Walker & Dunlop (WD) risk factors, FY2024 10-K

Risks Relating to Our Business

1. 01The loss of, changes in, or disruptions to our relationships with the Agencies and institutional investors would adversely affect our ability to originate commercial real estate loans, which would materially and adversely affect us
2. 02A reduction in the prices paid for our loans and services or an increase in loan or security interest rates required by investors could materially and adversely affect our results of operations
3. 03A significant portion of our revenue is derived from loan servicing fees, and declines in or terminations of servicing engagements or breaches of servicing agreements could have a material adverse effect on us
4. 04If a significant number of our loan warehouse facilities, on which we are highly dependent, are terminated or reduced, we may be unable to find replacement financing on favorable terms, or at all, which would have a material adverse effect on us
5. 05We may be required to repurchase loans or indemnify loan purchasers if there is a breach of a representation or warranty made by us in connection with the sale of loans through the programs of the Agencies, which could have a material adverse effect on us
6. 06We own and operate multifamily properties as a result of foreclosures or other acquisitions that involve risks that could adversely affect our business and financial results
7. 07We have made various investments that are funded with corporate capital. These investments may involve a greater risk of loss than our traditional real estate lending activities
8. 08(i) Joint ventures and other equity method investments
9. 09(ii) Loans to our LIHTC joint venture partners
10. 10We acquire interests in tax credit property partnerships for sale to LIHTC investment funds and, at any point in time, the aggregate amount of funds advanced can be material. Recovery of these investments is subject to our ability to attract investors to new investment funds
11. 11We are dependent upon the success of the multifamily real estate sector, and conditions that negatively impact the multifamily sector may reduce demand for our products and services and materially and adversely affect us
12. 12The loss of our Chairman and Chief Executive Officer could result in a material adverse effect on our business and results of operations
13. 13There is a risk of unfavorable changes to, or elimination of governmental programs that could limit the product offerings of our affordable housing real estate services
14. 14Our role as a sponsor of investment funds and co-developer of affordable properties exposes us to risks of loss
15. 15Noncompliance with various requirements by the affordable housing partnerships could impair our investors’ right to LIHTCs and have a negative impact on our business
16. 16The failure of banks or other major financial institutions, or sustained financial market illiquidity, could adversely affect our and our clients’ businesses and results of operations
17. 17We maintain cash deposits in excess of federally insured limits. Adverse developments affecting systematically important financial institutions, including bank failures, could adversely affect our liquidity and financial performance
18. 18We are subject to various risks associated with climate change and other ESG matters

Risks Relating to Regulatory Matters

1. 19As a registered broker-dealer, one of our subsidiaries is subject to extensive regulation that exposes us to a variety of risks associated with the securities industry
2. 20If we fail to comply with laws, regulations and market standards regarding the privacy, use, and security of customer information, or if we are the target of a successful cyber-attack, we may be subject to legal and regulatory actions and our reputation would be harmed

Risks Related to Our Organization and Structure

1. 21Certain provisions of Maryland law could inhibit changes in control
2. 22Our authorized but unissued shares of common and preferred stock may prevent a change in control of the Company
3. 23Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit our stockholders’ recourse in the event actions are taken that are not in our stockholders’ best interests
4. 24Our charter contains limitations on our stockholders’ ability to remove our directors, which could make it difficult for our stockholders to effect changes to our management
5. 25We are a holding company with minimal direct operations and rely largely on funds received from our subsidiaries for our cash requirements

Risks Related to Our Financial Statements

1. 26Our financial statements are based in part on assumptions and estimates which, if wrong, could result in unexpected cash and non-cash losses in the future, and our financial statements depend on our internal control over financial reporting
2. 27Our existing goodwill could become impaired, which may require us to take significant non-cash charges
3. 28more likely than not an impairment loss has occurred. Any impairment of goodwill as a result of such analysis would result in a non-cash charge against earnings, which charge could materially adversely affect our reported results of operations, stockholders’ equity, and our stock price