What changed in this filing

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Item 1A. Risk Factors

2025-03-19 compared with 2024-04-08 · 255 added, 448 removed, 924 unchanged (43% of the section changed)

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• We have a history of operating losses, including very significant losses, have not been able to maintain profitability achieved in 2020 and early 2021, and may not achieve and maintain profitability in the future.

• We may be unable to effectively restore or manage our growth, including being able to fill certain senior management roles with suitable candidates, which could have a material adverse effect on our business, financial condition and results of operations.

• We may be unable to effectively manage our growth, including being able to fill certain senior management roles with suitable candidates, which could have a material adverse effect on our business, financial condition and results of operations.

• We may be unable to effectively maintain and develop certain relationships with third-party vendors and key commercial partners, which could have a material adverse effect on our ability to attract customers and grow our business.

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Risks related to ownership of Common Stock and Better Home & Finance operating as a public company, including:

• We have received a notice from the listing qualifications staff of Nasdaq that we are currently not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing of our Class A Common Stock.

If we are unable to regain compliance, our Class A Common Stock could be delisted, which could affect the price and liquidity of our Class A Common Stock, reduce our ability to raise capital and have a material adverse effect on our revenues, financial condition, cash flows, results of operations and prospects.

• Our management team has limited experience managing a public company and international or banking operations

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Risks Related to Our Operating History, Business Model, Growth and Financial Condition

Since the third quarter of 2021, increased interest rates have negatively impacted our Funded Loan Volume, Gain on Sale Margin, revenue and profitability, which has resulted in significant strain on our business, results of operations and financial condition, which we have had limited success in managing.

In April 2021, the United States began experiencing what has become a significant rise in interest rates, which increased for a variety of reasons, including inflation, market capacity constraints and other factors.

Accordingly, during 2021 and continuing in 2022 and 2023, we experienced both a significant decline in Funded Loan Volume as refinancing loans became less attractive as interest rates increased.

Higher interest rates that initially materialized in the secondary market, including in our loan purchaser network, were not initially borne by our customers as increased mortgage rates, but rather reduced our Gain on Sale Margin as we sought to continue increasing our market share by offering more competitive pricing to customers in a more challenging market.

Since the second quarter of 2021, our Gain on Sale Margin and later our Funded Loan Volume have remained depressed as a result of elevated interest rates, reduced loan market activity and increased competition in the market.

Our business is significantly impacted by interest rates.

Loan production for refinancing customers’ existing loans is almost entirely driven by interest rates and our ability to maintain or further develop that portion of our business is heavily dependent on the attractive interest rates we offer relative to market interest rates and customers’ current interest rates.

While some areas of our business are relatively less rate-sensitive than refinance loans, including purchase loans and Better Plus businesses, demand for these products remains highly sensitive to interest rates (particularly significantly elevated interest rates), as purchase loans and other aspects of home services markets relating to home purchases are affected by changes in interest rates.

Accordingly, demand for the significant majority of our products and services remains tied to interest rates, notwithstanding our goals to decrease reliance on the most interest rate sensitive products and services.

Our business will continue to be materially adversely effected if interest rates do not decline.

Changes in prevailing interest rates or U.S.

monetary policies that affect interest rates may have a material adverse effect on our business, financial condition, results of operations, and prospects.

Interest rate fluctuations have a significant effect on our results of operations and cash flows.

Our financial performance is directly affected by changes in prevailing interest rates, which may subject our financial performance to substantial volatility.

We are particularly affected by the policies of the U.S.

Federal Reserve, which influence interest rates

and impact the size of the loan production market.

In 2021, the U.S.

Federal Reserve ended its quantitative easing program and started its balance sheet reduction plan.

Federal Reserve’s balance sheet consists of U.S.

Treasuries and mortgage-backed securities (“MBS”) issued by Fannie Mae, Freddie Mac and Ginnie Mae.

In 2022, the U.S.

Federal Reserve increased significantly its primary policy rate, which has and may continue to result in increased interest rates in the future.

Since origination volumes tend to increase in declining interest rate environments and decrease in increasing rate environments, mortgage originators are exposed to cyclical changes as a result of shifts in interest rates, and there has been an overall compression in the mortgage market as a result of fluctuations in interest rates.

Fluctuations in interest rates significantly impact every aspect of our operations:

• Increases in interest rates beginning in April 2021 have led to a sizable reduction of the refinance market as fewer consumers are incentivized to refinance their loans.

This has had a material adverse effect on revenues from our Refinance Loans as the market for these loans became more competitive.

Higher interest rates have a similarly negative impact on our purchase mortgage loan business, as homeownership becomes more expensive and demand for homeownership loans fall.

• Historically, we have sold the vast majority of our loans with servicing rights released, which means that we do not retain servicing rights and the income stream associated with such MSRs.

Accordingly, since loan production comprises a relatively greater share of our revenue than other home mortgage originators who retain MSRs, our revenues would be more sensitive to rising interest rates, since the value of MSRs generally increase in a rising interest rate environment and that tends to offset, in part, the decline in refinancing and purchase loan production.

• Interest rate lock commitments represent an agreement to extend credit to a customer where the interest rate is set prior to (and conditioned on) fully underwriting and funding the loan.

When loans are funded, they are classified as held for sale until they are sold.

During the origination and sale process, the value of interest rate lock commitments and loans held for sale inventory rises and falls with changes in interest rates;

for example, if we enter into interest rate lock commitments at low interest rates followed by an increase in interest rates in the market, the value of our interest rate lock commitment will decrease.

The market value of a loan held for sale generally declines as interest rates rise, and fixed-rate loans, which make up a substantial portion of our loans, are more sensitive to changes in market interest rates than adjustable-rate loans.

Such changes in the value of interest rate lock commitments and loans held for sale are recognized as a reduction in gain on loans, net, and accordingly affect our Gain on Sale Margin.

We employ hedging practices designed to mitigate the effects of any fluctuations in interest rates on our financial position related to interest rate lock commitments and loans held for sale.

We hedge our interest rate lock commitments and loans held for sale with forward to-be-announced securities.

• Changes in interest rates are also a key driver of the revenue we receive from the sale of MSRs, particularly because our portfolio is composed primarily of MSRs related to high-quality loans, the values of which are highly sensitive to changes in interest rates.

Historically, the value of MSRs has increased when interest rates rise as higher interest rates lead to decreased prepayment rates, and has decreased when interest rates decline as lower interest rates lead to increased prepayment rates.

As a result, decreases in interest rates could materially and adversely affect our business, financial condition, results of operations, and prospects.

Substantial changes in the market and operating environment have put significant strain on our business and have resulted in significant reductions to our workforce and scale, which we have had limited success in managing.

In response to substantial and sustained increases in interest rates and changes in macroeconomic conditions and our industry, as described in more detail elsewhere in this Annual Report, we significantly reduced our workforce to seek to align our headcount with demand for our loan production.

In response to the prevailing interest rate environment and changes in macroeconomic conditions and our industry, as described in more detail elsewhere in this Annual Report, we significantly reduced our workforce to seek to align our headcount with demand for our loan production.

As of December 31, 2024, we had approximately 1,250 team members, compared to approximately 10,400 team members at our peak in the fourth quarter of 2021.

In total, this represents an approximately 92% reduction in our workforce over an approximately twenty-four month period, which has had other detrimental effects on our business, financial condition, and results of operations as described elsewhere in this Annual Report.

In the third quarter of 2021 we implemented a reorganization of our sales and operations teams designed to provide our customers with a single customer service team member for all their contacts with us.

This operational reorganization reduced loan officer productivity and increased costs against a more challenging market.

Accordingly, we returned to our previous sales and operations team structure during the third quarter of 2022 and remain in this operating model at present.

There can be no assurances that our current strategy and structure of our sales and operations is or will be effective.

As Refinance Loan Volume declined starting in the second half of 2021 and continuing through 2023 due to increased interest rates, we experienced a decline in Funded Loan Volume, particularly in Refinance Loan Volume, as well as a corresponding increase in the proportion of our Funded Loan Volume that is comprised of Purchase Loan Volume, which is more labor intensive than Refinance Loan Volume.

In total, this represents an approximately 88% reduction in our workforce over an approximately thirty-six month period, which has had other detrimental effects on our business, financial condition, and results of operations as described elsewhere in this Annual Report.

As Refinance Loan Volume declined starting in the second half of 2021 and continuing through 2024 due to prevailing interest rates, we experienced a decline in Funded Loan Volume, particularly in Refinance Loan Volume, as well as a corresponding increase in the proportion of our Funded Loan Volume that is comprised of Purchase Loan Volume, which is more labor intensive than Refinance Loan Volume.

As a result, we experienced and expect to continue to experience meaningfully higher labor costs required to convert leads into Purchase Loan Volume and more customer service required to support such purchase transactions, leading to higher labor costs per loan.

These significant changes in our business and operations have resulted in significant challenges, with negative effects on our results of operations, employee morale, relationships with business partners and customers, and increased unplanned employee turnover in areas of our business relating to legal, compliance, finance, and accounting.

These changes in our business and operations have resulted in significant challenges, with negative effects on our results of operations, employee morale, relationships with business partners and customers, and increased unplanned employee turnover in areas of our business relating to legal, compliance, finance, and accounting.

In addition, further corrective actions to our workforce may be necessary to manage our business in a challenging environment, and if we take such corrective actions, such action may result in renewed negative media coverage that could have a detrimental impact on our business and employee morale.

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As a result of employee attrition, we have lost certain institutional knowledge and capabilities that has necessitated additional hiring, notwithstanding our decreased headcount, and there can be no assurance that we will be able to fill these roles with suitable candidates, or at all.

We have been subject to significant employee attrition, particularly among our senior management team, that has resulted in the reduction of institutional knowledge as well as capabilities in certain key functions, including legal, compliance, finance, and accounting.

For instance, we identified a material weakness in internal control over financial reporting due to the limited number of accounting personnel and an additional material weakness in internal control over financial reporting due to insufficient experience and capacity to verify control activities with respect to the work of the valuation specialist, and will need to fill certain roles in order to effectively function as a public company.

The inability to attract or retain qualified personnel or to identify and hire individuals for the roles that we seek to fill and other current or future organizational changes could materially and adversely affect our business, financial condition, results of operations, and prospects.

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Our ability to recruit and retain qualified personnel has also been adversely affected by the negative media coverage surrounding the series of workforce reductions and subsequent events.

Our future success depends to a significant extent on the continued services of our senior management, including Vishal Garg, our CEO, and Kevin Ryan, our President and Chief Financial Officer, and our ability to maintain morale, minimize internal distraction, recruit and retain employees, management and directors, and make changes to our organizational structure in response to the foregoing events.

Loss of our key leadership could result in a material adverse effect on our business.

Our future success depends to a significant extent on the continued services of our senior management, including Vishal Garg, our CEO, Kevin Ryan, our Chief Financial Officer, Chad Smith, President of wholly owned subsidiary, Better Mortgage Corporation, and our ability to maintain morale, minimize internal distraction, recruit and retain employees, management and directors, and make changes to our organizational structure in response to the foregoing events.

We believe Mr.

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The experience of our other senior management, including Mr.

Ryan, is a valuable asset to us and would be difficult to replace.

Smith, is a valuable asset to us and would be difficult to replace.

A failure to recruit and retain employees, including members of our senior management team, while preserving and improving our mission-based culture to adapt to the challenges and requirements of becoming a public company could materially and adversely affect our future success.

We may not be able to maintain or further develop our loan production business, which could materially and adversely affect our business, financial condition, results of operations and prospects.

Our loan production business primarily consists of providing loans to home buyers, refinancing existing loans and providing home equity line of credit (“HELOC”) loans.

Our loan production business primarily consists of providing loans to home buyers, refinancing existing loans and providing HELOC loans.

Loan production for home buyers is greatly influenced by traditional participants in the home buying process such as real estate agents and home builders.

As a result, our ability to offer competitive financing options to these traditional participants’ customers will influence our ability to maintain or further develop our loan production business.

Our HELOC loan originations are similarly dependent on interest rates, as well as available homeowner equity, and typically decline if interest rates increase or residential real estate prices decline.

For more information on the impact of interest rates on our business, see “ —Risks Related to Our Operating History, Business Model, Growth and Financial Condition—Since the third quarter of 2021, increased interest rates have negatively impacted our Funded Loan Volume, Gain on Sale Margin, revenue and profitability, which has resulted in significant strain on our business, results of operations and financial condition, which we have had limited success in managing.

Loan production for refinancing customers’ existing loans is almost entirely driven by interest rates and our ability to maintain or further develop that portion of our business is primarily dependent on the interest rates we offer relative to market interest rates and customers’ current interest rates.

For more information on the impact of interest rates on our business, see “ —Risks Related to Our Operating History, Business Model, Growth and Financial Condition—Our business is significantly impacted by interest rates.

Changes in prevailing interest rates or U.S.

monetary policies that affect interest rates may have a material adverse effect on our business, financial condition, results of operations, and prospects.”

In addition to interest rates, our business operations are also subject to other factors that can impact our ability to maintain or further develop our loan production business.

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If we are unable to continue to maintain or further develop our loan production business, this could materially and adversely affect our business, financial condition, results of operations, and prospects.

We have a history of operating losses, have not been able to maintain profitability achieved in 2020 and early 2021 and may not achieve and maintain profitability in the future.

We were formed in 2014, commenced operation in April 2015, and have experienced net losses and negative cash flows from operations for the majority of our operating history.

The year ended December 31, 2020 was the only year that

we have achieved an annual operating profit, but that year was followed with a net loss of $301.1 million for the year ended December 31, 2021 and a net loss of $888.8 million for the year ended December 31, 2022, as well as a net loss of $536.4 million for the year ended December 31, 2023.

While our goal remains to pursue profitable growth over the long term, we have not maintained and may not maintain profitability over any sustained period of time.

Our financial performance has in recent periods deteriorated as a result of numerous factors, including:

We have a history of operating losses and expect to incur significant losses for the foreseeable future.

We have experienced net losses and negative cash flows from operations for the majority of our operating history.

The year ended December 31, 2020 was the only year that we have achieved an annual operating profit, but that year was followed with a net loss of $301.1 million for the year ended December 31, 2021, a net loss of $888.8 million for the year ended December 31, 2022, a net loss of $536.4 for the year ended December 31, 2023, as well as a net loss of $206.3 million for the year ended December 31, 2024.

Our recent financial performance has been adversely affected as a result of numerous factors, including:

• persistent elevated interest rates, which have the effect of reducing industry mortgage origination volume, increasing competition for customers, and reducing revenue;

• continued investments in our business (including investments to expand our product offerings);

• reputational damage associated with negative media coverage following a series of workforce reductions that began in December 2021 and litigation, including litigation with a former employee described elsewhere in this Annual Report (which we believe has contributed to lower Funded Loan Volume);

• outsized costs relative to our Funded Loan Volume and revenue resulting from changes in the macroeconomic environment and our business (as described elsewhere in this Annual Report), including sales and operations compensation expense to support higher Purchase Loan Volumes, severance costs associated with the workforce reductions described above, expenses associated with non-mortgage business lines including Better Real Estate, legal and professional service expenses associated with our litigation, and technology and product development expenses resulting from continued investment in our platform.

Although our current business focus is on restoring profitable operations, certain of our costs and expenses may continue to remain elevated in future periods, which could materially and adversely affect our future operating results if our revenue does not increase.

• outsized costs relative to our Funded Loan Volume and revenue resulting from changes in the macroeconomic environment and our business (as described elsewhere in this Annual Report), including sales and operations compensation expense to support higher Purchase Loan Volumes, expenses associated with non-mortgage business lines including Better Real Estate, legal and professional service expenses associated with our litigation, and technology and product development expenses resulting from continued investment in our platform.

Additionally, certain of our historical costs and expenses may continue to remain elevated in future periods, which could materially and adversely affect our future operating results if our revenue does not increase.

We may also face increased regulatory compliance costs associated with growth and the expansion of our customer base.

Our efforts to grow our business and offer new products have been and may continue to be more costly than we expect, we may not be able to increase our revenue enough to offset our increased operating expenses and the investments we need to make in our business, and new products may not succeed.

Our efforts to grow our business, including our previously announced plan to expand our operations to include physical locations, and offer new products have been and may continue to be more costly than we expect, we may not be able to increase our revenue enough to offset our increased operating expenses and the investments we need to make in our business, and new products may not succeed.

We may continue to incur significant losses in the future for several reasons, including as a result of the other risks described herein, and unforeseen expenses, difficulties, complications, delays, and other presently unknown events or risks.

If we continue to be unable to achieve and maintain consistent profitability, this would materially and adversely affect the value of our business and Common Stock.

Our prior growth has slowed significantly and we have incurred significant declines in revenue and incurred significant net losses.

Our period of rapid growth and subsequent losses makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

We may not be able to grow our revenues or regain profitability in the future.

We believe our prior growth rates were partially driven by interest rates being at historic lows and the increased use of online services, both as a result of the COVID-19 pandemic.

Our period of rapid growth and subsequent losses makes it difficult to evaluate our future prospects and we may not be able to grow our revenues or regain profitability in the future.

We believe our prior growth rates were partially driven by interest rates being at historic lows and the increased use of online services.

Although our goal remains to pursue profitable growth over the long term, we do not believe that the revenue growth rate and profitability we experienced in 2020 and the first half of 2021 are representative of expected future growth rates and profitability.

For the years ended December 31, 2023 and 2022, we incurred a net loss of $536.4 million and $877.1 million with revenue of $76.8 million and $378 million, respectively (including Better Cash Offer revenue of $304 thousand and $228.7 million), a year-over-year revenue decrease of 80%.

For more information, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Performance ” and “ —Risks Related to Our Operating History, Business Model, Growth and Financial Condition—We have a history of operating losses, have not been able to maintain profitability achieved in 2020 and early 2021 and may not achieve and maintain profitability in the future.

Our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future financial performance.

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Our business depends, in part, on the success of our relationships with third-party vendors and the success of our strategic relationships in allowing us to attract potential customers for and to deliver our products, and our ability to grow our business depends on our ability to continue these relationships.

We are dependent upon certain third-party software platforms, including to close loans and for capital markets analytics.

We are dependent upon certain third-party software platforms for certain functions.

Failure of these or any other technology providers to maintain, support, or secure their technology platforms in general, and our integrations in particular, or errors or defects in their technology, could materially and adversely impact our relationship with our customers, damage our reputation and brand, and harm our business and operating results.

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In addition, we rely on third-party sources and sub-servicing arrangements, including credit bureaus, for credit, identification, employment, and other relevant information in order to review borrowers.

Furthermore, we maintain an integrated relationship with Ally, in which our subsidiary, Better Mortgage Corporation, powers the end-to-end home finance experience through a co-branded customer experience for loans that close in Ally’s name and are funded by Ally.

We also separately purchase certain of the loans originated through the Ally relationship prior to selling them in the secondary market.

Through this relationship, we generate a fixed fee per loan for our production services, purchase certain loans after they are originated, and generate additional revenue by selling such loans to our loan purchaser network.

When the loans are sold to our loan purchaser network, Ally receives a portion of the execution proceeds, with the total amount we pay Ally for the loans (including the initial purchase price and portion of the execution proceeds) not exceeding the loans’ fair market value.

Our agreements with Ally are non-exclusive and do not prohibit Ally from working with our competitors or from offering competing services.

We could have disagreements or disputes with Ally, which could negatively impact or threaten our relationship and that, in turn, would materially and adversely affect our business, financial condition, results of operations, and prospects.

In addition, Ally could elect to discontinue use of our services for any reason, including as a result of a merger or acquisition or Ally electing to in-source home loan production, and that would materially and adversely affect our business, financial condition, results of operations, and prospects.

If we are unsuccessful in establishing or maintaining our relationships with strategic partners and affiliates and identifying new strategic partners and establishing relationships with them in a timely and cost-effective manner, our ability to compete in the marketplace or to grow our revenue could be impaired and our results of operations may be materially and adversely affected.

If we are unsuccessful in developing or maintaining our relationships with strategic partners and affiliates and identifying new strategic partners and establishing relationships with them in a timely and cost-effective manner, our ability to compete in the marketplace or to grow our revenue could be impaired and our results of operations may be materially and adversely affected.

There can be no assurance that we will be successful in the implementation of these relationships and implementation or, if necessary, termination could require substantial time and attention from our management team.

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In addition, in some cases, our strategic partners may compete with certain parts or all of our business.

Negative publicity about Better Home & Finance, such as the negative media coverage surrounding our workforce reductions, could cause our current commercial partners (such as Ally) or potential commercial partners to reassess their relationship with us and determine to not renew their arrangements with us or to not pursue new relationships with us.

Negative publicity about us, such as the negative media coverage surrounding our workforce reductions, could cause our current commercial partners or potential commercial partners to reassess their relationship with us and determine to not renew their arrangements with us or to not pursue new relationships with us.

In 2022, such negative publicity and reputational concerns led a commercial partner to terminate its relationship and not to proceed with a pilot program.

For more information, see “—Risks Related to Our Operating History, Business Model, Growth and Financial Condition—Vishal Garg, our CEO, exposes us to particular risks and uncertainties regarding his control over our operations, both directly as our CEO and our largest stockholder, as well as through our commercial relationships with his various affiliates, which could materially and adversely affect our business, financial condition, results of operations, and prospects.”

We are also subject to regulatory risk associated with all of the above relationships, including changes in law or interpretations of law that could result in increased scrutiny of these relationships, require restructuring of these relationships, and/or diminish the value of these relationships.

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a determination that we have failed to comply with such laws could require restructuring of the relationships, result in material financial liabilities and exposure to regulatory enforcement and litigation risk, and/or diminish the value of these relationships .”

We depend on our ability to sell loans and MSRs in the secondary market to a limited number of loan purchasers and to the GSEs and other secondary market participants for each relevant product.

If our ability to sell loans and MSRs is impaired, our ability to produce loans and related MSRs would be materially and adversely affected.

Our business depends on our ability to sell our loan production.

The gain recognized from sales of our loan production in the secondary market represents the bulk of our revenues and net earnings.

We depend on our ability to sell loans and MSRs in the secondary market to a limited number of investors and to the GSEs and other secondary market participants.

If our ability to sell loans and MSRs is impaired, we may not be able to originate loans and related MSRs.

Substantially all of our loan production and related MSRs are sold to a limited number of purchasers in the secondary market.

Accordingly, our business depends on our ability to sell our loan production.

The gain recognized from sales of our loan production in the secondary market represents a significant portion of our revenues and net earnings.

Our ability to sell and the prices we receive for our loans vary from time to time and may be materially adversely affected by several factors, including, without limitation:

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If we lack liquidity to continue to fund future loans, our revenues on new loan productions would be materially and adversely affected, which in turn would materially and adversely affect our potential to again achieve profitability.

The severity of the impact would be most significant to the extent we were unable to sell conforming home loans to the GSEs or sell MSRs to private purchasers.

severity of the impact would be most significant to the extent we were unable to sell conforming home loans to the GSEs or sell MSRs to private purchasers.

The vast majority of the loans we produce are sold servicing released (with associated MSRs).

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The value we attribute to our MSRs is highly dependent on our models and therefore the assumptions incorporated into our models, and we cannot provide any assurance as to the accuracy of our models and their ability to predict the value of our MSRs on sale or other realization.

Substantially all of our loan production and related MSRs are sold to a limited number of purchasers in the secondary market, principally the GSEs.

The remainder of our loan production and MSRs are generally sold to a limited number of private purchasers.

We must meet the GSEs’ and private purchasers’ financial eligibility requirements to remain a seller in good standing.

On March 12, 2023, Fannie Mae notified us that we had failed to meet their additional financial requirements due to our decline in profitability and material decline in net worth.

The material decline in net worth and decline in profitability permit Fannie Mae to declare a breach of our contract with them.

Fannie Mae may permit a seller/servicer to take on credit recourse obligations, provided the seller/servicer meets certain requirements.

Fannie Mae permitted the Company, based upon an assessment of our financial strength, to enter into a Pledge and Security Agreement on July 24, 2023, pursuant to which the Company posted $5.0 million that is invested in a designated money market fund and will be held through termination.

Each quarterly period after December 31, 2023, the required cash collateral will be calculated based on an amount equal to the greater of:

(i) Fannie Mae’s origination representation and warranty exposure to the Company, multiplied by the average repurchase success rate for Fannie Mae single-family responsible parties or (ii) $5.0 million.

Following certain forbearance agreements from Fannie Mae regarding additional financial requirements, we remain in compliance with these additional financial requirements as of the date hereof.

Fannie Mae and other regulators and GSEs are not required to grant any such forbearance, amendment, extension, or waiver and may determine not to do so in the future.

If we were to fail to meet such requirements, the performance of our loans and MSRs were to materially vary from industry averages in a negative way, or we lose one or more of our purchasers, our ability to sell our loans and MSRs in the secondary market may be impaired, which would materially and adversely affect our results.

For further discussion, see “—Risks Related to Our Market, Industry, and General Economic Conditions—Our business is highly dependent on Fannie Mae and Freddie Mac and certain other U.S.

government agencies, and any changes in these entities or their current roles could have a material adverse effect on our business.”

There may be delays in our ability to sell future loans and MSRs that we produce, or there may be a market shift that causes purchasers of our non-GSE loans to reduce their demand for such products.

These market shifts can be caused by factors outside of our control:

for example, the market shift in response to the COVID-19 pandemic that reduced loan purchaser appetite for non-GSE loans.

To the extent similar market shifts occur in the future, we could be required to reduce our loan production volume.

Delays in the sale of loans and MSRs also increase our exposure to market risks, which could materially and adversely affect our potential to again achieve profitability on sales of loans and MSRs.

Any such delays or failure to sell loans and MSRs could materially and adversely affect our business.

We have been and may in the future be required to repurchase or substitute loans or MSRs that we have sold or indemnify purchasers of our loans or MSRs if we breach representations and warranties.

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If a mortgage loan or MSR does not comply with the representations and warranties, we could be required to repurchase the loan or MSR, and/or indemnify secondary market purchasers for losses.

If this occurs, we may have to bear any associated losses directly.

While our contracts vary, they generally contain provisions that require us to indemnify these parties, or repurchase these mortgage loans, if:

• our representations and warranties concerning mortgage loan quality and mortgage loan characteristics are inaccurate or are otherwise breached and not remedied within any applicable cure period (usually 90 days or less) after we receive notice of the breach;

• we fail to secure adequate mortgage insurance within a certain period after closing of the applicable mortgage loan;

• a mortgage insurance provider denies coverage;

• the borrower defaults on the loan payments within a contractually defined period (early payment default);

• the borrower prepays the mortgage loan within a contractually defined period (early payoff);

• the mortgage loan fails to comply with applicable underwriting or regulatory requirements, including those of investors or insurers, or at the federal, state, or local government level.

During times of market disruption or changes in interest rates, our counterparties that purchase mortgage loans may be particularly aware of the conditions under which mortgage loan originators or sellers must indemnify them against losses related to purchased mortgage loans, or repurchase those mortgage loans.

This may lead them to seek to enforce such rights, including requiring us to repurchase such loans.

Repurchased loans, which are typically in arrears or default, generally can only be resold at a steep discount to their repurchase price and the amount of the unpaid balance, if at all.

If this occurs, we may have to bear any associated losses directly, as repurchased loans typically can only be sold at a steep discount to their purchase price.

As of December 31, 2024, we had accrued $7.5 million in connection with our reserve for repurchase and indemnification obligations.

The loan repurchase reserve represents our estimate of the total losses expected to occur and, while we consider such reserve to be adequate, we cannot assure you that it will be sufficient to meet repurchase obligations in the future.

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We also depend upon our models in producing and selling our loan production and in connection with our hedging program.

If our loan production does not meet loan purchasers’ standards, we would be required to repurchase loans or

indemnify our loan purchasers and we may not be able to recover such amounts from third parties.

If our loan production does not meet loan purchasers’ standards, we would be required to repurchase loans or indemnify our loan purchasers and we may not be able to recover such amounts from third parties.

For more information, see “—Risks Related to Our Operating History, Business Model, Growth and Financial Condition—We have been and may in the future be required to repurchase or substitute loans or MSRs that we have sold or indemnify purchasers of our loans or MSRs if we breach representations and warranties.”

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To the extent that our traditional approach to customer acquisitions is not successful in achieving the levels of transaction volume that we seek, including in particular in an environment of rising interest rates or constrained housing capacity, we may be required to devote additional financial resources and personnel to our sales and marketing and advertising efforts and to increase discounts to consumers, which would increase the cost base for our services.

We face several challenges to our ability to maintain and increase the number of visitors directed to our website.

We also rely on our ability to attract online consumers to our websites to then convert them into loan applicants and customers in a cost-effective manner.

Our competitors may increase their online marketing efforts and outbid us for placement on various financial services lead aggregator websites or for search terms on various search engines, resulting in their websites receiving a higher search result page ranking than ours.

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In addition, although we have expanded our direct-to-consumer, or D2C, acquisition channels, including direct mail and identification of applicants from real estate agents, there can be no assurance that these efforts will succeed.

Also, there can be no assurance that any increased marketing and advertising spend allocated to either of our customer acquisition channels in order to maintain and increase the number of visitors directed to our website will be effective.

These marketing efforts may prove unsuccessful due to a variety of factors, including increased costs to use online advertising platforms, ineffective campaigns, and increased competition and there can be no assurance that any increased marketing and advertising spend allocated to either of our customer acquisition channels in order to maintain and increase the number of visitors directed to our website will be effective.

Certain factors not within our control, such as a change to the search engine ranking algorithm or an increased prominence of generative AI on the search engine result page, could negatively impact our efforts.

Any reduction in the number of visitors directed to our platform through internet search engines, financial services sites, social networking sites or any new strategies we employ could materially and adversely affect our business, financial condition, results of operations, and prospects.

Regulatory changes may also require search engines, social media platforms and other online sources to adjust their outreach techniques and algorithms, which may negatively impact the effectiveness of these platforms.

For instance, on March 28, 2019, HUD announced charges of discrimination against Facebook, Inc., or Facebook, indicating that HUD had reasonable cause to believe that Facebook engaged in discriminatory housing practices in connection with the manner in which it distributed advertisements to users.

Such actions could reduce the effectiveness of marketing strategies reliant on these tools and platforms.

Additionally, in the event the CFPB takes a more stringent and aggressive interpretation of laws governing our interaction with lead aggregators, including the RESPA, it could result in a material reduction in the availability of leads from such sources, increased costs, and increased regulatory risk.

We may be subject to liability in connection with loans we deliver to Ally Bank or other third parties, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

In addition to producing loans in our own name and with our own funds, we also have taken and continue to take mortgage loan applications and deliver them to a third-party lender that sourced the applicants;

initially, we conducted such activity on a private-label basis, but we recently transitioned to a co-branded mortgage broker model.

We perform fulfillment services for these loans, and also purchase certain of the loans from the lender after the lender has closed and funded the loans.

We expect to seek to enter into similar arrangements with additional lenders in the future.

We may be subject to liability in connection with loans we deliver to third parties, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

In addition to producing loans in our own name and with our own funds, we also have taken and continue to take mortgage loan applications and deliver them to third-party lenders that sourced the applicants.

We may perform fulfillment services for lenders in the future.

When we act as an outsourced loan producer, we deliver mortgage applications subject to a pre-existing contractual arrangement with the other lender.

If, in delivering those mortgage loan applications, we provide insufficient application information, provide the applicant non-compliant federal or state disclosures, do not meet applicable registration, licensing, or other applicable federal or state law requirements, or otherwise fail to comply with our agreements with the applicants or the lender, or if we are deemed to be the “true lender” of the loans based on our involvement in the origination and fulfillment of the loans and our secondary market purchase of certain of the loans, we can be held financially responsible for such issues and be subject to potential regulatory enforcement risk or litigation.

can be held financially responsible for such issues and be subject to potential regulatory enforcement risk or litigation.

In addition, we may incur liability from the lender or be subject to regulatory enforcement risk in the event that the ultimate borrower engaged in mortgage fraud, or the mortgage loan borrowers fail to perform on their loans.

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Remediation for non-compliance with these laws can be costly and significant fines may be incurred.

In 2022 and 2023, prior to the Business Combination, Pre-Business Combination Better and Aurora received voluntary requests for documents and subpoenas from the Division of Enforcement of the SEC, indicating that the SEC was conducting an investigation relating to Pre-Business Combination Better and Aurora to determine if violations of the federal securities laws had occurred.

The SEC asked Pre-Business Combination Better and Aurora to provide it with certain information and documents related to, among other things, certain aspects of Better’s business and operations, certain matters relating to certain actions and circumstances of our CEO and his other business activities, related party transactions, public statements made about Tinman, the Company’s financial condition, and allegations made in litigation filed by Sarah Pierce, Better’s former Head of Sales and Operations, and also sought interviews and testimony from various personnel, including senior leadership of Pre-Business Combination Better and Aurora.

After the requested information was provided, the SEC subsequently informed Pre-Business Combination Better and Aurora that the SEC had concluded the investigation and did not intend to recommend an enforcement action against Pre-Business Combination Better and Aurora;

however, there can be no assurances that we will not be subject to other government or regulatory proceedings in the future.

In addition, from time to time, we are subject to civil claims or investigations asserting that some employees are improperly classified under applicable law.

For example, we are currently party to pending legal claims and proceedings regarding an employee related labor dispute brought forth during the third quarter of 2020.

The disputes allege 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 majority of such legal claims and proceedings are in the early stages and, to the extent applicable, have not yet reached the class certification stage and as such the ultimate outcomes cannot be predicted with certainty due to inherent uncertainties in the legal claims and proceedings.

As part of the disputes, the Company included an estimated liability of $8.4 million as of both December 31, 2023 and 2022 on the consolidated balance sheets.

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

A determination in, or settlement of, any lawsuit or other legal proceeding relating to classification of our employees could materially and adversely affect our business, financial condition, results of

operations, and prospects.

For example, we are currently party to pending civil legal claims alleging that we failed to pay certain employees for overtime in violation of the Fair Labor Standards Act and labor laws of the State of California.

For more information, see “—Risks Related to Our Operating History, Business Model, Growth and Financial Condition—Our CEO is involved in litigation that could have a material adverse effect on our revenues, financial condition, cash flows and results of operations.”

We have identified three ongoing material weaknesses in our internal control over financial reporting and we may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control, which may result in material misstatements of our financial statements.

We have identified material weaknesses in our respective internal control over financial reporting as of December 31, 2023, 2022 and 2021.

We have identified three ongoing material weaknesses in our internal control over financial reporting.

If we fail to remediate the material weaknesses, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our shares may be adversely affected.

We have identified material weaknesses in our internal control over financial reporting as of December 31, 2023, 2022 and 2021.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The first material weakness was identified during late December 2021 when management, at the direction of the board of directors of Pre-Business Combination Better (the “Pre-Business Combination Better Board”), engaged an external law firm to assist the Pre-Business Combination Better Board in performing a cultural review to conduct an independent review of Better’s culture.

Based on the findings of the cultural review, certain actions taken by our CEO failed to set a tone at the top that supported a strong culture of internal controls.

There were enhancements that were needed to the channels by which ethics and compliance concerns could be reported, and, at the time this material weakness was initially identified, the organizational structure lacked specific leadership positions to support the achievement of objectives including an experienced President and an independent Chairman of the Pre-Business Combination Better Board.

Accordingly, Pre-Business Combination Better concluded that it had not maintained an effective control environment, based on the criteria established by the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO 2013 Framework”), which requires Better to demonstrate a commitment to integrity and ethical values, and for management to establish structures, reporting lines, and appropriate authorities and responsibilities.

The findings of the cultural review demonstrated ineffective internal controls that could have a direct or indirect effect on the integrity of Better’s financial reporting, which resulted in a material weakness in Better’s internal controls over financial reporting.

This material weakness remained as of December 31, 2023.

We are not aware of any misstatement (material or otherwise) of our annual or interim consolidated financial statements that has resulted from this material weakness.

The second material weakness was identified in connection with the audit of Pre-Business Combination Better’s fiscal year ended December 31, 2022.

Pre-Business Combination Better identified deficiencies in the design, implementation, and operating effectiveness of internal controls over financial reporting that were and are pervasive across Better.

These errors and deficiencies were caused by the limited number of accounting personnel with relevant experience and sufficient capacity throughout the year to verify that control activities were appropriately designed, implemented and operating effectively.

Pre-Business Combination Better concluded that it did not maintain an effective control environment nor did it implement proper control activities based on the criteria established in the COSO 2013 Framework.

Pre-Business Combination Better determined that such control deficiencies constitute a material weakness in internal control over financial reporting in the aggregate as of December 31, 2022.

This material weakness remained as of December 31, 2023.

The third material weakness was identified in connection with the audit of Pre-Business Combination Better’s fiscal year ended December 31, 2022.

Pre-Business Combination Better identified a material error in its 409A valuation and certain corresponding complex securities.

Pre-Business Combination Better used a discounted cash flow model as one aspect of deriving its 409A valuation, which provides the basis for valuing certain complex securities included on its balance sheet.

In connection with the preparation of its financial statements for the year ended December 31, 2022, Pre-Business Combination Better discovered an error related to an inappropriate input into the discounted cash flow model used to value the bifurcated derivative associated with the subordinated 0% bridge promissory notes that converted into or were exchanged for Class A Common Stock and Class C Common Stock (the “Pre-Closing Bridge Notes”) and the commitment to fund the subordinated unsecured 1% convertible note (the “Convertible Note”).

The input erroneously included the bifurcated derivative in the forecasted balance sheets that were used in the discounted cash flow model.

If this error had not been discovered, it would have resulted in an overstatement of Pre-Business Combination Better’s 409A valuation and an understatement of the bifurcated derivative as of December 31, 2022.

However, because Pre-Business Combination Better discovered and corrected this error before the issuance of its financial statements for the year ended December 31, 2022, the error was corrected and recorded in such financial statements.

There was no such error identified in the 2021 discounted cash flow model used in its’s 409A valuation.

This corrected error was caused by the limited number of accounting personnel with relevant experience and sufficient capacity to verify that control activities with respect to the work of the valuation specialist were appropriately designed,

implemented and operating effectively to ensure proper valuation of certain complex financial instruments.

This material weakness remained as of December 31, 2023.

If not remediated, these material weaknesses could result in material misstatements to our annual or interim consolidated financial statements that might not be prevented or detected on a timely basis, or in delayed filing of required periodic reports.

If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of the internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of the Common Stock could be adversely affected and Better Home & Finance could become subject to litigation, investigations, and other adverse actions by Nasdaq, the SEC, or other regulatory authorities, which could require additional financial and management resources.

For the measures we have taken and plan to take to remediate the identified material weakness and further evolving our accounting processes, see Part II, Item 9A (Controls and Procedures).

The material weaknesses in our internal control over financial reporting include:

• There was a material weakness related to actions taken by our CEO that failed to set a tone at the top that supported an effective control environment.

• There was a material weakness related to the design, implementation, and operating effectiveness of internal controls over financial reporting due to the limited number of accounting personnel with relevant experience and sufficient capacity;

• There was a third material weakness caused by the limited number of accounting personnel with relevant experience and sufficient capacity to verify that control activities with respect to the work of the valuation specialist were appropriately designed, implemented and operating effectively to ensure proper valuation of certain complex financial instruments.

We have commenced a plan of remediation to remedy the material weaknesses.

However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting.

Our failure to address any control deficiency could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis.

Moreover, effective internal control over financial reporting is important to prevent fraud.

As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our shares, may be adversely affected.

measures we have taken and plan to take to remediate the identified material weakness and further evolving our accounting processes, see Part II, Item 9A (Controls and Procedures) .

Better Cover, our property and casualty insurance agency, exposes us to additional risks and regulatory oversight that could materially and adversely affect our business, financial condition, results of operations, and prospects.

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Despite Better Settlement Services’ efforts to monitor third-party vendors with which Better Settlement Services transacts business, there is no guarantee that these vendors will comply with their contractual obligations.

Furthermore, Better Settlement Services cannot be certain that, due to changes in the regulatory environment and litigation trends, Better

Settlement Services will not be held liable for errors and omissions by these vendors.

Furthermore, Better Settlement Services cannot be certain that, due to changes in the regulatory environment and litigation trends, Better Settlement Services will not be held liable for errors and omissions by these vendors.

Accordingly, Better Settlement Services’ use of third-party vendors could materially and adversely impact the frequency and severity of title claims.

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If we are unable to effectively identify, manage, monitor, and mitigate financial risks, such as credit risk, interest rate risk, prepayment risk, liquidity risk, and other market-related risks, as well as, through our compliance management system (“CMS”), operational, legal, and regulatory risks related to our business, assets, and liabilities, we could incur substantial losses and our business operations could be materially disrupted.

We are also subject to repurchase liabilities for loans sold into the secondary market to the extent the loans are non-compliant, which require us to remediate the loans once repurchased and incur additional costs through remediation.

also subject to repurchase liabilities for loans sold into the secondary market to the extent the loans are non-compliant, which require us to remediate the loans once repurchased and incur additional costs through remediation.

These repurchase liabilities can create more risk on our balance sheet and increase our exposure to losses.

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Development of our business operations may also result in our being exposed to risks to which we have not previously been exposed or may increase our exposure to certain types of risks, and we may not effectively identify, manage, monitor, and mitigate these risks as our business activities change or increase.

Vishal Garg, our CEO, exposes us to particular risks and uncertainties regarding his control over our operations, both directly as our CEO and our largest stockholder, as well as through our commercial relationships with his various affiliates, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

Vishal Garg, our CEO, maintains a position of significant influence over our governance and operations in his capacity as our CEO and our largest stockholder, as well as through various affiliates that provide services and technology to Better Home & Finance.

Negative media coverage and dissatisfaction of certain management and team members of Better, including as a result of the handling of the workforce reductions, Mr.

Garg’s leadership style and continuing leadership at the company, has negatively affected Better Home & Finance’s management and leadership, has resulted in increased attrition among our remaining workforce and senior leadership, has detrimentally affected our productivity and financial results and has disrupted certain third party relationships.

This negative media coverage and/or the perception of reputational risk may have also made it and may in the future make it more difficult to enter into new arrangements with additional lenders or customers.

In addition, Better Home & Finance receives services from certain affiliates of Mr.

Garg, including:

• TheNumber, LLC (“TheNumber”), which is controlled and partially owned by Mr.

Garg and was co-founded by Mr.

Garg along with Nicholas Calamari, our Chief Administrative Officer and Senior Counsel, amongst others, provides data inputs and analytics on which our platform relies.

TheNumber also provides lead generation and risk analysis services.

The services provided by TheNumber are not integral to Better Home & Finance’s technology platform and amounts incurred are not material to Better Home & Finance.

Services rendered to Better Home & Finance by TheNumber were extended through 2022 and into 2023 in connection with entry into a development agreement for the further integration of its technology and services into our mortgage origination platform, which also clarified the scope of work between TheNumber and Better Home & Finance.

The further integration of these services increases our dependency on TheNumber.

If we were unable to negotiate future agreements with TheNumber on acceptable terms or if TheNumber were to cease to provide services to us, then, although we believe we would be able to replace these services on acceptable terms using other providers, until such time as we were able to replace the services on acceptable terms, this could materially and adversely affect our business, financial condition, results of operations, and prospects.

• Notable Finance, LLC (“Notable”), which is controlled by and partially owned by Mr.

Garg and other senior leadership of Better Home & Finance, including Nicholas Calamari, our Chief Administrative Officer and Senior Counsel, administers the Better Home Improvement Line of Credit, a closed-end, unsecured line of credit issued on a debit card to be used for home-related spending.

Given its technology and portfolio of consumer lending licenses, Better Home & Finance determined Notable was well positioned to administer this program, notwithstanding its affiliation with our CEO.

The services provided by Notable are not integral to Better Home & Finance’s technology platform and amounts incurred are not material to Better Home & Finance.

On October 15, 2021, Better Home & Finance entered into a private label consumer lending program agreement (the “2021 Notable Program Agreement”) with Notable.

On January 14, 2022, Better Trust I, a subsidiary of Better Home & Finance, entered into a master loan purchase agreement (the “Notable MLPA”), side letter to the Notable MLPA, and servicing agreement with Notable.

Under the terms of the Notable MLPA, Better purchases from Notable up to $20.0 million of unsecured home improvement loans underwritten and originated by Notable for Better Home & Finance’s customers.

On September 12, 2022, the 2021 Notable Program Agreement was amended and replaced (the “2022 Notable Program Agreement”) to provide for a structure in which Notable originates, funds, and services the loans and Better Home & Finance pays Notable for each Home Improvement Line of Credit loan funded.

Under the 2022 Notable Program Agreement, Better Home & Finance also markets the Better Home Improvement Line of Credit to customers through special offers and rewards for customers.

Under the terms of the 2022 Notable Program Agreement, Better Home & Finance pays Notable an administrative fee per each Home Improvement Line of Credit loan originated.

If we are unable to negotiate subsequent agreements with Notable to provide continuing support for this program on acceptable terms, then, until such time as we were able to replace the services on acceptable terms, it could negatively impact our growth prospects and profitability and may interrupt our ability to offer this product.

• Various members of our management team and legal department previously had, presently have, and may in the future have additional, ownership interests in, employment by and contractual obligations to other entities affiliated with 1/0 Capital, Mr.

Garg’s investment management firm, and Mr.

For example, Nicholas Calamari, our Chief Administrative Officer and Senior Counsel, maintains an ownership stake in 1/0 Capital, as well as a direct ownership interest in Notable and TheNumber, and until 2022 was employed by 1/0 Capital.

Such interests could divert the attention of our management from our business or create conflicts of interests, including litigation or investigations that could materially and adversely affect the reputation and perception among our consumers or potential team members of Mr.

Garg or our management team, which could in turn materially and adversely affect our business, financial condition and results of operations.

For more information, see “ Note 14, Related Party Transactions ,” to our consolidated financial statements included in this Annual Report.

Garg controls Common Stock that, as of March 13, 2024, entitled him to approximately 18% of the voting power of our outstanding Common Stock, and he is our largest stockholder.

This significant minority interest in Common Stock will increase over time as other Better stockholders that received shares of our Class B Common Stock in the Business Combination, which carries three votes per share, sell shares into the market as Class A Common Stock, which carries only one vote per share.

Assuming that all Better stockholders, other than Mr.

Garg, convert their shares of Class B Common Stock into Class A Common Stock, we expect that Mr.

Garg would have approximately 34.9% of the voting power of Common Stock.

Given our current corporate governance structure, Mr.

Garg has significant influence over our directors and leadership on an ongoing basis, notwithstanding unfavorable media coverage, challenging business conditions, potential conflicts with other affiliated entities, distraction from other pursuits, and personal litigation described below and elsewhere in this Annual Report.

This continued relationship exposes us to particular risks and uncertainties regarding Mr.

Our CEO is involved in litigation that could have a material adverse effect on our revenues, financial condition, cash flows and results of operations.

Garg is or has been involved in litigation related to prior business activities that includes at least one allegation about Better.

In one action, the plaintiff alleged, among other things, that our CEO breached his fiduciary duties to another company he co-founded prior to Better, misappropriated intellectual property and trade secrets, converted corporate funds, and failed to file corporate tax returns.

Garg’s motion for partial summary judgment in that action was granted on April 13, 2023, resulting in the dismissal of certain breach of fiduciary duty claims, among others, including claims that he misappropriated intellectual property and trade secrets for use in his other companies.

That dismissal is being appealed, and there is no assurance that the decision to dismiss these claims will be upheld.

In another action, plaintiff-investors in a prior

business venture alleged that they did not receive required accounting documentation, that our CEO misappropriated funds that should have been distributed to the plaintiff-investors, and that such funds could have been invested in Better.

These litigations could divert Mr.

In one action, the plaintiff alleged, among other things, that the Better Founder and CEO breached his fiduciary duties to another company he co-founded prior to Better, misappropriated intellectual property and trade secrets, converted corporate funds, and failed to file corporate tax returns.

Garg’s motion for partial summary judgment was granted on April 13, 2023, resulting in the dismissal of certain breach of fiduciary duty claims, among others, including claims that he misappropriated intellectual property and trade secrets for use in his other companies, as well as a judgment against plaintiff for conversion.

That dismissal and judgement were upheld on appeal, but there is no guarantee the plaintiff will not appeal further.

In April 2024, that action went to trial in New York state court and the jury rendered a verdict against Mr.

Garg but no judgment has been entered, and a judgment notwithstanding the verdict has been fully briefed.

In another action, plaintiff-investors in a prior business venture alleged that they did not receive required accounting documentation, that the Better Founder and CEO misappropriated funds that should have been distributed to the plaintiff-investors, and that such funds could have been invested in Better.

An New York state appeals court recently dismissed all claims against Mr.

Garg except one for corporate waste, which is scheduled for trial in July 2025.

These and other litigations could divert Mr.

Garg’s attention from our business regardless of the outcome of such litigations.

In addition, following her separation from the Company in February 2022, on June 7, 2022, Sarah Pierce, Better’s former Head of Sales and Operations, filed litigation against Better, Mr.

Garg, and Nicholas Calamari, our Chief Administrative Officer and Senior Counsel, in the United States District Court for the Southern District of New York, and on December 8, 2022, Ms.

Pierce amended her complaint.

The operative complaint, includes allegations of whistleblower retaliation related to, among other things, the December 2021 workforce reduction, and alleged violations of the securities laws related to statements made by our CEO regarding the Company’s financial prospects and performance, includes the following causes of action:

(i) violation of New York Labor Law §740 against the Company;

(ii) violations of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”);

(iii) violation of Dodd-Frank;

(iii) breach of fiduciary duty against Mr.

(iv) breach of fiduciary duty against Mr.

(v) defamation against Mr.

Garg and the Company relating to comments made about Ms.

Pierce’s work for the Company;

(vi) defamation against the Company for statements made in the lawsuit regarding enforcement of Ms.

Pierce’s loan;

(viii) intentional infliction of emotional distress against Mr.

(viii) tortious interference against Mr.

and (ix) breach of contract against the Company.

In addition, Ms.

Pierce filed a claim with the Occupational Safety and Health Administration (“OSHA”) against Better for retaliation, which was dismissed by OSHA on August 29, 2022.

On September 29, 2023, the Court dismissed the following claims:

(i) her Sarbanes-Oxley claim;

(ii) her Dodd-Frank claim;

(iii) her breach of fiduciary duty claims;

(iv) her defamation claim against the Company;

(v) her claim of intentional infliction of emotional distress against Mr.

(vi) her breach of contract claim;

and (vii) her tortious interference claim.

Fact discovery has begun and Better and Mr.

Garg intend to vigorously defend the remaining claims.

On October 11, 2022, Better filed a summary judgment action in New York state court seeking to enforce the terms of the promissory notes signed by Ms.

Pierce, requiring her to pay back a certain portion of the loan and return the remainder of her unvested options under the terms of the notes.

Pierce’s counsel removed the action to New York federal court, where Better re-filed its motion.

On September 29, 2023, the Court granted the Company’s motion and, on January 5, 2024, entered a judgment in favor of the Company, ordering Ms.

Pierce to either:

(i) pay the Company $2,277,000 in unpaid principal, and $483,051.93 in unpaid interest, plus additional interest through the date of repayment, plus reasonable costs and attorney’s fees;

or (i) return 220,500 unvested shares of common stock, make a payment of $1,161,270 in unpaid principal and $483,051.93 in unpaid interest, plus additional interest through the date of repayment, and reasonable costs and attorney’s fees.

The Company is in the process of enforcing this judgment.

There has been and will likely continue to be publicity regarding the litigation and claims discussed above, which could negatively affect our reputation.

Our involvement in any of litigation discussed above could impose a significant cost and divert resources and the attention of Mr.

There has been and will likely continue to be a large amount of publicity regarding the litigation and claims discussed above, which could negatively affect our reputation.

If we were to become involved in any of those litigations, our involvement could impose a significant cost and divert resources and the attention of Mr.

Garg and other members of our executive management from our business, regardless of the outcome of such litigations.

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Risks Related to Our Market, Industry, and General Economic Conditions

Our business is significantly impacted by interest rates.

Changes in prevailing interest rates or U.S.

monetary policies that affect interest rates may have a material adverse effect on our business, financial condition, results of operations, and prospects.

Interest rate fluctuations have a significant effect on our results of operations and cash flows.

Our financial performance is directly affected by changes in prevailing interest rates, which may subject our financial performance to substantial volatility.

We are particularly affected by the policies of the U.S.

Federal Reserve, which influence interest rates and impact the size of the loan production market.

In 2021, the U.S.

Federal Reserve ended its quantitative easing program and started its balance sheet reduction plan.

Federal Reserve’s balance sheet consists of U.S.

Treasuries and mortgage-backed securities (“MBS”) issued by Fannie Mae, Freddie Mac and Ginnie Mae.

In 2022, the U.S.

Federal Reserve increased significantly its primary policy rate, which has and may continue to result in increased interest rates in the future.

Fluctuations in interest rates significantly impact every aspect of our operations:

• Increases in interest rates beginning in April 2021 have led to a sizable reduction of the refinance market as fewer consumers are incentivized to refinance their loans.

This has had a material adverse effect on revenues from our Refinance Loans as the market for these loans became more competitive.

Higher interest rates have a similarly negative impact on our purchase mortgage loan business, as homeownership becomes more expensive and demand for homeownership loans fall.

• Historically, we have sold the vast majority of our loans with servicing rights released, which means that we do not retain servicing rights and the income stream associated with such MSRs.

• Interest rate lock commitments represent an agreement to extend credit to a customer where the interest rate is set prior to the loan funding.

When loans are funded, they are classified as held for sale until they are sold.

During the origination and sale process, the value of interest rate lock commitments and loans held for sale inventory rises and falls with changes in interest rates;

Such changes in the value of interest rate lock commitments and loans held for sale are recognized as a reduction in mortgage platform revenue, net, and accordingly affect our Gain on Sale Margin.

As a result, decreases in interest rates could materially and adversely affect our business, financial condition, results of operations, and prospects.

Our business and our mortgage loan origination revenues are highly dependent on macroeconomic and U.S.

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Economic factors such as increased interest rates, slow economic growth or recessionary conditions, the pace of home price appreciation or the lack of it, changes in household debt levels, and increased unemployment or stagnant or declining wages affect our customers’ income and thus their ability to purchase homes and willingness to make loan payments and demand for loans and refinancing transactions.

Market cycles and unpredictability may impact the mix and quantity of loans and other products that our customers

demand, and as a result our results of operations may be adversely impacted.

Market cycles and unpredictability may impact the mix and quantity of loans and other products that our customers demand, and as a result our results of operations may be adversely impacted.

National or global events, including, but not limited to, rising interest rates and volatility in financial markets, can affect all such macroeconomic conditions.

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If it is not possible or economical for us to continue selling the types of loans and other products that we currently sell, our business, financial condition, results of operations, and prospects could be materially and adversely affected.

We are exposed to interest rate volatility, including from SOFR, which could result in higher-than-market interest rates and may have a material adverse effect on our business, financial condition, results of operations, and prospects.

The U.S.-dollar London Inter-bank Offered Rate (“LIBOR”), was replaced with the Secured Oversight Financing Rate (“SOFR”), a new index calculated by reference to short-term repurchase agreements for U.S.

Treasury securities.

In light of guidance from the Alternative Reference Rate Committee, comprised of a broad set of industry regulators and market participants, we adopted SOFR as an index for the interest rate of our variable-rate indebtedness and the interest rate on the adjustable rate loans.

However, because SOFR is a broad U.S.

Treasury repurchase agreement financing rate that represents overnight secured funding transactions, it differs fundamentally from U.S.-dollar LIBOR.

In addition, daily changes in SOFR have, on occasion, been more volatile than daily changes in other benchmark or market rates, including LIBOR, which results from the volatility of SOFR reflecting the underlying volatility of the overnight U.S.

Treasury repurchase market.

The Federal Reserve Bank of New York has at times conducted operations in the overnight U.S.

Treasury repurchase market in order to help maintain the federal funds rate within a target range.

There can be no assurance that the Federal Reserve Bank of New York will continue to conduct such operations in the future, and the duration and extent of any such operations is inherently uncertain.

The effect of any such operations, or of the cessation of such operations to the extent they are commenced, is uncertain and could be materially adverse to investors or issuers or borrowers of SOFR-linked floating debt.

If we are not able to effectively manage these and other risks associated with the use of SOFR, our business, financial condition, results of operations, and prospects could be materially and adversely affected.

Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates, which could materially and adversely affect our earnings.

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The market value of loans held for sale and interest rate lock commitments (“IRLCs”) generally change along with interest rates.

Rising mortgage rates can result in falling prices for these interest-rate-sensitive assets, which negatively affect their value.

The value of such assets moves opposite of interest rate changes.

For example, as interest rates rise, the value of existing mortgage assets falls.

We actively engage in risk management policies to mitigate these risks.

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Our hedging strategies also rely on assumptions and projections regarding our assets and general market factors.

Our hedging strategies could be improperly executed or poorly designed and not have their desired effect, any of which could actually increase our risk of losses, or result in margin calls that materially and adversely affect our cash reserves, or our ability to fund additional loans or otherwise operate our business.

additional loans or otherwise operate our business.

Further, the significant and atypical volatility in the current interest rate marketplace can materially and adversely affect the effectiveness of our offsets.

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Currently, a significant portion of the loans that we sell are purchased by Fannie Mae or Freddie Mac.

For the years ended December 31, 2023 and 2022, 96% and 94%, respectively, of our Total Loans, excluding HELOC loans, conformed to GSE standards.We believe that the portion of our loans purchased by the GSEs was elevated in 2020 due to a decline in activity by private purchasers arising from market conditions at the onset of the COVID-19 pandemic, but as conditions stabilized, private purchasers improved their pricing and began purchasing a greater share of our loan volume in 2021.

We believe that the portion of our loans purchased by the GSEs was elevated in 2020 due to a decline in activity by private purchasers arising from market conditions at the onset of the COVID-19 pandemic, but as conditions stabilized, private purchasers improved their pricing and began purchasing a greater share of our loan volume beginning in 2021.

In 2021, we increased the share of our loans purchased by private purchasers, and maintained a higher share of loans purchased by private purchasers in 2022 and 2023 compared to 2020.

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Some of the actions against lenders alleged that the lenders sold defective loans to Fannie Mae and Freddie Mac, while representing that the loans complied with the GSEs’ underwriting guidelines.

The federal government has also brought actions against lenders asserting that they submitted claims for FHA-insured loans that the lender falsely certified to HUD met FHA underwriting requirements that resulted in

FHA paying out millions of dollars in insurance claims to cover the defaulted loans.

Because these actions carry the possibility for treble damages, many have resulted in settlements totaling in the hundreds of millions of dollars, as well as required lenders and servicers to make significant changes in their practices.

On March 12, 2023, Fannie Mae notified us that we had failed to meet their additional financial requirements due to our decline in profitability and material decline in net worth.

The material decline in net worth and decline in profitability permit Fannie Mae to declare a breach of our contract with them.

Following certain forbearance agreements from Fannie Mae regarding additional financial requirements, we remain in compliance with these additional financial requirements as of the date hereof.

Fannie Mae and other regulators and GSEs are not required to grant any such forbearance, amendment, extension, or waiver and may determine not to do so in the future.

For further discussion, see “ —Risks Related to Our Operating History, Business Model, Growth and Financial Condition—We depend on our ability to sell loans and MSRs in the secondary market to a limited number of loan purchasers and to the GSEs and other secondary market participants for each relevant product.

If our ability to sell loans and MSRs is impaired, our ability to produce loans and related MSRs would be materially and adversely affected.

to the GSEs and other secondary market participants.

If our ability to sell loans and MSRs is impaired, we may not be able to originate loans and related MSRs.

Our underwriting guidelines may not be able to accurately predict the likelihood of defaults on the mortgage loans in our portfolio, which could have a material adverse effect on our business, financial condition, liquidity and results of operations.

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Although most legal decisions have accepted MERS as mortgagee, these challenges could result in delays and additional costs in commencing, prosecuting, and completing foreclosure proceedings, conducting foreclosure sales of mortgaged properties, and submitting proofs of claim in customer bankruptcy cases.

Our business is subject to the risks of catastrophic events such as earthquakes, fires, floods and other natural catastrophic events, interruption by man-made issues such as strikes, cyberattacks and terrorist attacks.

Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, strikes, health pandemics, cyberattacks, terrorist attacks, and similar events.

Disease outbreaks have occurred in the past (including severe acute respiratory syndrome, avian flu, H1N1/09 flu, and COVID-19) and any prolonged occurrence of infectious disease or other adverse public health developments could have a material adverse effect on the macro economy and/or our business operations.

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We have expanded our business and operations through acquisitions in the United Kingdom and will face challenges in continuing to develop operations in a cross-border market where we have limited operating experience.

We have expanded our business and operations through acquisitions in the United Kingdom.

During the third quarter of 2021, we acquired two internet-enabled real estate finance businesses, during the first quarter of 2023, we acquired a lending entity and during the second quarter of 2023, we acquired Birmingham Bank, a bank in the United Kingdom.

We did not have material operations in the United Kingdom prior to 2021 and have primarily entered the market by acquiring other entities.

There can be no assurance that our management team’s experience operating in the United States will enable us to successfully operate businesses in the United Kingdom and no assurance that we will be able to successfully incorporate these entities into the Better Home & Finance ecosystem.

We have expanded our business and operations in the United Kingdom through acquisitions of two internet-enabled real estate finance businesses and Birmingham Bank in 2021 and 2023, respectively.

There can be no assurance that our management team’s experience operating in the United States will enable us to successfully operate businesses in the United Kingdom and no assurance that we will be able to successfully integrate these entities into the Better Home & Finance ecosystem.

Additionally, our management team has limited experience with operating a bank, which will compound the challenges of successfully managing the operations of Birmingham Bank and realizing the benefits of this acquisition.

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Failure to manage these risks and challenges could negatively affect our ability to expand our international and cross-border businesses and operations as well as materially and adversely affect our business, financial condition, and results of operations, both for these newly acquired entities and for our business as a whole.

Our acquisitions in the United Kingdom, including that of Birmingham Bank, subject us to laws and regulations with which we have limited experience, which could increase our costs associated with compliance and individually or in the aggregate adversely affect our business.

Our business operations in the United Kingdom subjects us to laws and regulations with which we have limited experience, which could increase our costs associated with compliance and individually or in the aggregate adversely affect our business.

We are subject to laws and regulations affecting our domestic and international operations in a number of areas, including in the United Kingdom, where we operate in highly regulated industries.

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Compliance with these laws, regulations and similar requirements may be onerous and expensive, and the required conduct to comply with law and regulations may be inconsistent across jurisdictions, further increasing the costs of compliance and doing business.

In particular, our acquisition of Birmingham Bank, which was completed in the second quarter of 2023, may require us as the stockholder of the bank to assist the bank in complying with certain other laws and regulations applicable to banks, including regulation of the bank by the Prudential Regulation Authority and the Financial Conduct Authority.

We have not previously been engaged in banking activities or subject to banking regulations, particularly those of the United Kingdom, and we may face additional risks and costs as a result of this recent international expansion.

If the bank is unable to effectively comply with regulatory requirements in the United Kingdom, or if the cost of

such compliance exceeds our expectations, our results of operation and financial condition could be materially and adversely affected.

In particular, our ownership of Birmingham Bank, may require us to assist the bank in complying with certain other laws and regulations applicable to banks, including regulation of the bank by the Prudential Regulation Authority and the Financial Conduct Authority.

We have not previously been engaged in banking activities or subject to banking regulations, particularly those of the United Kingdom, and we may face additional risks and costs.

If we are unable to effectively comply with regulatory requirements in the United Kingdom, or if the cost of such compliance exceeds our expectations, our results of operation and financial condition could be materially and adversely affected.

We have global operations that could be materially and adversely affected by changes in political or economic stability or by government policies in the U.S., United Kingdom, India or globally.

As of December 31, 2023, we had operations, including approximately 41% of our workforce, located in India, which is subject to relatively higher degrees of political and social instability and may lack the infrastructure to withstand political unrest or natural disasters.

As of December 31, 2023, approximately 18% of our workforce was located in the United Kingdom, which is subject to political or economic risks potentially more challenging and uncorrelated to the U.S.

As of December 31, 2024, we had operations, including approximately 33% and 7% of our workforce, located in India and the United Kingdom, respectively.

Our operations in India are subject to relatively higher degrees of political and social instability and may lack the infrastructure to withstand political unrest or natural disasters.

Additionally, our operations in the United Kingdom subject us to political or economic risks that are potentially more challenging than those we face in the U.S.

The political or regulatory climate in the United States, or elsewhere, also could change so that it would not be lawful or practical for us to use international operations in the manner in which we currently use them.

In many foreign countries, particularly in those with developing economies, it may be common to engage in business practices that are prohibited by laws and regulations applicable to us, such as the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”).

Any violations of the FCPA or local anti-corruption laws by us, our subsidiaries or our local agents in India or elsewhere could have a material adverse effect on our business, financial condition, results of operations, and prospects, as well as our reputation, and result in substantial financial penalties or other sanctions.

Local laws and customs in many countries differ significantly from those in the United States.

We are responsible for any violations by our employees, contractors and agents, whether based within or outside of the United States, for violations of the FCPA.

In many countries, particularly in those with developing economies, it may be common to engage in business practices that are prohibited by laws and regulations applicable to us.

Foreign Corrupt Practices Act (“FCPA”) and similar anti-bribery laws in other jurisdictions, including the Corruption of Foreign Public Officials Act and the UK Bribery Act 2010, prohibit corporations and individuals, including

us and our employees, from engaging in certain activities to obtain or retain business or to influence a person working in an official capacity.

A violation of any of these laws, even if prohibited by our policies, could have a material adverse effect on our business, financial condition or results of operations.

Actual or alleged violations could damage our reputation, be expensive to defend, and impair our ability to do business.

Certain activities that we may wish to perform offshore may require state licensure or may not be permitted by the agencies, due to the use of an offshore entity.

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Competition in our industry can take many forms, including the variety of loan programs being made available, interest rates and fees charged for a loan, convenience in obtaining a loan, customer service levels, the amount and term of a loan and marketing and distribution channels.

Fluctuations in interest rates and general economic conditions may also

materially and adversely affect our competitive position.

Fluctuations in interest rates and general economic conditions may also materially and adversely affect our competitive position.

During periods of rising rates, competitors that have locked in low borrowing costs may have a competitive advantage.

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Accordingly, we expect to continue to enhance our automated processes, grow our purchase business and improve cross-sell of non-mortgage products across our homeownership platform (subject to any applicable affiliated business arrangement or other disclosure or business restrictions), but there is no assurance that any of these actions will achieve their desired effect or that we will accurately predict and adapt to demand or growth of new or existing products or predict and adapt to changes in the mortgage market and macro environment.

For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Performance” and “—Risks Related to Our Operating History, Business Model, Growth and Financial Condition—We have a history of operating losses, have not been able to maintain profitability achieved in 2020 and early 2021 and may not achieve and maintain profitability in the future.”

For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Performance” and “—Risks Related to Our Operating History, Business Model, Growth and Financial Condition—We have a history of operating losses and expect to incur significant losses for the foreseeable future.”

We have invested significant resources in developing new and refining existing tools, features, services, products and other product offerings and, despite our reductions in near-term spending, remain focused on identifying and building out our long-term growth areas.

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If we are unable to sell such loans to private investors, we may be required to hold such loans for an extended period.

For these non-conforming loans, a customer’s ability to repay their non-conforming loan may be adversely impacted by numerous factors, including a healthcare event of the borrower, a change in the borrower’s employment or other negative local or more general economic conditions.

For these non-conforming loans, a customer’s ability to repay their non-conforming loan may be adversely impacted by numerous factors, including a healthcare event of the

borrower, a change in the borrower’s employment or other negative local or more general economic conditions.

Deterioration in a customer’s financial condition and prospects may be accompanied by deterioration in the value of the collateral for the non-conforming loan.

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The geographic concentration of our loan production and factors adversely affecting those geographic areas may adversely affect our financial condition and results of operations.

For our loan products offered through Home Finance, as of March 13, 2024, we are licensed to operate in all 50 states and the District of Columbia across various credit and income profiles.

For the fiscal years ended December 31, 2023 and 2022, respectively, approximately 32% and 36% of our Funded Loan Volume was secured by properties concentrated in three states:

California (approximately 9% and 15%, respectively), Texas (approximately 11% and 11%, respectively) and Florida (approximately 11% and 10%, respectively).

No other state represented more than 8% of our Funded Loan Volume for the periods presented.

or our loan products offered through Home Finance, as of March 1, 2025, we are licensed to operate in all 50 states and the District of Columbia across various credit and income profiles.

For the fiscal year ended December 31, 2024, approximately 30% of our Funded Loan Volume was secured by properties concentrated in three states:

California (approximately 12%), Texas (approximately 9%) and Florida (approximately 9%).

No other state represented more than 6% of our Funded Loan Volume for the period presented.

To the extent that these states in the future experience weaker economic conditions or greater rates of decline in real estate values than the United States generally, the concentration of loans that we produce in those states may decrease and materially and adversely affect our business.

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For example, under federal law, the GLBA, the GLBA Safeguards Rule, and the FCRA, among other laws, set forth privacy and data security requirements for NPI and consumer report information.

At the state level, the CCPA, which went into effect in January 2020, provides new data privacy rights for California consumers and new

operational requirements for us.

At the state level, the CCPA, which went into effect in January 2020, provides new data privacy rights for California consumers and new operational requirements for us.

The CCPA also includes a statutory damages framework for violations of the CCPA and a private right of action against businesses that fail to implement and maintain reasonable security procedures and practices appropriate to the nature of the information to prevent data breaches.

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Several other states are considering enacting similar legislation.

We could be materially and adversely affected if legislation or regulations are expanded to require changes in business practices or privacy policies (particularly to the extent such changes would affect the manner in which we store, share, use, disclose, process and protect such data), or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business, financial condition, results of operations, and prospects.

We could be materially and adversely affected if legislation or regulations are expanded to require changes in business

practices or privacy policies (particularly to the extent such changes would affect the manner in which we store, share, use, disclose, process and protect such data), or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business, financial condition, results of operations, and prospects.

In addition, even if legislation or regulation does not expand in a manner that affects our business directly, changing consumer attitudes or the perception of the use of personal information also could materially and adversely affect our business, financial condition, results of operations and prospects.

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In such an instance, we may also be subject to regulatory action, investigation or be liable to a governmental authority for fines or penalties associated with a lapse in the integrity and security of our loan applicants’, customers’ or team members’ information.

We may be required to expend significant capital and other resources to protect against and

remedy any potential or existing security breaches and their consequences.

We may be required to expend significant capital and other resources to protect against and remedy any potential or existing security breaches and their consequences.

In addition, our remediation efforts may not be successful and we may not have adequate insurance to cover these losses.

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Our technology must provide a loan application experience and homeownership product offerings that equal or exceed the experience provided by our competitors.

We have or may in the future experience service disruptions and failures caused by system or software failure, fire, power loss, telecommunications failures, including those of internet service providers, team member misconduct, human error, denial of service or information, cyberattacks, including computer hackers, computer viruses and disabling devices, malicious or destructive code, as well as natural disasters, health pandemics and other similar events.

We have, and may in the future, experience service disruptions and failures caused by system or software failure, fire, power loss, telecommunications failures, including those of internet service providers, team member misconduct, human error, denial of service or information, cyberattacks, including computer hackers, computer viruses and disabling devices, malicious or destructive code, as well as natural disasters, health pandemics and other similar events.

Any such disruption could interrupt or delay our ability to provide product offerings to our applicants or customers and could also impair the ability of third parties to provide critical services to us.

Although we have undertaken measures intended to protect the safety and security of our information systems and the information systems of our third-party providers and the data therein, there can be no assurance that disruptions, failures and cyberattacks will not occur or, if they do occur, that

they will be adequately addressed in a timely manner.

Such measures may in the future fail to prevent or detect unauthorized access to our team member, customer and loan applicant information, and our disaster recovery planning may not be sufficient to address all technology-related risks, which are constantly evolving.

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We do not carry business interruption insurance sufficient to compensate us for all losses that may result from interruptions in our service as a result of systems disruptions, failures and similar events.

Issues related to the development, proliferation and use of AI could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business.

We currently incorporate AI technology in certain of our products and services and in our business operations, and we believe the proliferation of AI will have a significant impact on customer preference and market dynamics in our industry.

Our research and development of such technology remains ongoing, and our ability to develop effective and ethical AI technology will be critical to our financial performance and long-term success.

We may be unable to develop and implement AI, both for internal operations and external support, that keeps pace with the rapid proliferation of AI systems by competitors in our industry, which may negatively impact our business and financial performance.

AI presents risks, challenges, and unintended consequences that could affect our and our customers’ adoption and use of this technology.

AI algorithms and machine learning methodologies may be flawed.

For example, the use of AI algorithms may raise ethical concerns and legal issues due to perceived or actual unintentional bias in the processing of loan applications.

Additionally, AI technologies are complex and rapidly evolving, and we face significant competition in the market and from other companies regarding such technologies.

Further, while we aim to develop and use AI responsibly and attempt to identify and mitigate ethical and legal issues presented by its use, we may be unsuccessful in identifying or resolving issues before they arise.

AI-related issues, including potential government regulation of AI, deficiencies and/or failures could give rise to legal and/or regulatory action, damage our reputation or otherwise adversely affect our business.

Our products use third-party software, hardware and services that may be difficult to replace or cause errors or failures of our products that could materially and adversely affect our business, financial condition, results of operations, or prospects.

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In the future, these software, hardware, or services may not be available to us on commercially reasonable terms, or at all.

Any loss of the right to use, or increase in cost of, any such software, hardware or services could result in decreased functionality of our products until equivalent technology is either developed by us or, if available from another provider, is identified, obtained and integrated, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

adversely affect our business, financial condition, results of operations, and prospects.

In addition, any errors or defects in or failures of the software, hardware or services we rely on, whether maintained by us or by third parties, could result in errors or defects in our products or cause our products to fail, which could materially and adversely affect our business, financial condition, results of operations, and prospects, and be costly to correct.

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Despite these measures, third parties may attempt to disclose, obtain, copy or use intellectual property owned or licensed by us and these measures may not prevent misappropriation, infringement, reverse engineering or other violation of intellectual property or proprietary rights owned or licensed by us, particularly in foreign countries where laws or enforcement practices may not protect our proprietary rights as fully as in the United States.

In addition, departing employees may attempt to misappropriate software upon their departure in a manner that may be difficult to detect, or to prove in a court action undertaken to remedy the misappropriation.

In at least one instance, a former Better software engineer attempted to misappropriate a substantial amount of source code upon their departure, and the company was forced to seek a restraining order to resolve the issue.

Although the case was satisfactorily resolved, similar events may occur in the future, and no assurance can be given that Better Home & Finance would prevail in future disputes of a similar nature.

In addition, departing employees have misappropriated, and may attempt to misappropriate, software upon their departure in a manner that may be difficult to detect, or to prove in a court action undertaken to remedy the misappropriation.

Furthermore, confidentiality procedures and contractual provisions can be difficult or costly to enforce and, even if successfully enforced, may not be entirely effective.

In addition, we cannot guarantee that we have entered into confidentiality agreements with all team members, partners, independent contractors, consultants or other third parties that have or may have had access to our trade secrets or other proprietary or confidential information.

In addition, we cannot guarantee that we have entered into confidentiality agreements with all team members, partners, independent contractors, consultants or other third parties that

have or may have had access to our trade secrets or other proprietary or confidential information.

Additionally, such confidentiality agreements may be breached or adequate remedies may not be available in the event of an unauthorized access, use or disclosure of our trade secrets or other proprietary or confidential information.

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Such licensing arrangements, by their nature, increase the risk of a technology licensee claiming Better Mortgage Corporation breached its licensing agreement or the technology otherwise did not meet the client’s expectations.

If this happened, Better Mortgage Corporation could also face negative press and be required to spend significant resources in order to protect our

intellectual property rights.

If this happened, Better Mortgage Corporation could also face negative press and be required to spend significant resources in order to protect our intellectual property rights.

Litigation brought to protect and enforce our intellectual property rights, either in the United States or internationally, could be costly and time consuming, could result in the diversion of time and attention of our management team, and may not be successful or could result in the impairment or loss of portions of our intellectual property.

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Our success and ability to compete also depends in part on our ability to operate without infringing, misappropriating or otherwise violating the intellectual property or proprietary rights of third parties.

We may, in the future, encounter disputes from time to time concerning intellectual property rights of others, including our competitors, and we may not prevail in these disputes.

We may encounter disputes from time to time concerning intellectual property rights of others, including our competitors, and we may not prevail in these disputes.

Third parties may raise claims against us alleging infringement, misappropriation or other violations of their intellectual property rights, including trademarks, copyrights, patents, or trade secrets.

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An adverse determination in any intellectual property claim could require us to pay damages (compensatory or punitive) and/or temporarily or permanently stop using our technologies, trademarks, copyrighted works and other material found to be in violation of another party’s rights and could prevent us from licensing our technologies to others unless we enter into royalty or licensing arrangements with the prevailing party or are able to redesign our product offerings and processes to avoid infringement.

Any such license may not be available on reasonable terms, if at all, and there can be no assurance that we would be able to redesign our product offerings in a way that would avoid any such limitation.

Any such license may not be available on reasonable terms, if at all, and there can be no

assurance that we would be able to redesign our product offerings in a way that would avoid any such limitation.

In addition, such claims, or resulting damages or injunctions, may result in negative publicity about us, which could materially and adversely affect our reputation.

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This ability, to some extent, is subject to market, economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control.

On October 12, 2023, the Company was notified by the listing qualifications staff of Nasdaq (the “Nasdaq Staff”) that the Company is not in compliance with the Bid Price Rule for continued listing and that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.

If our Class A Common Stock ceases to be listed on the Nasdaq, such delisting would constitute a fundamental change under the indenture for the Convertible Note that would require the Company to redeem the Convertible Note prior to maturity for an amount in cash equal to the principal amount of such Convertible Note plus accrued and unpaid interest to the redemption date.

As of December 31, 2023, the Company had cash and cash equivalents, together with short-term investments and restricted cash, of $554 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.

See “ —Risks Related to Ownership of Common Stock and Better Home & Finance Operating as a Public Company—Since the Class A Common Stock is currently trading under $1.00, Nasdaq may delist

our securities from trading on its exchange, which would limit investors’ ability to make transactions in our securities, subject us to additional trading restrictions and require us to redeem the Convertible Note .” There can be no assurance that our business will generate cash flow from operations, or that additional capital will be available to us, in amounts sufficient to enable us to meet our debt payment obligations and to fund other liquidity needs.

Our ability to refinance existing debt and borrow additional funds is affected by a variety of factors, including:

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(ii) our failure to maintain sufficient levels of eligible assets;

(iii) our inability to collect and maintain all records relating to the mortgage loans

underlying the warehouse lines;

(iii) our inability to collect and maintain all records relating to the mortgage loans underlying the warehouse lines;

(iv) our inability to access the secondary market for mortgage loans;

or (v) perceived reputational concerns by warehouse lenders.

In the event that a number of our warehouse lines are terminated or are not renewed, if such counterparties to any of these agreements fail to perform or if the principal amount that may be drawn under our funding agreements that provide for immediate funding at closing were to significantly decrease, we may be unable to find replacement financing on commercially favorable terms, or at all, which could materially and adversely affect our business.

commercially favorable terms, or at all, which could materially and adversely affect our business.

In addition, our reliance on warehouse lines of credit for purposes of funding loans contains certain risks, as the financial crisis of 2008-2009 resulted in certain warehouse lenders refusing to honor lines of credit for non-banks without a deposit base.

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We expect that our business will remain subject to extensive regulation and supervision.

Although we have systems and procedures designed to comply with developing legal and regulatory requirements, we cannot assure you that more

restrictive laws and regulations will not be adopted in the future, or that governmental bodies or courts will not interpret existing laws or regulations in a different or more restrictive manner than we have, which could render our current business practices non-compliant or which could make compliance more difficult or expensive.

Although we have systems and procedures designed to comply with developing legal and regulatory requirements, we cannot assure you that more restrictive laws and regulations will not be adopted in the future, or that governmental bodies or courts will not interpret existing laws or regulations in a different or more restrictive manner than we have, which could render our current business practices non-compliant or which could make compliance more difficult or expensive.

Any of these or other changes in laws or regulations could materially and adversely affect our business, financial condition, results of operations, and prospects.

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We did not receive approval from New York state regulators prior to closing of the Business Combination, which could adversely affect our business.

The Closing of the Business Combination required certain state regulatory approvals from states in which we are licensed.

The completion of the Business Combination (the “Closing”) required certain state regulatory approvals from states in which we are licensed.

We did not receive approval from New York state regulators prior to Closing of the Business Combination, including the New York State Department of Financial Services.

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Adding to these difficulties, laws may conflict with each other and, if we comply with the laws of one jurisdiction, we may find that we are violating laws of another jurisdiction.

These difficulties potentially increase our exposure to the risks of noncompliance with these laws and regulations, which could materially and adversely affect our business.

These difficulties potentially increase our

exposure to the risks of noncompliance with these laws and regulations, which could materially and adversely affect our business.

In addition, our failure to comply with these laws, regulations and rules may result in reduced payments by customers, modification of the original terms of loans, permanent forgiveness of debt, delays or defenses in the foreclosure process, increased servicing advances, litigation, enforcement actions and repurchase and indemnification obligations, as well as potential allegations that such compliance failures demonstrate weaknesses in our CMS.

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We have been, and expect to continue to be, subject to regulatory enforcement actions and private causes of action from time to time with respect to our compliance with applicable laws and regulations.

Failure to comply with employment and labor laws and regulations could materially and adversely affect our business, financial condition and results of operations.

We are subject to a variety of federal and state employment and labor laws and regulations, including the Americans with Disabilities Act, the Federal Fair Labor Standards Act, the Worker Adjustment and Retraining Notification Act and other regulations related to working conditions, wage-hour pay, over-time pay, employee benefits, anti-discrimination, and termination of employment.

Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties, or injunctions.

In addition from time to time we have received, and expect to continue to receive, correspondence from current and former employees terminated by us who threaten to bring claims against us alleging that we have violated one or more labor and employment laws or regulations.

In certain instances, current and former employees have threatened to bring claims against us, some of which have proceeded to litigation or arbitration against us, and we may encounter similar threatened claims and actions against us in the future.

An adverse outcome in any such litigation could require us to pay contractual damages, compensatory damages, punitive damages, attorneys’ fees and costs.

Claims, enforcement actions or other proceedings could harm our reputation, business, financial condition and results of operations.

If we do not prevail in any possible civil litigation, our reputation, business, financial condition and results of operations could be materially adversely affected.

In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees.

If we do not obtain and maintain the appropriate state licenses, we will not be allowed to produce or service loans or provide other services in some states, which could materially and adversely affect our business, financial condition, resu lts of operations, and prospects.

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In most states in which we operate, a regulatory agency regulates and enforces laws relating to loan production and servicing companies such as us.

These rules and regulations, which vary from state-to-state, generally

provide for licensing as a loan production company, loan brokering company, loan servicing company, debt collection agency or third-party default specialist, as applicable, licensure for certain individuals involved in loan production and in some cases servicing, requirements as to the form and content of contracts and other documentation, licensing of team members and team member hiring background checks, restrictions on production, brokering and collection practices, fees and charges, disclosure and record-keeping requirements, and protection of borrowers’ rights.

These rules and regulations, which vary from state-to-state, generally provide for licensing as a loan production company, loan brokering company, loan servicing company, debt collection agency or third-party default specialist, as applicable, licensure for certain individuals involved in loan production and in some cases servicing, requirements as to the form and content of contracts and other documentation, licensing of team members and team member hiring background checks, restrictions on production, brokering and collection practices, fees and charges, disclosure and record-keeping requirements, and protection of borrowers’ rights.

Future state legislation and changes in existing regulation may significantly increase our compliance costs or reduce the amount of fees we may charge, which could make our business cost-prohibitive in the affected state or states and could materially and adversely affect our business.

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We may not be able to maintain all requisite licenses and permits, and the failure to satisfy those and other regulatory requirements could restrict our ability to broker, produce, purchase, sell, service or enforce loans.

Our failure to satisfy any such requirements also could result in a default under our warehouse lines, other financial arrangements and/or servicing

agreements and have a material and adverse effect on our business, financial condition, results of operations, and prospects.

Our failure to satisfy any such requirements also could result in a default under our warehouse lines, other financial arrangements and/or servicing agreements and have a material and adverse effect on our business, financial condition, results of operations, and prospects.

Those states that currently do not provide extensive regulation of our business may later choose to do so, and if such states so act, we may not be able to obtain or maintain all requisite licenses and permits.

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The CFPB has issued or amended a number of regulations pursuant to the Dodd-Frank Act relating to loan production and servicing activities, including ability-to-repay and “qualified mortgage” underwriting standards, loan originator compensation standards, and other production standards and practices as well as servicing requirements that address, among other things, periodic billing statements, certain notices and acknowledgments, prompt crediting of borrowers’ accounts for payments received, additional notice, review and timing requirements with respect to delinquent borrowers, loss mitigation, prompt investigation of complaints by borrowers, and lender-placed insurance notices.

The CFPB has also amended provisions of the HOEPA regarding the determination of high-cost mortgages, and of Regulation B, to implement additional requirements under the Equal Credit Opportunity Act with respect to valuations, including appraisals and automated valuation models.

The CFPB has also amended provisions of the HOEPA regarding the determination of high-cost mortgages, and of Regulation B, to implement additional requirements under the Equal Credit Opportunity Act

with respect to valuations, including appraisals and automated valuation models.

The CFPB has also issued guidance to loan servicers to address potential risks to borrowers that may arise in connection with transfers of servicing.

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Following third-party audits of samples of loans produced during 2018, 2019, and 2021, we became aware of certain TRID defects in our 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, outside applicable tolerances under the TRID rule, which resulted in overcharges to consumers.

We have reserved

approximately $8.6 million as of December 31, 2023, for potential refunds due to consumers for TRID tolerance errors for loans produced from 2018 through 2023, and we conducted a detailed review of all loan files from that time period with a third-party service provider and continue to use this third-party service provider for ongoing review and remediation.

We have reserved approximately $6.6 million as of December 31, 2024, for potential refunds due to consumers for TRID tolerance errors for loans produced from 2018 through 2024, and we conducted a detailed review of all loan files from that time period with a third-party service provider and continue to use this third-party service provider for ongoing review and remediation.

The Company completed a TRID audit of 2022 files and is continuing to remediate TRID tolerance defects as necessary.

Although the Company has reserved for potential refunds and remediation costs, as discussed above, we are not able to estimate any penalties that may be imposed by federal or state regulators, including the CPFB as described above.

Accordingly, there can be no assurance that the amount that we have reserved will be sufficient to cover all costs associated with these matters.

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If in the future we are found to have violated the TCPA, the amount of damages and potential liability could be extensive and materially and adversely impact our business, financial condition, results of operations, and prospects.

Accordingly, were such a class certified or if we are unable to successfully defend such a suit, as we have in the past, then TCPA damages could materially and adversely affect our business, financial condition, results of operations, and prospects.

Accordingly, were

such a class certified or if we are unable to successfully defend such a suit, as we have in the past, then TCPA damages could materially and adversely affect our business, financial condition, results of operations, and prospects.

If new laws and regulations lengthen foreclosure times or introduce new regulatory requirements regarding foreclosure procedures, our operating costs could increase and we could be subject to regulatory action.

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Antidiscrimination statutes, such as the Fair Housing Act and the Equal Credit Opportunity Act, prohibit creditors from discriminating against loan applicants and borrowers based on certain characteristics, such as race, religion and national origin.

States have analogous anti-discrimination laws that extend protections beyond the protected classes under federal law, extending protections, for example to gender identity.

federal regulatory agencies and departments, including the U.S.

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These regulatory agencies, as well as consumer advocacy groups and plaintiffs’ attorneys, are focusing greater attention on “disparate impact” claims.

Supreme Court has confirmed that the “disparate impact” theory applies to cases brought under the Fair Housing Act.

On September 24, 2020, HUD released a final rule amending the agency’s interpretation of the Fair Housing Act disparate impact standard, which was challenged through litigation, with the court staying HUD’s implementation and enforcement of the rule before it became effective.

HUD, at the direction of the Biden administration, has since reconsidered the 2020 rule and has restored the existing “discriminatory effects” rule that HUD implemented in 2013, through a final rule that became effective on May 1, 2023.

Supreme Court has confirmed that the “disparate impact” theory applies to cases brought under the Fair Housing Act (“FHA”).

In September 2020, HUD released a final rule amending the agency’s interpretation of the FHA disparate impact standard to better align with the 2015 U.S.

Supreme Court case;

however, HUD more recently in March 2023 finalized a rule rescinding HUD’s 2020 final rule and restoring HUD’s 2013 disparate impact standard.

Although it is still unclear whether the “disparate impact” theory applies under the Equal Credit Opportunity Act, regulatory agencies and private plaintiffs can be expected to continue to apply it to both the Fair Housing Act and the Equal Credit Opportunity Act in the context of home loan lending and servicing.

To the extent that the “disparate impact” theory continues to apply, we may be faced with significant administrative burdens in attempting to comply and potential liability for failures to comply.

Additionally, in March 2022, the CFPB announced that, in the course of examining companies’ compliance with consumer protection rules, the CFPB will scrutinize discriminatory conduct that violates the federal prohibition against unfair practices, indicating that certain discriminatory practices may trigger liability under the Consumer Financial Protection Act, which prohibits unfair, deceptive and abusive acts and practices, regardless of whether liability is triggered under the Equal Credit Opportunity Act.

The CFPB stated that discrimination may meet the standard for “unfairness” regardless of whether it was intentional.

In addition to reputational harm, violations of the Equal Credit Opportunity Act and the Fair Housing Act can result in actual damages, punitive damages, injunctive or equitable relief, attorneys’ fees and civil money penalties.

The CFPB can seek several remedies under the Consumer Financial Protection Act including, but not limited to, rescission or reformation of contracts, refunds of money, restitution, disgorgement, payment of damages, and civil money penalties.

The Biden Administration also is focused on preventing discrimination in the residential home valuation process.

For example, in February 2022, the CFPB and seven other federal agencies sent a joint letter to The Appraisal Foundation (“TAF”) emphasizing that discrimination prohibitions under the Fair Housing Act and the Equal Credit Opportunity Act extend to appraisals, and the CFPB released an outline of possible options for upcoming rulemaking to prevent algorithmic bias in automated home valuation models.

In March 2022, HUD delivered to President Biden an Interagency Task Force on Property Appraisal and Valuation Equity Action Plan, which, among other things, describes efforts the Task Force—which includes thirteen federal agencies—plans to take to reduce racial bias in home appraisals.

In February 2023, the CFPB, HUD, and other federal regulators submitted a joint letter to the TAF, urging TAF to further revise its draft Ethics Rule for appraisers to include a detailed statement of federal prohibitions against discrimination under the Fair Housing Act and the Equal Credit Opportunity Act.

In March 2023, the U.S.

Department of Justice and the CFPB filed a statement of interest in a federal court appraisal bias case, asserting that a lender violates both the Fair Housing Act and the Equal Credit Opportunity Act “if it relies on an appraisal that it knows or should know to be discriminatory.” Changes to the home valuation rules and expectations may result in us needing to modify our valuation-related processes and practices.

If we are unable to make the necessary adjustments, our reputation could be harmed, our business could be adversely impacted, and we could be subject to liability under various laws, such as the Fair Housing Act, Equal Credit Opportunity Act, and the Consumer Financial Protection Act.

Furthermore, many industry observers believe that the “ability to repay” rule issued by the CFPB will have the unintended consequence of having a disparate impact on protected classes.

Specifically, it is possible that lenders that make only Qualified Mortgages may be exposed to discrimination claims under a disparate impact theory.

Beyond exposure to potential fair lending or servicing claims under disparate impact theory, lenders face increasing regulatory, enforcement and litigation risk under the FHA and ECOA from claims of “redlining” and “reverse redlining”.

Redlining is the practice

of denying a creditworthy applicant a loan for housing in a certain neighborhood even though the applicant may be otherwise qualified.

Reverse redlining is targeting an applicant in a certain neighborhood for higher cost products or services.

In late 2021, the DOJ launched a “combating redlining initiative” and partnership with other federal and state agencies, including the CFPB, to police these practices, making clear they are a high priority across the financial services regulatory ecosystem.

In June 2021 the U.S.

Federal Government also formed an interagency task force to address concerns around improper bias in home appraisals.

The CFPB, HUD and FHFA all have been clear that policing such bias and working to develop new guidance for industry as to how it can reduce human discretion in the home appraisal and valuation process are key agency priorities.

Such efforts could result in a change in our appraisal practices or expose us to liability under the FHA or ECOA.

In addition to reputational harm, violations of the ECOA and the FHA can result in actual damages, punitive damages, injunctive or equitable relief, attorneys’ fees and civil money penalties.

Relatedly, state legislatures and state financial regulatory agencies are becoming increasingly interested in implementing state level versions of the federal Community Reinvestment Act of 1977 (“CRA”).

The federal CRA was enacted as part of several landmark pieces of legislation to address systemic inequities in access to credit, expand financial inclusion, and reverse the impact of decades of redlining in low and moderate-income (“LMI”) communities and minority communities.

The federal CRA currently only applies to federally insured depository banks and institutions, and evaluates their lending, services and investments in LMI and minority communities.

However, certain state CRAs expanded the scope of application to include non-depository mortgage lenders, such as Rocket Mortgage.

The lack of consistency and clarity on the scope of how the state level CRAs will be applied and how entities will be examined presents unknown compliance risks that may adversely impact our operations, and could inadvertently provide additional evidentiary support for potential disparate impact claims.

Government regulation of the internet and sales and marketing on the internet is evolving, and we may experience unfavorable changes in or failure to comply with existing or future regulations and laws.

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Existing and future regulations and laws may impede the growth and availability of the internet and online services and may limit our ability to operate our business.

and regulations, which continue to evolve, cover privacy and data protection, data security, pricing, content, copyrights, distribution, mobile and other communications, advertising practices, electronic contracts, consumer protections, the provision of online payment services, unencumbered internet access to our product offerings, the design and operation of websites and the characteristics and quality of product offerings online.

These laws and regulations, which continue to evolve, cover privacy and data protection, data security, pricing, content, copyrights, distribution, mobile and other communications, advertising practices, electronic contracts, consumer protections, the provision of online payment services, unencumbered internet access to our product offerings, the design and operation of websites and the characteristics and quality of product offerings online.

For example, the FTC has promulgated a revised Safeguards Rule and the New York Department of Financial Services promulgated updated cybersecurity regulations.

We cannot guarantee that we have been or will be fully compliant with every law or regulation in every jurisdiction.

In addition, it is not entirely clear how existing laws and regulations governing issues such as property ownership, consumer protection, libel and privacy apply or will be enforced with respect to the internet and e-commerce, as many of these laws were adopted prior to the advent of the internet and do not contemplate or address the unique issues they raise.

Moreover, increased regulatory and enforcement efforts by federal and state agencies and the potential prospects for private litigation claims related to our data collection, privacy policies or other e-commerce practices have become more likely.

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Risks Related to Ownership of Common Stock and Better Home & Finance Operating as a Public Company

Since the Class A Common Stock is currently trading under $1.00, Nasdaq may delist our securities from trading on its exchange, which would limit investors’ ability to make transactions in our securities, subject us to additional trading restrictions and require us to redeem the Convertible Note.

On October 12, 2023, the Company received a letter (the “Notice”) from the Nasdaq Staff of Nasdaq notifying the Company that it is not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) for continued listing.

The Bid Price Rule requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.

In accordance with the Compliance Period Rule, the Company has 180 calendar days, or until April 9, 2024, to regain compliance with the Bid Price Rule.

In addition, Nasdaq Listing Rules permit the Company to transfer to The Nasdaq Capital Market and the Staff may grant the Company a second 180 calendar day period to regain compliance pursuant to the Compliance Period Rule, provided the Company meets the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the bid price requirement.

In response, the Company filed an application to transfer the listing of its Class A Common Stock from the Nasdaq Global Market to the Nasdaq Capital Market.

On March 7, 2024, Company 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.” On March 11, 2024, the Company applied for an additional 180-day compliance period, or until October 6, 2024, to regain compliance with the Bid Price Rule and notified Nasdaq of its intention to cure the deficiency.

Should Nasdaq grant an additional compliance period, the minimum bid price per share of Class A Common Stock must be at least $1.00 for at least ten consecutive business days during such additional 180-day compliance period in order to regain compliance with the Bid Price Rule.

As of April 8, 2024, Class A Common Stock has been trading below $1.00 for one-hundred and seventy-nine days.

The Company will continue to monitor the closing bid price of Class A Common Stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods.

The Company is evaluating options for regaining compliance with the Minimum Bid Rule, including seeking stockholder approval at its annual meeting of stockholders to declare and effect a reverse stock split.

If the Company’s request for an additional 180-day compliance period is denied or the Company fails to regain compliance during such additional compliance period, the Staff will provide notice that the Class A Common Stock will be subject to delisting.

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

There can be no assurance that the Company will regain compliance with the minimum bid price requirement during the 180-day compliance period, secure a second period of 180 days to regain compliance or maintain compliance with the other Nasdaq listing requirements.

If Nasdaq delists Better Home & Finance’s securities from trading on its exchange for failure to meet the listing standards, Better Home & Finance and its stockholders could face significant negative consequences including:

• a limited availability of market quotations for our securities;

• reduced liquidity for our securities;

• a determination that the shares of Class A Common Stock are “penny stock” which will require brokers trading in Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

• a limited amount of news and analyst coverage;

• a decreased ability to issue additional securities or obtain additional financing in the future.

Furthermore, if our Class A Common Stock ceases to be listed on the Nasdaq, such delisting would constitute a fundamental change under the indenture for the Convertible Note that would require the Company to redeem the Convertible Note prior to maturity for an amount in cash equal to the principal amount of such Convertible Note plus accrued and unpaid interest to the redemption date.

Failure to redeem the Convertible Note would be an event of default entitling the noteholder(s) to accelerate the amounts outstanding under the Convertible Note.

If the Company is unable to repay or refinance such accelerated debt under the Convertible Note, the Company could become insolvent and seek to file for bankruptcy protection, which would have a material adverse effect on our business, financial condition and results of operations.

Finally, the National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because Class A Common Stock and warrants are listed on the Nasdaq, our Class A Common Stock and warrants are covered securities.

Although the states are preempted from regulating the sale of our securities for so long as they are covered securities, the federal statute allows states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.

Further, if we were no longer listed on the Nasdaq or other national securities exchange, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities.

The market price of Class A Common Stock and Warrants substantially declined following the Business Combination, and the trading price of Better Home & Finance’s securities may not recover for a prolonged period, or at all.

Although the Business Combination valued Better at a $6.9 billion pre-money equity valuation, the market values of the securities of Better Home & Finance, including Class A Common Stock and Warrants, following the Closing of the Business Combination declined significantly from the implied valuation of Better on the date the Merger Agreement was executed.

As described elsewhere in this Annual Report, since the execution of the Merger Agreement, there have been significant changes in the macroeconomic environment, particularly increased interest rates and a resultant decline in mortgage origination activity and home purchases, and our business, including the size of our work force and operations, our financial results and condition, and a corresponding increase in our future capital needs.

The market price of Class A Common Stock and Warrants has previously and in the future may continue to decline significantly.

The market price of Class A Common Stock has demonstrated significant weakness and fluctuates in response to various factors and events, including:

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• actual or anticipated fluctuations in our quarterly and annual results and those of other public companies in our industry;

• the failure of securities analysts to publish research about us, negative analyst reports regarding our securities or shortfalls in our results of operations compared to levels forecast by securities analysts (see “—Risks Related to Ownership of Common Stock and Better Home & Finance Operating as a Public Company—Reports published by analysts, including projections in those reports that differ from our actual results, could materially and adversely affect the price and trading volume of shares of Class A Common Stock.” );

• economic and other external factors, including the general state of the securities market.

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The trading price of Better Home & Finance’s securities may not recover for a prolonged period, or at all.

Vishal Garg, our CEO, controls over 20 percent of our voting power and is able to exert significant influence over the direction of our business, both as our CEO and as a significant stockholder, as well as through our commercial relationships with his various affiliates, which could materially and adversely affect our business, financial condition, results of operations, and prospects.

Vishal Garg, our CEO, owns shares of our Class B Common Stock that, as of March 10, 2025, entitled him to approximately 20% of the voting power of our outstanding common stock.

Garg’s voting power will increase over time as holders of our Class B Common Stock, which carries three votes per share, sell shares into the market as Class A Common Stock, which carries only one vote per share.

Assuming that all shares of Class B Common Stockholders, other than those beneficially owned by Mr.

Garg, convert into Class A Common Stock, we expect that Mr.

Garg would have approximately 34.9% of the voting power of our outstanding common stock.

Given our current corporate governance structure, Mr.

Garg would be able to exercise significant influence over the outcome of all matters submitted to our stockholders for approval, including the election, removal, and replacement of our directors and any merger, consolidation, or sale of all or substantially all of our assets.

our directors and leadership on an ongoing basis, notwithstanding unfavorable media coverage, challenging business conditions, potential conflicts with other affiliated entities, distraction from other pursuits, and personal litigation described below and elsewhere in this Annual Report.

Additionally, as our CEO Mr.

Garg has significant control over the day-to-day management and the implementation of our major strategic decisions, subject to authorization and oversight by the Board including our Executive Chairman, Harit Talwar.

As a board member and officer, Mr.

Garg owes a fiduciary duty to our stockholders and must act in good faith and in a manner reasonably believed to be in the best interests of stockholders.

However, he will still be entitled to vote the shares over which he has voting control, which may be in a manner that other stockholders do not support.

In addition, Better Home & Finance receives services from certain affiliates of Mr.

Garg, including:

• TheNumber, LLC, which is controlled and partially owned by Mr.

Garg and was co-founded by Mr.

Garg along with Nicholas Calamari, our Chief Administrative Officer and Senior Counsel, and provides data inputs and analytics on which our platform relies, lead generation and risk analysis services.

• Notable Finance, LLC (“Notable”), which is controlled by and partially owned by Mr.

Garg and other senior leadership of Better Home & Finance, including Nicholas Calamari, our Chief Administrative Officer and Senior Counsel, have various commercial arrangements with us and our affiliates, including (i) administration of the

Better Home Improvement Line of Credit, a closed-end, unsecured line of credit issued on a debit card to be used for home-related spending, (ii) providing a private label consumer lending program agreement and (iii) purchasing from Notable funded Home Improvement Line of Credit loans.

We also market the Better Home Improvement Line of Credit to our customers through special offers and rewards for customers and pay Notable an administrative fee per each Home Improvement Line of Credit loan originated.

• Various members of our management team and legal department previously had, presently have, and may in the future may have additional, ownership interests in, employment by and contractual obligations to other entities affiliated with 1/0 Capital, Mr.

Garg’s investment management firm, and Mr.

For example, Nicholas Calamari, our Chief Administrative Officer and Senior Counsel, maintains an ownership stake in 1/0 Capital, as well as a direct ownership interest in Notable and TheNumber.

Garg or our management team, which could in turn materially and adversely affect our business, financial condition and results of operations.

For more information, see “ Note 16, Related Party Transactions ,” to our consolidated financial statements included in this Annual Report.

This continued relationship exposes us to particular risks and uncertainties regarding Mr.

Garg’s control over our operations, both directly, as a stockholder and through various affiliates, which could materially and adversely affect our business, financial condition, results of operations, and prospects.maintains a position of significant influence over our governance and operations in his capacity as our CEO and our largest stockholder, as well as through various affiliates that provide services and technology to Better Home & Finance.

The existence of multiple classes of common stock may materially and adversely affect the value and liquidity of Class A Common Stock.

The multiple class structure of Common Stock has the effect of concentrating voting control with those stockholders who held Better stock prior to the Business Combination, including our CEO, our employees and their affiliates, and limiting the ability of holders of Class A Common Stock to influence corporate matters, which could adversely affect the trading price of Class A Common Stock.

Class B Common Stock has three votes per share, while Class A Common Stock has one vote per share.

Based on shares of Common Stock held as of March 13, 2024, entities affiliated with our CEO beneficially own approximately 10% of our outstanding Common Stock as a whole, but control approximately 18% of the voting power of our outstanding Common Stock.

As a result, our CEO has significant influence over our management and affairs and over all matters requiring stockholder approval, including election of directors and significant corporate transactions, such as a merger or other sale of the Company or our assets.

Future transfers by holders of shares of Class B Common Stock will generally result in those shares converting to shares of Class A Common Stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B Common Stock who retain their shares in the long term.

Certain permitted transfers, as specified in our amended and restated certificate of incorporation (“Amended and Restated Charter”), will not result in shares of Class B Common Stock automatically converting to shares of Class A Common Stock, including certain estate planning transfers.

If, for example, Mr.

Garg (or family trusts to which he were to transfer shares of Class B Common Stock) retains a significant portion of his holdings of Class B Common Stock for an extended period of time, he (or such trusts) could, in the future, control a substantial portion (but less than a majority) of the combined voting power of Class A Common Stock and Class B Common Stock.

As a Board member and executive officer of Better Home & Finance, Mr.

Garg owes a fiduciary duty to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders.

As a stockholder, Mr.

Garg is entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders generally.

Some stock index providers do not allow most newly public companies utilizing dual or multi-class capital structures to be included in their indices.

Our multiple class structure may result in a lower or more volatile market price of our Class A common stock or in adverse publicity or other adverse consequences.

For example, certain index providers have announced restrictions on including companies utilizing dual or multi-class capital structures in their indices.

Under such policies, our multiple class capital structure would make us ineligible for inclusion in those indices, and as a result, mutual funds, exchange-traded funds, and other investment vehicles that attempt to passively track these indices will not be investing in our stock.

In addition, we cannot assure you that other stock indices will not take similar actions.

Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and would make Class A Common Stock less attractive to other investors.

As a result, the trading price, volume, and liquidity of Class A Common Stock could be materially and adversely affected.

Reports published by analysts, including projections in those reports that differ from our actual results, could materially and adversely affect the price and trading volume of shares of Class A Common Stock.

Securities research analysts may establish and publish their own periodic projections for us.

These projections may vary widely and may not accurately predict the results we actually achieve.

Our share price may decline if our actual results do not match the projections of these securities research analysts.

Similarly, if one or more of the analysts who write reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business, our share price could decline.

If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, our share price or trading volume could decline.

If no analysts commence coverage of us, the market price and volume for shares of Class A Common Stock could be materially and adversely affected.

Any such exclusion from indices could result in a less active trading market for our Class A common stock..

In addition, several stockholder advisory firms have announced their opposition to the use of dual or multiple class structures.

As a result, the multiple class structure of our common stock may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure.

Any actions or publications by stockholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A common stock.

The difference in the voting rights of our Class A, Class B and Class C common stock could harm the value of our Class A common stock to the extent that any investor or potential future purchaser of our Class A common stock ascribes value to the right of holders of our Class B common stock to hold at all times 51% of our voting power.

The existence of multiple classes of common stock could also result in less liquidity for our Class A common stock than if there were only one class of our common stock.

We do not expect to pay any cash dividends for the foreseeable future.

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Our directors have limited experience in the oversight of a publicly traded company, and most members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies.

Our directors and management team may not successfully or effectively manage our transition to a public company, which will be subject to significant regulatory oversight and reporting obligations under federal securities laws and the continuous scrutiny of securities analysis and investors.

Our directors and management team may not successfully or effectively manage our transition to a public company, which will be subject to significant

regulatory oversight and reporting obligations under federal securities laws and the continuous scrutiny of securities analysis and investors.

Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the strategy and operation of Better Home & Finance.

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• require a super-majority vote of stockholders to amend some provisions described above.

We expect to incur increased costs and are subject to additional regulations and requirements as a public company.

We continue to incur increased costs and are subject to additional regulations and requirements as a public company.

As a public company, we are incurring and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company, including costs associated with public company reporting requirements.

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We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we intend to take advantage of exemptions from certain reporting requirements available to “emerging growth companies” under that Act, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 (relating to the effectiveness of our internal control over financial reporting), reduced disclosure obligations regarding executive compensation in our periodic reports and any proxy statements we may be required to file, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

In addition, Section 107 of the JOBS Act provides that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would apply to private companies.

Section 107 of the JOBS Act provides that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would apply to private companies.

Until we are no longer considered an “emerging growth company,” we are electing to delay such adoption of new or revised accounting standards and, as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies that are not “emerging growth companies.” Consequently, our financial statements may not be comparable to the financial statements of other public companies.

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If investors were to find our securities less attractive as a result of our election, we may have difficulty raising in this offering and future offerings and the market price of our securities may be more volatile.

Because Better became a public reporting company by means other than a traditional underwritten initial public offering, Better Home & Finance’s stockholders may face additional risks and uncertainties.

In a traditional underwritten initial public offering, underwriters may be subject to civil liability under Section 11 and 12 of the Securities Act of 1933, as amended (“Securities Act”), for any omissions or misstatements in the registration statement, unless such underwriters can establish a “due diligence” defense by conducting a reasonable investigation of the

disclosures in the registration statement.

Due diligence reviews typically include an independent investigation of the background of the company, any advisors and their respective affiliates, review of the offering documents and independent analysis of the business plan and any underlying financial assumptions.

Because Better became a public reporting company by means of consummating the Business Combination rather than by means of a traditional underwritten initial public offering, there was no independent third-party underwriter selling the shares of Better, and, accordingly, investors in Better Home & Finance did not have the benefit of an independent review and due diligence investigation of the type normally performed by an unaffiliated, independent underwriter in a public securities offering.

Although Aurora performed a due diligence review and investigation of Better in connection with the Business Combination, Aurora had different incentives and objectives in the Business Combination than an underwriter would in a traditional initial public offering, and therefore Aurora’s due diligence review and investigation should not be viewed as equivalent to the review and investigation that an underwriter would be expected to conduct.

The lack of an independent due diligence review and investigation increases the risk of an investment in Better Home & Finance because it may not have uncovered facts that would be important to a potential investor.

In addition, because Better Home & Finance did not become a public reporting company by means of a traditional underwritten initial public offering, security or industry analysts may not provide, or may be less likely to provide, coverage of Better Home & Finance.

Investment banks may also be less likely to agree to underwrite securities offerings on behalf of the combined company than they might if the combined company became a public reporting company by means of a traditional underwritten initial public offering, because they may be less familiar with the combined company as a result of more limited coverage by analysts and the media.

The failure to receive research coverage or support in the market for the Company’s Common Stock could have an adverse effect on the Company’s ability to develop a liquid market for Common Stock.

See “ —Risks Related to Ownership of Common Stock and Better Home & Finance Operating as a Public Company—Reports published by analysts, including projections in those reports that differ from our actual results, could materially and adversely affect the price and trading volume of shares of Class A Common Stock.

If analysts do not publish research about our business or if they publish inaccurate or unfavorable research, the price and trading volume of the Company’s securities could decline.

The trading market for the Company’s securities will depend in part on the research and reports that analysts publish about our business.

We will not have any control over these analysts, and the analysts who publish information about us may have relatively little experience with the Company or its industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.

If few or no securities or industry analysts cover us, if one or more of the analysts who cover us ceases coverage of us or fails to publish reports on us regularly, the trading price for the Company’s securities would be negatively impacted.

If one or more of the analysts who cover us downgrades the Company’s securities or publishes inaccurate or unfavorable research about our business, the price of the Class A Common Stock would likely decline.

Certain data and information in this Annual Report were obtained from third-party sources and were not independently verified by us.

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Moreover, the market values of the securities of Better Home & Finance substantially declined following the Business Combination and may not recover for a prolonged period, or at all.

See “—Risks Related to Ownership of Common Stock and Better Home & Finance Operating As a Public Company—The market price of Class A Common Stock and Warrants substantially declined following the Business Combination, and the trading price of Better Home & Finance’s securities may not recover for a prolonged period, or at all.”

See “—Risks Related to Ownership of Common Stock and Better Home & Finance Operating As a Public Company—The market price of Class A Common Stock and Warrants has previously and in the future may continue to decline significantly.”

Although we believe that these sources are reliable, we have not independently verified the data and information contained in the third-party publications and reports.

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The provisions of the Amended and Restated Charter requiring exclusive forum in the Court of Chancery of the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.

Better Home & Finance’s Amended and Restated Charter provides that, to the fullest extent permitted by law, and unless Better Home & Finance consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that such court does not have jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on Better Home & Finance’s behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of Better Home & Finance to Better Home & Finance or Better Home & Finance’s stockholders, (iii) any action arising pursuant to any provision of the General Corporation Law of the State of Delaware or the Amended and Restated Charter or the Bylaws (as either may be amended from time to time), and (iv) any action asserting a claim governed by the

internal affairs doctrine.

Notwithstanding the foregoing, the Amended and Restated Charter provides that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

4 unchanged sentences

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-K

Item 1A. Risk Factors