration in the form of an earn out which is included within other liabilities on the condensed consolidated balance sheet at the acquisition date. In connection with this acquisition, the Company recognized the following assets and liabilities: (Amounts in thousands) As of Acquisition Date Cash and cash equivalents $ 2,907 Accounts receivable (1) 60 Short-term investments 8,729 Other assets 7,530 Property and equipment 83 Finite lived intangibles 854 Indefinite lived intangibles - Licenses 31 Goodwill 12,300 Accounts payable and accrued expenses (1) ( 248 ) Customer deposits ( 12,374 ) Other liabilities (1) ( 586 ) Net assets acquired $ 19,286 __________________ (1) Carrying value approximates fair value given their short-term maturity periods Intangible assets acquired consist of trade name, core deposits intangibles, and regulatory licenses. The acquisition was not material to the Company's condensed consolidated financial statements. Accordingly, pro forma results of this acquisition have not been presented. Changes in the carrying amount of goodwill, net consisted of the following: Nine Months Ended September 30, (Amounts in thousands) 2023 Balance at beginning of period $ 18,525 Goodwill acquired—Goodholm & Birmingham 14,041 Effect of foreign currency exchange rate changes ( 74 ) Balance at end of period $ 32,492 No impairment of goodwill was recognized for the three and nine months ended September 30, 2023 and 2022. 21 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Internal use software and other intangible assets, net consisted of the following: As of September 30, 2023 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.0 $ 136,092 $ ( 94,835 ) $ 41,257 Intellectual property and other 6.2 4,322 ( 1,402 ) 2,920 Total Intangible assets with finite lives, net 140,413 ( 96,237 ) 44,176 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 2,410 — 2,410 Total Internal use software and other intangible assets, net $ 144,643 $ ( 96,237 ) $ 48,406 As of December 31, 2022 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.0 $ 123,734 $ ( 67,319 ) $ 56,415 Intellectual property and other 7.5 3,449 ( 838 ) 2,611 Total Intangible assets with finite lives, net 127,183 ( 68,157 ) 59,026 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 1,150 — 1,150 Total Internal use software and other intangible assets, net $ 130,153 $ ( 68,157 ) $ 61,996 The Company capitalized $ 5.0 million and $ 3.0 million in internal use software and website development costs during the three months ended September 30, 2023 and 2022, respectively. Included in capitalized internal use software and website development costs are $ 2.5 million and $ 0.8 million of stock-based compensation costs for the three months ended September 30, 2023 and 2022, respectively. Amortization expense totaled $ 9.3 million and $ 9.0 million during the three months ended September 30, 2023 and 2022, respectively. For the three months ended September 30, 2023 and 2022, no impairment was recognized relating to intangible assets. The Company capitalized $ 12.4 million and $ 22.8 million in internal use software and website development costs during the nine months ended September 30, 2023 a nd 2022, respectively. Included in capitalized internal use software and website development costs are $ 3.9 million and $ 3.0 million of stock-based compensation costs for the nine months ended September 30, 2023 and 2022, respectively. Amortization expense totaled $ 28.1 million and $ 26.1 million during the nine months ended September 30, 2023 and 2022, respectively. For the nine months ended September 30, 2023 and 2022, no impairment was recognized relating to intangible assets. 22 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 8. Prepaid Expenses and Other Assets Prepaid expenses and other assets consisted of the following: As of September 30, As of December 31, (Amounts in thousands) 2023 2022 Prepaid expenses $ 27,095 $ 26,366 Tax receivables 9,717 18,139 Security Deposits 15,233 14,369 Loans held for investment 4,163 — Prepaid compensation asset — 5,615 Inventory—Homes — 1,139 Net investment in lease $ — $ 944 Total prepaid expenses and other assets $ 56,208 $ 66,572 Prepaid Compensation Asset —Prepaid compensation asset, which is related to prepaid expenses and other assets as shown in the table above, consists of a one-time retention bonus given to Kevin Ryan, Chief Financial Officer of the Company, in the form of a forgivable loan of $ 6.0 million, with an annual compounding interest rate of 3.5 % on August 18, 2022. Subject to Mr. Ryan’s active employment by the Company and status of good standing on each of December 1, 2023, December 1, 2024, December 1, 2025 and December 1, 2026, 25 % of the principal amount of, and accrued and unpaid interest on, the loan will be forgivable on each such dates. Further, the outstanding principal and interest will be forgivable upon Mr. Ryan’s death, termination as part of a reduction in force, the elimination or substantial reduction of Mr. Ryan’s role, a change in control of the Company, the Company’s insolvency or filing of bankruptcy or Mr. Ryan’s termination by the Company without cause. The loan will also be forgiven if it would violate applicable law, including Section 402 of the Sarbanes-Oxley Act as implemented in Section 13(k) of the Exchange Act. In the event of Mr. Ryan’s voluntary separation from the Company or termination by the Company for cause, any outstanding principal and interest will be due in full on the date that is twenty-four ( 24 ) months from the date of termination. The Company was recognizing the expense ratably over time until December 1, 2026 or until forgiveness based on the events discussed above. In August 2023, in connection with and prior to the closing of the Merger, the Company has forgiven Mr. Ryan’s loan in the amount of $ 6.0 million plus accrued interest of $ 0.2 million and as such the Company is in compliance with Section 402 of the Sarbanes-Oxley Act as implemented in Section 13(k) of the Exchange Act. As a result of the forgiveness, the Company has recognized $ 4.8 million and $ 0.1 million of compensation expense during the three months ended September 30, 2023 and 2022, respectively. The Company has recognized $ 5.5 million and $ 0.1 million of compensation expense during the nine months ended September 30, 2023 and 2022, respectively. In addition, the Company has agreed to reimburse and make whole Mr. Ryan with the withholding taxes incurred in connection with the forgiveness of the loan which resulted in additional compensation expense of $ 3.9 million for the three and nine months ended September 30, 2023. Loans Held for Investment —The Company holds a small amount of loans held for investment, which were acquired as part of the Birmingham acquisition in April 2023. For these loans, management has the intent and ability to hold for the foreseeable future or until maturity or payoff and are reported at amortized cost, which is the principal amount outstanding, net of cumulative charge-offs, unamortized net deferred loan origination fees and costs and unamortized premiums or discounts on purchased loans. The allowance for credit losses is a valuation account that is deducted from the loans held for investment amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged-off against the allowance when management believes the loan balance is deemed to be uncollectible. Management's estimation of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts, including expected defaults and prepayments. The Company recognized an immaterial current expected credit loss for loans held for investment as of September 30, 2023. 23 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 9. Customer Deposits The following table presents average balances and weighted average rates paid on deposits for the periods indicated: Three Months Ended September 30, 2023 Three Months Ended September 30, 2022 (Amounts in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Notice $ 2,190 2.92 % $ — — % Term 2,962 2.13 % — — % Savings 4,991 2.18 % — — % Total Deposits $ 10,143 2.41 % $ — — % Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022 (Amounts in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Notice $ 2,842 2.62 % $ — — % Term 2,402 1.66 % — — % Savings 5,511 1.97 % — — % Total Deposits $ 10,755 2.08 % $ — — % The following table presents maturities of customer deposits: (Amounts in thousands) As of September 30, 2023 Demand deposits $ 4,795 Maturing In: 2023 2,608 2024 2,299 2025 206 2026 — 2027 — Thereafter — Total $ 9,908 Interest Expense on deposits is recorded in warehouse interest expense in the condensed consolidated statements of operations and comprehensive loss for the periods indicated as follows: Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023 (Amounts in thousands) 2023 2022 2023 2022 Notice $ 22 $ — $ 43 $ — Term 4 — 10 — Savings 26 — 54 — Total Interest Expense $ 52 $ — $ 107 — Deposits are for U.K. banking clients and are protected up to £ 85.0 thousand ($ 103.7 thousand) per eligible person by the Financial Services Compensation Scheme in the U.K. Of the total customer deposits as of September 30, 2023, $ 1.0 million were over the applicable insured amount. 24 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 10. Corporate Line of Credit and Preclosing Bridge Notes Corporate Line of Credit —As of September 30, 2023 and December 31, 2022, the Company had none and $ 144.4 million, respectively, of outstanding borrowings on the line of credit, which are recorded net of the unamortized portion of the warrant discount and debt issuance costs within corporate line of credit, net in the condensed consolidated balance sheets. The Company had none and $ 2.0 million of unamortized warrant issuance related discount and debt issuance costs as of September 30, 2023 and December 31, 2022, respectively . In February 2023, the Company entered into a loan and security agreement (the “2023 Credit Facility”) with Clear Spring Life and Annuity Company, an entity affiliated with the previous agent and acting as an agent for such lenders (together, the “Lender”) to amend its previously existing loan and security agreement (the “2021 Credit Facility”). The terms of the 2023 Credit Facility granted relief from the acceleration of payments under minimum revenue triggers from the 2021 Credit Facility. The 2023 Credit Facility split the principal balance into two tranches, tranche “AB” in the amount of $ 96.7 million and Tranche “C” in the amount of $ 26.9 million. Tranche AB was backed by assets that the Company pledged, mainly loans held for sale that the Company fully owned while Tranche C was secured by other assets of the Company. Tranche AB had a fixed interest rate of 8.5 % and Tranche C had a variable interest rate based on the SOFR reference rate for a one-month tenor plus 9.5 %. During the nine months ended September 30, 2023, the Company paid off $ 144.4 million owed in principal balance on the 2023 Credit Facility. The Company made the final principal payment to the Lender in August 2023 and as the Company repaid the 2023 Credit Facility in full earlier than what was contractually required, the Company paid a make-whole amount that represents minimum interest for the Lender in the amount of $ 4.5 million. The Company also amortized the remaining unamortized debt issuance costs in the amount of $ 5.1 million as part of interest and amortization on non-funding debt expense within the consolidated statements of operations and comprehensive loss. For the three months ended September 30, 2023, the Company recorded a total of $ 11.3 million related to interest expense as follows: $ 6.1 million in interest expense related to the line of credit and $ 5.2 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest and amortization on non-funding debt expense, net within the condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2023, the Company recorded a total of $ 17.6 million related to interest expense as follows: $ 11.5 million in interest expense related to the line of credit and $ 6.0 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest and amortization on non-funding debt expense, net within the condensed consolidated statements of operations and comprehensive loss. For the three months ended September 30, 2022, the Company recorded a total of $ 2.8 million related to interest expense as follows: $ 2.4 million in interest expense related to the line of credit and $ 0.3 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest and amortization on non-funding debt expense within the consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2022, the Company recorded a total of $ 9.6 million related to interest expense as follows: $ 8.5 million in interest expense related to the line of credit and $ 0.8 million in interest expense related to the amortization of deferred debt issuance costs and discount and other debt servicing fees which is included in interest and amortization on non-funding debt expense within the consolidated statements of operations and comprehensive loss. Pre-Closing Bridge Notes —The carrying value of the Pre-Closing Bridge Notes as of December 31, 2022 is $ 750.0 million and is included in the condensed consolidated balance sheets. In connection with the Closing of the Business Combination, the Pre-Closing Bridge Notes held by SoftBank in an aggregate principal amount of $ 650.0 million automatically converted into Better Home & Finance Class C common stock at a conversion price of $ 10.00 per share (the “Bridge Note Conversion”). In connection with the Bridge Note Conversion, the Company issued an aggregate 65.0 million shares of Better Home & Finance Class C common stock to a trust designated by SoftBank to distribute such shares to SoftBank upon satisfaction of certain conditions. In addition, pursuant to the letter agreement, dated as of February 7, 2023, by and among Aurora, the Company and the Sponsor (the “Second Novator Letter Agreement”) and the letter agreement, dated August 22, 2023, by and among Aurora, Better and the Sponsor (the “Novator Exchange Agreement”), the Pre-Closing Bridge Notes held by the Sponsor in an aggregate principal amount of $ 100.0 million were exchanged for 40.0 million shares of Better Home & Finance Class A common stock. The Company recorded none and $ 80.1 million in interest expense on Pre-Closing Bridge Notes from the amortization of the discount during the three months ended September 30, 2023 and 2022, respectively, included within the condensed 25 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS consolidated statements of operations and comprehensive loss. The Company recorded none and $ 213.5 million in interest expense on Pre-Closing Bridge Notes from the amortization of the discount during the nine months ended September 30, 2023 and 2022, respectively, included within the condensed consolidated statements of operations and comprehensive loss. Issuance of Post-Closing Convertible Notes— In connection with the Closing of the Business Combination, the Company issued to SoftBank senior subordinated convertible notes in the aggregate principal amount of $ 528.6 million (the “Post-Closing Convertible Notes”), $ 550.0 million less approximately $ 21.4 million released to the Company at the Closing from Aurora’s trust account, pursuant to an Indenture, dated as of August 22, 2023 (the “Indenture”). The Post-Closing Convertible Notes bear 1 % interest per annum and mature on August 22, 2028, unless earlier converted or redeemed. Per the Indenture, the Company 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. Upon issuing the Convertible Notes, the loan commitment asset on Better’s balance sheet as of December 31, 2022 in the amount of $ 16.1 million, associated with the right to draw the Post-Closing Convertible Notes, is reflected as a debt discount which will be amortized as part of interest expense over the term of the Post-Closing Convertible Notes. As of September 30, 2023, the carrying amount of the Post-Closing Convertible Notes was $ 513.0 million on the condensed consolidated balance sheets. The Post-Closing Convertible Notes are convertible, at the option of SoftBank, into shares of the Company’s Class A common stock, with an initial conversion rate per $1,000 principal amount of Post-Closing Convertible Notes equal to (a) $1,000 divided by (b) a dollar amount equal to 115 % of the First Anniversary VWAP (as defined in the Indenture), subject to adjustments as described therein. The Indenture provides that the First Anniversary VWAP may be no less than $ 8.00 and no greater than $ 12.00 , subject to adjustments as described therein. The Post-Closing Convertible Notes may be redeemed at the option of the Company at a redemption price of 115 % of par plus accrued interest in cash, at any time on or before the 30th trading day prior to the maturity date of the Post-Closing Convertible Notes if the last reported sale price of the Class A common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days during the 30 trading day period ending on, and including, the trading day immediately preceding the date of notice of optional redemption. The Post-Closing Convertible Notes permit the Company to designate up to $ 150 million of indebtedness that is senior to the Post-Closing Convertible Notes, in addition to certain other customary exceptions. In addition, the Indenture requires that if a domestic subsidiary of the Company guarantees other senior indebtedness of the Company, such subsidiary would also be required to guarantee the notes, subject to certain exceptions for non-profit subsidiaries and regulated mortgage origination subsidiaries. For the three and nine months ended September 30, 2023, the Company recorded a total of $ 0.5 million and $ 0.5 million respectively, of interest expense related to the Post-Closing Convertible Notes. Interest expense from the Post-Closing Convertible Notes is included in interest and amortization on non-funding debt expense, net within the condensed consolidated statements of operations and comprehensive loss. 11. Related Party Transactions The Company has entered into a number of commercial agreements with related parties, which management believes provide the Company with products or services that are beneficial to its commercial objectives. Often these products and services have been tailored to the Company’s specific needs or are part of new pilot programs, both for the Company and the counterparty, for which there are not clear alternative vendors offering comparable services to compare pricing with. It is reasonable to assume that none of these related party commercial agreements were structured at arm’s length and therefore may be beneficial to the counterparty. 1/0 Capital —The Company is a party to an employee and expense allocation agreement with 1/0 Capital, LLC (“1/0 Capital”), an entity affiliated with 1/0 Real Estate, LLC (“1/0 Real Estate”) (an entity wholly owned by 1/0 Holdco, in which Vishal Garg, the Chief Executive Officer of the Company, and the Company’s executive officers each hold a more than five percent ownership interest). Under the employee and expense allocation agreement, 1/0 Capital provides the Company access to certain employees in exchange for reasonable consideration in the form of fees based on their time, as well as IT support services. Any intellectual property created under the agreement by 1/0 Capital employees working on behalf of the Company belongs to the Company. The term of the agreement will continue in perpetuity. The services provided by 1/0 Capital are not integral to the Company’s technology platform and amounts incurred are not material to the Company. In connection with this agreement, the Company reduced the accrued expense by $ 27.0 thousand and $ 187.3 thousand in the three months ended September 30, 2023 and 2022, respectively. As part of this agreement, the Company may provide access to certain of its employees for use by 1/0 Capital which reduced the amounts owed to 1/0 Capital by 26 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS none and none for the three months ended September 30, 2023 and 2022, respectively. The Company recorded a reduction of expenses of $ 27.0 thousand and $ 187.3 thousand for the three months ended September 30, 2023 and 2022, respectively, which are included within general and administrative expenses on the consolidated statements of operations and comprehensive loss. The Company incurred gross expenses of $ 6.4 thousand and $ 386.8 thousand in the nine months ended September 30, 2023 and 2022, respectively. As part of this agreement, the Company may provide access to certain of its employees for use by 1/0 Capital which reduced the amounts owed to 1/0 Capital by none and $ 18.2 thousand for the nine months ended September 30, 2023 and 2022, respectively. The Company recorded net expenses of $ 6.4 thousand and $ 368.6 thousand for the nine months ended September 30, 2023 and 2022, respectively, which are included within general and administrative expenses on the consolidated statements of operations and comprehensive loss. The Company is invoiced on a net basis and recorded a $ 144.4 thousand and $ 177.0 thousand payable as of September 30, 2023 and December 31, 2022, respectively, included within other liabilities, respectively, on the condensed consolidated balance sheets. TheNumber —The Company originally entered into a data analytics services agreement in August 2016 with TheNumber, LLC (“TheNumber”), an entity affiliated with both Vishal Garg, the Chief Executive Officer of the Company, and 1/0 Real Estate. In September 2021, the Company and TheNumber entered into a technology integration and license agreement, which was amended in November 2021, to develop a consumer credit profile technology which is to be launched in three stages. The first stage involves testing TheNumber’s limited graph Application Programming Interface (“API”) in a testing environment with test data. The second stage involves data such as credit, income, and assets of staged borrowers meeting certain measures of speed and performance. The third stage requires TheNumber to run the product and serve all borrowers on the production side as well as provide data to the Company from its rich data set. The listed services provided by TheNumber are lead generation, market rate analysis, lead growth analysis, property listing analysis, automated valuation models, and financial risk analysis. Both parties agreed to jointly develop all aspects of this program, and the agreement provides for the utilization of TheNumber employees by the Company. In January 2023, the agreement was extended for an additional year. The services provided by TheNumber are not integral to the Company’s technology platform and amounts incurred are not material to the Company. In connection with these agreements, the Company paid expenses of $ 66.9 thousand and $ 617.7 thousand for the three months ended September 30, 2023 and 2022 respectively, which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss. The Company paid expenses of $ 438.0 thousand and $ 1,123.0 thousand for the nine months ended September 30, 2023 and 2022 respectively, which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss and had a payable of $ 204.3 thousand and $ 232.0 thousand as of September 30, 2023 and December 31, 2022, respectively, within other liabilities on the condensed consolidated balance sheets. Holy Machine —In January 2018, the Company entered into a consulting agreement (the “2018 Holy Machine Consulting Agreement”) with Holy Machine LLC (“Holy Machine”) an entity controlled by Aaron Schildkrout, a former member of Better’s board of directors (the “Better Board”). Aaron Schildkrout resigned from the Better Board on June 8, 2022 and as an advisor shortly thereafter. The 2018 Holy Machine Consulting Agreement provided for consulting services related to executive recruiting and such other services as mutually agreed upon, and grants Holy Machine 603,024 options with a 4 -year vesting period and no cliff at two times the fair market value of the Company. Further, any inventions, discoveries, improvements or works of authorship made by Holy Machine and the results thereof that may be considered works made for hire shall be assigned to the Company and be the Company’s exclusive property to which the Company has the exclusive right to obtain and own all copyrights. In May 2020, the parties entered into an amendment to the 2018 Holy Machine Consulting Agreement to insert terms relating to compliance with applicable laws, contracts, and indemnification among the parties. No other terms of the 2018 Holy Machine Consulting Agreement were altered. The agreement ended in November 2022. In July 2020, the Company and Holy Machine entered into a new consulting agreement (the “2020 Holy Machine Consulting Agreement”). The 2020 Holy Machine Consulting Agreement granted Holy Machine (i) the option to purchase 764,143 shares of Better’s common stock, with an accompanying stock option agreement having a term of 10 years, at the then fair market value at the time of the grant and (ii) the option to purchase 764,143 shares of Better’s common stock, with an accompanying stock option agreement having a term of 10 years, with an exercise price per share equal to (a) $ 5.14 minus (b) the then current fair market value at the time of grant. Both tranches of granted options vest each month on the same day of the month as the vesting commencement date of April 18, 2020, subject to Holy Machine continuing to provide consulting services through each such date, and both have change in control vesting provisions which would result 27 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS in 100 % of unvested options vesting should there be a change of control of the Company, as defined in such a stock option agreement. The services provided by Holy Machine were not integral to the Company’s technology platform and amounts incurred were not material to the Company. During the second quarter of 2022, Aaron Schildkrout resigned from the Better Board and resigned as an advisor to Better shortly thereafter. The Company recorded none and $ 37.5 thousand of expenses during the three months ended September 30, 2023 and 2022, respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss. The Company recorded none and $ 137.5 thousand of expenses during the nine months ended September 30, 2023 and 2022, respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss and a payable of none and none as of September 30, 2023 and December 31, 2022, respectively, within other liabilities on the condensed consolidated balance sheets. Notable —In October 2021, the Company entered into a private label and consumer lending program agreement (the “2021 Notable Program Agreement”) to provide home improvement lines of credit to qualified borrowers of the Company with Notable Finance, LLC (“Notable”), an entity in which Vishal Garg, the Chief Executive Officer of the Company, and 1/0 Real Estate collectively hold a majority ownership interest. The program is intended to be used by qualified customers of the Company for home improvement purchases (the “Home Improvement Line of Credit”). This program required Notable to originate and service the loan and in consideration, the Company pays Notable $ 600 for each loan originated pursuant to the agreement. In connection with the 2021 Notable Program Agreement, Notable provided an unsecured personal loan product with an initial 12-month “draw period” during which the customers can use the approved loan amount and only pay interest on the used loan fund. Following this initial 12-month draw period, the customers are no longer able to withdraw funds and there is a 3 or 5-year “fixed” period to pay back the loan in full in months installments. For the three months ended September 30, 2023, the Company incurred $ 16.3 thousand of expenses under the agreement, which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss. For the three months ended September 30, 2022, the Company incurred $ 74.3 thousand of expenses under the agreement, $ 31.9 thousand of which are included within marketing expenses and $ 42.4 thousand of which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2023, the Company incurred $ 38.5 thousand of expenses under the agreement, which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2022, the Company incurred $ 74.3 thousand of expenses under the agreement, $ 31.9 thousand of which are included within marketing expenses and $ 42.4 thousand of which are included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss. The Company recorded a payable of $ 10.0 thousand and $ 15.0 thousand included within other liabilities on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. In January 2022, Better Trust I, a subsidiary of the Company entered into a master loan purchase agreement (the “Notable MLPA”) with Notable to purchase from Notable up to $ 20.0 million of unsecured home improvement loans underwritten and originated by Notable for the Company’s customers. Under the Notable MLPA, Notable originated home improvement loans, all of which Notable makes available for purchase by the Company. No additional cost outside the sale of the loan was contemplated by the Notable MLPA. The services provided by Notable are not integral to the Company’s technology platform and expenses incurred are not material to the Company. As of September 30, 2023 and December 31, 2022, the Company had $ 6.8 million and $ 8.3 million of unsecured home improvement loans from Notable, which are included within mortgage loans held for sale, at fair value on the condensed consolidated balance sheets. Truework —The Company is a party to a data analytics services agreement with Zethos, Inc., (“Truework”), an entity in which Vishal Garg, the Chief Executive Officer of the Company, is an investor. Under the data analytics services agreement, Truework provides digital Verification of Employment (“VOE”) and Verification of Income (“VOI”) services to the Company during the mortgage loan origination process to confirm the employment and income of borrowers seeking a mortgage. This is data required for underwriting mortgages to the specifications of FNMA, FMCC, and private loan purchasers. These data services are standard product offerings of Truework, which they offer to a number of mortgage lenders. Truework is one of multiple vendors the Company uses for VOE and VOI services, the largest other one being The Work Number by Equifax. The Company uses the two vendors interchangeably based on estimated lowest cost and turnaround time. The Company originally entered into the data services agreement in September 2020, and amended the agreement in October 2021 to run until September 30, 2023. In connection with usage of the services, the Company reduced the accrued expense of $ 8.6 thousand for the three months ended September 30, 2023, which is included within 28 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss. The Company incurred expenses of $ 414.3 thousand for the three months ended September 30, 2022, which is included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive. The Company reduced the accrued expense of $ 7.4 thousand for the nine months ended September 30, 2023 and recorded the expense of $ 414.3 thousand nine months ended September 30, 2022, respectively, which is included within mortgage platform expenses on the condensed consolidated statements of operations and comprehensive loss. The Company recorded a payable of $ 101.2 thousand and $ 16.2 thousand included within other liabilities on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. Share Repurchases —During the first quarter of 2022, Better repurchased from former member of the Better Board, Gabrielle Toledano, a total of 33,995 shares of Better’s common stock for an aggregate purchase price of $ 254,154 to defray taxes associated with vesting of equity awards of such shares. Ms. Toledano subsequently resigned from the Better Board in April 2022. During the third quarter of 2022, Better repurchased from General Counsel and Chief Compliance Officer Paula Tuffin a total of 82,527 shares of Better common stock for an aggregate purchase price of $ 399,600 to defray taxes associated with vesting of equity awards of such shares. Notes Receivable from Stockholders —The Company, previously at times, entered into promissory note agreements with certain employees for the purpose of financing the exercise of the Company’s stock options. These employees may have the ability to use the promissory notes to exercise stock options that have not yet been vested by the respective employees. Interest is compounded and accrued based on any unpaid principal balance and is due upon the earliest of maturity, 120 days after an employee leaves the Company, the date the employee sells shares acquired through the promissory note agreement without prior written consent of the Company, or the day prior to the date that any change in the employee’s status would cause the loan to be a prohibited extension or maintenance of credit under Section 402 of the Sarbanes-Oxley Act. The Company no longer enters into promissory note agreements for the purpose of financing the exercise of the Company’s stock options and no longer allows for the early exercise of stock options The Company included $ 10.4 million and $ 53.9 million of the notes, which include the outstanding principal amount and accrued interest, within notes receivable from stockholders in stockholders’ equity (deficit) on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, respectively. The balance as of September 30, 2023 does not include any promissory notes due from directors and officers of the Company. The balance as of December 31, 2022 includes $ 43.6 million of promissory notes due from directors and officers of the Company, of which $ 40.2 million was due from Vishal Garg. During the three months ended September 30, 2023, the Company reduced interest income from the promissory notes of $ 0.5 million, and during three months ended September 30, 2022, the Company recognized interest income from the promissory notes of $ 0.1 million which is included within interest income on the condensed consolidated statements of operations and comprehensive loss. During the nine months ended September 30, 2023, the Company reduced interest income from the promissory notes of $ 0.3 million, and nine months ended September 30, 2022, the company recognized interest income from the promissory notes of $ 0.3 million, which is included within interest income on the condensed consolidated statements of operations and comprehensive loss. The notes range in maturity from May 2025 to January 2026 and include interest rates ranging from 0.5 % to 2.5 % per annum. See Note 17 for further details on the accounting for notes receivable from stockholders. In August 2023, Better derecognized $ 46.4 million related to the partial forgiveness by Better to executive officers Vishal Garg, Kevin Ryan, and Paula Tuffin for their outstanding notes and cancellation of the shares collateralizing the notes to satisfy the remaining principal which was forgiven and cancelled upon the Closing. Additionally, for the nine months ended September 30, 2023, the Company recognized additional compensation expense of $ 0.4 million to certain of the Company's executives in connection with taxes due for capital gains on the sale of shares for settlement of the notes outstanding. 12. Commitments and Contingencies Litigation —The Company, among other things, engages in mortgage lending, title and settlement services, and other financial technology services. The Company operates in a highly regulated industry and may be subject to various legal and administrative proceedings concerning matters that arise in the normal and ordinary course of business, including inquiries, complaints, audits, examinations, investigations, employee labor disputes, and potential enforcement actions from regulatory agencies. While the ultimate outcome of these matters cannot be predicted with certainty due to inherent uncertainties in litigation, management is of the opinion that these matters will not have a material impact on the condensed 29 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS consolidated financial statements of the Company. The Company accrues for losses when they are probable to occur and such losses are reasonably estimable, and discloses pending litigation if the Company believes a possibility exists that the litigation will have a material effect on its financial results. Legal costs expected to be incurred are accounted for as they are incurred. The Company is currently a party to pending legal claims and proceedings regarding an employee related labor dispute brought forth during the third quarter of 2020. The dispute alleges that the Company has failed to pay certain employees for overtime and is in violation of the Fair Labor Standards Act and labor laws in the State of California and the State of Florida. The case is still in its early stages and has not yet reached the class certification stage and as such the ultimate outcome cannot be predicted with certainty due to inherent uncertainties in the legal claims. As part of the dispute, the Company included an estimated liability of $ 8.4 million as of both September 30, 2023 and December 31, 2022, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets. No additional expense was accrued for the nine months ended September 30, 2023. During the first quarter of 2023, the Company settled its employee related labor dispute in the State of Florida for an immaterial amount. In September 2022, the former Head of Sales and Operations of the Company, Sarah Pierce, filed litigation against the Company, the Company’s founder and CEO Vishal Garg, and the Company’s Chief Administrative Officer and Senior Counsel Nicholas Calamari. The complaint alleges several causes of action including: violation of certain state labor laws, breach of fiduciary duty and defamation against Mr. Garg, aiding and abetting breach of fiduciary duty against Mr. Calamari, and intentional infliction of emotional distress against Mr. Garg and Mr. Calamari. On September 29, 2023, the Court filed an Order granting the Company's motions to dismiss in part and denying the Company’s motions to dismiss in part. The following motions were granted: (i) the Company’s motion to dismiss Ms. Pierce’s Sarbanes-Oxley claim was granted; (ii) the Company’s motion to dismiss Ms. Pierce’s Dodd-Frank claim was granted; (iii) Mr. Garg and Mr. Calamari’s motion to dismiss Ms. Pierce’s claim for breach of fiduciary duty was granted; (iv) the Company's motion to dismiss Ms. Pierce’s defamation claim was granted; (v) Mr. Garg and Mr. Calamari’s motion to dismiss Ms. Pierce’s claim for intentional infliction of emotional distress was granted; (vi) Mr. Garg and Mr. Calamari’s motion to dismiss Ms. Pierce’s claim for tortious interference with contract was granted; and (vii) the Company’s motion to dismiss Ms. Pierce’s breach of contract claim was granted. The Company’s motion to dismiss Ms. Pierce's claim of retaliation was dismissed. Mr. Garg’s motion to dismiss Ms. Pierce’s defamation claim was denied, and the Company’s motion to dismiss Ms. Pierce’s defamation claim under the theory of respondeat superior was denied. The Company intends to vigorously defend this action. Regulatory Matters —In the third quarter of 2021, following third-party audits of samples of loans produced during the fiscal years 2018, 2019, and 2021, the Company became aware of certain TILA-RESPA Integrated Disclosure (“TRID”) defects in the loan production process that resulted in the final closing costs disclosed in the closing disclosure, in some instances, being greater than those disclosed in the loan estimate. Some of these defects were outside applicable tolerances under the TRID rule, which resulted in potential overcharges to consumers. As of September 30, 2023 and December 31, 2022, the Company included an estimated liability of $ 9.3 million and $ 11.9 million, respectively, within accounts payable and accrued expenses on the condensed consolidated balance sheets. For the three months ended September 30, 2023, the Company reduced the accrual for these potential TRID defects by $ 3.0 million and is included within mortgage platform expenses in the condensed consolidated statement of operations and comprehensive loss. For the nine months ended September 30, 2023, the Company reduced the accrual for these potential TRID defects by $ 2.7 million and is included within mortgage platform expenses in the condensed consolidated statement of operations and comprehensive loss. This accrual is the Company’s best estimate of potential exposure on the larger population of loans based on the results obtained by the audited sample. The accrued amounts are for estimated refunds potentially due to consumers for TRID tolerance errors for loans produced from 2018 through 2022. The Company completed a TRID audit of 2022 files and is continuing to remediate TRID tolerance defects as necessary. In the second quarter of 2022, Better and Aurora received a voluntary request for documents from the Division of Enforcement of the Securities and Exchange Commission (the “SEC”) and subsequently received several subpoenas, indicating that it is conducting an investigation relating to Aurora and Better to determine if violations of the federal securities laws had occurred. The SEC requested that Aurora and Better provide the SEC with certain information and documents. The voluntary and subpoena requests covered, among other things, certain aspects of Better’s business and operations, certain matters relating to certain actions and circumstances of the Company’s founder and Chief Executive Officer, Vishal Garg, and his other business activities, related party transactions, public statements made about the Company’s proprietary mortgage platform, Better’s financial condition, and allegations made in litigation filed by Sarah 30 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Pierce, Better’s former Head of Sales and Operations. On August 3, 2023, the SEC Division of Enforcement informed Aurora and Better that it has concluded its previously announced investigation and that the SEC does not intend to recommend an enforcement action against Aurora or Better. Loan Commitments —The Company enters into IRLCs to fund mortgage loans, at specified interest rates and within a specified period of time, with potential borrowers who have applied for a loan and meet certain credit and underwriting criteria. As of September 30, 2023 and December 31, 2022, the Company had outstanding commitments to fund mortgage loans in notional amounts of approximately $ 211.9 million and $ 225.4 million, respectively. The IRLCs derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of September 30, 2023 and December 31, 2022, respectively, on the condensed consolidated balance sheets. See Note 15. Forward Sale Commitments —In the ordinary course of business, the Company enters into contracts to sell existing LHFS or loans committed but yet to be funded into the secondary market at specified future dates. As of September 30, 2023 and December 31, 2022, the Company had outstanding forward sales commitment contracts of notional amounts of approximately $ 294.0 million and $ 422.0 million, respectively. The forward sales commitments derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of September 30, 2023 and December 31, 2022, respectively, on the condensed consolidated balance sheets. See Note 15. Concentrations —See below for areas considered to be concentrations of credit risk for the Company: Significant loan purchasers are those which represent more than 10% of the Company’s loan volume. During the three months ended September 30, 2023, the Company had three loan purchasers that accounted for 56 %, 22 % and 11 % of loans sold by the Company. During the three months ended September 30, 2022, the Company had one loan purchaser that accounted for 59 % of loans sold by the Company. During the nine months ended September 30, 2023 and 2022, the Company had one loan purchaser that accounted for 68 % and 65 % of loans sold by the Company. Concentrations of credit risk associated with the LHFS carried at fair value are limited due to the large number of borrowers and their dispersion across many geographic areas throughout the United States. As of September 30, 2023, the Company originated 12 % and 11 % of its LHFS secured by properties in Texas and Florida, respectively. As of December 31, 2022, the company originated 11 % of its LHFS secured by properties in each of California and Texas and 10 % of its LHFS secured by properties in Florida. The Company maintains cash and cash equivalent balances at various financial institutions. Cash accounts at each bank are insured by the Federal Deposit Insurance Corporation for amounts up to $0.25 million. As of September 30, 2023 and December 31, 2022, the majority of the Company’s cash and cash equivalent balances are in excess of the insured limits at various financial institutions. Advanced Loan Origination Fees (Deferred Revenue) —Deferred revenue primarily consists of advance payments for loan origination and servicing on behalf of an integrated relationship partner. The total advance was for $ 50.0 million and were recognized in revenue starting in August 2022 through August 2023. The Company must repay the advance in three tranches, $ 20.0 million due December 2022, $ 15.0 million due April 2023, and $ 15.0 million due October 2023, each to be reduced by the amount of loan origination revenue earned between the tranches. The Company repaid $ 12.9 million of the first tranche after reductions for loan origination revenue earned within mortgage platform revenue from August 2022 through December 31, 2022. In April 2023, the Company repaid $ 12.7 million of the second tranche after reductions for loan origination revenue earned within mortgage platform revenue from January 2023 through March 2023. As of September 30, 2023 and December 31, 2022, the Company included deferred revenue of $ 12.9 million and $ 30.0 million, respectively within other liabilities on the condensed consolidated balance sheets after reductions for loan origination revenue earned within mortgage platform revenue. Subsequent to September 30, 2023, in October 2023, the Company paid off $ 12.9 million of the third tranche. Escrow Funds —In accordance with its lender obligations, the Company maintains a separate escrow bank account to hold borrower funds pending future disbursement. 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. The Company also administers customer deposits in relation to other non-mortgage products and services that the Company offers. These funds are shown as restricted cash and there is a corresponding escrow payable on the consolidated balance sheet, as they are being held on behalf of the borrower or customer. The balance in these accounts as of September 30, 2023 and December 31, 2022 was $ 3.2 million and $ 8.0 million, respectively. In some instances the Company may 31 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS administer funds that are legally owned by a third-party which are excluded from the condensed consolidated balance sheets which amounted to none and $ 0.3 million as of September 30, 2023 and December 31, 2022, respectively. Customer Deposits —In relation to the Company’s banking activities tied to the Birmingham acquisition in the U.K., the Company offers individual savings accounts and other depository products with differing maturities and interest rates to its customers. The balance of customer deposits as of September 30, 2023 and December 31, 2022 was $ 9.9 million and none , respectively on the condensed consolidated balance sheets. 13. Risks and Uncertainties In the normal course of business, companies in the mortgage lending industry encounter certain economic and regulatory risks. Economic risks include credit risk and interest rate risk, in either a rising or declining interest rate environment. Credit risk is the risk of default that may result from the borrowers’ inability or unwillingness to make contractually required payments during the period in which loans are being held for sale by the Company. Interest Rate Risk —The Company is subject to interest rate risk in a rising interest rate environment, as the Company may experience a decrease in loan production, as well as decreases in the fair value of LHFS, loan applications in process with locked-in rates, and commitments to originate loans, which may negatively impact the Company’s operations. To preserve the value of such fixed-rate loans or loan applications in process with locked-in rates, agreements are executed for best effort or mandatory loan sales to be settled at future dates with fixed prices. These loan sales take the form of short-term forward sales of mortgage-backed securities and commitments to sell loans to loan purchasers. Alternatively, in a declining interest rate environment, customers may withdraw their loan applications that include locked-in rates with the Company. Additionally, when interest rates decline, interest income received from LHFS will decrease. The Company uses an interest rate hedging program to manage these risks. Through this program, mortgage-backed securities are purchased and sold forward. For all counterparties with open positions as of September 30, 2023, in the event that the Company does not deliver into the forward-delivery commitments, they can be settled on a net basis. Net settlements entail paying or receiving cash based upon the change in market value of the existing instrument. The Company currently uses forward sales of mortgage-backed securities, interest rate commitments from borrowers, and mandatory and/or best-efforts forward commitments to sell loans to loan purchasers to protect the Company from interest rate fluctuations. These short-term instruments, which do not require any payments to be paid to the counterparty in connection with the execution of the commitments, are generally executed simultaneously. Credit Risk —The Company’s hedging program is not designated as formal hedging from an accounting standpoint, contains an element of risk because the counterparties to its mortgage securities transactions may be unable to meet their obligations. While the Company does not anticipate nonperformance by any counterparty, it is exposed to potential credit losses in the event the counterparty fails to perform. The Company’s exposure to credit risk in the event of default by the counterparty is the difference between the contract and the current market price. The Company minimizes its credit risk exposure by limiting the counterparties to well-established banks and securities dealers who meet established credit and capital guidelines. Loan Repurchase Reserve —The Company sells loans to loan purchasers without recourse. As such, the loan purchasers have assumed the risk of loss or default by the borrower. However, the Company is usually required by these loan purchasers to make certain standard representations and warranties relating to the loan for up to three years post sale. To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase the loans or indemnify these loan purchasers for losses. In addition, if loans pay-off within a specified time frame the Company may be required to refund a portion of the sales proceeds to the loan purchasers. The Company repurchased $ 3.6 million ( 11 l oans) and $ 37.9 million ( 82 l oans) in unpaid principal balance of loans during the three months ended September 30, 2023 and 2022, respectively, related to its loan repurchase obligations. The Company repurchased $ 20.8 million ( 52 loans) and $ 97.0 million ( 221 loans) in unpaid principal balance of loans during the nine months ended September 30, 2023 and 2022, respectively, related to its loan repurchase obligations. The Company’s loan repurchase reserve as of September 30, 2023 and December 31, 2022 was $ 21.8 million and $ 26.7 million, respectively, and is included within other liabilities on the condensed consolidated balance sheets. The provision 32 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the loan repurchase reserve is included within mortgage platform expenses on the condensed consolidated statement of operations and comprehensive loss. The following presents the activity of the Company’s loan repurchase reserve: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Loan repurchase reserve at beginning of period $ 21,832 $ 21,070 $ 26,745 $ 17,540 Provision 866 11,683 178 25,125 Charge-offs ( 945 ) ( 9,754 ) ( 5,170 ) ( 19,667 ) Loan repurchase reserve at end of period $ 21,753 $ 22,999 $ 21,753 $ 22,999 Borrowing Capacity —The Company funds the majority of mortgage loans on a short-term basis through committed and uncommitted warehouse lines as well as from operations for any amounts not advanced by warehouse lenders. As a result, the Company’s ability to fund current operations depends on its ability to secure these types of short-term financings. If the Company’s principal lenders decided to terminate or not to renew any of the warehouse lines with the Company, the loss of borrowing capacity could be detrimental to the Company’s condensed consolidated financial statements unless the Company found a suitable alternative source. 14. Net Loss Per Share The computation of net loss per share and weighted average shares of the Company's common stock outstanding during the periods presented is as follows: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands, except for share and per share amounts) 2023 2022 2023 2022 Basic net loss per share: Net loss $ ( 340,033 ) $ ( 226,612 ) $ ( 475,441 ) $ ( 625,864 ) Income allocated to participating securities — — — — Net loss attributable to common stockholders - Basic $ ( 340,033 ) $ ( 226,612 ) $ ( 475,441 ) $ ( 625,864 ) Diluted net loss per share: Net loss attributable to common stockholders - Basic $ ( 340,033 ) $ ( 226,612 ) $ ( 475,441 ) $ ( 625,864 ) Interest expense and change in fair value of bifurcated derivatives on convertible notes — — — — Income allocated to participating securities — — — — Net loss income attributable to common stockholders - Diluted $ ( 340,033 ) $ ( 226,612 ) $ ( 475,441 ) $ ( 625,864 ) Shares used in computation: Weighted average common shares outstanding 496,577,751 292,660,334 364,817,445 289,934,149 Weighted-average effect of dilutive securities: — — Assumed exercise of stock options — — — — Assumed exercise of warrants — — — — Assumed conversion of convertible preferred stock — — — — Diluted weighted-average common shares outstanding 496,577,751 292,660,334 364,817,445 289,934,149 Earnings (loss) per share attributable to common stockholders: Basic $ ( 0.68 ) $ ( 0.77 ) $ ( 1.30 ) $ ( 2.16 ) Diluted $ ( 0.68 ) $ ( 0.77 ) $ ( 1.30 ) $ ( 2.16 ) 33 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Basic and diluted earnings (loss) per share are the same for each class of common stock because they are entitled to the same dividend rights. Basic and diluted earnings (loss) per share are presented together as the amounts for basic and diluted earnings (loss) per share are the same for each class of common stock. There were no preferred dividends declared or accumulated during the three months ended September 30, 2023 and 2022. There were no preferred dividends declared or accumulated during the nine months ended September 30, 2023 and 2022. The Company applies the two-class method which requires earnings available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all earnings for the period had been distributed. The Company’s outstanding convertible preferred stock is a participating security as the holders of such shares participate in earnings but do not contractually participate in the Company’s losses. The Company's potentially dilutive securities, which include stock options, convertible preferred stock that would have been issued under the if-converted method, warrants to purchase shares of common stock, warrants to purchase shares of preferred stock, and stock options exercised, not vested, have been excluded from the computation of diluted net loss per share, as the effect would be to reduce the net loss per share. The Company excluded the following securities, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated as including them would have had an anti-dilutive effect: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Options to purchase common stock (1) 48,389 44,857 48,389 44,857 Convertible preferred stock (2) — 108,721 — 108,721 Pre-Closing Bridge Notes — 247,777 — 247,777 Warrants to purchase convertible preferred stock (1) — 6,649 — 6,649 Total 48,389 408,004 48,389 408,004 __________________ (1) Securities have an antidilutive effect under the treasury stock method. (2) Securities have an antidilutive effect under the if-converted method. 15. Fair Value Measurements The Company’s financial instruments measured at fair value on a recurring basis are summarized below: September 30, 2023 (Amounts in thousands) Level 1 Level 2 Level 3 Total Mortgage loans held for sale, at fair value $ — $ 160,025 $ — $ 160,025 Derivative assets, at fair value (1) — 3,506 211 3,717 Total Assets $ — $ 163,531 $ 211 $ 163,742 Derivative liabilities, at fair value (1) $ — $ — $ 1,678 $ 1,678 Warrants and equity related liabilities, at fair value $ 577 $ 950 $ — $ 1,527 Total Liabilities $ 577 $ 950 $ 1,678 $ 3,205 December 31, 2022 (Amounts in thousands) Level 1 Level 2 Level 3 Total Mortgage loans held for sale, at fair value $ — $ 248,826 $ — $ 248,826 Derivative assets, at fair value (1) — 2,732 316 3,048 Bifurcated derivative, at fair value — — 236,603 236,603 Total Assets $ — $ 251,558 $ 236,919 $ 488,477 Derivative liabilities, at fair value (1) $ — $ — $ 1,828 $ 1,828 Convertible preferred stock warrants (2) — — 3,096 3,096 Total Liabilities $ — $ — $ 4,924 $ 4,924 __________________ (1) As of September 30, 2023 and December 31, 2022, derivative assets and liabilities represent both IRLCs and forward sale commitments. 34 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (2) Fair value is based on the intrinsic value of the Company’s underlying stock price at each balance sheet date and includes certain assumptions with regard to volatility. Specific valuation techniques and inputs used in determining the fair value of each significant class of assets and liabilities are as follows: Mortgage Loans Held for Sale —The Company originates certain LHFS to be sold to loan purchasers and elected to carry these loans at fair value in accordance with ASC 825. The fair value is primarily based on the price obtained for other mortgage loans with similar characteristics. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and receipt of principal payments associated with the relevant LHFS. Derivative Assets and Liabilities —The Company uses derivatives to manage various financial risks. The fair values of derivative instruments are determined based on quoted prices for similar assets and liabilities, dealer quotes, and internal pricing models that are primarily sensitive to market observable data. The Company utilizes IRLCs and forward sale commitments. The fair value of IRLCs, which are related to mortgage loan commitments, is based on quoted market prices, adjusted by the pull-through factor, and includes the value attributable to the net servicing fee. The Company evaluated the significance and unobservable nature of the pull-through factor and determined that the classification of IRLCs should be Level 3 as of September 30, 2023 and December 31, 2022. Significant changes in the pull-through factor of the IRLCs, in isolation, could result in significant changes in the IRLCs’ fair value measurement. The value of IRLCs also rises and falls with changes in interest rates; for example, entering into interest rate lock commitments at low interest rates followed by an increase in interest rates in the market, will decrease the value of IRLC. The Company had purchases/issuances of approximately $ 0.1 million and $ 2.4 million of IRLCs during the three months ended September 30, 2023 and 2022, respectively. The Company had purchases/issuances of approximately $ 0.6 million and $ 5.0 million of IRLCs during the nine months ended September 30, 2023 and 2022, respectively. The number of days from the date of the IRLC to expiration of the rate lock commitment outstanding as of September 30, 2023 was approximately 60 days on average. The Company attempts to match the maturity date of the IRLCs with the forward commitments. Derivatives are presented in the condensed consolidated balance sheets under derivative assets, at fair value and derivative liabilities, at fair value. During the three months ended September 30, 2023, the Company recognized $ 0.9 million of loss and $ 5.0 million of gains related to changes in fair value of IRLCs and forward sale commitments, respectively. During the nine months ended September 30, 2023, the Company recognized $ 0.1 million and $ 8.4 million of gains related to changes in the fair value of IRLCs and forward sale commitments, respectively. During the three months ended September 30, 2022, the Company recognized $ 7.0 million of losses and $ 26.2 million of gains related to changes in the fair value of IRLCs and forward sale commitments, respectively. During the nine months ended September 30, 2022, the Company recognized $ 14.3 million of losses and $ 188.6 million of gains related to changes in the fair value of IRLCs and forward sale commitments, respectively. Gains and losses related to changes in the fair value of IRLCs and forward sale commitments are included in mortgage platform revenue, net within the condensed consolidated statements of operations and comprehensive loss. Unrealized activity related to changes in the fair value of forward sale commitments were $ 1.5 million of gains and $ 13.2 million of gains, included in the $ 5.0 million of gains and $ 26.2 million of gains, during the three months ended September 30, 2023 and 2022, respectively. Unrealized activity related to changes in the fair value of forward sale commitments were $ 0.8 million of gains and $ 14.1 million of gains, included in the $ 8.4 million of gains and $ 188.6 million of gains, during the nine months ended September 30, 2023 and 2022, respectively. The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows: (Amounts in thousands) Notional Value Derivative Asset Derivative Liability Balance as of September 30, 2023 IRLCs $ 211,897 $ 211 $ 1,678 Forward commitments $ 294,000 3,506 — Total $ 3,717 $ 1,678 Balance as of December 31, 2022 IRLCs $ 225,372 $ 316 $ 1,828 Forward commitments $ 422,000 2,732 — Total $ 3,048 $ 1,828 35 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Warrant and equity related liabilities— The warrant liability consists of Warrants and the Sponsor-Locked up Shares. The Warrants consist of Public Warrants and Private Warrants. The Public Warrants trade on the Nasdaq Capital Market under the ticker symbol “BETRW” and as such is considered a Level 1 input from an active market to derive the value. The Private Warrants and Sponsor-Locked up Shares, although not publicly traded on an active market, use inputs from the publicly traded Public Warrants and the Company’s publicly traded common stock, respectively, and are further calibrated using unobservable inputs representing Level 2 measurements within the fair value hierarchy. Convertible Preferred Stock Warrants —The Company issued Former Preferred Stock Warrants to certain investors and to the Lender under its corporate line of credit (see Note 10). The Company obtained a fair value analysis from a third party to assist in determination of the fair value of warrants. The Company used the Black-Scholes-Merton option-pricing model to estimate the fair value of the warrants at the issuance date and as of December 31, 2022, which is based on significant inputs not observable in the market representing a Level 3 measurement within the fair value hierarchy. Significant changes in the unobservable inputs could result in significant changes in the fair value of the convertible preferred stock warrants. The warrant valuation was based on the intrinsic value of the Company’s underlying stock price and included certain assumptions such as risk free rate, volatility rate, and expected term. Bifurcated Derivative —The Company’s Pre-Closing Bridge Notes included embedded features that were separately accounted for and were marked to fair value at each reporting period with changes included in change in fair value of bifurcated derivative on the consolidated statements of operations and comprehensive loss. The Company obtained a fair value analysis from a third party to assist in determination of the fair value of the bifurcated derivative. In estimating the fair value of the bifurcated derivative, management considered factors management believed were material to the valuation process, including, but not limited to, the price at which recent equity was issued by the Company to independent third parties or transacted between third parties, actual and projected financial results, risks, prospects, and economic and market conditions, among other factors. As there was no active market for the Company’s equity, the fair value of the bifurcated derivative was based on significant inputs not observable in the market representing a Level 3 measurement within the fair value hierarchy. Management believed the combination of these factors provided an appropriate estimate of the expected fair value and reflected the best estimate of the fair value of the bifurcated derivative. As of September 30, 2023 and December 31, 2022, Level 3 instruments include IRLCs, bifurcated derivative and convertible preferred stock warrants. The following table presents the rollforward of Level 3 IRLCs: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Balance at beginning of period $ ( 514 ) $ 197 $ ( 1,513 ) $ 7,568 Change in fair value of IRLCs ( 953 ) ( 6,976 ) 46 ( 14,347 ) Balance at end of period $ ( 1,467 ) $ ( 6,779 ) $ ( 1,467 ) $ ( 6,779 ) The following table presents the rollforward of Level 3 bifurcated derivative: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Balance at beginning of period $ 237,667 $ 277,777 $ 236,603 $ — Change in fair value of bifurcated derivative ( 237,667 ) 29,089 ( 236,603 ) 306,866 Balance at end of period $ — $ 306,866 $ — $ 306,866 The following table presents the rollforward of Level 3 convertible preferred stock warrants: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Balance at beginning of period $ 2,830 $ 11,586 $ 3,096 $ 31,997 Exercises ( 2,830 ) — ( 2,830 ) — Change in fair value of convertible preferred stock warrants — ( 4,202 ) ( 266 ) ( 24,613 ) Balance at end of period $ — $ 7,384 $ — $ 7,384 36 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Counterparty agreements for forward sale commitments contain master netting agreements, which contain a legal right to offset amounts due to and from the same counterparty and can be settled on a net basis. The table below presents gross amounts of recognized assets and liabilities subject to master netting agreements. (Amounts in thousands) Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Net Amounts Presented in the Condensed Consolidated Balance Sheet Offsetting of Forward Commitments - Assets Balance as of: September 30, 2023: $ 3,525 $ ( 19 ) $ 3,506 December 31, 2022 $ 3,263 $ ( 531 ) $ 2,732 Offsetting of Forward Commitments - Liabilities Balance as of: September 30, 2023: $ — $ — $ — December 31, 2022 $ — $ — $ — Significant Unobservable Inputs — The following table presents quantitative information about the significant unobservable inputs used in the recurring fair value measurements categorized within Level 3 of the fair value hierarchy: September 30, 2023 (Amounts in dollars, except percentages) Range Weighted Average Level 3 Financial Instruments: IRLCs Pull-through factor 10.27 % - 97.49 % 85.1 % December 31, 2022 (Amounts in dollars, except percentages) Range Weighted Average Level 3 Financial Instruments: IRLCs Pull-through factor 14.66 % - 96.57 % 79.6 % Bifurcated derivative Risk free rate 4.69 % 4.69 % Expected term (years) 0.75 0.75 Fair value of new preferred or common stock $ 10.63 - $ 19.05 $ 9.77 Convertible preferred stock warrants Risk free rate 3.94 % - 4.04 % 4.00 % Volatility rate 40.4 % - 123.8 % 65.0 % Expected term (years) 4.24 - 5.74 4.8 Fair value of common stock $ 0.00 - $ 6.60 $ 1.60 U.S. GAAP requires disclosure of fair value information about financial instruments, whether recognized or not recognized in the condensed consolidated financial statements, for which it is practical to estimate the fair value. In cases where quoted market prices are not available, fair values are based upon the estimation of discount rates to estimated future cash flows using market yields or other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimates of fair value in both inactive and orderly markets. Accordingly, fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments in a current market 37 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS exchange. The use of market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts. The estimated fair value of the Company’s cash and cash equivalents, restricted cash, warehouse lines of credit, and escrow funds and customer deposits approximates their carrying values as these financial instruments are highly liquid or short-term in nature. The following table presents the carrying amounts and estimated fair value of financial instruments that are not recorded at fair value on a recurring or non-recurring basis: September 30, 2023 December 31, 2022 (Amounts in thousands) Fair Value Level Carrying Amount Fair Value Carrying Amount Fair Value Short-term investments Level 1 $ 29,831 $ 29,884 $ — $ — Loans held for investment Level 3 $ 4,163 $ 4,649 $ — $ — Post-Closing Convertible Notes Level 3 $ 513,001 $ 252,796 $ — $ — Loan commitment asset Level 3 $ — $ — $ 16,119 $ 54,654 Pre-Closing Bridge Notes Level 3 $ — $ — $ 750,000 $ 269,067 Corporate line of credit Level 3 $ — $ — $ 144,403 $ 145,323 In determining the fair value of the Short term investments, management used observable inputs such as quoted prices in active markets for identical assets. The fair value of loans held for investment is determined by management estimates of the specific credit risk attributes of each pool of loans, in addition to the quoted secondary-market prices which account for the interest rate characteristics of each loan. The corporate line of credit was valued using a Black Derman Toy model which incorporates the option to prepay given the make-whole premium as well as other inputs such as risk-free rates and credit spreads. In determining the fair value of the loan commitment asset and the Pre-Closing Bridge Notes, management used factors that are material to the valuation process, including but not limited to, the price at which recent equity was issued by the Company to independent third parties or transacted between third parties, actual and projected financial results, risks, prospects, and economic and market conditions, among other factors. As a number of assumptions and estimates were involved that are largely unobservable, loans held for investment, loan commitment asset and Corporate line of credit were classified as Level 3 inputs within the fair value hierarchy. 16. Income Taxes On a consolidated basis, the Company recorded total income tax expense (benefit) of $ 0.7 million and $( 0.1 ) million for the three months ended September 30, 2023 and 2022, respectively. The Company recorded total income tax expense of $ 2.5 million and $ 1.5 million for the nine months ended September 30, 2023 and 2022, respectively. The Company’s quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including the ability to accurately project the Company’s pre-tax income or loss for the year and the mix of earnings among various tax jurisdictions. The year-to-date effective tax rate, after discrete items, of ( 0.19 )% for the three months ended September 30, 2023, changed from 0.02 % for the three months ended September 30, 2022, as the Company is forecasting reduction in losses for 2023. The year-to-date effective tax rate, after discrete items, of ( 0.53 )% for the nine months ended September 30, 2023, changed from ( 0.23 )% for the nine months ended September 30, 2022, as the Company was subject to withholding taxes and is forecasting reduction in losses for 2023. The income tax expense for the three months ended September 30, 2023 primarily relates to the pre-tax income projections and dividend income withholding tax paid in certain foreign jurisdictions where the Company files standalone returns. The income tax expense for the nine months ended September 30, 2023 relates to the pre-tax income projections and dividend income withholding tax paid in certain foreign jurisdictions where the Company files standalone returns. As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred income tax assets. The Company is in a three year cumulative loss position as of September 30, 2023. Further, due to losses being estimated in the future, management continues to believe it is more likely than not that the benefit of the deferred income tax assets will not be realized. In recognition of this risk, the Company continues to provide a full valuation allowance on deferred income tax assets. 38 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 17. Convertible Preferred Stock In connection with the Business Combination, as described in Note 3, all series of Better convertible preferred stock were converted into Better common stock and subsequently converted to the Company’s common stock at the Exchange Ratio of approximately 3.06 . All share amounts in periods prior to the Business Combination have been retroactively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization. As of December 31, 2022, the Company had outstanding the following series of convertible preferred stock: As of December 31, 2022 (Amounts in thousands, except share amounts) Shares Authorized Shares Issued and outstanding Series D Preferred Stock 26,178,574 23,786,379 Series D-1 Preferred Stock 26,178,574 — Series D-2 Preferred Stock 21,305,758 20,390,896 Series D-3 Preferred Stock 914,862 914,862 Series D-4 Preferred Stock 1,062,009 1,062,009 Series D-5 Preferred Stock 1,062,009 — Series C Preferred Stock 132,946,826 100,138,544 Series C-1 Preferred Stock 132,946,826 8,939,693 Series C-2 Preferred Stock 18,624,354 14,018,524 Series C-3 Preferred Stock 19,741,818 8,367,368 Series C-4 Preferred Stock 2,171,064 2,171,064 Series C-5 Preferred Stock 18,624,354 4,605,830 Series C-6 Preferred Stock 19,741,818 11,374,450 Series C-7 Preferred Stock 9,833,660 4,469,846 Series B Preferred Stock 39,753,024 28,583,364 Series B-1 Preferred Stock 12,531,940 11,169,660 Series A Preferred Stock 93,850,533 69,267,349 Series A-1 Preferred Stock 24,937,838 23,054,899 Total convertible preferred stock 602,405,839 332,314,737 Convertible Preferred Stock Warrants —Immediately prior to the Closing of the Business Combination, certain convertible preferred stock warrant holders exercised their warrants on a cash basis and the remaining convertible preferred stock warrant holders exercised their warrants on a net basis at the Closing. In August 2023, the Company received $ 1.5 million from preferred stock warrant holders that exercised their warrants on a cash basis with an offset to additional 39 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS paid-in-capital and as the remaining convertible preferred stock warrants were exercise the entire convertible preferred stock liability of $ 2.8 million was reclassified to additional paid-in-capital. As of December 31, 2022, the Company had outstanding the following convertible preferred stock warrants: No. Warrants (Amounts in thousands, except no. warrants and strike prices) December 31, 2022 Strike Valuation at Issuance September 2018 Series C Preferred 9/28/2018 9/28/2028 2,312,296 $ 0.59 $ 170 February 2019 Series C Preferred 2/6/2019 9/28/2028 153,807 $ 0.59 $ 12 March 2019 Series C Preferred 3/29/2019 3/29/2026 1,146,214 $ 1.12 $ 87 April 2019 Series C Preferred 4/17/2019 4/17/2029 3,575,879 $ 1.12 $ 313 March 2020 Series C Preferred 3/25/2020 3/25/2027 410,228 $ 1.64 $ 201 Total 7,598,424 The Company valued these warrants at issuance and at each reporting period, using the Black-Scholes-Merton option-pricing model and their respective terms, as can be seen below: (Amounts in thousands, except per share amounts) December 31, 2022 Issuance Fair value per share Fair Value September 2018 $ 0.54 $ 1,256 February 2019 $ 0.54 84 March 2019 $ 0.35 397 April 2019 $ 0.35 1,240 March 2020 $ 0.29 119 Total $ 3,096 Warrants for Series C Preferred Stock, related to the above issuances, were recorded as liabilities at fair value, resulting in a liability of $ 3.1 million as of December 31, 2022. The change in fair value of warrants for the three months ended September 30, 2023 and 2022 was a gain of none and a gain of $ 4.2 million, respectively, and was recorded in change in fair value of convertible preferred stock within the condensed consolidated statements of operations and comprehensive loss. The change in fair value of warrants for the nine months ended September 30, 2023 and 2022 was a gain of $ 0.3 million and a gain of $ 24.6 million, respectively, and was recorded in change in fair value of convertible preferred stock warrants within the condensed consolidated statements of operations and comprehensive loss. 18. Stockholders' Equity On the Closing Date, the Company consummated the Business Combination pursuant to the terms of the Merger Agreement and on August 24, 2023, Better Home & Finance Class A common stock began trading and Public Warrants continued trading on the Nasdaq Global Market and the Nasdaq Capital Market, respectively, under the ticker symbols “BETR” and “BETRW”, respectively. Each outstanding share of Legacy Better common stock was exchanged for approximately 3.06 shares of the Company’s Class B common stock. The Company’s authorized capital stock consists of 1.8 billion shares of Class A common stock, 700.0 million shares of Class B common stock, and 800.0 million shares of Class C common stock, each with a par value per share of $ 0.0001 . Each holder of Class A common stock has the right to one vote per share and each holder of Class B common stock has the right to three votes per share. Except as described below or otherwise provided by the Company’s certificate of incorporation or required by applicable law, shares of Class C common stock are non-voting and will not entitle the holder thereof to any voting power. Shares of Class A common stock, Class B common stock and Class C common stock are treated equally, identically and ratably, on a per share basis, with respect to any dividends or distributions as may be declared and paid from time to time. Upon the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, holders of Class A common stock, Class B common stock and Class C common stock will be entitled to receive ratably all assets of the Company available for distribution to its stockholders unless disparate or different treatment 40 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS of the shares of each such class with respect to distributions upon any such liquidation, dissolution or winding up is approved in advance by the affirmative vote of the holders of a majority of the then-outstanding shares of Class A common stock, Class B common stock and Class C common stock, each voting separately as a class. Further, each share of Class B common stock is convertible into one fully paid and nonassessable share of Class A common stock or Class C common stock at the option of the holder thereof at any time upon written notice to the Company. Each share of Class C common stock is convertible into one fully paid and nonassessable share of Class A common stock at the option of the holder thereof at any time upon written notice to the Company. All share amounts in periods prior to the Business Combination have been retroactively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Business Combination to effect the reverse recapitalization. The Company's equity structure prior to the Closing consisted of different classes of common stock which is presented in the order of liquidation preference below: As of December 31, 2022 (Amounts in thousands, except share amounts) Shares Authorized Shares Issued and outstanding Par Value Common A Stock 24,452,565 24,452,565 $ 1 Common B Stock 588,261,164 171,441,780 5 Common B-1 Stock 236,938,220 — — Common O Stock 236,375,239 103,889,076 4 Total common stock 1,086,027,188 299,783,421 $ 10 Pre-Closing Common Stock Warrants —Immediately prior to the Closing of the Business Combination, all common stock warrant holders exercised their warrants on a net basis. The Company had outstanding the following common stock warrants as of December 31, 2022: (Amounts in thousands, except warrants, price, and per share amounts) Issuance Share Class Issue Date Expiration Date No. Warrants Strike Valuation at Issuance March 2019 Common B 3/29/2019 3/29/2026 1,146,214 $ 0.23 $ 179 March 2020 Common B 3/25/2020 3/25/2027 4,584,856 $ 1.12 $ 271 Total equity warrants 5,731,070 Private and Public Warrants— As of September 30, 2023 and December 31, 2022, the Company had a total of $ 1.1 million and none , respectively, of Warrants included as warrant liabilities within the condensed consolidated balance sheets. The change in fair value of Warrants for the three and nine months ended September 30, 2023 was a gain of $ 0.21 million and $ 0.21 million, respectively, and is included in change in fair value of warrant liabilities within the condensed consolidated statements of operations and comprehensive loss. Sponsor locked-up Shares— As of September 30, 2023 and December 31, 2022, the Company had a total of $ 0.5 million and none , respectively, of Sponsor locked-up Share liabilities which are included within warrant liabilities in the condensed consolidated balance sheets. The change in fair value of Sponsor locked-up Shares for the three and nine months ended September 30, 2023was a gain of $ 0.65 million and $ 0.65 million, respectively, and was recorded in change in fair value of warrant liabilities within the condensed consolidated statements of operations and comprehensive loss. Notes Receivable from Stockholders —The Company, in previous years, issued notes to stockholders to fund the payment of the exercise price of the stock options granted to such stockholders. The Company previously allowed stock option holders to early exercise stock options prior to the vesting date but no longer allows for the early exercise of stock options. The notes issued to stockholders to fund the exercises may include the exercise of stock options that have been vested by the holder as well as stock options that have not yet been vested by the holder. As of September 30, 2023 and December 31, 2022, the Company had a total of $ 19.1 million and $ 65.2 million, respectively, of outstanding promissory notes. 41 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Of the notes outstanding as of September 30, 2023 and December 31, 2022, $ 10.5 million and $ 53.9 million, respectively, were issued for the exercise of stock options vested and are recorded as a component of stockholders’ equity within the condensed consolidated balance sheets. Of the notes outstanding as of September 30, 2023 and December 31, 2022, $ 8.5 million and $ 12.3 million, respectively, were issued for the early exercise of stock options not yet vested. Notes issued for the early exercise of stock options not yet vested are not reflected within stockholders’ equity on the condensed consolidated balance sheets as they relate to unvested share awards and therefore are considered non-substantive exercises. As the unvested share awards, exercised in conjunction with the notes, vest, they are recognized in the statement of equity within vesting of common stock issued via notes receivable from stockholders. The notes bear annual interest payable upon maturity of the respective note (see Note 11). 19. Stock-Based Compensation Equity Incentive Plans —On November 3, 2016, Better’s board of directors and stockholders adopted the Better 2016 Equity Incentive Plan (the “2016 Plan”), which provides for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”) and deferred stock to eligible employees, directors and consultants of the Company. As of September 30, 2023, awards with respect to 1,212,059 shares of Class A common stock issuable upon the conversion of shares of Class B common stock into which such awards can be exercised have been granted under the 2016 Plan. Stock options granted under the 2016 Plan are generally subject to a one-year cliff vesting period with respect to 25 % of the award, and then 1/48 th of the award vests each month thereafter so that the entire award is vested on the fourth anniversary of the vesting start date. On May 15, 2017, Better’s board of directors and stockholders adopted the Better 2017 Equity Incentive Plan (the “2017 Plan”), which provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards and RSUs to eligible employees, directors and consultants of the Company. The 2017 Plan was most recently amended and approved by the stockholders of Better in August 2020. As of September 30, 2023, awards with respect to 77,053,345 shares of Class A Common Stock issuable upon the conversion of shares of Class B common stock into which such awards can be exercised have been granted under the 2017 Plan. Stock options and RSUs granted under the 2017 Plan are generally subject to a one-year cliff vesting period with respect to 25 % of the award, and then 1/48 th of the award vests each month thereafter so that the entire award is vested on the fourth anniversary of the vesting start date. Certain RSUs were also subject to a liquidity vesting condition that was satisfied in connection with the Business Combination. In connection with the Business Combination, the Better Home & Finance’s 2023 Incentive Equity Plan (the “2023 Plan”) became effective on August 22, 2023. The 2023 Plan allows for the issuance of stock options, stock appreciation rights, restricted stock awards, RSUs and other equity and equity-based awards for issuance to Better Home & Finance’s service providers. A total of 88,626,665 shares of Class A common stock were initially reserved for issuance pursuant to the 2023 Plan (the “Initial Share Reserve”). Shares subject to awards granted under the 2017 Plan that become available for issuance will again become available for issuance pursuant to the terms of the 2023 Plan, subject to certain adjustments as set forth in the 2023 Plan. The Initial Share Reserve will automatically increase on January 1 of each year beginning January 1, 2024 and ending in 2033, in an amount equal to the lesser of (i) five percent ( 5 %) of the shares of Class A common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares of Class A common stock as is determined by the Board or committee of the Board; provided, however, that no more than 614,343,928 shares of Class A common stock may be issued upon the exercise of incentive stock options. As of September 30, 2023, no awards have been granted under the 2023 Plan. In connection with the Business Combination, the Better Home & Finance 2023 Employee Stock Purchase Plan (the “ESPP”) became effective on August 22, 2023, pursuant to which eligible employees may purchase shares of Class A common stock at a discounted rate. A total of 16,113,939 shares of Class A common stock were initially reserved for issuance pursuant to the ESPP (the “ESPP Share Reserve”). The ESPP Share Reserve will automatically increase on January 1 of each year beginning January 1, 2024 and ending in 2033, in an amount equal to the lesser of (i) one percent ( 1 %) of the shares of Class A common stock outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares of Class A common stock as is determined by the Board; provided, however, that no more 42 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS than 120,854,543 shares of Class A common stock may be issued under the ESPP. As of September 30, 2023, no shares have been issued under the ESPP. The Company no longer allows for the early exercise of awards under the 2016 Plan or the 2017 Plan. Stock-Based Compensation Expense — The total of all stock-based compensation expense related to employees are reported in the following line items within the condensed consolidated statements of operations and comprehensive loss: Three Months Ended September 30, Nine Months Ended September 30, (Amounts in thousands) 2023 2022 2023 2022 Mortgage platform expenses 4,176 1,491 5,905 4,941 Other platform expenses 1,493 426 1,837 675 General and administrative expenses 16,828 6,862 25,123 20,479 Marketing expenses 146 369 216 709 Technology and product development expenses (1) 2,401 1,825 4,317 4,217 Total stock-based compensation expense 25,044 10,973 37,398 31,021 __________________ (1) Technology and product development expense excludes $ 2.5 million and $ 0.8 million for the three months ended September 30, 2023 and 2022, respectively.Technology and product development expense excludes $ 3.9 million and $ 3.0 million of stock-based compensation expense for the nine months ended September 30, 2023 and 2022, which was capitalized (see Note 7) . 20. Regulatory Requirements The Company is subject to various local, state, and federal regulations related to its loan production by the various states it operates in, as well as federal agencies such as the Consumer Financial Protection Bureau (“CFPB”), HUD, and the FHA and is subject to the requirements of the agencies to which it sells loans, such as FNMA and FMCC. As a result, the Company may become involved in requests for information, periodic reviews, investigations, and proceedings by such various federal, state, and local regulatory bodies and agencies. The Company is required to meet certain minimum net worth, minimum capital ratio and minimum liquidity requirements, including those established by HUD, FMCC and FNMA. As of September 30, 2023, the Company was in compliance with all necessary requirements. Additionally, the Company is subject to other financial requirements established by FNMA, which include a limit for a decline in net worth and quarterly profitability requirements. On March 12, 2023 and subsequently on May 19, 2023, FNMA provided notification to the Company that the Company had failed to meet FNMA’s financial requirements due to the Company’s decline in profitability and material decline in net worth. The material decline in net worth and decline in profitability permit FNMA to declare a breach of the Company’s contract with FNMA. The Company, following certain forbearance agreements from FNMA that instituted additional financial requirements on the Company that are pending FNMA’s administrative process for completion, remains in compliance with these requirements as of the date hereof. FNMA and other regulators and GSEs are not required to grant any forbearances, amendments, extensions or waivers and may determine not to do so. As a result of failing to meet FNMA’s financial requirements, the Company has entered into a Pledge and Security Agreement with FNMA on July 24, 2023, to post additional cash collateral starting with $ 5.0 million which will be held through December 31, 2023. Each quarterly period after December 31, 2023, the required cash collateral will be calculated based on an amount equal to the greater of: (i) FNMA’s origination representation and warranty exposure to the Company, multiplied by the average repurchase success rate for FNMA single-family responsible parties or (ii) $ 5.0 million. 21. Subsequent Events The Company evaluated subsequent events from the date of the condensed consolidated balance sheets of September 30, 2023 through the date of the release of financial statements, and has determined that, there have been no subsequent events that require recognition or disclosure in the condensed consolidated financial statements, except as described i n Note 1, Note 6, Note 10, Note 12 and as follows: Nasdaq Delisting Notice —On October 12, 2023, the Company received a letter from the listing qualifications staff (the “Staff”) of Nasdaq notifying the Company that it is not in compliance with the minimum bid price requirement set 43 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS forth in Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) for continued listing. The Bid Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Notice has no immediate effect on the listing of the Company’s Class A common stock, par value $ 0.0001 per share (the “Common Stock”), which continues to trade on The Nasdaq Global Market under the symbol “BETR.” In accordance with the Compliance Period Rule, the Company has 180 calendar days to regain compliance. If the Company does not regain compliance during this 180-day period, then the Company may be eligible to transfer to The Nasdaq Capital Market and the Staff may grant the Company a second 180 calendar day period to regain compliance pursuant to the Compliance Period Rule, provided the Company meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement. In addition, the Company would be required to notify Nasdaq of its intent to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split if necessary. The Company will continue to monitor the closing bid price of its Common Stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods. 44 Table of Contents