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United’s wholesale mortgage business grew 288%

United Wholesale Mortgage saw record purchase loan issuance during the second quarter of 2021, as the refinancing boom continued to weaken, helping the company take overall loan production to a new high.

In total, UWM, based in Pontiac, Mich., Made $ 59.2 billion in loans in April, May and June, up 21% from the first quarter of the year and 90% from the year before. to a year ago.

But the growing share of less profitable purchase mortgages in the mix reduced net income, which was down 74% from a year ago, to $ 138.7 million.

UWM mortgage origins by type

Source: Data from UWM regulatory files compiled by Inman

Purchase loan origination nearly doubled from the first quarter to the second, reaching a record $ 24.1 billion. This is a 288% jump from a year ago, when the pandemic slashed home sales. Purchase loans accounted for 41% of UWM’s loan volume in the second quarter, up from 22% in the last three months of 2020.

At 81 basis points, the total profit margin was down 67% from the 243 basis points the company earned a year ago, when 80% of the loans it took were refinances. This is also what UWM expects margins to look like going forward, offering indications that third-quarter loan production is expected to be between $ 57 billion and $ 62 billion, with a margin of gain. expected between 75 and 100 basis points.

UWM CEO Mat Ishbia highlighted the dramatic growth in the volume of purchase loans, saying the company’s relationships with mortgage brokers will help it stay profitable as mortgage rates rise and mortgage rates rise. refinances are drying up.

Mat Ishbia

Mat Ishbia, CEO of United Wholesale Mortgage

“As we said before, 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 squeezed and buying drives volume.” Ishbia said in a statement. declaration. “Consumers are increasingly realizing that working with a broker is the cheapest, fastest, and easiest way to get a mortgage, and as long as the wholesale channel thrives, UWM will be as well. the leader and the undisputed champion of the channel. “

In an interview, Ishbia told Inman that UWM is making a concerted effort to use social media and other marketing channels to “let realtors and consumers know that the best way to get a mortgage is to go through a broker ”- a message he delivers in person when doing the news series.

UWM launched a prime jumbo loan in March, which, combined with an increased focus on FHA loans, means that “mortgage brokers can count on our loans 90-95% of the time their loans will fit in our box,” Ishbia said. “It gives them more confidence to talk to real estate agents to drive business. “

UWM says its premier jumbo loan offers competitive rates, streamlined guidelines, and quick loan closings of up to $ 2 million for the purchase of primary residences, second homes and investment property. The mortgage wholesaler halted jumbo lending in March 2020 at the start of the pandemic, but is once again a major player. UWM issued $ 5.9 billion in jumbo loans during the second quarter, or about 10% of total loan volume.

Asked about his rival Rocket Cos. ‘ the recent announcement of its intention to embark on the iBuyer business through its real estate arm, Rocket Homes, Ishbia said UWM had “no plans or desire” to chart a similar course.

“These are people who are trying to make room for themselves when there really isn’t room for them,” Ishbia said. “A real estate agent is a specialist who knows the territory, who knows the market. Trying to eliminate these people is a silly concept that has failed for years and will continue to fail because of the value that real estate agents and mortgage brokers offer.

Since it is not a retail lender, UWM is not a household name with many consumers. But it was right behind Wells Fargo as a provider of purchase loans in 2020.

UWM rivals Rocket Mortgage – the nation’s largest mortgage lender – and LoanDepot also reported record purchase loan origination during the second quarter.

Editor’s Note: This story has been updated with additional comments from UWM CEO Mat Ishbia.

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