It’s a new “game on” for United Wholesale Mortgage, which announced robust results for the second quarter.
The Pontiac, Mich.-based company reported net income of $228.8 million in the second quarter compared to a net loss of $138.6 million in the first quarter and $215.4 million of net income in the second quarter of 2022. The company is back in the black after two losing quarters.
When it comes to originations, the company saw $31.8 billion in the past quarter, which was above the $29.9 billion they saw in the same quarter last year. There was a minor decline in the total gain margin, coming in at 88 basis points in Q2 compared to 92 bps in Q1 and 99 bps in Q2 of 2022.
The turnaround in UWM's Q2 earnings was largely connected to alterations in the value of mortgage servicing rights. In addition to this, the lender saw a 42.6% jump in originations from the first quarter.
UWM maintained total equity of $2.9 billion at the end of June 2023, consistent with the figure at the end of March but down from $3.2 billion on June 30, 2022.
"UWM continues to prove that regardless of the interest rate environment, our business model, coupled with the broker channel being the best place for a consumer to get a loan and the best place for a loan officer to work, is a winning formula,” UWM President and CEO Mat Ishbia said in the earnings release.
While they’re not doing their “Game On” program anymore, Ishbia said UWM continues to benefit from it.
In June 2022, it unleashed “Game On” pricing for its mortgage brokers, which dropped rates across the board by 50-100 basis points to oust the competition. In January 2023, it unveiled its "Control Your Price" program, which provides originators who lock loans with UWM with 125 basis points in price enhancements. LOs can use up to 40 basis points per loan, and the program can be applied to conventional, government, or non-agency loans valued at up to $1 million.
“We are profitable, we are hiring, and we are planning to continue to grow,” Ishbia said. “We know the refi boom, whether it’s a long sustained one or a mini refi boom, is going to come soon.”
Ishbia also highlighted the company's focus on technology and product investments and its proactive approach to the cyclical market conditions, unlike other firms that he claims "react late, hire late, train late and miss most of the opportunity."
He said they’ve been able to achieve the volume through their use of technology and are still hiring about 250 to 300 brokers per month. He declined to answer questions about the company's attrition rate.
He said it takes about six months to prepare a broker, so in order to be prepared for any boom, they need to be ready.
“We’re prepared for the first quarter [2024] return of the market,” Ishbia said.
He said their business model succeeds in both the up and the down markets, and this is the ultimate down market, “and we are still winning.”
He said they are on pace for an “all-time record purchase volume,” this year. He said for the third quarter, they expect production to be between $26 and $33 billion, in the range of 75 to 100 basis points.
