top wholesale lender composite wholesale mortgage (UWM) is again ramping up efforts to capture more market share at the cost of potential profits.
Thank you for reading this post, don't forget to subscribe!On Wednesday, the Detroit-based lender announced it is reviving the traditional 1% down loan option, which allows homebuyers to purchase a home with as little as 1% down payment.
Known as the “Traditional 1% Down,” the product is essentially a 3% down mortgage with UWM paying an additional 2%—up to $4,000—on top of the borrower’s 1% down payment. This gives the borrower a total of 3% to put down on the home.
“We are bringing the traditional 1% down to give independent mortgage brokers a competitive edge with borrowers and real estate agents, as well as making home ownership more affordable for borrowers across the country,” said Matt Ishbia, President and CEO of UWM. And helping to make it accessible.” said in a statement.
While UWM is reviving this loan option for borrowers, 1% down loan is not a new option for borrowers. Other lenders have launched similar programs over the years to drum up more leverage, and this type of product works like a modification. fannie maeof home ready and Freddie MacK’s HomePossible program, which allows for as little as 3% down payments on conventional loans – or what lenders refer to as 97% loan-to-value (LTV).
While UWM Down Payment Assistance is not working with a non-profit or government-sponsored enterprise (GSE), the product is subject to GSE guidelines, a company spokesperson said in an emailed response.
UWM said mortgage rates for the traditional 1% down program are comparable to rates for Freddie Mac’s HomePossible product.
To qualify, homebuyers must have an income at or below 50% of the area median income (AMI), a minimum credit score of 620, and an LTV of 97% to be eligible for UWM’s 1% down loan product. The company said mortgage insurance is required, and the product is only available to buyers purchasing a primary one-unit single-family home.
In a highly competitive environment in a high-rate environment, UWM, the country’s second largest mortgage lender, is taking other cost-cutting measures for brokers to gain market share.
At the beginning of the year, UWM said it would give brokers access to a total of 125 basis points (bps), with a maximum of 40 bps per loan, to apply increases to their pricing on any loan. Dubbed “Control Your Price”, brokers are able to use the points for conventional, government and non-agency loans of up to $1 million.
Its “Game On” initiative, which saw UWM cut prices of all loans by 50 to 100 bps through June 2022, led the wholesale lender to generate more loans than its rival, rocket hostageWreaking havoc on competitors with already compressed margins in the third quarter of last year.
UWM to originate $33.5 billion in the third quarter of 2022, beating rival Rocket Mortgage by 31%. In the most recent quarter, UWM originated $25.1 billion in mortgage loans, compared to Rocket’s $19 billion.
Since UWM’s aggressive price cuts were introduced, loandepot Has exited the wholesale channel and wholesale lender home point has closed its original business.
UWM won’t need to look under the couch cushions for money. The Detroit wholesale lender ended the fourth quarter with approximately $2.1 billion of available liquidity — including $886.2 million in cash and own-warehouses — and $1.25 billion of available lending capacity. This includes $750 million under a line of credit secured by agency MSRs and $500 million under an unsecured line of credit, according to its most recent 8-K filing. Securities and Exchange Commission (SEC).
In Q4, UWM reported a non-GAAP adjusted net loss of $53.3 million, which was in the red along with all of the top US mortgage lenders. In the fourth quarter of 2022, the company had an estimated 11% share of the overall mortgage market and a record 54% share of the wholesale channel.
