10-K: Better Home & Finance Reports Increased Loan Volume and Reduced Net Loss for Fiscal Year 2024

Better Home & Finance saw a 19% increase in funded loan volume and a significant reduction in net loss for the year ended December 31, 2024, despite a challenging interest rate environment.

Summary

• Better Home & Finance Holding Company's mission is to revolutionize the consumer experience of finding, financing, insuring, and selling a home.
• The company's funded loan volume increased by 19% year-over-year, reaching $3.6 billion in 2024 compared to $3.0 billion in 2023.
• Revenue increased by approximately 50% year-over-year, totaling $108.5 million in 2024 compared to $72.3 million in 2023.
• The company recorded a net loss of $206.3 million for 2024, a significant improvement from the $536.4 million net loss in 2023.
• Better Home & Finance expects to incur net losses in the near future due to the current interest rate environment and continued investments in the business.
• The company's technology platform, Tinman, uses AI and automation to streamline the mortgage process.
• The company is focused on growing its purchase business and improving the cross-sell of non-mortgage products.
• The company's customer acquisition channels include direct-to-consumer (D2C) and business-to-business (B2B) approaches.
• As of March 17, 2025, the company had onboarded approximately 110 NEO loan officers across 53 branches to build out a distributed retail channel.
• The company is licensed to offer Home Finance loan products in all 50 states and the District of Columbia.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While there are positive aspects like increased loan volume and reduced losses, the ongoing net losses, material weaknesses in internal controls, and CEO litigation temper the overall outlook.

Positives

• The company's funded loan volume increased by 19% year-over-year.
• Revenue increased by approximately 50% year-over-year.
• The company significantly reduced its net loss compared to the previous year.
• The company is investing in technology to improve customer experience and reduce labor costs.
• The company is expanding its distribution capabilities through the NEO Powered by Better brand.
• The company is licensed to operate in all 50 states and the District of Columbia.

Negatives

• The company recorded a net loss of $206.3 million for 2024.
• The company expects to incur net losses in the near future.
• The company has identified three ongoing material weaknesses in its internal control over financial reporting.
• The company has been subject to significant employee attrition, particularly among its senior management team.
• The company's CEO is involved in litigation that could have a material adverse effect on the company.

Risks

• Changes in interest rates could negatively impact the company's business.
• The company operates in a heavily regulated industry, and noncompliance could result in penalties.
• The company is highly dependent on Fannie Mae and Freddie Mac, and changes in these entities could have a material adverse effect.
• The company has global operations that could be materially and adversely affected by changes in political or economic stability.
• The company faces intense competition from other companies with more well established brands.
• The company may be subject to liability in connection with loans it delivers to third parties.
• The company's hedging strategies may not be successful in mitigating its risks associated with changes in interest rates.

Future Outlook

The company expects to incur net losses in proximate future periods due to the current interest rate environment, as well as continued investments that it intends to make in its business (including investments to expand product offerings and in technology).

Management Comments

• The company aims to provide customers with a superior customer experience and a wide selection of products to navigate their homeownership journey.
• The company believes that lowering loan manufacturing costs, integrating additional homeownership products onto its platform, and scaling its ecosystem will enable it to deliver increased value to its customers and contribute to its mission.

Industry Context

The U.S. single-family mortgage originations increased to $1.7 trillion in 2024, up from $1.5 trillion in 2023, but remained well below the $2.37 trillion in 2022 and $4.57 trillion in 2021, indicating a continued challenging environment for mortgage originators.

Comparison to Industry Standards

• The market for loan production is highly fragmented, with the largest player holding less than a 10% share.
• Digitally native home buying technology platforms are increasingly moving into the loan production space, but as of yet, they have not developed an independent loan production offering at scale.
• Some competitors may have more name recognition and greater financial and other resources than Better Home & Finance, including access to capital.
• Traditional banks that provide warehouse lines of credit are also active in the home mortgage market, which could create conflicts when renewing warehouse lines.

Legal Proceedings

• The company is subject to various litigation and regulatory enforcement matters from time to time.
• The company is currently party to pending civil legal claims alleging that it failed to pay certain employees for overtime in violation of the Fair Labor Standards Act and labor laws of the State of California.
• The company's CEO is involved in litigation related to prior business activities.

Related Party Transactions

• The company receives services from certain affiliates of its CEO, including TheNumber, LLC and Notable Finance, LLC.
• The company's CEO, in his personal capacity, has entered into a side letter with SB Northstar, pursuant to which he may be liable for realized losses or receive payments in certain circumstances from SB Northstar in connection with the Convertible Note.

Stakeholder Impact

• The company's performance impacts shareholders, employees, customers, suppliers, and creditors.
• The company's ability to maintain and improve morale and workplace culture is important for retaining employees.
• The company's ability to provide seamless, digital homeownership products is important for attracting and retaining customers.

Next Steps

• The company will continue to invest in automated processes and seek to grow its purchase business.
• The company will continue to test new products to optimize its offerings.
• The company aims to increase its addressable market by providing all of its products across the United States.
• The company seeks to pursue relationships with potential B2B partners that are aligned with its consumer-minded ethos.

Key Dates