UWM posts Q1 profit, Ishbia slams Two Harbors board in M&A battle

United Wholesale Mortgage (UWM) saw its origination engine cool in the first quarter compared to the previous three months, but the lender held the line on margins and remained profitable. Meanwhile, on the servicing strategy, UWM is steadily pulling more of its portfolio in-house as it battles CrossCountry Mortgage to acquire Two Harbors Investment Corp.

UWM closed $44.9 billion in mortgages in the first quarter, up 38.5% from the same period last year but 9.5% lower than the prior quarter.

Despite the dip in quarter-over-quarter volume, the company’s bottom line improved. Net income reached $170.4 million in the first quarter, up from a loss of $247 million in the same period last year and a profit of $164.5 million in the prior quarter, according to Securities and Exchange Commission (SEC) filings released Wednesday.

Revenue came in at $901 million, down from $945 million in the fourth quarter but well above the company’s guidance of $650 million to $850 million for the period.

In a statement, UWM Chairman and CEO Mat Ishbia said the quarter was the second-best of all time for the company. “The last time we delivered results of this magnitude, interest rates were nearly 50% lower,” he added.

The battle for Two Harbors 

In a 40-minute video answering questions previously submitted by analysts, Ishbia said UWM’s acquisition proposal for Two Harbors is focused entirely on the value of the REIT’s “pristine” servicing book and its shareholder base, not its leadership team.

He reiterated that UWM is willing to pay the equivalent of $12 per share but said Two Harbors’ board has never engaged with UWM’s offers. Ishbia framed recent competing bids from CCM as an effort by Two Harbors’ management and board to preserve their own roles, adding that UWM sees “no value” in retaining that leadership if a deal closes.

“It’s very clear that their management team and their board… is maybe playing some games, doing things because they realize that we don’t see any value for them specifically,” Ishbia said. “We’ll see how it shakes out for us.”

Addressing a question on UWM’s debt ratio, a concern raised by Two Harbor’s board, Ishbia noted that ratios can be temporarily elevated by hedging and balance sheet trades used to manage MSR risk. While those positions can make certain quarter-end metrics look worse than the underlying reality, he said they have already normalized somewhat.

Originations and servicing operations 

Refinance loans accounted for the largest share of UWM’s production in the first quarter at $26.3 billion. While that is more than double the volume recorded in the same period last year, it is down from the $30.7 billion posted in the prior quarter. Purchase volume came in at $18.7 billion, down from $21.7 billion year-over-year and $18.9 billion in the prior quarter.

Ishbia told analysts that roughly 12,500 brokers currently work with UWM, estimating that only 400 to 500 larger “all-in” shops do not. The primary growth opportunity, he argued, lies in expanding the broker channel itself by helping more originators transition into the broker space, rather than simply flipping existing high producers.

The company’s total gain-on-sale margin landed at 123 basis points in Q1, compared to 122 bps in the fourth quarter and 94 bps a year ago. Ishbia said he views current margins as being in the “right” range, though they could increase if rates decline. He did highlight recent market volatility — partly spurred by the U.S. conflict with Iran — which has occasionally forced the lender to issue up to five rate sheets in a single day.

On the servicing side, UWM ended the quarter with $229.5 billion in unpaid principal balance (UPB), down from $240.8 billion in the prior quarter. The weighted average coupon of the servicing book stood at 5.90% at quarter’s end.

Analysts at Keefe, Bruyette & Woods noted: “While operating trends were solid, servicing missed on derivative losses, which reduced the net mark on the mortgage servicing rights. This was a -$0.05 impact on earnings per share.”

Ishbia described the company as opportunistic regarding MSR sales, willing to sell when bids exceed UWM’s view of intrinsic value.

Looking internally, Ishbia said UWM continues “to move ahead of schedule with bringing servicing in‑house.” New loans are now going directly onto UWM’s proprietary servicing platform, while the entire portfolio is expected to be managed in-house by October 2026, ahead of the previously communicated timeline.

To support the transition, UWM has partnered with Black Knight and the fintech firm Bilt, alongside building its own internal technology.

UWM ended the quarter with $1.3 billion in available liquidity, including $424 million in cash and borrowing capacity.

Looking forward, Ishbia said he expects expenses to remain flat or decrease even as volume grows. Over the next five years, UWM is targeting at least $1.3 trillion in originations. In addition to origination revenue, he projected 20% to 25% growth in “other revenue” tied to ancillary products and artificial intelligence initiatives.