Key Takeaways:
– The old way of doing business is over and it is important to adapt to market challenges and prepare for future opportunities.
– UWM Holdings Corp., the nation’s biggest mortgage lender, hired 1,000 employees and remained profitable during the third quarter.
– UWM is investing in new technology and hiring new team members to be prepared when mortgage rates come down and business booms.
– Despite a decline in loan production, UWM reported a 31% boost in net income and a 15% growth in revenue in the third quarter.
– UWM is making a bigger profit on the smaller pool of loans it originates and its total gain on sale margin has increased.
– UWM’s stock soared more than 13% after earnings were announced.
– UWM originated $25.9 billion in purchase mortgages in the third quarter, surpassing rival Rocket Mortgage’s loan production.
– UWM has managed to originate $83.9 billion in mortgages so far this year, while Rocket’s mortgage production has decreased significantly.
– UWM’s refinancing volume has decreased, but the company is investing heavily to be ready for the next refi cycle.
– UWM is hiring and growing, and it has never laid off a team member in its first seven years of business.
– The company is focused on providing expert service, attention to detail, and an efficient process for purchase transactions.
– UWM remains strong in all markets and embraces market cycles to come out stronger.
– The company did not provide its current headcount but has been hiring and plans to hire more in the fourth quarter.
inman:
The verdict is in — the old way of doing business is over. Join us at Inman Connect New York Jan. 23-25, when together we’ll conquer today’s market challenges and prepare for tomorrow’s opportunities. Defy the market and bet big on your future.
While others are downsizing, the nation’s biggest mortgage lender hired 1,000 employees and remained profitable during the third quarter even as rising interest rates kept a lid on loan production.
Mat Ishbia, the chairman and CEO of UWM Holdings Corp., said the Pontiac, Michigan-based wholesaler is investing in new technology and hiring new team members to ensure UWM is prepared when mortgage rates come down and business booms.
In the meantime, UWM reported $301 million in third quarter net income Wednesday, a 31 percent boost from Q2, as revenue grew by 15 percent from the previous quarter to $677 million.
That’s despite the fact that at $29.7 billion, Q3 loan production declined 7 percent from the previous quarter and was down 11 percent from a year ago.
While UWM’s bottom line got a boost from a $92.9 million markup in the fair value of its $281.4 billion mortgage servicing portfolio, it’s also making a bigger profit on the smaller pool of loans the company originates. Total gain on sale margin hit 97 basis points in the third quarter, up from 88 basis points in Q2 and 52 basis points a year ago.
Shares in UWM, which in the last year have traded for as little as $3.23 and as much as $6.98, soared more than 13 percent after earnings were announced and Ishbia briefed investment analysts Wednesday morning, sharing credit for the company’s success with the mortgage brokers it does business with.
Mat Ishbia
“You’re now seeing the reality of what I’ve been saying for years: When rates rise both UWM and brokers shine, while others struggle,” Ishbia said on a call with investment analysts. “Despite 25-year-high mortgage rates and low housing inventory, we continue to thrive in all aspects of the business — including having one of our best purchase quarters of all time.”
UWM mortgage originations by quarter
UWM originated $25.9 billion in purchase mortgages in July, August and September — the third-best quarter in company history and more than rival Rocket Mortgage’s total Q3 loan production of $22.2 billion.
Since overtaking Rocket last year as the nation’s biggest provider of home loans, UWM has put even more distance between the two companies. During the first nine months of the year, Rocket has originated $61.5 billion in mortgages, down 46 percent from the $114.1 billion in mortgage production at the same point a year ago.
So far this year, UWM has managed to originate $83.9 billion in mortgages, a more modest drop of 18 percent compared to the first nine months of last year.
“It’s no secret why UWM and the broker community continue to do so well in the purchase market,” Ishbia said. “Purchase transactions require an expert. They require more attention to detail. They require a higher level of service for real estate agents, consumers and brokers — everybody. And they require an efficient process where speed matters for hitting contract deadlines.”
Like other lenders, UWM has seen its refinancing volume shrink to a trickle. During the third quarter, the company refinanced $3.8 billion in mortgages — about the same as Q2, but less than a tenth of the refi business UWM was doing in late 2020 and early 2021, when rates were at historic lows.
“When rates turn we will be ready because we are investing heavily right now to ensure our brokers will win bigger than ever in the next refi cycle,” Ishbia said. “The combination of our purchase business and the scale and quality of our servicing book is so strong that our business can thrive in virtually all markets. We embrace these cycles each time they happen and we come out stronger, and no other lender can say that.”
In its most recent annual report to investors, UWM said it employed approximately 6,000 team members as of Dec. 31, 2022. In reporting second-quarter results, UWM did not provide a headcount but said the number of team members was down from a year ago. Ishbia has previously said that UWM hasn’t laid off employees, but can downsize through attrition.
“Our culture is vibrant,” Ishbia said Wednesday. “We are hiring. We are growing, we are investing in technology. In the first seven years we’ve been in business we’ve never laid off a team member. And in fact, in the third quarter, we hired over 1,000 team members and we’re gonna hire more again in the fourth quarter.”
Although UWM’s Q3 hiring would represent a 17 percent increase from year-end 2022 staffing levels, the company did not immediately respond to a request for the company’s current headcount.
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Property Chomp's Take:
The real estate industry is constantly evolving, and it's clear that the old way of doing business is over. In today's market, it's essential to adapt to new technologies and strategies to stay ahead. That's why events like Inman Connect New York are so important – they bring together industry professionals to discuss and conquer the challenges of the present and prepare for the opportunities of the future.
One company that has embraced this new way of doing business is UWM Holdings Corp., the nation's biggest mortgage lender. While others are downsizing, UWM has hired 1,000 new employees and remained profitable during the third quarter. How did they do it? By investing in new technology and focusing on hiring new team members.
Mat Ishbia, the chairman and CEO of UWM, understands that mortgage rates will eventually come down and business will boom. That's why he's taking proactive steps to ensure that UWM is prepared when that time comes. And it seems to be paying off – UWM reported $301 million in net income for the third quarter, a 31 percent boost from the previous quarter.
Despite a decline in loan production, UWM's bottom line was boosted by a markup in the fair value of its mortgage servicing portfolio. Additionally, the company is making a bigger profit on the smaller pool of loans it originates. This success hasn't gone unnoticed – shares in UWM soared more than 13 percent after earnings were announced.
Ishbia credits UWM's success to the mortgage brokers it does business with. He believes that when rates rise, both UWM and brokers shine, while others struggle. UWM's expertise in purchase transactions has allowed them to thrive in the market, even with high mortgage rates and low housing inventory.
In fact, UWM originated $25.9 billion in purchase mortgages in the third quarter, making it the third-best quarter in company history. This is more than rival Rocket Mortgage's total loan production for the same period. Since overtaking Rocket as the nation's biggest home loan provider, UWM has put even more distance between the two companies.
While UWM's refinancing volume has seen a significant decline, Ishbia is confident that when rates turn again, UWM will be ready. The company is investing heavily in technology and hiring to ensure that their brokers will come out on top in the next refi cycle.
UWM's success is also reflected in its commitment to its employees. The company has a vibrant culture and is continuously hiring and growing. In fact, they hired over 1,000 new team members in the third quarter and plan to hire more in the coming months.
It's clear that the old way of doing business is over. Companies like UWM are embracing new technologies, investing in their employees, and adapting to the changing market. By doing so, they are defying the market and betting big on their future.
