United Wholesale Mortgage reports record volume for the third quarter

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United Wholesale Mortgage Holdings Corp. posted a 16% year-over-year increase in new issues for the third quarter on Tuesday, although net income declined 77% due to increased competition in the market.

Pontiac-based UWM posted third-quarter profits of $ 329.9 million on closed volumes of $ 63 billion, beating its forecast for the quarter. The profit margin fell from 3.18% in the previous year to 0.94%, but remained at the upper end of the forecast. The decline is due to the fact that the pandemic-induced boom is cooling last year, interest rates are rising and fewer people are refinancing, which increases competition among lenders as demand falls.

“We have demonstrated the strength of our business by delivering our best quarter ever in terms of total production and purchase-in production,” CEO Mat Ishbia said in a statement. “As we said earlier, UWM is designed to be successful not only when there is a refi boom and margins are at record highs, but also when margins are compressed and the grocery store increases in volume.”

Net income also included a $ 170.5 million decrease in the fair value of mortgage servicing rights compared to net income of $ 1.5 billion for the same period last year, including $ 68.9 million in charges related to depreciation, Depreciation and disbursements of servicing rights.

UWM had forecast a volume of 57 to 62 billion US dollars for the third quarter, with a profit margin between 0.75% and 1%. The results narrow the gap between him and metropolitan rival Rocket Mortgage, which sold $ 88.05 billion last week.

Ishbia aims to outperform Rocket Mortgage as the largest direct mortgage lender in the country by 2024, even though UWM sells loans solely through mortgage brokers who find products and rates from various lenders for their clients. Rocket also issues these wholesale loans, but also makes direct loans to homeowners. UWM said earlier this year it would stop doing business with brokers who continued to work with Fairway Independent Mortgage Corp. from Rocket and Wisconsin work together.

UWM expects origination to drop between $ 52 billion and $ 60 billion in the fourth quarter as home purchases slow around the holidays and profit margins decline between 0.85% and 1.05%. Rocket predicts loan closings of between $ 75 billion and $ 80 billion and surpassing the record lending volume of 2020.

In the third quarter, UWM revenue declined 62% year over year to $ 690.3 million and spending declined 6.7% to $ 357 million. Home purchase loans accounted for 42% of UWM’s mix to $ 26.5 billion for the quarter, nearly twice as much as last year. The remainder of the $ 36.5 billion came from refinancing, down 13%.

The average time to close a loan was 19 days in the quarter. The company aims to reduce that number to 12. It introduced a new technology, including BOLT, which enables qualified borrowers to get initial approval in just 15 minutes and reduce borrowing costs. UWM started contracting with appraisers last month to expedite the closing process. A pilot attempt has also been made to accept cryptocurrencies for mortgage payments, but broader usage remains.

The company’s 60-day failure rate was 1.01% and the forbearance rate was 0.83% as the COVID-19 pandemic caused economic disruption.

The company closed with $ 950.9 million in cash in September, an increase of 96% year over year. On January 6th, UWM will pay a quarterly dividend of 10 cents per Class A common share starting December 10th.

Rocket Companies Inc., which owns Rocket Mortgage, title insurer Amrock LLC, the automotive retail market Rocket Auto, and more, announced last week that it had net income of $ 1.393 billion for the third quarter. Home Point Capital Inc., based in Ann Arbor, a primarily wholesale lender, posted net income of $ 71.2 million on $ 20.8 billion in loans.

bnoble@detroitnews.com

Twitter: @BreanaCNoble


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