UWM
Holdings
Corp.,
the
parent
of United
Wholesale
Mortgage (UWM),
returned
to
profitability
in
the
first
quarter
of
2024
despite
higher
rates,
a
lack
of
inventory
and
a
decline
in
the
fair
value
of
its
mortgage
servicing
rights
(MSRs). 

The
quarter’s
positive
performance
was
supported
by
increased
origination
volumes
at
improved
margins
and
servicing
sales,
which
resulted
in
a
non-GAAP
net
income
of
$141
million
from
January
to
March,
compared
to
a $361
million loss
in
the
previous
quarter. 

Meanwhile,
the
GAAP
net
income
was
$180.5
million,
inclusive
of
a
$15.6
million
decline
in
the
fair
value
of
MSRs,
according
to
documents
filed
with
the Securities
and
Exchange
Commission (SEC)
on
Thursday. 

“We’re
extremely
busy
here
at
UWM;
we’re
hiring
hundreds
of
new
team
members
preparing
for
the
future,”
Mat
Ishbia,
UWM
chairman
and
CEO,
told
analysts
during
a
call.
“I
said
we
expected
2024
to
be
a
better
year
for
the
housing
and
mortgage
industries,
and
the
first
quarter
supports
what
I
expected.” 

UWM
originated
$27.6
billion
in
mortgages
in
the
first
quarter,
higher
than
the
$24.3
billion
in
the
previous
quarter
and
the
$22.3
billion
originated
in
the
first
quarter
of
2023.
The
company’s
volume
in
the
first
quarter
consisted
mainly
of
purchase
loans,
representing
$22.1
billion.

The
lender’s
mortgage
production
exceeded
that
of
its
primary
rival, Rocket
Mortgage,
which
generated
$20.2
billion
in
closed
loan
volume
from
January
to
March.
However,
Rocket
delivered
a
higher
profit
of $291
million.  

Ishbia
told
analysts
he
doesn’t
think
“a
lot
of
lenders
can
say
they’ve
grown
that
much
year
over
year”
in
mortgage
production,
and
that’s
happening,
among
other
things,
because
UWM
does
not
“try
to
be
all
things
to
all
people.” 

One
thing
UWM
has
tried
to
improve
is
its jumbo
offerings.
The
firm’s
jumbo
production
strongly
increased
in
the
first
quarter
to
$2.4
billion,
up
33%
quarter
over
quarter.
The
volume
was
also
four
times
higher
than
in
the
same
period
last
year. 

Pricing
strategies 

UWM’s
profit
on
each
loan
also
increased
in
the
quarter,
exceeding
the
pre-Game
On
pricing
initiative launched
in
June
2022.
Gain-on-sale
margins
rose
to
108
basis
points
in
the
first
quarter,
compared
to
92
bps
in
the
previous
quarter
and also
in the
same
period
last
year. 

Analysts
at Jefferies said
in
a
report
that, as
a
result
of the
Game
On
initiative,
“we
have
seen

exits
from
wholesale
from
numerous
(and
meaningful)
competitors
over
the
past
two
years.”
They
added
that
margins
quickly
“snapped
back
and
now
have
moved
in
excess
of
the
pre-Game
On
levels,”
despite
ongoing
macro
challenges. 

Regarding
new
pricing
initiatives
like
Game
On,
Ishbia
said,
“I
don’t
foresee
that
right
now.”
UWM
has
focused
on
other
ways
to
help
brokers,
such
as
investing
in
technology,
he
said. 

As
UWM
continues
to
sell
MSRs
opportunistically,
its
portfolio
ended
the
first
quarter
at
$229.7
billion
in
unpaid
principal
balance
(UPB),
compared
to
$299.5
billion
in
the
previous
quarter
and
$297.9
billion
in
the
same
quarter
of
2023.   

“Our
first-quarter
sales
were
accomplished
at
what
we
believe
to
be
favorable
prices,
and
have
allowed
us
to
significantly
de-risk
our
MSR
portfolio
and
deliver
our
balance
sheet
while
also
supporting
our
ability
to
originate
substantial
new
loan
volume,”
chief
financial
officer Andrew Hubacker
told
analysts. 

UWM
ended
the
quarter
with
$2.9
billion
of
available
liquidity,
including
$605.6
million
in
cash. 

The
company
anticipates
second-quarter
production
between
$28
billion
and
$35
billion.
Meanwhile,
the
gain
margin
is
expected
to
be
between
85
bps
and
110
bps.
Ishbia
said
margins
should
sustain
at
this
level
and
even
go
up
when
rates
drop. 

UWM shares were
trading
at
$7.41
on
Thursday
morning,
up
3.64%
from
the
previous
closing. 

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