Fortunately for Walker & Dunlop, we have benefited and generated record revenues of $253 million during the quarter, on the back of exceedingly strong loan origination and property sales volume of $7.1 billion.
Our recorded loan and origination volume of $6.7 billion coupled with our Q1 lending volume of $9.6 billion, catapulted Walker & Dunlop's market share, total commercial real estate lending in the United States for the first half of 2020% to 13.2%, nearly tripling our market share from last year.
All these investments in people, technology and branding, came together in Q2 2020 to generate 26% year-over-year growth in revenues, and 47% year-over-year growth in diluted earnings per share to $1.95, in the midst of the global pandemic, when our entire team was working remotely.
And if record revenue growth explosive earnings were not enough, we added a record net $5.2 billion of servicing from loan originations to our portfolio during the quarter, pushing our servicing portfolio to $100 billion at the end of July, and officially achieving the first pillar of our highly ambitious five-year strategic growth plan entitled Vision 2020.
Revenue growth of 26% during the quarter and our debt brokerage and property brokerage businesses were significantly curtailed, highlights the volume of lending we did with the GSEs and HUD.
We originated $4.5 billion of financing with Fannie Mae and Freddie Mac in the second quarter, increasing our market share with the GSEs from 10% last year, up to 14% through the first half of 2020.
Our partnership with Fannie Mae, which dates back to 1988, has had an incredible year, with Walker & Dunlop representing 20% of Fannie Mae's total multifamily lending volume for the first half of the year.
$5.2 billion of new loans into our servicing portfolio, during a quarter when we originated $6.7 billion in total financing; means, we were not simply refinancing loans that already existed in our servicing portfolio, but rather taking business from our competition and bringing in new clients into Walker & Dunlop.
As slide 6 shows, we had strong growth in our Fannie and Freddie origination volumes in Q2, and as the middle column shows, we had explosive growth with HUD this quarter, growing from $190 million of loan originations in Q2 of 2019, to $640 million loan originations this quarter, by far our largest HUD quarter ever.
First, Sheri Thompson joined Walker & Dunlop 18 months ago to lead our HUD business, and has done an absolutely magnificent job, taking our team from being a market leader to being the leader in HUD financing.
Finally, as you can see just to the right of the HUD volumes, we've brokered $1.5 billion of debt to third parties during Q2.
That number is down 23% from Q2 2019, but still very strong, given the dislocation in place in the markets.
It is noteworthy, that the New York-based debt brokerage team we added in Q1 was responsible for 26% of our total brokered volume in Q2, quite an accomplishment for first quarter at Walker & Dunlop, particularly considering they are based in the epicenter of the early COVID crisis.
We closed $447 million of sales volume in Q2, a slow quarter for our team, but we were seeing the market pick back up and currently have 33 properties worth $1.4 billion under contracts for closing in Q3 and Q4.
Vision 2020 was established in 2016 with very ambitious five-year goals, $30 billion of annual debt financing, $8 billion of annual investment sales, $8 billion in assets under management and $100 billion of loans in our servicing portfolio, which if achieved, would drive $1 billion in annual revenues.
As the left hand side of this next slide shows, we established the debt financing goal of $30 billion after originating $16.2 billion of debt financing in 2015 and on a trailing 12 month basis, as you can see in the last column of this chart, we have achieved our Vision 2020 debt financing goal by originating $31.4 billion of loans, which is a five-year compound annual growth rate on loan originations of 14%.
Similarly in the right side of this slide shows the growth in property sales, from established goal selling $8 billion in multifamily properties, after selling $1.5 billion in 2015, to selling $5.8 billion over the last 12 months.
While the pandemic has clearly slowed down our property sales business, we have grown this business at a compound annual growth rate of 31% over the past five years and have, built an absolutely incredible team.
I mentioned previously, the growth in our servicing portfolio to $100 billion and as this slide shows, over the past five years, we have grown the portfolio from $50.2 billion in 2015 to $100 billion today, at a compound annual growth rate of 15%.
The dramatic growth in loan originations, property sales, and servicing, have grown revenues, as you can see on the right side of this slide, from $468 million in $2015 to $916 million over the past 12 months, or at a compound annual growth rate of 14%.
So all of this brings us close, but not quite to our Vision 2020 goal of $1 billion in annual revenues, which we will continue chasing for the remainder of this year.
As Steve will discuss, we took a large loan loss reserve in Q1 to incorporate the expected impacts recorded and added another $5 million to that reserve in Q2.
For example, our client email database was 19,000 people prior to the COVID pandemic.
Today, it is over 120,000 email addresses.
Our media outreach has exploded, having Walker & Dunlop mentioned in 129 press articles in target publications during Q2, an all-time record by over 55%.
Q2 total transaction volume of $7.1 billion, included a significant year-over-year increase in our Fannie Mae loan originations, which drove the 26% year-over-year increase in total revenues, to a quarterly record of $253 million.
Second quarter net income of $62 million and diluted earnings per share of $1.95, were both up 47% from Q2 '19.
Second quarter total debt financing volume of $6.7 billion was led by $2.8 billion of Fannie Mae originations.
For the second consecutive quarter, Fannie Mae originations comprised over 40% of debt financing volume, which along with our robust HUD originations, pushed gain on sale margin to 252 basis points, well above our forecast range of 170 basis points to 200 basis points.
Our HUD business is poised for a breakout year in 2020, having originated $640 million in the quarter and with a strong pipeline for the rest of the year, while debt brokerage volumes will likely continue to be constrained by the current economic environment.
Anticipating the shift to more Freddie Mac originations in Q3, we expect gain on sale margin to be in the range of 190 basis points to 210 basis points for the quarter.
Our scaled business model continues to produce healthy key financial metrics, with second quarter operating margin of 33% and return on equity of 23%, both well above the top end of our target ranges of 30% and 20% respectively.
Personnel expense as a percentage of revenue was 42%, due to an increase in variable expenses for commissions and bonus, driven by the strong performance during the quarter.
Variable compensation expense was 60% of our total personnel costs during the quarter.
And finally, year-to-date revenue per employee has increased to over $1.1 million, as revenue growth has outpaced the hiring of new employees.
Our strong debt financing volumes in the first half of the year have enabled us to grow our servicing portfolio by more than $6.5 billion in the last six months and our servicing portfolio ended the quarter at just $12 million below the $100 billion mark.
As Willy, mentioned we have since crossed over $100 billion, successfully achieving an important pillar of our Vision 2020 goals.
The portfolio continues to fuel strong cash revenues, with record servicing fees totaling $57 million in Q2.
Additionally, the record mortgage servicing rights revenues of $90 million in the quarter, which were more than double those of Q2 '19, will translate into higher cash servicing fees in the future.
Turning now to liquidity, we continue to strengthen the balance sheet, increasing our available cash on hand, from $205 million at the end of Q1 to $275 million at the end of June.
Adjusted EBITDA in the quarter was $48.4 million, down from $62.6 million in the year ago quarter.
The decline was driven primarily by the impact of low short-term interest rates on our escrow earnings, which declined by $12 million year-over-year.
Our average escrow balances at the end of June were $2.2 billion, which will drive significant upside to earnings and adjusted EBITDA, if interest rates start to rise.
The advanced line is structured as a $100 million supplement to an existing agency warehouse line, and may be used to fund advances of principal and interest payments on loans that are in forbearance or are delinquent within our Fannie Mae DUS portfolio.
The facility provides 90% of the principal in interest advance payment, at a rate of LIBOR plus 175, and is collateralized by Fannie Mae's commitment to repay the advances.
Through the end of July, we had only nine Fannie Mae loans, totaling $261 million that took forbearance, which is less than 60 basis points of our Fannie Mae portfolio and we have granted no new requests since May.
During the quarter, we took an additional $5 million provision expense, to increase our allowance for credit obligations related to our at-risk Fannie Mae portfolio.
Our allowance now stands at just over $69 million or 17 basis points of our at-risk portfolio.
With respect to our interim loan portfolio, we reduced our allowance by $200,000 during the quarter, due to the overall decrease in the size of the portfolio, which declined from $458 million at March 31, to $408 million at the end of June.
So far this year, we've reduced the portfolio by 25%.
Inclusive of the interim loans in the Blackstone JV, we've had 12 loans, totaling $240 million, either rate lock or pay-offs so far this, year reducing the risk profile significantly.
And of those 12 loans at rate locked or paid off, we refinanced 10 of them with third party capital, mostly Fannie and Freddie, for over $290 million in permanent loan financing, achieving exactly the objective we have always had for the interim lending program.
Our strong financial results for the first half of the year and the pipeline of business we see for Q3, have put us back on track to achieving our annual operating margin and return on equity goals of 28% to 30%% and 18% to 20% respectively, and we believe double-digit earnings per share growth for 2020 is now achievable.
In addition, our robust capital and liquidity position give us great confidence in maintaining our dividend, as the Board approved a $0.36 dividend per share for the quarter, payable to shareholders of record as of August 21.
And our team of 900 employees took it upon themselves, to figure out how to inspect properties, receive appraisals, close loans and continue providing the exceptional service to our customers, this is expected to Walker & Dunlop each and every day.
And with multifamily comprising close to 80% of total commercial real estate financing volumes so far this year, we are extremely well positioned to be one of the largest providers of capital to the commercial real estate industry over the coming years.
As I ran through Vision 2020 on a trailing 12 month basis, I did not discuss our asset management business, which as we started at the end of -- to as we stated at the end of 2019, is not going to achieve the 2020 Vision goal of $8 billion of AUM.
First our AUM of $1.9 billion comprises three components; equity capital, invested in a broad array of commercial property types by JCR Capital; debt capital we lend on behalf of life insurance companies through separate accounts; and multifamily bridge loans we originate into our joint venture with Blackstone Mortgage Trust.
During Q2, we reached an agreement with a large Canadian pension fund to provide up to $250 million of preferred equity capital on multifamily deals, where we are originating first trust mortgage financing with Fannie Mae or Freddie Mac.
The loans we are currently originating, carry with them significant servicing fees, demonstrated by our 252 basis point gain on sale margin in Q2.
As you can see in our net income and EBITDA numbers, we are generating a huge amount of non-cash revenue in mortgage servicing rights, that will convert into cash revenues over the next seven, 10 and even 40 years, depending on the life of the loan.
And finally, at some point, interest rates will begin to rise, and we will generate substantial cash interest income off our $2.2 billion in escrow deposits.
But never in my 17 years at the company, have I seen how good we truly are, demonstrated so dramatically.

Summary:
All these investments in people, technology and branding, came together in Q2 2020 to generate 26% year-over-year growth in revenues, and 47% year-over-year growth in diluted earnings per share to $1.95, in the midst of the global pandemic, when our entire team was working remotely.
Q2 total transaction volume of $7.1 billion, included a significant year-over-year increase in our Fannie Mae loan originations, which drove the 26% year-over-year increase in total revenues, to a quarterly record of $253 million.
Second quarter net income of $62 million and diluted earnings per share of $1.95, were both up 47% from Q2 '19.