Mat Ishbia on low rate mortgages, refi fees and capacity
These days, a qualified buyer can find a mortgage loan at historically low interest rates. But it’s not good enough for United Wholesale Mortgages CEO Mat Ishbia. He seeks to hook borrowers to the lowest mortgage rates, although not all candidates will be able to make the numbers work, as editor-in-chief of HousingWire magazine Kelsey Ramírez detailed about a month ago.
In an interview this week with HousingWire, Ishbia, 40, explained how the the third quarter is coming; capacity limits in the mortgage sector; the probable impact of unfavorable market charges to come; and the company’s latest low-rate mortgage product, a 30-year fixed withdrawal refi at rates as low as 2.5%.
Here’s the interview, which has been edited for length and clarity:
Housing wire: Mat, can you explain the prices of these products to us? Let’s start with the recent 30-year fixed rate cash-out refinancing, which was introduced last week on conventional loans, with rates between 2.5% and 2.99%.
Mat Ishbia: For some borrowers, if they have a lower credit score and don’t invest the money and a few other nuances, it might cost them more because of all the Fannie Mae and Freddie mac tariff adjustments. But for us, it’s the same at UWM. So if the numbers work for them and they want the lowest rate, they can do it and the mortgage brokers can figure out what works for them and get that offer for them.
Let’s use the cash-out [as an example]. Two and a half to 2.99. So let’s call it 2.75, it saves the back of the rate sheet 2.5 points. So that means that if they make a withdrawal and they have a loan value of 70, Fannie Mae will charge them three quarters of a point.
Okay, so it was 2.5 to 1.75. If they work with a broker who charges 1.5 points for their services, they actually only have a quarter point left, so they get 2.75 in the form of a $ 400,000 loan including withdrawal, they get a… quarter point, or a $ 1,000 credit towards their closing costs. So the broker got paid, Fannie Mae got paid, and the borrower got a thousand dollars anyway.
Now, if that same borrower said, “I want 2.5%,” the demand is still the same. Fannie Mae will therefore get his 75 basis points for his adjustment, the broker gets his 150 basis points. But the 2.5 only pays 1.5 points, so I only give you 2.5 points for that and it costs 2.25, so you should actually pay 75 basis points, or on a loan of 400 $ 000, $ 3000 in fees.
HW: What kind of volume do you plan to make on this product, the refi cash-out? And how many borrowers will benefit from the 2.5% rate?
MID: We had about 1,000 locks in the first two days. The average rate was around 2.67%. By the end of the month we’ll probably have 10,000 or 15,000 or so. [in volume].
HW: Can you tell us a bit about the 30-year conventional, what you do in terms of volume and rates?
MID: The current average rate on our 30 years fixed agreement probably looks more like 2.5. We are doing a lot of 1999 but the borrower has to pay for it. A 30-year fixed within 2 is available and we’re doing a lot of it. In fact, these are the only loans we make – 98% of our loans are within 30 years fixed in both or both.
we have record month. We are currently the second largest mortgage company in the country behind Rocket Mortgage so we are going to have a huge quarter and [see] more purchases than ever. Our previous record was $ 42 billion in one quarter and we will far exceed it.
HW: Much has been said that lenders are at full capacity and are struggling to hire good talent to process claims quickly. What is the situation at UWM?
MID: Were busy. However, we have no trouble find people. We get around 300 people a day who apply to work here, or around 6,000 people a month. And we’ve hired about 1,800 in the last three months combined… so we don’t have the same problem as everyone else. We don’t have the constraints. We close the loans in 15, 16, 14, 13 days. Most of my competitors currently take 60 days.
When people say they are [increasing] capacity, what they do is they just swap each other’s capacity. They don’t really hire at all levels. So the reality is, it’s fair Flag star take from Freedom and freedom takes Caliber, they just move people. There are certainly capacity issues across the board, and people take over 60 days to refinance, and we do them in 15 days.
HW: What does it mean for brokers when refinancing takes so long?
MID: If it takes 60 days to close, they’ll end up losing customers… Having the certainty, having the ability to close your loans, that’s why we’re so big.
HW: How do you deal with rating and title issues? It seems a lot of lenders are hanging on once they get to this point.
Ishbia: We don’t really have a problem with that. We work with multiple AMCs and our brokers have great title company partners, we have different deals with them to help them… Again, I think a lot of people have a lot of issues that they report and blame it all on. the rest for why it takes the 60 days to close. If I do them in 17 days, 15 days, and I use the same valuers and the same title companies and the same initiators. It’s just your own process. You have to create your own technology, and we have our own technology that does a lot of work for us.
HW: A few companies have sent out notices regarding unfavorable market charges on conventional refinances, claiming this was the last day they could block for 60 days without being valued at 50 basis points. What is UWM’s lead time for fresh cooking?
MID: Heavy lenders are now putting it back on their rate sheet – Citi and Guaranteed rate and loan deposit all take 60 days to close loans, don’t they? And so if they’ve brought the rate sheet now, shut it down by November 15 so they can sell it to Fannie and Freddie by December 1, or they’ll have to charge that fee to consumers. At UWM, we are closing them so quickly that we are not putting them on the rate sheet at all this month. Everyone is adding these fees, and we don’t start at all.
I said the earliest would be October 1, but I don’t think it will because we are closing in 17 days, 15 days, 12 days, but we don’t need to charge borrowers. Borrowers can get a better deal by working through a broker and working with UWM also gives loan officers an edge now. This gives all the brokers who work with us a few extra weeks to offer better rates to consumers.