Good morning. My name is Aaron, and I'll be your conference operator for today. At this time, I'd like to welcome everyone to the UWM Holdings Corporation Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Blake Kolo, you may begin your conference. Thank you.

Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the Third Quarter 2025 UWM Holdings Corporation's Earnings Call. Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning. Our commentary today will also include non-GAAP financial measures. For information on our non-GAAP metrics and the reconciliation between the GAAP and non-GAAP metrics for the reported results, please refer to the earnings release issued earlier today as well as our filings with the SEC. I will now turn the call over to Mat Ishbia, Chairman, President and CEO of UWM Holdings Corporation and United Wholesale Mortgage.

Thanks, Blake, and thank you, everyone, for joining. Over the past 3-plus years, we've successfully navigated a higher rate environment with a focus on taking market share, showcasing that we are uniquely capable of both dominating purchase business and investing for the future. While most other lenders scaled back, we invested in our people, our technology and the broker channel, which are all operating at all-time high levels. We've been prepared for a rate reality for years. And the third quarter gave us a little bit of a glimpse of what it would look like, and we delivered on everything we said we would. To give you a more tangible example, showcasing our capabilities, one day in September, we had an all-time record lock day. We locked $4.8 billion, yes, $4.8 billion of locks in 1 day. We handled it all in 1 day along with submissions that followed seamlessly. Now that was only a 3-, 4-, 5-day window of opportunity, and we took advantage of it by handling all the volume all the way through our organization from setup to submission to underwriting to closing to client service priorities and all went pretty close to flawless. We maintained turn times, SLAs, world-class Net Promoter Scores and our submission to critical close times actually got even faster from 12 days to 11 days, which are like record-breaking numbers. It was phenomenal to see across the board the execution because we have been preparing for years when you actually have to do it and execute, you never know how it's going to go, and it went amazing. The investments we have made in technology will continue to solidify our competitive advantage and the gap between UWM and our competitors continues to widen. Back in May at UWM LIVE!, we made headlines…

Thank you, Mat. Q3 was a strong quarter for us. We reported net income of $12.1 million and adjusted EBITDA of $211.1 million, up from both Q2 and Q1 of this year. Loan production volume of $41.7 billion, also up from Q2 and Q1 and gain margin of 130 basis points, again, up from Q2 and Q1. Operationally, our business continues to deliver. We also continue to maintain a healthy MSR portfolio with net servicing income of $135.1 million. As we've said before, to support our growth, we continue to invest in our people, processes and innovative technologies to prepare us and our broker partners for long-term growth. We remain on strategy with our investments, including our investments to bring servicing in-house to be prepared for significant market opportunities for us and our broker partners going forward. We previously said that our business is positioned to handle twice the volume without interruptions or adding significant staffing or fixed costs. In Q3, we demonstrated that as there were several periods throughout the quarter where production more than doubled and it was seamless. From a liquidity perspective, we recently completed a successful offering of $1 billion in unsecured notes. With the proceeds received, we plan to pay off $800 million unsecured notes maturing in mid-November, and we'll utilize the remainder to support our growth. We remain well capitalized with total equity of $1.5 billion and continue to be in a strong liquidity position with total available liquidity of $3 billion and $2.2 billion after paying off the bonds maturing in mid-November. While our liquidity and leverage ratios are slightly higher as of the end of Q3, it was the result of the timing of our bond issuance in September and our proactive liability management with the use of proceeds prior to mid-November maturity. Net of available cash, our leverage ratio as of the end of Q3 remained largely consistent with the prior quarter. Going forward, we expect to continue to maintain our capital, liquidity and leverage ratios within what we believe to be acceptable ranges in the current market conditions. In summary, Q3 was a great quarter with strong production and even stronger gain margin performance, levels we haven't seen in a while. We continue to invest in our people and technologies to be the most prepared mortgage company in the country. We're also prepared from a capital and liquidity perspective and believe that we are well positioned for Q4, 2026 and beyond. I will now turn things back over to our Chairman, President and CEO, Mat Ishbia, for closing remarks.

Thanks, Rami. I'll close with a few points before our Q&A. Our work to bring servicing in-house is on track for the first quarter of 2026. This will have a positive financial impact on our business, and we're excited to bring our world-class approach to the servicing world. This will no doubt strengthen the consumer loyalty to their brokers. It was great to share more details on our partnership with Bilt will deliver best service experience in the history of mortgage, plus a tremendous amount of exclusive benefits for our brokers, including 400,000 to 500,000 leads Bilt renters that convert to purchase every single year exclusively to our mortgage brokers. We're also excited about the mortgage matchup center sponsorship out in Phoenix. We've seen a significant spike in both traffic and success through the mortgagematchup.com website since launching this. So very excited about all those things. Now I don't normally do this because I know you guys are going to ask me a bunch of questions. But before I move to guidance, I'll ask you a question. When rates drop, what mortgage company do you believe is most prepared to handle it with AI, with operational capacity, not with buzzwords, but with actual technology, process and preparation that's already been proven. The 10-year dipped to 4%, and you saw what we did. I've been saying this for years, when the 10-year dips to 3.75%, we're going to double our business. No other lender can do that. Even if they could, were they going to go from $4 billion to $8 billion? Like we're going to go from $30 billion to $40 billion a quarter to $60 billion to $80 billion in a quarter, right, with margin expansion. That's how UWM works. I hope you feel good about what lies ahead for UWM because I do. All right. Now turning to guidance. I expect the fourth quarter production to be between $43 billion and $50 billion of production. And we're going to raise our levels on the gain margin to 105% to 130%, moving it up 1 level. And honestly, if we get another dip like we just saw, those numbers could be even higher. But overall, excited about what UWM is doing. We're going to continue to dominate. Thank you for your time today. Let's flip it over to the Q&A.

[Operator Instructions] And our first question for today comes from the line of Terry Ma with Barclays.

I just wanted to follow up on the effort to bring servicing in-house and specifically with the Bilt partnership. Maybe just talk about what you're seeking to accomplish with that partnership, how widespread the adoption could be? And then like ultimately, like who's going to fund the rewards issued from the Bilt card?

Yes. Thanks for the question. So it's got nothing to do with the Bilt card. So it's every mortgage payment that goes through UWM we are letting them be the front-end servicing app, if you think of it that way, the technology on the front end. The real benefit for us at UWM is, one, we're going to be better than every other servicer out there because we're better than everyone at everything we do and servicing is a joke in our industry. And so we're going to make it really great for the client. So when people call, we're going to actually answer the phone, not 43-minute waiting periods like everybody else does. So we'll be great on servicing from a service perspective for the consumers, so consumers will love it, and then they'll get rewards for making their mortgage payment, which is something that's never been done before. And then obviously, the front-end technology to your point about built will be fantastic. On top of that, as I mentioned, built has 5 million people making their rental payments to they're about 10% go and buy houses every year. Right now, they just leave Bilt and go buy house. Now they're going to have a way to make a mortgage payment through Bilt by working with a mortgage broker. So those turn into great leads and opportunities exclusive to our mortgage brokers. And so it's a win-win-win. Bilt is a great company. They do good things, but UWM and our servicing process is going to be the best-in-class. That's how we do things. And so we're excited about that.

Got it. Just to follow up on the rewards piece. Like will that show up on expenses anywhere on your P&L?

P&L? No. That's a silly question, but no, it's not funded by UWM. There's no expense for it at all. This is all upside.

Okay. Great. And then maybe just a follow-up on me. I appreciate the stats. I think you mentioned 14,000 loans off 400,000 outbound calls. Like any room for improvement as we kind of go forward and you continue to kind of use it?

Everything we do has room for improvement. So yes, Mia has been fantastic. It's been better than we expected. The answer rates are higher. The response has been better. But every day that goes by, she gets better. And every day that goes by, our brokers get more and more comfortable, consumers get more and more comfortable with the AI agents reaching out and it's not a human. Like every day, it's getting better and better, and it's only going to be more and more loans. And so 14,000 was a really big number, surprisingly big number for us, but that's also the market we had that little couple of week blip where the market got really good, and we took advantage of that. But no, Mia has been fantastic. And we spend all of our time and investments internally on AI and investments around AI. Once again, it's not a buzzword for us, it's actually producing business. And so Mia has been great. And so I appreciate that question because she's been better than we expected.

Our next question is from the line of Eric Hagen with BTIG.

Good quarter. On the guidance for the gain on sale margin, is that a function of lower rates? Or is there another variable or condition in the market, which is supporting that? And how do you feel like the margin compares on refis versus purchased loans at this point?

Yes. So the margin on purchase and refis are -- there's no difference. It's not a different thing. The opportunity is if rates drop a little bit as rates get lower, more volume comes in the market. And anyone that's a good mortgage loan officer or knows how to do business knows that rates are not what drives business because if that was the case, then there will be no retail business because everyone in retail charges 400 basis point gain on sale, takes advantage of consumers, does the wrong thing. If rates really matter, then there would be no retail channel. Since there is 70% of the market goes through retail, rates are not the biggest thing. So margin being up 105%, 130% in that range, that just -- for years, we were at the low end. I always told you different levels, 75 to 100 was the lower. And I keep -- I've kept moving it up strategically and timely, and I control that. Nobody else does. And so that's what's happening, and that's what it will be in that range again this month. And like I said, on the volume and margin guidance is accurate as it was last. But if I get a 2-week blip, we are unable to take advantage of it and margins go up and volume goes up and we crush it, just like we did this quarter, although I don't know if you guys recognize it, but it was a dominant quarter.

Yes, we recognize it was good stuff. Good color from you as always. I mean the origination numbers look really strong, but what was the driver of the conventional purchase loans being down a little bit quarter-over-quarter? And how much upside do you think there is to the purchase numbers if rates fall? I think you mentioned 3.75% on the 10-year. I mean if that's the level, what is the upside to the purchase segment?

The purchase business is -- the best part about our business, and you understand it pretty well, Eric, is that we're consistently dominant on the purchase. We do $25 billion a quarter, maybe $22 billion, maybe $27 billion. But basically, we're $95 billion to $105 billion of purchase every year. Rates go down to 4%, let's just play that out, just use an example, crazy not to 10-year, just the real rates. Yes, purchases will go up maybe 20% to 30%. It's not like a crazy difference. The real difference is the refi. Purchases are steady, consistent always. And that's why nobody else has that. That's why everyone else is sitting here waiting and they've been dying for the last 4 years, and we've been consistent with purchase. So the real upside is in the refi business that will go up like we saw it can double or triple in a week or a day. And so the purchase business, especially in fourth quarter, first quarter, purchase business, as you know, is that's not the purchase season. Purchase season is second and third quarter in really the summer because that's when people are moving and all that stuff. And so it will be steady. It will be consistent. Yes, there's plus 25%, maybe plus 30%, maybe plus 40% volume on purchase with lower rates because maybe some more people sell their houses and you can get all that stuff, affordability gets better, but people got to go out and buy houses still. So I'm not that focused on -- we will dominate the purchase market no matter what happens and then the refi is where the upside comes in.

Our next question is from the line of Bose George with KBW.

Can you talk about the volume and margin trends that you've seen so far in October, is that kind of at the midpoint of the guidance range?

Yes. I guided for -- to where I did for a reason. October was a great month and the volume and margins are aligned. Now November is a 19 business day month. And if you take out the Wednesday and Friday after Thanksgiving and before it's really a 17 business day month. So it's a really short month. So this quarter is actually a short quarter tied to the end of the year stuff. But I've just guided that no matter what, I'm going to have the best quarter we've had in 4 years. Maybe you guys will recognize that and realize that we're dominating out here. But either way, $43 billion to $50 billion is very good. It's never been done in 4 years at UWM. The margins are guided to those same places that I just did. And so we will not miss guidance just as I never have, I think, as long as I've been doing this.

Okay. Great. And then actually, on the servicing side, you noted that you'll be bringing it in-house early '26. Does that happen? And is it staggered? Does it come in over time? Or -- how is that going to work?

Yes. All new loans that close in 2026 will be -- will stay here, so we won't subservice those out to your point, to your question. And then the loans that are currently subserviced out at Cenlar over the year, we'll transition them here. So by the end of 2026, there won't be loans anywhere else outside of default loans and different things that we make decisions on. But for the most part, everything will be here internally, whether I move a big chunk of them in March or April, another chunk in September, October, but all new originations are coming in 2026. And by the end of 2026, 100% of the servicing book will be internal, like I said, outside of the loans that I've chosen to not come in town or come in-house.

Our next question is from the line of Doug Harter with UBS.

Mat, as we think about your ability to ramp up volumes, how -- you've talked about the scale of the business. How should we think about like what are the incremental costs that -- for funding that new volume and just how to think about the operating leverage that's in the business?

Yes. The operating leverage in the business is substantial right now. So there's -- the cost -- you guys look at cost all the time. A lot of them are investments. You look at how do we invest in technology, how do I continue to invest in everything that we do, the broker channel, all the different pieces to it. But where we're at right now, I don't need to add costs to do -- double my business. I've said that before. And so therefore, you can kind of think of the cost. Like obviously, when you do more volume, there's more commissions that get paid out and there's things like that, but that's a variable cost. From a fixed perspective, I feel really good about where we are right now. And I'd expect over the next year that to stay the same or stay in that range, plus or minus 10% and probably be on the lower end of the minus 10% is how I think about it based on just the AI initiatives and things that we've done. But at the same time, if there's an opportunity to make an investment to build the business and dominate, we will do that without question, without thought. And so the investments we make will continue. But the expenses like if you're looking like fixed costs, like how much more, we don't need anything to do the volumes I just told you guys. We don't need anything.

And then speaking of investment, can you just remind us on the bringing the servicing in-house? I guess, have those investments already started? So like are those costs kind of already in your cost base? And just how to think about kind of the cost side as servicing comes in-house?

Yes. Those costs -- so I'm getting double hit on it, right, because I'm paying subservicers and I'm also building out a servicing portfolio and servicing people, hiring people to build out the way I want to do it. I told you guys really I'd say between $40 million and $100 million. I think I guess said $60 million to $100 million, probably closer to the high end of these ranges I'm giving you, let's call it $40 million to $100 million to bring servicing in-house, and those numbers are accurate. You won't see that all the way through the income until 2027, right? Because this year is the worst because I'm double dipping, I'm hiring people, building it out, and I'm still subservicing. Next year is a combo of it. In 2027, I'll have all the savings baked into our business, along with the leads, along with the growth, along with the success, along with better retention and all the things that come from it. So yes, so you're correct. There's -- those costs are already in there. And same thing with the technology investments right now, building out some of those things from the AI perspective to make servicing, like I said, the best in the country. I'm not trying to be like all these other guys.

Our next question is from the line of Jeff Adelson with Morgan Stanley.

Mat, just maybe a quick reminder of the hedging. I think this quarter, the hedge gain against the MSR loss was a little bit smaller than we saw last quarter. Just maybe give us a quick update on the hedging strategy. I know you've been a little bit more opportunistic there.

Yes. No, I appreciate it. We don't hedge our MSRs as you're hopefully aware of. I do look at opportunities and look at interest rates and make decisions. Sometimes we do more of it, sometimes we do less of it. This quarter, we focused less on it because we focused on just the dominating the business. Obviously, the 10-year goes up and down, MBS rates go up and down and how it finishes, depending on how it started, it ties to an MSR loss. Anyone, and I know it's you guys because I love all of you guys, but anyone that f****** focuses on MSRs and the fair value just doesn't understand mortgages, doesn't understand this business. It's got 0 to do with what I'm doing, the operating of the business. The 10-year can literally be at 3.75% for this whole quarter. Let's say if it drops to 3.75% today, I'm go to crush it, just crush it across the board. I'll call you next quarter. I'll say, $60 billion, $70 billion, 135 basis points of margin, we'll crush it. But on December 31, the 10-year goes back up to 4.40%, just to use some crazy number, and I'll have an MSR write-up of another $400 million also. That has 0 to do with my business. And the inverse is accurate, too. So the MSR value stuff means nothing. I don't focus on it. I don't care about it. I'm not going to care about it because it's like why would I focus on since I have 0 control over, 0. you can hedge it, Mat, we'll hedge it. That -- once again, MSR value, I'd be putting costs out there to hedge something that I have 0 control over. I don't care about the MSR values. If you guys write about the MSR values, you don't understand my business. It just doesn't matter. It matters 0. So just like, by the way, and you can go back and listen to the record I told you the same stuff when my -- I got an MSR write-up of $500 million. I'm like, don't give me credit for that. I didn't do anything for that. That means 0. Watch my core business. watch what I do with my production, my gain on sale, my expenses and how we dominate in there. And our adjusted EBITDA of $200-plus million, like that's how you run a business. That's all we focus on. I don't focus on other stuff. I know other people like to talk about it because they just don't understand our business.

And then just in terms of Mia, it was good to hear the color on the success so far there. Just as I sort of think about that 14,000 transactions closed, do you think about that as mostly refi at this point? And some really rough math, if I sort of think about an average loan size here would suggest there was somewhere in the ballpark of maybe like 10% of your originations this quarter. And if most of it was refi, that would be quite a bit of refi as well. So is that right? Or how should we be thinking about those numbers and the path from here?

Yes. And to be clear, and maybe I should have done a better job of stating it, the 14,000 probably includes loans that have closed in the beginning of October because I think I pulled the data like 2 weeks ago. So it's probably a little runoff. So it's not all 14,000 in the first quarter -- in the second quarter -- excuse me, third quarter. And also was probably a little bit in the second quarter. So it's not like pure, but we really saw a massive pickup in that September little blip that we just talked about. So a lot of that stuff closed in September and a little bit rolled in October. With that being said, I would assume that it's all refinanced. 95% is refi. Yes, there are some that Mia called and they're like, "Oh, I'm looking to buy a house or I want a second home." But the focus on the 400,000-plus calls were rate watch calls, which basically means, hey, you might be in the market for a refinance. You should be in the market for refinance. I've got good news, you're LO at this company. And so maybe at some point, we'll play the call. If you call our Investor Relations team, they'll let you hear a call, like the real live calls and people like, yes, I have Johnny call me, and then that turns into an import, which turns into a loan, which turns into a closing. And so I would say 95% refi in the data I just gave you on the 14,000, but I won't try to put it in the third quarter number because it's not all in the third quarter. I would say a good amount of it was in the third quarter, but some of it trickled into the fourth quarter, and we'll have more in the fourth quarter. We already have some since I pulled that data.

So a pretty good number though, but appreciate the color, Mat...

[Operator Instructions] Our next question is from the line of Mikhail Goberman with Citizens.

Just a quick question about -- a big picture question about technology and how it's affecting the industry, especially with respect to refi, there's been a lot of talk about the sort of traditional 75 basis point incentive for refis really contracting to much lower level going forward, maybe even as low as 25, 30. Could you talk about that and how technology and specifically AI is affecting that?

Yes. Just to clarify your question, so I understand so I can give you the right answer. You're saying that people are more likely to refinance because it's easier these days. They used to think you have to save more money. Now they're willing to do it quicker. Is that what you're asking?

Correct. Yes. Given that sort of the human element has always been the choke point in the refi experience and technology just collapsing that into a faster process.

Yes. I mean I see that. And I guess your point is will there be -- since there's less cost, less friction and it's easier to refinance because of -- will there be more refinances. And I guess I would say, yes, I see the opportunities there. But you're also assuming that all lenders are actually good at it. You're also assuming that other lenders actually have technology. The friction is still a pain in the butt for -- I mean, I think I said 11 days [ sub the CTC ], and I've refis even faster than that. The industry average are still 40 days. There's still a lot of friction. People are still literally -- you get a mortgage with some of these retail lenders or some of these other lenders, you're literally going and printing out your 12 months bank statement, going and get your pay stubs, calling your tax people and getting your tax returns and setting them up, like it's a complete joke still. So don't get confused that just because we're dominating and doing these things and that a couple of other companies are focused on AI. A lot of AI is buzzwords and bulls*** right now. The truth is we're closing like why don't you check their data, see who is actually pulling the friction out. But you are correct. When you make it faster, easier and cheaper, people are willing to do it because like I was not a pain in the butt to refinance. I'll take $92 of savings. I don't need to wait for $200 of savings. In the old days, it was like, let me wait until $200 because it's not worth my time. I don't want to go get my pay stubs and go to Kinko's and fax,…

Ladies and gentlemen, that will conclude our Q&A portion for today. I would like to turn the call back over to Mat Ishbia for any closing comments.

Yes. Thanks for the time today, guys. Appreciate you guys. Have a good day.

Thank you. And ladies and gentlemen, that will conclude today's conference. Thanks for attending. We'll see you next time.