UWM boosts MSR liquidity with $1.5 billion Citibank deal

United Wholesale Mortgage is boosting its liquidity for mortgage servicing rights with a $1.5 billion facility with Citibank.

The agreement, dated Sept. 30 and filed with the Securities and Exchange Commission last week, provides UWM with funds to finance the origination, acquisition or holding of MSRs. The Citi MSR facility is secured by the UWM MSRs, and outstanding balances are due at the end of next September.

The massive lender and servicer said in the disclosure it wasn’t a party to other financing facilities related to its MSRs. UWM executives hinted at an MSR capital line during the company’s second quarter earnings call in August, while president and CEO Mat Ishbia emphasized the firm’s cash flow. 

“One thing people don’t recognize and I don’t get any credit for on here is that our MSR lines are not encumbered at all,” he said during the call. “All my other companies that we’re competing with are leveraged up on their MSRs, we have not one penny leveraged on our MSRs. And so, we’re accessing a line on that.”

A representative for UWM didn’t return a request for comment Thursday.

UWM reported $958 million cash and cash equivalents in the second quarter. At the end of June, UWM also reported $3.7 billion in mortgage servicing rights, while the unpaid principal balance of its MSRs increased to $308.1 billion. UWM sold $73 billion of MSRs in the first half of the year, it said.

Net earnings at the mortgage giant’s parent company UWM Holdings fell 53% from the previous quarter, but steady gain on sale margins in the first half prompted the lender to roll out an ambitious pricing strategy. The firm in the past month also rolled out a title insurance alternative and was among the first lenders to boost its confirming loan limit ahead of next year. 

The move to bolster MSR liquidity comes as UWM seeks to gain market share in the competitive wholesale space. Several lenders have exited the channel while other giants like loanDepot and Homepoint have laid off employees and reduced origination funding capacities.