United Wholesale Mortgage (UWM) ended 2023 as the top U.S. mortgage company, with more than $108 billion in home loans produced in the period, a record purchase volume and increased margins. It was not enough to make its parent company UWM Holdings Corp. financially profitable, which the company attributed to mortgage servicing rights markdowns. 

The Pontiac, Michigan-based lender announced a non-GAAP adjusted net loss of $57.1 million in 2023, compared to a profit of $719.4 million in the previous year. The GAAP net loss in 2023 was $69.7 million, inclusive of a $854.1 million decline in fair value of MSRs, per documents filed with the Securities and Exchange Commission (SEC) on Wednesday. 

In the last quarter of the year, the adjusted net loss was $361 million, compared to a gain of $234.7 million in the previous quarter. The GAAP net loss was $460.9 million, including a $634.4 million decline in fair value of MSRs. 

“We continue to be operationally profitable, the true measure of a mortgage originator’s health, while our financial loss was driven by the MSR markdown which is a result of interest rate movements,” Mat Ishbia, chairman and CEO, said in a statement. 

In a surging mortgage rate environment, UWM originated $108.3 billion in mortgage loans in 2023, lower than the $127.3 billion reported in 2022. It exceeded the company’s primary rival Rocket Mortgage, which generated $78.7 billion in closed loan volume last year, down from $133.1 billion in the previous year. 

In the last three months of the year, UWM originated $24.4 billion in home loans, compared to $29.7 billion in Q3 2023 and $25.1 billion in Q4 2022. 

Most of UWM’s volume was purchase loans, representing $93.8 billion in 2023, including $20.6 billion in the last quarter. The year’s volume is higher than the $90.8 billion produced in 2022.

The company’s total gain-on-sale margins increased to 92 basis points in 2023, compared to 77 bps in 2022. Margins were close to the 99 bps level before the launch of the Game-on pricing initiative in June last year.

UWM’s servicing portfolio ended the fourth quarter of 2023 at $299.4 billion in unpaid principal balance (UPB), compared to $312.4 billion in the same quarter of 2022. The portfolio increased compared to the third quarter of 2023, when it was at $281.4 billion.

UWM ended the year with $2.2 billion of available liquidity, including $497.5 million in cash. 

The company anticipates first-quarter production to be between $22 billion and $28 billion. Meanwhile, the gain margin is expected to be between 80 bps and 105 bps.

UWM shares were trading at $6.43 on Wednesday morning, down 5.81% from the previous closing.

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