UWM Holdings Corporation - Ordinary Shares - Class A Stock

[Audio Gap] go through every one of them, at least I'm trying to get through every one of them. Hopefully make it as effective for everyone as possible. Before I get into that, obviously, from a second quarter perspective, operating income, over $180 million EBITDA -- adjusted EBITDA along with about $40 billion of business. We feel really good about UWM and the strength of the broker channel and the growth of the broker channel. So we feel great about where that's at.

Obviously, I got so many questions about Oaktree partnership, the dividend, Two Harbors, the hedging, we're going to get through all that stuff, and I'll try to get through it. Before I get into it, I wanted to start with the overall picture from where we are at UWM and the partnership with Oaktree. We feel great about Oaktree and the partnership that we have and are creating -- and Oaktree is not just capital, they're strategic partners of ours. They have MSR background, non-agency -- like they have a lot of mortgage related, and they're betting on housing, and they're betting on UWM. And so we're excited about the partnership and what it's going to do for our business long term, and that's what we always think about is how do we dominate long term. The mortgage market has been tough for the last 5 years now. And UWM has consistently made operating income. And Two Harbors have recognized the strength of our business and says, hey, how can we take this to the next level.

And from a strategic perspective, we see a lot of the same vision about the brokers, about the operating model and infrastructure that we've built to help the independent mortgage channel grow and dominate. And that's really what we're about here at UWM. And housing and mortgages are going to be here and be strong. It's a huge market. And it's been a tough 4, 5 years, and we expect the next 4, 5 years to be significantly, significantly better. And in the tough years, we still are successful and profitable at UWM, as Oaktree points out many times, we spent time with them. And now it's like how do we take it to a whole another level.

And so the balance sheet is fortified. The debt ratios that people are concerned about are non-question anymore, and we're ready to go forward in a really, really strong way. So with that being said, I know there's AI questions, there's dividend questions. So let me just go into all these questions and hopefully answer all of them.

I'm going to try to mention a couple of people that ask the questions, but to be fair, I think we got the same questions from about 15 different people. So I won't try -- I won't do too many. But let's just start, I guess, with the dividend. I got some questions, Jason Stewart, Bose, Jeff. I mean, I got people. So I'm not going to name everyone's name that asked the question.

But the basic question is, hey, Matt, UWM, why are we cutting the dividend now? And so the first part, how we got here, a lot of things tied to the dividend. We've always rewarded our shareholders, and we feel good about rewarding our shareholders, and we're going to always look at ways to do that. The decision to cut it right now is just capital allocation. Right now, our -- after this transaction, after the $2 billion plus, which is the largest capital raise, I think, in mortgage history, we're going to have over $3 billion of equity. And so how do we continue to build on that going forward. The dividend obviously comes -- takes out from that. And we made the decision that the right thing for our business for the long term is to continue to build up equity, continue to solve for the debt ratios, which are significant -- are well below industry norms now with the capital infusion and run the business in the most effective way.

Will there be special dividends down the road? Possibly. Will there be -- will we go back to regular dividend? Possibly. Once again, we look at that stuff every single quarter. But the reality is liquidity matters, equity matters, and we have the best operating business and infrastructure for brokers to grow and dominate. And so if I can make sure the capital and liquidity are in a great position, then all the rest takes care of itself. And once again, it's been a tough 4, 5 years in the mortgage industry. The next 4 or 5 years are going to be significantly better. Oaktree believes in that. They believe in housing, they believe in UWM and so do we, and so do I, obviously.

And so that's kind of how I think about the dividend. It's just the right time to pause that and suspend that process. And then we'll always evaluate every quarter with our Board of Directors and see what's best. But right now, I see a going-forward path of let's retain equity, retain earnings, continue to build, continue to grow and take advantage of the market that we have in front of us.

All right. Let's see. Two Harbors, I guess we can talk -- Two Harbors, a couple of questions on the transaction. So let me just -- did that create the need for capital? So I don't really look at it that way. And so here's what I'll say. The way we look at it is how do we make sure we have a good amount of equity, we have good ratios, and we have a fortified balance sheet. So that's a big part of why we have the capital raise. And it's not just capital because if it was just capital and I could put money in myself or we can get random people put capital. This was a strategic partnership with Oaktree because of their MSR background, they have a whole -- and also their -- just their knowledge and their sophistication around capital markets, which will help us in so many ways. And so we're excited about the partnership.

Now the Two Harbors transaction, it definitely was unfortunate how it happened. And you'll see some litigation and some things that they did inappropriately, and we'll go through that process when that time comes. However, I'm not going to spend my time talking about that. What I'm going to talk about is that Two Harbors transaction was one of the strategies of helping from a cash, liquidity and equity perspective. And when that did not go the way we expected, we had another option. And it's great to have options. And once again, Oaktree wrote a massive size check to be part of this and to be next to me and UWM and help us grow together.

And so if the deal would have closed, maybe the Oaktree thing would not have happened as quickly. The silver lining is Oaktree has so much better partnership for us than Two Harbors or anything else would have been. And so I think of it as a long-term upside for UWM the way it all played out, and we'll go through the litigation process with Two Harbors and CrossCountry and some of the inappropriate things that happened in that deal at that time. So I think that covers Two Harbors.

I'm trying to think if there's anything else that -- look at some of the other Two Harbors questions. Let me go into the hedge loss because I think that's a handful of other questions here. Can you please explain the hedge loss, what caused it and how investors should think about it?

So listen, hedging in general in the mortgage industry is expensive. And it's something I actually don't believe in, in general. We have never hedged our MSR, I say never. We don't traditionally hedge our MSRs. Our origination machine is so big and strong that if the rates drop, you'll lose MSR value and equity, but you'll do so much more business that you're good. And if rates go up, your MSR values go up and you do less originations, but your equity goes up. That's kind of how we've always played it.

Well, when you're going through and acquiring a company like Two Harbors and a massive MSR book, then our MSR book became double the size of what we've always managed. And therefore, it created a little more risk. So when we did put a hedge on to protect against that risk and then a lot of things happen.

Let's just be real with whether it's a war, a lot of different things that happened that created the 10-year to go up -- and then obviously, the Two Harbors transaction went away. And so a confluence of events that created a hedge loss. We hit a certain risk threshold that I said we're not going to continue hedging regardless because we didn't want to have more of an equity drain, and we took the hedge off. And of course, that's the strategy that we've always had is let's not hedge, let's run the business effectively.

Once again, Oaktree has a strategic perspective on this, and I'll go through that with them after this process and whether we hedge going forward or not. But once you have $3 billion of equity, you're really not at a risk of the MSR values go down $400 million for this quarter or go up $400 million, it's less relevant. But when you're hovering around $1.5 billion or $2 billion, it becomes a little bit more relevant. And so that became an issue. We hedged -- and it was a onetime event, to be honest with you, because of Two Harbors, we were overhedged, if you think of it that way, protecting against the Two Harbors transaction. The market moved against us, and it's a onetime event that won't happen again. We feel like our hedging policies are much stronger now, but also we're not acquiring another company that has an MSR book like that, at least that's not the plan of now, and we know how to handle it differently going forward.

So I think that covers it. It was a transaction-specific event. It's not a reflection of our operating business, by the way, at all. As you guys know, as I pointed out at the beginning of the call, $160 million to $200 million of adjusted EBITDA almost every quarter consistently, a little bit higher than that if you look at the numbers, but we're consistently making that much money.

What did management learn from hedge loss? I kind of covered this one. A unique circumstance. Traditionally, we don't hedge MSRs at UWM. Definitely, with the size book we have right now, we wouldn't be hedging MSRs at that level. And once again, the market moved in a certain way, and it was an event that obviously unfortunate and not planned and not expected. But at the same time, we're looking forward now and know what our business is about and operating business is great. The balance sheet is fortified. It's never been stronger. I even looked at the balance sheet from 2020 and '21, I think $3 billion is kind of the high watermark, and we're going to be at that number when this capital raise is done.

And at the same time, after another quarter or 2 of earnings as we're going to have, it will continue to grow. And with no dividend, that will make our balance sheet strong, liquidity is strong. And then just let's continue to build and dominate helping independent mortgage operate in this housing market with AI, all the things that we've really been building for years and years here at UWM can now go to the next level. So I think that covers those.

Let me see if there's any other ones. So let's talk -- now there's a bunch of Oaktree questions, obviously. So let me talk about that. I talked a lot about it already, but why was Oaktree the right partner for UWM at this point of the cycle?

So first, Oaktree has a great background, great reputation from their leadership to also just their mortgage knowledge and their housing belief. So they believe in housing, they believe in UWM, and we partner together. Once again, my background has always been, hey, I'll just do it myself. We don't really bring outside parties in. And that was really the path we're going to. We started having some in-depth conversations with Oaktree, and I realized the strategic benefit of bringing in someone next to me. And so instead of Mat putting in $1 billion or more, Mat will put in $500 million, $550 million. These guys put in $1 billion, $1.5 billion, and that's kind of how we get to $2 billion. And so that was the strategy there, but it's strategic money. It's not just capital. We can get capital from anyone, but strategic partner, we're going to have a member or 2 on the board as well.

They're going to have some different conversations, and they have different belief systems on things that maybe can help us. They also believe heavily, heavily in the strategy and the vision of the UWM, the broker channel, the independent market. And I wouldn't be aligned with someone that didn't believe strategically and the same thing from housing, from the infrastructure we built for brokers, the AI investments that we're making and continue to make so they're aligned with us and how we're doing things. And so I think it's really been a perfect match. They understand the cycles of the industry as well. They understand that in most cycles, most mortgage markets, it's every 6, 7 years, it's $15-plus trillion of mortgages. And the last 5 have not been that. So they know the good years of the $2 trillion, $3 trillion, $4 trillion years are most likely coming in the next 3, 4, 5 years. So they understand that right now is an amazing time to be partnered with UWM.

And I understand that as well, which is why I put a lot of money in as well. And obviously, I'm the biggest shareholder and also big in on this deal as well. So we believe in the market, we believe in UWM, and Oaktree is a great partner in that respect.

So let's see. Let me see if I can cover more Oaktree. There's a lot of Oaktree questions here. So some people look at the size and cost of the transaction and think, is this -- how do we think about this from a strategic benefit? Is this -- Oaktree is getting a great deal is what people say, which they are, and they should get a great deal, and we're happy for them. When Oaktree makes a lot of money, so does every shareholder, so does UWM. Everyone is going to win together. And so I don't begrudge anyone from making a lot of money next to me. I wish them all the best along with everyone.

And when the warrants become very profitable -- I guess one of the questions kind of ties to, will the warrants become very profitable? I think everyone that owns shares today will make a lot of money as well. And so the way we look at that is, yes, there's a lot of different pieces to it. And Oaktree wrote a $1.5 billion check. I'm putting it up to $550 million. I believe that, that's an opportunity for everyone to succeed, and it's putting the common shareholders, the debt holders, all in a better long-term position. And that's my job to run the business the most effective for the long term, not for whatever today is August 6. It's not about August 6, it's about '27, '28, 2030, 2032. And anyone that's partnered with us, Oaktree being one of them, me being a big shareholder and a lot of the shareholders on the call and people that pay attention to what we talk about, everyone is going to win together.

And it's about UWM and the operating platform, the AI, the technology that we've built to dominate for the long term. And now our balance sheet is fortified and integrated. So yes, Oaktree is getting a great deal, and I'm happy for them. And when they make a boatload of money and are very successful, so will most of our shareholders and a lot of shareholders make even more because of based on where the stock is today. And so we're excited about everyone's winning together, and we're going to continue to win going forward.

Let's see. So I think there's a question here about debt ratios and equity. And so the key thing is the total equity increases from $1 billion to roughly $3 billion and growing, right? And the nonfunding debt-to-equity declines from -- it was -- with the end of the quarter, it jumped up to a really high number because of the hedging and the negative we had in the second quarter to over 5x or I think it was 5.6x, but now we're down to 1.2x. So 1.2x is well below the industry norms. Most people operate 1.5x to 2x, maybe a little higher than that, but we'll call it 1.5x to 2x. We're well below it, and we have plenty of room to grow. And so we feel really good about where we are right now from a debt-to-equity ratios and overall, our business and balance sheet.

So the key thing for me here on the Oaktree, the 2 -- the question kind of talks about the $2 billion capital raise and how that handles for debt ratios and equity. And I think, in general, it's a real big positive. Anyone wants to take a step back and says, is the company stronger today than it was 6 months or a year ago? Anyone would say yes. Everyone would say yes. And that's what I think about right now is how are we positioned for the future. We have never been better positioned not because of just the equity and capital and liquidity, which, of course, is a big part of it but also the Oaktree strategic partnership and all that they bring to the table.

And then on top of that, we are the best and biggest mortgage originator in America. We brought servicing in-house. We are dominating in that respect. I know there aren't that many questions about all these things operating-wise, which I understand why, but that's okay. But operating wise, we have a massive moat around our business. The broker channel is growing and the infrastructure that we are built -- we've built and the AI we built to help power them to grow even further and waiting for not only big years because those will happen, but just the normal mortgage years -- in a traditional mortgage year, even in these bad years, we've been doing really well operating income-wise. And so we feel really good about the business and where we are at right now.

Let me see. So I guess there's a couple of people asked about -- Mikhail Goberman, and a couple of people asked about why choose preferred equity with warrants instead of issuing common stock?

So first off, a large issue -- common issuance at current trading levels would create significant and immediate dilution, and we can talk about dilution. The preferred equity rates, permanent capital in our business is a better upside for the business and our belief system. The warrants do create dilution as people will ask about, and I understand that. And to be honest with you, on the dilution because I know there's some dilution questions, it's definitely something we had to weigh heavily. However, the long-term benefit of us making significantly more money and building this business significantly bigger is the right decision for all shareholders, including myself.

And so although the dilution is real, the dilution is only really real at a high level when the warrants are in the money. And the average of the warrants are $4, which is significantly higher than our stock price. And a lot of the warrants are at $6. And so that's how I look at it. This structure balances near-term capital with long-term shareholder upside. And we do not want to dilute the common shareholders more than necessary, and we feel great about where we're at right now and about what's going to happen going forward.

Let's see. I think I kind of covered the dilution question there, too, but obviously can have no more. And by the way, I know I'm answering all these, and I appreciate all the questions. After the call, whether it's me or our Investor Relations team or even people from Oaktree, we're all available to talk through anybody's thoughts and strategy on all aspects of the business. We feel -- once again, I continue to tell you, I feel excellent about the business, the fortified balance sheet and the long-term strategic benefit of the Oaktree partnership and where we're going together.

Let's see. Okay. So here's something that's interesting. How much interest savings does this transaction create? So a lot of people ask, there's another question that ties to the amount of the coupon that Oaktree is receiving. And so right now, a lot of the money that we're borrowing is between 6% and 8%, we'll call it. And yes, the coupon on this new partnership is 10%. But so it's not 10% on $1.65 billion to start because remember, and the question that you're basically asking here is, we are saving about $100 million by paying down MSR lines and paying off other things from an interest perspective, and then we're paying out $165 million in this example on a 10%. And so it's not truly $165 million more of expense because you have to net out the savings that we would be having because we are paying from a capital perspective right now on borrowing money against our MSR lines or other liquidity that we have.

So the interest expense will go down roughly $100 million, but we're going to pay about $100 million and $165 million for the [ pref ] money. So I just want to make sure that's clear. So the question is talking about interest savings. Yes, there are interest savings. I don't really look at it -- I look at it as a net number as it's slightly more expensive in that perspective, but not the full amount, and it's not interest savings overall, although it might look like that.

Let me see if there's other questions, a lot of Oaktree stuff. So well, we hit this -- I kind of talked to -- the next one was about total potential dilution from the warrants. And so once again, there's 330 million total warrants, 165 million warrants that can be exercised at $2, which is obviously higher than the stock price is today. Most people won't exercise the warrants until it's well above $2 in my perspective. So I believe that those warrants are probably in the money, more closer to $3 or $3.50 when people will exercise them. And then the other half or 165 million warrants are at $6. So same concept there that it will be probably exercised when they're higher than $6. And so that's to answer that question, just I don't think there's much more to it than just -- I think someone was just asking for clarification there.

Jeff Adelson, Bose George, Mikhail, a bunch of people asked about -- so this is a little bit off of Oaktree now. Happen -- what happens to the MSR book from here if rates fall sharply? And so here's what I say. Rates fall sharply. That's a win for our mortgage business, right? The MSR, just like ours and everyone else will get -- will have a write-down if you have a massive MSR rates drop. When rates drop, though, our origination machine will kick in at a high, high level. And so if that happens, we're -- that's why I always -- I was kind of talking about earlier about the natural hedge and how we've always run our business is, we don't put a hedge on our MSR portfolio. We sit there and wait. If rates go up, our MSRs are worth more. Rates go down, we do a lot more loans. And so it's a win-win for our business.

The only reason that was different in this situation was because of the Two Harbor transaction of having a double the size of the MSR book and obviously, a war happening and a couple of different things happening all at once and our equity levels being too low. So the confluence of those 3 things created us to hedge at the level that we did. And so I guess a long way of saying, it will be a really great thing if rates drop sharply, and we'll do a whole lot of loans. Obviously, we did $40 billion in a really tough mortgage market and $45 billion in the quarter before when rates were slightly lower. But overall, our origination machine can handle $250 billion to $300 billion as we stand today, if not more. And so I hope rates drop sharply, and we have to deal with the MSR write-down. That will be a fine problem to have because the origination machine will kick in. We'll do $60 billion, $70 billion, $80 billion in a quarter at big margins, and the brokers will grow, will grow and the overall shareholder base will be excited and positive about that opportunity.

So we'll see what happens. We've been talking about rates dropping for a while. They haven't happened. When they do, we'll be ready.

All right. Let's see. Is UWM becoming a servicing-focused company? No. No. UWM, we're -- like I said, I talk about is we're big in housing. We're big in AI. We're big in infrastructure to help mortgage brokers build and grow the independent channel, but we're an origination machine. And we have a moat around our business that people can't touch. And with some of these things happening, understanding that the barriers to entry to compete with UWM is significantly higher than it's ever been, even back to 2020 and '21 when we're doing a huge amount of volume, the capital and liquidity requirements were not at the level they are today.

And so we look at that as a positive because our balance sheet is now fortified at a level that almost has never been done before at our size for UWM perspective-wise, and we're excited about it. So no, we're not a servicing focused company. We will continue to build our servicing book. We brought servicing in-house.

I do see a question here, so I kind of hit this at once, expenses are higher on the servicing side right now because I've got both, right? I got internal and I'm -- still have external with Cenlar. And so having external servicing and internal and then I also have to pay the offboarding cost. So the servicing costs, I'm kind of getting double hit this year. Next year, we'll see those big benefits that we've talked about now. So you're kind of getting hit a double on that right now tied to the service. But we are not a servicing company. We are an origination company. We're an infrastructure and AI technology company, helping brokers dominate in this housing market, and we feel good about the moat around our business. And the servicing book is definitely a nice thing that we have, and we will continue to grow because we can originate loans at a level that almost -- actually, I won't say almost, we originate loans at a level that nobody in the market can do.

Let me see. I'm trying to think of -- I've covered all those. I kind of covered the servicing for a higher rate perspective. Obviously, scale is a big part of servicing, and we are pretty close to that level. We obviously have one of the top 10 servicing books in America. But as we continue to grow and now one of the things that kind of tested the scale, are we going to continue to scale our servicing book? So let me answer that one head on.

Can we continue to scale the MSR book? And the way we look at it is with the equity that we have now, we will continue to opportunistically sell our servicing when the time is right. And so we don't have a need to sell. If someone is going to pay a great price and it makes strategic benefit, we will sell the MSRs and bring in that cash and validate all of that. Or if we feel like it's the right time to continue to build, we can do that. And that's one of the benefits of Oaktree. They have an intimate knowledge of the MSR book and the MSR asset in general. And I feel really good about the partnership there because they have a lot of views on that and how we can build this the best way together. So I feel good about the MSR book and our ability. Once again, we don't have to go buy MSRs. We originate them, which is something that we have at the highest level in the country, which will help us continue to grow going forward.

Let's see. I think there's some questions that are kind of -- let me try to knock some more of these out. So Jeff Adelson, as you build an in-house servicing platform, how are you balancing the strategic value of retaining MSRs and growing the servicing portfolio against the liquidity generated through MSR sales?

And so I kind of answered that question, I think, a minute ago. And so I'm trying to think if there's anything else I'd want to add to it to help answer your question. But we will continue to grow the MSR book. We love what we've done. We will be the best servicer in America. We might not be the biggest servicer in America because we will opportunistically sell when it makes sense. But what we're doing for the consumers and the retention of those loans, giving them back to our broker channel has been a huge, huge benefit. We've always done a very good job of it.

But now that we're handling the servicing process and not outsourcing it to Cenlar or other lenders or other servicers, we feel we can do a better job, which will hopefully only drive the refinance when the refinances come, a higher percentage come back to UWM. But as I've said before, although we don't have the biggest servicing book, we do 12%, 13%, I think, of all refinances in the market. We only have 2% or 3% of the servicing. So we don't have to own the servicing book to do the refinances.

The broker channel is very efficient, and we help our brokers succeed with the technology and the infrastructure we provided for them to help them win, they will win in that market when the rates do drop for refinances. And so there's still a lot of refinances right now but it's obviously been a higher rate environment. And so in this example, our MSR book will continue to be stronger and continue to build going forward.

Let's see. I've covered a lot of these questions. I'm trying to see if there's any other questions that I have not covered. This is an Oaktree question, kind of like, I guess, I kind of said it already, so I'll just kind of repeat myself, but just to kind of reiterate the question tied to Oaktree is, why is Oaktree the partner and not capital from other companies or bringing in other -- and Oaktree is a strategic partner, right? Capital is capital. Money is money. But if you get someone that could help you build your business and actually aligns with the vision and strategy that you have going forward, that's a different type of capital. And that's how we look at MSR as -- I mean, excuse me, Oaktree has strategic value, but they have MSR knowledge. They have -- there are some things we can do on the non-agency side. And they also have really strong leadership there and people that we're going to partner with that think of things in a way that maybe think a little differently and they give us different perspectives on things.

But I'm going to continue to run this business the best way for our brokers, for our team members, for our shareholders and for Oaktree and for UWM. And once again, I'm one of the shareholders as well, so we're all doing it together. And we're all going to win together. And once again, in the question kind of alludes to Oaktree could you've gotten cheaper capital elsewhere, I'm sure we could have gotten cheaper capital elsewhere, but is that the right long-term benefit? I'm thinking about the size, yes, someone could put in $100 million, someone put $1.5 billion, and I put in $550 million or committed up to $550 million. Those are big numbers. And so I want Oaktree to make a lot of money. And Oaktree's warrants are in the money, everyone that's watching this [indiscernible] that cares about UWM is going to be extremely happy for Oaktree because they're going to make a lot of money as well.

So we feel great about Oaktree, the partnership, but it's not just capital. They wrote a big check. They believed in housing. They believe in UWM and they're making their bet with us right next to me, and I feel great about that opportunity.

I don't know, I feel like I've covered almost all of these. I don't know if there's any other questions. Here's what I'll say is, I'll kind of wrap up because I feel like a lot of questions are duplicative, and I want to make sure I cover everyone. If I do not cover your question, I'm personally happy to get on a call with people. Of course, Investor Relations, Blake, Mat Roslin, my CFO, Rami, everyone is available to talk. The Oaktree team is ready to talk. We're happy to talk about it with anyone.

We're excited about the opportunity. The biggest thing is long-term winning. UWM is always about long term. We're not looking back at a bad month or a bad quarter or a bad trade. That's not what UWM is about. UWM has been in business 40 years, 40 years of helping brokers win, growing and continuing to put ourselves in a position to dominate in all cycles. In the last 5 years have been a down cycle and UWM has consistently made, what do you want to call it, $400 million, $500 million, but also I look at $150 million to $200 million of adjusted EBITDA pretty consistently. We are a strong operating business. And with the capital infusion and liquidity we have right now, the sky is the limit.

And so I look at that from a perspective of how do we win long term together, and that's what UWM is about, and we are going to win with Oaktree next to us and all of our shareholders and partners, our brokers, our team members, we're going to win together going forward. And that's my job, long-term domination, and that's where UWM has never been better positioned than we are today.

Thanks for the time. Look forward to talking to anybody about it. We appreciate the questions, the support and you being on the call with us. Have a great day.

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.