Taylor Morrison Home CorpTMHC
Taylor Morrison Home Corp Fair Value Disclosure
FAIR VALUE DISCLOSURES
(1) No fair value adjustment recorded in period.
ASC Topic 820, Fair Value Measurement, provides a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are summarized as follows:
Level 1 — Fair value is based on quoted prices for identical assets or liabilities in active markets.
Level 2 — Fair value is determined using quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active or are directly or indirectly observable.
Level 3 — Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.
The fair value of our Mortgage loans held for sale is derived from negotiated rates with partner lending institutions. The fair value of derivative assets and liabilities includes IRLCs and mortgage backed securities (“MBS”). The fair value of IRLCs is based on the value of the underlying mortgage loans, quoted MBS prices and the probability that the mortgage loan will fund within the terms of the IRLCs. We estimate the fair value of the forward sales commitments based on quoted MBS prices. The fair value of our Mortgage warehouse borrowings and Loans payable and other borrowings approximate carrying value due to their short term nature and variable interest rate terms. The fair value of our Senior Notes is derived from quoted market prices by independent dealers in markets that are not active.
During the year ended December 31, 2025, we invested in fixed income funds and equity securities. Fixed income funds consist of investments in diversified portfolios of corporate bonds, U.S. Treasury securities, and other debt instruments. These investments are valued based on the underlying securities’ observable market inputs, including benchmark yields, reported trades of identical or similar securities, issuer spreads, and broker‑quoted prices. Equity securities primarily include investments in publicly traded companies. The fair values of these securities are based on quoted prices in active markets.
There were no changes to or transfers between the levels of the fair value hierarchy for any of our financial instruments as of December 31, 2025, when compared to December 31, 2024.
The carrying value and fair value of our financial instruments are as follows:
| As of December 31, 2025 | As Of December 31, 2024 | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | Level in Fair Value Hierarchy | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||||||||||
| Description: | ||||||||||||||||||||||||||||||||
| Mortgage loans held for sale | 2 | $ | 132,512 | $ | 132,512 | $ | 207,936 | $ | 207,936 | |||||||||||||||||||||||
| IRLCs | 3 | (12,715) | (12,715) | (5,917) | (5,917) | |||||||||||||||||||||||||||
| MBSs | 2 | (1,858) | (1,858) | 4,174 | 4,174 | |||||||||||||||||||||||||||
| Mortgage warehouse borrowings | 2 | 82,605 | 82,605 | 174,460 | 174,460 | |||||||||||||||||||||||||||
| Loans payable and other borrowings | 2 | 745,169 | 745,169 | 475,569 | 475,569 | |||||||||||||||||||||||||||
5.875% Senior Notes due 2027 (1) | 2 | — | — | 498,110 | 501,770 | |||||||||||||||||||||||||||
6.625% Senior Notes due 2027 (1) | 2 | — | — | 27,803 | 26,804 | |||||||||||||||||||||||||||
5.75% Senior Notes due 2028 (1) | 2 | 448,711 | 457,956 | 448,080 | 446,679 | |||||||||||||||||||||||||||
5.125% Senior Notes due 2030 (1) | 2 | 497,094 | 503,070 | 496,461 | 478,455 | |||||||||||||||||||||||||||
5.75% Senior Notes due 2032 (1) | 2 | 517,528 | 539,963 | — | — | |||||||||||||||||||||||||||
U.S. Treasury securities | 1 | 27,174 | 27,174 | — | — | |||||||||||||||||||||||||||
Corporate bonds | 2 | 27,159 | 27,159 | — | — | |||||||||||||||||||||||||||
Equity securities | 1 | 4,932 | 4,932 | 201 | 201 | |||||||||||||||||||||||||||
(1)Carrying value for Senior Notes, as presented, includes unamortized debt issuance costs or bond premium. Debt issuance costs are not factored into the fair value calculation for the Senior Notes.
Fair value measurements are used for real estate inventory on a nonrecurring basis when events and circumstances indicate that the carrying value of a property is not recoverable. These values are a level 3 in the fair value hierarchy.
The fair value of such inventories are as follows for the periods presented:
| (Dollars in thousands) | ||||||||||||||||||||||||||
As of | ||||||||||||||||||||||||||
| March 31, | June 30, | September 30, | December 31, | |||||||||||||||||||||||
| 2025 | $ | 75,122 | $ | 31,615 | $ | 19,473 | (1) | |||||||||||||||||||
| 2024 | (1) | $ | 7,024 | (1) | $ | 10,560 | ||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 18, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 23, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 19, 2020 | |
| 2018 | Feb 20, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 21, 2017 | |
| 2015 | Feb 25, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.