UWM posts $860M record Q1 profit, but misses volume expectations

Breana Noble
The Detroit News
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United Wholesale Mortgage Holdings Corp. on Monday recorded a net income of $860 million in the first quarter, up more than 41 times year-over-year. But the Pontiac-based mortgage lender missed its volume guidance for the first three months of the year.

The company, which went public in January on the New York Stock Exchange with a special-purpose acquisition, had expected to close loan volume between $52 billion and $57 billion during the first quarter, an increase of up to 34% year-over-year. It ended up closing $49.1 billion, up 16% year-over-year, as interest rates inched up and discouraged refinancings. Shares were falling about 3% in after-market hours Monday.

The company expects to close $51 billion to $55 billion in volume in the second quarter and thrive in an environment even when interest rates increase.

United Wholesale Mortgage Holdings Corp. on Monday recorded a net income of $860 million in the first quarter, up more than 41 times year-over-year.

"The first quarter of 2021 was not only the best first quarter in our 35-year history, it also marked our first quarter as a public company and solidified our foundation for growth," UWM CEO Mat Ishbia said in a statement. "We believe we now have the capital, liquidity, technology, campus and staffing necessary to further scale our business and grow to become the largest mortgage originator in the country."

The results positioned UWM as the fourth-largest originator in the first quarter behind Detroit-based Rocket Companies Inc., California's PennyMac Financial Services Inc. and Wells Fargo & Co., according to trade publication Inside Mortgage Finance.

Refinances represented three-quarters of UWM's first-quarter mix at $36.9 billion, a 23% increase year-over-year, as interest rates remain historically low. The rest of the $12.2 billion in volume came from purchases, which decreased 2.5% year-over-year.

The company's more than 60-day delinquency rate was at 1.54%, and its forbearance rate was 1.44% as the COVID-19 pandemic has created economic disruption.

The average interest rate on a 30-year fixed loan slipped to 2.96%, the lowest since mid-February, government-sponsored mortgage giant Freddie Mac said Thursday. Experts and Treasurer Secretary Jenet Yellen have observed the Federal Reserve might at some point move to increase interest rates to keep inflation in check.

But Ishbia isn't afraid of that: "We welcome the shift to more of a purchase market and the pressure on margins as we believe our business model is built to outperform competitors under those conditions."

Gain margins at UWM were at 2.19% in the first quarter, up from 0.95% a year ago, and in-line with its forecast. But that was down from 3.05% in the last three months of 2020.

The company ended March with $1.59 billion in cash and cash equivalents, an amount 27 times more than a year ago. On July 6, UWM will pay a quarterly dividend of 10 cents per share as of June 10.

The second quarter is expected to provide a clearer look at the effects of UWM's March ultimatum to no longer work with mortgage brokers who continue to do business with Rocket and Wisconsin-based Fairway Independent Mortgage Corp. UWM is the country's largest wholesale lender, doing business exclusively through brokers, the middlemen who find homeowners and buyers the best rates. UWM says it now has more than 10,000 broker partners, down from roughly 12,000 prior to issuing the March 15 deadline to sign an addendum that has attracted at least one legal challenge.

Ishbia will hold a call with investors at 10 a.m. Tuesday. Crosstown rival Rocket, which includes its Quicken Loans LLC lending business, title insurer Amrock LLC, automotive retail marketplace Rocket Auto and more, last Wednesday said it made $2.8 billion in profit in the first quarter and closed $103.5 billion in mortgages. Ann Arbor-based Home Point Capital Inc. posted a net income of $149 million on $29.4 billion in originations.


Twitter: @BreanaCNoble

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