UWM Holdings Corp
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
UWMC$1.52-6.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001783398-24-000038
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001783398-24-000044
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 195 previous paragraphs and 204 current paragraphs.
138 unchanged; 52 reworded; 13 added; 4 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Three and Nine Months Ended September 30, 2024 and 2023 Summary
Current report
The increase in production volume was primarily due to higher refinance volume as a result of lower market interest rates in the third quarter of 2024.
Current report
The increase in production volume was primarily due to higher refinance volume, due to the generally lower market interest rate environment in the first nine months of 2024 as compared to 2023.
Current report
Gain on Other Interest Rate Derivatives
Current report
The gains on other interest rate derivatives of $226.9 million for the three months ended September 30, 2024 and $254.1 million for the nine months ended September 30, 2024 were due to gains on interest rate swap futures that we entered into during the second quarter of 2024, attributable declines in market interest rates.
Current report
Other costs were $880.3 million for the nine months ended September 30, 2024, an increase of $188.1 million, or 27.2%, as compared to $692.2 million for the nine months ended September 30, 2023. This increase was primarily due to an increase in salaries, commissions and benefits of $108.3 million, or 27.9%, an increase in direct loan production costs of $59.0 million, an increase in general and administrative expenses of $17.3 million, as well as an increase in marketing, travel and entertainment expenses of $7.1 million. The increases were primarily due to the same reasons mentioned in the three month analysis above. These increases were partially offset by a decrease in other expense (income) of $3.3 million primarily due to lower expenses associated with the change in fair value of retained investment securities, partially offset by higher expenses related to the change in fair value of Public and Private Warrants.
Current report
be opportunistic in evaluating the refinance market.
Current report
2 Subsequent to September 30, 2024, the funding limit on this line was increased to $1.0 billion.
Current report
3 Subsequent to September 30, 2024, the funding limit on this line was increased to $750.0 million.
Current report
4 Subsequent to September 30, 2024, the funding limit on this line was increased to $1.5 billion, $150.0 million of which is committed, for a total of $900.0 million of committed line amounts as of October 31, 2024.
Current report
5 Interest rates under these funding facilities are based on a reference interest rate benchmark plus a spread, which ranged from 1.35% to 1.95% for substantially all of our loan production volume as of September 30, 2024.
Current report
The weighted average interest rate charged for borrowings under our MSR facilities was 8.14% and 9.04% for the three months ended September 30, 2024 and 2023, respectively, and 8.92% and 8.71% for the nine months ended September 30, 2024 and 2023, respectively.
Current report
We also enter into 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. In addition, we have entered into certain interest rate swap futures contracts, referred to as other interest rate derivatives. These financial instruments include margin call provisions that require us to transfer cash in an amount sufficient to eliminate any margin deficit. A margin deficit generally results from daily changes in the fair value of these financial instruments. We are generally required to satisfy the margin call on the day of or within one business day of such notice.
Removed paragraphs (4)
Previous report
Three and Six Months Ended June 30, 2024 and 2023 Summary
Previous report
The increase in production volume was due to higher refinance activity, despite the higher primary mortgage interest rate environment, partially offset by a slight decrease in purchase volume.
Previous report
The increase in production volume was due to higher refinance and purchase volume, despite the higher interest rate environment.
Previous report
Other costs were $552.3 million for the six months ended June 30, 2024, an increase of $108.1 million, or 24.3%, as compared to $444.2 million for the six months ended June 30, 2023. This increase was primarily due to an increase in salaries, commissions and benefits of $62.2 million, or 24.6%, primarily due to an increase in average team member count, as we prepare for anticipated increases in production volume. Direct loan production costs increased $36.8 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.
Reworded paragraphs (52)
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 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.
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 nine months ended September 30, 2024, 91% 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-wareh ouse" 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 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;
Current wording
◦the change in fair value of IRLCs, 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
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.
Current wording
For the three months ended September 30, 2024, we originated $39.5 billion in loans, which was an increase of $9.8 billion, or 32.9%, from the $29.7 billion of originations during the three months ended September 30, 2023. We reported net income of $31.9 million during the three months ended September 30, 2024, which was a decrease of $269.0 million, compared to net income of $301.0 million for the three months ended September 30, 2023. Adjusted EBITDA for the three months ended September 30, 2024 was $107.2 million as compared to $112.1 million for the three months ended September 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
For the six months ended June 30, 2024, we originated $61.3 billion in loans, which was an increase of $7.1 billion, or 13.1%, from the $54.2 billion of originations during the six months ended June 30, 2023. We reported net income of $256.8 million during the six months ended June 30, 2024, which was an increase of $166.6 million, compared to net income of $90.2 million for the six months ended June 30, 2023. Adjusted EBITDA for the six months ended June 30, 2024 was $234.6 million as compared to $266.4 million for the six 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.
Current wording
For the nine months ended September 30, 2024, we originated $100.8 billion in loans, which was an increase of $16.9 billion, or 20.1%, from the $83.9 billion of originations during the nine months ended September 30, 2023. We reported net income of $288.8 million for the nine months ended September 30, 2024, which was a decrease of $102.4 million, compared to net income of $391.2 million for the nine months ended September 30, 2023. Adjusted EBITDA for the nine months ended September 30, 2024 was $341.8 million as compared to $378.7 million for the nine months ended September 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 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.
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, gains or losses on other interest rate derivatives, the impact of non-cash deferred compensation expense, the change in fair value of the Public and Private Warrants, the non-cash income/expense impact of the change in the Tax Receivable Agreement liability, and the change in fair value of retained investment securities. We exclude the non-cash income/expense impact of 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, and finance leases.
Previous wording
The following table presents a reconciliation of net income (loss), the most directly comparable U.S. GAAP financial measure, to Adjusted EBITDA:
Current wording
The following table presents a reconciliation of net income, the most directly comparable U.S. GAAP financial measure, to Adjusted EBITDA:
Previous 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.
Current wording
(1)Reflects the change ((increase)/decrease) in fair value of MSRs due to changes in valuation inputs or assumptions. Refer to Note 5 - Mortgage Servicing Rightsto the condensed consolidated financial statements.
Previous wording
(4)Reflects the change (increase/(decrease)) in the Tax Receivable Agreement liability. Refer to Note 1 - Organization, Basis of Presentation and Summary of Significant Accounting Policiesto the condensed consolidated financial statements for additional information related to the Tax Receivable Agreement.
Current wording
(4)Reflects the non-cash (income) expense impact of the change in the Tax Receivable Agreement liability. Refer to Note 1 - Organization, Basis of Presentation and Summary of Significant Accounting Policiesto the condensed consolidated financial statements for additional information related to the Tax Receivable Agreement.
Previous wording
Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023
Current wording
Results of Operations for the Three and Nine Months Ended September 30, 2024 and 2023
Previous wording
The net total of primary loss and capitalization of MSRs increased approximately $40.2 million for the three months ended June 30, 2024 as compared to the same period in 2023. This increase was primarily due to an increase in loan production volume of $1.8 billion, or 5.6%, from $31.8 billion to $33.6 billion during the three months ended June 30, 2024, as comparedto the same period in 2023, and pricing impacts, as we transitioned to more targeted pricing initiatives in 2024, following more broad-based programs in 2023.
Current wording
The total of primary loss and capitalization of MSRs increased approximately $128.7 million for the three months ended September 30, 2024 as compared to the same period in 2023. This increase was primarily due to an increase in loan production volume of $9.8 billion, or 32.9%, from $29.7 billion to $39.5 billion during the three months ended September 30, 2024, as compared to the same period in 2023 and the impacts of improved pricing.
Previous wording
The provision for representations and warranties obligations increased by $4.3 million for the three months ended June 30, 2024 as compared to the same period in 2023, due to an increase in expected loss rates and the increase in loan production volume. Loan origination fees increased by approximately $40.5 million for the three months ended June 30, 2024 as comp ared to the same period in 2023, due to the increase in loan production volume and increases in certain per loan origination and other fees.
Current wording
The provision for representations and warranties obligations increased by $4.1 million for the three months ended September 30, 2024 as compared to the same period in 2023, due primarily to the increase in loan production volume. Loan origination fees increased by approximately $52.1 million for the three months ended September 30, 2024 as compared to the same period in 2023, due to the increase in loan production volume and increases in certain per loan origination and other fees.
Previous wording
The net total of primary loss and capitalization of MSRs increased approximately $100.1 million for the six months ended June 30, 2024 as compared to the same period in 2023. This increase was primarily due to an increase in loan production volume of $7.1 billion, or 13.1%, from $54.2 billion to $61.3 billion during the six months ended June 30, 2024, as compared to the same period in 2023, and pricing impacts, as we transitioned to more targeted pricing initiatives in 2024, following more broad-based programs in the first half of 2023.
Current wording
The total of primary loss and capitalization of MSRs increased approximately $228.8 million for the nine months ended September 30, 2024 as compared to the same period in 2023. This increase was primarily due to an increase in loan production volume of $16.9 billion, or 20.1%, from $83.9 billion to $100.8 billion during the nine months ended September 30, 2024, as compared to the same period in 2023, and the impacts of improved market pricing.
Previous wording
The provision for representations and warranties obligations increased by $7.2 million for the six months ended June 30, 2024 as compared to the same period in 2023, due to an increase in expected loss rates and the increase in loan production volume. Loan origination fees increased by approximately $77.0 million for the six months ended June 30, 2024 as compared to the same period in 2023, due to increases in certain per loan origination and other fees and the increase in loan production volume.
Current wording
The provision for representations and warranties obligations increased by $11.4 million for the nine months ended September 30, 2024 as compared to the same period in 2023, due to an increase in expected loss rates and the increase in loan production volume. Loan origination fees increased by approximately $129.1 million for the nine months ended September 30, 2024 as compared to the same period in 2023, due to increases inloan production volume and increases in certain per loan origination and other fees.
Previous 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.
Current wording
Loan servicing income was $134.8 million for the three months ended September 30, 2024, a decrease of $65.7 million, or 32.8%, as compared to $200.4 million for the three months ended September 30, 2023. The decrease in loan servicing income during the three months ended September 30, 2024 was primarily driven by a decline in the average servicing portfolio, partially offset by an increase in the portfolio weighted average servicing fee as a result of increased retained excess servicing on new production.
Previous wording
Servicing costs decreased $5.9 million for the three months ended June 30, 2024 as compared to the same period in 2023 primarily as a result of a decline in the average servicing portfolio.
Current wording
Servicing costs decreased $8.6 million for the three months ended September 30, 2024 as compared to the same period in 2023 primarily as a result of a decline in the average servicing portfolio.
Previous wording
Loan servicing income was $328.6 million for the six months ended June 30, 2024, a decrease of $83.2 million, or 20.2%, as compared to $411.8 million for the six months ended June 30, 2023. The decrease in loan servicing income during the six months ended June 30, 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 $463.4 million for the nine months ended September 30, 2024, a decrease of $148.8 million, or 24.3%, as compared to $612.2 million for the nine months ended September 30, 2023. The decrease in loan servicing income during the nine months ended September 30, 2024 was primarily driven by the same reasons mentioned above in the three months analysis.
Previous wording
Servicing costs decreased $12.4 million for the six months ended June 30, 2024 as compared to the same period in 2023 primarily as a result of a decline in the average servicing portfolio.
Current wording
Servicing costs decreased $21.0 million for the nine months ended September 30, 2024 as compared to the same period in 2023 primarily driven by the same reasons mentioned above in the three months analysis.
Previous wording
Change in Fair Value of Mortgage Servicing Rights, Net
Current wording
Change in Fair Value of Mortgage Servicing Rights
Previous 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.
Current wording
The change in fair value of MSRs for the three months ended September 30, 2024 was a decrease of $446.1 million, as compared with an increase of $92.9 million for the three months ended September 30, 2023. The decrease in fair value of MSRs for the three months ended September 30, 2024 was primarily attributable to a decrease in fair value of approximately $263.9 million as a result of changes in valuation inputs and assumptions due to the decline in market interest rates, a decrease in fair value of approximately $161.4 million due to realization of cash flows, decay, and other (including loans paid in full) and approximately $20.8 million of net reserves and transaction costs for bulk MSR sales and sales of excess servicing cash flows. The increase in fair value for the three months ended September 30, 2023 of approximately $92.9 million was primarily attributable to an increase of approximately $236.0 million resulting from changes in valuation inputs and assumptions, mainly due to changes in market interest rates, partially offset by a decline of approximately $127.8 million due to realization of cash flows, decay, and other (including loans paid in full) and approximately $15.3 million of net reserves and transaction costs for bulk MSR sales and sales of excess servicing cash flows.
Previous wording
The change in fair value of MSRs was a net decrease of $115.3 million for the three months ended June 30, 2024 as compared with a net increase of $24.6 million for the three months ended June 30, 2023. The net decrease in fair value of MSRs for the three months ended June 30, 2024 was primarily attributable to a decline in fair value of approximately $88.2 million due to realization of cash flows, decay, and other (including loans paid in full), a decrease in fair value of approximately $38.2 million due to changes in valuation inputs and assumptions and approximately $16.0 million of net reserves and transaction costs for bulk MSR sales and sales of excess servicing cash flows, partially offset by a $27.2 million gain on interest rate swap futures that we entered into during the second quarter of 2024. The net increase in fair value for the three months ended June 30, 2023 of approximately $24.6 million was attributable to an increase of approximately $164.5 million resulting from changes in valuation inputs and assumptions, primarily due to changes in market interest rates, partially offset by a decline of approximately $136.4 million due to realization of cash flows, decay, and other (including loans paid in full) and approximately $3.4 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 for the nine months ended September 30, 2024 was a decrease of $604.1 million, as compared with a decrease of $219.7 million for the nine months ended September 30, 2023. The decrease in fair value of MSRs for the nine months ended September 30, 2024 was primarily attributable to a decline in fair value of approximately $377.9 million due to realization of cash flows, decay, and other (including loans paid in full), a decrease in fair value of approximately $161.1 million due to changes in valuation inputs and assumptions (due primarily to changes in market interest rates) and approximately $65.2 million of net reserves and transaction costs for bulk MSR sales and sales of excess servicing cash flows. The decrease in fair value for the nine months ended September 30, 2023 of approximately $219.7 million was primarily attributable to a decline of approximately $360.5 million due to realization of cash flows, decay, and other (including loans paid in full) and approximately $36.9 million of net reserves and transaction costs for bulk MSR sales and sales of excess servicing cash flows, partially offset by an increase of approximately $177.7 million resulting from changes in valuation inputs and assumptions, primarily due to changes in market interest rates.
Previous 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.
Current wording
Net interest income (interest income less interest expense on funding facilities) was $35.7 million for the three months ended September 30, 2024, a decrease of $8.2 million, or 19%, as compared to $44.0 million for the three months ended September 30, 2023, mainly as a result of higher interest expense on funding facilities, partially offset by an increase in interest income. Interest expense on funding facilities increased due to higher average warehouse balances and lower credits from warehouse lenders on custodial and other deposits. Interest income increased primarily as a result of higher average balances of mortgage loans at fair value due to increased loan production volume.
Previous 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.
Current wording
Interest expense on non-funding debt was $31.5 million for the three months ended September 30, 2024, a decrease from $42.8 million for the three months ended September 30, 2023, primarily due to a decrease in average borrowings on the MSR facilities.
Previous wording
Net interest income (interest income less interest expense on funding facilities) was $88.1 million for the six months ended June 30, 2024, a decrease of $15.1 million, or 15%, as compared to $103.2 million for the six 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. The increase in interest income and interest expense on funding facilities increased due to the same reasons mentioned in the three month analysis above.
Current wording
Net interest income (interest income less interest expense on funding facilities) was $123.9 million for the nine months ended September 30, 2024, a decrease of $23.6 million, or 16%, as compared to $147.4 million for the nine months ended September 30, 2023, as a result of higher interest expense on funding facilities, partially offset by an increase in interest income. The increase in interest expense on funding facilities increased was primarily due to higher average warehouse balances from increased loan production. The increase in interest income was due to the same reasons mentioned in the three month analysis above.
Previous wording
Interest expense on non-funding debt was $72.2 million for the six months ended June 30, 2024, a decrease from $85.5 million for the six months ended June 30, 2023, due to the same reasons mentioned in the three month analysis above.
Current wording
Interest expense on non-funding debt was $103.7 million for the nine months ended September 30, 2024, a decrease from $128.6 million for the nine months ended September 30, 2023, due to the same reasons mentioned in the three month analysis above.
Previous 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.
Current wording
Other costs were $328.0 million for the three months ended September 30, 2024, an increase of $80.0 million, or 32.3%, as compared to $248.0 million for the three months ended September 30, 2023. This increase was primarily due to an increase in salaries, commissions and benefits of $46.1 million, or 34.1%, primarily due to an increase in average team member count as we prepare for anticipated increases in production volume, an increase in direct loan production costs of $22.2 million, primarily due to higher costs associated with our free credit report program and down payment assistance programs as well as the increased loan production volume. General and administrative expenses increased $8.8 million primarily due to an increase in computer support services and professional service fees. Marketing, travel and entertainment expenses increased $2.3 million primarily due to our continued investment in our broker relationships through broker visits and training programs.
Previous 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.
Current wording
We recorded a $0.3 million provision for income taxes during the three months ended September 30, 2024, compared to a provision for income taxes of $0.7 million for the three months ended September 30, 2023. The decrease in income tax provision for the three months ended September 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
We recorded a $4.5 million provision for income taxes during the six months ended June 30, 2024, compared to a provision for income taxes of $.2 million for the six months ended June 30, 2023. The increase in income tax provision for the six months ended June 30, 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 $4.9 million provision for income taxes during the nine months ended September 30, 2024, compared to a provision for income taxes of $0.9 million for the nine months ended September 30, 2023. The increase in income tax provision for the nine months ended September 30, 2024, as compared to the same period in 2023, was primarily due to an increase in state taxes payable in both the current and future periods.
Previous wording
Net income was $76.3 million for the three months ended June 30, 2024, an decrease of $152.5 million or 66.7%, as compared to net income of $228.8 million for the three months ended June 30, 2023. The decrease in net income was primarily the result of a decrease in total revenue, net of $80.4 million and an increase in total expenses (including income taxes) of $72.1 million, as further described above.
Current wording
Net income was $31.9 million for the three months ended September 30, 2024, a decrease of $269.0 million or 89.4%, as compared to net income of $301.0 million for the three months ended September 30, 2023. The decrease in net income was primarily the result of a decrease in total revenue, net of $150.7 million and an increase in total expenses (including income taxes) of $118.4 million, as further described above.
Previous 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.
Current wording
Net loss attributable to the Company of $6.3 million and net income attributable to the Company of $18.2 million for the three months ended September 30, 2024 and 2023, respectively, includes the net income of UWM attributable to the Company due to its approximate 7% and 6% ownership interest in Holdings LLC as September 30, 2024 and 2023, respectively. Net loss attributable to the Company for the three months ended September 30, 2024 was also impacted by the change in fair value of the Public and Private Warrants due to the change in UWMC's stock price during the quarter.
Previous 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.
Current wording
Net income was $288.8 million for the nine months ended September 30, 2024, a decrease of $102.4 million or 26.2%, as compared to net income of $391.2 million for the nine months ended September 30, 2023. The increase in net income was primarily the result of an increase in total revenue, net of $177.6 million, partially offset by an increase in total expenses (including income taxes) of $280.0 million, as further described above.
Previous wording
Net income attributable to the Company of $3.1 million and$7.6 million for the three months ended June 30, 2024 and 2023, respectively, includes thenet income 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 $5.5 million and $13.8 million for the nine months ended September 30, 2024 and 2023, respectively, includes the net income (loss) of UWM attributable to the Company due to itsapproximate 7% and 6% ownership interest in Holdings LLC as September 30, 2024 and 2023, respectively.
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, 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.
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, unsecured debt maturities, 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. Based on the upcoming maturity for our 2025 Senior Notes, we expect to
Previous wording
Our warehouse facilities, which are our primary loan funding facilities used to fund the origination of our mortgage loans, are primarily in the form of master repurchase agreements. Loans financed under these facilities are generally financed, on average, at approximately 97% to 98% of the principal balance of the loan, which requires us to fund the remaining 2-3% of the unpaid principal balance from cash generated from our operations. Once closed, the underlying residential mortgage loan is pledged as collateral for the borrowing or advance that was made under these loan funding facilities. In most cases, the loans we originate will remain in one of our warehouse facilities for less than one month, until the loans are pooled and sold. During the time we hold the loans pending sale, we earn interest income from the borrower on the underlying mortgage loan note. This income is partially offset by the interest and fees we have to pay under the warehouse facilities. Interest rates under the warehouse facilities are typically based on a reference interest rate benchmark plus a spread.
Current wording
Our warehouse facilities, which are our primary loan funding facilities used to fund the origination of our mortgage loans, are primarily in the form of master repurchase agreements. Loans financed under these facilities are generally financed, on average, at approximately 97% to 98% of the principal balance of the loan, which requires us to fund the remaining 2-3% of the unpaid principal balance from cash generated from our operations. Once closed, the underlying residential mortgage loan is pledged as collateral for the borrowing or advance that was made under these loan funding facilities. In most cases, the loans we originate will remain in one of our warehouse facilities for less than one month, until the loans are pooled and sold. During the time we hold the loans pending sale, we earn interest income from the borrower on the underlying mortgage loan note. This income is partially offset by the interest and fees we have to pay under the warehouse facilities.
Previous wording
1 An aggregate of $750 million of these line amounts is committed as of June 30, 2024.
Current wording
1 An aggregate of$750.0 million of these line amounts is committed as of September 30, 2024.
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 June 30, 2024, no amount was outstanding under the ASAP+ program and $165.1 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 September 30, 2024, no amount was outstanding under the ASAP+ program and $105.0 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 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.
Current wording
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 September 30, 2024.
Previous wording
November 15, 2023 at 101.375%; or November 15, 2024 until maturity at 100%, of the principal amount of the 2025 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.
Current wording
Beginning on April 15, 2024, we may, at our option, redeem the 2029 Senior Notes in whole or in part during the twelve-month period beginning on the following dates at the following redemption prices: April 15, 2024 at 102.750%; April 15, 2025 at 101.375%; or April 15, 2026 until maturity at 100%, of the principal amount of the 2029 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest.
Previous wording
On January 30, 2023, UWM, entered into Amendment No. 1 to the Loan and Security Agreement with Citibank, permitting UWM, with the prior consent of Citibank, to enter into transactions for the sale of excess servicing cash flows (as discussed below) whereby Citibank will release its security interest in that portion of the collateral.
Current wording
On January 30, 2023, UWM, amended the Loan and Security Agreement with Citibank, to permit UWM, with the prior consent of Citibank, to enter into transactions for the sale of excess servicing cash flows (as discussed below) whereby Citibank will release its security interest in that portion of the collateral.
Previous wording
On June 27, 2024, UWM and Citibank, N.A. amended both the Loan and Security Agreement and the warehouse facility agreement between the parties. These amendments increased the combined total uncommitted borrowing capacity of the MSR Facility and the warehouse facility to $2.0 billion, which can be allocated between the two facilities at UWM's discretion, and extended the maturity dates to June 26, 2026. All other material terms of these agreements remained the same. As of June 30, 2024, the Company was in compliance with all applicable covenants. No amounts were outstanding under the MSR Facility as of June 30, 2024.
Current wording
On June 27, 2024, UWM and Citibank, N.A. amended both the Loan and Security Agreement and the warehouse facility agreement between the parties. These amendments increased the combined total uncommitted borrowing capacity of the MSR Facility and the warehouse facility to $2.0 billion and extended the maturity dates to June 26, 2026. As of June 30, 2024, the Company was in compliance with all applicable covenants. As of September 30, 2024, $150.0 million was outstanding under the MSR Facility.
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 June 30, 2024, no amounts 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. The draw period for the GNMA MSR facility ends on March 20, 2026, and the facility has a maturity date of March 20, 2027. As of September 30, 2024, $150.0 million was outstanding under the GNMA MSR facility.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Beginning on November 15, 2022, we may, at our option, redeem the 2025 Senior Notes in whole or in part during the twelve-month period beginning on the following dates at the following redemption prices: November 15, 2022 at 102.750%;