UWM Holdings Corporation - Ordinary Shares - Class A Aktie

All right. Thanks, everyone, for joining today. Appreciate you guys. Obviously, a little different format this quarter. Hopefully, you guys like it. We'd love to get feedback on it. This probably fits my style more. Hopefully, you guys -- I love to BE able to see you guys too I don't think we set up that way this time, maybe next time. But I appreciate everyone being here today.

I got a bunch of questions. So I'm going to go through and go through them. I know last quarter, we didn't do Q&A, and I know people missed that. So I'm happy. And hopefully, this is valuable to you guys in any way possible about the industry, about UWM. And I got a whole variety of types of questions. I'm going to try not to duplicate and try to put some of them together, but I'll go through and maybe read off a person's name, read the question and go through it.

If anyone has any follow-up questions, I know I can't take them live this way, but obviously, our Investor Relations team, Blake and everybody else would -- will be able to handle your questions and help you with anything you need.

So let's get started, and we'll jump into it right now. First question, I got Doug Harter from BTIG. What is the status of bringing servicing in-house? What is the latest time line transitioning all servicing to our own platform? So first, status of bringing servicing in-house.

Is the video on? It's working?

It's up. The video is on, we can hear you. They can hear you.

Okay. Sorry if you can't see me. I look good today. Hopefully, everyone will see the video. IT people will fix this.

So anyways, I'll answer your question without the video for this first one. But anyways, status of bringing servicing in-house. It's going fantastic. So we feel really great about where servicing is right now and how it's going. We have less than [ 100,000 ] loans on, but all new originations are going on, and then we've moved a bunch of loans over from Cenlar already. So we feel really good about that. The process will be this year. Over the whole year, we'll bring all of our loans in-house from -- so there will be no subservicers by the end of this year, and UWM will handle it all now.

It's going really great. Our technology process is going great. We partnered with Black Knight and then we partnered with Bilt, and we also built a bunch of stuff ourselves. So we feel really good about where that's all going and how it's been going and our client service has been excellent. All the metrics that people look at are fantastic. So we feel really good about that across the board.

So servicing house is great. The transition time line that's this year. Hopefully, that answers your question, Doug. I know there's some other servicing questions. I'm sure I'll get to them as we go through it.

All right. The next one, Ryan Nash, Goldman Sachs. What are your thoughts on future gain on sale margins? What does competitive landscape look like in a heightened rate environment?

So obviously, rates went up in March, and they've gone up even more in April -- and now you guys can see me. See I told you I got a good blue suit on today. But margin went up -- excuse me, rates went up in March from February, but I think the 10-year finished at [ 3.95% ]. And so seeing rates go up, how does that impact competitive landscape and gain on sale margins?

So what you'll see is we're in a really great position from a perspective of margin and competitive position. I feel like the competitive landscape is very competitive right now and a heightened rate environment means obviously purchases more than refi. However, if you look at our first quarter, we did a heck of a job on the refinance side.

And so I guess my answer to you on this, Ryan, will be that gain on sale margins, I kind of see this range that they're in right now being the right range. And I think that it's going to continue to be in these levels right now and not significantly higher, not significantly lower. And I actually think there's upside in the margins based on -- our margins were pretty strong in the first quarter. I expect it to be in those ranges again in the second quarter. But also if rates come down, you could see margins increase. And so the competitive landscape, it is very competitive out there right now. We obviously had a great first quarter. You guys saw the numbers and see what we did. And first quarter is usually the slowest quarter.

Now obviously, rates going up. It changes. The war going on. There's a lot of uncertainty, which creates issues, obviously, in the rate environment, but we feel really good about where it's at right now.

Ryan Nash also asked thoughts on the Knicks winning at all. So obviously, you must be a New York Knicks fan. They have a very, very good team. We obviously just lost Oklahoma City, who's an amazing team, too. So it will be interest the East is open. The Knicks have a real good chance. I'm not really cheering for anybody. I'm just watching and learning, but good luck to your Knicks.

Let's go. Next question, Mark DeVries from Deutsche Bank. What's the strategic value you see in Two Harbors? And what updates can you share with us regarding its progress or impact?

And so yes, the Two Harbors things out there right now. It's interesting. When we originally went to acquire the company, they have something that's really great. They have a pristine servicing book, a great servicing book. When we bought the company or originally agreed on a deal before all the work was done, we thought there'd be a lot of synergies also. They had capital markets expertise, maybe some finance expertise, their servicing platform maybe we can learn from. As we went through the due diligence process, we learned that there was a really great servicing book, and we still like that servicing book.

We originally put an offer out there. And so where that stands now is like, we don't see as much value in their management team. I think their team members there, we met some of -- their people are very good, but their leadership team, we were not as impressed with. And so what's happened since then is they went out and try to get another bid, and they did, whether it was appropriate or not, we can discuss that at a later point.

But what's happened is if they were to just engage with us, we always plan on paying $12. And quite honestly, based on when the stock price went down, I'd rather pay it in cash than in stock because I feel like I'm giving my stock away at a really low price. And so they never engaged. They just went out to another offer. We made another offer. They just basically ignored it. Now they -- we made another one and said, okay, we'll go to $12 what we originally plan on paying, which I think is maybe $11.95, but you can do the math based on when the stock was at $5.11 or $5.15 the day we cut the deal, I think. And so we still feel really good about that deal.

I feel like there -- it's very clear that their management team and their Board is -- which has its own issues in the past with their lawsuits and stuff, is maybe playing some games and doing things because they realize that we don't see any value for them specifically. And so it's interesting. They have really great shareholders, which we are excited to bring on to UWM. But their Board and their management team doesn't have any value to us. So now they're trying to do anything they can to potentially go with someone else so that they have jobs and sustainability. And so I think it will play out. We'll see how it shakes out.

For us that's the strategic value is their MSR book. Their shareholders have some value because we think that we've got a chance to know them during that process and feel like they got some really good shareholders, and we love them to be UWMC shareholders. Whether they take cash or stock, it does not matter to me. We feel really good about that. And for the shareholders of Two Harbors, they obviously would prefer taking $12 in cash or UWM share and taking $11.30 in cash. So that's obviously going to play out that way. It's really surprising to see how it is. But we'll see how it goes. And I feel good about that, and we feel good about the strategic value. But it's very clear to us that it's MSR book, it's their shareholders and there's not -- we're not -- we don't have any value for their leadership team, which is obviously not what they like to hear.

All right. Mikhail Goberman, sorry if I don't pronounce everyone's name perfectly from Citizens Bank. How do you foresee the balance between origination income and service income evolving, especially given the post war reversal of rates seen since end of February?

So listen, we're an origination company. We're the biggest and best originator in the country. We feel great about where we are in origination. You saw an amazing first quarter. We've been the #1 originator for 4 straight years, and we'll continue to be the #1 wholesale lender for 11 straight years. So origination is our game. Now as I bring in servicing in-house, we're going to have more servicing, and we're going to continue to retain the servicing. Now are we still opportunistic if someone gives me a bid that we believe is more than what the intrinsic value is? I'll sell the servicing. Like I have those options. And now with the lower cost of servicing by bringing in-house and the better level of service, which will help retention, we feel like we've got the best of all of it.

So how do I see it all balancing? Like we'll see with the income levels of origination versus servicing. But origination is still our game. We're going to continue to build out the servicing book. But I'm always opportunistic and people call us all the time because even when I just talked about Two Harbors, some of the servicing book that they have, I call it a pristine servicing book, a lot of that happens to be our old servicing book that we sold to them. And so we feel good about the paper we originate every day in servicing the loans. But if someone wants to come offer us a great opportunistic price, we will always look at that. Thank you for the question.

Jason Stewart. Mr. Jason Stewart for Compass Point. Let me read through. There's an increased number of high -- was there an increased number of high-producing brokers affiliated with UWM during the quarter supporting wholesale channel growth.

And so good question, Jason. High-producing broker shops affiliated with UWM, I always say the numbers and it's roughly this, but there's 12,000, 12,500 brokers that work with UWM and maybe there's 400 or 500 that are not all in with UWM. So there's not that many high-producing shops to bring over to UWM. They're affiliated with UWM. Almost everyone in the market works with UWM. That's why we have almost 50% market share. I think it's 44.7% or 44.8% market share for the year last year of the broker channel.

So our big focus is grow the channel, help brokers do more, help more originators realize that broker is the place to go, whether they join a broker shop or starts their own, and that's been a really big focus. As the broker channel grows, UWM will grow even if our market share would happen to go down. And so I feel great about growing the broker channel. And then our brokers coming over to join UWM? Yes, they are. Every single day, people see the value of what UWM does. And I got some actually examples that maybe will come up, that I can share because I've been talking about some things recently with some new ideas that have happened.

Now separately from that, the whole all-in thing with brokers from years ago, one of the biggest adversaries of UWM was a guy named Mike Fawaz at Rocket. He was saying a bunch of things negative about UWM and about what we do and how UWM wasn't best for brokers. Recently, that man left his company at Rocket and started a broker shop and called me. And now he's working with UWM. And so the biggest anti-UWM, I think he called it the bully shield. He came up with some stuff, which I've got to know him now, and I like the guy. I always respected the guy because he was in the weeds of the business. But he started a broker shop and chose to work with UWM and not to work with Rocket.

I think that sends enough message. Someone that knows every detail of what Rocket is doing and said, I came and learn about UWM and joined a broker -- or started a broker shop and picked to work with UWM, I think sends the message that there will be more and more big broker shops moving over to UWM. There aren't that many left out there that don't work with us, but that's an opportunity. But the bigger thing is grow the broker channel and continue to grow. And so that's been very positive and the broker channels continue to be very positive, and we're excited about the growth of the channel.

All right. I got -- let me -- I got a couple -- I'm going to bundle these, so I apologize, I'm not going to name everyone's name. I got a couple of questions on Mia and the AI initiatives. So let me just hit on that and kind of combine these questions. Let me see if I'm kind of combining a couple of people here and make sure I get it all here together.

Okay. Let me -- so I'll kind of read a couple of these, and I'll talk generally about Mia, but one person asked about Mia's text messaging capabilities and how has it been going, customers' response to Mia generally, lead time competitive -- I discussed Mia over past -- so let me give you a Mia update. Mia has been fantastic. It's been almost a year. I rolled it out at UWM LIVE! last year, and it's been amazing. I think the data, and I'll get the exact numbers, I'll call it roughly, I would say, about 100,000 closings, but I think it's closer to like 80,000, 85,000, but let's call it, in that range of closings over the last year have come from Mia. It's been fantastic.

And so the Mia numbers, and I get the exact numbers, but it's been -- the last report I saw was so strong with the Mia initiation of refinance opportunity. And so if you look at our servicing book, people always ask me, hey, you have 2% or 3% of the servicing book, but you guys did 12% or 13% of all refinances. Well, Mia is a big part of that. Brokers do such a great job with the consumer upfront. Consumers want to come back to the broker. The problem was brokers did such an average to below average job, I won't say poor job of following up with their past clients that they would just be one and done. They do the purchase and then they won't to talk to them again.

Well, now with Mia, she's keeping the broker in front of the -- of the consumer. And so when the consumer goes to refinance, they work with the broker because the broker offered a better deal anyways. It just don't know who to call. And so Mia has been fantastic. Now when she leaves voice mails, she does send a text message out. So that was an initiation that was different. It was just voice mails. So she calls.

And right now, we're seeing the data, and I think I gave this data before. Mia, about 40% of her calls get picked up, which was a bigger number than we expected. So 60% leave a voice mail. And now we send a text message also. And a lot of those call the broker back. Like, hey, was that AI? Or was that real? Was that spam? And I'm like, yes, it was real. I could save you some money. Let's talk and they do a loan. And then on 40% or 16,000 of a 40,000 call day, let's just use that as a day, talk to Mia and have long conversations. I just played one day for the sales, like they have 2, 3, 4 minute conversations. Some of them know it's AI and some of them don't know it's AI. It's gotten that good. And so then they -- we send a follow-up email to the broker, hey, you have a call scheduled at 3:00 p.m. with Jenny, the borrower, and it's really been successful.

And so we have more things coming out with Mia and they continue to enhance it and make it at the scale that we're doing it with our IT team has been phenomenal. Like there's no one in the country. I don't think there's anyone that I know of in any industry, let alone in mortgage space doing it at the scale that we're doing with Mia. So it's been great. We feel really good about it, and it's going to get better next week at UWM Live! and beyond. I got some big enhancements to continue to make it better and better and better, and it will help brokers win.

And so I think it's a big part of that 2%, 3% of the servicing book, 12%, 13% of refis. What's that delta? Mia, brokers are doing a great job. Now we're doing a better job stay in front of them. And so it's been very, very successful. So hopefully, that -- I apologize if I didn't answer anyone's specific Mia question, but that kind of combines a couple here.

All right. Let's see, Kyle Joseph. Could you review industry competitive trends, current broker share and how you see it evolving in the current market?

So I kind of answered that one, so I apologize, but let me kind of give it a little bit more and then we'll keep moving. The current broker share, I think, is about 28%. The mortgage broker market is -- brokers do about 28% of the market. And so just 5 years ago, I think in 2019 or '20, it was like 14% to 15%. So it's almost doubled. And so it's growing. Will it double again? Well, we're working on it. We're hoping so, but it's obviously going from 14% to 28%, it's harder or easier than going from 28% to 56%. But our goal is to help brokers be the #1 overall channel. So 50.1% is where we're going to go with the broker channel, and we're on a path to doing that.

So with that being said, our share has been very steady. It's been over 40% for years now. I think 44.7% or 44.8%, whatever I told you guys earlier, is roughly what it is. We'll call it between 40% to 45% consistently for years now. Never been done in the wholesale channel before, never even close. No one's ever got close to those market share numbers. And it's because we provide value. So you understand, it's not because I'm the best looking guy, you'll love me, like it's because we provide value. We help brokers grow. We help them look good to the real estate agents. We help them do more business, right? We help them make the process easier, and we help them be successful. And so we train them, we coach them. We give them cool tools to help them win more loans. And so that's why we're the best and why we're the biggest. And we're going to continue to be the best and the biggest in wholesale and overall.

But the key is helping brokers win. And so as brokers win, UWM wins. And so the nice part is like being the largest lender in the country for 4 straight years, I only have a chance of 28 out of 100 loans. And so think about that. We're the biggest and we only have a chance of 20 out of 100 loans. Every other lender, the #2, the #3, #4, all those guys, they have access to 100 out of 100 loans they're competing for them. So I'm not even having a chance at those 72. So is that 72 out of 100 in the retail channel goes to 65 or 60 or 50. Well, that's just growth for UWM. That's why we're so bullish on the UWM's growth, but also on the broker growth, we're going to all win together.

And so I think that answers your question, Kyle. You have another one that I usually -- I'll come back to, but I guess I kind of answered that. What is UWM's current broker share? So I kind of covered that one. Thank you for the question.

All right. I got a couple of questions here. Ryan, I got a couple of ones here tied to -- yes, I'm going to kind of knock these out together, expenses. So I got a couple of questions on our expenses. You guys saw our expenses went down. And the way I look at expenses in general is we've invested a lot. I've been talking about it for years. And now I'm starting to see the harvesting or the success of those investments, right? And whether you want to talk about TRAC+ or the investment in free credit reports to help brokers grow, I can go through a lot of these details.

And so what we're going to start seeing out is like more of a little leveling out of expenses as you saw they went down. I don't -- I think our investments are going to start paying off now. And you're starting to see it already. I think you saw a little in the first quarter is we didn't have a great quarter by where I want us to be. But compared to the industry, we had a great quarter. I think we're up -- I think last year, first quarter was $32 billion, which is a great quarter. This year, we did about $45 billion. That's significant.

Our gain on sale was up and volume is up year-over-year. And so seeing that and then our expenses are flat or down, right? And so we feel good about where we're at from an expense perspective. Like I said, I think of them as investments, and I think they're paying off in a really, really positive way. So I feel great about that. And I think -- I mean, I'm trying to see -- hopefully, I covered that comment -- question enough with that. So I think that covers it.

Let's see. I got Mikhail, you got another question here. Let me hit this one because -- on what are your thoughts of the new VantageScore rating system for borrower credit? So sorry, Mikhail Goberman, I'm just using your question again, another question you have on VantageScore.

So let me give you thoughts on this because it's actually interesting. I've gotten a lot of talk. So kudos to the leadership of FHFA about rolling out a new way. FICO scores and credit reports have got really expensive. And if you have a competitor in there, now you have options. And so options usually create better outcomes. And that's why wholesale works because brokers have options and they figure out what's best. And people like us -- now what's happened is FICO and Vantage are both now on the top of their game to be the best they can be.

Now with that being said, there's very few companies that were put on the pilot. We were one of them. I think I rolled out less than 2 weeks ago from FHFA Director, Bill Pulte, and the support of Fannie Mae and Freddie Mac, 4 business days later, Wednesday of last week, we rolled it out, VantageScore. And so it's been an enormous, enormous success. And not for the reasons you might think, not for, hey, you're saving $50 a credit report, that's possible, too.

But what we're doing is we've got both, FICO and VantageScore. And we're making sure the borrowers get the best opportunity because they have different models. So Vantage looks at it a little different, maybe a little bit thinner credit. They understand they can add rent and other things in there. So more people can qualify or maybe they qualify with -- have a little bit higher score. Now Vantage, you have to take a 20-point haircut. So if the VantageScore is 744, that's equivalent of 724 on FICO. But if the FICO score was 719, well, I just got that borrower a better deal, lower LLPAs or a little better opportunity. And so that's a win for the consumers. And so this has been a massive thing in 5 business days.

And so the amount of e-mails I've gotten on loans that we've helped brokers win on consumers that have been so grateful and thankful that they can qualify for a home or they got a better interest rate and lower fees has been phenomenal. And so kudos to FHFA, kudos to Fannie and Freddie getting out, we rolled it out with VA today, loans as well and FHFA will be soon. I think the MI companies, the leaders in MI companies like Essent and Enact, they're on it and others, they're coming and like how do we do this? How do we make things better for consumers?

And so VantageScore and FICO -- by the way, FICO is still great in so many ways. It's not one or the other. It's both are great. And now can we help consumers in a better way, qualify for mortgage? Can we have better credit profiles. I've been extremely, extremely happy with this and the rollout and just to give you guys recognition of what we do in our IT team, like to roll this thing out in 4 business days and have it work flawlessly, is obviously a different team than put together the Zoom earlier that wasn't getting my video on earlier. Just kidding to my guys behind the film. But you get my point of like they did a heck of a job. They did a heck of a job of getting this thing done, and it's out and live, and we're seeing so much success of it on VantageScore. So congratulations to my IT team to brokers that are understanding it and to Fannie and Freddie, who said, let's go, let's do this and FHA (sic) [ FHFA ], of course, FHFA for leading.

So hopefully, that answers your question, but other people don't have it. I think nobody in the country has it, by the way, besides UWM right now because they can't implement it as quick as us. Maybe they'll have it out in May or June, like we're rolling with it. We're saving loans, helping loans, giving better deals right now because of Vantage.

All right. Let's see. I got a couple of questions here on -- let's put this, we'll do a Bilt partnership question. There's a couple. Let me try to read a couple of them off and I'll try to answer it, but I'll talk about Bilt, but indication of Bilt card relationship increased leads, like your status partnership with Bilt? Update infrastructure is in place.

So here's how we -- I'll say about Bilt. Ankur Jain, the CEO of Bilt, phenomenal CEO, doing great things. Their vision is ridiculously great. So it's fantastic. UWM is servicing. So UWM is a servicer. We brought servicing in-house. We are controlling everything. What we did is we chose a platform on the front end that was able to provide rewards points to consumers, which has never been done. They don't have to use a credit card. They can use ACH to get [ reward points ]. It's all -- it's never been done in our industry. And so rewards points for making your mortgage on time. And you know what, I mean, you guys are all consumers to -- everyone loves points. You can use points.

And then it hooks their credit card in there, once again, and they get points. If they get their American Express points, they also get points through Bilt and you can do this and earn points and use it for flights and other things that you want to use it for. It's really, really cool. Now beyond that, the servicing platform is really slick. Like we built this with them, obviously, because they never have done this before on the front end for mortgage. And so it's really cool for consumers. It's a great platform upfront and the Bilt partners.

And then on top of that, Bilt has over 6 million consumers. And depending on the year, 8%, 10% of them go buy houses. Those are now curated leads. They're going to want to stand the Bilt platform, and they're going to work with a mortgage broker. That's a huge opportunity. We've already had that in pilot. And so there's some really cool things. There's a concierge service that's really cool that gives our clients, our consumers, which are our brokers consumers, our brokerage partners, an amazing platform to get things done and make their life easier. It's really a cool neighborhood experience. So it's hard to explain to people that don't understand it.

I'm actually -- Ankur is going to speak at UWM LIVE! next week. I know a lot of guys are going to be at UWM LIVE!. so hopefully you'll see him speaking, you'll understand it a little bit better. But the vision is going to be awesome. But the key is UWM has servicing in-house. We've been the best originator in the country for a long time. Now we're going to be the best servicer because we're focused on it. It's going to help retention for our brokers. It's going to make the consumer experience better. And there's all these other ancillary benefits, too. And so it's been a great, great partnership. It's off, it's launched. It's rolling. It's fully active.

And of course, getting better every day like we do with everything at UWM, because we don't have all 600,000, 700,000 clients, consumers on it, we only have the ones that are on it right now, and they're all moving on to it. And so I've shadowed the team. I've spent time with our team, our servicing team. The servicing process has been really great. I know you guys have asked me in the past, why don't you do it? And I've always said, focus on originations, which I'm still doing. But the cost expense will be great on the servicing, not outsourcing anymore. But better than that, the retention and the experience for the consumers and our brokers is going to be even better. And that's really what we're focused on. And so we're excited about that.

Hopefully, that answered the Bilt thing. Let me just see. I got all these pages, make sure if -- anyone else had a Bilt question that could maybe tie into it.

All right. Well here, I got a couple -- let's see. So I got a couple -- this is an interesting one. This might take a little bit of time, but it kind of covers -- trying to hit all of them together on what do you see in the business for the next 3 to 5 years? I got someone says what's a 10-year horizon, someone says what's a 5-year. I got someone asking about how do I think expenses or volume will go over the next 3 years.

So I'm going to kind of combine these and kind of give you my view on our business because we spend a lot of time on it. Like what does the next 3 to 5 years look like? And I look out -- I have 3-year goals, but then we also have 5-year goals and targets. So that's think 2031. So if we were to say the next 5 years, here's like high level or high-end thought process on it is. I think UWM over the 5 years from whatever you want to call, '27, '28, '29, '30, '31, those 5 years, we're expecting to do over $1.3 trillion in mortgages. I believe we're going to do $1.3 trillion or more in that 5-year window. So that's a big number overall.

Now there might be 1 year and there with $400 billion. There might be 1 year and there with $150 billion to $200 billion, right? But I believe that $1.3 trillion is that kind of that North Star over the next 5 years, while -- and it's important to understand, while my expense is basically staying the same. With our AI initiatives and our technology, the expenses you see today, I'll call it, roughly $600 million in the quarter, I think it was $590 million or whatever, but you get my point.

I expect when I do one point -- like each of these years, that's kind of what we'll see from expense. So think about volume doubling, more than doubling and expenses the same. Now with that being said, there's another -- which really probably is not accounted for by many of you, outside of the volume and gain on sale margins basically being in those ranges that you see and expenses being flat. On top of that, I see another 20%, almost 25%, in other revenue coming into UWM that's starting to happen with some of these ancillary products that we have, and they're starting to really pick up steam. So seeing revenue growth outside of just -- and it's tied to originations, of course, but outside of just volume and gain on sale or however you want to think about it, there's some of it that's in the gain on sale and some of its maybe not and some opportunities.

So that's kind of like I would say, I know that's high level. I didn't get the nitty-gritty of some of these questions. Let me just read and make sure like -- and some of those other revenue sources, some of them, could there be opportunities on TRAC+ that's really taken off. Could there be other opportunities to grow and help consumers while helping brokers and UWM winning.

And so I see $1.3 trillion -- I guess I'll summarize it, $1.3 trillion over 5 years. I see gain on sale margins basically being in these ranges, maybe slightly higher, we'll call it, expenses flat or down, and it might be down, but I'll call it flat to be clear. And at the same time, other revenue tied to some AI initiatives that we have that are actually starting to produce margin and gain on sale, while others are producing things that our other revenues could be pretty cool. So that's kind of how I look at that.

Hopefully, that helps answer. I think I answered a handful of questions here. I'll look. Yes. So hopefully, that covers it. Obviously, if I didn't answer it exactly some shorter term or more detail, like I said, Blake Kolo, Investor Relations team, he will be happy to jump on a call any time. And [ Matt Roslin ], any of those people you can talk to.

All right. Let's see. Let's see. I got Kyle Joseph, another question, homebuyer. Like how are you thinking of the Homebuyers Privacy Protection Act and its potential impacts on the industry competitive environments and overall margin?

All right. So Kyle, let me answer that question. You talking about the trigger lead rule. The trigger lead rule, I think it's about March 4, I think, is the date. And so it's definitely changed. When consumers used to pull credit, man, 50 people would call. Now it's the servicer, the original lender, regional broker, maybe their bank, it's like 3, 4. And so what it's actually done is change the competitive landscape, probably better experience for consumers to not getting 50 calls. So that's one thing. I think that was the goal of Congress and people that pushed this.

On the flip side, the consumers maybe don't get as many options because you get offered one thing, you don't know any better and you get offered 6.5% or with $5,000 of fees and you don't know any better and no one else is offering things, you might pay that when you could have gotten 6.25% with $3,000 of fees by working with a mortgage broker, going to mortgagematchup.com or going somewhere like that. And so the trigger leads would get more people and make people compete more.

So from a competitive landscape, I could say -- I could argue that, that's maybe not as good for the consumer. The experience is better, but maybe the rates and fees aren't. But once again, if you're only winning on rates and fees, you didn't get to be around long in this business. So that's part of it. Now like -- so I could argue that it actually will increase margins. And you might see gain on sale margin increase a little bit because people aren't low ball, low ball, low ball, to win a loan because there's not 19 people calling them in my example.

So I think it's been good. It's been good overall. I don't have a huge preference one way for it or against it, but I'm just telling you what the results have been. Still early, it's only been 60 days or so since that rule came out. But that's what we're seeing right now. But brokers -- our brokers that work with trigger leads, they're just finding other people are buying data now. So it's just not trigger leads, it's other forms of buying data. So people are still getting leads. And so it's still competitive. So I don't want to make it seem like there's -- it's just you go to one and you don't hear anything, but it's a lot less. And so it's changed the competitive environment on that.

So hopefully, that answers your question, Kyle.

Let's see. Hopefully, this format is good for you. I feel like we've gone through a lot of questions.

Let's see. Here's one. A couple have asked a little bit about debt ratios. Let me go through why secured debt go up relative to other aspects of the balance sheet? And how do we look at the debt ratio.

So obviously, we look at the debt ratios every day. We're very focused on them. The debt ratio is really good a couple of years ago and the volume in the business wasn't as good. And now I think the business is really good and the debt ratios aren't as good as we'd like. But at the same time, some of those debt ratios are a little bit of an anomaly based on -- and same thing with the liquidity number based on some trades we have out there to help balance the MSR book. And so that sometimes goes up and down. And at the end of the quarter, it was up, but it's already come down a little bit now. And so those things change and fluctuate a little bit, which kind of throws those ratios off a little bit from what you're looking at. So they're better than you see.

But at the same time, like I said, I feel really good about it. We watch the numbers closely. The key is earnings, right? And we're starting to see -- you saw we had a very good earnings quarter in the first quarter. I won't say very good, I'll say good. And there will be quarters that we have a lot bigger earnings, but we're monitoring it and managing it. We obviously really believe in delivering value to our shareholders of whether it's through a dividend, which we've been doing, obviously, but then buy back shares or other things, how do we continue to add value to our shareholders, and that's what we think about a lot.

And so overall, our leverage ratios, our debt ratios, we feel really good about where they are. We monitor them. We manage them, and we understand them very, very well. And there's a lot of levers we can pull to make those ratios better while still doing more business and having higher earnings. And so you'll see some of those in the second quarter and then beyond overall. So I feel good about that.

I think that covered a couple of people on that. Let me just make sure I didn't miss a topic on that for anybody.

Okay. So let's keep moving and let's see. I'm going to try to hit a couple of these. But Jason Stewart, another one. And once again, please feel free to e-mail. I know I can't do them live right now because I'm on a Zoom with you guys, but I'm trying to make sure I cover everyone's questions and make sure.

But here's a question kind of tied about from Jason from Compass Point. During periods of heightened volatility at the start of the year, how do you manage lock duration and pricing cadence? Did you increase frequency of rate sheet updates? I'll talk about that.

How much volatility is awarded by Bilt Rewards? It's got nothing to do with that, but I'll explain that in a second. And impact of Purchase Boost 50 and something so let me just talk pricing and dynamics and volatility.

So first off, yes, I mean, the market has been very volatile. And so we have an extremely experienced capital markets team. And so sometimes you have 2 and 3 different rate sheets in a day, maybe 4, rates get better. We're proving improvement out there because we don't put an improvement out there, we won't get the loans because we want the brokers to have the most competitive opportunity they have.

Pricing get worse, we have to worsen pricing. But like as you guys know, these numbers are all day, all day. And so we have different thresholds that we move pricing up or down. And so when we hit those, like I said, I bet there's been days of 4, maybe even 5. And there's some days that you put a rate sheet out at 10 a.m., nothing changes all day or it doesn't move enough that I would make a price change, because you want to have some consistency for our clients as well. So that's a balance, but we feel really good about that. And that's why you saw really strong margins fourth quarter, by the way, and first quarter. And you'll see that same thing in the second quarter, strong margins, and we -- our team manages the risk and volatility. So I think that answers most of your question.

If you had ask a thing about Bilt Rewards, and that doesn't really have anything to do with it. Bilt Rewards is just another benefit of brokers using UWM and consumers paying UWM as a servicer because they get rewards points and they get some cool things through Bilt, which I kind of explained earlier. So it's got nothing to do with gain on sale or pricing, to be honest with you at all.

And then kind of another question from you, and I think it's all one, but I'm kind of answering it. So sorry to keep hitting on your same question, Jason.

Purchase Boost 50 or pricing initiatives, like -- so all those things are designed to help brokers succeed and win. Our brokers are not, I need the lowest price to succeed because if that was the case, they'd have -- they've cut their comp in half and they'd all use Provident funding, and that doesn't -- lowest price does not win. Lowest fees does not win. A lot of our price incentives are more strategic than that. They're incenting brokers with a price incentive but to use a tool of ours.

So I think it was in the fourth quarter, maybe even the beginning of the first quarter, we had an incentive tied to 40 or 45 basis points, but use a hybrid or virtual closing because I know that makes the experience better for the consumer, which then makes the consumer more likely to like you, [ John Smith at Smith Mortgage ], a broker and more likely to refinance with you in the future. How do we make the borrower happiness score, which we track on every single loan higher.

And so a lot of those are investments, and it's all put in the gain on sale. So when you see I did some stuff in the fourth quarter, I did some in the first quarter, and the gain on sale is still much higher than it was last year in the first quarter. So understanding that 123 basis points, I think, is what it was in the first quarter or 122 in the fourth quarter.

I understand the margins. I personally get involved with it every single day, so you know. So we track it. We understand where we're at with these things, and we give a very competitive price to our broker. We add significant value to our brokers to help them win more loans. We give the best service in the industry. We come out with AI tools and technology. We invest with free credit forms for brokers to help them compete even more and help more consumers. And then I can go through all these things. I'm not going to go through them all, but it's all part of the deal. And so hopefully, that makes sense.

But I hope you realize that one thing I said there, which maybe I've not done a good job explaining is a lot of these decisions are strategic to help brokers win. Sometimes brokers have ever done a virtual closing and they're getting extra 45 basis points, we'll get them to do it. And then they do it all the loans now, even though they don't get that incentive because they realize it's the best thing for the consumer and it will help them build their business and grow and be a better experience. And then we all win. If brokers win, UWM wins.

When consumers realize the fastest, easiest, cheapest way to get a mortgage is through brokers, UWM wins. Real estate agents win, like we're all one team because that's best for consumers. When the consumer goes to some random commercial or goes to their local bank, which, by the way, no disrespect any of those do, but they usually are offering higher rates. When a consumer goes to mortgagematchup.com, they're going to find a broker that's going to get them a better rate, better fee and a better experience. And so anything I can do to drive more business there is what I will do.

I think I've covered a lot of -- I know I didn't answer every question. I apologize, but I did combine a bunch of them. So I think I've covered most themes, if that's the right way of thinking about it. Let me just make sure.

UWM LIVE! questions, I think I kind of answered UWM LIVE! about -- it's next week. So thank you for those of you that are coming. It's going to be a great -- it's the biggest mortgage event in the year. And so please come. I look forward. I'm going to meet with some investors, analysts, anybody that's out there. I spend time. I'm there all day. We have some great speakers. it's really cool to see the broker community. So I think that's kind of answering the question here about is UWM LIVE! am I going to be there? Of course, I'm going to be there. I love that. I'm here every day grinding at it.

So we're about 40 minutes, I feel like we've covered a lot of the questions. I don't know, how about this? Just make sure I'm not missing anyone specific question that asked. I think I've covered it all.

Let me know how you like the format. Maybe next month, I can see you guys too, and we can have more interaction. But either way, hopefully, you like the format. Hopefully, it's different. I know that last quarter, you didn't like that we didn't do the Q&A. So I'm here for it. I love this. I'll do this any time with you guys. I enjoy talking about our business, but also you can use Mia -- talking about the industry because this is where I live and breathe and sleep every day.

So please give us feedback, give our Investor Relations team on the format, if you liked it. If -- make sure if didn't answer questions, I apologize. I think I got everybody. But if I didn't, and you're asking Investor Relations team, Blake, that whole team will answer all your questions. And we appreciate you guys.

So thanks for being partners of UWM, shareholders, investors, analysts, anything we do to help make your life easier. Thanks for everything. And we're going to keep winning together, hopefully, with our brokers, the broker community and UWM is going to continue to grow with my amazing team members here at UWM. So thank you for your time. I'm excited about the future. UWM second quarter is going to be great as well, and we'll do the same format again unless I get a lot of different feedback that you didn't like it, but hopefully you did, and hopefully, it was valuable to you to spend this time with me. Have a great day.

Good morning. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation Fourth Quarter 2025 and full year 2025 Earnings Conference Call. [Operator Instructions] Blake Kolo, you may begin your conference.

Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the Fourth Quarter and Full Year 2025 UWM Holding Corporation Earnings Call.

Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning.

Our commentary today will also include non-GAAP financial measures. For more information on our non-GAAP metrics and the reconciliation between the GAAP and non-GAAP metrics for the reported results, please refer to the earnings release issued earlier today, as well as our filings with the SEC.

I will now turn the call over to Mat Ishbia, Chairman, President and CEO of UWM Holdings Corporation and United Wholesale Mortgage.

Thanks, Blake, and thank you, everyone, for joining. Appreciate you guys being here. 2025 was an amazing year at UWM. Reflecting the strength and consistency of our business model, we executed at a high level and delivered industry-leading results throughout the year while still investing in the long term.

It was our fourth consecutive year as the #1 overall lender in America and our 11th consecutive year as the #1 wholesale lender. This has never been done in the history of the mortgage industry, and we're really proud of our success and our dominance across the industry in wholesale and overall.

Now for the year, we delivered $163.4 billion originations, which is up 17% from 2024. $244 million of net income and included a $435 million MSR write-down. Our adjusted EBITDA was over $697 million. So a phenomenal year across the board.

Now turning to the fourth quarter. We delivered an amazing quarter, $49.6 billion of originations, which is up 28% year-over-year. Our gain margin was 122 basis points, and our net income was $164.5 million, and that included a $28.8 million write-down of MSRs. On top of that, adjusted EBITDA was $232.8 million, it was just really strong across the board, an amazing fourth quarter, really proud of what we did, and now we're going to continue to dominate going forward.

Now our process of bringing servicing in-house are on track, and our partnership with Bilt is going fantastic. We're so excited about what's going on right now. We're going to deliver the best consumer experience in the industry, just like we do on the mortgage side, on the lending side, we're going to do on the servicing side and also keep our brokers connected and engaged to their consumers' lives going forward.

So we're really excited about this. Bilt is going to allow our brokers to not really acquire consumers earlier and expand the volume at the top of our funnel for lead flow, but also keeps the mortgage brokers top of mind through the whole process. So Bilt and the UWM servicing process is off to an amazing start, and we're really excited to give you more information about that as it goes forward.

Now the pending Two Harbors acquisition and process of bringing servicing in-house are strategic inflection points, not just operational improvements. Together, these initiatives position us to expand our dominance, deliver high-quality leads to our brokers, increase the recapture rate while lowering cost per recaptured loan and more data-driven personalization tools for our brokers.

So you can think about our servicing platform as both a growth and retention engine. We will continue to capitalize on where the market is going. More consumers are entering the broker channel, driven by rate shopping, optionality, speed and mortgage broker's ability to guide them. Our 100% broker model at our scale is both unique and a tremendous advantage. We put our business in position in a more organic way to dominate than any of our competitors, and we're excited about the growth going forward.

Now I'm going to turn the call over to our CFO, Rami Hasani.

Thank you, Mat. Q4 was a strong quarter. We reported total revenue of $945 million in Q4, up from $843 million in Q3. Net income was $164.5 million in Q4, up from $12.1 million in Q3. We also continue to maintain our MSR portfolio with a UPB of approximately $241 billion, a fair value of $4.1 billion and net servicing income of $186 million in Q4, up from $169 million in Q3.

For the full year, we reported total revenue of $3.2 billion in 2025, up from $2.7 billion in 2024. Net income was $244 million, down from net income of $329 million in 2024. We also delivered servicing income of $725 million in 2025, up from $637 million in 2024. As we've said consistently, supporting long-term growth means continuing to invest in our people, processes and technology, and doing so in a disciplined way that strengthens our operating capacity.

In 2025, we continue to focus on investing to be prepared for growth, as we've mentioned before. We remain firmly on strategy with our investments, including bringing servicing in-house, which positions us to capitalize on significant market opportunities as volumes continue to normalize and grow.

From a capital and liquidity perspective, we remain well capitalized with total equity of $1.6 billion. We also continue to be in a strong liquidity position with total available liquidity of $1.8 billion at the end of Q4. While our liquidity position was higher at the end of Q3, it was due to the timing of the $1 billion senior unsecured bond issuance in September and our proactive liability management with the use of proceeds prior to the mid-November bond maturity.

Net available cash, our leverage ratios as of the end of Q4 remained relatively consistent with Q3. Going forward, we expect to continue to maintain our capital, liquidity and leverage ratios within what we believe to be acceptable ranges. And upon completion of our acquisition of Two Harbors, we expect that our capital liquidity and leverage ratios will be further enhanced.

In summary, Q4 and 2025 delivered strong performance, and we are excited for 2026 for bringing servicing in-house and completing the Two Harbors acquisition to further strengthen our business for long-term growth and success.

I will now turn things back over to our Chairman, President and CEO, Mat Ishbia, for closing remarks.

All right. Thanks, Rami. I'll close with a few quick points. We're very optimistic on the mortgage and housing industry. There's a big tailwind behind all of us. A lot of it's tied to the market, but the administration HUD, FHFA, Treasury, all these leaders in the country and in our industry are trying to find a way to help affordability and lowering rates to help more consumers. UWM will be the clear beneficiaries of all these changes, and we're excited about what's going on.

Now we expect to stay #1 in the growing market and excited about how our AI implementation can drive expenses lower while driving production much higher. I think the opportunity is there right now, we're seeing it happen. Our model is unique, as the lowest cost in the industry and with servicing in-house, the Bilt experience and pending Two Harbors acquisitions, we now have a closed-loop platform that will help position us to accelerate broker channel growth and drive consumer retention for us and the channel.

Now on these calls, I've always taken questions. We've gone through the process, and we believe our industry is superior business model that the short Q&A doesn't necessarily do a justice, really make it to explain the complexity of our business. So I'm not going to go through the question process today, but I do encourage you to read the SEC filings for more information about our business and strategy. UWM has had such a dominant 2025. We're going to have an even more dominant 2026, and I'm really, really excited about it.

So the year of 2025 was about execution, disciplined investment, continued leadership. We're well positioned operationally, financially, strategically for 2026 and beyond, and we remain focused on the long-term focus of dominating this industry, taking care of our consumers, our team members, our brokers, our shareholders and we're going to do just that going forward. Thanks for the time today. Have a great day, and we'll talk soon.

This concludes today's conference call. You may now disconnect.

Good morning. My name is Aaron, and I'll be your conference operator for today. At this time, I'd like to welcome everyone to the UWM Holdings Corporation Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

Blake Kolo, you may begin your conference. Thank you.

Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the Third Quarter 2025 UWM Holdings Corporation's Earnings Call.

Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning.

Our commentary today will also include non-GAAP financial measures. For information on our non-GAAP metrics and the reconciliation between the GAAP and non-GAAP metrics for the reported results, please refer to the earnings release issued earlier today as well as our filings with the SEC.

I will now turn the call over to Matt Ishbia, Chairman, President and CEO of UWM Holdings Corporation and United Wholesale Mortgage.

Thanks, Blake, and thank you, everyone, for joining. Over the past 3-plus years, we've successfully navigated a higher rate environment with a focus on taking market share showcasing that we are uniquely capable of both domain purchase business and investing for the future. While most other lenders scale back, we invested in our people, our technology and the broker channel, which are all operating at all-time high levels. .

We've been prepared for a rate rally for years, and the third quarter gave us a little bit of a glimpse of what it would look like, and we delivered on everything we said we would.

To give you a more tangible example showcasing our capabilities on day in September, with an all-time record lock day. We locked $4.8 billion, yes, $4.8 billion of locks in 1 day. We handle it all in 1 day along with the submission that followed seamlessly. Now that was only a 3-, 4-, 5-day window of opportunity, and we took advantage of it by handling all the volume all the way through the organization, from setup to submission, to underwriting to closing to client service priorities and all went pretty close to flawless.

We maintained SLAs, world-class net promoter scores and our submission to critical cost times actually got even faster from 12 days to 11 days, which are like record-breaking numbers. It was phenomenal to see across the board, the execution because we have been preparing for years when you actually have to do it and execute, you never know how it's going to go, and it went amazing.

The investments we have made in technology will continue to solidify our competitive engine and the gap between UEM and our competitors continues to widen. Back in May at UWM Live, we made headlines using Mia, our most intelligent agent, a generative AI, loan officer assistant. A lot of people were unsure of what this meant and how would it impact business. but we now have actual results. Mia has made over 400,000 calls on behalf of our mortgage brokers, helping them stay in touch with past clients.

Remember, as I told you before, 97% of all borrowers love their experience to the broker and want to work with them in the future and have a great experience, but only 10%, remember who the brokers when they want to refinance again. Mia is built to solve that issue and she's doing it. She made over 400,000 calls starting business conversations with borrowers on behalf of the brokers. These are mostly the rate watch calls, and of these, over 14,000 have already closed.

What's interesting is we forecasted 10% to 15% answer rate, we've actually seen over 40% answer rate. Mia has been phenomenal. We've been saying from the beginning, our business is tied to AI is based on 3 main issues, enhancing knowledge which ChatUWM does along with a couple of other things we've done, create efficiency, which Bolt has done. And then the hardest one to solve is growth, which Mia is doing, by solving the issue for brokers missing business from their past clients. So having over 14,000 closings from this in the last couple of months is even higher than we expected when we rolled it out by a wide margin. And that's why we are the biggest and best mortgage company in America.

We have been for years and now we are just accelerating and leading the gap.

Separately, Mia also answered about 70,000 inbound calls. Once again, this is actual AI working in our business, not just talking in buzzwords like a lot of other people like to do. She's taking messages, making appointments, helping them succeed. I love to see how many of our clients are utilizing Mia and having success.

Now let's talk about the third quarter performance. We closed $41.7 billion of production, obviously beating our guidance. It was our best quarter since 2021 back when rates were in the 2.5% to 3% range. We did $25.2 billion of purchase, which is on track to as we said, is consistently doing about $100 billion of purchase every year. We have been doing that consistently at UWM. And then $16.5 billion of refi, which is up significant. Like I said, we were able to take a vantage of a very small window a couple of week window in there where we were able to execute and close loans fast, and we're excited to be able to prove that that we can not only -- we were prepared, but we also execute it.

Our game margin was 130 basis points which is slightly above the gain margin that we provided in guidance. And part of that is market moves in our direction, we were able to take advantage of that for that couple of week window. Because of this window, you can see when rates drop, our volume goes up quickly, our margin goes up quickly, and we can really take advantage of it. And it's just a 3- to 4-week window, like I said, not just similar to what we saw last September, but we have been more prepared and we will take advantage in a bigger way this time.

Last year, we had a similar 3- to 4-week window and the 10-year went to about [3.75, maybe 3.80], and we had a great month, we did about $17 billion. But we didn't have the success that we had this time because we have Mia. This time, the rates didn't even get that low. The rates got to about 4% in the 10-year, and it's about the same short window, Mia has helped us grow the business exponentially, and we're clearly prepared to handle that volume and more.

Now from an income perspective, we did over $12 million of income. That's inclusive of $160 million decline of fair values. But really, the number to focus on is over $211 million of adjusted EBITDA, once again, a dominant performance from UWM. You've heard me say this on every call, Year after year, our playbook and recipe remain consistent. We will continue to invest in our people, our technology and dominate this industry with our service and by growing the broker channel.

Our operating profile and relentless drive to deliver results provides a consistent message for the investment community. UWM is uniquely positioned to win in any market environment, and we are investing every day to further extend our lead for the benefit of independent mortgage brokers and their consumers.

I'll now turn the call over to our CFO, Rami Hasani.

Thank you, Matt. Q3 was a strong quarter for us. We reported net income of $12.1 million and adjusted EBITDA of $211.1 million, up from both Q2 and Q1 of this year. Loan production volume of $41.7 billion, also up from Q2 and Q1 and gained margin of 130 basis points, again, up from Q2 and Q1.

Operationally, our business continues to deliver. We also continue to maintain a healthy MSR portfolio with net servicing income of $135.1 million. As we said before, to support our growth, we continue to invest in our people, processes and innovative technologies to prepare us and our broker partners for long-term growth. we remain on strategy with our investments, including our investments to bring servicing in-house to be prepared for significant market opportunities for us and our broker partners going forward. We previously said that our business is positioned to handle twice the volume without interruptions or adding significant staffing or fixed costs.

In Q3, we demonstrated that as there were several periods throughout the quarter where production more than doubled and it was seamless. From a liquidity perspective, we recently completed a successful offering of $1 billion in unsecured notes. With the proceeds received, we plan to pay off $800 million unsecured notes maturing in mid-November, and will utilize the remainder to support our growth. We remain well capitalized with total equity of $1.5 billion and continue to be in a strong liquidity position with total available liquidity of $3 billion. and $2.2 billion after paying off the bonds maturing in mid-November.

While our liquidity and leverage ratios are slightly higher as of the end of Q3, it was the result of the timing of our bond issuance in September and our proactive liability management with the use of proceeds prior to mid-November maturity.

Net of available cash, our leverage ratio as of the end of Q3 remained largely consistent with the prior quarter. Going forward, we expect to continue to maintain our capital liquidity and leverage ratios within what we believe to be acceptable ranges in the current market conditions.

In summary, Q3 was a great quarter with strong production and even stronger gain margin performance. levels we haven't seen in a while. We continue to invest in our people and technologies to be the most prepared mortgage company in the country. We're also prepared from a capital and liquidity perspective and believe that we are well positioned for Q4 2026 and beyond.

I will now turn things back over to our Chairman, President and CEO, Matt Ishbia, for closing remarks.

Thanks, Rami. I'll close with a few points before our Q&A. Our work to bring servicing in house is on track for the first quarter of 2026. This will have a positive financial impact on our business, and we're excited to bring our world-class approach to the servicing world. This will no doubt strengthen the consumer loyalty to their brokers. It was great to share more details on how partnership with Bill will deliver best service experience in the history of mortgage plus a tremendous amount of exclusive benefits for our brokers, including 400,000 to 500,000 leads built renters that convert to purchase every single year exclusively to our mortgage brokers.

We're also excited about the mortgage matchup center sponsors [indiscernible] Phoenix. We've seen a significant spike in both traffic and success to the mortgage matchup .com website launching this. So very excited about all those things.

Now I don't normally do this because I know you guys have asked me a bunch of questions. But before I move to guidance, I'll ask you a question. When rates drop, what mortgage company do you believe is most prepared to handle it with AI with operational capacity, not with buzzwords, but with actual technology, process and preparation that's already been proven? The tenure dipped to 4, and you saw what we did. I've been saying this for years when the tenure dips at 3.75, we're going to double our business. No other lender can do that. Even if they could, where they're going to go from $4 billion to $8 billion. Like we're going to go from $30 billion to $40 billion a quarter to $60 billion to $80 billion in the quarter, right? With margin expansion. That's how UBM works. I hope you feel good about what lies ahead for UWM because I do.

All right. Now turning to guidance. I expect the fourth quarter production to be between $43 million and $50 billion of production. And we're going to raise our levels on the gain margin to 105 to 130, moving it up 1 level. And honestly, if we get another dip like we just saw, those numbers could be even higher. But overall, excited about what UWM is doing. We going to continue to dominate. Thank you for your time today. Let's flip it over to the Q&A.

[Operator Instructions] And our first question for today comes from the line of Terry Ma with Barclays.

I just wanted to follow up on the effort to bring servicing in-house. And specifically with the bill partnership. Maybe just talk about what you're seeking to accomplish with that partnership how what spread the adoption could be? And then like, ultimately, like who's going to fund the rewards issues from the bill card?

Yes. Thanks for the question. So it's got nothing to do with the build card. So it's every mortgage payment that goes through UWM, we are letting them be the front-end servicing app, if you think of it that way, the technology on the front end. The real benefit for us at UWM is one, we're going to be better than every other servicer out there because we're better than everyone at everything we do and servicing have joke in our industry. And so we're going to make it really great for the client. -- when people call we're going to actually answer the phone, not 43-minute leading periods like everybody else does. So we'll be great on servicing from the service perspective for the consumers to consumers to love it and then they'll get rewards for making their mortgage payment, which is something that's never been done before.

And then obviously, the front-end technology that, to your point about built, will be fantastic. On top of that, as I mentioned, Bill has million people making their rental payments to they're about 10% going buy houses every year. Right now, they just leave built and go by house. Now they're going to have a way to make a mortgage payment built by working with the mortgage broker. So those turn into great leads and opportunities exclusive to our mortgage brokers. And so it's a win-win-win. -- built is a great company. They do good things. but UWM and our servicing process is going to be the best in class. That's how we do things. And so we're excited about that.

Got it. Just to follow up on the rewards piece. Like, will that show up on expenses anywhere on your P&L?

No. That's a silly question, but no, it's not funded by UW. There's no expense for it at all. This is all upside. .

Okay. Great. And then maybe just a follow-up on Mia. I appreciate the stats. I think you mentioned 14,000 loans of 400,000 outbound calls. Like any room for improvement as we kind of go forward and you continue to kind of use it?

Everything we do has room for improvement. So yes, Mia has been fantastic. It's better than we expected. The answer rates are higher. The response has been better. But every day that goes by, she gets better. And every day it goes by, our brokers get more and more comfortable, consumers get more comfortable with agents reaching out and it's not a human, like every day, it's getting better and better, and it's only going to be more and more loans.

And so 14,000 was a really big number, surprisingly big number for us, but that's also the market we had that little couple of week blip where the market got really good and Mia took advantage of that. But no, Mia has been fantastic. And we spend all of our time and investments internally on AI and investments around AI. Once again, it's not a buzzword for us is actually producing business. And so Mia has been great. And so I appreciate that question because she's been better than we expected.

Our next question is from the line of Eric Hagen with BTIG.

On the guidance for the gain on sale margin, is that a function of lower rates? Or is there another variable or condition in the market, which is supporting that and how do you feel like the margin compares on refis versus purchased loans at this point?

Yes. So the margin on purchase refis are -- there's no difference. It's not a different thing. The opportunity is if rates drop a little bit, as rates get lower, more volume comes in the market. And anyone that's a good mortgage loan officer or knows how to do business knows that rates are not what drives business because if that was the case, then there would be no retail business because everyone in retail charges a 400 basis point gain on sale takes advantage of consumers does the wrong thing.

If rates really matter, then there would be no retail channel. Since there is 70% of the market goes through retail, rates are not the biggest thing. So margin being up 105, 130 in that range. That's just as -- for years, we were at the low end. I always told you a different level, 75 to 100 was lower, and I keep -- kept moving it up strategically and timely, and I control that nobody else does.

And so that's what's happening. And that's what it will be in that range again this month. And like I said, on the volume and margin guidance is accurate as it was last. But if I get a 2-week blip, we are able to take advantage of it and margins go up and volume goes up and we crush it just like we did this quarter, although I don't know if you guys recognized it, but it was a dominant quarter.

Yes, we recognize it was good stuff. Good color from you as always. I mean the origination numbers look really strong, but what was the driver of the conventional purchase ones being down a little bit quarter-over-quarter and -- how much upside do you think there is to the purchase numbers if rates fall? I think you mentioned $3.75 on the 10-year. I mean if that's the level, what is the upside to the purchase segment?

The purchase business is the best part of our business, and you understand it pretty well, Eric, is that we're consistently dominant on the purchase. We do $25 billion a quarter, maybe $22 billion, maybe $27 million. But basically, were $95 million to $105 billion of purchase every year. Rates go down to 4%, let's just play that out, just to use an example, crazy not to tenure, just the real rates. .

Yes, our purchases will go up maybe 20% to 30%. It's not like a crazy difference. The real difference is the refi. Purchases are steady, consistent always. And that's why nobody else has that. That's why everyone else is sitting here waiting and they've been dying for the last 4 years, and we've been consistent with purchase. So the real upside is in the refi business that will go up like we saw it can double or triple in a week or a day.

And so the purchase business, especially in the fourth quarter, first quarter, purchase business, as you know, is -- that's not the purchase season, purchases season is the second and third quarter. in really the summer because that's what people are moving and all that stuff. And so it's -- it will be steady. It will be consistent. Yes, there's plus 25%, maybe plus 30%, maybe plus 40% volume on purchase with lower rates because maybe some more people sell their houses and give me all that stuff, affordability gets better, but people got to go out and buy houses still. So I'm not that focused on -- like we will dominate the purchase market no matter what happens and then the refi is where the upside comes in.

Our next question is from the line of Bose George with KBW.

Can you talk about the volume and margin trends that you've seen so far in October? Is that kind of at the midpoint of the guidance range?

Yes. Like I guided for -- so where I did for a reason, October was a great month and the volume, the margins are aligned. Now November is 19 business day month. And if you take out the Wednesday and Friday after Thanksgiving and before then, it's really a 17-month a month. So it's a really short month. So this quarter is actually a short quarter tied to the end of the year stuff.

But I've just guided that no matter what I'm going to have the best quarter we've had in 4 years. Maybe you guys will recognize that and realize that we're dominating out here. But either way, $43 billion to $50 billion is very good. It's never been -- has done in 4 years at UWM. The margins are guided to those same places that I just did. And so we will not miss guidance just as I never have, I think, as long as I've been doing this.

Okay. Great. And then actually on the servicing side, you noted that you'd be bringing it in-house early -- does that happen? And is it staggered? Does it come in over time? Or how is that going to work?

Yes, all new loans that close in 2026 will be -- we'll stay here so we won't subservice those out to your point, to your question. And then the loans that are currently subserviced out of similar over the year, we'll transition them here. So by the end of 2026, there won't be loans anywhere else outside of default loans and different things that we make decisions on.

But for the most part, everything will be here internally. When I move a big chunk of them in March or April, another chunk in September, October, but all new originations are to 2026. And by the end of 2026 100% of the servicing book will be internal. Like I said, outside of the loans that I've chosen to not come in town or come in-house.

Our next question is from the line of Doug Harter with UBS.

Matt, as we think about your ability to ramp up volumes, how -- you've talked about the scale of the business. How should we think about like what are the incremental costs that for funding that new volume and just how to think about the operating leverage that's in the business?

Yes, the operating leverage in the business is substantial right now. So there's the cost -- you guys look at costs all the time, the light of them are investments you look at like how do we invest in technology, how I continue to invest in everything that we do with the broker channel, all the different pieces to it.

But where we're at right now, I don't need to add costs to double my business. I've said that before. And so therefore, you can kind of think of the cost. Like obviously, when you do more volume, there's more commission to get paid out. And there's things like that, but that's a variable cost. -- from [indiscernible] perspective I feel really good about where we are right now. And I'd expect over the next year that to stay the same or stay in that range, plus or minus 10% and probably be on the lower end of the minus 10% is how I think about it based on just the AI initiatives and things that we've done.

But at the same time, if there's an opportunity to make an investment to build the business and dominate. We will do that without question, without thought. And so the investments we make will continue. But the expenses like if you're looking like fixed cost, like how much more -- we don't need anything to do the volumes I just told you guys, we don't need anything.

And then speaking of investment, can you just remind us on bringing the servicing in-house? I guess have those investments already started. So like are those costs kind of already in your cost base and just how to think about kind of the cost side as servicing comes in-house?

Yes, those costs. So getting double hit on it, right, because I'm paying subservicers and I'm also building out a servicing portfolio and servicing people, hiring people to build out the way I want to do it. I told you guys originally I'd say, between $40 million and $100 million. I think at 60 to 100 is probably closer to the high end of these ranges, I'm giving you, but let's call it $40 million to $100 million to bring servicing in-house, and those numbers are accurate. You won't see that all the way through the income until 2027, right, because -- this year is the worst because I'm double dipping, I'm hiring people, building it out, and I'm still subservicing. Next year is a combo of it in 2027. I'll have all the savings baked into our business, along with the leads, along with the growth along with the success.

So along with better retention and all the things that come from it. So yes, so you're correct. The -- those costs are already in there. And same thing the technology investments right now, building out some of those things from the AI perspective to make servicing, like I said, the best in the country. I'm not trying to be like all these other guys.

Our next question is from the line of Jeff Adelson with Morgan Stanley.

Matt, just maybe a quick reminder of the hedging. I think this quarter, the hedge gain against the MSR loss was a little bit smaller than we saw last quarter. Just -- maybe just a quick update on the hedging strategy? I know you've been a little bit more opportunistic there.

Yes. No, I appreciate it. We don't hedge our MSRs, as you're hopefully aware of. I do look at opportunities and look at interest rates and make decisions. Sometimes we do more of it, sometimes we do less of it. This quarter, we focused less on that because we focused on just the dominating the business.

Obviously, the tenure goes up and down. MBS rates go up and down and how it finishes depending on how it started, it ties to an MSR loss. Anyone -- and I know it's you guys because I love all of you guys, but I think f****** focuses on the MSRs and the fair value, just doesn't understand mortgages, doesn't manage this business. It got 0 to do with what I'm doing, the operating of the business. The 10-year can literally be at 3.75 for this whole quarter. I'll say you drop it 30 today, and I'm going to crush it, just crush it across the board.

I'll call you next quarter. I'll say, we did $60 billion, $70 billion 135 basis points of margin, we'll crush it. But on December 31, the 10-year goes back up to $440 million just to use some crazy number, and I'll have an MSR write-up of another $400 million also. They had 0 to do with my business. And the inverse is accurate, too. So the MSR value stuff means nothing. I don't focus on it. I don't care about it. I'm not going to care about it because it's like a focus on to have 0 control. You can hedge it Matt, -- that's -- once again, MSR value actually putting costs out there to hedge something I have 0 control. I don't care about the MSR values. If you guys write about the MSR values, you don't understand my business. It just doesn't matter. It matters 0.

So just like, by the way, and you can go back and listen to the cords, I told you the same stuff when my -- I got an MSR write-up of $500 million. I'm like, don't give me credit for that. I didn't do anything for that. That means 0. -- watch my core business, watch what I do with my production, my gain on sale, my expenses and how we dominate in there and our adjusted EBIT of $200-plus million, like that's how you run a business. That's all we focus on. I don't focus on other stuff. I know other people like to talk about it because they just don't understand our business.

And then just in terms of Mia, it was good to hear the color on the success so far there. Just as I sort of think about our 14,000 transaction closed, -- do you think about that as mostly refi at this point? And some really rough math, if I sort of think about an average loan size here would suggest there was somewhere in the ballpark of maybe like 10% of your originations this quarter and if most of it was refi, that would be quite a bit of refi as well. So is that right? Or how should we be thinking about those numbers and the path from here?

Yes. And to be clear, maybe I should have done a better job of stating it. The 14,000 probably includes loans that have closed in the beginning of October because I think I pulled the data like 2 weeks ago. So it's probably a little runoff. So it's not all 14,000 in the first quarter -- in the second quarter, third quarter. and also it was probably a little bit in the second quarter. So it's not like Pure, but we really saw a massive pickup in that September little blip that we just talked about.

So a lot of that stuff closed in September and a little bit rolled in October. With that being said, I would assume that it's all refinanced. Yes, there are some that we have called and they're like, oh, I'm looking to buy a house or I want a second home. But the focus on the 400,000-plus calls were rate watch calls, which basically means, hey, you might be in the market for a refinance. You should be in the market of a refinance. I've got good news you're LO at this company. And so maybe at some point, we'll play the call if you call our Investor Relation to let you hear a call like real live calls and people like, "Yes, I have Johnny call me. and then that turns into an import with surgeon do alone, which turns to do a closing.

And so I would say 95% refi in the data I just gave you on the 14,000, but I wouldn't try to put it in the third quarter number because it's not all in the third quarter, I would say, good amount of it was in the third quarter, but some of it trickled into the fourth quarter, and we'll have more in the fourth quarter. We already have some since I pulled that data.

[Operator Instructions] Our next question is from the line of Mikhail Goberman with Citizens.

I hope you're doing well. Just a quick question about big picture question about technology and how it's affecting the industry, especially with respect to refi, there's been a lot of talk about the sort of traditional 75 basis point incentive for refis really contracting to a much lower level going forward, maybe even as low as 25 30. Could you talk about that? And how technology, specifically AI is affecting that? .

Yes. Just to clarify your question, so I understand so I can give you the right answer. You're saying that people are more likely to refinance because it's easier these days they used to think you get to save more money now they're willing to do it quicker. Is that what you're asking? .

Correct. Yes. Given that sort of the human element has always been the choke point in the refi experience and technology just collapsing that into a faster process.

Yes. I mean I see that. And I guess your point is, will there be since there's less cost, less friction and it's easier to refinance because of will there be more refinances. And I guess, I would say, yes, I see the opportunity there. But you're also assuming that all lenders are actually good at it. You're also assuming that the lenders actually have technology. the friction is still a pain in the butt for -- I mean, I think I said 11 days sub to CTC, and refis even faster than that. The industry average are still 40 days. There's still a lot of friction.

People are still literally you get a mortgage with some of these retail lenders or some of these other lenders, you're literally going and printing out your 12 months baked statement, going and get your paystubs calling your return, your tax people and getting your tax returns and sending them up like it's a complete joke still. So don't get confused that just because we're dominating and doing these things and that a couple of other companies are focused on AI.

A lot of AI is buzzwords and bolshie right now. The truth is we're closing like, why don't you check their data. So he's actually pulling the friction out. But you are correct, when you make it faster, easier and cheaper, people are willing to do it because it like, it's not a pain in a bunch of refinance.

I'll take $92 of savings. I don't need to wait for $200 of savings. In the old days, it was like let me wait until $200 because it's not worth my time. I don't want to go get my pay stub and go to Kings and facts. They make copies and all that nonsense. But there are still lenders and the majority of lenders are still doing it the old way.

So I wouldn't say there's a massive change. You'll see our faster from the opportunity because we'll be able to help people, but it's still -- it's not going to be a massive change in the markets yet. In the future, it will be -- I think you're actually on to something. But you're still the technology that I speak of, and we talk about in AI is I say light years, but we'll call it 3 to 5 years ahead of all these other people.

And so yes, there'll be more refinances. But with our servicing bringing in-house, with our faster, easier process with mortgage brokers being cheaper and lower cost, it's going to be more refis, and that's why we're -- we dominated in September, and we dominated in October. -- and we'll dominate this fourth quarter, we'll continue with the volume on refis.

And we don't have to own the servicing book as a lot of people like to say they own servicing, but they get the refis, that didn't the game anymore, although people are spending billions and billions of dollars buying servicing books. -- that helps, and it gives you a little bit of a leg up, a little inside track, but that is not driving it. As you saw, I think I said last quarter that we own 2% of the servicing book or 3% of the book, and we did 11% or 12% of the refis in the market.

So obviously, that's not the game anymore. So taking the patient out is the game technology of the game, and that's why you see me making investments every single day to be prepared to dominate just like we did in the third quarter, and I will get in the fourth quarter and then in 2026.

Thanks for your questions. Ladies and gentlemen, that will conclude our Q&A portion for today. I would like to turn the call back over to Matt Ishbia for any closing comments.

Yes, thanks for the time today, guys. I appreciate you guys. Have a good day. .

Thank you. And ladies and gentlemen, that will conclude today's conference. Thanks for attending. We'll see you next time.

Hello, everyone, and good morning. My name is Jim, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation Second Quarter 2025 Earnings Conference Call. [Operator Instructions]. Thank you.

Blake Kolo, you may begin your conference.

Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the second quarter 2025 UWM Holdings Corporation's earnings call.

Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning.

Our commentary today will also include non-GAAP financial measures. For information on our non-GAAP metrics and the reconciliation between GAAP and non-GAAP metrics for the reported results, please refer to the earnings release issued earlier today as well as our filings with the SEC.

I will now turn the call over to Matt Ishbia, Chairman, President and CEO of UWM Holdings Corporation and United Wholesale Mortgage.

Thanks, Blake, and thank you, everyone, for joining today. UWM strong, consistent and differentiated values continue to be the foundation for everything we do here. Every day, our team of more than 9,000 people delivered the best products and services to the broker community, which in turn benefits homeowners with significant cost savings and a world-class mortgage experience.

Our operating profile and relentless drive to deliver results run themselves to a consistent message with the investment community. UWM is uniquely positioned to win in any market environment. While others have pulled back, UWM has doubled down, proving that we can and will dominate the purchase market regardless of market cycles. And when rates come down, we'll leverage our world-class operating system and industry-best technology that we develop for brokers to scale and dominate.

Over the last several years, we've built scalability in our business by investing in technology. While your many other companies using AI as a buzzword, the difference is actually at UWM, we have products and services that are powered by AI that are actually impacting our business today and will impact our business even more when rates drop and just going forward in the future.

Years ago, we invested heavily to build our AI-based underwriting system both. While underwriters at most lenders can do 2 or 3 loans per day, maybe even 4, we can do 2, 3x or more per day than anyone else in the country. Our loan quality is better because of this technology and will continue to improve.

So here, UWM, we can say AI is making a big impact on our business today. Another example of AI actually working is Chat UWM, which is similar to ChatGPT, but for mortgages. Our brokers and team members now use this as a primary resource for accessing job aids, guidelines and other information that arises that they need on a mortgage transaction.

And within this, is LEO loan estimate Optiver, which we launched at UWM Live on May 16 and LEO helps brokers compete and win by showing exactly how they can beat a competitor's loan estimate. All things to do is drag and drop the borrowers loan estimate into LEO and they get a detailed announce of tips on how to win the specific loan.

And finally, the big noise and big opportunity is around MEA. MEA has been a huge, huge success. It's an AI loan officer assistant. MEA is designed to help loan officers do more loans and get more business, right? She is the ultimate loan officer since she works 24/7, 365. She doesn't get days off. We rolled this out at UWM the broker feedback was incredible. We wrote at UWM live back in May. We've been using it every single day, and it's having so much success we're scheduling meetings and helping brokers get more business. And that's really the game.

Now a stat that we've -- or big on here, UWM was 97% of all consumers that work with a mortgage broker give a 5-star review, which is phenomenal, unbelievable information, but only 10% of those people remember who the mortgage broker is when they go to refinance they're mortgage because so much time has gone by. And until now, brokers haven't had great tools to stand for their business, and from the past borrowers.

So MEA changes all that. She'll stay in front of it, and we think that 10% number could go to 30%, 40%. Maybe even 50% of the know who their mortgage brokers would just guarantees more business for brokers, which helps UWM and the broker channel continue to grow.

She makes thousands of outbound calls every single day. She takes inbound call, she sets appointments. All this is happening today. There's not something that we plan on doing and some cool things that we're going to tell you that's going to happen in 2028. It's happening today and it's impacting business today. And if rates tick down a little bit more, it will impact business greatly today and this year.

Supplying brokers with the best tools and technology helps them win and a channel continues to post higher and higher overall market share. Broker share all direct lending has more than doubled since 2016, reaching about 30%. Our goal is for brokers to be #1. In my mind, that means 50.1%. I don't know if that will take 5 years or 15 years, but we're going to grind it out and make sure it happens. It's best for consumers, it's best for real stations, it's best for loan officers, which is why the channel continues to grow. I'm super excited about the opportunity as we continue to build this together.

And a lot of the AI things I talked about will help brokers scale, help UWM scale, and we're going to all win together.

Okay. Let's get into the quarter. We closed $39.7 billion of production, our best quarter since 2021 and almost 20% higher than last year's second quarter. We did about $12.4 billion of refi volume, which is double what we did last year's second quarter and represents about 11% of the volume in the industry, which is really interesting because most people think you need to have the client in your servicing book to refinance them.

First, we don't refinance any borrowers our brokers do. But second, we only own about 2% of the industry servicing market. So for us to do 11-plus percent really just proves the age-old theory that you must have the service need to refi when you deliver a world class experience, you get 97% of borrowers, giving a 5-star rating, it really doesn't matter how big your servicing book, it gives the brokers the ability to excel on refinances and you're seeing that in real time here with UWM.

Additionally, we originated $27.3 billion of purchases. This is our third best first quarter of all time, and there's a big number in the market that we're in right now, and it's tracking to do over $100 billion this year.

Gain on sale margin was 113 basis points, which is up a lot since the first quarter. We also had a pretty good quarter of earnings, $314.5 million in net income, demonstrating the earnings power of our business and that also included $111 million decline in fair value of our MSRs.

Our playbook won't change, invest in our business, win, grow the broker channel and repeat.

I'll now turn the call over to our CFO, Rami Hasan to go over some more numbers.

Thank you, Matt. Q2 was a strong quarter for us. Net income of $314.5 million and adjusted EBITDA of $195.7 million. Production volume of $39.7 billion, up $7.3 billion from Q1 and gain margin of 113 basis points, up by 19 basis points from Q1. And consistently maintaining a strong MSR portfolio of $211.2 billion in UPB and WACC of 5.51%. All this while never skipping a begin service, with best-in-class Net Promoter Score of 87, again, a strong and successful quarter by all measures.

To support our growth, we continue to invest in our people, processes and developing innovative technology to prepare us and our broker partners for growth in 2025 and beyond. We remain on strategy with our investments to be prepared for significant market opportunities for us and our broker partners.

As we've said before, we believe our business is positioned to handle twice our current production volume with minimal impact to fixed costs. We are prepared and excited for the future. We also remain well capitalized with total equity of $1.7 billion, up from $1.6 billion in Q1 and continue to be in a strong liquidity position, cash of $490 million, total available liquidity of $2.2 billion and an MSR portfolio of $3.4 billion.

We continue to assess and evaluate the opportunistic refinancing of our $800 million unsecured notes maturing in November of 2025. And given the current market conditions and strong investor demand for our last offering, we expect a favorable outcome in refinancing these notes.

And as part of all this, we continue to maintain capital and liquidity leverage ratios within what we believe to be acceptable ranges in the current market environment.

In summary, Q2 was a great quarter for us with strong production, gain margin and net income performance. We continue to invest to be the most prepared mortgage company in America. We are also prepared from a capital equity perspective and believe that we are well positioned operationally and financially for any market cycle.

I will turn things back over to our Chairman, President and CEO, Matt Ishbia, for closing remarks.

Thanks, Rami. Appreciate it. And I'll close with a few points before the Q&A. First, our work to bring servicing and House is progressing nicely. As I told you before, we'll have that done in the first quarter of next year. We'll have some positive financial impact of our business in 2026 and beyond.

More importantly than that, this gives you give you complete control to borrower experience. We'll do with the same world clusters we're known for on the servicing side, which will drive increased loyalty to brokers and UWM. Right now in the market, it's not done that way on the servicing side and UWM will be best-in-class.

We recently partnered with a company called Built, which will help make the amazing front-end experience for the consumers. And in a lot of places, which I'll explain very soon, it will make a huge impact. I'm really excited about bringing servicing in-house and helping UWM dominate on this part of the business, just like we do in origination.

All right. Turning to guidance, based on where rates are and where they've been, I expect the third quarter production to be around $33 billion to $40 billion. And now I'm actually going to improve the guidance on the margin up 2 levels to 100 to 125 basis points based on the markets they've been in, I feel confident it's the first time in 4 years to move the margins up to those levels. And I'm excited about what's going to happen in the future, even in this tough market, but we see some reasons to believe the market is going to open up in a positive way going forward.

I really believe that UWM is positioned to be great in the third quarter, the fourth quarter and into 2026. We're really excited about our business.

I'll turn it over to questions from all of you guys now.

[Operator Instructions] Your first question today comes from Bose George at KBW.

Actually, just first on the guidance and the higher gain on sale margins. Does that reflect market trends? Or are you prioritizing higher margins a little more? Or just can you give us color on that?

Yes. No, just understand the market, we obviously have a view at the market and understanding what we're doing and what our clients need and what's going on in the markets that maybe others don't have that same view as you see in our margins sometimes look a lot different than everybody else's. So I feel very confident in my guidance and that we'll hit in that range. Obviously, we had a good quarter from a volume and margin perspective, and we expect to do the same in the second quarter -- third quarter, excuse me.

Okay. Great. And then actually one on the servicing in-house. The costs related to that, like the OpEx number this quarter already, did that already include costs related to that? And should we see any change? Or does that already kind of incorporate what's happening there?

No, you'll see some of those costs come out in some savings and some opportunity for us in '26. So we're -- I think a lot of the stuff that we are doing right now, there's actually some increasing costs in the servicing side tied to -- we moved it all to one subservicer. We modify -- we're in the process of building out technology tied to servicing. We're partnering with a lot of different things to make it all happen in a very short time frame.

But you'll see some of the costs come out in a positive way in '26. We're going to get the servicing up internally by early '26 first quarter, and then you'll see the costs come out throughout the year and then obviously beyond.

Your next question comes from Eric Hagen at BTIG.

Do you feel like the speed to close loans has room to fall further, while keeping your margin the same? Like what are the processes or catalysts that would support an even faster turn time from here?

Yes. Thanks, Eric. I mean our speed to close loans, yes, with the AI investments and the things we've done and we'll continue to get faster. There's laws that you can't actually close it quicker than like 8 days. So there's actually some laws in place that -- but we talk about how quickly you get the clear to close, purchase and refi.

Obviously, refis are even faster and easier. But the truth is, what's going to happen is when rates do go down a little bit more and there are more refinanced in the market, everyone else's turn times are going to get longer. And they're going to slow down more, and we won't.

Based on our AI investments, based on our team and our ability to scale, so I've been talking about for probably 3 or 4 quarters now that we're ready. And so that will not impact us. And what we'll do is we create a competitive advantage, which then gives us opportunity to get more business, more margin on both.

Love it. Has the playbook or the parameters around selling MSRs changed at all for you guys? Like do you think the market has the capacity to buy more than you're currently selling at these interest rates? And like how much capacity do you think would be available for MSRs if rates fall, like do you think the market can handle that?

Yes. The market is very robust in it, honestly. We had new buyers coming in. We have people coming in and aggressively trying to buy our servicing. Once again, we're one of the few people that actually originate anything at scale. So if you want to get into servicing game, you got to come to UWM because we originate a volume that makes sense.

Also, a lot of people think that the way to refinance people was to buy servicing. And as I pointed out earlier, that's not how it really works anymore, but don't tell the servicing buyers. So it's fine for them to continue to buy loans and -- but there's a lot of people that -- and they also look at things, there are someone that aren't buying them the refinance, they're buying them to hedge to other parts of their portfolio.

So we've seen a good strong market, we're opportunistically selling. But at the same time, we can shut it down and not sell any. And we'll look at all those options and we look at every single deal before we make the trade and all those. So we feel good about what we're doing on the MSR side.

Next question today comes from Terry Ma at Barclays.

I just wanted to follow up on expenses. Your noninterest expense growth has been quite elevated in the last 6 quarters, but it did moderate the last 2. I'm just curious like how should we think about the trajectory of that noninterest expense growth as we look out to the back half of the year, particularly as you start to build out in-house servicing?

Yes. No, it's a good question, Terry. I look at the -- we look at the fixed expenses. That's really what we manage and monitor and understand. And a lot of them are investments, right? I look at that as investments into the scalability into the AI and into the servicing. And so I think those will moderate as you already pointed out, yes, and they will continue to moderate going forward.

Now the variable expenses, if we double our volume as an example, right, if that happens, obviously, the variable expenses will go up. But we're in a really good position from a ability to handle the volume and then a lot more volume that we have today, along with the investments we've made from a perspective of broker business along with servicing, along with technology tied to AI. And so a lot of that stuff you see through there.

But I do think that we're -- I won't say we're -- it will never go up again, but I feel pretty good that we're in a place that's not going to be going up significantly.

Got it. That's helpful. And then I guess maybe just on the 10b5 that's been active since about mid-June. Any updated thoughts on how you're kind of thinking about that and how much longer it will be kind of active like what's the end point?

Yes. I mean the 10b55 is a plan out there that obviously you can't change what you started. The stock price is way too low to be doing it, but I don't get to choose that anymore. But we feel fine about it because I know it's a long-term play. It's the right thing for the long-term, build to float all of you guys that are on the call, tell me that we need more float.

And so I'm selling at a massive discount to provide that for all our investors. And my strategy and our strategy based on feedback from you guys is that the expectation is that the other 85% or 83% of what I own will be worth more because I'm getting more float on the market.

Our next question will come from the line of Doug Harter at UBS.

Matt, you gave a little update on MEA, but hoping you could talk a little bit more about kind of broker reaction to it, consumer reaction to it? And any metrics on kind of around the success of that rollout.

Yes. Thanks a lot. It's been great. It's been -- we've not -- it's not been 100,000 calls a day because the market hasn't needed that yet, but it's ready. And she's been making a lot of calls. I actually played a couple on the sales huddle to all our brokers, 10,000 people, almost 10,000 people watch that and let them hear MEA talking with borrowers calling inbound and she's answering and setting up an appointment for the broker or she's making outbound calls, hey, it looks like your rate should be dropped, could drop. Do you want to talk to Johnny Smith your low and personally, yes, I love the schedule [indiscernible] tomorrow and they literally schedule appointment and then the broker called and the broker does alone, it's really cool.

And now we're just doing it at scale, which we already are doing it at scale like thousands and thousands a day, but I think, scale of $50,000, $100,000, and it doesn't go on scale until rates drop a little bit more to where it's going to drive more business, dut I think that's -- it's close to happening right now where the 10-year is and where the market and mortgage-backed securities are trading right now. We're getting closer and closer.

So MEA be making a lot of calls today and driving a lot of refinance activity, along with in general, just keeping the brokers name and information in front of the borrower to referral based system, and brokers are not good at that in general, and we are helping and we are seeing brokers get more business and have more upside because of what we're doing. So MEA has been a great success, and it's only going to continue. But it's not like in theory, hope you make some calls in 2027. It's like we're actually doing this today.

I don't use AI as a buzzword like everybody else. We actually are doing stuff and it's actually working and we're getting more business, and we're more efficient because of the artificial intelligence that we've invested in and we built out here at UWM with our over 2,000 technology people.

All right. Great. And then just -- I appreciate that, Matt. To shift, can you talk a little bit about the derivative gain in the quarter? Was that kind of opportunistic? Or is that kind of a change in kind of how you're using derivatives.

No, it's opportunistic, understand the market, understand the situations and when the opportunity is there, we look at those things, right? As you saw the tenure dropped significantly over the last 2 weeks of the last quarter. which would had a big hit on our MSR book, which is why we lost $111 million on MSR book.

We put out a trade to hopefully manage some of that, and we took advantage of the opportunity. And that trade, we look at that. We have a lot of very analytical people here making those decisions, and we feel really good about that. And we'll look at that sometime, but it's all opportunistic.

Our next question will come from the line of Jeff Edelson at Morgan Stanley.

I wanted to follow-up on the guidance for originations. The $33 billion to $40 billion, if I look at the midpoint, it does seem to imply a bit of a decline versus this quarter and a year ago. And I think when we look at some of the industry forecasts, it does look like there's a bit more of a positive outlook and even with the weekly out data, it looks a little bit more positive. I was just wondering maybe what you can -- what you're seeing that is causing you to maybe look for a little bit of a decline in the originations outlook versus prior periods?

Yes. No, just understanding the market right now with where rates were and where rates are in June and July, it obviously impacts the purchase market a little bit. And so I feel confident in our guidance. Obviously, our margins are higher and margin and volume is a combination to do things. Obviously, we feel good about the guidance I provided. We're obviously working to do as much volume and do margin and take care of brokers to help them grow.

So the market does dictate a little bit, so I want to give you a little bit of a range, $33 billion to $40 billion, I feel good about that. But overall, we're the leader in the market. And so -- on the purchase side, I feel really confident that -- now is there some tailwinds or headwinds based on how much refi happens, Yes. And so that's what we're trying to understand in the market. But we feel like it's going to be a great quarter across the board in the third quarter. And I think you'll love our results this quarter, just like you guys did this quarter.

Okay. Great. And just a follow-up on the hedge. I mean, I know in the past, you talked a bit about really hedge the MSR book and it sounds now like you're being a little bit more opportunistic. Is this something you think you'll kind of continue to evaluate and do more of going forward? Or maybe just what's the strategy and the go forward here?

Yes. I mean, we're opportunistic with everything we do here UWM selling MSRs to derivative trade, to doing more loans to margin to volume, to helping brokers grow. We look at everything to win. And we have a lot of smart people here that analyze things, but it's not -- I don't look at it like, oh, we're going to head MSR sometimes -- that's not how I would look at it. It's not even look at it like that in type MSRs in my mind, to my mind is understanding the market and understand how we do things. But obviously, when you sell MSRs, you have that hedge your position. But once again, I don't need to do that either.

So we look at all those things. We're opportunistic with everything we do and things go going in a positive direction sometimes, as they have been over the last couple of quarters tied to those things, but we analyze it all and make the decisions on a day-by-day, week-by-week basis here with our strategy team.

[Operator Instructions] Our next question will come from Mikhail Goberman at Citizens JMP.

Congrats on a great quarter. If I could just follow-up real quick on a question about margins. The new margin guidance. What would you say is the biggest driver or drivers of that decision to bump that range up 10 basis points?

Yes. Thanks for the question. Yes, we feel -- I've been always in line with what we say we're going to do on the margin side and volume side, as you guys have seen for whatever, 16, 18, 19, whatever quarters, how many over course we've been public.

And I give you guys a range that I know that we'll be in, and I feel confident that we'll be in based on the market. The market, understanding every aspect of the market. So it's not just, oh, what's going on with volume, it's tied to market side, the inventory in the housing market is tied to interest rates it tied to [indiscernible] to how bonds are trading.

There's a lot of pieces to it. to come up with that range for you. And for the first time in a long time or first time ever, I guess, we've decided to move it up to levels because I feel very confident that, that's the new range that will be from a margin perspective in the wholesale channel. And so we control that, and that's what we feel it will be. And we feel confident that, that's what the margin will be. And at the same time, going forward, we feel good that 100 to 125 is a nice number until I change the levels again.

And that was the final question on our queue today. I'm happy to turn the floor back to management for any additional or closing remarks.

Well, thank you for the time today. I appreciate the questions, and I look forward to talking to you guys again after another great quarter after the third quarter. Have a great day.

This does conclude today's teleconference, and we thank you all for your participation. You may now disconnect your lines.