Hello, LOs!
United Wholesale Mortgage held its quarterly earnings call on Tuesday morning. There's lots of interesting stuff to unpack, so let's get to it.
*He didn't mention them by name, but Mat Ishbia told investors and analysts that he definitively won the war against Rocket Mortgage and Fairway Independent Mortgage (the rivals have claimed otherwise). Ishbia said UWM lost only 600 broker partners (which doesn't include about 1,000 brokers who did an insignificant amount of business with UWM). He said UWM recorded one of its best months on record for new registrations. Ishbia also said the LOs that stuck with UWM are sending the wholesaler more volume than they had prior to the ultimatum.
*And surely you've noticed that UWM's pricing has been very competitive lately. Expect that strategy – which they've employed in the past – to continue in the upcoming few quarters. UWM is projecting gain-on-sale margins between 75 bps and 110 bps in Q2. "Part of that is tied to some of the acquisition concepts that we talked about, which was understanding that we could acquire someone and spend money, or we could do it organically by lowering price a little bit and acquiring their clients, the brokers," Ishbia said on the call. "And so we see 75 to 110 [bps] for a couple quarters, potentially."
*Few lenders can sustain profits at the 75 bps mark for long, Ishbia and CFO Tim Forrester said on the call, giving UWM an opportunity to grow market share. Several other large retail and multi-channel competitors have said a version of this in recent weeks.
*Ishbia told analysts that UWM will likely achieve record purchase volume in Q3, thanks in part to the return of jumbo loans.
*About that push to grow the mortgage broker channel. Toward the end of the call, KBW analyst Bose George asked Ishbia if retail LOs would actually make more money on the wholesale side.
"Yes, the loan officer will make more money," he said. "And yes, at the same time the consumer will get a better rate. So put those two things together and say, 'Hey, how can the loan officer who's originating make more, and the consumer get a better deal? That's the difference between that 300 basis points 350 basis point margin everyone else has, and the 100 basis points, 125, 150 basis point margin on wholesale. That's not even taking into account a W2 loan officer at whatever company, Caliber, Guaranteed Rate, to start his own company and be a mortgage broker shop, and now he's self-employed and he gets the benefits of writing taxes off...the opportunity is huge. You will see happen this year where some of the biggest loan officers in America leave their retail companies and go to brokers."
*Investors don't appear to share Ishbia's optimism. As of 12 p.m. EST, UWM's stock was trading at $6.72 a share. UWM's board approved a share buyback of up to $300 million over the next two years.
My complete story on UWM's forecast will go live on HW+ by tomorrow morning. Make sure to check it out!
Other assorted items of note:
*Better.com plans to go public via SPAC later this year, to the surprise of pretty much no one. The lender claims it will be valued at $7.7 billion following the merger with a blank check company sponsored by Novator Capital. The digital lender is one of America's fastest-growing mortgage companies, but that growth came during the unprecedented refi boom. It's growth path in a purchase environment is a lot less certain.
*Guild Holdings will pay just under $200 million to acquire Residential Mortgage Services Holdings, giving it about 70 retail offices in the Northeast and the mid-Atlantic. The Maine-based lender originated roughly $8.5 billion in mortgages last year.
*Our feature on why many would-be VA borrowers are getting screwed in this wild real estate market will go live tomorrow, so make sure to check back.
James Kleimann
Managing Editor, HousingWire
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