UWM Holdings Corp

Previous wording

Our mortgage origination business derives revenue from originating, processing and underwriting primarily government-sponsored enterprise ("GSE") conforming mortgage loans, along with FHA, USDA and VA mortgage loans, which are subsequently pooled and sold in the secondary market. For the three months ended March 31, 2024, 89% of the loans weoriginated were sold to Fannie Mae or Freddie Mac, or were transferred to Ginnie Mae pools in the secondary market, while the remainder were primarily jumbo loans that are underwritten to the same “Qualified Mortgage" underwriting standards and have a similar risk profile but are sold to third party investors primarily due to loan size. The mortgage origination process generally begins with a borrower entering into an IRLC with us that is arranged by an independent mortgage broker, pursuant to which we have committed to enter into a mortgage at specified interest rates and terms within a specified period of time with a borrower who has applied for a loan and met certain credit and underwriting criteria. As we have committed to providing a mortgage loan at a specific interest rate, we generally hedge that risk by selling forward-settling mortgage-backed securities and FLSCs in the To Be Announced ("TBA") market. When the mortgage loan is closed, we fund the loan with approximately 2-3%, on average, of our own funds and the remainder with funds drawn under one of our warehouse facilities (except when we opt to "self-warehouse" in which case we use our cash to fund the entire loan). At that point, the mortgage loan is legally owned by our warehouse facility lender and is subject to our repurchase right (other than when we self-warehouse). When we have identified a pool of mortgage loans to sell to the agencies, non-governmental entities, other investors, or through our private label securitization transactions, we repurchase loans not already owned by us from our warehouse lender and sell the pool of mortgage loans into the secondary market, but in most instances retain the mortgage servicing rights, or MSRs, associated with those loans. We currently retain the majority of the MSRs associated with our production, but we have, and intend to continue to opportunistically sell MSRs depending on market conditions. This nimble approach has provided us funding flexibility, and reduced legacy MSR asset exposure. When we sell MSRs, we typically sell them in the bulk MSR secondary market.

Current wording

Our mortgage origination business derives revenue from originating, processing and underwriting primarily government-sponsored enterprise ("GSE") conforming mortgage loans, along with FHA, USDA and VA mortgage loans, which are subsequently pooled and sold in the secondary market. For the three and six months ended June 30, 2024, 89% and 88%, respectively, of the loans we originated were sold to Fannie Mae or Freddie Mac, or were transferred to Ginnie Mae pools in the secondary market, while the remainder were primarily jumbo loans that are underwritten to the same “Qualified Mortgage" underwriting standards and have a similar risk profile but are sold to third party investors primarily due to loan size. The mortgage origination process generally begins with a borrower entering into an IRLC with us that is arranged by an independent mortgage broker, pursuant to which we have committed to enter into a mortgage at specified interest rates and terms within a specified period of time with a borrower who has applied for a loan and met certain credit and underwriting criteria. As we have committed to providing a mortgage loan at a specific interest rate, we generally hedge that risk by selling forward-settling mortgage-backed securities and FLSCs in the To Be Announced ("TBA") market. When the mortgage loan is closed, we fund the loan with approximately 2-3%, on average, of our own funds and the remainder with funds drawn under one of our warehouse facilities (except when we opt to "self-warehouse" in which case we use our cash to fund the entire loan). At that point, the mortgage loan is legally owned by our warehouse facility lender and is subject to our repurchase right (other than when we self-warehouse). When we have identified a pool of mortgage loans to sell to the agencies, non-governmental entities, other investors, or through our private label securitization transactions, we repurchase loans not already owned by us from our warehouse lender and sell the pool of mortgage loans into the secondary market, but in most instances retain the mortgage servicing rights, or MSRs, associated with those loans. We currently retain the majority of the MSRs associated with our production, but we have, and intend to continue to opportunistically sell MSRs depending on market conditions. This nimble approach has provided us funding flexibility, and reduced legacy MSR asset exposure. When we sell MSRs, we typically sell them in the bulk MSR secondary market.

Previous wording

• the change in fair value of IRLCs, FLSCs and recorded loans on the balance sheet, due to changes in estimated fair value, driven primarily by interest rates but also influenced by other assumptions; and

Current wording

◦the change in fair value of IRLCs and FLSCs (used to economically hedge IRLCs and loans at fair value from the origination to the sale date) due to changes in estimated fair value, driven primarily by interest rates but also influenced by other valuation assumptions;

Previous wording

• provision for representation and warranty obligations, which represent the reserves initially established at the time of sale for our estimated liabilities associated with the potential repurchase or indemnity of purchasers of loans previously sold due to representation and warranty claims by investors. Included within these reserves are amounts for estimated liabilities for requirements to repay a portion of any premium received from investors on the sale of certain loans if such loans are repaid in their entirety within a specified time period after the sale of the loans;

Current wording

• provision for representation and warranty obligations, which represent the reserves initially established at the time of sale for our estimated liabilities associated with the potential repurchase or indemnity of purchasers of loans previously sold due to representation and warranty claims by investors. Included within these reserves are amounts for estimated liabilities for requirements to repay a portion of any premium received from investors on the sale of certain loans if such loans are repaid in their entirety within a specified time period after the sale of the loans; and

Previous wording

Three Months Ended March 31, 2024 and 2023 Summary

Current wording

Three and Six Months Ended June 30, 2024 and 2023 Summary

Previous wording

For the three months ended March 31, 2024, we originated $27.6 billion in loans, which was an increase of $5.3 billion, or 23.7%, from the $22.3 billion of originations during the three months ended March 31, 2023. We reported net income of $180.5 million during the three months ended March 31, 2024, which was an increase of $319.1 million, compared to a net loss of $138.6 million for the three months ended March 31, 2023. Adjusted EBITDA for the three months ended March 31, 2024 was $101.5 million as compared to $141.0 million for the three months ended March 31, 2023. Refer to the "Non-GAAP Financial Measures" section below for a detailed discussion of how we define and calculate Adjusted EBITDA.

Current wording

For the three months ended June 30, 2024, we originated $33.6 billion in loans, which was an increase of $1.8 billion, or 5.6%, from the $31.8 billion of originations during the three months ended June 30, 2023. We reported net income of$76.3 million during the three months ended June 30, 2024, which was a decrease of$152.5 million, compared to net income of $228.8 million for the three months ended June 30, 2023. Adjusted EBITDA for the three months ended June 30, 2024 was $133.1 million as compared to $125.4 million for the three months ended June 30, 2023. Refer to the "Non-GAAP Financial Measures" section below for a detailed discussion of how we define and calculate Adjusted EBITDA.

Previous wording

We exclude the change in the Tax Receivable Agreement liability, the change in fair value of the Public and Private Warrants, the change in fair value of retained investment securities, and the change in fair value of MSRs due to valuation inputs or assumptions as these represent non-cash, non-realized adjustments to our earnings, which is not indicative of our performance or results of operations. Adjusted EBITDA includes interest expense on funding facilities, which are recorded as a component of interest expense, as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA. Non-funding debt includes the Company's senior notes, lines of credit, borrowings against investment securities, equipment notes payable, and finance leases.

Current wording

We define Adjusted EBITDA as earnings before interest expense on non-funding debt, provision for income taxes, depreciation and amortization, stock-based compensation expense, the change in fair value of MSRs due to valuation inputs or assumptions, net, the impact of non-cash deferred compensation expense, the change in fair value of the Public and Private Warrants, the change in the Tax Receivable Agreement liability, and the change in fair value of retained investment securities. We exclude the change in the Tax Receivable Agreement liability, the change in fair value of the Public and Private Warrants, the change in fair value of retained investment securities, and the change in fair value of MSRs due to valuation inputs or assumptions as these represent non-cash, non-realized adjustments to our earnings, which is not indicative of our performance or results of operations. Adjusted EBITDA includes interest expense on funding facilities, which are recorded as a component of interest expense, as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA. Non-funding debt includes the Company's senior notes, lines of credit, borrowings against investment securities, equipment notes payable, and finance leases.

Previous wording

(1)Reflects the change ((increase)/decrease) in fair value of MSRs due to changes in valuation inputs or assumptions, including discount rates and prepayment speed assumptions, primarily due to changes in market interest rates. Refer to Note 5 - Mortgage Servicing Rightsto the condensed consolidated financial statements.

Current wording

(1)Reflects the change ((increase)/decrease) in fair value of MSRs due to changes in valuation inputs or assumptions, net of gains or losses on interest rate swap futures. Refer to Note 5 - Mortgage Servicing Rightsto the condensed consolidated financial statements.

Previous wording

(5)Reflects the change (decrease/(increase)) in the fair value of the retained investment securities.

Current wording

(5)Reflects the change ((increase)/decrease) in the fair value of the retained investment securities.

Previous wording

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Current wording

Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Loan servicing income was $184.7 million for the three months ended March 31, 2024, a decrease of $33.9 million, or 15.5%, as compared to $218.6 million for the three months ended March 31, 2023. The decrease in loan servicing income during the three months ended March 31, 2024 was primarily driven by a decline in the average servicing portfolio, partially offset by higher average servicing fees.

Current wording

Loan servicing income was $143.9 million for the three months ended June 30, 2024, a decrease of $49.3 million, or 25.5%, as compared to $193.2 million for the three months ended June 30, 2023. The decrease in loan servicing income during the three months ended June 30, 2024 was primarily driven by a decline in the average servicing portfolio, partially offset by higher average servicing fees.

Previous wording

As of the dates presented below, our loan servicing portfolio of loans serviced for others consisted of the following:

Current wording

As of the dates presented below, our portfolio of loans serviced for others consisted of the following:

Previous wording

Change in Fair Value of Mortgage Servicing Rights

Current wording

Change in Fair Value of Mortgage Servicing Rights, Net

Previous wording

The change in fair value of MSRs was a net decrease of $15.6 million for the three months ended March 31, 2024 as compared with a net decrease of $337.3 million for the three months ended March 31, 2023. The net decrease in fair value of MSRs for the three months ended March 31, 2024 was primarily attributable to a decline in fair value of approximately $128.2 million due to realization of cash flows, decay, and other (including loans paid in full) and approximately $28.4 million of net reserves and transaction costs for bulk MSR sales and sales of excess servicing cash flows, offset by an increase in fair value of approximately $141.1 million due to changes in valuation inputs and assumptions, mainly as a result of increases in market interest rates. The net decrease in fair value for the three months ended March 31, 2023 of approximately $337.3 million was attributable to a decrease of approximately $222.9 million resulting from changes in valuation inputs and assumptions, primarily due to changes in market interest rates, a decline of approximately $96.3 million due to realization of cash flows, decay, and other (including loans paid in full) and approximately $18.1 million of net reserves and transaction costs for bulk MSR sales and sales of excess servicing cash flows.

Current wording

The change in fair value of MSRs was a net decrease of $130.9 million for the six months ended June 30, 2024 as compared with a net decrease of $312.6 million for the six months ended June 30, 2023. The net decrease in fair value of MSRs for the six months ended June 30, 2024 was primarily attributable to a decline in fair value of approximately $216.5 million due to realization of cash flows, decay, and other (including loans paid in full) and approximately $44.4 million of net reserves and transaction costs for bulk MSR sales and sales of excess servicing cash flows, partially offset by an increase in fair value of approximately $102.8 million due to changes in valuation inputs and assumptions, mainly as a result of increases in market interest rates and a $27.2 million gain on interest rate swap futures. The net decrease in fair value for the six months ended June 30, 2023 of approximately $312.6 million was attributable to a decline of approximately $232.7 million due to realization of cash flows, decay, and other (including loans paid in full), a decrease of approximately $58.4 million resulting from changes in valuation inputs and assumptions, primarily due to changes in market interest rates, and approximately $21.6 million of net reserves and transaction costs for bulk MSR sales and sales of excess servicing cash flows.

Previous wording

Net interest income (interest income less interest expense on funding facilities) was $43.4 million for the three months ended March 31, 2024, a decrease of $10.6 million, or 20%, as compared to $54.0 million for the three months ended March 31, 2023, as a result of an increase in interest income along with an increase in interest expense on funding facilities. Interest income increased due to higher average balances of mortgage loans at fair value, partially offset by lower average note rates on mortgage loans at fair value. Interest expense on funding facilities increased due to higher average warehouse balances and higher interest rates on warehouse facilities, all of which are variable based on short-term interest rate benchmarks (which were higher in the first quarter of 2024) plus a spread, partially offset by higher credits from warehouse lenders on custodial and other deposits.

Current wording

Net interest income (interest income less interest expense on funding facilities) was $44.7 million for the three months ended June 30, 2024, a decrease of $4.5 million, or 9%, as compared to $49.2 million for the three months ended June 30, 2023, as a result of an increase in interest income, offset by a higher increase in interest expense on funding facilities. Interest income increased due to higher average balances of mortgage loans at fair value and higher average note rates on mortgage loans at fair value. Interest expense on funding facilities increased due to higher average warehouse balances and higher interest rates on warehouse facilities, all of which are variable based on short-term interest rate benchmarks (which were higher in the second quarter of 2024) plus a spread, partially offset by higher credits from warehouse lenders on custodial and other deposits.

Previous wording

Interest expense on non-funding debt was $40.2 million for the three months ended March 31, 2024, a slight decrease from $42.7 million for the three months ended March 31, 2023, primarily due to a decrease in average borrowings on the MSR facilities.

Current wording

Interest expense on non-funding debt was $32.0 million for the three months ended June 30, 2024, a decrease from $42.8 million for the three months ended June 30, 2023, primarily due to a decrease in average borrowings on the MSR facilities.

Previous wording

Other costs were $256.7 million for the three months ended March 31, 2024, an increase of $56.0 million, or 27.9%, as compared to $200.7 million for the three months ended March 31, 2023. This increase was primarily due to an increase in salaries, commissions and benefits of $33.2 million, or 27.5%, primarily due to an increase in average team member count, an increase in direct loan production costs of $15.0 million primarily due to costs associated with our 1% down payment assistance program (launched in the second quarter of 2023) as well as increased loan production volume, an increase in general and administrative expense of $6.2 million primarily due to increases in occupancy and equipment expenses and professional service fees, as well as an increase in marketing, travel and entertainment expenses of $1.9 million from our continued investment in our broker relationships through broker visits and training programs.

Current wording

Other costs were $295.6 million for the three months ended June 30, 2024, an increase of $52.2 million, or 21.4%, as compared to $243.4 million for the three months ended June 30, 2023. This increase was primarily due to an increase in salaries, commissions and benefits of $28.9 million, or 22.0%, primarily due to an increase in average team member count as we prepare for anticipated increases in production volume, and an increase in direct loan production costs of $21.9 million, primarily due to costs associated with our free credit report program (launched in the second quarter of 2024) and a down payment assistance program (launched late in the second quarter of 2023) as well as the increased loan production volume.

Previous wording

We recorded a $3.7 million provision for income taxes during the three months ended March 31, 2024, compared to a benefit for income taxes of $1.0 million for the three months ended March 31, 2023. The increase in income tax provision for the three months ended March 31, 2024, as compared to the same period in 2023, was primarily due to the increase in pre-tax income attributable to the Company.

Current wording

We recorded a $.8 million provision for income taxes during the three months ended June 30, 2024, compared to a provision for income taxes of $1.2 million for the three months ended June 30, 2023. The decrease in income tax provision for the three months ended June 30, 2024, as compared to the same period in 2023, was primarily due to the decrease in pre-tax income attributable to the Company.

Previous wording

Net income was $180.5 million for the three months ended March 31, 2024, an increase of $319.1 million or 230.2%, as compared to net loss of $138.6 million for the three months ended March 31, 2023. The increase in net income was primarily the result of an increase in total revenue, net of $408.7 million, partially offset by an increase in total expenses (including income taxes) of $89.5 million, as further described above.

Current wording

Net income was $256.8 million for the six months ended June 30, 2024, an increase of $166.6 million or 184.8%, ascompared to net income of $90.2 million for the six months ended June 30, 2023. The increase in net income was primarily the result of an increase in total revenue, net of $328.3 million, partially offset by an increase in total expenses (including income taxes) of $161.6 million, as further described above.

Previous wording

Net income attributable to the Company of $8.7 million and net loss attributable to the Company of $11.9 million for the three months ended March 31, 2024 and 2023, respectively, includes the net income (loss) of UWM attributable to the Company due to its approximate 6% ownership interest in Holdings LLC for these periods.

Current wording

Net income attributable to the Company of $11.8 million and net loss attributable to the Company of $4.4 million for the six months ended June 30, 2024 and 2023, respectively, includes the net income (loss) of UWM attributable to the Company due to its approximate 6% ownership interest in Holdings LLC for these periods.

Previous wording

Our consolidated subsidiary, Holdings LLC, is generally required from time to time to make distributions in cash to SFS Corp. (as well as distributions to UWMC) in amounts sufficient to cover the taxes on its allocable share of the taxable income of Holdings LLC. We are also subject to contingencies which may have a significant impact on the use of our cash, including our obligations under the Tax Receivable Agreement that we entered into with SFS Corp. at the time of initial listing.

Current wording

Our consolidated subsidiary, Holdings LLC, is generally required from time to time to make distributions in cash to SFS Corp. (as well as distributions to UWMC) in amounts sufficient to cover the taxes on its allocable share of the taxable income of Holdings LLC. We are also subject to contingencies which may have a significant impact on the use of our cash, including our obligations under the Tax Receivable Agreement that we entered into with SFS Corp. at the time of the business combination.

Previous wording

We continually evaluate our capital structure and capital resources to optimize our leverage and profitability and take advantage of market opportunities. As part of such evaluation, we regularly review our levels of secured and unsecured indebtedness and available equity, our strategic investments, including technology and growth of the wholesale channel, the availability or desirability of growth through the acquisition of other companies or other mortgage portfolios, the repurchase or redemption of our outstanding indebtedness, or repurchases of our common stock or common stock derivatives.

Current wording

We continually evaluate our capital structure and capital resources to optimize our leverage and profitability and take advantage of market opportunities. As part of such evaluation, we regularly review our levels of secured and unsecured indebtedness, available borrowing capacity and available equity, our strategic investments, including technology and growth of the wholesale channel, the availability or desirability of growth through the acquisition of other companies or other mortgage portfolios, the repurchase or redemption of our outstanding indebtedness, or repurchases of our common stock or common stock derivatives.

Previous wording

From a cash flow perspective, the vast majority of cash received from mortgage originations occurs at the point the loans are sold or securitized into the secondary market. The vast majority of servicing fee income relates to the retained servicing fee on the loans, where cash is received monthly over the life of the loan and is typically a product of the borrowers’ current unpaid principal balance multiplied by the weighted average service fee. For a given mortgage loan, servicing revenue from the retained servicing fee declines over time as the principal balance of the loan is reduced.

Current wording

From a cash flow perspective, the vast majority of cash received from mortgage originations occurs at the point the loans are sold or securitized into the secondary market. The vast majority of servicing fee income relates to the retained servicing fee on the loans, where cash is received monthly over the life of the loan and is typically a product of the borrowers’ current unpaid principal balance multiplied by the weighted average service fee. For a given mortgage loan, servicing revenue from the retained servicing fee generally declines over time as the principal balance of the loan is reduced.

Previous wording

Warehouse lenders generally conduct daily evaluations of the adequacy of the underlying collateral for the warehouse loans based on the fair value of the mortgage loans. As the loans are generally financed at 97% to 98% of principal balance and our loans are typically outstanding on warehouse lines for short periods (e.g., less than one month), significant increases inmarket interest rates would be required for us to experience margin calls or requirements to reduce the amount outstanding with respect to the corresponding loan from a majority of our warehouse lenders. Four of our warehouse lines advance based on the fair value of the loans, rather than principal balance. For those lines, we exchange collateral for modest changes in value. As of March 31, 2024, there were no outstanding exchanges of collateral.

Current wording

Warehouse lenders generally conduct daily evaluations of the adequacy of the underlying collateral for the warehouse loans based on the fair value of the mortgage loans. As the loans are generally financed at 97% to 98% of principal balance and our loans are typically outstanding on warehouse lines for short periods (e.g., less than one month), significant increases inmarket interest rates would be required for us to experience margin calls or requirements to reduce the amount outstanding with respect to the corresponding loan from a majority of our warehouse lenders. Four of our warehouse lines advance based on the fair value of the loans, rather than the principal balance. For those lines, we exchange collateral for modest changes in value. As of June 30, 2024, there were no outstanding exchanges of collateral.

Previous wording

We are an approved lender for loan early funding facilities with Fannie Mae through its As Soon As Pooled Plus (“ASAP+”) program and Freddie Mac through its Early Funding (“EF”) program. As an approved lender for these early funding programs, we enter into an agreement to deliver closed and funded one-to-four family residential mortgage loans, each secured by related mortgages and deeds of trust, and receive funding in exchange for such mortgage loans in some cases before the lender has grouped them into pools to be securitized by Fannie Mae or Freddie Mac. All such mortgage loans must adhere to a set of eligibility criteria to be acceptable. As of March 31, 2024, no amount was outstanding under the ASAP+ program and $35.5 million was outstanding through the EF program.

Current wording

We are an approved lender for loan early funding facilities with Fannie Mae through its As Soon As Pooled Plus (“ASAP+”) program and Freddie Mac through its Early Funding (“EF”) program. As an approved lender for these early funding programs, we enter into an agreement to deliver closed and funded one-to-four family residential mortgage loans, each secured by related mortgages and deeds of trust, and receive funding in exchange for such mortgage loans in some cases before the lender has grouped them into pools to be securitized by Fannie Mae or Freddie Mac. All such mortgage loans must adhere to a set of eligibility criteria to be acceptable. As of June 30, 2024, no amount was outstanding under the ASAP+ program and $165.1 million was outstanding through the EF program.

Previous wording

Our warehouse facilities generally require us to comply with certain operating and financial covenants and the availability of funds under these facilities is subject to, among other conditions, our continued compliance with these covenants. These financial covenants include, but are not limited to, maintaining (i) a certain minimum tangible net worth, (ii) minimum liquidity, (iii) a maximum ratio of total liabilities or total debt to tangible net worth, and (iv) profitability. A breach of these covenants can result in an event of default under these facilities and as such would allow the lenders to pursue certain remedies. In addition, each of these facilities, as well as our secured and unsecured lines of credit, includes cross default or cross acceleration prov isions that could result in all facilities terminating if an event of default or acceleration of maturity occurs under any facility. We were in compliance with all covenants under these facilities as of March 31, 2024.

Current wording

Our warehouse facilities generally require us to comply with certain operating and financial covenants and the availability of funds under these facilities is subject to, among other conditions, our continued compliance with these covenants. These financial covenants include, but are not limited to, maintaining (i) a certain minimum tangible net worth, (ii) minimum liquidity, (iii) a maximum ratio of total liabilities or total debt to tangible net worth, and (iv) profitability. A breach of these covenants can result in an event of default under these facilities and as such would allow the lenders to pursue certain remedies. In addition, each of these facilities, as well as our secured and unsecured lines of credit, includes cross default or cross acceleration provisions that could result in all facilities terminating if an event of default or acceleration of maturity occurs under any facility. We were in compliance with all covenants under these facilities as of June 30, 2024.

Previous wording

On or after June 15, 2024, we may, at our option, redeem the 2027 Senior Notes in whole or in part during the twelve-month period beginning on the following dates at the following redemption prices: June 15, 2024 at 102.875%; June 15, 2025 at 101.438%; or June 15, 2026 until maturity at 100%, of the principal amount of the 2027 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest. Prior to June 15, 2024, we may, at our option, redeem up to 40% of the aggregate principal amount of the 2027 Senior Notes originally issued at a redemption price of 105.750% of the principal amount of the 2027 Senior Notes redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. In addition, we may, at our option, redeem the 2027 Senior Notes prior to June 15, 2024 at a price equal to 100% of the principal amount redeemed plus a “make-whole” premium, plus accrued and unpaid interest.

Current wording

Beginning on June 15, 2024, we may, at our option, redeem the 2027 Senior Notes in whole or in part during the twelve-month period beginning on the following dates at the following redemption prices: June 15, 2024 at 102.875%; June 15, 2025 at 101.438%; or June 15, 2026 until maturity at 100%, of the principal amount of the 2027 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.

Previous wording

On September 30, 2022, the Company's consolidated subsidiary, UWM, entered into a Loan and Security Agreement with Citibank, N.A. ("Citibank"), providing UWM with up to $1.5 billion of uncommitted borrowing capacity to finance the origination, acquisition or holding of certain mortgage servicing rights (the “Citi MSR Facility”). The Citi MSR Facility is collateralized by all of UWM's mortgage servicing rights that are appurtenant to mortgage loans pooled in securitizations by Fannie Mae or Freddie Mac that meet certain criteria. Available borrowings, as well as mandatory curtailments, under the Citi MSR Facility are based on the fair market value of the collateral, and borrowings under the Citi MSR Facility bear interest based on one-month term SOFR plus an applicable margin. The Citi MSR Facility has a maturity date of November 5, 2024. As of March 31, 2024, $100.0 million was outstanding under the Citi MSR Facility.

Current wording

On September 30, 2022, the Company's consolidated subsidiary, UWM, entered into a Loan and Security Agreement with Citibank, N.A. ("Citibank"), providing UWM with up to $1.5 billion of uncommitted borrowing capacity to finance the origination, acquisition or holding of certain mortgage servicing rights (the “Citi MSR Facility”). The Citi MSR Facility is collateralized by all of UWM's mortgage servicing rights that are appurtenant to mortgage loans pooled in securitizations by Fannie Mae or Freddie Mac that meet certain criteria. Available borrowings, as well as mandatory curtailments, under the Citi MSR Facility are based on the fair market value of the collateral, and borrowings under the Citi MSR Facility bear interest based on one-month term SOFR plus an applicable margin.

Previous wording

On March 20, 2023, our consolidated subsidiary, UWM, entered into a Credit Agreement with Goldman Sachs Bank USA, providing UWM with up to $500.0 million of uncommitted borrowing capacity to finance the origination, acquisition or holding of certain mortgage servicing rights (the "GNMA MSR facility"). The GNMA MSR facility is collateralized by all of UWM's mortgage servicing rights that are appurtenant to mortgage loans pooled in securitization by Ginnie Mae that meet certain criteria. Available borrowings, as well as mandatory curtailments, under the GNMA MSR facility are based on the fair market value of the collateral. Borrowings under the GNMA MSR facility bear interest based on SOFR plus an applicable margin. On March 20, 2024, UWM entered into the First Amendment to Credit Agreement with Goldman Sachs Bank USA. The First Amendment removed the minimum utilization fee on undrawn amounts and extended the maturity date of the GNMA MSR Facility to March 20, 2027. All other material terms of the GNMA MSR facility remained the same. The draw period for the GNMA MSR facility ends on March 20, 2026. As of March 31, 2024, $100.0 million was outstanding under the GNMA MSR facility.

Current wording

On March 20, 2023, our consolidated subsidiary, UWM, entered into a Credit Agreement with Goldman Sachs Bank USA, providing UWM with up to $500.0 million of uncommitted borrowing capacity to finance the origination, acquisition or holding of certain mortgage servicing rights (the "GNMA MSR facility"). The GNMA MSR facility is collateralized by all of UWM's mortgage servicing rights that are appurtenant to mortgage loans pooled in securitization by Ginnie Mae that meet certain criteria. Available borrowings, as well as mandatory curtailments, under the GNMA MSR facility are based on the fair market value of the collateral. Borrowings under the GNMA MSR facility bear interest based on SOFR plus an applicable margin. On March 20, 2024, UWM entered into the First Amendment to Credit Agreement with Goldman Sachs Bank USA. The First Amendment removed the minimum utilization fee on undrawn amounts and extended the maturity date of the GNMA MSR Facility to March 20, 2027. All other material terms of the GNMA MSR facility remained the same. The draw period for the GNMA MSR facility ends on March 20, 2026. As of June 30, 2024, no amounts was outstanding under the GNMA MSR facility.

Previous wording

In 2021, our consolidated subsidiary, UWM, began selling some of the mortgage loans that it originates through private label securitization transactions. In executing these transactions, UWM sells mortgage loans to a securitization trust for cash and, in some cases, retained interests in the trust. The securitization entities are funded through the issuance of beneficial interests in the securitized assets. The beneficial interests take the form of trust certificates, some of which are sold to investors and some of which may be retained by UWM due to regulatory requirements. UWM entered into sale and repurchase agreements for a portion of the retained beneficial interests in the securitization trusts established to faci litate its private label securitization transactions which have been accounted for as borrowings against investment securities. As of March 31, 2024, we had $94.1 million outstanding under individual trades executed pursuant to a master repurchase agreement with a counterparty which is collateralized by the investment securities (beneficial interests in the trusts) that we retained due to regulatory requirements. The borrowings against investment securities have remaining terms ranging from one to two months as of March 31, 2024, and interest rates based on SOFR plus a spread. We intend to renew these sale and repurchase agreements upon their maturity during the required holding period for the retained investment securities.

Current wording

In 2021, our consolidated subsidiary, UWM, began selling some of the mortgage loans that it originates through UWM's private label securitization transactions. In executing these transactions, UWM sells mortgage loans to a securitization trust for cash and, in some cases, retained interests in the trust. The securitization entities are funded through the issuance of beneficial interests in the securitized assets. The beneficial interests take the form of trust certificates, some of which are sold to investors and some of which may be retained by UWM due to regulatory requirements. UWM entered into sale and repurchase agreements for a portion of the retained beneficial interests in the securitization trusts established to faci litate its private label securitization transactions which have been accounted for as borrowings against investment securities. As of June 30, 2024, we had $91.4 million outstanding under individual trades executed pursuant to a master repurchase agreement with a counterparty which is collateralized by the investment securities (beneficial interests in the trusts) that we retained due to regulatory requirements. The borrowings against investment securities have remaining terms ranging from one to three months as of June 30, 2024, and interest rates based on SOFR plus a spread. We intend to renew these sale and repurchase agreements upon their maturity during the required holding period for the retained investment securities.

Previous wording

The counterparty under these sale and repurchase agreements conducts daily evaluations of the adequacy of the underlying collateral based on the fair value of the retained investment securities less specified haircuts. These investment securities are financed on average atapproximately 73% of the outstanding principal balance, and exchanges of cash collateral are required if the fair value of the retained investment securities less the haircut is less than the principal balance plus accrued interest on the secured borrowings. As of March 31, 2024, we had delivered $1.1 million of collateral to the counterparty under these sale and repurchase agreements.

Current wording

The counterparty under these sale and repurchase agreements conducts daily evaluations of the adequacy of the underlying collateral based on the fair value of the retained investment securities less specified haircuts. These investment securities are financed on average at approximately 73% of the outstanding principal balance, andexchanges of cash collateral are required if the fair value of the retained investment securities, less the haircut, is less than the principal balance plus accrued interest on the secured borrowings. As of June 30, 2024, we had delivered $5.3 million of collateral to the counterparty under these sale and repurchase agreements.

Previous wording

As of March 31, 2024, our finance lease liabilities were $28.5 million, $25.9 million of which relates to leases with related parties. The Company’s financing lease agreements have remaining terms ranging from approximately three months to twelve years.

Current wording

As of June 30, 2024, our finance lease liabilities were $26.8 million, $25.4 million of which relates to leases with related parties. The Company’s financing lease agreements have remaining terms ranging from approximately three months to twelve years.

Previous wording

Cash flow data for the three months ended March 31, 2024 and 2023

Current wording

Cash flow data for the six months ended June 30, 2024 and 2023

Previous wording

Net cash used in operating activities was $2.20 billion for the three months ended March 31, 2024 compared to net cash provided by operating activities of $1.99 billion for the same period in 2023. The decrease in cash flows from operating activities year-over-year was primarily driven by the increase in mortgage loans at fair value in the period ended March 31, 2024, as compared to a decrease in mortgage loans at fair value in the period ended March 31, 2023.

Current wording

Net cash used in operating activities was $3.52 billion for the six months ended June 30, 2024 compared to net cash provided by operating activities of $148.6 million for the same period in 2023. The decrease in cash flows from operating activities year-over-year was primarily driven by the increase in mortgage loans at fair value for the six month period ended June 30, 2024, as compared to a decrease in mortgage loans at fair value for the comparable period in 2023.

Previous wording

Net cash provided by investing activities was $1.29 billion for the three months ended March 31, 2024 compared to $644.4 million of net cash provided by investing activities for the same period in 2023. The increase in cash flows provided by investing activities was primarily driven by an increase in proceeds from the sales of MSRs and excess servicing cash flows.

Current wording

Net cash provided by investing activities was $2.34 billion for the six months ended June 30, 2024 compared to $1.07 billion of net cash provided by investing activities for the same period in 2023. The increase in cash flows provided by investing activities was primarily driven by an increase in proceeds from the sales of MSRs and excess servicing cash flows.

Previous wording

Net cash provided by (used in) investing activities

Current wording

Net cash provided by (used in) financing activities

Previous wording

Net cash provided by financing activities was $1.02 billion for the three months ended March 31, 2024 compared to cash used in financing activities of $2.60 billion for the same period in 2023. Net cash provided by financing activities for the three-months ended March 31, 2024 was primarily driven by net borrowings under warehouse lines of credit (due to the increase in mortgage loans at fair value), partially offset by net repayments on our MSR facilities, member distributions (including tax distributions) and dividends. Net cash used in financing activities for the three-months ended March 31, 2023 was primarily driven by net repayments under warehouse lines of credit (due to the decrease in mortgage loans at fair value), along with net repayments on our MSR facilities, member distributions and dividends.

Current wording

Net cash provided by financing activities was $1.36 billion for the six months ended June 30, 2024 compared to cash used in financing activities of $1.29 billion for the same period in 2023. Net cash provided by financing activities for the six-months ended June 30, 2024 was primarily driven by net borrowings under warehouse lines of credit (due to the increase in mortgage loans at fair value), partially offset by net repayments on our MSR facilities, member distributions (including tax distributions) and dividends. Net cash used in financing activities for the six-months ended June 30, 2023 was primarily driven by net repayments under warehouse lines of credit (due to the decrease in mortgage loans at fair value), along with net repayments on our MSR facilities, member distributions and dividends.

Previous wording

During the first quarter of 2024, the Board declared a dividend of $0.10 per share of Class A common stock for an aggregate $9.4 million. Concurrently with this declaration, the Board, in its capacity as the Manager of Holdings LLC, under the Holdings LLC Second Amended and Restated Operating Agreement, approved a proportional distribution of $150.2 million from Holdings LLC to SFS Corp. with respect to Class B Units of Holdings LLC. The dividend and the distributions were paid on April 11, 2024.

Current wording

During the second quarter of 2024, the Board declared a dividend of $0.10 per share of Class A common stock for an aggregate $9.4 million. Concurrently with this declaration, the Board, in its capacity as the Manager of Holdings LLC, under the Holdings LLC Second Amended and Restated Operating Agreement, approved a proportional distribution of $150.2 million from Holdings LLC to SFS Corp. with respect to Class B Units of Holdings LLC. The dividend and the distributions were paid on July 11, 2024.

Previous wording

Our consolidated subsidiary, Holdings LLC, is generally required from time to time to make distributions in cash to SFS Corp. (as well as distributions to UWMC) in amounts sufficient to cover the taxes on its allocable share of the taxable income of Holdings LLC. In April 2024, Holdings LLC made a $25.6 million tax distribution to SFS Corp. and a proportional $1.6 million tax distribution was made by Holdings LLC to UWMC.

Current wording

Our consolidated subsidiary, Holdings LLC, is generally required from time to time to make distributions in cash to SFS Corp. (as well as distributions to UWMC) in amounts sufficient to cover the taxes on its allocable share of the taxable income of Holdings LLC.

Previous wording

The sources of funds needed to satisfy these cash requirements include cash flows from operations and investing activities, including cash flows from sales of MSRs and excess servicing cash flows, sale or securitization of loans into the secondary market, loan origination fees, servicing fee income, and interest income on mortgage loans.

Current wording

The sources of funds needed to satisfy these cash requirements include cash flows from operations and investing activities, including cash flows from sales of MSRs and excess servicing cash flows, sale or securitization of loans into the secondary market, loan origination fees and certain other fees related to the origination of a loan, servicing fee income, and interest income on mortgage loans.

Previous wording

In the normal course of business, we are party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit to borrowers at either fixed or floating interest rates. IRLCs are binding agreements to lend to a borrower at a specified interest rate within a specified period of time as long as there is no violation of conditions established in the contract. Forward commitments generally have fixed expiration dates or other termination clauses which may require payment of a fee. As many of the commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. In addition, we have contracts to sell loans into the secondary market at specified future dates (commitments to sell loans), and forward commitments to sell MBS at specified future dates and interest rates. The blended average pullthrough rate was 79% and 76% as of March 31, 2024 and December 31, 2023, respectively.

Current wording

In the normal course of business, we are party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit to borrowers at either fixed or floating interest rates. IRLCs are binding agreements to lend to a borrower at a specified interest rate within a specified period of time as long as there is no violation of conditions established in the contract. Forward commitments generally have fixed expiration dates or other termination clauses which may require payment of a fee. As many of the commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. In addition, we have contracts to sell loans into the secondary market at specified future dates (commitments to sell loans), and forward commitments to sell MBS at specified future dates and interest rates. The blended average pullthrough rate was 80% and 76% as of June 30, 2024 and December 31, 2023, respectively.