The nation’s biggest wholesale mortgage lender released Q4 and full 2021 earnings, revealing it originated a record $226.5 billion in mortgages last year, up 24 percent from 2020. But net income was down 54 percent to $1.57 billion.

The nation’s biggest wholesale mortgage lender, United Wholesale Mortgage, said its decision to roll out higher conforming loan limits last fall in advance of an official government announcement cut into already slim profit margins.

In the end, however, the move was a boon for UWM’s customers that ultimately paid off for the company as well, according to fourth-quarter and full 2021 earnings released Tuesday.

UWM originated a record $226.5 billion in mortgages last year, up 24 percent from 2020. But net income was down 54 percent to $1.57 billion, as total gain margin slipped from 2.49 percent in 2020 to 1.14 percent in 2021.

That’s a story most mortgage lenders are familiar with, as rising interest rates have the industry pivoting from refinancing existing loans to funding more laborious — and less profitable — purchase loans.

As a wholesale lender that funds loans arranged by mortgage brokers, UWM has maintained that it’s in a better position to adapt, thanks to brokers connections to real estate agents and homebuyers in their local market. UWM is also investing in technology that it says gives mortgage brokers an edge in winning business from homebuyers.

UWM mortgage originations by type

Source: Data from UWM regulatory filings compiled by Inman.

The numbers seem to substantiate UWM’s case that it’s adapting to the new lending environment. During the fourth quarter, purchase loans accounted for 44 percent of UWM’s $55.2 billion in loan production, up from 22 percent a year ago.

But even though total loan production for the quarter was also up slightly from a year ago, fourth quarter profits fell 82 percent from 2020, to $239.8 million. With purchase loans accounting for a bigger share of UWM’s business, total gain margin fell to 0.80 percent, down from 3.05 percent during the same quarter a year ago.

Another factor was UWM’s Sept. 30 decision to treat mortgages with balances of up to $625,000 as if they were conforming loans eligible for purchase by Fannie Mae and Freddie Mac — more than $75,000 higher than the 2021 conforming loan limit of $548,250 in most markets.

The conforming loan limit is adjusted each year if home prices rise. On Nov. 30, Fannie and Freddie’s federal regulator did announce a record-setting 18 percent increase in the conforming loan limit — to $647,200 in most of the country, and close to $1 million in high-priced housing markets.

But UWM and other lenders who jumped the gun on the official announcement had to keep higher balance loans exceeding the 2021 conforming loan limit on their books until the increase took effect on Jan. 1.

Tim Forrester

“We sold around $5.8 billion more in loans in the first week of January than we originated, and around $9.5 billion more for the month,” UWM Chief Financial Officer Tim Forrester said on a call with investment analysts.

The hedging costs of holding the loans “further pushed down the margins from an already competitive environment,” Forrester said. But in the end, “the economics made sense for us to hold the loans. It just shows up in different line items.”

In a statement accompanying UWM’s earnings release, CEO Mat Ishbia said that the Pontiac, Michigan-based lender had the flexibility to hold the loans on its books thanks to its move to go public in a September, 2020 merger with a special purpose acquisition company (SPAC).

Mat Ishbia

Mat Ishbia

“Our decision to temporarily increase our assets and utilize our cash during Q4 is a great example of the benefits of being a public company and having significantly more cash, equity and liquidity than we have had through most of our history,” Ishbia said in a statement. “Being able to opportunistically roll out higher conforming loan limits early was a strategic move giving borrowers and brokers a financing option that they would not have otherwise had. It serves as another example of the partnership and value that UWM provides to independent mortgage brokers.”

UWM said it expects to originate between $33 billion and $42 billion in loans during the first quarter of 2022, with expected gain margin between 0.75 and 0.85 percent.

“With these being some of the lowest margins we’ve seen in a quarter history, we still remained very, very profitable,” Ishbia told investment analysts. While Ishbia said he believes “margin numbers are near the bottom,” the company will “be very profitable with these numbers and will remain so even if it were lower.”

Shares in UWM, which in the past 12 months have traded for as little as $3.93 and for as much as $12.45, gained 6.45 percent Tuesday, closing at $4.62.

Get Inman’s Extra Credit Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.

Email Matt Carter

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×