Pontiac-based United Wholesale Mortgage saw $1.6B in profits in 2021
Pontiac-based United Wholesale Mortgage did a higher volume of business in 2021 compared with the previous year, although it saw lower profits and tighter profit margins as the mortgage refinancing boom started fading and the industry entered a down cycle.
UWM, a competitor to Detroit-based Rocket Companies, reported Tuesday that it earned $1.6 billion in net income, or profit, last year versus $3.4 billion in 2020.
During an earnings call, UWM executives said the company is still hiring, albeit at a slower pace than last year, and that the company's employee head count at its sprawling Pontiac campus is down from the second and third quarters of 2021 because of natural attrition rather than layoffs.
The company had roughly 9,000 employees as of last summer. It is currently "hovering between 8,000-9,000" employees, a spokesperson said.
"Our staffing levels have naturally migrated a little bit lower," UWM Chief Financial Officer Tim Forrester told Wall Street analysts. "Because we’ve managed our head count and our hiring rate, our overall head count is a little bit lower, or we expect it to be a little bit lower, in the first quarter."
The industry-wide shift in the mortgage market was most pronounced in the fourth quarter for UWM, when the company saw $239 million in net income compared with nearly $1.4 billion in the same quarter in 2020.
However, some of that decline was the result of UWM temporarily holding more Federal Housing Finance Agency loans on its books during the quarter to sell in early 2022.
For the full year, the company's total volume of loan originations rose 24% in 2021 to $226.5 billion, a record for the company.
More: Gilbert's Rocket Companies saw $6 billion in profits in 2021
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Of those mortgages, about 61% were for refinancings and 39% for home purchases. In 2020, more than 76% of UWM's loans were for refinancings and 23% for purchases.
UWM's "gain-on-sale" margin, a closely watched measure of each loan's profitability, fell to 1.14% for 2021 compared with 2.49% in 2020.
“The competitive environment pushed margins lower as compared to record margins we saw in the fourth quarter of 2020, Forrester said. "Even with the increased competition, our financial performance remains strong."
UWM CEO Mat Ishbia said 2021 was "an amazing year for UMW," and that early 2022 is looking good for the company, too.
There have been recent reports of layoffs at some mortgage lenders, including at Ann Arbor-based Homepoint and at Better.com, whose top executive later apologized for laying off about 900 workers via a Zoom call in December.
Ishbia said the head count reductions at UWM aren't the result of any mass layoffs.
“We don’t lay off like other companies, and we don’t have a need to, because of our cost to originate (and) our technology is superior to our competition," Ishbia said.
UWM competes with Dan Gilbert's Rocket Companies in underwriting loans for independent mortgage brokers and is the industry leader in that segment.
It does not do the type of direct-to-consumer mortgages that Rocket does, which have higher profit margins.
The mortgage industry overall saw lower profits last year as the refinancing boom that began in spring 2020 began to fade as interest rates edged up.
Refinancings were estimated to be 57% of the overall mortgage market last year, compared with 64% in 2020, and are forecast to fall to 33% for all of this year, according to the Mortgage Bankers Association.
The association forecasts the overall mortgage market falling to $2.6 trillion this year, down from $3.9 trillion last year and $4.1 trillion in 2020..
UWM's stock closed at $4.34 Monday and was down 16 cents as of midday Tuesday.
Contact JC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.
This article originally appeared on Detroit Free Press: United Wholesale Mortgage saw $1.6B in profits in 2021
