Even as UWM Holdings generated record volume, second quarter net income declined from prior periods. Depressed margins and a cut in the fair value of its mortgage servicing rights offset the big numbers.
UWM reported net income of $138.7 million for the quarter, down from $860 million in the first quarter and $539.5 million in the second quarter of last year.
Still, United Wholesale Mortgage originated $59.1 billion in the most recent period, up from $49.1 billion the prior quarter and $31.1 billion in the same period last year.
"As we have said previously, UWM is built to succeed not only when there is a refi boom and margins are at record highs, but also when margins are compressed and purchase business drives the volume," Mat Ishbia, chairman and CEO, said in a press release.
Total volume exceeded the expectations of between $51 billion and $55 billion Ishbia set in the first quarter earnings call.
Plus, the wholesaler had its best quarter ever for purchase mortgages, at $24.1 billion, almost double the $12.2 billion in the first quarter and approximately 389% more than $6.2 billion originated in the second quarter of 2020.
Total gain margin fell to 81 basis points for the quarter, down from 219 bps in the first quarter and 243 bps in the second quarter of 2020. That is at the low end of the 75 bps to 110 bps range Ishbia projected during the first quarter call.
That margin decline dropped UWM's loan production income down to $479.3 million for the second quarter. Loan production income totaled $1.07 billion in the prior quarter and $756 million the year before.
UWM's mortgage servicing rights portfolio grew to $260.5 billion on June 30, compared with $221 billion three months ago and $109.4 billion one year prior.
The larger portfolio led to an increase in servicing income to $145.3 million in the second quarter, compared with $123.8 million in the first quarter and $62.1 million in last year's second quarter.
However, that $219 million hit to the MSRs fair value contributed to lower total net revenue of $484.7 million. Those compared with $1.19 billion in the first quarter and a $59.3 million cut in the fair value of its MSRs. In the second quarter of 2020, UWM had total net revenue of $830.6 million, with no change in the fair value of its MSRs.
