Walker & Dunlop’s Freddie Mac Claims Clash With Servicing Growth Outlook in Q2 2026 Earnings Call

Date of Call: Aug 6, 2026

Financials Results

• EPS: Diluted EPS of $0.09, reflecting $23 million in charges; Adjusted core EPS increased 3% to $1.19

Guidance:

• Excluding repurchase-related costs, core business is on a path to finish toward the lower end of original guidance if current market conditions persist.
• An improvement in market conditions would position the core business to perform within the middle to upper portion of the range.
• Expect credit-related charges of $12M to $16M in Q3 related to Fannie Mae's review.
• Brokered volumes expected to continue growing throughout the year.

Business Commentary:

Transaction Volume and Market Share:

• Walker & Dunlop reported transaction volumes of $14.4 billion for Q2 2026, marking an 8% increase year-over-year.
• The company's market share with Fannie Mae and Freddie Mac grew by 350 basis points, reaching nearly 15% year-to-date.
• Growth in transaction volume was primarily driven by a 43% increase in HUD originations and a 17% rise in brokered lending. The market share gains were attributed to a strong client relationship and increased capital deployment capabilities.

Servicing Portfolio and Recurring Cash Flows:

• The servicing portfolio reached a record $146 billion, representing a 6% year-over-year increase.
• This growth in the servicing portfolio provides stable recurring earnings and cash flow, supported by durable revenues.
• The expansion of the servicing portfolio is a result of increased transaction activity and the retention of loans for their entire lifecycle.

Challenges and Resolutions:

• The company reported $23 million in charges and operating costs related to repurchased loan portfolios in Q2.
• These charges were primarily due to defaults in previously repurchased loans and increased loss estimates.
• The company has since sold properties worth $40 million, with plans to sell an additional $41 million, aiming to complete all sales by early next year.

Strategic Expansion and Growth:

• Walker & Dunlop expanded its services to include hospitality investment sales and opened an office in London, enhancing its geographical reach.
• The company aims to win new clients and increase its wallet share by offering a broader range of services.
• Strategic moves are part of the "Journey to 30" plan, focusing on geographic and service expansion, and adding top talent to drive growth.

Credit Performance and Risk Management:

• Only 28 basis points of the $71 billion at-risk portfolio were in default at quarter-end, with a weighted average debt service coverage ratio of two times.
• The strong operating fundamentals and low default rates indicate excellent credit performance.
• The company has strengthened its underwriting and fraud detection processes to mitigate future risks.

Sentiment Analysis:

Overall Tone: Positive

• "Walker & Dunlop continues to demonstrate the strength and resilience of our platform..." "We feel very good about the underlying fundamentals of our business." "Our capital markets platform is gaining market share, and our servicing business continues generating steady recurring cash flow." "We have emerged a better, more robust company."

Q&A:

• Question from Kyle Joseph (Stevens): Just want to go through expectations for deal flow and kind of mix it for the remainder of the year...
  Response: Expectation is that agencies are focused on deploying their 2026 lending caps, with Freddie Mac being aggressive; the mix between agency and brokered lending is hard to predict, but gaining 350 bps market share with GSEs positions the company well if agencies increase volume.

• Question from Kyle Joseph (Stevens): Just in terms of the timing on the joint venture earnings related to affordable...
  Response: The JV earnings impact in Q2 was a unique quarter due to losses; going forward, earnings from the servicing segment will be more consistent and driven by the size of the servicing platform.

• Question from Jade Romani (KBW): I wanted to ask what you're hearing from multifamily investors...
  Response: Market sentiment is cautious due to delayed rent growth recovery and political/regulatory uncertainty around rent control, but fundamentals are improving. Underlying credit performance of the broader portfolio is strong, with only isolated defaults.

• Question from Jade Romani (KBW): ...on the underlying credit performance and if there was any credit deterioration...
  Response: Credit performance of the broader portfolio is excellent, with only two smaller loans defaulting in the quarter; overall defaults are low at 28 bps, and operating fundamentals like DSCR and LTV are strong.

• Question from Chris Mueller (Citizens Capital Markets): Are the increases to reserves in the quarter part of the investigation conclusion...
  Response: The credit charges were driven by two factors: defaults on previously repurchased loans and Fannie Mae's completion of a portion of its review, leading to increased loss sharing on some loans; no further repurchases are expected.

• Question from Chris Mueller (Citizens Capital Markets): ...on the Fannie investigation, is that 12 to 16 million of expected credit losses in the third quarter...
  Response: The $12-16M charge in Q3 is a new credit mark related to finalizing Fannie Mae's review and loss sharing, separate from reserves already recorded.

• Question from Chris Mueller (Citizens Capital Markets): ...as you guys open an office in Europe now, can you just talk about maybe the differences in that market versus the U.S...
  Response: The European market lacks U.S. agencies; the team is leveraging the W&D brand and existing U.S. client relationships to execute deals, with plans to expand into investment sales.

Contradiction Point 1

Status of Freddie Mac Investigation and Repurchase Loan Resolution

Conflicting statements on whether the repurchase loan issue is fully resolved and the investigation's conclusion.

What are your thoughts on the company's financial performance this quarter? - Chris Mueller (Citizens Capital Markets)

2026Q2: The investigation with Freddie Mac is complete, and no further repurchases are expected. - [Greg Florkowski](CFO)

Were the quarterly reserve increases due to the Freddie Mac investigation or specific property-level issues? - Chris Muller (Citizens Capital Markets)

2026Q1: Yes, the $134 million in loans previously in dispute have now reached either repurchase+indemnification or standalone indemnification agreements, and that issue is 'behind us.' The company is working closely with Freddie Mac on their annual review, hopes it concludes in the near term (next few quarters), but does not control the timing. - [Greg Florkowski](CFO)

Contradiction Point 2

Growth Outlook for the Servicing Segment

Different emphasis on near-term versus long-term drivers for segment profitability.

Kyle Joseph (Stevens) - Kyle Joseph (Stevens)

2026Q2: The servicing segment's primary driver is the size of the servicing platform and its steady cash flows. - [Greg Florkowski](CFO)

Will joint venture earnings related to affordable housing provide a tailwind for the servicing segment in Q3? - Kyle Joseph (Stephens)

2026Q1: The primary near-term action is reducing the repurchase loan portfolio... The long-term growth path is clear: the successful capital markets business feeds the servicing portfolio, driving growth in servicing revenues and fees, which will improve segment profitability over time. - [Greg Florkowski](CFO)

Contradiction Point 3

Resolution and Financial Impact of GSE Loan Investigations

Inconsistent statements on whether investigations are concluded and if related charges are complete.

Chris Mueller (Citizens Capital Markets) - Chris Mueller (Citizens Capital Markets)

2026Q2: The investigation with Freddie Mac is complete, and no further repurchases are expected... Once the final review is complete, the charge will be taken in Q3, and the investigations with both Freddie Mac and Fannie Mae are expected to be done imminently. - [Greg Florkowski](CFO)

Are the expected $12–$16 million Q3 credit losses linked to the Fannie Mae investigation separate from the 15.9 bps loss sharing reserve increase already recorded? - Steven Delaney (Citizens JMP Securities, LLC)

2025Q4: The company has thoroughly investigated the problematic loan portfolios... awaiting their final review (expected in ~90 days). - [Willy Walker](CEO)

Contradiction Point 4

Credit Portfolio Health and Underlying Performance

Contradiction on whether credit issues are isolated or if there is broader concern.

Jade Romani (KBW) - Jade Romani (KBW)

2026Q2: The credit issues are isolated to a small group of fraudulent sponsors and a specific origination team that is no longer with the company. The broader at-risk portfolio... has only 28 bps in default... - [Greg Florkowski](CFO) and [Willie Walker](CEO)

How would you assess the portfolio's underlying credit performance amid mixed credit perspectives this quarter? - Jade Rahmani (Keefe, Bruyette, & Woods, Inc.)

2025Q4: The company feels extremely good about the credit portfolio and its scale... The investigation into the fraudulent loans... This has led to improved internal processes. The company believes it is now an even better company and is well positioned despite the isolated incidents. - [Willy Walker](CEO)

Contradiction Point 5

Market Position and Outlook with GSEs

Inconsistency regarding the company's ranking and share gain potential with Freddie Mac.

Kyle Joseph (Stevens) - Kyle Joseph (Stevens)

2026Q2: The company gained 350 bps in market share with the GSEs year-to-date, taking its combined share to nearly 15%. If agencies increase volume in the second half, it will benefit the company. - [Willie Walker](CEO)

What are the expectations for deal flow and mix for the remainder of the year, and what would need to happen for the GSE pipeline to come to fruition? - Steven Delaney (Citizens JMP Securities, LLC)

2025Q4: The company aims to maintain its #1 position with Fannie Mae and continue gaining share with Freddie Mac. The 2026 outlook is positive due to the ~20% increase in the GSEs' multifamily lending caps. - [Willy Walker](CEO)