UWM (UWMC) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's analysis of financial condition Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in equity, and cash flows, along with comprehensive notes detailing the company's accounting policies, financial instruments, debt, equity, and other significant financial disclosures for the periods ended June 30, 2025 and December 31, 2024 Condensed Consolidated Balance Sheets Details the company's financial position, including assets, liabilities, and equity, at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Assets | | | | Cash and cash equivalents | $489,984 | $507,339 | | Mortgage loans at fair value | $8,040,310 | $9,516,537 | | Mortgage servicing rights | $3,445,195 | $3,969,881 | | Total assets | $13,886,889 | $15,671,116 | | Liabilities | | | | Warehouse lines of credit | $7,254,526 | $8,697,744 | | Senior notes | $2,787,797 | $2,785,326 | | Total liabilities | $12,138,907 | $13,617,268 | | Equity | | | | Total equity | $1,747,982 | $2,053,848 | | Total liabilities and equity | $13,886,889 | $15,671,116 | - Total assets decreased by approximately $1.78 billion from December 31, 2024, to June 30, 2025, primarily driven by a decrease in mortgage loans at fair value and mortgage servicing rights[9] - Total liabilities decreased by approximately $1.48 billion, mainly due to a reduction in warehouse lines of credit[9] Condensed Consolidated Statements of Operations Presents the company's revenues, expenses, and net income for the specified interim periods Condensed Consolidated Statements of Operations (in thousands, unaudited) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total revenue | $758,700 | $622,413 | $1,372,070 | $1,207,932 | | Other gains (losses), net | $97,483 | $(115,319) | $(291,102) | $(130,882) | | Total expenses | $526,765 | $430,022 | $1,012,366 | $815,714 | | Net income | $314,479 | $76,286 | $67,451 | $256,817 | | Net income attributable to UWMC | $22,909 | $3,050 | $9,230 | $11,780 | | Basic EPS | $0.11 | $0.03 | $0.05 | $0.12 | | Diluted EPS | $0.11 | $0.03 | $0.03 | $0.12 | - Net income for the three months ended June 30, 2025, increased significantly to $314.5 million from $76.3 million in the prior year, primarily driven by higher total revenue and a positive shift in other gains (losses)[11] - For the six months ended June 30, 2025, net income decreased to $67.5 million from $256.8 million in the prior year, largely due to increased other losses and total expenses, despite higher total revenue[11] Condensed Consolidated Statements of Changes in Equity Outlines changes in the company's equity components, including stock and retained earnings, over time Key Changes in Equity (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Total Equity (End of Period) | $1,747,982 | $2,053,848 | | Class A Common Stock Shares (Outstanding) | 205,979,563 | 157,940,987 | | Class D Common Stock Shares (Outstanding) | 1,393,282,620 | 1,440,332,098 | | Additional Paid-in Capital | $5,688 | $3,523 | | Retained Earnings | $170,320 | $157,837 | | Non-controlling Interest | $1,571,814 | $1,892,328 | - Total equity decreased from $2.05 billion at December 31, 2024, to $1.75 billion at June 30, 2025, primarily due to net loss, Class A common stock dividends, and member distributions to SFS Corp., partially offset by stock-based compensation and re-measurement of non-controlling interest[14] - The number of Class A common stock shares outstanding significantly increased from 157.9 million to 206.0 million, while Class D common stock shares decreased, reflecting exchange transactions and RSU vesting[14][80] Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands, unaudited) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by (used in) operating activities | $328,022 | $(3,519,919) | | Net cash provided by investing activities | $1,556,333 | $2,343,887 | | Net cash (used in) provided by financing activities | $(1,901,710) | $1,358,717 | | Net (decrease) increase in cash and cash equivalents | $(17,355) | $182,685 | | Cash and cash equivalents, end of period | $489,984 | $680,153 | - Operating activities generated $328.0 million in cash for the six months ended June 30, 2025, a significant improvement from a $3.5 billion cash outflow in the same period of 2024, primarily due to a decrease in mortgage loans at fair value[16][202] - Investing activities provided $1.56 billion in cash, down from $2.34 billion in the prior year, mainly due to decreased net proceeds from MSR sales[16][203] - Financing activities used $1.90 billion in cash, a reversal from $1.36 billion provided in the prior year, driven by net repayments under warehouse lines of credit[16][204] Notes to Condensed Consolidated Financial Statements Provides detailed disclosures on accounting policies, financial instruments, and other significant financial data NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Describes the company's structure, financial statement preparation, and key accounting principles - UWM Holdings Corporation operates as an 'Up-C' structure, with United Wholesale Mortgage, LLC (UWM) as its operating subsidiary. The Company's capital structure includes Class A, B, C, and D common stock, with Class A and B having economic interest and Class C and D having voting rights[18][19][20] - The financial statements are unaudited and prepared in accordance with U.S. GAAP for interim financial information, with results not necessarily indicative of a full fiscal year[23] - The Company operates in a single segment focused on residential mortgage loan origination, sale, and servicing in the wholesale channel[25] - The Company accounts for a Tax Receivable Agreement (TRA) with SFS Corp., obligating payments of 85% of realized tax savings from certain tax basis increases, with changes recorded as adjustments to equity for Exchange Transactions[29][30] - Public and Private Warrants are classified as derivative liabilities at fair value, with changes recognized in the consolidated statement of operations[33] - Stock-based compensation expense is recognized straight-line over the service period, with forfeitures recognized as they occur[35] NOTE 2 – MORTGAGE LOANS AT FAIR VALUE Details the valuation and changes in mortgage loans measured at fair value - The Company elected the fair value option for mortgage loans to reflect economic consequences of origination and hedging activities[39] Mortgage Loans at Fair Value (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------- | :-------------- | :---------------- | | Mortgage loans, UPB | $7,868,480 | $9,450,137 | | Premiums paid on mortgage loans | $92,624 | $88,202 | | Fair value adjustment | $79,206 | $(21,802) | | Mortgage loans at fair value | $8,040,310 | $9,516,537 | - Mortgage loans at fair value decreased by approximately $1.48 billion from December 31, 2024, to June 30, 2025[40] NOTE 3 – DERIVATIVES Explains the company's use of derivative instruments for risk management and their fair values - The Company uses Interest Rate Lock Commitments (IRLCs) and Forward Loan Sale Commitments (FLSCs) to manage interest rate risk, with a blended average pullthrough rate of 77% as of June 30, 2025[41] Derivative Financial Instruments (in thousands) | Derivative Type | June 30, 2025 Fair Value (Assets) | June 30, 2025 Fair Value (Liabilities) | June 30, 2025 Notional Amount | December 31, 2024 Fair Value (Assets) | December 31, 2024 Fair Value (Liabilities) | December 31, 2024 Notional Amount | | :---------------- | :-------------------------------- | :----------------------------------- | :------------------------------ | :-------------------------------- | :----------------------------------- | :------------------------------ | | IRLCs | $54,747 | $1,562 | $9,568,158 | $6,729 | $33,685 | $7,669,392 | | FLSCs | $4,609 | $75,121 | $14,038,250 | $93,235 | $2,280 | $14,842,453 | | Total | $59,356 | $76,683 | | $99,964 | $35,965 | | - Derivative assets decreased from $99.96 million to $59.36 million, while derivative liabilities increased from $35.97 million to $76.68 million from December 31, 2024, to June 30, 2025[43] NOTE 4 – ACCOUNTS RECEIVABLE, NET Provides a breakdown and changes in various components of net accounts receivable Accounts Receivable, Net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Servicing fees | $159,678 | $159,282 | | Servicing advances | $121,633 | $148,953 | | Receivables from sales of servicing | $114,002 | $32,582 | | Margin deposits | $290,923 | $25,520 | | Total accounts receivable, net | $719,369 | $417,955 | - Total accounts receivable, net, increased by approximately $301.4 million from December 31, 2024, to June 30, 2025, primarily due to significant increases in margin deposits and receivables from sales of servicing[44] NOTE 5 – MORTGAGE SERVICING RIGHTS Details the valuation methodology and changes in the fair value of mortgage servicing rights - MSRs are measured at fair value using a valuation model incorporating estimates like prepayment speeds, discount rates, and servicing costs[45] Changes in MSR Assets (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Fair value, beginning of period | $3,321,457 | $3,191,803 | $3,969,881 | $4,026,136 | | Capitalization of MSRs | $901,271 | $682,671 | $1,636,842 | $1,218,622 | | MSR and excess servicing sales | $(684,105) | $(1,097,932) | $(1,694,230) | $(2,481,031) | | Changes in fair value (valuation inputs/assumptions) | $3,154 | $(38,222) | $(247,667) | $102,837 | | Changes in fair value (collection/realization) | $(96,582) | $(88,230) | $(219,631) | $(216,474) | | Fair value, end of period | $3,445,195 | $2,650,090 | $3,445,195 | $2,650,090 | - The fair value of MSRs decreased by $500.0 million for the six months ended June 30, 2025, primarily due to changes in valuation inputs and assumptions ($247.7 million decrease) and collection/realization of cash flows ($219.6 million decrease)[47][151] MSR Key Unobservable Inputs | Input | June 30, 2025 Range | June 30, 2025 Weighted Average | December 31, 2024 Range | December 31, 2024 Weighted Average | | :-------------------- | :------------------ | :----------------------------- | :-------------------- | :----------------------------- | | Discount rates | 7.9% — 16.0% | 10.2% | 9.3% — 16.0% | 10.9% | | Annual prepayment speeds | 4.7% — 20.3% | 9.0% | 4.6% — 20.9% | 8.3% | | Cost of servicing | $75 — $137 | $87 | $74 — $124 | $85 | NOTE 6 – WAREHOUSE AND OTHER SECURED LINES OF CREDIT Outlines the company's secured financing facilities, including outstanding balances and compliance Warehouse Lines of Credit (in thousands) | Facility Type | June 30, 2025 Advanced | December 31, 2024 Advanced | | :--------------------------- | :--------------------- | :----------------------- | | Master Repurchase Agreements | $6,998,603 | $8,394,830 | | Early Funding (EF) | $255,868 | $279,515 | | Total Warehouse Lines of Credit | $7,254,526 | $8,697,744 | - Total outstanding under warehouse lines of credit decreased by approximately $1.44 billion from December 31, 2024, to June 30, 2025[50] - The Company maintains a Conventional MSR Facility of up to $1.5 billion (combined with warehouse facility to $2.0 billion) and a Ginnie Mae MSR Facility of up to $500.0 million, with $325.0 million and $100.0 million outstanding, respectively, as of June 30, 2025[53][54][55] - The Company was in compliance with all covenants for its warehouse and MSR facilities as of June 30, 2025[52][54][55] NOTE 7 – OTHER BORROWINGS Details the company's senior unsecured notes and revolving credit facility Senior Notes Outstanding (in thousands) | Senior Note Type | Maturity Date | Interest Rate | June 30, 2025 Carrying Amount | December 31, 2024 Carrying Amount | | :--------------------------- | :------------ | :------------ | :------------------------------ | :-------------------------------- | | 2025 Senior notes | 11/15/2025 | 5.500% | $799,179 | $798,084 | | 2027 Senior notes | 06/15/2027 | 5.750% | $498,303 | $497,870 | | 2029 Senior notes | 04/15/2029 | 5.500% | $696,683 | $696,245 | | 2030 Senior notes | 02/01/2030 | 6.625% | $793,632 | $793,127 | | Total senior notes | | | $2,787,797 | $2,785,326 | | Weighted average interest rate | | 5.87% | | 5.87% | - The Company has $2.79 billion in senior unsecured notes outstanding across four series, with maturities ranging from 2025 to 2030 and a weighted average interest rate of 5.87%[57] - The Company maintains a $500.0 million unsecured Revolving Credit Facility with SFS Corp. as the lender, with no amounts outstanding as of June 30, 2025[65][66] NOTE 8 – COMMITMENTS AND CONTINGENCIES Describes the company's off-balance sheet commitments, legal proceedings, and potential liabilities Representations and Warranties Reserve Activity (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Balance, beginning of period | $93,401 | $68,222 | $87,647 | $62,865 | | Additions | $9,800 | $13,393 | $20,176 | $23,856 | | Loss realized, net of adjustments | $(4,260) | $(11,072) | $(8,882) | $(16,178) | | Balance, end of period | $98,941 | $70,543 | $98,941 | $70,543 | - The representations and warranties reserve increased to $98.9 million as of June 30, 2025, from $87.6 million at the beginning of the six-month period[68] - Commitments to originate loans totaled approximately $17.4 billion as of June 30, 2025, representing off-balance sheet credit risk[69] - The Company is routinely involved in legal and regulatory matters but does not believe any current matters will have a material adverse effect on its financial position[70] NOTE 9 - ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER Provides a breakdown of various current liabilities, including TRA liability and reserves Accounts Payable, Accrued Expenses and Other (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | TRA liability | $132,364 | $78,519 | | Servicing fees payable | $113,713 | $95,621 | | Representations and warranties reserve | $98,941 | $87,647 | | Accrued compensation and benefits | $97,494 | $90,964 | | Margin call payable | $935 | $66,551 | | Public and Private Warrants | $749 | $2,743 | | Total accounts payable, accrued expenses and other | $661,496 | $580,736 | - Total accounts payable, accrued expenses and other increased by $80.76 million from December 31, 2024, to June 30, 2025, primarily due to a significant increase in TRA liability and derivative settlements payable, partially offset by a decrease in margin call payable[71] NOTE 10 – VARIABLE INTEREST ENTITIES Explains the company's involvement with and consolidation of variable interest entities - The Company consolidates Holdings LLC as its primary beneficiary under the variable interest entity (VIE) model, with no recourse to the Company's general credit[72][73][74] - The Company sells mortgage loans through private label securitization trusts, retaining a 5% vertical interest to comply with risk retention requirements, which are measured at fair value as 'Investment securities at fair value, pledged'[76] - The Company is not the primary beneficiary of these securitization trusts and does not consolidate them, with maximum exposure to loss limited to the retained beneficial interests[77][78] NOTE 11 – NON-CONTROLLING INTEREST Details the ownership structure and changes in non-controlling interest in Holdings LLC Holdings LLC Ownership (Common Units) | Entity | June 30, 2025 Ownership Percentage | December 31, 2024 Ownership Percentage | | :--------------------------- | :----------------------------------- | :----------------------------------- | | UWM Holdings Corporation | 12.88% | 9.88% | | SFS Corp. | 87.12% | 90.12% | | Total | 100.00% | 100.00% | - The non-controlling interest represents SFS Corp.'s economic interest in Holdings LLC, which decreased from 90.12% to 87.12% due to Exchange Transactions where SFS Corp. exchanged Paired Interests for Class A common stock[79][80] NOTE 12 – REGULATORY NET WORTH REQUIREMENTS Outlines the company's compliance with minimum net worth, liquidity, and capital ratio regulations - UWM is subject to minimum net worth, liquidity, and capital ratio requirements by secondary market agencies and state regulators[81] - As of June 30, 2025, UWM was in compliance with the most restrictive requirements, including a minimum net worth of $660.0 million, minimum liquidity of $301.0 million, and minimum capital and risk-based capital ratios of 6%[82] NOTE 13 – FAIR VALUE MEASUREMENTS Explains the fair value hierarchy and measurement of financial instruments using observable and unobservable inputs - Fair value measurements are classified into a three-level hierarchy (Level 1, 2, 3) based on the observability of inputs[83][84][85] - Mortgage loans at fair value, FLSCs, and investment securities at fair value are primarily Level 2, while IRLCs and MSRs are classified as Level 3 due to significant unobservable inputs like pullthrough rates and prepayment speeds[88][89][90][91][92][94] Financial Instruments Measured at Fair Value (June 30, 2025, in thousands) | Description | Level 1 | Level 2 | Level 3 | Total | | :----------------------------------- | :------ | :-------- | :-------- | :---------- | | Assets: | | | | | | Mortgage loans at fair value | — | $8,040,310 | — | $8,040,310 | | IRLCs | — | — | $54,747 | $54,747 | | FLSCs | — | $4,609 | — | $4,609 | | Investment securities at fair value, pledged | — | $101,627 | — | $101,627 | | Mortgage servicing rights | — | — | $3,445,195 | $3,445,195 | | Total assets | — | $8,146,546 | $3,499,942 | $11,646,488 | | Liabilities: | | | | | | IRLCs | — | — | $1,562 | $1,562 | | FLSCs | — | $75,121 | — | $75,121 | | Public and Private Warrants | $744 | $5 | — | $749 | | Total liabilities | $744 | $75,126 | $1,562 | $77,432 | NOTE 14 – RELATED PARTY TRANSACTIONS Details transactions with related parties, including rent, legal fees, and other expenses Related Party Net Payments (in thousands) | Expense Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Rent and other occupancy related fees, net | $4,985 | $4,524 | $9,874 | $9,421 | | Legal fees | $150 | $150 | $300 | $300 | | Other expenses | $1,183 | $19 | $1,262 | $141 | | Total related party net payments | $6,318 | $4,693 | $11,436 | $9,862 | - Total related party net payments increased by $1.63 million for the three months ended June 30, 2025, and by $1.57 million for the six months ended June 30, 2025, compared to the same periods in 2024[99] - Related party transactions include leases for corporate campus, legal services from a director's firm, aircraft leases from the CEO's entities, employee lease agreements, and a UWM branded sponsorship agreement[101] NOTE 15 – INCOME TAXES Discusses effective tax rates and the impact of Exchange Transactions on deferred tax assets and liabilities Effective Tax Rates | Period | Effective Tax Rate | | :--------------------------- | :----------------- | | 3 Months Ended June 30, 2025 | 4.53% | | 3 Months Ended June 30, 2024 | 1.02% | | 6 Months Ended June 30, 2025 | 1.68% | | 6 Months Ended June 30, 2024 | 1.73% | - The effective tax rate for the three months ended June 30, 2025, increased to 4.53% from 1.02% in the prior year, primarily due to increased pre-tax income attributable to the Company and increased ownership in Holdings LLC from Exchange Transactions[102][103][158] - Exchange Transactions for the six months ended June 30, 2025, resulted in a $36.4 million net increase in deferred tax assets and a $50.9 million increase in TRA liability, recorded as adjustments to equity[104] NOTE 16 – STOCK-BASED COMPENSATION Reports on stock-based compensation expense and unvested awards, including RSU activity RSU Activity (Shares) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Unvested - beginning of period | 21,349,692 | 7,500,941 | 19,997,692 | 7,867,321 | | Granted | 6,668,086 | 1,251,997 | 8,813,662 | 2,450,342 | | Vested | (702,621) | (642,171) | (1,047,578) | (2,068,761) | | Forfeited | (596,135) | (227,236) | (1,044,754) | (365,371) | | Unvested - end of period | 26,719,022 | 7,883,531 | 26,719,022 | 7,883,531 | - Stock-based compensation expense was $11.6 million for the three months and $19.9 million for the six months ended June 30, 2025, significantly higher than the prior year periods[105][106] - As of June 30, 2025, $128.7 million of unrecognized compensation expense related to unvested awards is expected to be recognized over a weighted average period of 3.3 years[106] NOTE 17 – EARNINGS PER SHARE Explains the calculation of basic and diluted earnings per share using the two-class method - The Company applies the two-class method for EPS calculation, allocating undistributed earnings equally per share between Class A and Class B common stock[107] Earnings Per Share of Class A Common Stock | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to UWMC | $22,909 | $3,050 | $9,230 | $11,780 | | Basic EPS | $0.11 | $0.03 | $0.05 | $0.12 | | Diluted EPS | $0.11 | $0.03 | $0.03 | $0.12 | | Weighted average shares outstanding (Basic) | 202,133,122 | 95,387,609 | 183,221,635 | 94,876,800 | | Weighted average shares outstanding (Diluted) | 202,133,122 | 95,387,609 | 1,598,706,211 | 94,876,800 | - Diluted EPS for the six months ended June 30, 2025, was significantly impacted by the assumption of Class D common stock exchange for Class B and conversion to Class A common stock, making it dilutive[109] NOTE 18 – SUBSEQUENT EVENTS Reports significant events occurring after the reporting period, such as dividends and stock exchanges - Subsequent to June 30, 2025, the Board declared a cash dividend of $0.10 per share on Class A common stock, payable October 9, 2025, along with a proportional distribution to SFS Corp[111] - The Company acquired 12,600,000 Class A common units in Holdings LLC from SFS Corp. via Exchange Transactions, which were immediately converted into Class A common stock, as part of SFS Corp.'s 10b5-1 plan[112] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, condition, and operational results for the three and six months ended June 30, 2025 and 2024, including a business overview, detailed analysis of revenue and expense components, non-GAAP financial measures, liquidity, and capital resources Business Overview Provides an overview of the company's operations as a residential mortgage lender in the wholesale channel - UWM Holdings Corporation is the largest overall residential mortgage lender in the U.S. by closed loan volume, operating exclusively through the wholesale channel[114] - The company originates primarily conforming and government loans, with 91-92% sold to Fannie Mae, Freddie Mac, or Ginnie Mae pools, and the remainder including non-agency jumbo loans and non-qualified mortgage products[115] - Revenue is derived from loan origination, sale, and servicing, with MSRs typically retained but opportunistically sold based on market conditions[116] New Accounting Pronouncements Refers to Note 1 for details on recently issued accounting pronouncements and their expected impact - The company refers to Note 1 for details on recently issued accounting pronouncements and their expected impact[118] Components of Revenue Identifies the primary sources of revenue, including loan production, servicing, and interest income - Revenue is generated from three main components: loan production income (origination and sale), loan servicing income (contractual fees and ancillary revenue), and interest income (on mortgage loans at fair value)[119][120] Components of Operating Expenses Lists the various categories of operating expenses incurred by the company - Operating expenses include salaries, commissions and benefits, direct loan production costs, marketing, travel and entertainment, depreciation and amortization, servicing costs, general and administrative, interest expense, and other expense (income)[121] Three and Six Months Ended June 30, 2025 and 2024 Summary Summarizes key financial performance metrics for the three and six months ended June 30, 2025 and 2024 Summary Financial Performance (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Loan Originations | $39,700 | $33,600 | $72,100 | $61,300 | | Net Income | $314.5 | $76.3 | $67.5 | $256.8 | | Adjusted EBITDA | $195.7 | $133.1 | $253.5 | $234.6 | - Loan originations increased by 18.2% to $39.7 billion for the three months ended June 30, 2025, and by 17.7% to $72.1 billion for the six months ended June 30, 2025, compared to the prior year periods[122][124] - Net income for the three months ended June 30, 2025, surged by $238.2 million, while for the six months, it decreased by $189.4 million[122][124] Non-GAAP Financial Measures Presents and reconciles non-GAAP financial measures like Adjusted EBITDA for operational insights - Adjusted EBITDA is presented as a non-GAAP measure to provide insights into operating performance, excluding non-indicative items like non-funding debt interest, income taxes, depreciation, stock-based compensation, and fair value changes of MSRs and derivatives[125][126] Adjusted EBITDA Reconciliation (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $314,479 | $76,286 | $67,451 | $256,817 | | Interest expense on non-funding debt | $50,775 | $31,951 | $100,855 | $72,194 | | Provision for income taxes | $14,939 | $786 | $1,151 | $4,519 | | Depreciation and amortization | $12,200 | $11,404 | $23,540 | $22,744 | | Stock-based compensation expense | $11,729 | $3,937 | $20,039 | $9,813 | | Change in fair value of MSRs due to valuation inputs or assumptions | $(3,154) | $38,222 | $247,667 | $(102,837) | | Gain on other interest rate derivatives | $(208,904) | $(27,166) | $(208,904) | $(27,166) | | Adjusted EBITDA | $195,683 | $133,146 | $253,485 | $234,636 | Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024 Analyzes the company's financial performance for the three and six months ended June 30, 2025 and 2024 Loan production income Examines the components and drivers of income generated from loan originations and sales Loan Origination Volume by Type (in thousands) | Loan Type | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total purchase | $27,299,401 | $27,172,651 | $49,046,438 | $49,294,080 | | Total refinance | $12,445,113 | $6,456,342 | $23,049,852 | $11,965,448 | | Total loan origination volume | $39,744,514 | $33,628,993 | $72,096,290 | $61,259,528 | | Percentage of loans sold to GSEs/GNMA | 92% | 89% | 91% | 88% | | Servicing-retained | 94% | 92% | 93% | 91% | - Total loan origination volume increased by 18.2% for the three months and 17.7% for the six months ended June 30, 2025, primarily driven by higher refinance volume due to a generally lower market interest rate environment[132][136][138] Components of Loan Production Income (in thousands) | Component | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Primary loss | $(585,383) | $(423,728) | $(161,655) | 38.2% | | Loan origination fees | $141,795 | $111,560 | $30,235 | 27.1% | | Provision for representation and warranty obligations | $(9,801) | $(13,394) | $3,593 | (26.8)% | | Capitalization of MSRs | $901,271 | $682,671 | $218,600 | 32.0% | | Loan production income | $447,882 | $357,109 | $90,773 | 25.4% | | Gain margin | 1.13% | 1.06% | 0.07% | | - Loan production income increased by 25.4% for the three months and 14.7% for the six months ended June 30, 2025, primarily due to increased loan production volume and higher MSR capitalization[133][135][137] Loan servicing income and servicing costs Analyzes revenue and expenses associated with servicing the company's mortgage loan portfolio Loan Servicing Income and Costs (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :--------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Loan servicing income | $178,813 | $143,910 | $34,903 | 24.3% | | Servicing costs | $35,083 | $25,787 | $9,296 | 36.0% | | Average UPB of loans serviced | $204,422,940 | $217,681,122 | | | | Weighted average servicing fee as of period end | 0.35% | 0.29% | | | - Loan servicing income increased by 24.3% for the three months and 12.4% for the six months ended June 30, 2025, driven by an increase in the portfolio weighted average servicing fee due to better execution on new production[140][142] - Servicing costs increased by 36.0% for the three months and 16.8% for the six months ended June 30, 2025, primarily due to shortfall interest and costs associated with the upcoming transition to in-house servicing[141][143] Servicing Portfolio Metrics | Metric | June 30, 2025 | December 31, 2024 | | :--------------------------- | :-------------- | :---------------- | | UPB of loans serviced | $211,237,964 | $242,405,767 | | Number of loans serviced | 583,958 | 729,781 | | MSR portfolio delinquency count (60+ days) as % of total | 1.49% | 1.37% | | Weighted average service fee | 0.35% | 0.33% | Interest income and Interest expense Details the company's interest income and expense on funding facilities and debt Interest Income and Expense (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest income | $132,005 | $121,394 | $250,107 | $223,257 | | Interest expense on funding facilities | $82,692 | $76,700 | $153,022 | $135,125 | | Net interest income | $49,313 | $44,694 | $97,085 | $88,132 | | Interest expense on non-funding debt | $50,775 | $31,951 | $100,855 | $72,194 | | Total interest expense | $133,467 | $108,651 | $253,877 | $207,319 | - Net interest income increased by 10% for both the three and six months ended June 30, 2025, driven by higher interest income from increased mortgage loan balances, partially offset by higher interest expense on funding facilities[145][147] - Interest expense on non-funding debt increased significantly due to interest on the 2030 Senior Notes issued in December 2024 and higher average balances on MSR facilities[146][148] Other gains (losses) Reports on fair value changes in MSRs and gains or losses from other interest rate derivatives - The change in fair value of MSRs resulted in a decrease of $111.4 million for the three months and $500.0 million for the six months ended June 30, 2025, primarily due to changes in valuation inputs and realization of cash flows[149][151] - A gain on other interest rate derivatives of $208.9 million was recognized for both the three and six months ended June 30, 2025, from interest rate swap futures used to protect interest rate risk[153] Other costs Breaks down various operating costs, including salaries, direct loan production, and general administrative Other Costs (in thousands) | Component | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------- | | Salaries, commissions and benefits | $211,461 | $160,311 | $51,150 | 31.9% | | Direct loan production costs | $46,330 | $45,485 | $845 | 1.9% | | Marketing, travel, and entertainment | $26,379 | $24,438 | $1,941 | 7.9% | | General and administrative | $59,999 | $55,051 | $4,948 | 9.0% | | Other costs (Total) | $358,215 | $295,584 | $62,631 | 21.2% | - Other costs increased by 21.2% for the three months and 25.5% for the six months ended June 30, 2025, primarily due to a $51.2 million increase in salaries, commissions, and benefits from higher team member count and production volume[155][156] - General and administrative expenses rose due to increased computer services and software licensing, while marketing expenses increased from broker promotions and sponsorship fees[155][156] Income Taxes Discusses the provision for income taxes and factors influencing the effective tax rate - The provision for income taxes increased to $14.9 million for the three months ended June 30, 2025, from $0.8 million in the prior year, due to higher pre-tax income attributable to the Company and increased ownership in Holdings LLC[157][158] - For the six months ended June 30, 2025, the provision for income taxes decreased to $1.2 million from $4.5 million, primarily due to a decrease in pre-tax income attributable to the Company, partially offset by increased ownership in Holdings LLC[159] Net income Analyzes the company's net income and its attribution to UWM Holdings Corporation - Net income for the three months ended June 30, 2025, increased by 312.2% to $314.5 million, driven by higher total revenue and other gains, partially offset by increased expenses[160] - Net income attributable to UWM Holdings Corporation for the three months ended June 30, 2025, was $22.9 million, reflecting its approximate 13% ownership interest in Holdings LLC[161] - Net income for the six months ended June 30, 2025, decreased by 73.7% to $67.5 million, primarily due to increased other losses and total expenses, partially offset by higher total revenue[162] Liquidity and Capital Resources Discusses the company's sources and uses of funds, and its ability to meet financial obligations - Primary liquidity sources include borrowings under warehouse and other financing facilities, and cash flow from operations and investing activities (loan sales, origination fees, servicing income, MSR sales)[164] - Primary uses of funds include loan originations, MSR retention, payment of interest and operating expenses, and dividends/distributions[164] - The company believes current cash and liquidity sources are sufficient for operations and loan originations for the next twelve months, including the upcoming maturity of the 2025 Senior Notes[168] - Warehouse facilities are the primary short-term funding for mortgage loan originations, with loans typically financed at 97-98% of principal balance and held for less than one month[169] Cash Flow Data (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by (used in) operating activities | $328,022 | $(3,519,919) | | Net cash provided by investing activities | $1,556,333 | $2,343,887 | | Net cash (used in) provided by financing activities | $(1,901,710) | $1,358,717 | | Net (decrease) increase in cash and cash equivalents | $(17,355) | $182,685 | - The company's material cash requirements include interest and principal payments on Senior Notes, MSR Facilities, lease agreements, and tax distributions to SFS Corp[205][206][208] Notional Amounts of Commitments (in thousands) | Commitment Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :-------------- | :---------------- | | Interest rate lock commitments—fixed rate | $8,865,696 | $7,661,650 | | Interest rate lock commitments—variable rate | $702,462 | $7,742 | | Commitments to sell loans | $2,633,034 | $2,240,558 | | Forward commitments to sell mortgage-backed securities | $11,405,216 | $12,601,895 | Critical Accounting Estimates and Use of Significant Estimates Identifies key accounting estimates and confirms no material changes from prior reports - Critical accounting estimates include mortgage loans held at fair value and revenue recognition, mortgage servicing rights, derivative financial instruments, and representations and warranties reserve[216] - There were no significant changes to the company's critical accounting policies, methodologies, or processes from those described in the 2024 Annual Report on Form 10-K[216] Cautionary Note Regarding Forward-Looking Statements Highlights forward-looking statements and the inherent risks and uncertainties associated with them - The report contains forward-looking statements related to future financial performance, business strategies, loan originations, interest rate risks, hedging, tax impacts, and macroeconomic conditions[218][219] - These statements involve estimates and assumptions subject to risks and uncertainties, including dependence on macroeconomic conditions, financing facilities, ability to sell loans, regulatory changes, and competition[218][219] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks, specifically interest rate risk, credit risk, and counterparty risk, and outlines the strategies employed to manage these risks, including sensitivity analysis for interest rate changes - The company is subject to interest rate risk, credit risk, and counterparty risk, which can affect operations and profitability[221] - Interest rate risk impacts origination volume, MSR valuations, IRLCs, mortgage loans at fair value, and net interest margin. The origination business provides a natural hedge to servicing, and the company uses forward agency or Ginnie Mae TBA securities for hedging[222][223] Sensitivity Analysis: Estimated Change in Fair Value (June 30, 2025, in thousands) | Instrument | Down 25 bps | Up 25 bps | | :--------------------------- | :---------- | :-------- | | Mortgage loans at fair value | $33,336 | $(42,635) | | MSRs | $(213,637) | $192,683 | | IRLCs | $42,020 | $(55,830) | | Total change in assets | $(138,281) | $94,218 | | FLSCs | $(78,355) | $95,170 | | Total change in liabilities | $(78,355) | $95,170 | - Credit risk from borrower defaults is mitigated by stringent underwriting standards and strong fraud detection tools, with originated loans having a weighted average LTV of 81.97% and FICO of 735 as of June 30, 2025[228] - Counterparty risk is managed by selecting financially strong counterparties, diversifying risk, limiting credit exposures, and using master netting agreements with margin requirements[229][230] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, based on an evaluation by the Principal Executive Officer and Principal Financial Officer, and reports no material changes in internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[234] - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[235] PART II - OTHER INFORMATION This section provides information on legal proceedings, risk factors, and other disclosures Item 1. Legal Proceedings This section provides an update on the company's legal and regulatory matters, including ongoing consumer complaints, regulatory actions, and specific legal cases, while asserting that none are expected to have a material adverse effect on its financial position - The company is routinely involved in consumer complaints, regulatory actions, and legal proceedings in its heavily regulated industry[237] - The Okavage Group, LLC class action complaint was dismissed without prejudice, and the appeal was affirmed by the United States Court of Appeals for the Eleventh Circuit on May 28, 2025[239] - In the America's Moneyline, Inc. case, the court granted UWM's motion for partial summary judgment on July 1, 2025[240] - New complaints include the 401k Complaint (alleging misuse of plan forfeitures) and the AMC Complaint (alleging unlawful appraisal fees), with UWM filing motions to dismiss or demurrers[241][243] - A new Website Complaint was filed on June 26, 2025, alleging damages related to tracking technologies on UWM's website, which UWM intends to vigorously defend[244] Item 1A. Risk Factors This section states that there have been no material changes to the company's risk factors since its 2024 Annual Report on Form 10-K and the quarterly period ended March 31, 2025 - No material changes to the Company's Risk Factors have occurred since the 2024 Annual Report on Form 10-K and the Form 10-Q for the quarterly period ended March 31, 2025[245] Item 5. Other Information This section reports that no officers or directors adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No officers or directors adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[246] Item 6. Exhibits and Financial Statement Schedules This section lists the exhibits filed with the Form 10-Q, including certifications, the Executive Officer Clawback Policy, and XBRL-related documents - Exhibits include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), the UWM Holdings Corporation Executive Officer Clawback Policy (97), and various XBRL taxonomy extension documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104.0)[247] SIGNATURES Confirms the official signing and submission of the report by the authorized financial officer - The report was signed on behalf of UWM Holdings Corporation by Rami Hasani, Executive Vice President, Chief Financial Officer, on August 7, 2025[250][251]