UWMC - United Wholesale Merges With a SPAC: Should You Buy Into Mortgage Mania?
The past year was one of the best ever for mortgage bankers. According to the Mortgage Bankers Association, total volume for 2020 will come in at $3.2 trillion, which would be the best year since 2003. Perhaps fittingly, we saw a slew of mortgage bankers go public in 2020, as many hoped to raise capital to build their business. Most have similar business models, but the biggest broker went public by merging with a special purpose acquisition company (SPAC). United Wholesale Mortgage recently completed its merger and is now trading as UWM Holdings (NYSE: UWMC) . Brokers have a different focus and business model, and it pays to understand the various models in the mortgage business.
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Most publicly traded mortgage companies look similar to Rocket or PennyMac Financial Services . Rocket is primarily a consumer-direct mortgage originator. In other words, consumers deal directly with Rocket's application, submit their financial data, and then Rocket approves and funds the loan. It then retains the servicing business, and uses that to keep the customer and build the relationship. PennyMac Financial is an aggregator. Consumers deal directly with their independent mortgage bank, which works the loan and funds it. The independent mortgage bank then sells the completed loan to PennyMac, which then sells or securitizes the loan and hangs on to the servicing.
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United Wholesale Merges With a SPAC: Should You Buy Into Mortgage Mania?