Good morning. We are here, my name is Mike Rehaut, and we are here continuing the first day of our 13th annual Home Building and Building Products Conference in our new virtual format in today's new world. We're thrilled to continue the program. It's 11:00 a.m. We have our next 35-minute session with Taylor Morrison Home Corporation, and we're thrilled to have with us, live from Scottsdale, CEO Sheryl Palmer and CFO Dave Cone. I'm going to turn it over to Sheryl and Dave for some prepared remarks and slides. Then I will ask some questions prepared from our own team, and then turn it over. I'll also be moderating some questions from here, my name is Mike Rehaut, and we are here continuing the first day of our 13th annual Home Building the virtual audience. I want to thank Taylor Morrison's participation. It's turning out to be a great conference so far. I think the new format's allowed many additional people to participate.
With that, I'll turn it over to Sheryl and Dave.
Good morning. Thank you, Michael. Thanks for the opportunity to talk with you today. It's certainly been an unusual couple of months. And as we shared on our earnings call about 10 days ago, most every part of our business, I'd say every part of the industry, has been tested through this COVID period. I won't spend much time on who we are because I think everyone probably has a good perspective on that. But maybe we'll start on page six with a couple of comments around the COVID impacts. I feel we've been very fortunate as we've had little to no impact with COVID inside our organization, which really aided in the confidence with our team, as it was critical to act swiftly in mid-March when all these things began to unfold.
As you've heard, the last couple of weeks of March were our low point, likely as much around the consumer trying to understand what all of this was about and builders settling into their new protocols. But we immediately put our crisis management plans to work, and we looked to protect all of our cash out the door. We evaluated all of our land spend production activity, in fact, holding off on any speculative inventory until we fully vetted our backlog and understood the sales trajectory better. Ramped up on our team communications, mostly through our TM daily huddles that we've talked about, and expedited our virtual plans with our new infrastructure to allow us to get to a virtual sales platform very, very quickly.
If we turn to page seven, as we've updated in our investor deck to include last week's web traffic through middle of May to show the trend on how our conversions continue to improve week over week, and our web tools are providing for a much more qualified, I'd say, prepared consumer customer as they enter into homeownership. I've personally been very surprised how quickly we've been able to help customers get through both the fact-finding part of the process and the emotional journey to enter into contract. That's evident as you turn to page eight, and you see the 2,500 online appointments that came in over really the last 30 days on our new online appointment system.
As we mentioned on our call, about 85% of the online appointments select an in-person appointment, and the majority of the others select a virtual tour or a phone call to discuss the research they had done online on their own. As we reported on our Q1 call, we saw about 20% of our sales in April completely virtual, meaning they never had entered into any of our sales offices toward any of our models, and that number continues to grow. Equally excited with our plans to add the online reservation system this quarter, we'll begin with inventory homes, and our customers will be able to select a specific home and home site and reserve it with an online deposit.
I expect the next generation of that technology will be a to-be-built feature, and a customer will be able to select a home site and a plan, then proceed to the design center, really, and then move to a virtual contract. As we've said, the silver lining with COVID is our communication with our customer advances, allowing them to interact with us in their preferred way. Dave, you want to pick it up with William Lyon integration process?
Yeah, you bet. Good morning, everybody, so as Sheryl said, I'm going to pick up on slide nine with the integration update and we continue to make progress with the integration of William Lyon, despite the COVID-19 challenges and you likely heard Sheryl mention on our earnings call the various things that we've been able to complete, such as town hall meetings that were pre- and then immediately post-closing with all the William Lyon team members to begin the onboarding and integration process. We have reprioritized some items given the current environment, but major systems and processes continue to be transitioned. We completed the renegotiation and implementation of all of our national and regional contracts, which has benefited both the legacy brands more initially than we anticipated. We've added all the William Lyon communities to our key operating reports that track sales, margin, and construction cycle times.
And everyone is also up to speed on our investment committee process for current and future land deals. Although we've made progress on many fronts, there are some things that have been impacted. For example, in-person training, that's transitioned to the virtual training sessions until we can get all of our teams back together across the divisions. The other area that has been more difficult to advance quickly is the non-overlapping markets in the portfolio. Unfortunately, these markets have had the added pressures with Seattle, for example, deeming construction as a non-essential business, and Las Vegas being uniquely shut down with peak unemployment. But we're encouraged that construction in Seattle is returning, albeit with some exceptionally strict protocols, but we're making our way through it.
Then our daily communication with each member in the organization through our daily huddles, as Sheryl mentioned, that's proven to be a key tool for us in ensuring that our William Lyon integration efforts remain on track, and then lastly, assuming a more normalized environment, we remain confident in achieving our $80 million in annualized synergy levels previously discussed, and that would be for 2021. As we moved ahead, I'm going to hit the next two slides together, and that's on our land portfolio management, so we still find it critically important to stay disciplined in our underwriting with a focus on efficient capital allocation no matter the macro environment. This slide shows our model, which links our analysis of the external environment with key internal factors within Taylor Morrison.
This all informs the way we think about capital allocation to reinvest back into the business, and ultimately our appetite for organic reinvestment balanced against appetite for market expansion, debt reduction, and then, of course, Sheryl, the return of capital. We've consciously been working down our own land, which is now three-point years of supply, as we continue to shift more toward option land, and the addition of William Lyon has helped this. We mentioned in the call with COVID-19, we're also working with land sellers and developers and our internal development teams on approximately $320 million of land and development spend, which pushed out or reduced payments on covering over 8,000 lots. Maintaining the right amount of land with a focus on efficient use of capital continues to be a top priority for us.
Thanks, Dave. Continuing forward, not a lot to report on page 13, as with the only portion of the quarter really being impacted by William Lyon closings. Generally, our consumer groups remain consistent year over year. The first-timer business looks to be a bit different, but one is showing the quarter and one is showing the full year. And that's really just a function of Q4 versus Q1 penetration. As much as I love to talk about our awards, I'll keep going and recognizing the time we have.
And before Dave turns to the balance sheet, let's just spend a couple of minutes on page 17 on Taylor Morrison Home Funding, discussing the mortgage environment, as we spend a great deal of time on our call talking through the mortgage environment and really what we saw in the middle of March to early April. Honestly, more volatility than I remember and seeing in more than 30 years. But I would tell you over these last few weeks, we really have seen that business settle in a bit. We are not having any challenges getting consumers qualified, getting them locked. As you can see through on page 17, we have a very qualified customer with an average FICO score of 750 and an LTV of 78%. Our mortgage capture for the quarter was about 75%. We've seen that continue to move up.
I think we ended April somewhere over 80%, Dave. And so as difficult as that was and still some of the fuzziness is around the meanings of forbearance and what that will do for people requalifying and what it will do to their credit as far as the impact to the business today and getting people qualified, we're not having any issues. Probably the last point worth mentioning is as you look at the FHA, probably been a lot more movement on the FHA numbers. It's a small piece of our business, somewhere around 10%. But even with those buyers, there might be an added cost to getting them closed at what I would call an attractive interest rate, but we're still able to get them qualified. Our average first-time buyer credit score is somewhere around 709.
So once again, no matter which consumer set we're looking at, we aren't really having challenges in today's environment. And so Mike with that, or actually, Dave, why don't we go to the balance sheet? I'm sorry.
So I'm going to pick up on slide 23. So if you guys could skip forward a little bit. Our balance sheet remains strong with the William Lyon transaction. We ended the quarter with about $736 million in total available liquidity. Over $500 million of that cash is cash on hand with remaining difference coming from our revolver. We did have about $485 million in borrowings on the revolver at quarter end, but as you can see, much of that was held in cash on the balance sheet as we borrowed about $250 million in the middle of March at the onset of COVID-19 to ensure that we had an abundance of liquidity for daily operations. Our net debt to capital ratio at the end of the quarter was 46.8%.
Given our planned reduction in land and development spend over the next several quarters, we anticipate Q1 to be the peak level for that ratio. We continue to focus on driving this ratio down. It's one of the commitments we made as part of the William Lyon transaction. But I'm happy to report that where we are now with the ratio relative to our internal modeling, we are ahead of where we expected. And then from a notes perspective, our next notes are not due until 2023. So looking out, we have no additional need for debt, and we have sufficient liquidity. And I believe we built our balance sheet to achieve a level of flexibility allowing us to respond to market dynamics, which is obviously very important in these current times. Lastly, if you could turn to slide 24 just to touch on our capital allocation strategy.
Our ability to maintain strong liquidity continues to fuel our four-pillar capital deployment philosophy. As we've discussed, we've slowed our investment to build up cash and ensure liquidity as we move through the pandemic. But we continue to reinvest in the business, just obviously at levels that are more modest than typical. Once we feel the time is right, we will further up our capital allocation by reinvesting back into the business in both land and development. We'd normally look to M&A as another way to grow. However, we're obviously very focused on the integration of William Lyon right now. So the next place we would turn to is evaluating our debt leverage and then finally looking to share repurchases. Historically, we've been very focused on share repurchases. In fact, we've repurchased over 33 million shares for about $630 million over the last several years.
Where we allocate the capital going forward will obviously depend on a lot of factors: where the land market is, where interest rates are, and where our share price is trading. I'd say at our current share price, we would have a bias towards share repurchase, but that's going to be when it makes sense as we move further along through the pandemic. So with that, Mike, I think we're prepared to move into Q&A.
Great. Thank you, Sheryl and Dave. Appreciate all the comments and the slides. As I said, I'll ask a few questions and then turn it over if there's any questions from the virtual audience that I'll pass along. I think the first question that most people will ask you in your individual meetings and is top of mind generally across the board is there was one builder this morning that gave an update on May trends or how they're seeing May shape up so far, probably more positive than anticipated. Obviously, the stock's reacting well today, to say the least. You had in one of your slides some of the continued positive trends that you're seeing on online traffic. I was wondering if you could comment at all around general order trends.
I believe you, along with most of the industry, talked about, on your conference call, positive trends as April progressed. Any update to that into May would obviously be helpful and of interest to the people listening.
Yeah. Mike, as we said on the call through the first week of May, and honestly, no different as we continue forward, we've seen tremendous strength each and every week. We continue to get parts of the country open. I'd say as of today, we probably have 75% of the country open. We still are closed in parts of California and the Pacific Northwest. But being closed, to my surprise, hasn't given the numbers you've seen us report, and the virtual environment hasn't really held us back. It was really more about the consumer trying to find their way through this process. So we're delighted with the trends, what we shared. And obviously, we didn't have the opportunity through last night to update this slide. We took you through a week ago. But the trends continue forward.
I think we had something, just as an anecdote, something like this Saturday or Sunday was one of our largest appointment weekends with something like over 200 appointments. So it just gives you an idea of the momentum that we're continuing to see.
Great. Thank you, Sheryl. I think one of the disconnects in one of the areas of great volatility that caused concern, broadly speaking, around how to think about demand over the next few quarters is the unemployment rates that we're seeing across the country, and again, relative to the builder released this morning, relative to all the builders' comments around trends in the last several weeks, you've seen this steady improvement in trends against the backdrop of a steady deterioration of employment, so I was curious how you're thinking about these trends impacting your business, if at all, and how you're thinking about these trends over the next two, three, four quarters, what the ultimate impact may or may not be.
Yeah. Good questions, Michael. And obviously, we can only give you our perspective as we don't have a crystal ball onto the next few quarters. But I think you really have to dissect the numbers that are getting reported. So I've had the unique opportunity over the last few weeks to be on a couple of different calls with zandi as you really start to break apart the unemployment numbers. And I think much of what we're seeing is a number of the folks, unfortunately, that have been laid off were renters and not necessarily home buyers. Not all of them. So obviously, you have to break it apart, and you have to actually break it apart by part of the country as well.
It's been interesting because as we talked about on our call, we've seen the greatest strength, or great strength, I would say, probably tied with that first-time move-up buyer in that first-time buyer, and I think there's both pull and push factors bringing that consumer into the marketplace. Some within their existing circumstances, potentially an urban environment, potentially in an apartment, probably was on the radar to move into home ownership. Historically, low interest rates had them think maybe this is a better time. At the same time, we're also seeing that that's the consumer that's been most sensitive, and that's where the greatest cancellation volatility has been, so they're replacing each other for sure, but I think we'll continue to see that until we see what jobs really does to consumer confidence.
Zandi would say that something like 50% of the jobs that have been lost will be regained at some level over the next couple of months, so we're going to see some quick snapback on a high portion of those jobs. If that really does happen, and I think that's what the market's been reacting to today, is what does this opening plan start to look like? Because if you think about all the tailwinds we had as an industry, Michael, you're exactly right. If you think about all of the tailwinds, we had the demographic tailwinds, which I think are still with us. We have the low inventory supply, which has certainly been exacerbated and still with us, but the third thing that makes for a good housing market is employment and optimism, right, and that's the piece that's been rocked.
But it doesn't appear to be as rocked by potential home buyers. The last thing I'd say is we do a great deal of research, as you know, and as we continue to talk to the consumers week over week that are in the market, the numbers of folks that feel that COVID is impacting their home ownership decisions or desire to buy continues to reduce and at this point has become pretty nominal numbers.
Great. No, thank you. That was very helpful, Sheryl. Maybe on this topic, it kind of goes hand in hand. When you talk about demand, you talk about pricing and incentive levels out there. And I think one of the uniform responses that we've heard so far throughout this past earnings season by a majority of the builders was that, effectively, just about all the builders, was that you had pricing essentially holding in the current environment or the current backdrop over the last couple of months, really in some cases, even in the worst parts of it, simply because there was no price discovery. Then as April progressed, some maybe modest level of increase of incentives, more perhaps focused in certain areas where there's higher inventory or builders caught with a little excess of spec.
I was hoping if you could just kind of update us on what you're seeing currently across the markets from a pricing and incentive level, if anything's changed, if it's continued, if it's gotten better. Any color there, I think, would be top of mind.
Yeah. I don't think we've seen real changes since we reported 10 days ago, Michael. I think what we said is you're going to always see some pockets of incentives, right? It's been nice to see that, generally speaking. You pointed them out correctly, that it's maybe some challenged inventory, maybe certain submarkets or positions different than others. It's closed out. It's, like I said, a kind of a remnant spec here or there. But generally, I think the builders have targeted their incentives a little differently, trying to deal with some of the mortgage environment that came to us early on and some of that volatility. But I didn't see those as added incentives. In many instances, I think those were just targeting the incentive dollars that were already in the marketplace. Now, I also agree with you that there were some places where maybe builders made big bets.
They came into the new year expecting a very strong spring selling season, which, by the way, we had, and maybe they caught with a little more inventory, and so there might have been some more aggressive discounting, but I'd say that was pockets. I don't believe we've seen that holistically, and I think when you look at just the limited inventory, both in new and in resale, we're so low that much good inventory is getting to market and getting chewed up pretty quickly.
Great. Great. I think one of the areas that was of interest. You got a few questions on this on the conference call. We've gotten some questions afterwards. It's been around some of the adjustments that you've made with regards to the mortgage business in just trying to maintain a good level of service to your customers as it relates to taking on some of the mortgage servicing and working with servicing subservicers to maintain that consistency with your client base.
So I was hoping if you could give us a little bit of an update as to where you stand with those efforts, to the extent that, as you mentioned earlier with the mortgage environment, you've seen the business start to settle, and you haven't had maybe there was some initial disruption, but you kind of stated just recently that you haven't had much in terms of challenges with customers getting qualified. Where you stand right now with taking on some of the servicing rights and if that's the degree of magnitude that represents right now as part of your overall book of business?
Yeah. So when we look at the mortgage business and delivery, it's really always about best execution, Michael, and best delivery. And so we are fortunate enough to be able to have two different paths that we can go down. The first is what we've historically done, and that would be selling directly to the aggregator. And that still exists today. So as we look at each loan, it allows us the opportunity to say, are we better off selling direct to the aggregator, letting them sell to the agency, or do we go directly to delivering the loan to the agency and then transferring the servicing to CMHL, which is the entity that we acquired with William Lyon Homes? So when we deliver the loan directly to Fannie, Freddie, or Ginnie, we are able to avoid some of the overlays that you know have been put into the market.
But we do that on an individual loan-by-loan basis. So some aggregators have put 700 minimum credit scores out there. Some have put 80% LTVs. Each one's a little bit different. Once again, as we look at FHA, that's a little different game and a very small piece of our business just as the jumbo. And I would say those have been the two subsets that have been most disrupted. So we have a few things really working in our favor on the servicing side of the business today when we decide to sell directly to the agencies or to the cash window. One is we don't have any of the historical risk that went along with servicers and I think have taken most of the airtime around forbearance and servicers potentially going out of business. Now that risk has been capped.
So if you think about the risk today of a brand new servicing book and you say, "Okay, I can make so much on selling the loan to the agency, and I can make so much in managing the servicing rights through our subservicer, Dovenmuehle," and I compare that to best execution of selling through an aggregator, I'm actually making a lot more money. And I'm able, even though I'm selling the loan, I'm able to transfer those servicing rights to my balance sheet at a very low number compared to the historical norm, which really gives me a future cash flow stream as well. But then, obviously, to your point, Michael, you look at what's the worst case. And the worst case is what if some of those folks do go into forbearance?
So what we've done is run some pretty significant modeling on understanding what would that servicing cost. And let me give you an example. If I have an average $340,000 loan at a 3.5% interest rate and I end up with this 10% forbearance rate on my book, which I would say is tremendously high, we haven't had one request yet because of the educational process we're putting the consumer through. And if I end up with 10% over and over on my total book, that will defer my cash flow for a whole lot less than the money I made last month in not going directly to the aggregators but going directly to the agency based on what we're able to move those loans at. So the risk is very low and allows us to continue to utilize best efforts, really look at risk-reward on a loan-by-loan basis.
As the aggregators open back up, I would expect that we'll see more and more of our historic business, and then as you build a servicing book up, then at some point, you sell it back into the marketplace.
Okay. No, that's helpful, so just to make sure I understand, Sheryl, because I think you made an interesting point in that example or that scenario analysis, are you saying that the fees, or if I understand it correctly, that you're making or the percent basis points, whatnot, on retaining the servicing rights or saving would cover a 10% forbearance scenario that you would still be in the black? Is that oversimplifying it, or?
Yeah. I mean, and I put it on steroids, Michael. I just looked at what we thought an overall impact if we took a 10% of our overall servicing book over time. So we've assumed what could it be, let's say, for six months. And we say, "Okay, we recognize that on average, if we get hit with forbearance on 10% of those loans, recognize the processes that are in place today before you ever close a loan, you're re-verifying employment." We're putting the consumer through a very in-depth educational process to make sure they understand that the CARES Act only covers them if it's an agency loan, so they need to wait so much time. So I think all the steps we've taken have really helped our consumer understand. I think when this first happened, it was kind of everyone just called for forbearance because it was so easy.
I think people today realize there will be repercussions, so don't just do it. But even if they do, even if we get 10% of our servicing book that goes into forbearance and we have to pay the investors for that four months, which, by the way, we will get back in 12 months. So it's just a deferral of cash. That cash out the door is less than what we made in the first 30 days.
Okay. No, that's helpful. Dave, I think you mentioned in capital allocation earlier, part of your strategy has been, obviously, a pretty prominent strategy over the last few years has been through M&A. We heard some of the updates around the William Lyon integration. Where would you put yourself at this point in your corporate development and strategy? Obviously, you've broadened out to many different parts of the country from a geographic footprint sense. How do you think about M&A, how it fits in your business? And Sheryl and Dave, feel free to answer as you like, not just for Dave. But over the next few years, would you consider M&A to still be kind of a central part of how you expect to grow the business, or would it be much more opportunistic and tuck-in at this point?
Yeah. I mean, I'll start. One, with the William Lyon acquisition, we're very happy with the footprint that we have. Our focus was really on driving scale, and we've been able to do that. And you look at all of our markets, with really the only exception being Jacksonville, we're a top builder in each of those markets. And we've really seen the benefit come through, especially on the purchasing and the construction side of the business. So we are, I would argue, where we wanted to be. We're very focused, obviously, on integrating William Lyon, doing it the right way, as we've done with our five previous, because that's really where you maximize the potential. We've committed to the $80 million in synergies. I'd say in a normalized environment, for sure, we'd be disappointed if we didn't do more than that.
We still think that even with some of these challenges, there'll be a point in time where we're going to probably get more than the $80 million. So that's the short-term focus for us right now. Longer term, I think M&A. It's always going to be part of our strategy. But I would argue that we're more opportunistic when it comes to that. And it has to come down to the best use of cash. So we're going to look at reinvesting back in the business, what kind of returns we can expect relative to M&A. And we do the same thing when we look at the ability to delever our balance sheet or go after share repurchases as well. And as things evolve, where we put that money will evolve. So as an example, and I mentioned our share price is obviously trading under book. We get through the pandemic.
That's something that we would probably see as one of our best returns as far as where we could put the money. It's very different than, call it 90- 120 days ago when interest rates were low and the share price was higher. I would have told you our focus might have been a little bit more on delivering some of the debt. But our balance sheet, as I said, has to be built to be nimble, and we're going to adjust based on market conditions.
Yeah. I mean, Michael, I think we're heads down right now. We got a lot to do. We didn't expect COVID to come 30 days after we closed on the transaction. I'm so pleased with what the team's been able to do to really not miss too many, really miss a beat on the integration. But I don't think we've been very secretive that we recognize the benefits of large cap. We've seen those with each of the deals we've done. But it's not on the plate right now. We just need to get William Lyon, let the synergies come through the business, do what we've done on the last five deals.
Great. Great. Well, I think that actually is time. We're right at the end of the session. So I want to thank you again, Sheryl and Dave. And I believe I see Jason there in the background, Jason Lenderman from the IR team. Thanks very much for your participation. Thank you. We will be resuming at quarter to with our next presenter, Green Brick Partners. Thanks again, Sheryl and Dave and Jason. And we'll see you.
Really good to see you.
Thanks, Mike. Thank you, everyone. Bye.
Bye-bye.