Walker & Dunlop Swings to Loss on Legacy Loan Charges

The Tip Desk · November 6, 2026 · 4 min read

The company booked a $37.3 million net loss, or $1.15 a share, after a $56 million fair-value charge on remaining repurchased loans as it moved to clear the portfolio by early 2027.

Walker & Dunlop, Inc. (WD), a commercial real estate finance and advisory firm, reported a net loss of $37.3 million, or $1.15 a share, in the third quarter of 2026, reversing the $3.0 million of net income, or $0.09 a share, recorded in the second quarter. The company said the swing primarily reflected charges associated with the accelerated resolution of legacy loan repurchases and indemnifications.

Total revenues were $298.4 million, down 12% from the year-earlier quarter, after a 4% year-over-year decline in the second quarter. Adjusted core EPS, a non-GAAP measure, fell 25% to $0.92 from a year earlier, after a 3% year-over-year increase to $1.19 in the second quarter. The company attributed the adjusted-core decline primarily to lower revenue and increased costs within the repurchased portfolio, which it said are expected to be eliminated by early 2027.

The company reclassified all repurchased assets and non-performing notes to held for sale and recognized a $56 million fair-value adjustment on the remaining portfolio. It exited $39.4 million of repurchased loans in the quarter, reducing total repurchased loans to $164.8 million as of September 30, 2026, from $221.6 million at year-end 2025. The carrying value of the remaining repurchased portfolio was $76.9 million. Indemnified and repurchased loan expenses, net, were $63 million in the three months ended September 30, 2026, versus $4 million a year earlier; the total net expense impact of those loans was $56 million. The company said it launched marketing of non-performing repurchased loans, with about $25 million already under letter of intent, and intends to dispose of the assets by early 2027.

Chairman and CEO Willy Walker said the company received notice that Fannie Mae had completed its fraud review, similar to Freddie Mac in the second quarter of 2026, and that it does not expect further buybacks or indemnifications related to those investigations. He said the company underwent a reduction in force and reorganization in the third quarter.

Total transaction volume declined 11% to $13.78 billion, reversing a 3% year-over-year increase to $14.4 billion in the second quarter. Debt financing volume fell 5% to $10.28 billion. Brokered debt volume rose 58% to $7.15 billion. Fannie Mae volume fell 40% to $1.28 billion and Freddie Mac volume fell 63% to $1.35 billion. Property sales volume declined 25% to $3.49 billion. Walker said an 84 basis point increase in the Ten-Year Treasury rate increased volatility and slowed capital markets activity.

Capital Markets revenues fell 18% to $148 million. The company said the revenue drop exceeded the 11% transaction-volume decline because of a higher mix of lower-fee brokered transactions, resulting in lower origination fees and MSR income. Origination fee rate fell to 0.79% from 0.90% a year earlier. The Agency MSR rate rose to 1.02% from 0.79%. Capital Markets net income fell 59% to $11 million from $28 million a year earlier.

Servicing & Asset Management revenues declined 2% to $148 million. Servicing fees increased 3% year over year; the company said total revenue declined primarily because of lower placement-fee earnings from escrow accounts as the Effective Federal Funds Rate fell. The segment swung to a $12 million loss from $37 million of net income a year earlier, including $63 million of repurchase-related charges, comprised of $56 million of non-cash valuation adjustments and $7 million of operating expenses on the aggregate portfolio.

The servicing portfolio increased to $146.6 billion as of September 30, 2026, up 5% from the prior-year period, after a 6% year-over-year increase to $145.8 billion as of June 30, 2026. Agency production over the past 12 months was the main driver of more than $7 billion of net loans added. Brokered servicing declined 14% to $14.23 billion, which the company attributed primarily to a large partner consolidating servicing relationships for one of its funds in the second quarter of 2026. Weighted-average servicing fee rate at period end fell to 23.2 basis points from 24.0 basis points a year earlier, and weighted-average remaining servicing term fell to 6.9 years from 7.4 years.

Defaulted loans rose to $255 million, or 0.36% of the at-risk portfolio, from $199 million, or 0.28%, in the second quarter. Year-to-date GSE market share increased 290 basis points to 13.7% from the prior-year period.

The board declared a $0.68 a share dividend for the fourth quarter of 2026, payable December 4, 2026. The company did not repurchase shares in the second or third quarters; $61.7 million of the $75.0 million 2026 repurchase authorization remained as of September 30, 2026.