"Although I don't know if you guys recognize it, but it was a dominant, dominant quarter," Mat Ishbia, chairman, CEO and president said on the earnings call.

The company reported GAAP net income of $12.1 million, the second consecutive quarter it has been profitable by this standard. These results include a $158.8 million decline in the fair value of its mortgage servicing rights.

Why Mat Ishbia doesn't care about servicing valuations

In response to a question, Ishbia said he does not care about MSR values because it is something out of his control; he pointed out that he had said the same thing in quarters during which the fair value increased.

The number that people should be focused on, he said, is UWM's reported $211 million of adjusted EBITDA for the quarter.

This compares with second quarter net income of $314.5 million and year ago net income of $31.9 million.

During the period, United Wholesale Mortgage produced $41.7 billion, compared with internal guidance of between $33 billion and $40 billion. This beat Keefe, Bruyette & Woods' estimate of $38.3 billion.

For the second quarter, UWM originated $39.7 billion, while for the third quarter of 2024, it did $39.5 billion.

UWM's third quarter production by loan purpose

Purchase originations made up $25.2 billion during the quarter, compared with $27.3 billion three months ago and $26.2 billion last year.

Meanwhile, the refinance share grew to $16.5 billion. This compared with $12.4 billion in the second quarter and $13.3 billion one year ago.

The purchase share of 60% was "slightly below the approximately 70% purchase mix estimated for the industry in the third quarter," Bose George, an analyst at KBW, said in a flash note.

Prior to the quarter, UWM guided to gain on sale between 100 basis points and 125 basis points, and beat that at 130 basis points. This also beat George's 120 basis point expectations.

In the second quarter, GOS was 113 basis points, while for the year ago period, it was 118 basis points.

Operating earnings per share were in line with KBW's and Street estimates, as revenues came in 2 cents higher but so did UWM's expenses, George said.

What drove September production at UWM

The company also noted it had its single best rate lock day ever in September, $4.8 billion, as part of a short window of opportunity leading up to the Federal Open Market Committee meeting that month. The previous record was $2.8 billion in October 2020.

"It was phenomenal to see across the board the execution, because we have been preparing for years," Ishbia said. "When you actually have to do it and execute, you never know how it's going to go, and it went amazing."

Ishbia credited the company's Mia technology, noting it made over 400,000 calls on behalf of its mortgage brokers. The company had forecasted a 10% to 15% answer rate, but it has gotten a 40% answer rate.

It also answered about 70,000 inbound calls. 

UWM's expectations for originations and margin

Ishbia guided to even better production in the fourth quarter for UWM, to between $43 billion and $50 billion. It also raised its guidance on GOS to between 105 basis points and 130 basis points.

He also said that UWM's initiative to bring its servicing function in-house is on track for the first quarter of 2026. As part of the shift, during the third quarter, the company entered into a relationship with Bilt, which will give borrowers rewards when they make their mortgage payments.

But UWM will not see the full financial benefit of bringing servicing in-house until 2027 because "I'm double dipping," having the costs associated with the build out as well as still having to pay subservicers to handle the portfolio until it can get it fully on-boarded, Ishbia said.

Ishbia did note that servicing rights purchasers might be getting "a little inside track" from their buys, but "that is not the game anymore" for driving originations.

"Taking the friction out is the game," he declared. "Technology is the game, and that's why you see me making investments every single day to be prepared to dominate, just like we did in the third quarter, and I will again in the fourth quarter and then in 2026."

Eric Hagen, an analyst at BTIG called UWM's stock "inexpensive" in his post-earnings report.

UWM was trading at $5 per share at 1:30 eastern time, down 11.66% or 66 cents on the day.

"The business model serves as a 'hub' for brokers, which makes it less necessary to retain an MSR portfolio in order to support originations and recapture when interest rates fall," Hagen said. "Since Rocket acquired Mr. Cooper, we think UWM has effectively emerged as the solution for investors to pick up an 'asset light' origination strategy whose capacity is probably least at risk of meeting higher loan demand at lower mortgage rates (especially if rates were to plummet)."

Hagen sees upside not just in these two companies, but Pennymac as well. "We think the origination capabilities and overall level of production volume tend to get emphasized a little more in stock valuation for UWM and Rocket, while servicing costs and conditions tend to drive more of the bottom line and the narrative at Pennymac.

"From that vantage point, we think there could be room for UWM's stock valuation to catch up to Rocket," he said.