What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-14 compared with 2024-05-15 · 395 added, 259 removed, 742 unchanged (47% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, December 31,

June 30, December 31,

(Amounts in thousands, except share and per share amounts) 2024 2023

3 unchanged sentences

Mortgage loans held for sale, at fair value 349,206 170,150

166,214 170,150

Loans held for investment (net of allowance for credit losses

of $ 261 and none as of June 30, 2024 and December 31, 2023, respectively)

Other receivables, net 20,359 16,888

10 unchanged sentences

Customer deposits 36,594 11,839

Accounts payable and accrued expenses 55,721 66,558

Accounts payable and accrued expenses (includes $ 66 and none payable to related parties as of June 30, 2024 and December 31, 2023, respectively)

62,267 66,558

Escrow payable and other customer accounts 4,097 3,376

2 unchanged sentences

Lease liabilities 27,201 31,202

Other liabilities (includes $ 334 and $ 390 payable to related parties as of March 31, 2024 and December 31, 2023, respectively)

Other liabilities (includes none and $ 390 payable to related parties as of June 30, 2024 and December 31, 2023, respectively)

17,316 25,837

3 unchanged sentences

Common stock $ 0.0001 par value;

3,300,000,000 shares authorized as of March 31, 2024 and December 31, 2023, and 755,578,694 and 751,773,361 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

3,300,000,000 shares authorized as of June 30, 2024 and December 31, 2023, and 755,548,679 and 751,773,361 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Notes receivable from stockholders ( 9,130 ) ( 10,111 )

7 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended

(Amounts in thousands, except share and per share amounts) 2024 2023 2024 2023

4 unchanged sentences

Interest expense ( 4,245 ) ( 7,615 ) ( 9,099 ) ( 13,084 )

Net interest income 3,782 921

Net interest income/(loss) 5,152 ( 41 ) 8,934 880

Total net revenues 32,262 31,095 54,513 49,722

5 unchanged sentences

Depreciation and amortization 7,990 10,822 17,064 22,299

Other expenses ( 183 ) 11,065

Other expenses/(Income) ( 879 ) ( 537 ) ( 1,062 ) 10,527

Total expenses 73,424 74,649 147,024 179,474

Loss before income tax expense ( 51,349 ) ( 86,198 )

Income tax expense/(benefit) 143 1,424

Loss before income tax (benefit)/expense ( 41,162 ) ( 43,554 ) ( 92,511 ) ( 129,752 )

Income tax (benefit)/expense 203 456 346 1,880

Net loss ( 41,365 ) ( 44,010 ) ( 92,857 ) ( 131,632 )

11 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2024

(Amounts in thousands, except share and per share amounts) Issued and Outstanding Par

1 unchanged sentence

Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit)

Balance as of March 31, 2024 755,578,694 75 ( 10,976 ) 1,844,786 ( 1,755,568 ) ( 2,027 ) 76,290

Issuance of common stock for options exercised 17,629 — — 1,435 — — 1,435

Cancellation of common stock ( 859,697 ) — — — — — —

Stock-based compensation — — — 8,053 — — 8,053

Tax withholding upon vesting of restricted stock units — — — ( 84 ) — — ( 84 )

Share issued for vested restricted stock units 812,053 — — — — — —

Settlement of notes receivable from stockholders — — 1,846 ( 1,846 ) — — —

Net loss — — — — ( 41,365 ) — ( 41,365 )

Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — 579 579

Balance - June 30, 2024 755,548,679 $ 75 $ ( 9,130 ) $ 1,852,344 $ ( 1,796,933 ) $ ( 1,448 ) $ 44,908

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the Three Months Ended June 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 - March 31, 2023 108,721,433 $ 436,280 98,358,440 $ 10 $ ( 55,581 ) $ 625,545 $ ( 1,255,278 ) $ ( 1,645 ) $ ( 686,949 )

Recapitalization of shares due to Business Combination 223,593,304 — 202,281,077 20 — ( 20 ) — — —

Adjusted Balance as of March 31, 2023 332,314,737 436,280 300,639,517 30 ( 55,581 ) 625,525 ( 1,255,278 ) ( 1,645 ) ( 686,949 )

Issuance of common stock for options exercised — — 42,154 — — 853 — — 853

Repurchase or cancellation of common stock — — ( 127,028 ) — — — — — —

Stock-based compensation — — — — ( 185 ) 5,287 ( 32 ) — 5,050

Shares issued for vested restricted stock units — — 157,474

Vesting of common stock issued via notes receivable from stockholders — — — — ( 991 ) — — ( 991 )

Net loss — — — — — — ( 44,010 ) — ( 44,010 )

Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — ( 172 ) — ( 87 ) ( 259 )

Balance - June 30, 2023 332,314,737 $ 436,280 300,712,117 $ 30 $ ( 56,757 ) $ 631,493 $ ( 1,299,320 ) $ ( 1,732 ) $ ( 726,306 )

The accompanying notes are an integral part of these unaudited consolidated financial statements.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the Six Months Ended June 30, 2024

(Amounts in thousands, except share and per share amounts) 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, 2023 751,773,361 74 ( 10,111 ) 1,838,427 ( 1,704,076 ) ( 1,714 ) 122,600

Adjustment of transaction costs related to the Business Combination — — — ( 2,372 ) — — ( 2,372 )

Adjustment of transaction costs related to Business Combination — — — ( 2,372 ) — — ( 2,372 )

Issuance of common stock for options exercised 138,516 — — 1,454 — — 1,454

4 unchanged sentences

Vesting of common stock issued via notes receivable from stockholders — — ( 865 ) 857 — — ( 8 )

Settlement of notes receivable from stockholders — — 1,846 ( 1,846 ) — — —

Net loss — — — — ( 92,857 ) — ( 92,857 )

Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — 266 266

Balance - March 31, 2024 755,578,694 $ 75 $ ( 10,976 ) $ 1,844,786 $ ( 1,755,568 ) $ ( 2,027 ) $ 76,290

Balance - June 30, 2024 755,548,679 $ 75 $ ( 9,130 ) $ 1,852,344 $ ( 1,796,933 ) $ ( 1,448 ) $ 44,908

The accompanying notes are an integral part of these unaudited consolidated financial statements.

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the Three Months Ended March 31, 2023

For the Six Months Ended June 30, 2023

Convertible preferred stock Common Stock

4 unchanged sentences

Adjusted Balance as of December 31, 2022 332,314,737 436,280 299,783,421 30 ( 53,225 ) 618,091 ( 1,167,656 ) ( 1,423 ) ( 604,183 )

Issuance of common stock — — 133,645 — — 1,353 — — 1,353

Issuance of common stock for options exercised — — 175,799 — — 2,206 — — 2,206

Repurchase or cancellation of common stock — — ( 453,329 ) — — ( 8 ) — — ( 8 )

4 unchanged sentences

Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — ( 309 ) ( 309 )

Balance - March 31, 2023 332,314,737 $ 436,280 300,639,517 $ 10 $ ( 55,581 ) $ 625,545 $ ( 1,255,278 ) $ ( 1,645 ) $ ( 686,949 )

Balance - June 30, 2023 332,314,737 $ 436,280 300,712,117 $ 30 $ ( 56,757 ) $ 631,493 $ ( 1,299,320 ) $ ( 1,732 ) $ ( 726,306 )

The accompanying notes are an integral part of these unaudited consolidated financial statements.

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

Three Months Ended March 31,

Six Months Ended June 30,

(Amounts in thousands) 2024 2023

31 unchanged sentences

Purchase of short-term investments ( 97,617 ) ( 31,812 )

Origination of loans held for investment ( 28,428 ) —

Principal payments received on loans held for investment 1,822 —

Net cash used in investing activities ( 62,974 ) ( 42,712 )

Cash Flows from Financing Activities:

Net (repayments)/ borrowings on warehouse lines of credit ( 57 ) 94,105

Net borrowings/(repayments) on warehouse lines of credit 121,136 2,432

Repayments on finance lease liabilities — ( 205 )

Net decrease in customer deposits ( 8 ) —

Net increase (decrease) in customer deposits 24,755 ( 1,281 )

Repayments on corporate line of credit — ( 22,847 )

11 unchanged sentences

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.

Three Months Ended March 31,

Six Months Ended June 30,

(Amounts in thousands) 2024 2023

9 unchanged sentences

Vesting of common stock issued via notes receivable from stockholders $ 865 $ 2,354

Settlement of Notes Receivable from Stockholders $ 1,846 $ —

Acquisition earnout $ — $ 3,430

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

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.

(“Aurora”), together with its subsidiaries (collectively, the “Company”), provides a comprehensive set of homeownership offerings in the United States while expanding the Company’s offerings in the United Kingdom.

The Company’s offerings include mortgage loans, real estate agent services, title and homeowner’s insurance, and other homeownership offerings.

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.

2 unchanged sentences

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 its 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.

by acquisition of regulated entities to offer a multitude of financial products and services to consumers.

On August 22, 2023 (the “Closing Date”), the Company consummated its 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.

(“Pre-Business Combination Better”), and Aurora Merger Sub I, Inc., formerly a wholly owned subsidiary of Aurora (“Merger Sub”).

5 unchanged sentences

If the Class A common stock is no longer listed on Nasdaq, or another national securities exchange, such delisting would constitute a fundamental change under the indenture for the Convertible Note (as defined below) that would require the Company to redeem the Convertible Note prior to maturity for an amount in cash equal to the principal amount of the Convertible Note plus accrued and unpaid interest to the redemption date.

As of March 31, 2024, the Company had cash and cash equivalents, together with short-term investments of $ 482.6 million, compared to $ 528.6 million principal amount outstanding under the Convertible Note.

As of June 30, 2024, the Company had cash and cash equivalents, together with short-term investments of $ 378.8 million, compared to $ 528.6 million principal amount outstanding under the Convertible Note.

If the Company is required to redeem the Convertible Note prior to maturity, the Company may not have sufficient available cash and cash equivalents or be able to obtain additional liquidity, on acceptable terms or at all, to enable the Company to redeem or refinance the Convertible Note and continue operating its business.

The Company is evaluating options for regaining compliance with the $1.00 minimum bid price rule.

The Company applied for and, on March 7, 2024, received approval from Nasdaq to transfer the listing of its Class A common stock, from

The Company applied for and, on March 7, 2024, received approval from Nasdaq to transfer the listing of its Class A common stock, from the Nasdaq Global Market to the Nasdaq Capital Market.

The Class A common stock transferred to the Nasdaq Capital Market effective as of the opening of business on March 13, 2024 and continues to trade under the symbol “BETR.”

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the Nasdaq Global Market to the Nasdaq Capital Market.

The Class A common stock transferred to the Nasdaq Capital Market effective as of the opening of business on March 13, 2024 and continues to trade under the symbol “BETR.”

On March 19, 2024, the Company’s board of directors approved a proposal for its annual meeting of stockholders in 2024 to seek stockholder approval to declare and effect one or more reverse stock splits designed to increase the price of the Class A common stock above the $1.00 minimum bid price rule to maintain its Nasdaq listing.

Directors and officers, certain senior employees, and significant stockholders, who together hold a majority of the voting power of our outstanding common stock, have indicated that they will vote to approve the reverse stock splits at the Company’s meeting of stockholders in June 2024.

On April 9, 2024, the Company received formal notice that Nasdaq granted the Company’s request for an additional 180-day period, or until October 7, 2024, to evidence compliance with the $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to the Bid Price Rule.

If at any time before October 7, 2024, the bid price of the Company’s Class A common stock closes at or above $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Bid Price Rule.

On June 4, 2024, at the 2024 annual meeting of the Company’s stockholders, the Company’s stockholders approved amendments to the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to effect one or more reverse stock splits of the Company’s Common Stock (as defined below) at a ratio ranging from any whole number between 1-for-2 and 1-for-100 and in the aggregate not more than 1-for-100, inclusive, as determined by the Company’s board of directors (the “Reverse Stock Split Authorization”).

On August 1, 2024, pursuant to the Reverse Stock Split Authorization, the Company’s board of directors approved a reverse stock split (the “Reverse Stock Split”) and set a split ratio of 1-for-50 of our Class A common stock, Class B common stock, par value $ 0.0001 per share (“Class B common stock”), and Class C common stock, par value $ 0.0001 per share (“Class C common stock” and, together with the Class A common stock and the Class B common stock, “Common Stock” ), provided that the Company’s board of directors reserved the right to modify or abandon the amendment prior to filing with the Secretary of State of the State of Delaware.

As of the effective time of the Reverse Stock Split, one post-split share of our Common Stock will be issued in exchange for every 50 pre-split shares of our Common Stock.

The Reverse Stock Split will result in the Company’s share price being above the $1.00 Bid Price Rule and mitigates the going concern conditions.

The Reverse Stock Split is currently scheduled to become effective at 6:00 p.m.

New York time on August 16, 2024.

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.

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 three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2024.

The unaudited condensed consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes of Pre-Business Combination Better thereto for the year ended December 31, 2023.

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, and stockholders’ equity (deficit) and cash flows.

The results of operations and other information for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2024.

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, 2023.

Consolidation — The accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries.

3 unchanged sentences

Actual results could differ from those estimates.

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 stock options at grant date, the fair value of acquired intangible assets and goodwill, the provision for loan repurchase reserves, and the incremental borrowing rate used in determining lease liabilities and warrant liabilities.

Short-term investments — Short term investments consist of fixed income securities, typically U.K.

government treasury securities and U.K.

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 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 stock options at grant date, the fair value of acquired intangible assets and goodwill, the provision for loan repurchase reserves, and the incremental borrowing rate used in determining lease liabilities and warrant liabilities.

Short-term investments — Short term investments consist of fixed income securities, typically U.S and U.K.

government treasury securities and U.S.

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.

Short-term investments reported as held-to-maturity are those investments that 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 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 securities.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

Allowance for Credit Losses – Held to Maturity (“HTM”) Short-term Investments —The Company’s HTM Short-term investments are required to utilize the Current Expected Credit Loss approach to estimate expected credit losses.

Management classifies the short term investments portfolio by security types, such as U.S.

government agency securities.

The U.S and U.K.

government treasury securities and U.S.

government agency securities are issued by the U.S.

government entities and agencies, respectively.

These securities are either explicitly or implicitly guaranteed by the respective governments 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 on these short-term investments.

Mortgage Loans Held for Sale, at Fair Value — The Company sells its mortgage loans held for sale (“LHFS”) to loan purchasers.

Mortgage Loans Held for Sale, at Fair Value — The Company sells its loans held for sale (“LHFS”) to loan purchasers.

These loans can be sold in one of two ways, servicing released, or servicing retained.

4 unchanged sentences

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.

LHFS primarily consists of mortgage loans as well as home equity line of credit and closed-end second lien loans (together defined as “HELOC”), originated for sale by BMC.

The Company elects the fair value option, in accordance with ASC 825 – Financial Instruments (“ASC 825”), for all LHFS with changes in fair value recorded in gain on loans, net in the condensed consolidated statements of operations and comprehensive loss.

1 unchanged sentence

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 .

The Company accounts for the gains or losses resulting from sales of loans based on the guidance of ASC 860-20 – Sales of Financial Assets .

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 gain on loans, net.

6 unchanged sentences

The Company typically considers the above criteria to have been met upon receipt of sales proceeds from the loan purchaser.

Loans Held for Investment — The Company holds a small amount of loans held for investment, for which 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.

Loans held for investment are included within prepaid expenses and other assets on the condensed consolidated balance sheets.

Loans Held for Investment — The Company originates, primarily through its U.K.

operations, loans held for investment, for which 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.

1 unchanged sentence

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 March 31, 2024 and December 31, 2023.

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.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

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

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company has access to the market as of the measurement date.

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.

4 unchanged sentences

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, mortgage servicing rights, 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.

11 unchanged sentences

Convertible Note proceeds are allocated between the carrying value of the note 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.

Any portion of proceeds allocated to embedded derivatives are treated as reductions in, or discounts to, the carrying value of the Convertible Note 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 9 for further details on the Company’s Convertible Note.

See Note 10 for further details on the Convertible Note.

Income Taxes — Income taxes are calculated in accordance with ASC 740, Accounting for Income Taxes .

5 unchanged sentences

Revenue Recognition — The Company generates revenue from the following streams:

1) Gain on loans, net includes revenues generated from the Company’s mortgage production process.

1) Gain on loans, net includes revenues generated from the Company’s loan production process, see Note 3.

The components of gain on loans, net are as follows:

11 unchanged sentences

The provision for loan repurchase reserve, represents the charge for these potential losses.

2) Net interest income includes interest income from LHFS calculated based on the note rate of the respective loan, interest income from short-term investments, and interest income on loans held for investment.

Interest expense includes interest expense on warehouse lines of credit, interest expense on customer deposits, as well as interest expense on the Convertible Note.

3) Other revenue consists of revenue from the Company’s additional offerings which primarily consist real estate services, insurance, and international lending revenue which is recognized based on ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”).

2) Other revenue consists of revenue from the Company’s additional offerings such as real estate services, insurance, and international lending revenue, which 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.

7 unchanged sentences

Insurance revenue primarily consists of fees earned on homeowners insurance policies and title insurance.

The Company generates revenues from agent fees on homeowners insurance policies obtained by customers through

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the Company’s marketplace of third-party insurance carriers.

The Company generates revenues from agent fees on homeowners insurance policies obtained by customers through the Company’s marketplace of third-party insurance carriers.

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 homeowners insurance and 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.

For homeowners insurance and title insurance, the Company is the agent in the transactions as

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

For international lending revenue, the Company generates revenue primarily from broker fees earned in the U.K.

The Company recognizes international lending revenue upon completion of the performance obligation, which is when the mortgage transaction closes.

3) Net interest income includes interest income from LHFS, including HELOCs, calculated based on the note rate of the respective loan, interest income from short-term investments, and interest income on loans held for investment.

Interest expense includes interest expense on warehouse lines of credit, interest expense on customer deposits, as well as interest expense on the Convertible Note.

Compensation and Benefits — Compensation and benefits include salaries, wages, and incentive pay as well as stock-based compensation, employee health benefits, 401(k) plan benefits, and social security and unemployment taxes.

17 unchanged sentences

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.

Reclassification of Prior Period Presentation in the Statement of Operations and Comprehensive Loss — Reclassifications of the previously reported statement of operations and comprehensive loss have been made to conform to the current period’s presentation which provides increased transparency to the nature of the costs.

Reclassification of Prior Period Presentation in the Balance Sheet and Statement of Operations and Comprehensive Loss — Reclassifications of the previously reported statement of operations and comprehensive loss have been made to conform to the current period’s presentation, which provides increased transparency to the nature of the costs.

To conform to the current presentation, the following changes were made to the prior period statement of operations:

• Loans held for investment—Loans held for investment has been reclassified from prepaid expenses and other assets to loans held for investment on the condensed consolidated balance sheets.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• Gain on loans, net (Previously mortgage platform revenue, net)—Loan repurchase reserve recovery (provision) has been reclassified from mortgage platform expenses to gain on loans, net.

1 unchanged sentence

• Net interest income:

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• Interest income—Interest income from short-term investments has been reclassified from other income.

9 unchanged sentences

The impacts of the reclassifications on the condensed consolidated statements of operations and comprehensive loss are as follows:

(Amounts in thousands) Three Months Ended March 31, 2023

(Amounts in thousands) Six Months Ended June 30, 2023

Caption name change As previously reported Reclassifications As reclassified

10 unchanged sentences

Cash offer program expenses 398 ( 398 ) —

Other platform expenses Other expenses 4,693 6,372 11,065

Other platform expenses Other expenses/(Income) 8,465 2,062 10,527

General and administrative expenses 52,483 ( 23,011 ) 29,472

14 unchanged sentences

Reclassification of the Statement of Cash Flows —To conform to the current presentation, borrowings on warehouse lines of credit and repayments of warehouse lines of credit on the statement of cash flows have been combined into net borrowings (repayments) on warehouse lines of credit within cash (used in)/provided by financing activities as well as the breakout for gain on sale of loans, net from proceeds from sale of mortgage loans held for sale within cash used in operating activities.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Standards Not Yet Adopted

1 unchanged sentence

Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X:

120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X:

Income or Loss Applicable to Common Stock (“ASU 2023-03”).

2 unchanged sentences

ASU 2023-03 will become effective for the Company once the addition to the FASB Codification is made available.

As of March 31, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements.

As of June 30, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements.

In August 2023, the FASB issued ASU 2023-04, Liabilities (Topic 405):

4 unchanged sentences

ASU 2023-04 will become effective for the Company once the addition to the FASB Codification is made available.

As of March 31, 2024, the Company does not expect ASU 2023-04 will have any impact on the consolidated financial statements.

As of June 30, 2024, the Company does not expect ASU 2023-04 will have any impact on the consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements:

3 unchanged sentences

ASU 2023-06 will become effective for each amendment on the effective date of the SEC’s corresponding disclosure rule changes.

As of March 31, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements.

As of June 30, 2024, the Company does not expect ASU 2023-06 will have a material impact on the consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures .

24 unchanged sentences

Gain on loans, net consisted of the following :

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Amounts in thousands) 2024 2023 2024 2023

4 unchanged sentences

Other revenue consisted of the following:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Amounts in thousands) 2024 2023 2024 2023

4 unchanged sentences

Total other revenue $ 2,881 $ 4,711 $ 5,698 $ 9,655

Net interest income consisted of the following:

Three Months Ended June 30, Six Months Ended June 30,

(Amounts in thousands) 2024 2023 2024 2023

Mortgage interest income $ 4,468 $ 4,803 $ 7,432 $ 8,728

Interest Income from Investments 4,929 2,771 10,601 5,236

Warehouse interest expense ( 2,577 ) ( 4,007 ) ( 4,766 ) ( 6,786 )

Other interest expense ( 1,668 ) ( 3,608 ) ( 4,333 ) ( 6,298 )

Total net interest income $ 5,152 $ ( 41 ) $ 8,934 $ 880

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 three months ended March 31, 2024, consists of reductions in headcount and any associated costs which primarily include one-time employee termination benefits.

The restructuring program, which continued during the six months ended June 30, 2024, consists of reductions in headcount and any associated costs that primarily include one-time employee termination benefits.

The Company expects the restructuring initiatives to continue at least through the end of 2024.

5 unchanged sentences

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 March 31, 2024 and 2023, the Company impaired property and equipment of none and $ 4.5 million, respectively, which was related to termination of lease agreement and sale of laptops resulting from a reduction in the workforce.

For the six months ended June 30, 2024 and 2023, the Company impaired property and equipment of none and $ 4.8 million, respectively, which was related to termination of lease agreement and sale of laptops resulting from a reduction in the workforce.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2024 and 2023, the Company’s restructuring and impairment expenses consist of the following:

Three Months Ended March 31,

For the three and six months ended June 30, 2024 and 2023, the Company’s restructuring and impairment expenses consist of the following:

Three Months Ended June 30, Six Months Ended June 30,

(Amounts in thousands) 2024 2023 2024 2023

Employee one-time termination benefits (1)

$ 184 $ 1,266 $ 905 $ 1,554

Impairments of Right-of-Use assets (2)

Real estate restructuring loss (2)

Gain on lease settlement (2)

— — — ( 977 )

Impairment of property and equipment (2)

Total Restructuring and Impairments $ 721 $ 9,137

— 302 — 4,844

Total Restructuring and Impairments $ 184 $ 1,687 $ 905 $ 10,829

(1) Employee one-time termination benefits are included in compensation and benefits on the condensed consolidated statements of operations and comprehensive loss.

(2) Real estate restructuring loss, gain on lease settlement, and impairment of property and equipment are included in other expenses on the condensed consolidated statements of operations and comprehensive loss.

The cumulative amount of one-time termination benefits, impairment of loan commitment assets, impairment of right-of-use assets, and impairment of property and equipment as of March 31, 2024 is $ 123.0 million, $ 105.6 million, $ 8.5 million, and $ 12.0 million, respectively.

Mortgage Loans Held for Sale and Warehouse Lines of Credit

(2) Impairments of Right-of-Use Assets, real estate restructuring loss, gain on lease settlement, and impairment of property and equipment are included in other expenses on the condensed consolidated statements of operations and comprehensive loss.

The cumulative amount of one-time termination benefits, impairment of loan commitment assets, impairment of right-of-use assets, and impairment of property and equipment as of June 30, 2024 is $ 123.2 million, $ 105.6 million, $ 8.5 million, and $ 12 million, respectively.

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 March 31, 2024 December 31, 2023

(Amounts in thousands) Maturity Facility Size June 30, 2024 December 31, 2023

Funding Facility 1 (1)

8 unchanged sentences

Cash collateral deposit of $ 15 million is maintained and included in restricted cash.

Subsequent to June 30, 2024, the Company extended the maturity to August 31, 2024.

(2) Interest charged under the facility is at the 30-day term SOFR plus 2.10 % - 2.25 %.

1 unchanged sentence

(3) Interest charged under the facility is at the 30-day term SOFR plus 1.75 % - 3.75 %.

There is no cash collateral deposit maintained as of March 31, 2024.

There is no cash collateral deposit maintained as of June 30, 2024.

Subsequent to June 30, 2024, the Company extended the maturity to August 3, 2025.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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) March 31, 2024 December 31, 2023

(Amounts in thousands) June 30, 2024 December 31, 2023

Funding Facility 1 $ 69,404 $ 63,483

3 unchanged sentences

Company-funded LHFS 10,933 12,386

Company-funded Home Equity Line of Credit 28,295 25,098

Company-funded HELOC 88,761 25,098

Total LHFS 346,941 170,177

1 unchanged sentence

Total LHFS at fair value $ 349,206 $ 170,150

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Average days loans held for sale, other than Company-funded LHFS and Company-funded HELOC, for the three months ended March 31, 2024 and 2023 were approximately 20 days.

Average days loans held for sale, excluding Company-funded LHFS and Company-funded HELOC, for the three and six months ended June 30, 2024 and 2023 were approximately 20 days, 23 days, 22 days, and 23 days, respectively.

This is defined as the average days between funding and sale for loans funded during each period.

As of March 31, 2024 and December 31, 2023, the Company had an immaterial amount of loans either 90 days past due or non-performing.

For the three months ended March 31, 2024 and 2023, the weighted average interest rate for the warehouse lines of credit was 7.39 % and 6.67 %, respectively.

As of June 30, 2024 and December 31, 2023, the Company had an immaterial amount of loans either 90 days past due or non-performing.

For the six months ended June 30, 2024 and 2023, the weighted average interest rate for the warehouse lines of credit was 7.40 % and 6.77 %, 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, and leverage ratios.

In addition, these warehouse lines also require the Company to maintain compensating cash balances which aggregated to $ 18.8 million as of March 31, 2024 and December 31, 2023 and are 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 March 31, 2024 .

In addition, these warehouse lines also require the Company to maintain compensating cash balances, which aggregated to $ 18.8 million as of June 30, 2024 and December 31, 2023 and are 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 June 30, 2024.

Loans Held for Investment

Loans Held for Investment —The majority of the Company’s Loans Held for Investment portfolio consists of property - buy to let loans which makes up 93 % of the total loan portfolio as of June 30, 2024.

The Company’s Loans Held for Investment portfolio is summarized as follows:

(Amounts in thousands) June 30, 2024 December 31, 2023

Property - Buy to Let $ 28,930 $ 1,063

Other 2,330 3,730

Total Loans Held for Investment (net of allowance for credit losses

of $ 261 and none as of June 30, 2024 and December 31, 2023, respectively)

$ 31,260 $ 4,793

Accrued interest receivable on loans receivable totaled $ 0.2 million and an immaterial amount, respectively, as of June 30, 2024 and December 31, 2023 and is included in other receivables, net on the condensed consolidated balance sheets.

The Company elected the practical expedient to exclude the applicable accrued interest receivable on loans receivable from the disclosed amortized cost basis.

The Company concluded that it has a substantive non-accrual policy which allows for the timely reversal of accrued interest should an asset be placed on non-accrual;

accordingly, there was no allowance for credit losses for accrued interest receivable on loans receivable as of June 30, 2024.

When writing off uncollectible accrued interest receivables on its loans held for investment portfolio, the Company considers 90 days to be a timely manner.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Uncollectible amounts of accrued interest receivable are charged off by reversing interest income.

The Company had no charge offs of uncollectible accrued interest on its outstanding loans held for investment during the three and six month period ended June 30, 2024 and 2023.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due.

As of both June 30, 2024 and December 31, 2023, there were no loans held for investment past due.

The Company considers loans for which the repayment is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, or where foreclosure is probable to be collateral dependent.

As of June 30, 2024 and December 31, 2023, there were no loans secured by any asset type for which formal foreclosure proceedings are in process.

Loans are placed on non-accrual status and the accrual of interest is discontinued if principal or interest payments become 90 days past due and/or management deems the collectability of the principal and/or interest to be in question.

Loans to a customer whose financial condition has deteriorated are considered for non-accrual status whether or not the loan is 90 days or more past due.

Generally, payments received on non-accrual loans are recorded as principal reductions.

Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

As of June 30, 2024 and December 31, 2023, there were no loans that were placed on non-accrual status.

During the three and six months ended June 30, 2024 and 2023, there were no modifications for loans to borrowers experiencing financial difficulty.

Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt, including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends.

The Company analyzes loans individually by classifying the loans as to credit risk.

This analysis includes all loans with the exception of homogeneous loans, or loans that are evaluated together in pools of similar loans (i.e., home mortgage loans, home equity lines of credit, overdraft loans, express business loans, and automobile loans).

This analysis is performed at least on a quarterly basis.

Homogeneous loans are not risk rated and credit risk is analyzed largely by the contractual maturity and payment status of the loan.

We utilize maturity bands to assess the probability of credit losses within the portfolio.

The three main bands are as follows:

0-20 months, 21-40 months, and over 40 months.

The following table presents amortized cost for outstanding loans, by class and year of origination/renewal, as of June 30, 2024 and December 31, 2023.

The tables below presents loans by credit quality indicator and vintage year:

June 30, 2024

(Amounts in thousands) 2024 2023 2022 2021 2020 Prior Total

Property - Buy to Let

0-20 Months $ — $ — $ — $ — $ — $ — $ —

21-40 Months — — — — — — —

Over 40 Months 28,213 717 — — — — 28,930

Total $ 28,213 $ 717 $ — $ — $ — $ — $ 28,930

0-20 Months $ — $ 62 $ 224 $ 312 $ 178 $ 43 $ 819

21-40 Months — — 1,042 455 — — 1,497

Over 40 Months — 14 — — — — 14

Total $ — $ 76 $ 1,266 $ 767 $ 178 $ 43 $ 2,330

Total $ 28,213 $ 793 $ 1,266 $ 767 $ 178 $ 43 $ 31,260

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023

(Amounts in thousands) 2023 2022 2021 2020 2019 Prior Total

Property - Buy to Let

0-20 Months $ — $ — $ — $ — $ — $ — $ —

21-40 Months — — — — — — —

Over 40 Months 1,063 — — — — — 1,063

Total $ 1,063 $ — $ — $ — $ — $ — $ 1,063

0-20 Months $ 116 $ 472 $ 417 $ 175 $ 203 $ 2 $ 1,385

21-40 Months 10 1,093 856 129 — — 2,088

Over 40 Months 17 240 — — — — 257

Total $ 143 $ 1,805 $ 1,273 $ 304 $ 203 $ 2 $ 3,730

Total $ 1,206 $ 1,805 $ 1,273 $ 304 $ 203 $ 2 $ 4,793

Goodwill and Internal Use Software and Other Intangible Assets, Net

Changes in the carrying amount of goodwill, net consisted of the following:

Three Months Ended March 31,

Six Months Ended June 30,

(Amounts in thousands) 2024 2023

Balance at beginning of period $ 32,390 $ 18,525

Goodwill acquired—Goodholm — 1,741

Goodwill acquired — 14,041

Effect of foreign currency exchange rate changes ( 145 ) 734

Balance at end of period $ 32,245 $ 33,300

No impairment of goodwill was recognized for the three months ended March 31, 2024 and 2023.

No impairment of goodwill was recognized for the three and six months ended June 30, 2024 and 2023.

Internal use software and other intangible assets, net consisted of the following:

As of March 31, 2024

As of June 30, 2024

(Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value

19 unchanged sentences

Total Internal use software and other intangible assets, net $ 141,967 $ ( 103,841 ) $ 38,126

The Company capitalized $ 0.4 million and $ 3.5 million in internal use software and website development costs during the three months ended March 31, 2024 and 2023, respectively.

Included in capitalized internal use software and website development costs are $ 0.4 million and $ 0.7 million of stock-based compensation costs for the three months ended March 31, 2024 and 2023, respectively.

Amortization expense totaled $ 8.0 million and $ 9.4 million during the three months ended March 31, 2024 and 2023, respectively.

For the three months ended March 31, 2024 and 2023, no impairment was recognized relating to intangible assets.

The Company capitalized $ 2.2 million and $ 3.5 million in internal use software and website development costs during the three months ended June 30, 2024 and 2023, respectively.

Included in capitalized internal use software and website development costs are $ 0.5 million and $ 0.7 million of stock-based compensation costs for the three months ended June 30, 2024 and 2023, respectively.

Amortization expense totaled $ 7.1 million and $ 9.4 million during the three months ended June 30, 2024 and 2023, respectively.

For the three months ended June 30, 2024 and 2023, no impairment was recognized relating to intangible assets.

The Company capitalized $ 3.0 million and $ 7.6 million in internal use software and website development costs during the six months ended June 30, 2024 and 2023, respectively.

Included in capitalized internal use software and website development costs are $ 0.9 million and $ 1.4 million of stock-based compensation costs for the six months ended June 30, 2024 and 2023, respectively.

Amortization expense totaled $ 15.1 million and $ 18.8 million during the six months ended June 30, 2024 and 2023, respectively.

For the six months ended June 30, 2024 and 2023, no impairment was recognized relating to intangible assets.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consisted of the following:

As of March 31, As of December 31,

As of June 30, As of December 31,

(Amounts in thousands) 2024 2023

2 unchanged sentences

Security Deposits 14,012 15,179

Loans held for investment 7,900 4,793

Prefunded loans in escrow 10,179 —

Total prepaid expenses and other assets $ 54,951 $ 51,386

The prefunded loans in escrow consists of loans that were funded in the current period but closed in the subsequent period.

Due to the timing of the closing of these loans they are not mortgage loans held for sale in the current period.

Customer Deposits

Customer Deposits —In relation to the Company’s banking activities tied to the Company’s acquisition of Birmingham Bank 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 both March 31, 2024 and December 31, 2023 was $ 11.8 million on the condensed consolidated balance sheets.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

differing maturities and interest rates to its customers.

The balance of customer deposits as of June 30, 2024 and December 31, 2023 was $ 36.6 million and $ 11.8 million, respectively, on the condensed consolidated balance sheets.

The following table presents average balances and weighted average rates paid on deposits for the periods indicated:

Three Months Ended March 31,

(Amounts in thousands) Average Balance Average Rate Paid

Three Months Ended June 30,

(Amounts in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid

Notice $ 2,416 2.85 % $ 3,618 2.32 %

2 unchanged sentences

Total Deposits $ 28,739 2.97 % $ 11,768 1.76 %

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Six Months Ended June 30,

(Amounts in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid

Notice $ 2,413 2.85 % $ 3,618 2.32 %

Term 13,805 3.87 % 1,906 1.20 %

Savings 4,211 2.20 % 6,244 1.76 %

Total Deposits $ 20,429 2.97 % $ 11,768 1.76 %

The following table presents maturities of customer deposits:

(Amounts in thousands) As of March 31, 2024

(Amounts in thousands) As of June 30, 2024

Demand deposits 4,852

Thereafter 2,172

Total $ 36,594

Interest Expense on deposits is recorded in interest expense in the condensed consolidated statements of operations and comprehensive loss for the periods indicated as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Amounts in thousands) 2024 2023 2024 2023

Notice $ 21 $ 20 $ 45 $ 20

Term 218 6 270 6

Savings 28 29 57 29

Total Interest Expense $ 267 $ 55 $ 372 55

Deposits are for U.K.

banking clients and are protected up to £ 85.0 thousand ($ 107.3 thousand) per eligible person by the Financial Services Compensation Scheme in the U.K.

Of the total customer deposits as of March 31, 2024, $ 1.0 million were over the applicable insured amount.

banking clients and are protected up to £ 85.0 thousand ($ 107.5 thousand, USD equivalent as of June 30, 2024 ) per eligible person by the Financial Services Compensation Scheme in the U.K.

Of the total customer deposits as of June 30, 2024, $ 1.7 million were over the applicable insured amount.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Corporate Line of Credit and Convertible Note

Corporate Line of Credit —The Company made the final principal payment on its corporate line of credit in August 2023 and as such incurred no interest expense under the corporate line of credit during the three months ended March 31, 2024.

For the three months ended March 31, 2023, the Company recorded a total of $ 2.6 million related to interest expense as follows:

For the three months ended June 30, 2023, the Company recorded a total of $ 3.6 million related to interest expense as follows:

$ 3.1 million in interest expense related to the line of credit and $ 0.5 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 expense within the condensed consolidated statements of operations and comprehensive loss.

For the six months ended June 30, 2023, the Company recorded a total of $ 6.2 million related to interest expense as follows:

$ 5.4 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 expense within the condensed consolidated statements operations and comprehensive loss.

Convertible Note— In connection with the Closing of the Business Combination, the Company issued to SB Northstar LP, a Cayman Islands exempted limited partnership and an affiliate of SoftBank Group Corp., a senior subordinated convertible note in the aggregate principal amount of $ 528.6 million (the “Convertible Note”), $ 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”).

1 unchanged sentence

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.

The counter parties to the Convertible Note and Merger Agreement are related parties.

The Convertible Note is convertible, at the option of SB Northstar, into shares of the Company’s Class A common stock, with an initial conversion rate per $1,000 principal amount of Convertible Note 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.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 d ate of notice of optional redemption.

The Convertible Note may be redeemed at the option of the Company at a redemption price of 115 % of par pl us accrued interest in cash, at any time on or before the 30th trading day prior to the maturity date of the Convertible Note 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 d ate of notice of optional redemption.

The Convertible Note is redeemable prior to maturity in the event of a fundamental change under the Indenture, such as the removal of the Company’s Class A common stock from the Nasdaq.

In this event, the Company would be required to redeem the Convertible Note for an amount in cash equal to the principal balance plus accrued and unpaid interest on the redemption date.

As of March 31, 2024 and December 31, 2023, the carrying amount of the Convertible Note was $ 514.8 million and $ 514.6 million on the condensed consolidated balance sheets, respectively.

For the three months ended March 31, 2024, the Company recorded a total of $ 2.7 million of interest expense related to the Convertible Note.

As of June 30, 2024 and December 31, 2023, the carrying amount of the Convertible Note was $ 516.4 million and $ 514.6 million on the condensed consolidated balance sheets, respectively.

For the three and six months ended June 30, 2024, the Company recorded a total of $ 1.6 million and $ 4.3 million, respectively, of interest expense related to the Convertible Note.

Interest expense from the Convertible Note is included in interest expense within the condensed consolidated statements of operations and comprehensive loss.

In February 2024, the Company made a cash payment in the amount of $ 2.5 million, representing interest expense from the issuance of the Convertible Note through February 15, 2024.

In February 2024, the Company made a cash payment in the amount of $ 2.5 million , which consisted of $ 1.1 million towards the principal and $ 1.4 million of interest from January 1, 2024 through February 15, 2024.

As the Convertible Note was issued in August 2023, no interest expense was incurred for the three and six months ended June 30, 2023.

Related Party Transactions

2 unchanged sentences

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 LLC, 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).

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

2 unchanged sentences

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 incurred gross expense of none and $ 28 thousand in the three months ended three months ended March 31, 2024 and 2023, respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.

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 for both the three months ended March 31, 2024 and 2023, respectively.

The Company is invoiced on a net basis and recorded a $ 152 thousand and $ 153 thousand payable as of March 31, 2024 and December 31, 2023, respectively, included within other liabilities on the condensed consolidated balance sheets.

In connection with this agreement, the Company incurred gross expense of none and $ 6 thousand in the three months ended June 30, 2024 and 2023, respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.

The Company incurred gross expense of none and $ 33 thousand in the six months ended June 30, 2024 and 2023, respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.

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 for both the three and six months ended June 30, 2024 and 2023, respectively.

The Company is invoiced on a net basis and recorded none and $ 153 thousand payable as of June 30, 2024 and December 31, 2023, respectively, included within other liabilities 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 in a testing environment with test data.

5 unchanged sentences

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 $ 62 thousand and $ 301 thousand for the three months ended March 31, 2024 and 2023 respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss and had a payable of $ 171 thousand and $ 230 thousand as of March 31, 2024 and December 31, 2023, respectively, within other liabilities on the condensed consolidated balance sheets.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In connection with these agreements, the Company paid expenses of $ 153 thousand and $ 70 thousand for the three months ended June 30, 2024 and 2023 respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.

The Company paid expenses of $ 478 thousand and $ 371 thousand for the six months ended June 30, 2024 and 2023 respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss and had a payable of $ 66 thousand and $ 230 thousand as of June 30, 2024 and December 31, 2023, respectively, included 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.

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 monthly installments.

In September 2022, the Company entered into an amendment of the 2021 Notable Program Agreement, the “Amended Notable Program”.

The Amended Notable Program expands Notable’s product offerings to include in the private label consumer loan program, a non-revolving personal line of credit, where the unpaid principal balance converts to a closed-end, multiyear unsecured personal loan following a designated draw period, to qualified consumers for the financing of purchases of home improvement products and services.

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.

2 unchanged sentences

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 March 31, 2024 and December 31, 2023, the Company had $ 5.8 million and $ 6.3 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.

For the three months ended March 31, 2024, the Company incurred $ 16 thousand of expenses for amortization of internal use software under the agreement, which are included within depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss.

For the three months ended March 31, 2023, the Company incurred $ 21 thousand of expenses under the agreement, $ 5 thousand of which are included within marketing expenses and $ 16 thousand of which are included within depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss.

As of June 30, 2024 and December 31, 2023,

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the Company had $ 5.3 million and $ 6.3 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.

For the three months ended June 30, 2024, the Company incurred $ 16 thousand of expenses for amortization of internal use software under the agreement, which are included within depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss.

For the three months ended June 30, 2023, the Company incurred $ 1 thousand of expenses under the agreement which are included within marketing expenses and depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss.

For the six months ended June 30, 2024, the Company incurred $ 32 thousand of expenses for amortization of internal use software under the agreement, which are included within depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss.

For the six months ended June 30, 2023, the Company incurred $ 22 thousand of expenses under the agreement, which are included within marketing expenses and depreciation and amortization on the condensed consolidated statements of operations and comprehensive loss.

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.

5 unchanged sentences

The Company originally entered into the data services agreement in March 2021, and amended the agreement in October 2021 to run until September 30, 2023.

In connection with usage of the services, the Company incurred expenses of $ 8 thousand and $ 43 thousand for the three months ended March 31, 2024 and 2023 respectively, which are included within loan origination expenses on the consolidated statements of operations and comprehensive loss .

In connection with usage of the services, the Company incurred expenses of $ 13 thousand and $( 42 ) thousand for the three months ended June 30, 2024 and 2023 respectively, which are included within loan origination expenses on the consolidated statements of operations and comprehensive loss.

The Company incurred expenses of $ 40 thousand and none for the six months ended June 30, 2024 and 2023 respectively, which are included within loan origination expenses on the consolidated statements of operations and comprehensive loss.

The Company recorded a payable of none and $ 7 thousand as of June 30, 2024 and December 31, 2023, respectively, and is included within other liabilities on the condensed consolidated balance sheets.

Commitments and Contingencies

5 unchanged sentences

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

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 $ 8.5 million and $ 8.4 million as of June 30, 2024 and December 31, 2023, respectively, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets.

During the three and six months ended June 30, 2024, the changes in the liability included a settlement of $ 0.5 million as well as an additional accrued expense of $ 0.6 million related to certain other employment matters, which is included within general and administrative expense on the consolidated statement of operations and comprehensive loss.

There were no changes in the estimated liability for both the three and six months ended June 30, 2023.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

overtime and is in violation of the Fair Labor Standards Act and labor laws in the State of California and the State of Florida.

As part of the dispute, the Company included an estimated liability of $ 8.4 million as of both March 31, 2024 and December 31, 2023, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets.

No additional expense was accrued for the three months ended March 31, 2024.

During the first quarter of 2023, the Company settled its employee related labor dispute in the State of Florida for an immaterial amount.

On June 7, 2022, Sarah Pierce, Pre-Business Combination Better’s former Head of Sales and Operations, filed litigation against Pre-Business Combination Better, Mr.

2 unchanged sentences

Garg and Calamari with prejudice and withdrawn her appeal of a separate judgment obtained by the Company against her.

Impacts of the settlement were not material to the Company and are included within the condensed consolidated statements of stockholder’s equity.

Regulatory Matters —In the third quarter of 2021, following third-party audits of samples of loans produced during the fiscal years 2018, 2019, and 2022, 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 March 31, 2024 and December 31, 2023, the Company included an estimated liability of $ 8.7 million and $ 8.6 million, respectively, within accounts payable and accrued expenses on the condensed consolidated balance sheets.

For the three months ended March 31, 2024, the Company recorded an additional accrual for these potential TRID defects of $ 0.1 million and is included within loan origination expense in the condensed consolidated statement of operations and comprehensive loss.

As of June 30, 2024 and December 31, 2023, the Company included an estimated liability of $ 6.6 million and $ 8.6 million, respectively, within accounts payable and accrued expenses on the condensed consolidated balance sheets.

For the three and six months ended June 30, 2024, the Company recorded additional accruals for these potential TRID defects of $ 0.1 million and $ 0.1 million, respectively, which are included within loan origination expense in the condensed consolidated statement of operations and comprehensive loss.

During the three and six months ended June 30, 2024, the Company had relief of the liability due to payments to customers in the amount of $ 2.1 million and $ 2.1 million, respectively.

For the three and six months ended June 30, 2023, the Company recorded an additional accrual for these potential TRID defects of $ 0.1 million and $ 0.3 million, respectively, and are included within loan origination expense 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.

10 unchanged sentences

The Company would then be entitled to appeal that determination to a Nasdaq hearings panel.

On August 1, 2024, pursuant to the Reverse Stock Split Authorization, the Company’s board of directors approved the Reverse Stock Split and set a split ratio of 1-for-50 of our Common Stock.

As of the effective time of the Reverse Stock Split, one post-split share of our Common Stock will be issued in exchange for every 50 pre-split shares of our Common Stock.

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 March 31, 2024 and December 31, 2023, the Company had outstanding commitments to fund mortgage loans in notional amounts of approximately $ 262.7 million and $ 227.4 million, respectively.

The IRLCs derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets.

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 March 31, 2024

As of June 30, 2024 and December 31, 2023, the Company had outstanding commitments to fund mortgage loans in notional amounts of approximately $ 309.7 million and $ 227.4 million, respectively.

The IRLCs derived from those

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and December 31, 2023, the Company had outstanding forward sales commitment contracts of notional amounts of approximately $ 356.0 million and $ 265.0 million, respectively.

The forward sales commitments derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets.

notional amounts are recorded within derivative assets and liabilities, at fair value as of June 30, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets.

As of June 30, 2024 and December 31, 2023, the Company had outstanding forward sales commitment contracts of notional amounts of approximately $ 460.0 million and $ 265.0 million, respectively.

The forward sales commitments derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of June 30, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets.

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 March 31, 2024, the Company had three loan purchasers that accounted for 53 %, 17 % and 18 % of loans sold by the Company.

During the three months ended March 31, 2023, the Company had one loan purchaser that accounted for 79 % of loans sold by the Company.

Significant loan purchasers are those that represent more than 10% of the Company’s loan volume.

During the three months ended June 30, 2024, the Company had three loan purchasers that accounted for 48 %, 27 % and 12 % of loans sold by the Company.

During the three months ended June 30, 2023, the Company had one loan purchaser that accounted for 71 % of loans sold by the Company.

During the six months ended June 30, 2024, the Company had three loan purchasers that accounted for 51 % , 22 % and 15 % of loans sold by the Company.

During the six months ended June 30, 2023, the Company had one loan purchaser that accounted for 75 % 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 March 31, 2024 , the company originated 10 % of its LHFS secured by properties in Florida.

As of June 30, 2024 , the company originated 10 % of its LHFS secured by properties in Florida.

As of December 31, 2023 , the Company originated 12 % and 11 % of its LHFS secured by properties in Florida and Texas, respectively.

1 unchanged sentence

Cash accounts at each bank are insured by the Federal Deposit Insurance Corporation for amounts up to $0.25 million.

As of March 31, 2024 and December 31, 2023, the majority of the Company’s cash and cash equivalent balances are in excess of the insured limits at various financial institutions.

As of June 30, 2024 and December 31, 2023, the majority of the Company’s cash and cash equivalent balances are in excess of the insured limits at various financial institutions.

Escrow Payable and Other Customer Accounts —In accordance with its lender obligations, the Company maintains a separate escrow bank account to hold borrower funds pending future disbursement.

2 unchanged sentences

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 March 31, 2024 and December 31, 2023 was $ 3.8 million and $ 3.4 million, respectively.

The balance in these accounts as of June 30, 2024 and December 31, 2023 was $ 4.1 million and $ 3.4 million, respectively.

Risks and Uncertainties

9 unchanged sentences

Through this program, mortgage-backed securities are purchased and sold forward.

For all counterparties with open positions as of March 31, 2024, in the event that the Company does not deliver into the forward-delivery commitments, they can be settled on a net basis.

For all counterparties with open positions as of June 30, 2024, 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.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

7 unchanged sentences

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 $ 2.0 million ( 6 l oans) and $ 8.2 million ( 21 l oans) in unpaid principal balance of loans during the three months ended March 31, 2024 and 2023, respectively, related to its loan repurchase obligations.

The Company repurchased $ 1.0 million ( 5 l oans) and $ 9.0 million ( 20 l oans) in unpaid principal balance of loans during the three months ended June 30, 2024 and 2023, respectively, related to its loan repurchase obligations.

The Company repurchased $ 3.0 million ( 11 l oans) and $ 14.9 million ( 35 l oans) in unpaid principal balance of loans during the six months ended June 30, 2024 and 2023, respectively, related to its loan repurchase obligations.

The Company’s loan repurchase reserve is included within other liabilities on the consolidated balance sheets.

1 unchanged sentence

The following presents the activity of the Company’s loan repurchase reserve:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Amounts in thousands) 2024 2023 2024 2023

3 unchanged sentences

Loan repurchase reserve at end of period $ 11,721 $ 21,832 $ 11,721 $ 21,832

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.

4 unchanged sentences

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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Amounts in thousands, except for share and per share amounts) 2024 2023 2024 2023

5 unchanged sentences

Net loss attributable to common stockholders - Basic $ ( 41,365 ) $ ( 44,010 ) $ ( 92,857 ) $ ( 131,632 )

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 $ ( 41,365 ) $ ( 44,010 ) $ ( 92,857 ) $ ( 131,632 )

9 unchanged sentences

Diluted $ ( 0.05 ) $ ( 0.15 ) $ ( 0.12 ) $ ( 0.44 )

Basic and diluted loss per share are the same for each class of common stock (i.e., Class A, Class B and Class C) because they are entitled to the same dividend rights.

Basic and diluted loss per share are the same for each class of our Common Stock because they are entitled to the same dividend rights.

Basic and diluted loss per share are presented together as the amounts for basic and diluted loss per share are the same (i.e., the Company’s other equity-linked instruments outstanding are anti-dilutive for the periods presented).

There were no preferred dividends declared or accumulated during the three months ended March 31, 2024 and 2023.

Historically, the Company applied 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.

There were no preferred dividends declared or accumulated during the three and six months ended June 30, 2024 and 2023.

Historically, the Company applied the two-class method that requires earnings available to common stockholders for the period to be allocated between our 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 was a participating security as the holders of such shares participated in earnings but did not contractually participate in the Company’s losses and therefore no losses were allocated to the convertible preferred stock in prior periods.

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 anti-dilutive.

The Company's potentially dilutive securities, which include stock options, RSUs, convertible preferred stock, warrants to purchase shares of convertible common stock, warrants to purchase shares of preferred stock, pre-closing Bridge Notes, and Sponsor locked-up shares, have been excluded from the computation of diluted net loss per share, as the effect would be anti-dilutive.

The Company excluded the following

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

securities, presented based on amounts outstanding at each year end, from the computation of diluted net loss per share attributable to common stockholders for the years indicated as including them would have had an anti-dilutive effect:

Three Months Ended March 31,

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:

Six Months Ended June 30,

(Amounts in thousands) 2024 2023

RSUs and Options to purchase common stock (1)

49,562 141,059

Convertible preferred stock (2)

Pre-Closing Bridge Notes (2)

RSUs and Options to purchase common stock (1)

59,355 144,726

Warrants to purchase convertible preferred stock (1)

2 unchanged sentences

Sponsor locked-up shares (1)

Warrants to purchase common stock (1)

Total 69,857 1,263,120

4 unchanged sentences

The Company’s financial instruments measured at fair value on a recurring basis are summarized below:

March 31, 2024

June 30, 2024

(Amounts in thousands) Level 1 Level 2 Level 3 Total

16 unchanged sentences

$ — $ 872 $ 77 $ 949

Warrant and equity related liabilities, at fair value (2)

Warrants and equity related liabilities, at fair value (2)

972 1,359 — 2,331

1 unchanged sentence

__________________

(1) As of March 31, 2024 and December 31, 2023, derivative assets and liabilities represent both IRLCs and forward sale commitments.

(1) As of June 30, 2024 and December 31, 2023, derivative assets and liabilities represent both IRLCs and forward sale commitments.

(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.

3 unchanged sentences

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

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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 March 31, 2024 and December 31, 2023.

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 June 30, 2024 and December 31, 2023.

Significant changes in the pull-through factor of the IRLCs, in isolation, could result in significant changes in the IRLCs’ fair value measurement.

1 unchanged sentence

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 $ 2.6 million and $ 0.9 million of IRLCs during the three months ended March 31, 2024 and 2023, respectively.

The number of days from the date of the IRLC to expiration of the rate lock commitment outstanding as of March 31, 2024 was approximately 51 days on average.

The Company had purchases/issuances of approximately $ 3.4 million and $ 0.2 million of IRLCs during the three months ended June 30, 2024 and 2023, respectively.

The Company had purchases/issuances of approximately $ 5.9 million and $ 0.7 million of IRLCs during the six months ended June 30, 2024 and 2023, respectively.

The number of days from the date of the IRLC to expiration of the rate lock commitment outstanding as of June 30, 2024 was approximately 50 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 March 31, 2024, the Company recognized none of losses and $ 2.5 million of gains related to changes in fair value of IRLCs and forward sale commitments, respectively.

During the three months ended March 31, 2023, the Company recognized $ 4.2 million of gains and $ 4.5 million of losses related to changes in the fair value of IRLCs and forward sale commitments, respectively.

During the three months ended June 30, 2024, the Company recognized $ 1.5 million and $ 4.0 million of gains related to changes in fair value of IRLCs and forward sale commitments, respectively.

During the six months ended June 30, 2024, the Company recognized $ 1.6 million and $ 6.4 million of gains related to changes in fair value of IRLCs and forward sale commitments, respectively.

During the three months ended June 30, 2023, the Company recognized $ 3.2 million of losses and $ 7.9 million of gains related to changes in the fair value of IRLCs and forward sale commitments, respectively.

During the six months ended June 30, 2023, the Company recognized $ 1.0 million and $ 3.4 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 gain on loans, 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 $ 3.8 million of gains and $ 8.8 million of losses, included in the $ 2.5 million of gains and $ 4.5 million of losses, during the three months ended March 31, 2024 and 2023, respectively.

Unrealized activity related to changes in the fair value of forward sale commitments were $ 0.7 million and $ 8.1 million of gains, included in the $ 4.0 million of gains and $ 7.9 million of gains, during the three months ended June 30, 2024 and 2023, respectively.

Unrealized activity related to changes in the fair value of forward sale commitments were $ 4.5 million of gains and $ 0.7 million of losses, included in the $ 6.4 million of gains and $ 3.4 million of gains, during the six months ended June 30, 2024 and 2023, 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 March 31, 2024

Balance as of June 30, 2024

IRLCs $ 309,687 $ 3,348 $ 142

6 unchanged sentences

Warrant and equity related liabilities— The warrant liability consists of Warrants and certain shares issued to Novator Capital Sponsor Ltd.

("Sponsor") that are subject to transfer restrictions contingent on the price of Class A common stock exceeding certain thresholds (the "Sponsor-Locked-Up Shares").

("Sponsor, a related party") that are subject to transfer restrictions contingent on the price of Class A common stock exceeding certain thresholds (the "Sponsor-Locked-Up Shares").

The warrants consist of the Company's publicly traded warrants ("Public Warrants") and private warrants to acquire shares of Aurora that have been converted into warrants to acquire shares of Class A common stock ("Private Warrants").

3 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024 and December 31, 2023, Level 3 instruments include IRLCs, bifurcated derivative and convertible preferred stock warrants.

As of June 30, 2024 and December 31, 2023, Level 3 instruments include IRLCs.

The following table presents the rollforward of Level 3 IRLCs:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Amounts in thousands) 2024 2023 2024 2023

2 unchanged sentences

Balance at end of period $ 3,206 $ ( 514 ) $ 3,206 $ ( 514 )

The following table presents the rollforward of Level 3 bifurcated derivative:

Three Months Ended March 31,

(Amounts in thousands) 2024 2023

Balance at beginning of period $ — $ 236,603

Change in fair value of bifurcated derivative — ( 1,887 )

Balance at end of period $ — $ 234,716

The following table presents the rollforward of Level 3 convertible preferred stock warrants:

Three Months Ended March 31,

(Amounts in thousands) 2024 2023

Balance at beginning of period $ — $ 3,096

Exercises — —

Change in fair value of convertible preferred stock warrants — ( 553 )

Balance at end of period $ — $ 2,543

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.

3 unchanged sentences

Balance as of:

March 31, 2024:

June 30, 2024:

$ 1,761 $ ( 379 ) $ 1,382

December 31, 2023 $ — $ — $ —

1 unchanged sentence

Balance as of:

March 31, 2024:

$ 311 $ ( 828 ) $ ( 517 )

June 30, 2024:

December 31, 2023 $ 168 $ ( 1,041 ) $ ( 872 )

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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:

March 31, 2024

June 30, 2024

(Amounts in dollars, except percentages) Range Weighted Average

10 unchanged sentences

The use of market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(Amounts in thousands) Fair Value Level Carrying Amount Fair Value Carrying Amount Fair Value

4 unchanged sentences

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.

In determining the fair value of the Convertible Note, management used factors that are material to the valuation process, including but not limited to, the trading price of the Company’s securities, actual and projected financial results, risks, prospects, and economic and market conditions, among other factors.

In determining the fair value of the Convertible Note, issued by a related party, management used factors that are material to the valuation process, including but not limited to, the trading price of the Company’s securities, 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 and the Convertible Note were classified as Level 3 inputs within the fair value hierarchy.

On a consolidated basis, the Company recorded total income tax expense (benefit) of $ 0.1 million and $ 1.4 million for the three months ended March 31, 2024 and 2023, respectively.

On a consolidated basis, the Company recorded total income tax expense of $ 0.3 million and $ 1.9 million for the six months ended June 30, 2024 and 2023, 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 ( 0.28 )% for the three months ended March 31, 2024, changed from ( 1.65 )% for the three months ended March 31, 2023, as the Company is forecasting reduction in losses for 2024.

In addition, the

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company was subject to withholding taxes on a dividend in 2023.

The income tax expense for the three months ended March 31, 2024 primarily relates to the pre-tax income projections in certain foreign jurisdictions where the Company files standalone returns.

The income tax expense for the three months ended March 31, 2023 relates to the pre-tax income projections and dividend income withholding tax paid in certain foreign jurisdictions where the Company files standalone returns.

The year-to-date effective tax rate, after discrete items, of ( 0.4 )% for the six months ended June 30, 2024, changed from ( 1.4 )% for the six months ended June 30, 2023, as the Company was subject to withholding taxes on an intercompany dividend in 2023.

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 March 31, 2024.

The Company is in a three-year cumulative loss position in all material jurisdictions as of June 30, 2024.

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.

3 unchanged sentences

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.

The change in fair value of warrants for the three months ended March 31, 2024 and 2023 was a gain of none and a gain of $ 0.6 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 three months ended June 30, 2024 and 2023 was none and a loss of $ 0.3 million, respectively, and was recorded in other expenses within the condensed consolidated statements of operations and comprehensive loss.

The change in fair value of warrants for the six months ended June 30, 2024 and 2023 was none and a gain of $ 0.3 million, respectively, and was recorded in other expenses within the condensed consolidated statements of operations and comprehensive loss.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stockholders' Equity

1 unchanged sentence

The Company’s Class A common stock and Public Warrants currently trade on the Nasdaq Capital Market, under the ticker symbols “BETR” and “BETRW”, respectively.

Each outstanding share of Pre-Business Combination Better common stock was exchanged for approximately 3.06 shares of the Company’s Class A or Class B common stock, par value $ 0.0001 per share (“Class B common stock”).

Private and Public Warrants— As of March 31, 2024 and December 31, 2023, the Company had a total of $ 1.3 million and $ 1.9 million, in respect of Private Warrants and Public Warrants, respectively, included as warrant and equity related liabilities within the condensed consolidated balance sheets.

The change in fair value of Warrants for the three months ended March 31, 2024 was a gain of $ 0.6 million and is included in other expenses within the condensed consolidated statements of operations and comprehensive loss.

There was no activity for the three months ended March 31, 2023 as the Warrants were assumed at the Closing of the Business Combination.

Sponsor Locked-up Shares— As of March 31, 2024 and December 31, 2023, the Company had a total of $ 0.2 million and $ 0.4 million, respectively, in respect of Sponsor Locked-up Share liabilities which are included within warrant and equity liabilities in the condensed consolidated balance sheets.

The change in fair value of Sponsor Locked-up Shares for the three months ended March 31, 2024 was a gain of $ 0.2 million and was included in other expenses within the condensed consolidated statements of operations and comprehensive loss.

There was no activity for the three months ended March 31, 2023 as the Sponsor Locked-up shares were assumed at the Closing of the Business Combination.

Each outstanding share of Pre-Business Combination Better common stock was exchanged for approximately 3.06 shares of the Company’s Class A or Class B common stock.

Private and Public Warrants— As of June 30, 2024 and December 31, 2023, the Company had a total of $ 1.4 million and $ 1.9 million, of Private Warrants held by a related party, and Public Warrants, respectively, which are included as warrant and equity related liabilities within the condensed consolidated balance sheets.

The change in fair value of Warrants for the three and six months ended June 30, 2024 was a loss of $ 0.1 million and gain of $ 0.5 million, respectively, and is included in other expenses within the condensed consolidated statements of operations and comprehensive loss.

There was no activity for the three and six months ended June 30, 2023 as the Warrants were assumed at the Closing of the Business Combination.

Sponsor Locked-up Shares— As of June 30, 2024 and December 31, 2023, the Company had a total of $ 0.2 million and $ 0.4 million, respectively, in respect of Sponsor Locked-up Share liabilities which were issued to a related party, and are included within warrant and equity liabilities in the condensed consolidated balance sheets.

The change in fair value of Sponsor Locked-up Shares for the three and six months ended June 30, 2024 was none and a gain of $ 0.2 million, respectively, and was included in other expenses within the condensed consolidated statements of operations and comprehensive loss.

There was no activity for the three and six months ended June 30, 2023 as the Sponsor Locked-up shares were assumed at the Closing of the Business Combination.

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.

1 unchanged sentence

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 of 2002 (“Sarbanes-Oxley Act”).

The Company no longer enters into promissory note agreements for

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the purpose of financing the exercise of the Company’s stock options and no longer allows for the early exercise of stock options.

As of March 31, 2024 and December 31, 2023, the Company had a total of $ 17.9 million and $ 18.3 million, respectively, of outstanding promissory notes.

Of the notes outstanding as of March 31, 2024 and December 31, 2023, $ 11.0 million and $ 10.1 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.

The balance as of March 31, 2024 does not include any promissory notes due from directors and officers of the Company.

During the three months ended March 31, 2024 and 2023 the Company recognized interest income from the promissory notes of $ 0.1 million, and $ 0.1 million, respectively which is included within interest income on the condensed consolidated statements of operations and comprehensive loss.

Of the notes outstanding as of March 31, 2024 and December 31, 2023, $ 6.9 million and $ 8.2 million, respectively, were issued for the early exercise of stock options not yet vested.

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.

As of June 30, 2024 and December 31, 2023, the Company had a total of $ 16.0 million and $ 18.3 million, respectively, of outstanding promissory notes.

Of the notes outstanding as of June 30, 2024 and December 31, 2023, $ 9.1 million and $ 10.1 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.

The balance as of June 30, 2024 does not include any promissory notes due from directors and officers of the Company.

Of the notes outstanding as of June 30, 2024 and December 31, 2023, $ 6.8 million and $ 8.2 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 vest and are exercised in conjunction with the notes, they are recognized in the statement of equity within vesting of common stock issued via notes receivable from stockholders.

As the unvested share awards vest and are exercised in conjunction with the notes, they are recognized in the statement of equity within vesting of our Common Stock issued via notes receivable from stockholders.

The notes range in maturity from May 2025 to January 2026 and include interest rates ranging from 0.5 % to 2.5 % per annum.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

1 unchanged sentence

The Company recognized stock-based compensation expense as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(Amounts in thousands) 2024 2023 2024 2023

Stock-based compensation expense 8,760 4,408

Stock-based compensation expense excludes $ 0.4 million and $ 0.7 million of stock-based compensation expense for the three months ended March 31, 2024 and 2023, which was capitalized (see Note 6).

Total stock-based compensation expense 7,959 4,054 16,325 8,462

Stock-based compensation expense excludes $ 0.5 million and $ 0.7 million of stock-based compensation expense for the three months ended June 30, 2024 and 2023, which was capitalized (see Note 7).

Stock-based compensation expense excludes $ 0.9 million and $ 1.4 million of stock-based compensation expense for the six months ended June 30, 2024 and 2023, which was capitalized (see Note 7).

Regulatory Requirements

3 unchanged sentences

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 March 31, 2024, the Company was in compliance with all necessary requirements.

As of June 30, 2024, the Company was in compliance with all necessary requirements.

Additionally, the Company is subject to other financial requirements established by government-sponsored enterprises (“GSEs”), which include a limit for a decline in net worth and quarterly profitability requirements.

1 unchanged sentence

The decline in net worth and decline in profitability permit GSEs to declare a breach of the Company’s contract.

The Company instituted additional financial requirements and remains in compliance with these requirements as of March 31, 2024.

As a result of failing to meet additional financial requirements, the Company has entered into a Pledge and Security Agreement in July 2023, to post additional cash collateral against the representation and warranty exposed to the Company.

BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2024, there have been no changes to the required cash deposit amount, which is included within the prepaid expenses and other assets on the consolidated balance sheet.

The Company instituted additional financial requirements and remains in compliance with these requirements as of June 30, 2024.

Subsequent Events

The Company evaluated subsequent events from the date of the condensed consolidated balance sheets of March 31, 2024 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 in Note 1 and Note 11.

The Company evaluated subsequent events from the date of the condensed consolidated balance sheets of June 30, 2024 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 in Note 1, Note 5, and Note 12.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements