Rocket Cos., the Detroit-based fintech platform company that includes Rocket Mortgage, Rocket Homes, Rocket Money, and Rocket Loans, and Pontiac’s UWM Holdings Corp. indirect parent company of United Wholesale Mortgage, the nation’s largest wholesale mortgage company, announced their third quarter (Q3) financial results.
Based on Q3 results, UWM has officially surpassed Rocket Mortgage to become the #1 overall mortgage lender in the nation.
Rocket Cos.’ reported a total revenue, net of $1.3 billion and delivered net income of $96 million. Rocket Mortgage generated $25.6 billion in mortgage origination closed loan volume and the gain on sale margin was 2.69 percent.
“This period of change and reset in the mortgage industry creates significant opportunity for Rocket. The company operates from a position of strength, which is clear from our $8.8 billion of liquidity and differentiated competitive advantages in brand, technology, data insights, client experience and client engagement,” says Jay Farner, vice chairman and CEO of Rocket Cos.
“We are actively investing in the Rocket Platform to attract more consumers, lift conversion and lower client acquisition cost. This week, we launched Rocket Rewards, our new loyalty program and a key component of our platform. We expect our new offerings and investments to unlock the true growth potential and scale of Rocket.”
Its total liquidity increased by $1.5 billion in the quarter to $8.8 billion, which includes $4 billion of available cash, $3.1 billion of undrawn lines of credit, and $1.7 billion of undrawn MSR lines.
Rocket reported an adjusted revenue of $888 million, down from $3.16 billion year-over-year, and a net income loss of $166 million, down from a gain of $1.13 billion year-over-year,
Its servicing book unpaid principal balance of $531 billion this quarter was up 2 percent from Q3 2021. Rocket’s servicing portfolio includes 2.5 million clients and generates over $1.4 billion of recurring servicing fee income on an annualized basis.
The company has reached more than 24 million Rocket Accounts, the single sign-on solution for the services in the Rocket ecosystem. With these accounts, we have deeper insights into our clients, allowing us to provide a much richer experience through our platform.
Rocket Money, formerly known as Truebill, that was acquired in December 2021, again showed growth this quarter. Paying premium members nearly doubled year-over-year.
Rocket’s fourth quarter outlook includes an adjusted revenue of between $600 million to $750 million, closed loan volume of between $17 billion and $22 billion, net rate lock volume of between $15 billion and $21 billion, and a gain on sale margins of 2.3 to 2.6 percent.
UWM reported a Q3 net income of $325.6 million. Total loan origination volume for the quarter was $33.5 billion, which included $27.7 billion in purchase volume. Net income for the third quarter was inclusive of a $236.8 million increase in fair value of MSRs.
“The results of the third quarter speak for themselves. The momentum of the broker channel is accelerating. I have never been more proud of our team members and the broker community than I am today. Being No. 1 is amazing for UWM, but probably even more amazing for all mortgage brokers throughout America,” says Mat Ishbia, CEO of UWMC.
“It is validation that mortgage brokers are the best place for consumers to get a loan and for loan officers to work, and that our singular focus on helping brokers win was the right strategic decision. Winning this championship will be celebrated, however we realize that much work remains to help brokers continue to thrive and for UWM to continue to win with them.”
UWM’s originations of $33.5 billion was up compared to $29.9 billion in the second quarter of this year down from $63 billion year-over-year. Purchase originations of $27.7 billion this quarter represent the best purchase quarter in UWM’s history, and a 24 percent increase compared to $22.4 billion in last quarter and a 5 percent increase compared to $26.5 billion year-over-year.
Its net income was $325.6 million in Q3 compared to $215.4 million of net income in Q2 of 2022 and $329.9 million of net income in Q3 2021. It has reported a net income of approximately $1 billion year-to-date.
The company’s total equity of $3.4 billion was up in Q3 compared to $3.2 billion in Q2 and $3 billion year-over-year. UWM ended Q3 with approximately $2.9 billion of available liquidity, including $860.8 million of cash and self-warehouse, and $2.0 billion of available borrowing capacity, which includes $1.5 billion under a line of credit secured by agency MSRs.
UWM averaged an application to clear to close of approximately 17 business days in Q3, about twice as fast as the industry average, which UWM management estimates to be at an average of 44 days during Q2
“UWM has never been better positioned than we are today. Our technology is the best it has ever been, our service levels and client satisfaction are at all-time highs, our clients are winning in today’s purchase environment and our team members are thriving in a culture where they don’t worry about layoffs and can instead focus on their own growth and serving the broker community,” says Ishbia.
The company anticipates fourth quarter production to be in the $19 billion to $26 billion range, with a gain margin from 40 to 70 basis points.