Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the UWM Holdings Corporation's Q4 and Full Year 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press Star followed by the number one on your telephone keypad. If at any time you'd like to remove yourself from the queue, please re-press Star one. Thank you. Blake Kolo, you may begin your conference.
Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the Q4 and full year 2022 UWM Holdings Corporation's earnings call. Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning. I will now turn the call over to Mat Ishbia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage.
Thanks, Blake. Thank you everyone for joining us today. I appreciate you guys being here, and we're looking forward to going through another great quarter and an awesome year here at UWM. 2022 was great across the board. As I've been saying all along, a higher interest rate environment is where you'll see the best mortgage companies separate even further from the rest of the mortgage companies remaining, and we definitely saw that happen in 2022. I'm confident UWM is the best mortgage company in America because of our efficiencies in partnership with mortgage brokers. The broker channel is the best place for consumers to get a loan and the best place for loan officers to work, and we're seeing that happen in front of all of our eyes. With that being said, UWM is not slowing down.
Regardless of interest rates, we continue to invest in our people and our technology. We continue to focus on our effort to help brokers win in the market. Our 54% market share of the broker channel in the Q4 is proof of that partnership has never been stronger. As I'm sure everyone knows on this call, that is an all-time market share record in mortgage and is truly an amazing accomplishment for the broker channel and for UWM as their partner. Before talking about the Q4, I'd like to touch base on, you know, a few full-year financial and business highlights. First off, best purchase year of all time, 2022. About $91 billion. In addition, it's our third-best production year with over $127 billion of total production.
We delivered almost $1 billion in profit in a market where most lenders lost money, you know, were laying people off or went out of business altogether. I'm also very proud to announce this is our ninth consecutive quarter paying a $0.10 per share dividend, which is close to a 10% yield at today's stock price. I explained nine quarters ago when we first went public, I feel comfortable paying this dividend in various market environments, and we continue to demonstrate this in the best market conditions and even very tough market conditions. This will continue. Lastly, and most important to me, while my competitors are cutting investments and laying off thousands and thousands of people, we continue to invest in technology, take care of our people, and have never laid off a single team member in our 37-year history.
I'm extremely proud of our team members. The brokers are continuing to push forward and grind and ultimately win regardless of the market. 2023 is another huge opportunity for UWM and the broker community to continue to separate ourselves further from our competition, invest in the future, and continue to win together as a team. Let's look closely at Q4. We closed $25.1 billion of production for the quarter, about $21.7 billion of this coming from purchase. Brokers are dominant purchase market. We see that continuing to happen in 2023 and beyond. As I mentioned earlier, UWM has 54% brokers market share in Q4, the highest share we're hitting ever, up from 41% in Q3. This is a 100% result of our commitment to the broker channel.
Our partners continue to improve and win regardless of the market. Helping our partners grow faster than the rest of the market has been a huge part of this success. We'll remain dedicated and committed to helping the mortgage brokers across America dominate, provide the best service, rates, and technology to their consumers, so they can grow in their individual markets as they continue to win as well. The Q4 was our second consecutive quarter as the number one overall mortgage lender in America. To add a little perspective on this is the third consecutive year as the number one purchase lender, the eighth consecutive year as the number one wholesale lender. As I said before, everyone doing mortgages looks decent when rates are low, and having success in a purchase market continues to set us apart.
High rate purchase market, are you succeeding or are you not? That's the difference at UWM. If you actually look at the market, with brokers being about 20% and us being about 54%, like, we're about 11% of the overall mortgage market, which is crazy to think about while we only are in the wholesale channel. It's great for brokers, it's great for UWM, and we're continuing to win together as a team. Now, in the Q4, we showed a sixty-two and a half million dollar loss, but that's inclusive of about a $151 million decrease of fair value of MSRs. Really operationally profitable once again. Our gain margin was 51 basis, well within our guidance. The momentum of the broker channel has never been stronger.
The last six months since announcing Game On strategy has resulted in more retail loan officers joining the wholesale channel than ever before. In addition, the second-largest month of all time of retail loan officers converting over was January of this year, just, you know, a month and a half ago. Amazing numbers, and a lot of that stuff takes 6, 9, 12 months for them to actually produce, get going, get licenses switched over. All the benefits have still not really come to fruition. We're really proud of the Game On strategy and all the great things that's done for the broker community and for UWM as a partner with brokers.
As you can tell, I'm excited about 2023, a year in which we can expect our competitive advantage to continue to become clearer to everybody as we continue to invest in our people, the brokers, and our business. We know this formula works because we've seen it in similar market cycles. Every time we've emerged stronger and more dominant. Right now is not any different. Before I turn things over to Andrew Hubacker, I want to congratulate him on officially being named our Chief Financial Officer. He's done great work since joining us over two years ago. I'm excited for him to continue to take this next step in his career and continue to help UWM grow and be more successful. Andrew, take it away.
Thanks, Mat. We finished 2022 strong with Q4 production volume on the high end of our outlook and gain margin well within the range we expected. Our Q4 profitability was impacted by negative MSR fair value marks, but we delivered strong net income for 2022 in a challenging and volatile mortgage market. The rising rate environment throughout the year resulted in positive MSR fair value marks, but our core purchase business was strong in 2022 with a year-over-year increase in purchase origination volume. We've said this before, but it's worth repeating. Our servicing portfolio remains very strong with a total UPB of approximately $312 billion as of the end of 2022. As newly originated and retained MSRs largely kept pace with sales and payoffs throughout the year.
With a low WAC, very low delinquencies, and high asset quality, our MSR portfolio remains strong and continues to provide balance to our business model, a recurring quarterly cash flow stream, and a strategic source of additional liquidity if and when we choose to sell our MSRs in the bulk secondary market. On the call last quarter, we discussed steps we took in Q3 to further enhance our access to liquidity, which included establishing a line of credit secured by our agency MSRs. Our available borrowing capacity on this secured facility was $750 million at the end of the year, and our total available liquidity increased to approximately $2.1 billion as of the end of 2022, compared to just over $700 point at the end of 2021.
We believe the measures we took last year and plan to continue to take in 2023 to enhance our liquidity will allow for our continued investments in growing both the wholesale channel and our market share. On the cost side, we continue to focus on prudent cost management in the current origination environment. Excluding the impact of an incremental addition to our repurchase reserves recorded in Q4 due to changes in estimates and increased interest expense from borrowings on our secured line of credit, total expenses decreased in Q4. Year-to-date, total operational expenses are also down as our cost structure aligns with the current mortgage origination environment. Okay, turn things back over to our Chairman and CEO, Mat Ishbia, for some closing remarks.
Yeah. Thanks a lot, Andrew. Before the Q&A, I want to make a quick few points, everybody. 2023 will be the year that continues to separate the best lenders from the rest. Okay? We'll continue to support the broker channel and do everything we can to help them be successful and continue to grow. At UWM, we're investing in people, process, technology, continuing to deliver the best service experience for our brokers. In fact, this year, we're expecting to have 20,000 plus loan officers out to our campus to get trained, improve their game, and continue to grow their business, including, as many of you guys know, UWM LIVE!, which has been a huge success. Many of you guys actually on the call were at it last year, you can come again this year. It's May fourth.
We expect to have that to be the biggest mortgage event of the year, in all of the industry here at UWM. I'll be speaking at it. We believe Tony Robbins will be speaking at it. We'll have a couple of great brokers. It'll be a great all-around event. We'd love to have a couple of you out there. Lastly, I want to touch on aspect of business that I think is undervalued by the investment community. We have control of our business. The decisions we make are intentional. For the long-term success of the business, what I continue to tell you on these calls continues to happen quarter over quarter over quarter. I think we continue to demonstrate having great control of our margins and our business in general.
I've consistently said that 75-100 annualized margin is what you can expect in a really purchase-heavy market or a higher rate environment. As you saw, the full year ended in that range. Now we're back to guiding that range again for Q1 2023. Realize with that said, we expect Q1 production to be between $16 billion and $23 billion, and our margins will be in the range of 75-100 basis points.
We have complete control of our business, complete control of our margins, complete control of what's going on here at UWM, and we've been consistent with our message on strategy, and the results have shown that. I wanna thank our amazing team members at UWM for a great year in 2022, and we look forward to dominating again in 2023. I'll pause now and turn it back over to the Q&A for all of you guys, and look forward to answering some of your questions.
At this time, I'd like to remind everyone in order to ask a question, press star then one on your telephone keypad. At any time you'd like to remove yourself from the queue, please re-press star one. At this time, we'll pause momentarily to assemble our roster. We'll now begin the Q&A session. The first question is from Bose George with KBW. Your line is open.
Hey, good morning. I wanted to start with a question just on market share. Obviously, you know, very impressive level just in terms of both the share, overall and at the broker channel. Just can you remind us where you think the broker channel as a whole could go to? Now with your share at 54%, you know, do you think that's peaked, or and where do you think that trends?
Yeah, thanks for the question. I appreciate it. You know, if you go back to the roadshow, even when we went public, you know, and that's why I think it's important people go back and see what we said then is happening now. What I said back then was, "Hey, UWM could get to 40% market share in the channel, and the broker channel should be 30% of the overall market." I said, "33% by 2025, 2026." Like, I say to that stuff, I still believe in those numbers.
54% is off the charts crazy, right? 11% of the overall market, right? What I told you back then, 40% of the broker channel, 30% of the overall channel, of the overall industry is brokers, would be about 12% of our market share. That's kind of what I still see the trend. Do I think UWM will stay 54% forever? No, I do think UWM being 11%, 12% of the overall market is very realistic. If you look at what we said back.
You know, we're a lot less impacted by the cycles as everyone else. Like, you know, no one expected 2022. We still made about $1 billion. We are very competitive, very successful in market share and profitability. We continue to pay the dividend. The way I look at the market share, the broker channel will get to 30, then eventually 33%. I think I stated by 2025 or 2026. Our belief system is we can be at 40%+ of that market share. 40% of a bigger pie, being 11%, 12% of the mortgage market in general, one out of every eight or nine loans in America. We're pretty proud of that, especially in a purchase market.
Okay, great. Makes sense. Thank you. Just one on the margin guidance. you know, just the increase, does that imply that, is Game On sort of playing a smaller role, in the Q1?
Yeah. Way I look at it is Game On has made a big impact. We still have very, very competitive pricing. That's why the margins are still in that 75%-100% range. As I told you, I have control of it. I decide when we wanna change things and tweak things, and we've done things to help our brokers in certain ways, and we have different initiatives out there to help brokers succeed and excel. I don't know if that's your phone, anyways.
No. I'm sorry.
Sorry, no worries. It's all good. You know, as you can see with Game On, our pricing is still extremely competitive. Brokers have extremely competitive pricing. It's helping them grow their business right now. We aren't gonna be at, you know, that investment of being at 50 basis point margins as you saw for two quarters. I don't expect that to continue unless I decide to do it again in the future. Right now, I have no expectation of that. 70, and I think that's just the proof, 'cause you'll see everyone else will follow because we do control the margins in this industry.
Okay, great. Thanks a lot.
The next question is from Eric Hagen with BTIG. Your line is open.
Hey, good morning. Good to hear from you guys. Yeah, I've got a couple questions. You know, we know that the interest rate buydowns have been popular for borrowers that are confronting affordability challenges. Are there any limitations that you see to continue offering that solution if rates head even higher? Just maybe how valuable is that opportunity going forward?
Thanks for the question, Eric. Appreciate it. The buydown opportunity is great. It's a 2-1 buydown, 1-0 buydown. There's even a 3-2-1 buydown. I think the key is mortgage brokers are knowledgeable. They understand they have those options. Those are still viable. Those will continue to be viable. Those don't go away or change. Those are very good opportunities. You know, whether it affects affordability or really what they reward for is to give a borrower the consistency of a 30-year fix, but the lower rate or the lower payment for the first 2 or 3 years or 1 year, depending on the buydown of the buydown product.
It's been a very successful product. Instead of real estate agents and sellers lowering their price, you can contribute towards a buydown, and it creates opportunity. We're seeing a lot of it, and it's been very successful. We're the largest personal lender in the country. We're kind of leading on that, and people are using it quite a bit right now.
Yeah. That's really helpful detail. There's, you know, lots of focus out there on bulk MSR supply and there being a pretty robust pipeline. Just curious how you guys are thinking about the opportunity and sort of the value in selling MSRs against that backdrop, even how you think about, you know, doing that versus drawing against the MSR financing that you have? Thank you, guys.
Yeah, thanks for the question on that too. You know, you know, I think there's a lot more made out of this crazy amount of supply hitting the market. I think that's a little bit more of a fun media story than a reality. UWM's liquidity is extremely strong. We think the MSR market is actually more liquid than you guys are recognizing. We're taking advantage of that if we want to. We have complete control of it. We can either, A, tap the MSR line as you point out, or B, sell MSRs, sell. Like, we have all different options. Liquidity is not a concern. Let me say it differently. Liquidity is always a concern in any mortgage business.
It's not a concern for UWM with the great job that our finance team and our MSR sales team, everyone's been doing to make sure that we don't have to think about that stuff. We're opportunistic. We're in exactly the position we wanna be. Our MSR book is strong. It produces a lot of liquidity. At the same time, we wanna sell. We can sell that as well. I think a lot more has been made of this, you know, because of who we are, that people wanna buy our servicing.
When you're a company that's maybe struggling, people don't wanna buy your servicing 'cause of reps and warrants and other things. We're the strongest mortgage company in America, period. People know that. For us, it's not an issue. I don't think it's as much of an issue as people make, but maybe it's a little more for some of the weaker counterparties.
Yep. That's helpful detail. Thank you guys very much.
The next question is from Doug Harter with Credit Suisse. Your line is open.
Thanks. Just, I apologize if this is asked, just can you talk about how you think your market share trends, as you kind of have pulled back from Game On and how sticky kind of the additions, that, you know, of brokers that you have added will be?
Yeah. Thanks for the question. Doug, you know, I think I talked about it even when we rolled out Game On, that the expectation of what I consider success on it. You know, my expectations, Game On was not a market share play. It obviously helped market share. It was a let's grow the broker channel play. Help the loan officer and the broker channel get new real estate agents, build relationships, win more loans, continue to educate consumers that, and educate the markets, which you guys have happily wrote. It's $9,400 cheaper to go through a mortgage broker than a retail lender or mega bank. That's why the big mega banks, we heard Wells back out. You see Rocket falling through, you know, through the ground. All these companies really struggling because they are charging so much more to consumers.
Game On, you know, accelerates that and shows even more. You know, it's gonna be, you know, very interesting to watch and see how that happens. Market share obviously went up. Do I expect the market share to stay at 54%? No, I probably don't expect it to stay there, but I never expected it to get there, to be clear. You know what we said was, "Hey, can we get over 40% and maintain it in that level?" We've seen this happen before. We did this. This isn't like a new thing. We went public last time I did it back in 2019. We've seen it. We know the stickiness. We understand how to control the stickiness and make sure clients understand the value.
Once a loan officer, and you can call any loan officer you want, Doug, in the mortgage. Go to FindAMortgageBroker.com. Call loan officers, ask them, and they'll say, once you use UWM, you realize it's faster, it's easier, it's cheaper. They look good to realtors. They look good to consumers. Why would they not use UWM? Game On helped bring a couple of those loan officers to use UWM that hadn't in a while, and they see it. They're gonna see the value of UWM, and they're gonna stick with us for the long term. We've seen it happen before. You'll see it play out. It will happen quarter after quarter. Will it stay 54%? I don't think so. Will it be higher market share than I had before it? Absolutely, without question.
Appreciate that. Thanks, Mat.
Thank you.
The next question is from Steve DeLaney with... Who's a research analyst. Your line is open.
Thanks. Good morning, Mat and everyone at UWM. A lot of focus, obviously, on originations side of the business, but love to talk about servicing for a bit. You know, rising rates where, you know, the economy really hasn't broken from an employment standpoint yet, but, you know, at some point, the higher rates are gonna have an impact. Just curious if you're seeing any increase in delinquency, special servicing, you know, servicing advances that obviously follow delinquency? Are your cost per unit on the servicing side of the business, are you seeing any pressure there that those are moving higher? Thanks.
Thank you for the question and the focus on the servicing. I understand that is important. What we've done differently is it's just not been effective and no impact at all, right? Our delinquency is one thing that people don't give us credit for is, you know, although we're the largest lender in the country, I focus on being the best lender in the country. We've been the best for years. The delinquency rate at UWM is lower than almost anyone in the country. The FICO scores of the loans UWM does is the highest in the country. I'm not just comparing to other non-banks. I'm looking at banks, non-banks, credit unions. We are the elite on this. Our delinquency rate's less than one per-- Like, it's... The numbers are just aren't impacting. Lower delinquency rates.
Got it.
which we have. Better credit quality, which we have. Not doing the loans. Like, we don't go below 612. Those guys are trying to compete with go lower credit scores. They're doing riskier loans. We just don't do it. Therefore, my servicing costs stay low. My delinquencies stay low. My concerns about unemployment going up impacting it's less of an impact. We're like, same thing on originating. We're less cyclical. We're less impacted. We're a little bit more protected on this same exact thing because of our business strategy and business model on the type of loans we do.
That's helpful. Just one last comment and question, I guess is, look, it's been widely publicized that you've been successful in your bid to acquire a leading NBA franchise. Congratulations on that, and, you know, interesting and exciting part of your life. I guess from an investor standpoint in UWMC, what could you say to your investors or would you, if you can, what impact, if any, on that successful business opportunity, what impact could that have on your equity commitment to UWMC going forward because of that new opportunity? Thank you.
Yeah. Thank you for the question. First off, yeah, real excited about the Phoenix Suns and Phoenix Mercury, as something completely outside of UWM and been a lifelong dream and something I'm excited to be involved with. With that being said, there's actually zero impact. Actually, I'd reverse that and say there's probably a positive impact on UWM and my leadership here. Not only the notoriety of me, but the broker channel in general and educating consumers. I have a bigger platform personally, more people following me, more people listening to me, more people learning and being educated about brokers. It's only gonna help. It's not taking any more of my time.
I actually can argue that I spent more time trying to do research to find the right team and getting lucky enough to get the Suns and Mercury was like the elite of the elite, that I actually think I have more time on my hands now that I'm not chasing a team and trying to find the right thing for me, and then I actually can focus on UWM. It will have zero impact is probably what I would say, but I would probably say on the reverse side, a positive impact on UWM and the broker channel and consumers, with the new platform we have. Thank you.
Thank you. Appreciate it.
Are there any other questions? I feel like there's some in the queue. Maybe. Operator, is there any other questions? I see some in the queue. If not, we can close the meeting down, but I wanna make sure I answer those couple questions that are out there. Once again, operator, there looks like there's questions in the queue. I see a couple different analysts. You know, I don't know if you could open up the line for it looks like Kevin Barker. I don't know if he can speak. All right. Well, I think there's some issue with the operator. If anyone wants to reach out, I see Kevin, I see a couple questions there. You can reach out to Blake Kolo, who's business officer, head of investor relations. You can also. I'm happy to jump on a call.
I guess I'll close with this. Amazing 2022 at UWM. 2023, I'm so optimistic about and excited about the opportunity ahead. We are the biggest and best mortgage company in the country, and we will maintain that and continue to grow and dominate, take the market share, continue to help brokers win and help consumers across the board. UWM and our investors are gonna be excited about it with the dividend and all the great things we've got going. Thanks for the questions. We're excited about 2023. Fantastic.