Walker & Dunlop (NYSE:WD) reported second-quarter transaction volume growth and continued expansion of its servicing portfolio, while earnings were weighed down by charges tied to previously disclosed problem loans associated with a borrower fraud investigation.
Chairman and CEO Willy Walker said the company’s core operating business “performed very well” despite an uncertain commercial real estate environment marked by geopolitical tensions and interest-rate volatility. Total transaction volume increased 3% from a year earlier to $14.4 billion, including an 8% increase in debt financing volume to $12.5 billion.
Capital Markets Activity and Market Share
Walker & Dunlop’s year-to-date combined market share with Fannie Mae and Freddie Mac increased 350 basis points to nearly 15%, according to management. Walker noted that the government-sponsored enterprises had deployed $62.5 billion during the first half of 2026, leaving $114 billion of lending capacity for the remainder of the year.
“If the agencies crank up their volume in the second half of the year, that will be very beneficial to us given our positioning with both of them,” Walker said in response to an analyst question. He added that debt funds, CMBS lenders and banks also remain active sources of commercial real estate financing.
The company said its property-sales pipeline improved meaningfully from the prior quarter. If clients choose to transact during 2026, Walker said the company could finish the year with property-sales volume above 2025 levels despite a slower start to the year.
Servicing Portfolio Reaches Record
Walker & Dunlop’s servicing portfolio reached a record $146 billion at the end of the second quarter, up 6% year over year. The portfolio provides recurring revenue and future refinancing and sales opportunities, management said. Fifty-two percent of loans in the portfolio mature over the next five years.
Chief Financial Officer Greg Florkowski said servicing and asset management revenue declined 5% from the prior year, primarily because of lower earnings from joint-venture investments in the company’s affordable housing business. He attributed the decline to transaction timing rather than an underlying trend in the servicing business.
Florkowski said the servicing platform’s recurring revenue and cash flow remain stable and that capital markets execution in future quarters should support continued portfolio growth.
The company also highlighted WDSuite, its digital client platform, which enables borrowers to access loan documents, make payments, run payoff calculations, view property valuation data and connect with the company’s financing, appraisal, research and property-sales teams.
Legacy Loan Charges Weigh on Reported Earnings
Reported diluted earnings per share were $0.09, reflecting $23 million of charges and operating costs related to the company’s repurchase loan portfolio. Adjusted core EPS increased 3% to $1.19, Florkowski said.
The charges were linked to a previously disclosed investigation involving a small group of fraudulent sponsors and a specific Walker & Dunlop banking team that is no longer with the company. Management said 95% of losses recognized to date relate to those sponsors and loans originated by that team.
Freddie Mac’s loan-level review has been completed, and the company does not expect further repurchase requests from that process. Fannie Mae’s review is nearly complete. Walker & Dunlop expects to recognize an additional $12 million to $16 million of credit-related charges in the third quarter as part of the final resolution with Fannie Mae, without needing to repurchase additional loans.
During the second quarter, a group of previously repurchased loans defaulted, leading the company to reassess property values and increase loss estimates. The company also increased loss sharing on a subset of loans reviewed by Fannie Mae instead of repurchasing them.
Since the end of the quarter, Walker & Dunlop sold $40 million of properties at prices close to its estimates and is preparing another $41 million of assets for sale later this year. Management expects sales of all repurchased assets to be completed by early next year, subject to ultimate selling prices.
Credit Performance and Outlook
Management said the broader at-risk portfolio continues to perform well. At quarter-end, 28 basis points of the $71 billion at-risk portfolio was in default. The portfolio had a weighted average debt-service coverage ratio of 2.0 times and a weighted average underwritten loan-to-value ratio of 61%.
Walker said multifamily supply-and-demand conditions are improving, citing slower apartment development, first-half absorption of approximately 279,000 units and four consecutive months of rising occupancy. However, he said rent growth has emerged only in certain parts of the country and cautioned that rent-control policies could affect specific markets.
For 2026, Florkowski said the company remains confident in its core earnings outlook excluding repurchase-related costs. If current borrowing costs and market conditions persist, management expects the core business to finish toward the lower end of its original guidance range. Improved market conditions could increase transaction activity and place results in the middle to upper portion of that range.
The board approved a quarterly dividend of $0.68 per share, unchanged from the prior quarter, payable to shareholders of record as of Aug. 20.
About Walker & Dunlop (NYSE:WD)
Walker & Dunlop is one of the largest providers of commercial real estate finance in the United States, specializing in the origination, servicing and sale of loans secured by multifamily, seniors housing, healthcare, student housing and manufactured housing properties. The firm offers a full suite of debt and equity solutions, including agency financing through Fannie Mae and Freddie Mac, HUD and FHA-insured loans, bridge and construction financing, mezzanine debt, preferred equity, and investment sales advisory.
With roots dating back to 1937 and its headquarters in Bethesda, Maryland, Walker & Dunlop has expanded its platform through both organic growth and strategic acquisitions.
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