Better Home & Finance Holding Co 10-Q

Item 1. Financial Statements BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, (Amounts in thousands, except share and per share amounts) 2025 2024 Assets Cash and cash equivalents $ 110,565 $ 211,101 Restricted cash 25,197 24,416 Short-term investments 117,411 53,774 Mortgage loans held for sale, at fair value 413,031 399,241 Loans held for investment (net of allowance for credit losses of $ 3,000 and $ 1,667 as of March 31, 2025 and December 31, 2024, respectively) 207,185 111,477 Other receivables, net 28,697 17,549 Assets held for sale 10,704 10,411 Property and equipment, net 2,380 2,717 Right-of-use assets 5,512 1,387 Internal use software and other intangible assets, net 20,488 20,936 Goodwill 23,994 23,615 Derivative assets, at fair value 3,961 2,539 Prepaid expenses and other assets 35,867 33,894 Total Assets $ 1,004,992 $ 913,057 Liabilities and Stockholders’ (Deficit)/Equity Liabilities Warehouse lines of credit $ 235,956 $ 244,070 Convertible Note 521,449 519,749 Customer deposits 261,063 134,130 Liabilities held for sale 5,842 6,116 Accounts payable and accrued expenses (includes $ 78 and $ 74 payable to related parties as of March 31, 2025 and December 31, 2024, respectively 58,873 48,134 Escrow payable and other customer accounts 689 74 Warrant and equity related liabilities, at fair value 1,179 1,407 Lease liabilities 7,467 4,081 Other Liabilities 14,619 13,466 Total Liabilities 1,107,137 971,227 Commitments and contingencies (see Note 12) Stockholders’ (Deficit)/Equity Common stock $ 0.0001 par value; 66,000,000 shares authorized as of March 31, 2025 and December 31, 2024, and 15,188,035 and 15,168,795 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively 2 2 Notes receivable from stockholders ( 9,160 ) ( 9,158 ) Additional paid-in capital 1,867,649 1,863,288 Accumulated deficit ( 1,960,923 ) ( 1,910,366 ) Accumulated other comprehensive income/(loss) 287 ( 1,936 ) Total Stockholders’ (Deficit)/Equity ( 102,145 ) ( 58,170 ) Total Liabilities and Stockholders’ (Deficit)/Equity $ 1,004,992 $ 913,057 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Three Months Ended March 31, (Amounts in thousands, except share and per share amounts) 2025 2024 Revenues: Gain on loans, net $ 24,576 $ 15,652 Other revenue 4,030 2,817 Net interest income Interest income 10,445 8,636 Interest expense ( 6,498 ) ( 4,854 ) Net interest income 3,947 3,782 Total net revenues 32,553 22,251 Expenses: Compensation and benefits 46,668 38,073 General and administrative 11,630 14,047 Technology 7,182 5,458 Marketing and advertising 8,687 4,554 Loan origination expense 2,503 2,577 Depreciation and amortization 3,975 9,074 Other expenses/(Income) 2,320 ( 183 ) Total Expenses 82,965 73,600 Loss before income tax expense ( 50,412 ) ( 51,349 ) Income tax expense/(benefit) 145 143 Net Loss ( 50,557 ) ( 51,492 ) Other comprehensive loss: Foreign currency translation adjustment, net of tax 2,223 ( 313 ) Comprehensive loss $ ( 48,334 ) $ ( 51,805 ) Per share data: Loss per share attributable to common stockholders: Basic $ ( 3.33 ) $ ( 3.41 ) Diluted $ ( 3.33 ) $ ( 3.41 ) Weighted average common shares outstanding — basic 15,166,729 15,079,871 Weighted average common shares outstanding — diluted 15,166,729 15,079,871 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) For the Three Months Ended March 31, 2025 Common Stock (Amounts in thousands, except share and per share amounts) Issued and Outstanding Par Value Notes Receivables from Stockholders Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income/(Loss) Total Stockholders' Equity (Deficit) Balance - December 31, 2024 15,168,795 2 ( 9,158 ) 1,863,288 ( 1,910,366 ) ( 1,936 ) ( 58,170 ) Stock-based compensation — — — 4,443 — — 4,443 Tax withholding upon vesting of restricted stock units ( 9,679 ) — — ( 87 ) — — ( 87 ) Share issued for vested restricted stock units 28,919 — — — — — — Vesting of common stock issued via notes receivable from stockholders — — ( 2 ) 5 — — 3 Net loss — — — — ( 50,557 ) — ( 50,557 ) Other comprehensive income— foreign currency translation adjustment, net of tax — — — — — 2,223 2,223 Balance - March 31, 2025 15,188,035 $ 2 $ ( 9,160 ) $ 1,867,649 $ ( 1,960,923 ) $ 287 $ ( 102,145 ) The accompanying notes are an integral part of these unaudited consolidated financial statements. 3 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) For the Three Months Ended March 31, 2024 Common Stock (Amounts in thousands, except share and per share amounts) Issued and Outstanding 1 Par Value 1 Notes Receivables from Stockholders Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders' Equity (Deficit) Balance - December 31, 2023 15,035,467 $ 2 $ ( 10,111 ) $ 1,838,499 $ ( 1,704,076 ) $ ( 1,714 ) $ 122,600 Adjustment of transaction costs related to the Business Combination — — — ( 2,372 ) — — ( 2,372 ) Issuance of common stock for options exercised 2,418 — — 19 — — 19 Cancellation of common stock ( 13,479 ) — — — — — — Stock-based compensation — — — 9,143 — — 9,143 Tax withholding upon vesting of restricted stock units — — — ( 1,288 ) — — ( 1,288 ) Share issued for vested restricted stock units 87,168 — — 1 — — 1 Vesting of common stock issued via notes receivable from stockholders — — ( 865 ) 857 — — ( 8 ) Net loss — — — — ( 51,492 ) — ( 51,492 ) Other comprehensive loss— foreign currency translation adjustment, net of tax — — — — — ( 313 ) ( 313 ) Balance - March 31, 2024 15,111,574 2 ( 10,976 ) 1,844,859 ( 1,755,568 ) ( 2,027 ) 76,290 1. Periods have been adjusted to reflect the 1-for-50 reverse stock split on August 16, 2024. See Note 1 Organization and Nature of the Business - Reverse Stock Split, for additional information. The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW Three Months Ended March 31, (Amounts in thousands) 2025 2024 Cash Flows from Operating Activities: Net loss $ ( 50,557 ) $ ( 51,492 ) Adjustments to reconcile net loss to net cash (used in)/provided by operating activities: Depreciation of property and equipment 415 1,029 Impairments 139 — Amortization of internal use software and other intangible assets 3,560 8,045 Gain on sale of loans, net ( 21,278 ) ( 9,821 ) Non-cash interest and amortization of debt issuance costs and discounts 1,700 1,217 Change in fair value of warrants ( 228 ) ( 823 ) Stock-based compensation 4,033 8,760 Recovery of loan repurchase reserve ( 2,127 ) ( 3,563 ) Provision for credit losses 1,244 — Change in fair value of derivatives ( 1,051 ) ( 410 ) Change in fair value of mortgage loans held for sale ( 5,343 ) 829 Change in operating lease of right-of-use assets ( 4,125 ) 1,148 Originations of mortgage loans held for sale ( 875,348 ) ( 650,505 ) Proceeds from sale of mortgage loans held for sale 887,694 662,965 Change in operating assets and liabilities: Other receivables, net ( 11,539 ) 5,404 Prepaid expenses and other assets ( 2,021 ) 519 Operating lease liabilities 3,386 ( 2,003 ) Accounts payable and accrued expenses 10,439 ( 14,534 ) Escrow payable and other customer accounts 662 384 Other liabilities 3,158 45 Net cash used in operating activities ( 57,187 ) ( 42,806 ) Cash Flows from Investing Activities: Purchase of property and equipment ( 202 ) ( 473 ) Capitalization of internal use software ( 2,339 ) ( 386 ) Maturities of short-term investments 85,325 22,638 Purchase of short-term investments ( 148,026 ) ( 55,165 ) Origination of loans held for investment ( 94,029 ) — Principal payments received on loans held for investment 428 — Net cash used in investing activities ( 158,843 ) ( 33,386 ) Cash Flows from Financing Activities: Principal payments on convertible notes — ( 1,103 ) Net repayments on warehouse lines of credit ( 8,114 ) ( 57 ) Net increase (decrease) in customer deposits 126,933 ( 8 ) Proceeds from exercise of stock options 2 20 Net cash provided by/(used in) financing activities 118,821 ( 1,148 ) Effects of currency translation on cash, cash equivalents, and restricted cash ( 2,835 ) ( 123 ) Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash, including cash classified within assets held for sale ( 100,044 ) ( 77,463 ) Less: net change in cash, cash equivalents and restricted cash classified within assets held for sale 289 — Cash, cash equivalents, and restricted cash—Beginning of period 235,517 528,066 Cash, cash equivalents, and restricted cash—End of period $ 135,762 $ 450,603 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total of the same such amounts shown on the previous page. Three Months Ended March 31, (Amounts in thousands) 2025 2024 Cash and cash equivalents, end of period $ 110,565 $ 424,528 Restricted cash, end of period 25,197 26,075 Total cash, cash equivalents and restricted cash, end of period $ 135,762 $ 450,603 Supplemental Disclosure of Cash Flow Information: Interest paid $ 2,793 $ 2,550 Income taxes paid/(refunded) $ ( 680 ) $ 247 Non-Cash Investing and Financing Activities: Capitalization of stock-based compensation related to internal use software $ 410 $ 383 Vesting of common stock issued via notes receivable from stockholders $ 2 $ 865 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Nature of the Business Better Home & Finance Holding Company, formerly known as Aurora Acquisition Corp. (“Aurora”), together with its subsidiaries (collectively, the “Company”), provides a comprehensive set of homeownership offerings in the United States while expanding in the United Kingdom (the “U.K.”). The Company’s offerings include mortgage loans, real estate agent services, title and homeowner’s insurance, and other homeownership offerings. The Company leverages Tinman, its proprietary technology platform, to optimize the mortgage process from the initial application, to the integration of a suite of additional homeownership offerings, to the sale of loans to a network of loan purchasers. Mortgage loans originated within the United States are through the Company’s wholly-owned subsidiary Better Mortgage Corporation (“BMC”). BMC is an approved Title II Single Family Program Lender with the Department of Housing and Urban Development’s (“HUD”) Federal Housing Administration (“FHA”), and is an approved seller and servicer with the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FMCC”). The Company has expanded into the U.K. and offers a multitude of financial products and services to consumers via regulated entities obtained through acquisitions. Within the fourth quarter of 2024, the Company decided to dispose of certain operating units in the U.K., see Note 8 for further details. On August 22, 2023 (the “Closing Date”), the Company consummated the previously announced Business Combination (the “Business Combination”), pursuant to the terms of the Agreement and Plan of Merger, dated as of May 10, 2021 (as amended from time to time, the “Merger Agreement”), by and among Aurora, Better Holdco, Inc. (“Pre-Business Combination Better”), and Aurora Merger Sub I, Inc., formerly a wholly owned subsidiary of Aurora (“Merger Sub”). On the Closing Date, Merger Sub merged with and into Pre-Business Combination Better, with Pre-Business Combination Better surviving the merger (the “First Merger”) and Pre-Business Combination Better merged with and into Aurora, with Aurora surviving the merger and changing its name to “Better Home & Finance Holding Company” (referred to as “Better Home & Finance”) (such merger, the “Second Merger,” and together with the First Merger, the “Business Combination” and the completion thereof, the “Closing”). Unless otherwise indicated, references to “Better,” “Better Home & Finance,” the “Company,” “we,” “us,” “our” and other similar terms refer to (i) Pre-Business Combination Better and its consolidated subsidiaries prior to the Closing and (ii) Better Home & Finance and its consolidated subsidiaries following the Closing. The Company’s Class A common stock and warrants are listed on the Nasdaq Capital Market (the “Nasdaq”) under the ticker symbols “BETR” and “BETRW,” respectively. Reverse Stock Split— On Friday, August 16, 2024, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation, effecting a 1-for-50 reverse stock split of the Company’s common stock (the “Reverse Stock Split”) for the primary purpose of increasing the per share trading price of the Company’s Class A common stock to enable the Company to regain compliance with the minimum bid price requirement for continued listing on The Nasdaq. The Company’s Class A common stock began trading on a split-adjusted basis on the Nasdaq upon the market open on Monday, August 19, 2024. Effective August 16, 2024, as a result of the Reverse Stock Split, every 50 shares of the Company’s issued and outstanding common stock were converted into one issued and outstanding share of Class A common stock, Class B common stock and Class C common stock, as applicable, without any change to the par value per share, the voting rights of the common stock, any stockholder’s percentage interest in the Company’s equity or any other aspect of the common stock. The accompanying financial statements have been retroactively recast to reflect this reverse split stock resulting in a reclassification to historic financials between common stock and additional paid-in-capital. 2. Summary of Significant Accounting Policies Basis of Presentation — The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of its financial position and its results of operations, changes in convertible preferred stock and stockholders’ equity (deficit) and cash flows. The results of operations and other information for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2025. The unaudited 7 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS condensed consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2024. Consolidation — The accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates — The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the fair value of mortgage loans held for sale, the fair value of derivative assets and liabilities, which includes interest rate lock commitments and forward sale commitments, the determination of a valuation allowance on the Company’s deferred tax assets, capitalization of internally developed software and its associated useful life, determination of fair value of the stock options at grant date, the fair value of acquired intangible assets and goodwill, the provision for loan repurchase reserves, the allowance for credit losses, and the incremental borrowing rate used in determining lease liabilities, and the fair value of warrant and equity related liabilities. Short-term investments — Short term investments consist of fixed income securities, typically U.S. and U.K. government treasury securities and U.S. and U.K. government agency securities with maturities ranging from 91 days to one year. Management determines the appropriate classification of short-term investments at the time of purchase. Short-term investments reported as held-to-maturity are those investments that the Company has both the positive intent and ability to hold to maturity and are stated at amortized cost on the condensed consolidated balance sheets. All of the Company’s short term investments are classified as held to maturity. The Company has not recognized any impairments on these investments to date and any unrealized gains or losses on these investments are immaterial. Allowance for Credit Losses – Held to Maturity (“HTM”) Short-term Investments — The Company’s HTM Short-term investments are required to utilize the Current Expected Credit Loss (“CECL”) approach to estimate expected credit losses. Management measures expected credit losses on short-term investments on a collective basis by major security types that share similar risk characteristics, such as financial asset type and collateral type adjusted for current conditions and reasonable and supportable forecasts. Management classifies the short term investments portfolio by security types, such as U.S. and U.K. government agency securities. The U.S. and U.K. government treasury securities and U.S. and U.K. government agency securities are issued by U.S. and U.K. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the respective governments as to timely repayment of principal and interest, are highly rated by major rating agencies, and have a long history of no credit losses. Therefore, credit losses for these securities were immaterial as the Company does not currently expect any material credit losses on these short-term investments. Mortgage Loans Held for Sale, at Fair Value — The Company sells its loans held for sale (“LHFS”) to loan purchasers. LHFS primarily consists of mortgage loans as well as home equity line of credit and closed-end second lien loans (together defined as “HELOC”), originated for sale by BMC. The Company elects the fair value option, in accordance with Accounting Standard Codification (“ASC”) 825 – Financial Instruments (“ASC 825”), for all LHFS with changes in fair value recorded in gain on loans, net in the consolidated statements of operations and comprehensive loss. Management believes that the election of the fair value option for LHFS improves financial reporting by presenting the most relevant market indication of LHFS. The fair value of LHFS is based on market prices and yields at period end. The Company accounts for the gains or losses resulting from sales of loans based on the guidance of ASC 860-20 – Sales of Financial Assets (“ASC 860”). The Company generally sells all of its loans servicing released. For interim servicing, the Company engaged a third-party sub-servicer to collect monthly payments and perform associated services. The Company issues interest rate lock commitments (“IRLC”) to originate mortgage loans and the fair value of the IRLC, adjusted for the probability that a given IRLC will close and fund, is recognized within gain on loans, net. Subsequent changes in the fair value of the IRLC are measured at each reporting period within gain on loans, net until the loan is funded. When the loan is funded, the IRLC is derecognized and the LHFS is recognized based on the fair value of the loan. The LHFS is subsequently remeasured at fair value at each reporting period and the changes in fair value are 8 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS included within gain on loans, net until the loan is sold on the secondary market. When the loan is sold on the secondary market, the LHFS is derecognized and the gain/(loss) is included within gain on loans, net based on the cash settlement. LHFS are considered sold when the Company surrenders control over the loans. Control is considered to have been surrendered when the transferred loans have been isolated from the Company, are beyond the reach of the Company and its creditors, and the loan purchaser obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred loans. The Company typically considers the above criteria to have been met upon receipt of sales proceeds from the loan purchaser. Loans Held for Investment — The Company originates, primarily through its U.K. operations, loans held for investment, for which management has the intent and ability to hold for the foreseeable future or until maturity or payoff and are reported at amortized cost, which is the principal amount outstanding, net of cumulative charge-offs, unamortized net deferred loan origination fees and costs and unamortized premiums or discounts on purchased loans. The allowance for credit losses is a valuation account that is deducted from the loans held for investment amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged-off against the allowance when management believes the loan balance is deemed to be uncollectible. Management’s estimation of expected credit losses is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts, including expected defaults and prepayments. See Note 5 for additional details. Fair Value Measurements — Assets and liabilities recorded at fair value on a recurring basis on the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The price used to measure fair value is not adjusted for transaction costs. The principal market is the market in which the Company would sell or transfer the asset with the greatest volume and level of activity for the asset. In determining the principal market for an asset or liability, it is assumed that the Company has access to the market as of the measurement date. If no market for the asset exists, or if the Company does not have access to the principal market, a hypothetical market is used. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: Level 1 —Unadjusted quoted market prices in active markets for identical assets or liabilities; Level 2 —Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value on a recurring basis include LHFS, derivative assets and liabilities, including IRLCs and forward sale commitments, and warrant and equity related liabilities. Common stock warrants are measured at fair value at issuance only and are classified as equity on the condensed consolidated balance sheets. When developing fair value measurements, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. However, for certain instruments, the Company must utilize unobservable inputs in determining fair value due to the lack of observable inputs in the market, which requires greater judgment in measuring fair value. In instances where there is limited or no observable market data, fair value measurements for assets and liabilities are based primarily upon the Company’s own estimates, and the measurements reflect information and assumptions that management believes a market participant would use in pricing the asset or liability. Assets and Liabilities Held for Sale — Assets and liabilities to be disposed of by sale are reclassified into assets held for sale and liabilities held for sale on the condensed consolidated balance sheets. The Company presents the assets and liabilities of a disposal group as held for sale upon meeting all of the following criteria: • Management, having the authority to approve the action, commits to a plan to sell the asset (disposal group). 9 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS • The asset (disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (disposal groups). • An active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated. • The sale of the asset (disposal group) is probable, and transfer of the asset (disposal group) is expected to qualify for recognition as a completed sale, within one year. • The asset (disposal group) is being actively marketed for sale at a price that is reasonable in relation to its current fair value. • Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The determination as to whether the sale of the disposal group is probable may include significant judgments from management related to the estimated timing of the closing of a future sales transaction. Assets held for sale are measured at the lower of their carrying amount or fair value less cost to sell and are not depreciated or amortized. See Note 8 for further detail on assets and liabilities held for sale. Warehouse Lines of Credit — Warehouse lines of credit represent the outstanding balance of the Company’s warehouse borrowings collateralized by mortgage loans held for sale or related borrowings collateralized by restricted cash. Generally, warehouse lines of credit are used as interim, short-term financing which bears interest at a fixed margin over an index rate, such as the Secured Overnight Financing Rate (“SOFR”). The outstanding balance of the Company’s warehouse lines of credit will fluctuate based on its lending volume. The advances received under the warehouse lines of credit are based upon a percentage of the fair value or par value of the mortgage loans collateralizing the advance, depending upon the type of mortgage loan. Should the fair value of the pledged mortgage loans decline, the warehouse provider may require the Company to provide additional cash collateral or mortgage loans to maintain the required collateral level under the relevant warehouse line. The Company did not incur any significant issuance costs related to its warehouse lines of credit. Convertible Note — As part of the Closing of the Business Combination, the Company issued to SB Northstar LP, an affiliate of SoftBank Group Corp., a senior subordinated convertible note (the “Convertible Note”). Upon initial issuance, the Convertible Note is evaluated for redemption and conversion features that could result in embedded derivatives that require bifurcation from the notes. Upon initial issuance, any embedded derivatives are measured at fair value. Convertible Note proceeds are allocated between the carrying value of the note and the fair value of embedded derivatives on the initial issuance date. Any portion of proceeds allocated to embedded derivatives are treated as reductions in, or discounts to, the carrying value of the Convertible Note on the issuance date. Embedded derivatives are adjusted to fair value at each reporting period, with the change in fair value included within interest expense on the consolidated statements of operations and comprehensive income (loss). See Note 10 for further details on the Convertible Note. Income Taxes — Income taxes are calculated in accordance with ASC 740, Accounting for Income Taxes . An estimated annual effective tax rate is applied to year-to-date income (loss). At the end of each interim period, the estimated effective tax rate expected to be applicable for the full year is calculated. This method differs from that described in the Company’s income taxes policy footnote in the audited consolidated financial statements and related notes thereto for the year ended December 31, 2024, which describes the Company’s annual significant income tax accounting policy and related methodology. Revenue Recognition — The Company generates revenue from the following streams: 1) Gain on loans, net includes revenues generated from the Company’s loan production process. See Note 3. The components of gain on loans, net are as follows: i. Gain on sale of loans, net —This represents the premium the Company receives in excess of the loan principal amount and certain fees charged by loan purchasers upon sale of loans into the secondary market. Gain on sale of loans, net includes unrealized changes in the fair value of LHFS, which are recognized on a loan by loan basis as part of current period earnings until the loan is sold on the secondary market. The fair value of LHFS is measured based on observable market data. This also includes activity for loans originated on behalf of the integrated partnership that are subsequently purchased by the Company as well as the portion of the sale 10 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS proceeds to be received by the integrated partner. The portion of the sale proceeds that is to be allocated to the integrated partner is accrued as a reduction of gain on sale of loans, net when the loan is initially purchased by the Company from the integrated partner. Gain on sale of loans, net also includes the changes in fair value of IRLCs and forward sale commitments. IRLCs include the fair value upon issuance with subsequent changes in the fair value recorded in each reporting period until the loan is sold on the secondary market. Fair value of forward sale commitments hedging IRLCs and LHFS are measured based on quoted prices for similar assets. ii. Integrated partnership fees —Includes fees that the Company receives for originating loans on behalf of an integrated partnership, which are recognized as revenue upon the integrated partner’s funding of the loan. iii. Loan repurchase reserve recovery/(provision) —In connection with the sale of loans on the secondary market, the Company makes customary representations and warranties to the relevant loan purchasers about various characteristics of each loan, such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local laws. In the event of a breach of its representations and warranties, the Company may be required to repurchase the loan with the identified defects. The provision for loan repurchase reserve, represents the charge for these potential losses. 2) Other revenue consists of revenue from the Company’s additional offerings such as real estate services, insurance services, and international lending revenue which is recognized based on ASC 606, Revenue from Contracts with Customers . ASC 606 outlines a single comprehensive model in accounting for revenue arising from contracts with customers. The core principle, involving a five-step process, of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For real estate services, the Company generates revenues from fees related to real estate agent services, mainly from cooperative brokerage fees from the Company’s network of third-party real estate agents, which assist customers in the purchase or sale of a home. The Company recognizes revenues from real estate services upon completion of the performance obligation which is when the mortgage transaction closes. Performance obligations for real estate agent services are typically completed 40 to 60 days after the commencement of the home search process. Payment for these services is typically settled in cash as part of closing costs to the borrower upon closing of the mortgage transaction. Also included in real estate services are settlement services which are revenue from fees charged for services such as title search fees, wire fees, policy and document preparation, and other mortgage settlement services. The Company recognizes revenues from settlement services upon completion of the performance obligation which is when the mortgage transaction closes. Insurance revenue primarily consists of fees earned on homeowners insurance policies and title insurance. The Company generates revenues from agent fees on homeowners insurance policies obtained by customers through the Company’s marketplace of third-party insurance carriers. The Company offers title insurance as an agent and works with third-party providers that underwrite the title insurance policies. For title insurance, the Company recognizes revenue from fees upon the completion of the performance obligation which is when the mortgage transaction closes. For homeowners insurance and title insurance, the Company is the agent in the transactions as the Company does not control the ability to direct the fulfillment of the service, is not primarily responsible for fulfilling the performance of the service, and does not assume the risk in a claim against a policy. For international lending revenue, the Company generates revenue primarily from broker fees earned in the U.K. The Company recognizes international lending revenue upon completion of the performance obligation which is when the mortgage provider approves the mortgage. 3) Net interest income includes interest income from LHFS calculated based on the note rate of the respective loan, interest income from short-term investments, and interest income on loans held for investment. Interest expense includes interest expense on warehouse lines of credit, interest expense on customer deposits, as well as interest expense on the Convertible Note. 11 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Compensation and Benefits — Compensation and benefits include salaries, wages, and incentive pay as well as stock-based compensation, employee health benefits, 401(k) plan benefits, and social security and unemployment taxes. Stock-based compensation includes expenses associated with restricted stock unit grants, performance stock unit grants, and stock option grants, under the Company’s stock plans. Compensation expense for the stock-based payments is based on the fair value of the awards on the grant date. Compensation and benefits expenses are expensed as incurred with the exception of stock-based compensation, which is recognized in a straight-line basis over the requisite service period. General and Administrative Expenses — General and administrative expenses include rent and occupancy expenses, insurance, and external legal, tax and accounting services. General and administrative expenses are expensed as incurred. Technology Expenses — Technology expenses consist of direct costs related to vendors engaged in product management, design, development, and testing of the Company’s websites and products. Technology expenses are expensed as incurred. Marketing and Advertising Expenses — Marketing and advertising expenses consist of direct costs related to customer acquisition expenses, brand costs, and paid marketing. For customer acquisition expenses, the Company primarily generates loan origination leads for which the Company incurs “pay-per-click” expenses. Marketing and advertising expenses are expensed as incurred. Loan Origination Expenses — Loan origination expenses consist of costs directly attributable to the production of loans such as appraisal fees, processing expenses, underwriting, closing fees, and servicing costs. These expenses are expensed as incurred. Other Expenses/(Income) — Other expenses consist of direct costs related to other non-mortgage homeownership activities, including settlement service expenses, lead generation expenses, expenses incurred in relation to our international lending activities, restructuring and impairment expenses, and gains and losses from equity related liabilities. Settlement service expenses consist of fees for transactional services performed by third-party providers for borrowers while lead generation expenses consist of fees for services related to real estate agents. Other expenses are expensed as incurred. Segments — The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities as a single operating and reportable segment at the consolidated level. Accordingly, the CODM uses consolidated net income to measure segment profit or loss, allocate resources and assess performance. Further, the CODM reviews and utilizes functional expenses (general and administrative, marketing and advertising, loan origination expense, and others as presented in the consolidated statements of operations and comprehensive loss) at the consolidated level to manage the Company’s operations. Other segment items included in consolidated net income are net interest income and income tax expense (benefit), which are reflected in the consolidated statements of operations and comprehensive loss. Recently Issued Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, and in January 2025, ASU 2025-01, Income Statement - Comprehensive Income - Expense Disaggregation Disclosures (subtopic 220-40), which requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The ASUs are effective on a prospective basis, with the option for retrospective application, for annual periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted for annual financial statements that have not yet been issued. The Company is in the process of assessing the impact the adoption of this guidance will have on the Company’s financial statement disclosures. 3. Revenue Revenue — The Company disaggregates revenue based on the following revenue streams: 12 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Gain on loans, net consisted of the following : Three Months Ended March 31, (Amounts in thousands) 2025 2024 Gain on sale of loans, net $ 21,278 $ 9,821 Integrated partnership fees 1,171 2,268 Loan repurchase reserve recovery/(provision) 2,127 3,563 Total gain on loans, net $ 24,576 $ 15,652 Other revenue consisted of the following: Three Months Ended March 31, (Amounts in thousands) 2025 2024 International lending revenue $ 1,528 $ 1,108 Insurance services 673 639 Real estate services 947 347 Other revenue 882 723 Total other revenue $ 4,030 $ 2,817 Net interest income consisted of the following: Three Months Ended March 31, (Amounts in thousands) 2025 2024 Mortgage interest income $ 6,437 $ 2,964 Interest income on loans held for investment 1,878 82 Interest income from investments 2,130 5,590 Warehouse interest expense ( 2,788 ) ( 2,087 ) Interest expense on customer deposits ( 2,005 ) ( 103 ) Other interest expense ( 1,705 ) ( 2,664 ) Total net interest income/(loss) $ 3,947 $ 3,782 4. Mortgage Loans Held for Sale and Warehouse Lines of Credit The Company has the following outstanding warehouse lines of credit: (Amounts in thousands) Maturity Facility Size March 31, 2025 December 31, 2024 Funding Facility 1 (1) September 30, 2025 $ 100,000 $ 21,000 $ 60,747 Funding Facility 2 (2) March 6, 2026 150,000 123,849 74,472 Funding Facility 3 (3) August 1, 2025 175,000 91,107 108,851 Total warehouse lines of credit $ 425,000 $ 235,956 $ 244,070 __________________ (1) Interest charged under the facility is at the 30-day term SOFR plus 2.125 % . Cash collateral deposit of $ 15.0 million is maintained and included in restricted cash. (2) Interest charged under the facility is at the 30-day term SOFR plus 2.10 % - 2.25 %. Cash collateral deposit of $ 3.8 million is maintained and included in restricted cash. (3) Interest charged under the facility is at the 30-day term SOFR plus 1.75 % - 3.75 %. There is no cash collateral deposit maintained as of March 31, 2025. 13 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The unpaid principal amounts of the Company’s LHFS are also pledged as collateral under the relevant warehouse funding facilities. The Company’s LHFS are summarized below by those pledged as collateral and those fully funded by the Company: (Amounts in thousands) March 31, 2025 December 31, 2024 Funding Facility 1 $ 21,175 $ 61,341 Funding Facility 2 130,431 83,562 Funding Facility 3 100,051 123,081 Total LHFS pledged as collateral 251,657 267,984 Company-funded LHFS 20,602 10,056 Company-funded HELOC 135,427 118,879 Total LHFS 407,686 396,919 Fair value adjustment 5,345 2,322 Total LHFS at fair value $ 413,031 $ 399,241 Average days loans held for sale, other than Company-funded LHFS and Company-funded HELOC, for the three months ended March 31, 2025 and 2024 were approximately 21 days and 20 days, respectively. This is defined as the average days between funding and sale for loans funded during each period. As of March 31, 2025 and December 31, 2024, the unpaid principal balance of loans that were either 90 days past due or non-performing was $ 0.8 million and $ 1.4 million, respectively. For the three months ended March 31, 2025 and 2024, the weighted average interest rate for the warehouse lines of credit was 6.46 % and 7.39 %, respectively. The warehouse lines of credit contain certain restrictive covenants that require the Company to maintain certain minimum net worth, liquid assets, current ratios, liquidity ratios, and leverage ratios. In addition, these warehouse lines also require the Company to maintain compensating cash balances which aggregated to $ 18.8 million as of March 31, 2025 and December 31, 2024 and are included in restricted cash on the accompanying condensed consolidated balance sheets. The Company was in compliance with all financial covenants under the warehouse lines as of March 31, 2025. 5. Loans Held for Investment The majority of the Company’s Loans Held for Investment portfolio consists of property - buy to let loans, which is the purchase of property for the purpose of renting to a tenant, which makes up 99.4 % and 98.6 % of the total loan portfolio as of March 31, 2025 and December 31, 2024, respectively. The Company’s Loans Held for Investment portfolio is summarized as follows: (Amounts in thousands) March 31, 2025 December 31, 2024 Property - Buy to Let $ 208,998 $ 111,630 Other 1,187 1,514 Allowance for credit losses $ ( 3,000 ) $ ( 1,667 ) Total Loans Held for Investment, net $ 207,185 $ 111,477 Accrued interest receivable on loans receivable totaled $ 0.6 million and $ 0.4 million, respectively, as of March 31, 2025 and December 31, 2024 and is included in other receivables, net on the condensed consolidated balance sheets. The Company elected the practical expedient to exclude the applicable accrued interest receivable on loans receivable from the disclosed amortized cost basis. The Company concluded that it has a substantive non-accrual policy which allows for the timely reversal of accrued interest should an asset be placed on non-accrual; accordingly, there was no allowance for credit losses for accrued interest receivable on loans receivable as of March 31, 2025. When writing off uncollectible accrued interest receivables on its loans held for investment portfolio, the Company considers 90 days to be a timely manner. 14 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Uncollectible amounts of accrued interest receivable are charged off by reversing interest income. The Company had no charge offs of uncollectible accrued interest on its outstanding loans held for investment during the during the three months ended March 31, 2025 and 2024. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. As of both March 31, 2025 and December 31, 2024 there were no loans held for investment past due. The Company considers loans for which the repayment is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, or where foreclosure is probable, to be collateral dependent. As of March 31, 2025 and December 31, 2024, there were no loans secured by any asset type for which formal foreclosure proceedings are in process. Loans are placed on non-accrual status and the accrual of interest is discontinued if principal or interest payments become 90 days past due and/or management deems the collectability of the principal and/or interest to be in question. Loans to a customer whose financial condition has deteriorated are considered for non-accrual status whether or not the loan is 90 days or more past due. Generally, payments received on non-accrual loans are recorded as principal reductions. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. As of March 31, 2025 and December 31, 2024, there were no loans that were placed on non-accrual status. During the three months ended March 31, 2025 and 2024, there were no modifications for loans to borrowers experiencing financial difficulty. Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt, including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes all loans with the exception of homogeneous loans, or loans that are evaluated together in pools of similar loans (i.e., home mortgage loans, home equity lines of credit, overdraft loans, express business loans, and automobile loans). This analysis is performed at least on a quarterly basis. Homogeneous loans are not risk rated and credit risk is analyzed largely by the contractual maturity and payment status of the loan. The Company utilizes maturity bands to assess the probability of credit losses within the portfolio. The three main bands are as follows: 0-20 months, 21-40 months, and over 40 months. The following table presents amortized cost for outstanding loans, by class and year of origination/renewal, as of March 31, 2025 and December 31, 2024. The tables below present loans by credit quality indicator and vintage year: March 31, 2025 (Amounts in thousands) 2025 2024 2023 2022 2021 Prior Total Property - Buy to Let 0-20 Months $ — $ — $ — $ — $ — $ — $ — 21-40 Months — — — — — — — Over 40 Months 94,022 114,214 762 — — — 208,998 Total $ 94,022 $ 114,214 $ 762 $ — $ — $ — $ 208,998 Other 0-20 Months $ — $ 1 $ 28 $ 212 $ 368 $ 22 $ 631 21-40 Months — — 34 522 — — 556 Over 40 Months — — — — — — — Total $ — $ 1 $ 62 $ 734 $ 368 $ 22 $ 1,187 Total $ 94,022 $ 114,215 $ 824 $ 734 $ 368 $ 22 $ 210,185 15 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS December 31, 2024 (Amounts in thousands) 2024 2023 2022 2021 2020 Prior Total Property - Buy to Let 0-20 Months $ — $ — $ — $ — $ — $ — $ — 21-40 Months — — — — — — — Over 40 Months 110,891 739 — — — — 111,630 Total $ 110,891 $ 739 $ — $ — $ — $ — $ 111,630 Other 0-20 Months $ — $ 34 $ 255 $ 435 $ 77 $ 2 $ 803 21-40 Months — 13 630 68 — — 711 Over 40 Months — — — — — — — Total $ — $ 47 $ 885 $ 503 $ 77 $ 2 $ 1,514 Total $ 110,891 $ 786 $ 885 $ 503 $ 77 $ 2 $ 113,144 6. Goodwill and Internal Use Software and Other Intangible Assets, Net Changes in the carrying amount of goodwill, net consisted of the following: Three Months Ended March 31, (Amounts in thousands) 2025 2024 Balance at beginning of period $ 23,615 $ 32,390 Effect of foreign currency exchange rate changes 379 ( 181 ) Balance at end of period $ 23,994 $ 32,209 No impairment of goodwill was recognized for the three months ended March 31, 2025 and 2024. Internal use software and other intangible assets, net consisted of the following: As of March 31, 2025 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.3 $ 151,101 $ ( 133,017 ) $ 18,084 Intellectual property and other 6.0 895 ( 343 ) 552 Total Intangible assets with finite lives, net 151,996 ( 133,360 ) 18,636 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 32 — 32 Total Internal use software and other intangible assets, net $ 153,848 $ ( 133,360 ) $ 20,488 16 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2024 (Amounts in thousands, except useful lives) Weighted Average Useful Lives (in years) Gross Carrying Value Accumulated Amortization Net Carrying Value Intangible assets with finite lives Internal use software and website development 3.0 $ 147,994 $ ( 129,487 ) $ 18,507 Intellectual property and other 6.0 869 ( 291 ) 578 Total Intangible assets with finite lives, net 148,863 ( 129,778 ) 19,085 Intangible assets with indefinite lives Domain name 1,820 — 1,820 Licenses and other 31 — 31 Total Internal use software and other intangible assets, net $ 150,714 $ ( 129,778 ) $ 20,936 The Company capitalized $ 2.7 million and $ 0.4 million in internal use software and website development costs during the three months ended March 31, 2025 and 2024, respectively. Included in capitalized internal use software and website development costs are $ 0.4 million and $ 0.4 million of stock-based compensation costs for the three months ended March 31, 2025 and 2024, respectively. Amortization expense totaled $ 3.6 million and $ 8.0 million during the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025 and 2024, no impairment was recognized relating to intangible assets. 7. Prepaid Expenses and Other Assets Prepaid expenses and other assets consisted of the following: As of March 31, As of December 31, (Amounts in thousands) 2025 2024 Prepaid expenses $ 16,654 $ 17,165 Tax receivables 4,688 5,484 Security Deposits 11,308 11,245 Prefunded loans in escrow 3,217 — Total prepaid expenses and other assets $ 35,867 $ 33,894 The prefunded loans in escrow consist of loans that were funded in the current period but closed in the subsequent period. Due to the timing of the closing of these loans, they are not mortgage loans held for sale in the current period. 8. Assets and Liabilities Held for Sale During the fourth quarter of 2024, management enacted a plan to sell several entities in the U.K. which are being actively marketed, are available for sale in their current respective conditions, and management expects to complete the respective sales within the year and all criteria included in Note 2 have been met. The following table represents summarized balance sheet information of assets and liabilities held for sale: 17 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands) March 31, 2025 December 31, 2024 Cash and cash equivalents $ 3,477 $ 3,814 Restricted cash 3,916 3,868 Mortgage loans held for sale, at fair value 1,907 1,721 Other receivables, net 1,632 1,244 Write down of assets to fair value less cost to sell ( 4,346 ) ( 4,220 ) Property and equipment, net 25 35 Internal use software and other intangible assets, net 2,267 2,203 Goodwill 1,145 1,112 Prepaid expenses and other assets 681 634 Total assets held for sale $ 10,704 $ 10,411 Accounts payable and accrued expenses 1,471 1,684 Escrow payable and other customer accounts 3,916 3,868 Other liabilities 455 564 Total liabilities held for sale $ 5,842 $ 6,116 9. Customer Deposits Customer Deposits —In relation to the Company’s banking activities tied to the Company’s acquisition of Birmingham Bank in the U.K., the Company offers individual savings accounts and other depository products with differing maturities and interest rates to its customers. The balance of customer deposits as of March 31, 2025 and December 31, 2024 was $ 261.1 million and $ 134.1 million, respectively, on the condensed consolidated balance sheets. The following table presents average balances and weighted average rates paid on deposits for the periods indicated: Three Months Ended March 31, 2025 2024 (Amounts in thousands) Average Balance Average Rate Paid Average Balance Average Rate Paid Notice $ 45,456 3.71 % $ 2,406 2.85 % Term 160,481 4.72 % 5,432 3.77 % Savings 516 1.53 % 4,260 2.28 % Total Deposits $ 206,453 3.32 % $ 12,098 2.97 % 18 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following table presents maturities of customer deposits: (Amounts in thousands) As of March 31, 2025 Demand deposits $ 98,450 Maturing In: 2025 10,785 2026 30,295 2027 63,360 2028 17,520 2029 28,616 Thereafter 12,037 Total $ 261,063 Interest Expense on deposits is recorded in interest expense in the condensed consolidated statements of operations and comprehensive loss for the periods indicated as follows: Three Months Ended March 31, (Amounts in thousands) 2025 2024 Notice $ 482 $ 24 Term 1,619 52 Savings — 29 Total Interest Expense $ 2,101 $ 105 Deposits are for U.K. banking clients and are protected up to £ 85 thousand ( $ 109.9 thousand ) per eligible person by the Financial Services Compensation Scheme in the U.K. Of the total customer deposits as of March 31, 2025, $ 58.3 million were over the applicable insured amount. 10. Corporate Line of Credit and Convertible Note Pre-Closing Bridge Notes —In connection with the Closing of the Business Combination, the Pre-Closing Bridge Notes held by SB Northstar in an aggregate principal amount of $ 650.0 million automatically converted into Class C common stock at a conversion price of $ 500.00 per share, adjusted by the 1-for-50 reverse stock split. The Pre-Closing Bridge Notes held by Novator Capital Sponsor Ltd. (the “Sponsor”) in an aggregate principal amount of $ 100.0 million were exchanged for $ 0.8 million shares of Class A common stock. Convertible Note —In connection with the Closing of the Business Combination, the Company issued to SB Northstar LP, a related party, the Convertible Note in the aggregate principal amount of $ 528.6 million, $ 550.0 million less approximately $ 21.4 million released to the Company at the Closing from Aurora’s trust account, pursuant to an Indenture, dated as of August 22, 2023 (the “Indenture”). The Convertible Note bears 1 % interest per annum and matures on August 22, 2028, unless earlier converted or redeemed. Per the Indenture, the Company may elect to pay all or any portion of interest in kind by issuing to the holder of such note an additional note or in cash. The Convertible Note is convertible, at the option of SB Northstar, into shares of the Company’s Class A common stock, with an initial conversion rate per $1,000 principal amount of Convertible Note equal to (a) $1,000 divided by (b) a dollar amount equal to 115 % of the First Anniversary VWAP (as defined in the Indenture), subject to adjustments as described therein. The Indenture provides that the First Anniversary VWAP may be no less than $ 400.00 and no greater than $ 600.00 , adjusted by the 1-for-50 reverse stock split, subject to adjustments as described therein. The Convertible Note may be redeemed at the option of the Company at a redemption price of 115 % of par pl us accrued interest in cash, at any time on or before the 30 th trading day prior to the maturity date of the Convertible Note if the last reported sale price of the Class A common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days during the 30 trading day period ending on, and including, the trading day immediately preceding the d ate of notice of optional redemption. The Convertible Note is redeemable prior to maturity in the event of a fundamental change under the Indenture, such as the removal of the Company’s Class A common stock from the Nasdaq. In this event, the Company 19 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS would be required to redeem the Convertible Note for an amount in cash equal to the principal balance plus accrued and unpaid interest on the redemption date. As of March 31, 2025 and December 31, 2024, the carrying amount of the Convertible Note was $ 521.4 million and $ 519.7 million on the condensed consolidated balance sheets, respectively. For the three months ended March 31, 2025 and March 31, 2024, the Company recorded a total of $ 1.7 million and $ 2.7 million, respectively, of interest expense related to the Convertible Note. Interest expense from the Convertible Note is included in interest expense within the condensed consolidated statements of operations and comprehensive loss. In February 2024, the Company made a cash payment in the amount of $ 2.5 million, which consisted of $ 1.1 million towards the principal and $ 1.4 million of interest from January 1, 2024 through February 15, 2024. For the period February 16, 2024 to March 31, 2025, the Company has elected to pay interest in kind on the Convertible Note, which is calculated at 1 % per annum and accrued at the fair value of the additional note issued. Refer to Note 20 for additional information. 11. Related Party Transactions The Company has entered into a number of commercial agreements with related parties, which management believes provide the Company with products or services that are beneficial to its commercial objectives. Often these products and services have been tailored to the Company’s specific needs or are part of new pilot programs, both for the Company and the counterparty, for which there are not clear alternative vendors offering comparable services to compare pricing with. It is reasonable to assume that none of these related party commercial agreements were structured at arm’s length and therefore may be beneficial to the counterparty. TheNumber —The Company originally entered into a data analytics services agreement in August 2016 with TheNumber, LLC (“TheNumber”), an entity affiliated with both Vishal Garg, the Chief Executive Officer of the Company, and 1/0 Real Estate. In September 2021, the Company and TheNumber entered into a technology integration and license agreement. The listed services provided by TheNumber are lead generation, market rate analysis, lead growth analysis, property listing analysis, automated valuation models, and financial risk analysis. Both parties agreed to jointly develop all aspects of this program, and the agreement provides for the utilization of TheNumber employees by the Company. In January 2024, the agreement was extended for an additional year. The services provided by TheNumber are not integral to the Company’s technology platform and amounts incurred are not material to the Company. In connection with these agreements, the Company paid expenses of $ 0.3 million and $ 0.1 million for the three months ended March 31, 2025 and 2024 respectively, which are included within general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss and had an immaterial payable as of March 31, 2025 and December 31, 2024, respectively, within accounts payable and accrued expenses on the condensed consolidated balance sheets. Notable —In previous years, the Company or subsidiaries of the Company, entered into several agreements (herein referred to as the “Notable Agreements”) with Notable Finance LLC (“Notable”), an entity in which Vishal Garg and 1/0 Real Estate (an entity affiliated with Vishal Garg), collectively hold a majority ownership interest. The Notable Agreements included products such as a consumer lending program, a non-revolving personal line of credit, and other financial products which were offered to borrowers of the Company. The Notable Agreements also included the ability for the Company to purchase up to $ 20.0 million of unsecured home improvement loans underwritten and originated by Notable for the Company’s customers. During 2024, the Company decided to cease offering the products and services provided via the Notable Agreements. As of March 31, 2025 and December 31, 2024, the Company had $ 3.8 million and $ 4.2 million of unsecured home improvement loans purchased from Notable, which are included within mortgage loans held for sale, at fair value on the condensed consolidated balance sheets. Notable will continue to provide servicing for the loans purchased from Notable that remain on the Company’s balance sheet. 12. Commitments and Contingencies Litigation —The Company, among other things, engages in mortgage lending, title and settlement services, and other financial technology services. The Company operates in a highly regulated industry and may be subject to various legal and administrative proceedings concerning matters that arise in the normal and ordinary course of business, including inquiries, 20 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS complaints, audits, examinations, investigations, employee labor disputes, and potential enforcement actions from regulatory agencies. While the ultimate outcome of these matters cannot be predicted with certainty due to inherent uncertainties in litigation, management accrues for losses when they are probable to occur and such losses are reasonably estimable, and discloses pending litigation if the Company believes a possibility exists that the litigation will have a material effect on its financial results. Legal costs expected to be incurred are accounted for as they are incurred. The Company is currently a party to pending legal claims and proceedings regarding employee related labor disputes. 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. 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 and other similar types of legal matters, the Company included an estimated liability of $ 8.3 million as of both March 31, 2025 and December 31, 2024, which is included in accounts payable and accrued expenses on the condensed consolidated balance sheets. No additional expense was accrued for both the three months ended March 31, 2025 and 2024. Refer to Note 20 for additional information. Regulatory Matters —In the third quarter of 2021, following third-party audits of samples of loans produced during the fiscal years 2018, 2019, and 2021, the Company became aware of certain TILA-RESPA Integrated Disclosure (“TRID”) defects in the loan production process that resulted in the final closing costs disclosed in the closing disclosure, in some instances, being greater than those disclosed in the loan estimate. Some of these defects were outside applicable tolerances under the TRID rule, which resulted in potential overcharges to consumers. As of March 31, 2025 and December 31, 2024, the Company included an estimated liability of $ 5.6 million and $ 6.6 million, respectively, within accounts payable and accrued expenses on the condensed consolidated balance sheets. For the three months ended March 31, 2025, the Company recorded a reduction in the liability for these potential TRID defects of $ 0.9 million and is included within loan origination expense in the condensed consolidated statement of operations and comprehensive loss. During the three months ended March 31, 2025, the Company had relief of the liability due to payments to customers in the amount of $ 0.1 million. For the three months ended March 31, 2024, the Company recorded an additional accrual for these potential TRID defects of $ 0.1 million and is included within loan origination expense in the consolidated statement of operations and comprehensive loss. This accrual is the Company’s best estimate of potential exposure on the larger population of loans based on the results obtained by the audited sample. The accrued amounts are for estimated refunds potentially due to consumers for TRID tolerance errors for loans produced with the identified defects. The Company is continuing to remediate TRID tolerance defects as necessary. Loan Commitments —The Company enters into IRLCs to fund mortgage loans, at specified interest rates and within a specified period of time, with potential borrowers who have applied for a loan and meet certain credit and underwriting criteria. As of March 31, 2025 and December 31, 2024, the Company had outstanding commitments to fund mortgage loans in notional amounts of approximately $ 219.9 million and $ 129.9 million, respectively. The IRLCs derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2025 and December 31, 2024, respectively, on the condensed consolidated balance sheets. See Note 15. Forward Sale Commitments —In the ordinary course of business, the Company enters into contracts to sell existing LHFS or loans committed but yet to be funded into the secondary market at specified future dates. As of March 31, 2025 and December 31, 2024, the Company had outstanding forward sales commitment contracts of notional amounts of approximately $ 207.0 million and $ 158.0 million, respectively. The forward sales commitments derived from those notional amounts are recorded within derivative assets and liabilities, at fair value as of March 31, 2025 and December 31, 2024, respectively, on the condensed consolidated balance sheets. See Note 15. Concentrations —See below for areas considered to be concentrations of credit risk for the Company: Significant loan purchasers are those which represent more than 10% of the Company’s loan volume. During the three months ended March 31, 2025, the Company had three loan purchasers that accounted for 33 %, 15 % and 14 % of loans sold by the Company. During the three months ended March 31, 2024, the Company had three loan purchasers that accounted for 53 %, 18 %, and 17 % of loans sold by the Company. 21 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Concentrations of credit risk associated with the LHFS carried at fair value are limited due to the large number of borrowers and their dispersion across many geographic areas throughout the United States. As of March 31, 2025 , the company originated 11 % of its LHFS secured by properties in California. As of December 31, 2024 , the Company originated 10 % of its LHFS secured by properties in California. The Company maintains cash and cash equivalent balances at various financial institutions. Cash accounts at each bank are insured by the Federal Deposit Insurance Corporation for amounts up to $0.25 million. As of March 31, 2025 and December 31, 2024, the majority of the Company’s cash and cash equivalent balances are in excess of the insured limits at various financial institutions. Escrow Payable and Other Customer Accounts —In accordance with its lender obligations, the Company maintains a separate escrow bank account to hold borrower funds pending future disbursement. The Company administers escrow deposits representing undisbursed amounts received for payment of property taxes, insurance and principal, and interest on mortgage loans held for sale. The Company also administers customer deposits in relation to other non-mortgage products and services that the Company offers. These funds are shown as restricted cash and there is a corresponding escrow payable on the consolidated balance sheet, as they are being held on behalf of the borrower or customer. The balance in these accounts as of March 31, 2025 and December 31, 2024 was $ 0.7 million and $ 0.1 million, respectively, and are included within escrow payable and other customer accounts on the condensed consolidated balance sheets. 13. Risks and Uncertainties In the normal course of business, companies in the mortgage lending industry encounter certain economic and regulatory risks. Economic risks include credit risk and interest rate risk, in either a rising or declining interest rate environment. Credit risk is the risk of default that may result from the borrowers’ inability or unwillingness to make contractually required payments during the period in which loans are being held for sale by the Company. Interest Rate Risk —The Company is subject to interest rate risk in a rising interest rate environment, as the Company may experience a decrease in loan production, as well as decreases in the fair value of LHFS, loan applications in process with locked-in rates, and commitments to originate loans, which may negatively impact the Company’s operations. To preserve the value of such fixed-rate loans or loan applications in process with locked-in rates, agreements are executed for best effort or mandatory loan sales to be settled at future dates with fixed prices. These loan sales take the form of short-term forward sales of mortgage-backed securities and commitments to sell loans to loan purchasers. Alternatively, in a declining interest rate environment, customers may withdraw their loan applications that include locked-in rates with the Company. Additionally, when interest rates decline, interest income received from LHFS will decrease. The Company uses an interest rate hedging program to manage these risks. Through this program, mortgage-backed securities are purchased and sold forward. For all counterparties with open positions as of March 31, 2025, in the event that the Company does not deliver into the forward-delivery commitments, they can be settled on a net basis. Net settlements entail paying or receiving cash based upon the change in market value of the existing instrument. The Company currently uses forward sales of mortgage-backed securities, interest rate commitments from borrowers, and mandatory and/or best-efforts forward commitments to sell loans to loan purchasers to protect the Company from interest rate fluctuations. These short-term instruments, which do not require any payments to be paid to the counterparty in connection with the execution of the commitments, are generally executed simultaneously. Credit Risk —The Company’s hedging program is not designated as formal hedging from an accounting standpoint, contains an element of risk because the counterparties to its mortgage securities transactions may be unable to meet their obligations. While the Company does not anticipate nonperformance by any counterparty, it is exposed to potential credit losses in the event the counterparty fails to perform. The Company’s exposure to credit risk in the event of default by the counterparty is the difference between the contract and the current market price. The Company minimizes its credit risk exposure by limiting the counterparties to well-established banks and securities dealers who meet established credit and capital guidelines. Loan Repurchase Reserve —The Company sells loans to loan purchasers without recourse. As such, the loan purchasers have assumed the risk of loss or default by the borrower. However, the Company is usually required by these loan purchasers to make certain standard representations and warranties relating to the loan for up to three years post sale. 22 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS To the extent that the Company does not comply with such representations, or there are early payment defaults, the Company may be required to repurchase the loans or indemnify these loan purchasers for losses. In addition, if loans pay-off within a specified time frame the Company may be required to refund a portion of the sales proceeds to the loan purchasers. The Company repurchased $ 2.0 million ( 6 l oans) and $ 2.0 million ( 6 l oans) in unpaid principal balance of loans during the three months ended March 31, 2025 and 2024, respectively, related to its loan repurchase obligations. The Company’s loan repurchase reserve is included within other liabilities on the condensed consolidated balance sheets. The (recovery of)/provision for the loan repurchase reserve is included within gain on loans, net on the consolidated statements of operations and comprehensive loss. The following presents the activity of the Company’s loan repurchase reserve: Three Months Ended March 31, (Amounts in thousands) 2025 2024 Loan repurchase reserve at beginning of period $ 7,523 $ 19,472 Recovery ( 2,127 ) ( 3,563 ) Charge-offs ( 351 ) ( 468 ) Loan repurchase reserve at end of period $ 5,045 $ 15,441 Borrowing Capacity —The Company funds the majority of mortgage loans on a short-term basis through committed and uncommitted warehouse lines as well as from operations for any amounts not advanced by warehouse lenders, see Note 4. As a result, the Company’s ability to fund current operations depends on its ability to secure these types of short-term financings. If the Company’s principal lenders decided to terminate or not to renew any of the warehouse lines with the Company, the loss of borrowing capacity could be detrimental to the Company’s consolidated financial statements unless the Company found a suitable alternative source. 14. Net Loss Per Share The computation of net loss per share and weighted average shares of the Company's common stock outstanding during the periods presented is as follows: Three Months Ended March 31, (Amounts in thousands, except for share and per share amounts) 2025 2024 Basic net loss per share: Net loss $ ( 50,557 ) $ ( 51,492 ) Shares used in computation: Weighted average common shares outstanding (1) 15,166,729 15,079,871 Weighted-average effect of dilutive securities: Assumed exercise of stock options — — Assumed exercise of Public & Private Warrants — — Diluted weighted-average common shares outstanding 15,166,729 15,079,871 Earnings (loss) per share attributable to common stockholders: Basic $ ( 3.33 ) $ ( 3.41 ) Diluted $ ( 3.33 ) $ ( 3.41 ) 1. Period ended March 31, 2024 has been adjusted to reflect the 1-for-50 reverse stock split on August 16, 2024. See Note 1 Organization and Nature of the Business - Reverse Stock Split, for additional information. Basic and diluted loss per share are the same for each class of common stock (i.e., Class A, Class B and Class C) because they are entitled to the same dividend rights. Basic and diluted loss per share are presented together as the amounts for basic and diluted loss per share are the same (i.e., the Company’s other equity-linked instruments outstanding are anti-dilutive for the periods presented). The Company's potentially dilutive securities, which include stock options, RSUs, warrants to purchase shares of common stock, and Sponsor locked-up shares, have been excluded from the computation of diluted net loss per share, as the effect would be anti-dilutive. The Company excluded the following securities, presented based on amounts outstanding 23 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated as including them would have had an anti-dilutive effect: Three Months Ended March 31, (Amounts in thousands) 2025 2024 (2) RSUs and Options to purchase common stock (1) 1,442 991 Public Warrants (1)(3) 6,075 6,075 Private Warrants (1)(3) 3,733 3,733 Sponsor locked-up shares (1) 14 14 Total 11,264 10,813 __________________ (1) Securities have an antidilutive effect under the treasury stock method. (2) Period ended March 31, 2025 has been adjusted to reflect the 1-for-50 reverse stock split on August 16, 2024. See Note 1 Organization and Nature of the Business - Reverse Stock Split, for additional information. (3) Public and Private warrants are unadjusted by the Reverse Stock Split as a holder must exercise 50 warrants to receive one share of common stock . 15. Fair Value Measurements The Company’s financial instruments measured at fair value on a recurring basis are summarized below: March 31, 2025 (Amounts in thousands) Level 1 Level 2 Level 3 Total Mortgage loans held for sale, at fair value $ — $ 413,031 $ — $ 413,031 Derivative assets, at fair value (1) — — 3,961 3,961 Total Assets $ — $ 413,031 $ 3,961 $ 416,992 Derivative liabilities, at fair value (1) —included within other liabilities $ — $ 344 $ 113 $ 457 Warrants and equity related liabilities, at fair value $ 587 $ 592 $ — $ 1,179 Total Liabilities $ 587 $ 936 $ 113 $ 1,636 December 31, 2024 (Amounts in thousands) Level 1 Level 2 Level 3 Total Mortgage loans held for sale, at fair value $ — $ 399,241 $ — $ 399,241 Derivative assets, at fair value (1) — 1,231 1,308 2,539 Total Assets $ — $ 400,472 $ 1,308 $ 401,780 Derivative liabilities, at fair value (1) —included within other liabilities $ — $ — $ 86 $ 86 Warrants and equity related liabilities, at fair value 729 678 — 1,407 Total Liabilities $ 729 $ 678 $ 86 $ 1,493 __________________ (1) As of March 31, 2025, derivative assets represent IRLCs, and liabilities represent both IRLCs and forward sale commitments. As of December 31, 2024, derivative assets represent forward sale commitments and IRLCs, and liabilities represent IRLCs. (2) Fair value is based on the intrinsic value of the Company’s underlying stock price at each balance sheet date and includes certain assumptions with regard to volatility. Specific valuation techniques and inputs used in determining the fair value of each significant class of assets and liabilities are as follows: Mortgage Loans Held for Sale —The Company originates certain LHFS to be sold to loan purchasers and elected to carry these loans at fair value in accordance with ASC 825. The fair value is primarily based on the price obtained for other mortgage loans with similar characteristics. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and receipt of principal payments associated with the relevant LHFS. 24 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Derivative Assets and Liabilities —The Company uses derivatives to manage various financial risks. The fair values of derivative instruments are determined based on quoted prices for similar assets and liabilities, dealer quotes, and internal pricing models that are primarily sensitive to market observable data. The Company utilizes IRLCs and forward sale commitments. The fair value of IRLCs, which are related to mortgage loan commitments, is based on quoted market prices, adjusted by the pull-through factor, and includes the value attributable to the net servicing fee. The Company evaluated the significance and unobservable nature of the pull-through factor and determined that the classification of IRLCs should be Level 3 as of March 31, 2025 and December 31, 2024. Significant changes in the pull-through factor of the IRLCs, in isolation, could result in significant changes in the IRLCs’ fair value measurement. The value of IRLCs also rises and falls with changes in interest rates; for example, entering into interest rate lock commitments at low interest rates followed by an increase in interest rates in the market, will decrease the value of IRLC. The Company had purchases/issuances of approximately $ 8.0 million and $ 2.6 million of IRLCs during the three months ended March 31, 2025 and 2024, respectively. The number of days from the date of the IRLC to expiration of the rate lock commitment outstanding as of March 31, 2025 was approximately 47 days on average. The Company attempts to match the maturity date of the IRLCs with the forward commitments. Derivatives are presented in the condensed consolidated balance sheets under derivative assets, at fair value and derivative liabilities, at fair value. During the three months ended March 31, 2025, the Company recognized $ 2.6 million of gains and $ 2.5 million of losses related to changes in fair value of IRLCs and forward sale commitments, respectively. During the three months ended March 31, 2024, the Company recognized no gains or losses and $ 2.5 million of gains related to changes in the fair value of IRLCs and forward sale commitments, respectively. Gains and losses related to changes in the fair value of IRLCs and forward sale commitments are included in gain on loans, net within the condensed consolidated statements of operations and comprehensive loss. Unrealized activity related to changes in the fair value of forward sale commitments were $ 2.6 million of losses and $ 3.8 million of gains, included in the $ 2.5 million of losses and $ 2.5 million of gains, during the three months ended March 31, 2025 and 2024, respectively. The notional and fair value of derivative financial instruments not designated as hedging instruments were as follows: (Amounts in thousands) Notional Value Derivative Asset Derivative Liability Balance as of March 31, 2025 IRLCs $ 219,915 $ 3,961 $ 113 Forward commitments $ 207,000 — 344 Total $ 3,961 $ 457 Balance as of December 31, 2024 IRLCs $ 129,900 $ 1,308 $ 86 Forward commitments $ 158,000 1,231 — Total $ 2,539 $ 86 Warrant and equity related liabilities— The warrant liability consists of Warrants and certain shares issued to the Sponsor, a related party, that are subject to transfer restrictions contingent on the price of Class A common stock exceeding certain thresholds (the "Sponsor-Locked-Up Shares"). The warrants consist of the Company's publicly traded warrants ("Public Warrants") and private warrants to acquire shares of Aurora that have been converted into warrants to acquire shares of Class A common stock ("Private Warrants"). The Public Warrants trade on the Nasdaq under the ticker symbol “BETRW” and as such is considered a Level 1 input from an active market to derive the value. The Private Warrants and Sponsor-Locked up Shares, although not publicly traded on an active market, use inputs from the publicly traded Public Warrants and the Company’s publicly traded Common Stock, respectively, and are further calibrated using unobservable inputs representing Level 2 measurements within the fair value hierarchy. 25 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS As of March 31, 2025 and December 31, 2024, Level 3 instruments include IRLCs, bifurcated derivative and convertible preferred stock warrants. The following table presents the rollforward of Level 3 IRLCs: Three Months Ended March 31, (Amounts in thousands) 2025 2024 Balance at beginning of period $ 1,222 $ 1,640 Change in fair value of IRLCs 2,626 35 Balance at end of period $ 3,848 $ 1,675 Counterparty agreements for forward sale commitments contain master netting agreements, which contain a legal right to offset amounts due to and from the same counterparty and can be settled on a net basis. The table below presents gross amounts of recognized assets and liabilities subject to master netting agreements. (Amounts in thousands) Gross Amount of Recognized Assets Gross Amount of Recognized Liabilities Net Amounts Presented in the Consolidated Balance Sheet Offsetting of Forward Commitments - Assets Balance as of: March 31, 2025: $ — $ — $ — December 31, 2024 $ 1,249 $ ( 18 ) $ 1,231 Offsetting of Forward Commitments - Liabilities Balance as of: March 31, 2025: $ ( 344 ) $ — $ ( 344 ) December 31, 2024 $ — $ — $ — Significant Unobservable Inputs — The following table presents quantitative information about the significant unobservable inputs used in the recurring fair value measurements categorized within Level 3 of the fair value hierarchy: March 31, 2025 (Amounts in dollars, except percentages) Range Weighted Average Level 3 Financial Instruments: IRLCs Pull-through factor 0.33 % - 100.00 % 73.6 % December 31, 2024 (Amounts in dollars, except percentages) Range Weighted Average Level 3 Financial Instruments: IRLCs Pull-through factor 0.45 % - 100.00 % 74.8 % U.S. GAAP requires disclosure of fair value information about financial instruments, whether recognized or not recognized in the condensed consolidated financial statements, for which it is practical to estimate the fair value. In cases where quoted market prices are not available, fair values are based upon the estimation of discount rates to estimated future cash flows using market yields or other valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimates of fair value in both inactive and orderly markets. Accordingly, fair values are not necessarily indicative of the amount the Company could realize on disposition of the financial instruments in a current market exchange. The use of market assumptions or estimation methodologies could have a material effect on the estimated fair value amounts. 26 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The estimated fair value of the Company’s cash and cash equivalents, restricted cash, warehouse lines of credit, and escrow funds approximates their carrying values as these financial instruments are highly liquid or short-term in nature. The following table presents the carrying amounts and estimated fair value of financial instruments that are not recorded at fair value on a recurring or non-recurring basis: March 31, 2025 December 31, 2024 (Amounts in thousands) Fair Value Level Carrying Amount Fair Value Carrying Amount Fair Value Short-term investments Level 1 $ 117,411 $ 117,726 $ 53,774 $ 53,791 Loans held for investment Level 3 $ 210,185 $ 210,391 $ 113,144 $ 113,348 Convertible Note Level 3 $ 521,449 $ 356,657 $ 519,749 $ 371,160 In determining the fair value of the Convertible Note and loans held for investment, management uses factors that are material to the valuation process, including but not limited to, risks, prospects, and economic and market conditions, among other factors. As a number of assumptions and estimates were involved that are largely unobservable, Convertible Note, and loans held for investment are classified as Level 3 inputs within the fair value hierarchy. 16. Income Taxes On a consolidated basis, the Company recorded total income tax expense (benefit) of $ 0.1 million and $ 0.1 million for the three months ended March 31, 2025 and 2024, respectively. The Company’s quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including the ability to accurately project the Company’s pre-tax income or loss for the year and the mix of earnings among various tax jurisdictions. The year-to-date effective tax rate, after discrete items, of ( 0.28 )% for the three months ended March 31, 2025, changed from ( 0.28 )% for the three months ended March 31, 2024, as the Company is forecasting reduction in losses for 2025. The income tax expense for the three months ended March 31, 2025 primarily relates to the pre-tax income projections in certain foreign jurisdictions where the Company files standalone returns. The income tax expense for the three months ended March 31, 2024 relates to the pre-tax income projections and dividend income withholding tax paid in certain foreign jurisdictions where the Company files standalone returns. As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred income tax assets. The Company is in a three-year cumulative loss position as of March 31, 2025. Further, due to losses being estimated in the future, management continues to believe it is more likely than not that the benefit of the deferred income tax assets will not be realized. In recognition of this risk, the Company continues to provide a full valuation allowance on deferred income tax assets. 17. Stockholders' Equity On the Closing Date, the Company consummated the Business Combination pursuant to the terms of the Merger Agreement. The Company’s Class A common stock and Public Warrants currently trade on the Nasdaq, under the ticker symbols “BETR” and “BETRW”, respectively. Each outstanding share of Pre-Business Combination Better common stock was exchanged for approximately 3.06 shares of the Company’s Class A or Class B common stock. Private and Public Warrants— As of March 31, 2025 and December 31, 2024, the Company had a total of $ 1.1 million and $ 1.3 million, in respect of Private Warrants and Public Warrants, respectively, included as warrant and equity related liabilities within the condensed consolidated balance sheets. The change in fair value of Warrants for the three months ended March 31, 2025 and 2024, was a gain of $ 0.2 million and a gain of $ 0.6 million, respectively, and is included in other expenses within the condensed consolidated statements of operations and comprehensive loss. Sponsor Locked-up Shares— As of March 31, 2025 and December 31, 2024, the Company had a total of $ 0.1 million and $ 0.1 million, respectively, in respect of Sponsor Locked-up Share liabilities which are included within warrant and equity liabilities in the condensed consolidated balance sheets. The change in fair value of Sponsor Locked-up Shares for the three months ended March 31, 2025 and 2024, was an immaterial loss and a gain of $ 0.2 million, respectively, and was included in other expenses within the condensed consolidated statements of operations and comprehensive loss. 27 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Notes Receivable from Stockholders —The Company, previously at times, entered into promissory note agreements with certain employees for the purpose of financing the exercise of the Company’s stock options. These employees had the ability to use the promissory notes to exercise stock options that have not yet been vested by the respective employees. Interest is compounded and accrued based on any unpaid principal balance and is due upon the earliest of maturity, 120 days after an employee leaves the Company, the date the employee sells shares acquired through the promissory note agreement without prior written consent of the Company, or the day prior to the date that any change in the employee’s status would cause the loan to be a prohibited extension or maintenance of credit under Section 402 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”). The Company no longer enters into promissory note agreements for the purpose of financing the exercise of the Company’s stock options and no longer allows for the early exercise of stock options. As of both March 31, 2025 and December 31, 2024 the Company had a total of $ 16.0 million of outstanding promissory notes. Of the notes outstanding as of both March 31, 2025 and December 31, 2024 $ 9.2 million were issued for the exercise of stock options vested and are recorded as a component of stockholders’ equity within the condensed consolidated balance sheets. The balance as of March 31, 2025 does not include any promissory notes due from directors and officers of the Company. Of the notes outstanding as of both March 31, 2025 and December 31, 2024 $ 6.8 million were issued for the early exercise of stock options not yet vested. Notes issued for the early exercise of stock options not yet vested are not reflected within stockholders’ equity on the condensed consolidated balance sheets as they relate to unvested share awards and therefore are considered non-substantive exercises. As the unvested share awards vest and are exercised in conjunction with the notes, they are recognized in the statement of equity within vesting of common stock issued via notes receivable from stockholders. The notes range in maturity from May 2025 to January 2026 and include interest rates ranging from 0.5 % to 2.5 % per annum. 18. Stock-Based Compensation Stock-Based Compensation Expense —Stock-based compensation expense is included within compensation and benefits in the condensed consolidated statements of operations and comprehensive loss. The Company recognized stock-based compensation expense as follows: Three Months Ended March 31, (Amounts in thousands) 2025 2024 Stock-based compensation expense 4,033 8,760 Stock-based compensation expense excludes $ 0.4 million and $ 0.4 million of stock-based compensation expense for the three months ended March 31, 2025 and 2024, which was capitalized (see Note 6). 19. Regulatory Requirements The Company is subject to various local, state, and federal regulations related to its loan production by the various states it operates in, as well as federal agencies such as the Consumer Financial Protection Bureau, HUD, and the FHA and may be subject to the requirements of the agencies to which it sells loans, such as FNMA and FMCC. As a result, the Company may become involved in requests for information, periodic reviews, investigations, and proceedings by such various federal, state, and local regulatory bodies and agencies. The Company is required to meet certain minimum net worth, minimum capital ratio and minimum liquidity requirements, including those established by HUD, FMCC and FNMA. As of March 31, 2025, the Company was in compliance with all necessary requirements. Additionally, the Company may be subject to other financial requirements established by government-sponsored enterprises (“GSEs”), which include a limit for a decline in net worth and quarterly profitability requirements. In 2023, the Company failed to meet the additional financial requirements due to the Company’s decline in profitability and decline in net worth. The decline in net worth and decline in profitability permit GSEs to declare a breach of the Company’s contract. 28 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The Company has implemented additional financial requirements and remains in compliance with all applicable obligations as of March 31, 2025. 20. Subsequent Events The Company evaluated subsequent events from the date of the condensed consolidated balance sheets of March 31, 2025 through the date of the release of financial statements, and has determined that, there have been no subsequent events that require recognition or disclosure in the condensed consolidated financial statements, except as described below: Legal Settlement —Subsequent to March 31, 2025, the court approved a $ 1.4 million settlement regarding a subset of the Company’s employee labor disputes as disclosed in Note 12. During May 2025, the Company funded the $ 1.4 million settlement to the Settlement Administrator. Note Exchange Agreement —On April 12, 2025, the Company entered into a privately negotiated Exchange Agreement (the “Note Exchange Agreement”) with SB Northstar LP (the “Investor”), pursuant to which the Company and the Investor agreed to exchange (the “Exchange”) all of the $ 532.5 million total aggregate principal amount outstanding of the Company’s existing 1.00 % Convertible Notes due 2028 (the “Existing Notes”) held by the Investor for (i) $ 155.0 million in aggregate principal amount of new 6.00 % Senior Secured Notes due 2028 (the “New Notes”), and (ii) a cash payment of $ 110.0 million (the “Cash Payment”). The Company will not receive any cash proceeds in connection with the Exchange. The Exchange was subsequently consummated on April 28, 2025 (the “Closing Date”), upon which the Company received and cancelled all Existing Notes and the Investor forfeited any accrued and unpaid interest in respect of the Existing Notes to, but not including, the Closing Date. Pursuant to the Note Exchange Agreement, the Company granted the Investor, conditioned on closing of the Exchange, a non-transferrable right to designate one non-voting board observer from June 1, 2025, for so long as the Investor and affiliates of the Investor continue to hold, in the aggregate, either (i) at least 25 % of the initial aggregate principal amount of the New Notes or (ii) at least 12 % of the sum of the outstanding shares of the Company’s Class A Common Stock, Class B Common Stock and Class C Common Stock, calculated on a fully diluted basis. New Notes Indenture On the Closing Date, the Company entered into an indenture (the “New Notes Indenture”) with GLAS Trust Company LLC, as trustee and notes collateral agent (the “Trustee”). The New Notes represent the Company’s senior secured obligations, and are secured by substantially all of the Company’s and its material domestic subsidiaries’ assets. The New Notes are (i) senior in right of payment to the Company’s existing and future senior, unsecured indebtedness to the extent of the value of the collateral; and (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the New Notes. Interest on the New Notes is payable, at the Company’s election, in cash or by payment-in-kind by issuing additional notes in an aggregate principal amount equal to the relevant amount of interest paid in kind. The New Notes will accrue interest at a rate of 6.00 % per annum, payable semi-annually in arrears on June 30 and December 31 of each year, with the initial payment on June 30, 2025. The New Notes will mature on December 31, 2028. The New Notes will be redeemable, in whole and not in part, at the Company’s option at any time prior to December 31, 2028, at a cash redemption price equal to 106.00 % of the principal amount of the New Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, with an amount not exceeding the net cash proceeds of one or more “Equity Offerings” (as defined in the New Notes Indenture); provided that at least 60 % of the aggregate principal amount of the New Notes remains outstanding immediately after the redemption and the redemption occurs within 150 days of the date of the closing of each such Equity Offering. Additionally, prior to December 31, 2028, the Company may redeem all or part of the New Notes at a redemption price equal to the sum of 108 % of the principal amount of the New Notes to be redeemed, plus the “Make Whole Premium” (as defined in the New Notes Indenture) at the redemption date, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If certain corporate events that constitute a “Change of Control Triggering Event” (as defined in the New Notes Indenture) occur, then noteholders may require the Company to repurchase all or any part of their New Notes at a cash repurchase price equal to 101 % of the aggregate principal amount of the New Notes to be repurchased, plus accrued and unpaid interest, if any, to the date of settlement. The definition of Change of Control Triggering Event includes certain business combination transactions involving the Company. 29 Table of Contents BETTER HOME & FINANCE HOLDING COMPANY AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ****** 30 Table of Contents