The latest purchase loan product offering from United Wholesale Mortgage does not require private mortgage insurance when the borrower is putting more than 10.01% down.
Typically, when a borrower’s down payment is less than 20% on a conforming mortgage, insurance is required as a credit enhancement for when the loan is sold in the secondary market.
However, the UWM loans that waive the MI are not being sold to Fannie Mae or Freddie Mac and the wholesale lender will retain the servicing on them, a company spokesperson said.
Guidelines for this program, MI Buster, apply to conventional purchase loans starting at $200,000, as well as high balance loans with loan-to-value ratio between 80.01% and 89.99%.
"MI Buster allows independent mortgage brokers to put the purchase power back in borrowers' hands," Mat Ishbia, UWM's president and CEO said in a press release. "By avoiding mortgage insurance with less money down, borrowers can now decide if they want to use those savings to purchase more home, have a lower monthly payment or maybe both."
In the past, other lenders have not required MI on certain high LTV conventional loans, typically
Separately, after the market closed on Nov. 16, UWM Holdings announced that its controlling shareholder, SFS Holding is selling 50 million shares of the company's publicly-traded Class A common stock in a secondary offering.
The prospectus does not have a dollar amount for the sale.
UWM's common stock price closed at $6.61 on Nov. 16. The next morning, it opened at $6.57 per share and sank as low as $5.94. Trading volume was much higher than normal; as of 3:30 p.m., nearly 8.9 million shares changed hands, while its average volume was 2.2 million, according to Yahoo Finance.
SFS Holding does not currently hold any shares of Class A common stock. "It only holds 1,502,069,787 non-economic voting Class D common stock and the equal number of UWM LLC Class B Units that together are exchangeable into Class A common stock," the prospectus said.
It was disclosed at the time United Wholesale Mortgage announced
The SPAC merger was completed
In addition, concurrently with the pricing of the offering, UWM intends to use $100 million of its existing $300 million stock repurchase program to buy an incremental $100 million of SFS's equity interests — which are convertible on a one-for-one basis into shares of Class A Common Stock — at a price per share equal to the price at which the underwriter will purchase the shares in the offering.
J.P. Morgan and BofA Securities are acting as joint lead book-running managers.
The stock sale was announced one day after an indirect subsidiary of UWM Holdings disclosed a debt offering consisting of $500 million of 5.750% senior notes due 2027.
UWM plans to use the net proceeds for general corporate purposes and to fund growth. The debt offering is expected to close on Nov. 22.
