UWM CEO Mat Ishbia sees ‘bumpy’ year leading to growth down the road
Breana NoblePontiac — Mat Ishbia, CEO of Pontiac-based United Wholesale Mortgage Holdings Corp., said Thursday the rest of 2023 will be "bumpy" in the mortgage industry, commenting hours after the Federal Reserve increased interest rates for a 10th consecutive time.
But Ishbia struck a positive tone for farther ahead: "This year is the work year, the grind year. Next year and '25 and '26 are going to be off the charts."
"Be prepared" was his message to the more than 6,000 brokers and real estate agents who descended upon the company's sports complex adjacent to its headquarters on South Boulevard East for the second annual "UWM Live!" event — the lender's Super Bowl to encourage and educate its partners in the industry. Ishbia forecasted interest rates will decline by 2025 as the Fed signaled it's hitting pause on future hikes, and he wants brokers to capture the refinancing activity that would follow by ensuring they have the infrastructure to handle the demand.
UWM originates mortgages exclusively through independent brokers who compare loans and rates across multiple lenders for homebuyers and owners. Citing U.S. Department of Housing and Urban Development data, Ishbia says on average households can save $9,400 by using a broker. He's predicted brokers will represent 33% of mortgage originations by 2026, up from roughly 20% now.
UWM in 2022 recorded a $62.5 million net loss in the fourth quarter of 2022, its first since going public, resulting in a 41% decline year-over-year in net income to $932 million for last year. The lender will report first-quarter results for 2023 on Wednesday, but Ishbia described today's market as "more normalized" with new-home purchases representing a large majority of the market compared to the "not normal" refinancing boom in 2021 when UWM posted record results. The best mortgage companies prove themselves now, Ishbia said.
"It's the best time, because you know what people need? They need an expert," he said. "I'm excited about the market. And so my mindset is this the best market there can be for a loan officer. This is the best market it can be a real estate agent. I know everyone else is saying it's crazy. I'm saying it's time to win."
David Hall, CEO of Troy's Hall Financial brokerage who formerly was chief innovation officer of UWM's predecessor United Shore, described 2021 as the easiest and 2022 as the hardest years in his 27 years in the business.
"The last couple of months we've started to see a little pickup in business from like the last six or seven months that were really hard, so our best month of this year was April, and May is going to be even better," he said. "Now people are used to this sort of 5-7% interest rate. More people are considering doing a refinance, maybe if they need to take some cash out. Certainly the spring buying season is key in that, as well. We have more pre-approvals, buyers in our pipeline than we've ever had. There's just not enough inventory right now."
Ishbia said UWM will be there to help brokers support the scale to come, though he shrugged at the possibility of mergers or acquisitions as some lenders like Ann Arbor-based Home Point Capital Inc. pull out of the business.
"I'm so big on our culture here, so big on family-style, it's hard to have anyone that's not in our four walls," Ishbia said. "They all bring them to us. I look at everything, but I'm not going to do that right now. We have the business model that everyone wants. I don't need to go get someone else's business model and add it to mine."
Steven Guagliano, owner, broker and real estate agent at Family Realty Group in Sandy Hook, Connecticut, said he uses UWM because it often has the best pricing for his clients in this competitive market.
"It's not going to be a soft landing," he said. "The high rates, economy, job security. ... We grind. We work" to be successful.
Ishbia spoke to reporters in a media roundtable during which they were told not to ask him about UWM's rivalry with Rocket Mortgage or a recent report in Bloomberg that described a hostile culture of harassment and drug use by UWM employees on the job.
"You can't ask me something," Ishbia said during the roundtable, "that I won't answer the real way."
He said his goal at the live event was to sell authenticity as the lender seeks to grow the wholesale channel, which represents 20% of the country's mortgages, which are originated through brokers who find the best loans and interest rates for homebuyers and owners from multiple lenders.
Between presentations from brokers providing advice and promoting UWM products and a session with life coach Tony Robbins, he took the large stage on the complex's indoor soccer field fashioned with blue and green lighting and an animated backdrop to a standing ovation. The crowd joined in chants led by Mateen Cleaves, former Michigan State University basketball and NBA player, UWM leadership coach and emcee for the event.
"If you're trying to win," Cleeves said with attendees responding, "Tap in!" followed by two claps.
Ishbia's hour-long presentation focused on "seven secrets to dominate your business" that emphasized not diversifying business to instead become an expert in one field and practicing good time management. Recommendations from the billionaire whose net worth Forbes places at $6.9 billion included getting six hours of sleep instead of eight or hiring someone to do your laundry or set up appointments.
"I realized that I got in the office in a suit and tie at 4 a.m. every day, and they got in at 7," Ishbia said, referring to competitors, "that is three hours a day, 15 hours a week, 60 hours a month, 720 hours a year that I can outwork these people. I used to think (JPMorgan Chase Bank N.A. CEO) Jamie Dimon wasn't seven or 20 hours smarter than me, but he's a lot smarter."
Ishbia didn't hesitate to toss insults out of humor, calling from the stage a broker who'd raised her hand to indicate that she didn't expect interest rates to fall by 2025 "stupid." He later said they got a photo after the presentation.
In an anecdote about disagreeing with a friend over the timing he should put in an offer on a home, Ishbia said regarding his unnamed friend's wife, "I don't like her."
Referencing Rocket Mortgage founder Dan Gilbert, Ishbia said, "I don't like him either."
When asked about his rhetoric, Ishbia said about the brokers in attendance, "They're all fans of UWM and what we do, because I'm authentic, I am who I am, and at the same time, we deliver for them. I can be much more buttoned up and not say certain things, but that's not authentic. And also that doesn't resonate with my audience.
"I speak to investors, and people on Wall Street. I have a little different perspective. When I speak as a Phoenix Suns owner, there's a different perspective. When I speak to my brokers, they like the candid, genuine authentic Mat Ishbia, which is what we've been, and so that will always be me."
Look at the results: Ishbia was the 12th employee hired at the lending side hustle founded by his lawyer father. In the second half of 2022, his company was the largest originator of mortgages in the country. Its stock is up 45% in the past six months to $5.75 per share.
Industry publication Inside Mortgage Finance forecasts that last month UWM closed $21.75 billion in loans in the first quarter of 2023, which would be a 44% decrease from a year ago. That'd be ahead of Rocket, which said Thursday it originated $17 billion in mortgages in the first three months, but less than the $22.8 billion loan volume reported by California's PennyMac Financial Service Inc. in the first three months of the year. That, though, includes PennyMac's correspondents channel, which are loans it purchased from another lender that originated the mortgage.
"They're not" No. 1, Ishbia said about PennyMac. "You can't originate the same loan twice."
Before reporting quarterly earnings, Ishbia said he'll head to Phoenix, where he owns the Suns NBA franchise for second-round playoff games Friday and Sunday against the Denver Nuggets. The Suns, Vegas' favored from the Western Conference despite being the No. 4 seed, lost the first two games against the top-seed Nuggets.
"The way it works in the playoffs is you have to win your home games," Ishbia said. "The other team did their job. They're the higher seed. They won their first two home games. We have to come back and win our home games. So, we actually have Chris (Paul), who got hurt, which makes it harder for us to win. But I love our guys. I love our team. I know we're focused."
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