During the third quarter, UWM’s production mainly consisted of purchase loans, amounting to $25.2 billion compared to $29.7 billion in the previous quarter. Refinances, on the other hand, experienced a significant increase, reaching $16.5 billion from $12.4 billion in the prior quarter.
UWM’s proprietary loan assistant MIA played a crucial role in closing over 14,000 loans, primarily refinances, after making 400,000 outbound calls on behalf of brokers during the quarter.
MIA addresses a common challenge in the industry where borrowers often forget their broker’s identity despite having a positive experience. Ishbia highlighted that MIA’s response rate exceeded expectations, reaching over 40%.
Financial performance
UWM’s gain-on-sale margin increased to 130 basis points, up from 113 bps in the previous quarter and 118 bps from a year ago.
Despite reporting a net income of $12 million for the quarter, down from $314 million in the previous quarter and $31 million a year earlier, UWM’s non-GAAP net profit was $9 million. The decline was attributed to a fair value decrease in its servicing portfolio.
Analysts at Keefe, Bruyette & Woods noted that the earnings were in line with expectations, with total volumes and higher margins offset by increased expenses.
Servicing overhaul ahead
UWM’s mortgage servicing rights (MSRs) increased to $216 billion in unpaid principal balance (UPB) by the end of September. The company remains on track to transition servicing in-house by 2026.
Short-term costs have risen due to the servicing book transition, but Ishbia emphasized that it will lead to reduced expenses and generate long-term benefits for the company.
Liquidity conditions
UWM closed the quarter with $3 billion in available liquidity, including $870 million in cash and borrowing capacity. The company completed a $1 billion offering of unsecured notes to support its growth.
Looking ahead, UWM expects to originate between $43 billion and $50 billion in the fourth quarter, with a projected gain-on-sale margin of 105 to 130 bps.
With plans to expand business volume and margin, UWM anticipates significant growth in the coming quarters. As of Thursday, UWM shares traded at $5.22, reflecting a 7.8% decrease from the previous day’s close.