Top markets for affordable renovated housing inventory

Despite the rapidly deteriorating affordability, there is some hope for homebuyers in the form of renovated homes: properties that have been rehabbed into move-in ready condition after being purchased at auction.

HousingWire Magazine: December 2021/ January 2022

AS WE ENTER A NEW YEAR, let’s look at some of the events that we can look forward to in 2022. But what about what’s next for the housing industry?

Back to the Future of Mortgage Lending

This webinar will be a discussion on understanding what’s to come in the future of mortgage lending by analyzing past trends in the industry, evolving consumer behaviors and demographics of the industry’s production capacity.

Logan Mohtashami on Omicron and pending home sales

In this episode of HousingWire Daily, Logan Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

Mortgage

UWM posts $330M in profits in Q3 2021

Origination volume in the quarter reached $63 billion, including $26.5 billion in purchase volume

HW-Mat-Ishbia
Mat Ishbia, President and CEO of United Wholesale Mortgage

United Wholesale Mortgage (UWM), the nation’s largest wholesale lender, posted $329.9 million in profits during the third quarter, an uptick from the $138.7 million registered in the second quarter.

According to the Pontiac, Michigan-based lender’s earning report, loan origination volume reached $63 billion in the third quarter, up from $59.2 billion in the prior quarter and the $54.3 billion year over year. UWM said it originated $26.5 billion in purchase mortgages during the third quarter, far more than its rivals.

“UWM broke company records yet again in Q3 for overall originations and purchase originations, demonstrating continued momentum for both UWM and the broker channel,” Mat Ishbia, UWM’s president and CEO, said in a statement. “I’m proud of our newest technology launches, BOLT, The Source, and UWM Appraisal Direct... Now more than ever, the broker channel is the fastest, easiest and cheapest way for a consumer to get a mortgage.”

During the company’s earnings call, Ishbia said UWM’s technology sets it apart from the competition and will allow it to win in a more purchase-heavy environment.

According to the company’s earnings report, UWM’s gain-on-sale margin ticked up to 94 basis points in the third quarter, up from 81 bps in the second quarter, but a huge decline from the 318 bps it notched in the third quarter of 2020.

Ishbia mentioned during the call that keeping their margins low is a tactic to grow the wholesale channel.

“These margins are part of a strategy…it’s more expensive to go to a retail lender, but by keeping our wholesale margins low, it’s a long-term business development play to help the wholesale channel,” Ishbia said. “Brokers can offer lower-cost loans and put pressure on retail lenders and we expect LOs to leave the retail channel and enter the wholesale channel.”

UWM’s sold $22.7 billion of mortgage servicing rights, for which it received $269.9 million in proceeds, according to the earnings statement.

The behemoth wholesale lender is forecasting purchase originations for the fourth quarter to range between $52 billion and $62 billion, and its gain-on-sale margin to range from 85 to 105 basis points.

“Taking a look at our numbers from the first quarter, second quarter, to third quarter, it’s an amazing thing to see us continue to grow and the rest of the market- not,” Ishbia said. “As you can see in our earnings, we went up almost 30% from Q1 to Q3, and most big banks were flat, while the rest of the largest lenders were down between 10% to 25% [because] rates ticked up just a bit…once rates begin to rise, we will see who really is the strongest mortgage company in America.”

He also remarked that he expects the Federal Housing Finance Agency to raise conforming loan limits somewhere in the range of $640,000 to $645,000 come the end of November. In October, most big nonbank mortgage shops, UWM included, announced that they would be raising their conforming loans limit to $625,000. 

“You’ll see a little spike in our Q4 assets because we’re holding those loans until the beginning of January,” Ishbia said.

Virtually all rival nonbanks posted solid Q3 results when compared to the preceding quarter, though no one has hit the highs seen a year ago, in which margins were comfortably at record highs.

Last week, Rocket Companies, the parent of Rocket Mortgage, reported $1.4 billion in net income in the first quarter and $88 billion in origination volume. Its gain-on-sale margin rose 27 bps from the second quarter to 305 bps.

LoanDepot, another multichannel lender, also saw margins rebound in the third quarter, posting net income of $154.3 million. CEO Tony Hsieh also noted that it reduced personnel expenses by $20 million, which stemmed from “initiatives that began in the second quarter” including a “redesign of compensation.” LoanDepot’s origination volume came in at $32 billion, a $2.5 billion drop from the prior quarter.

As of 11 a.m. EST on Tuesday, UWM’s stock was trading at $7.24 a share, up 1.26% from the prior day.

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

Better.com lays off LOs, secures $750M cash injection

Digital mortgage lender Better.com is laying off 9% of its workforce ahead of a $750 million cash injection from financial backer SoftBank Group.

Dec 01, 2021 By

Latest Articles

What Omicron, bond market and jobs mean for housing

We often have two to three job reports per year that miss estimates badly. However, remember that we have over 10 million job openings.

Dec 03, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please