Transcript: Walker & Dunlop Q2 2026 Earnings Conference Call

Walker & Dunlop (NYSE: WD ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

5 billion, led by significant growth in HUD originations. The company's market share with Fannie Mae and Freddie Mac increased by 350 basis points to nearly 15%, positioning it well for the remainder of 2026. Walker & Dunlop's servicing portfolio reached a record $146 billion, offering durable recurring revenues, while the WD Suite platform enhances client offerings and connectivity. The company faced financial challenges due to loan repurchases and credit marks related to a borrower fraud investigation, but these issues were isolated to a small group of fraudulent sponsors.

Walker & Dunlop launched strategic initiatives like the 'Journey to 30' growth plan and expanded into hospitality investment sales and opened a new office in London. 19, though diluted EPS was impacted by charges related to problematic loans. The company remains optimistic about future growth, driven by improving commercial real estate fundamentals and strategic expansion efforts. Full Transcript OPERATOR Good day and welcome to the second quarter 2026 Walker & Dunlop earnings call.

Today's conference is being recorded. At this time I would like to turn the conference over to Amy Hopkins, Senior Vice President of Investor Relations. Please go ahead. Amy Hopkins, Senior Vice President, Investor Relations Thank you, Taryn.

Good morning, everyone. Thank you for joining Walker & Dunlop's second quarter 2026 earnings call. This call is being webcast live on our website and a recording will be available later today. Joining me today are Willy Walker, Chairman and CEO, and Greg Florkowski, our CFO.

Before we begin, please note that statements made on this call which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are urged to read the forward-looking statements language in our press release which was posted this morning to the Investor Relations section of our website. More detailed information about risk factors can be found in our annual and quarterly reports filed with the SEC. Additionally, we'd like to remind you that during this call we will discuss some non-GAAP financial metrics.

Reconciliations of these non-GAAP financial metrics are included in our most recent earnings release and earnings call presentation which can be found on our website. And with that, I will now turn the call over to Willy. Willy Walker, Chairman and Chief Executive Officer Thank you, Amy, and good morning, everyone. This is Amy's first Walker & Dunlop earnings call since joining us to run investor relations and I'd like to welcome Amy to the Walker & Dunlop team.

Thank you everyone for joining us. Walker & Dunlop continues to demonstrate the strength and resilience of our platform despite the uncertain macroeconomic environment in commercial real estate. Due to geopolitical tensions and associated interest rate volatility, Walker & Dunlop is gaining market share, expanding our capital relationships, generating durable recurring cash flows, and deepening the client relationships that have differentiated our company for decades. Those fundamentals remain as strong today as they ever have been.

Importantly, our clients continue to choose Walker & Dunlop because of the exceptional execution of our team, the quality of our people, and the breadth of our capital relationships around the globe. Our core operating business performed very well during the quarter as shown on slide 3. 4 billion. 5 billion, led by 43% growth in HUD originations.

Brokered lending grew 17% in the second quarter and comprised a larger percentage of total transaction volume, which reflects progress on our strategic plan to expand our capital relationships in the United States and Europe. We expect brokered volumes to continue growing throughout the year due to the volume of maturing non-multifamily loans and the broad supply of capital for commercial real estate lending. Our Fannie Mae and Freddie Mac lending volumes were down 10% on the quarter due to an extremely active Q2 last year. And yet year to date our market share with the GSEs is up 350 basis points to nearly 15%.

This is a tremendous accomplishment by our team and positions us extremely well to end 2026 once again at the top of the GSEs' league tables. 5 billion of capital through the first half of the year, or about one third of their combined lending capacity. So with $114 billion remaining for 2026 and our increased market share to 15%, we see a very constructive backdrop for our GSE lending over the balance of the year. Our property sales pipeline has strengthened meaningfully compared to last quarter and if our clients decide to transact in 2026, we are well positioned to finish the year with property sales volume above last year despite the slower start to 2026.

Increased property sales activity would also support stronger multifamily debt financing volumes in the remainder of the year. Our servicing portfolio continues to grow and reached a record $146 billion at the end of Q2, up 6% year over year, providing durable recurring revenues and cash flows while deepening client relationships that generate future financing and advisory opportunities. 52% of the loans in our portfolio mature over the next five years and will generate refinancing and sales opportunities with our existing clients.

To further enhance our client offering and connectivity, we launched WD Suite last year, giving clients a single digital platform to manage their loan with Walker & Dunlop. Through WD Suite, clients can access loan documents, make loan payments, run analytics such as payoff calculations, get real-time property valuation data, research investment opportunities near their property and connect directly with our financing, appraisal research and property sales teams. WD Suite brings the full breadth of our commercial real estate services platform into one digital experience, reducing friction for our clients while strengthening our relationship with our borrowers.

We feel very good about the underlying fundamentals of our business, yet our financial results year to date have been negatively impacted by loan repurchases and credit marks related to a borrower fraud investigation that began a year ago. We are pleased to report that Freddie Mac's loan-level review related to the investigation is complete and we are very close to being finished with Fannie Mae. Greg will discuss the loan-level charges we have taken this quarter and the projected charges related to the Fannie Mae investigation in a moment. I must say it feels very good to be close to putting all of this behind us.

The investigations have been extremely challenging for our company, for our financial results and for our team. I can sufficiently express my thanks to many members of our team for the countless hours of double and triple work they invested while these investigations were ongoing. Importantly, the investigations indicate that these credit issues were almost exclusively related to a small group of fraudulent sponsors that originated loans with one Walker & Dunlop banking team that is no longer at the company. And while all of this has been costly and time consuming, we have learned a great deal from this process and emerge a stronger company.

As Nelson Mandela once said, I never lose. I either win or I learn. We have learned plenty and our underwriting processes and partnerships with the GSEs are more robust than ever before. Together, we have strengthened our underwriting, fraud detection and review processes while reinforcing the culture of accountability that has always been central to Walker & Dunlop.

Our focus going forward is to execute on the five year strategic growth plan called the Journey to 30 that we outlined for investors earlier this year. The Journey to 30 is designed to make Walker & Dunlop the best commercial real estate capital markets company in the world. An important component of that plan is adding the very best talent across geographies and asset classes to expand our origination volumes, deepen our client relationships and generate exceptional financial returns. Our move into the hospitality investment sales in 2025, along with the opening of an office in London, England were the first two investments in this broader capital market strategy.

And as we expand the scope of our services and our geographic reach, we must continue winning new client relationships. Year to date, 19% of our transaction volume has come from new clients to Walker & Dunlop and 3/4 of the loans we refinanced were new loans to our portfolio. Winning new clients and new loans has been and will continue to be central to our growth and market share gains over the coming years. As transaction and refinancing activity accelerates over the coming years, our strategy is to continue winning new business while deepening the relationships with our existing clients.

Our bankers and brokers need to expand those relationships with new products and services to increase Walker & Dunlop's wallet share while retaining the loans that already exist in our portfolio. As seen on slide 9, on a trailing twelve-month basis, our average transaction volume per banker/broker reached $288 million, almost to our 2026 goal of $300 million of production per banker/broker. Because that production flows through a cost structure and producer base we have already built, increased transaction activity per banker/broker should drive greater economies of scale and margin expansion.

And because every agency origination becomes part of a servicing portfolio that we retain for the life of the loan, each new transaction adds a recurring revenue stream that generates value well beyond its initial closing. With that, I'll turn the call over to Greg to walk through our financial results and our outlook for the balance of the year. Greg. Greg Florkowski, Chief Financial Officer Thank you, Willie, and good morning.

Our Capital Markets team navigated a challenging macroeconomic environment this quarter, reinforcing our clients’ trust in our team and enabling us to gain market share and deliver solid financial results within our core business. At the same time, our reported diluted earnings per share reflects $23 million of charges and operating costs related to previously identified problem loans. These charges are meaningful yet isolated to a small number of fraudulent borrowers and not related to new repurchase exposure or deterioration within our broader portfolio. 09 reflects the cost of resolving legacy repurchase issues.

4 billion of transaction volume during the quarter. Revenue for the segment was down slightly while net income was down 10%, primarily reflecting a greater mix of broker transactions relative to GSE lending, which reduced non-cash MSR income. We told you in March we expected MSR margins to be broadly consistent between 2025 and 2026, and that remains the case. Importantly, that mix shift demonstrates the availability of capital to the commercial real estate sector and the scale and quality of our debt brokerage business.

Turning to our Servicing and Asset Management, or SAM, segment, the servicing platform continues to generate stable recurring earnings and cash flow and the recurring revenues of the managed portfolio continued to grow steadily. The servicing portfolio increased 6% from a year ago, and while revenue for the segment was down 5% from last year, the decrease was driven by a reduction in earnings from joint venture investments in our affordable business that was driven by transaction timing and not an underlying trend.

The fundamentals of the servicing platform remain strong, and continued execution from our Capital Markets business in the coming quarters should drive additional servicing portfolio expansion as we move through the year. Turning to credit. As I referenced earlier, charges and operating losses associated with our repurchase loan portfolio impacted our financial performance this quarter. Before getting into the details of the quarter, let me briefly provide some background.

As we previously disclosed, about a year ago we began an investigation in coordination with Freddie Mac that identified a small group of fraudulent sponsors that originated loans with a specific banking team at Walker & Dunlop. Through that investigation it was determined that banking team did not adhere to our policies and procedures, and they are no longer with the company. The investigation was then expanded to include broader loan-level reviews by both Freddie Mac and Fannie Mae. Freddie Mac’s review is now complete and we do not expect additional repurchase requests related to that process.

Fannie Mae’s review is almost complete, and based on our analysis and communication with Fannie Mae, we expect to recognize credit-related charges of $12 million to $16 million in the third quarter this year related to the final resolution of their review, without the need to repurchase any loans at this point. The investigations will be completed imminently and the capital and financial impacts are known and sized. We can now turn our attention to getting back to business as usual with the GSEs. Turning specifically to the second quarter, the $23 million of charges and operating costs recognized this quarter were primarily driven by two events.

First, a group of previously repurchased loans defaulted during the quarter. These loans were performing when we agreed to repurchase them at the end of last year. As a result of the default, we performed property-level inspections and increased our loss estimates to reflect the current condition of the assets. Second, Fannie Mae completed a portion of its loan-level review during the second quarter, and we agreed to increase our loss sharing on a subset of loans rather than repurchasing them.

With regard to loans we previously repurchased, we are actively executing our disposition strategy. Since quarter end, we sold $40 million of properties at prices very close to our estimates, and we are preparing to market another $41 million that will be sold later this year. We expect all sales and repurchase assets to be completed by early next year, with any future valuation adjustments dependent upon ultimate selling prices relative to our current estimates. To put this all in perspective, 95% of the losses we have recognized to date relate to a small group of fraudulent sponsors and loans originated by the banking team that is no longer with Walker & Dunlop.

We are nearing the end of this process, and after reviewing broad portions of both that team’s production and our broader portfolio alongside the GSEs and outside advisors, we have not identified similar issues elsewhere in our portfolio. We have significantly strengthened our ability to detect and prevent the type of coordinated fraud that led to these events and believe the control enhancements we have implemented alongside the GSEs will materially reduce the risk of this happening in the future. Our broader at-risk portfolio continues to demonstrate strong underlying credit performance.

As shown on slide 11, at quarter end just 28 basis points of the portfolio was in default. The operating fundamentals of our at-risk portfolio remain excellent. Operating at a weighted average debt service coverage ratio of two times and a weighted average underwritten loan-to-value of 61%, we remain confident in the underlying credit quality of the at-risk portfolio. We continue generating consistent recurring cash flow from our servicing platform and ended the quarter with a strong balance sheet that provides the flexibility to continue investing in the growth of the business while resolving the remaining legacy repurchase issues.

We have a robust recruiting pipeline, and we will continue prioritizing reinvesting in the growth of our business in pursuit of our long-term strategic objectives. 68 per share, consistent with last quarter, and payable to shareholders of record as of August 20th. Turning to our outlook, our guidance at the beginning of the year, shown on slide 12, did not predict the significant repurchase-related charges recognized during the first half, nor the potential for the additional costs I just outlined related to Fannie Mae’s review. Excluding repurchase-related costs, we remain confident in our core earnings outlook.

The ultimate outcome for the year will depend largely on the pace of transaction activity during the second half. Capital remains broadly available and spreads remain competitive, but the absolute cost of borrowing is currently elevated and could continue to delay financing and property sale decisions if current market conditions persist. We believe the core business is on a path to finish toward the lower end of our original guidance.