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United Wholesale Mortgage Announces Record Third Quarter Origination Volume

United Wholesale Mortgage Holdings Corp. on Tuesday posted mounts up 16% year-on-year in the third quarter, setting a record even as net profit fell 77% amid increasing competition in the market.

Pontiac-based UWM reported third-quarter profit of $ 329.9 million on closed volume of $ 63 billion, beating its guidance for the quarter. Its selling profit margin fell to 0.94% from 3.18% last year, but it remained at the top of its projections. The decrease comes as last year’s pandemic-induced boom cools with rising interest rates and fewer people refinancing, increasing competition among lenders as demand declines.

“We have demonstrated the strength of our company by having our best quarter ever in terms of overall production and procurement production,” CEO Mat Ishbia said in a statement. “As we said before, UWM is designed to be successful not only when there is a refi boom and margins hit record highs, but also when margins are squeezed and buying drives volume.”

Net income also included a decrease of $ 170.5 million in the fair value of mortgage management rights compared to $ 1.5 billion in net income for the prior year period, including $ 68.9 million. dollars in expenses related to amortization, depreciation and management fee refunds.

UWM had forecast its volume in the third quarter to be between $ 57 billion and $ 62 billion with a profit margin on the sale of between 0.75% and 1%. The results continue to narrow the gap between it and crosstown rival Rocket Mortgage, which last week posted $ 88.05 billion in creations for the July-September quarter, down 1% from the previous week. ‘last year.

Ishbia has set a goal of overtaking Rocket Mortgage by 2024 as the nation’s largest direct mortgage lender, although UWM exclusively sells loans through mortgage brokers who find products and rates from of various lenders for their clients. Rocket is also behind these wholesale loans, but he also lends directly to homeowners. Earlier this year, UWM said it would no longer do business with brokers who continue to work with Fairway Independent Mortgage Corp, based in Rocket and Wisconsin.

UWM expects fourth-quarter creations to fall to between $ 52 billion and $ 60 billion as home purchases slow during the holidays, with profit margins ranging between 0.85% and 1.05%. Rocket expects to close between $ 75 billion and $ 80 billion in loans and surpass the record origination volume of 2020.

In the third quarter, UWM’s revenue fell 62% year-on-year to $ 690.3 million, and expenses fell 6.7% to $ 357 million. Home purchase loans jumped to 42% of UWM’s mix for the quarter to $ 26.5 billion, up nearly double year-over-year. The remainder of the $ 36.5 billion came from refinancing, down 13%.

The average loan closing time was 19 days during the quarter. The company is looking to reduce that figure to 12. It has introduced new technology including this BOLT that can provide initial underwriting approval for qualified borrowers in as little as 15 minutes and lower lending costs. UWM began contracting with appraisers last month in an effort to speed up the close process. It has also tested the acceptance of cryptocurrencies for mortgage payments, but stops before wider use.

The company’s 60-day failure rate was 1.01% and its abstention rate was 0.83% as the COVID-19 pandemic created economic disruption.

The company ended September with $ 950.9 million in cash and cash equivalents, a 96% increase from a year ago. On January 6, UWM will pay a quarterly dividend of 10 cents per Class A common share effective December 10.

Rocket Companies Inc., which includes Rocket Mortgage, title insurer Amrock LLC, automotive retail market Rocket Auto and more, said last week it had third quarter net income of $ 1.393 billion. Home Point Capital Inc., based in Ann Arbor, a predominantly wholesale lender, posted net income of $ 71.2 million on $ 20.8 billion in fixtures.

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