UWM chief says company is winning in more ways than one

While earnings at United Wholesale Mortgage declined on a quarterly basis, its Chairman and CEO Mat Ishbia expects it will outperform competitors in the second quarter.

"Our competitors are not excited about Q2; we are thrilled," Ishbia said. "We are excited about when rates go up a little bit, because you know what happens, we will gain market share."

UWM received 17,000 more loan application submissions in April compared with February when rates were much lower, he said.

Ishbia associated that jump with his March announcement that the company would ban brokers from working with Rocket Pro TPO and Fairway Independent Mortgage. He added that the reaction to the ultimatum has been more positive than the company expected.

"We've won on that not because of the more volume — of course we got more volume but that wasn't the point," Ishbia said on the company's first quarter earnings call. "The point was alignment with our brokers, sending the message that we are going to do everything right for the consumer, which is mortgage brokers and for our broker partners."

UWM Holdings earned $860 million in the first quarter, compared with $1.37 billion in the fourth quarter and $20.3 million in the first quarter of 2020.

In the first quarter, the company did $49.1 billion in origination volume, of which $12.2 billion was purchase and $36.8 billion was refinance. The total fell below the $52 billion to $57 billion Ishbia predicted during the fourth quarter earnings call.

In the last three months of 2020, UWM originated $54.7 billion, with $12.1 billion coming from purchase and $42.6 billion from refinancings. One year ago, it did $42.1 billion, consisting of $12.5 billion in purchase production and $29.9 billion in refinances.

Ishbia is predicting UWM will end up with second quarter origination volume of between $51 billion and $55 billion. Other companies are largely expecting lower production in comparison to the first quarter. But Ishbia pointed to UWM's 17-day average time to close a loan, contrasting it with the rest of the industry, which is running at approximately 50 days.

But gain on sale margins for the second quarter could average between 75 and 110 basis points. Previously, the company had expected margins to be in the mid-to-high 100s basis point range. First quarter gain margins were 219 bps, down from 305 bps in the fourth quarter but up from 95 bps one year ago.

"We didn't expect them to go down to this point in this part of 2021, but we're excited about it because we're still going to produce a lot of income where our competitors might not," because wholesale mortgage originations has a lower cost structure than retail, Ishbia said.

In March, UWM rolled out a prime jumbo product, for which it received over $1 billion in submissions in April and expects to receive over $2 million during this month, Ishbia said. More importantly, nearly half of the applications for the jumbo product are for purchases.

The company keeps expanding its offerings, he added, as earlier this month, UWM added 5-year, 7-year and 10-year adjustable rate mortgage products indexed to the Structured Overnight Financing Rate.

While Ishbia plans to grow UWM to be not just the No. 1 wholesale lender but the largest lender overall, such expansion is not likely to come from acquisitions. He described New Residential's deal for Caliber Home Loans and Finance of America's agreement to pick up Parkside Lending as "a really interesting way of trying to acquire market share.

"We can acquire that [market share] by sharpening our pricing or expanding our products, which we are doing right now," he said.