In line with housing market challenges and persistently high mortgage rates, United Wholesale Mortgage (UWM) reported a net loss of $138.6 million in Q1 2023. Despite this, executives still have a positive outlook on the quarter and for the rest of the year.
“The results of the first quarter again demonstrate that UWM will do what we say we are going to do. We are on track with our plan and extremely well-positioned to take advantage of the next upcycle,” said Chairman and CEO Mat Ishbia.
Here’s the breakdown of UWM’s finances at the end of Q1 2023:
- Total loan originations came in at $22.3 billion compared to $25.1 billion in Q4 2022 and $38.8 billion last year.
- Of loan originations, $19.2 billion were purchase originations compared to $21.7 billion in Q4 2022 and $19.1 billion last year.
- The adjusted EBITDA was $141 million compared to $60.4 million in Q4 2022 and $128.4 million last year.
- Saw a net loss of $138.6 million compared to a net loss of $62.5 million in Q4 2022 and a $453.3 million net income last year. This loss includes a $337 million decline in fair value of MSRs and diluted loss per share of $0.13.
- Reached a total equity of $2.9 billion compared to $3.2 billion last quarter and last year.
- UWM ended Q1 with approximately $2.9 billion of available liquidity, including $1 billion of cash and self-warehouse, and $1.9 billion of available borrowing capacity (which includes $1.4 billion under lines of credit secured by agency and Ginnie Mae MSRs) and $500 million under an unsecured line of credit.
Executives noted that loan originations were at the high end of their guidance for the quarter, and that the purchase volume was the highest Q1 volume in UWM history.
“We’ve been very proud of these metrics, particularly in this rate environment and with the gentle declines for most in the industry,” added Ishbia.
UWM launched a few new tech and loan enhancements in Q1 that they feel will continue to help the company grow their earnings and improve.
The company TRAC added two additional settlement agents to their Title Review and Closing (“TRAC”) program, allowing loan officers to choose from three UWM-approved settlement agents and pay a low flat fee. They also launched Control Your Price, a pricing incentive that gives brokers access to 125 basis points to use when and where they need it, up to 40 basis points per loan. Lastly, they released their One-Time Close New Construction loans with one closing and one interest rate.
“We continue to believe the measures we have taken to enhance our liquidity and strengthen our balance sheet will allow for our continued investments and growing both the wholesale channel and our marketshare,” said CFO Andrew Hubacker.
As for Q2, executives stated they anticipate production to be in the $23 to $30 billion range, with a gain margin from 75 to 100 basis points.
“I think back to where we were in the first quarter of 2020, and we are so much stronger today in all aspects of our business,” concluded Ishbia. “With that said, I’m confident we’ll be saying the same thing again and three years from now and how we continue to evaluate, continue to evolve. We have the capital, liquidity, technology, client relations and infrastructure in place to thrive regardless of cycles.”
