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Ahead of its big IPO, United Wholesale Mortgage reports record volume and margins

Mat Ishbia-led wholesaler posted $54B in closed loans during Q3 2020

Just one quarter away from its expected public debut, United Wholesale Mortgage reported record loan volume in the third quarter.

The Detroit-based company, the largest wholesale lender in the U.S., originated $54.2 billion in closed loans during the third quarter, an 81% increase from the $29.9 billion it originated in Q3 2019 (loan volume was up 31.8% from Q2 2020). To date, UWM has closed nearly $128 billion in production this year, eclipsing the $108 billion it originated throughout all of 2019, the firm said.

“This is our best quarter in the company’s 34 years, showing that borrowers are recognizing that independent mortgage brokers offer better rates, greater speed and deeper experience,” UWM CEO Mat Ishbia said in a statement.

According to company statements, net income totaled $1.45 billion in the third quarter, up from $198 million during the same period in 2019. The gain-on-sale margin also inched up to a record 3.18%; a year ago it was 1.29%.

It’s been a wild ride for the 40-year-old CEO, whose company has grown to be the second-largest originator in the U.S., behind only its Detroit rival Rocket Mortgage. Through a merger with a special-purpose acquisition company founded by Alec Gores, Ishbia plans to take UWM public at a $16.1 billion valuation in the fourth quarter. Ishbia – a driving force in the rise of the broker channel – will retain 94% of the merged company. The IPO will likely make Ishbia a billionaire overnight.

Across several interviews with HousingWire late last month, Ishbia reiterated that the company would be managed exactly as it is now, just with far greater access to capital.

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“We would have never gone public if we couldn’t have gone public in the way that we did,” Ishbia said. “It’s not about answering to investors. Investors bought in at 6%, they bought into the culture, the team and the vision of my team – me and my leadership team, not what they think a future could look like. It’s not like we’re a company that’s just getting up and running. We’re massively profitable, with massive growth and massive success, and this is going to throw fuel on the fire.”

Like others in the space, UWM has ridden a massive wave of refinancings to record volume and profitability. The company has offered a host of ultra-low-rate mortgage products to entice mortgage brokers who are awash in customers looking to clip 100 points or more on their existing mortgages.

In the run up to the IPO, Ishbia has said that in the past he made the choice to prioritize technology over retaining servicing rights. But with the entrance to the public markets – and now flush with cash – UWM plans to hoard those MSRs. In the third quarter, UWM increased MSR from $924 million to $1.41 billion. It also increased its cash-on-hand to $756 million from $570 million in the prior quarter, and increased equity by $556 million to $2 billion.

It’s shaping up to be a busy upcoming six months for IPOs. Nonbank lenders such as Caliber Home Loans, AmeriHome, LoanDepot and Finance of America could all make debuts in the upcoming two or three quarters.

Correction: A prior version of this story stated that Mat Ishbia is 42; he is 40.

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