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UWM Beats Rocket To Become Top U.S. Mortgage Originator

David Krechevsky
Nov 04, 2022
Uwm front building with sign

Reports strong Q3 earnings, with net income and overall originations up from Q2.

United Wholesale Mortgage (UWM) saw its net profit increase in the third quarter from the previous three months, but that was not the number Chairman & CEO Mat Ishbia wanted to brag about.

In the quarterly earnings report issued Friday by UWM Holdings Corp., the publicly traded parent of UWM, the Detroit-based mortgage lender noted that its loan origination volume was $33.5 billion, making it the top overall mortgage originator in the nation.

While UWM has typically been both the top wholesale and top purchase lender, it overtook crosstown rival Rocket Mortgage in overall loan originations in the third quarter. Rocket on Thursday reported closed loan origination volume of $25.6 billion.

"The results of the third quarter speak for themselves,” Ishbia said in a news release. “The momentum of the broker channel is accelerating. I have never been more proud of our team members and the broker community than I am today. Being No. 1 is amazing for UWM, but probably even more amazing for all mortgage brokers throughout America. It is validation that mortgage brokers are the best place for consumers to get a loan and for loan officers to work, and that our singular focus on helping brokers win was the right strategic decision.”

He added, “Winning this championship will be celebrated; however, we realize that much work remains to help brokers continue to thrive and for UWM to continue to win with them."

Rocket Companies pushed back, saying in a statement, "As the largest home lender in the country, we remained focused on helping more American families buy or refinance their homes than all other lenders. As opposed to focusing on large loan amounts, which is common practice for many lenders in more challenging rate markets, we will continue to take pride in growing the number of families we assist."

In the latest issue of National Mortgage Professional Magazine, Ishbia is quoted from the second-quarter earnings call as saying, “We continue to capture more market share and not only position ourselves to win but dominate the future. And we feel great about the decision we made. As I said before, we control the margins; we decided to lower margins strategically to grow the broker channel and help us continue to grow our market share.”

UWM reported net income of $325.6 million, or 13 cents per diluted share, up 51% from $215.45 million in the second quarter but down 1.3% from the same quarter last year. The results beat analysts’ estimates of 2 cents per share, according to SeakingAlpha.com.

The $33.5 billion in overall loan originations was an increase of 12% from the second quarter, but was down nearly 47% from the third quarter of last year. The increase in originations in the third quarter came despite the continued rise of mortgage rates, which rose above 7% last week for the first time in two decades.

During a conference call with analysts, Ishbia credited UWM’s third-quarter gains to its “Game On” pricing campaign, which was announced in late June. Game On pricing dropped mortgage rates by 50 to 100 basis points across the board, drawing criticism from some who claimed the discounts were intended to put smaller competitors out of business.

UWM nonetheless saw the benefits of the program in the third quarter. Purchase originations totaled $27.7 billion in the quarter, “the best purchase quarter in UWM’s history,” the company said. The total was up 24% from the second quarter and was 5% above the $26.5 billion in loans originated in the third quarter of 2021.

“We said we would dominate the purchase market; we just had our best quarter ever,” Ishbia said during the conference call. “Our share in the wholesale channel is north of 40% and could be close to 50%.”

He added, “It is undeniable that Game On has been a massive success.”

UWM reported the unpaid principal balance (UPB) of its mortgage servicing rights (MSRs) totaled $306 billion as of Sept. 30, down slightly from $308.1 billion at the end of the second quarter but up 7.4% from a year earlier. 

The company also ended the third quarter with approximately $2.9 billion in available liquidity, including $860.8 million in cash and self-warehouse, and $2 billion in available borrowing capacity that includes $1.5 billion via a line of credit secured by agency MSRs, it said.

Kevin Heal, Argus Research Analyst on UWM earnings, said mortgage servicing income is a buffer for UWM.

"It shows they’re selling more mortgages and keeping the new ones, and it allows them to continue with their strategy," Heal said. "The ‘Game On' strategy is working because we’re seeing more layoffs in the wholesale mortgage market. The servicing income is increasing, and it shows they’re writing more mortgages. Rocket doesn’t want to compete head-to-head with UWM on this strategy. UWM is providing a (interest) rate break but doing it for 30 years."

Ishbia told analysts that he believes UWM is “in the best strategic position we’ve ever been in,” and added that, “While it’s great to be No. 1 overall, we’re just getting started.”

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