UWM Holdings Corporation Q1 2023 Earnings Call
Okay.
Good morning, My name is Sarah and I will be your conference operator today.
At this time I would like to welcome everyone to the U W. N Holdings Corporation first quarter 2023 earnings conference call all lines have been placed on mute.
To prevent any background noise. After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by one on your telephone keypad. If at any time, you would like to remove yourself from the queue. Please read press star one.
Lake Colo you May now begin your conference.
Good morning. This is Blake Colo Chief business Officer, and head of Investor Relations. Thank you for joining us and welcome to the first quarter 2023 U W. M 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 <unk>.
<unk> looking statements. Please refer to the earnings release that we issued this morning, I will now turn the call over to Matt <unk>, Chairman and CEO of <unk> Holdings Corporation, and United Wholesale mortgage. Thanks, Blake a lot of great things to discuss today first of all I'll start the call by thanking the 6000 plus broker partners of ours that were able to join US for you Debbie on live last week, which is amazing event.
Also think a lot of analysts and investors were able to come out and make it Jamie Deutsche Bank time, with you and fueling the great questions over the couple of days, we had together UW M lives an amazing event that allows you to see and feel the growth momentum of the broker channel in one room. All those loan officers broke ground doesn't even real estate, there's lots of Pontiac, Michigan on their own dime to get better share.
Yes for success and try to win together as a team. This is what makes you wm and the broker channel different because we can work together as a team and are excited about the growth together.
Hopefully everyone in terms enabled us to see for themselves.
The couch, how the accommodation of a co our culture. The amazing relationships, we have with our broker partners uniquely positions us for growth and success is one of the main ingredients to our secret sauce here at U W. M. It's all about the broker community, winning and we're here to help them grow and succeed and it's happening together as a team before I get into the quarter I wanted to give people always address the current.
Overall mortgage industry and market, obviously, there's a lot going on in Missouri and is still a tough time for most lenders. This is the time when scale efficiencies investment in technology and business strategy around purchase are showing the winners separately from the rest while others are having to adjust their business for the worst UWS hiring innovating and preparing for further growth.
In 'twenty four 'twenty, five and beyond I've never been more confident with our model and strategy that I am today now let's get into quarter.
We delivered $22.3 billion of overall production, which is the high end of our guidance more importantly, the $19.2 billion of purchase volume, which was our first quarter production purchase record for US we've been very proud of these metrics, particularly in this rate environment and with the general declines for most of the industry are gained margin was 92.
Basis points also at the higher end of the guidance and up from 51 basis points in the fourth quarter.
We have control of our business that are very happy with both our margin and volume in Q1.
I also quickly want to provide some highlights of the 2000 2200 data that was released in the first quarter.
This is the government data that Trump some of the self reported industry data for the full 2022, a year. We were the number one overall mortgage on American when you're looking at purchases and refinances are single family homes, which is the definition of residential lending I'm proud of this because the positive impact it had on the consumers who chose to work with mortgage brokers furthest from the data on average consumers.
94 hours by working with a mortgage broker and number goes up to 10004 hours for minorities. These backs make me feel great about the positive impact we have on the consumers in America that choose to work with independent mortgage brokers by the mortgage broker dotcom has become a great website, where consumers are learning.
About the benefits of working with a mortgage broker the data supports the brokerage channel as the best place for because you have to get alone and as we all know the best place for a loan officer work.
And in addition to that some of the best News is we're the number one mortgage ridge area in the country. Once again in the first quarter, helping consumers, helping our brokers and we're continuing to win together as a team Andrew will take a deeper dive into the financials, but before I pass it I want to give a couple of comments on the financial performance for the first quarter.
As I previously mentioned 92 basis points of margin and $22.3 billion of production, which were both very good numbers, resulting in a favorable operating gain for the quarter with that said many of you are now where the two distinct components of our reported financials. The income from loan production and servicing income and along with the MSR value the value of the MSR portfolio.
Because rates went down in Q4 to Q1, the write down of our MSR book was large this markdown is driven primarily by rates are outside of our control and noncash gain loss, we reported a net loss of $139 million.
But at the same time, there's a fair value marked out of over $337 million.
Operationally with higher margins and great volumes, we actually made money and if you look at it compared to Q1 of 2022 actually core where is made more money operating than we did in 2022, which is still a good cordon industry, making money profitably right now is a big deal and UW M is doing it and re continue to do it going forward you didn't have as <unk>.
Ever been better positioned for the growth and success going forward I think back to where we were in the first quarter 2020 and were so much stronger today and all aspects of our business with that said I'm cockpit will be saying the same thing again in three years from now and how we continue to evaluate continue to evolve you didnt have the capital liquidity technology correlation of infrastructure in place.
To thrive regardless of cycles, and we are doing that right now I'm going to turn over to Andrew our CFO for more details.
Thanks, Matt 2023 is off to a great start as we achieved strong mortgage loan production volume and experienced improved gain margin in the first quarter as compared to the last half of 2022.
As Matt mentioned, the higher gain margin contributed to improved profitability before considering the impact of the decline in fair value of Msr's are expenses moderated in Q1, as we continue to focus on prudent cost management, excluding interest and servicing costs and other non operational expenses total expenses declined nearly $50 million.
Or 19% compared to the first quarter of 2022, which also contributed to our strong core operational performance in Q1 of 2023 <unk>.
During the first quarter, we continued to execute our plans to strengthen our balance sheet and improve liquidity. We completed two bulk MSR sales as well as to excess servicing strip sales in Q1 on loans with a total U P. B of approximately $98 billion and completed two additional MSR sale subsequent to quarter end net.
Net cash proceeds approximated $650 million from MSR and excess sales in Q1.
In addition, we entered into a line of credit providing up to $500 billion of borrowing capacity secured by our Ginnie Mae MSR ours. This.
<unk> along with the MSR facility secured by our Fannie and Freddie Msr's provide up to 2 billion of borrowing capacity of which only 500 million was drawn as of the end of the quarter.
Considering available cash self warehouse and remaining available borrowing capacity under our secured and unsecured lines of credit our total liquidity increased to approximately $2.9 billion as of March 31, 2023, which is an approximate $800 million increase from the end of last year.
We continue to believe the measures we have taken to enhance our liquidity and strengthen our balance sheet will allow for our continued investments in growing both the wholesale channel and our market share.
Okay, I'll now turn things back over to our chairman and CEO Maddish be asked for some closing remarks, thanks, a lot Andrew and before I get into Q&A I want to hit on a couple of points before we go first we aren't stopping we will continue to embrace every cycle of the mortgage industry driving forward and winning together with the broker community.
We will continue to launch new products relevant products, we rollout many in the first quarter, whether it's technology, whether it's actual products at one time closed new construction control your price from a technology, we're going to continue to innovate and when there's no hidden agenda here the broker channels. The best place for American consumer to get a mortgage it's the fastest easiest cheapest way for consumers to get alone.
It will do everything we can to support growing the channel. We also appreciate the investor community and for the 10th consecutive quarter, we're going to announce our 10 cent quarterly dividend a we want to continue to reward our shareholders as I've said many times in the past and I'm excited about the prospects of us continuing to do that going forward. In addition to that the second quarter, we expect production to be between 23 and 30 billion with.
Our margins in the range of 75 to 100 basis points, you Wm as winning.
We're making income we have great liquidity, our technology and our culture are strong and I've never been so excited about what we're doing compared to our competitors in the mortgage market, we're going to keep winning together. We're now glad to take your questions I would turn it back to the moderator.
At this time I would like to remind everyone in order to ask a question press star one and if you wish to remove yourself simply press Star. One again. Your first question comes from the line of Kyle Joseph with Jefferies. Please go ahead.
Hey, good morning, Matt and Andrew Thanks for Thanks for taking my question.
On the on the margin front, obviously came on was very successful and it was nice to see you know how quickly margins to normalize in the first quarter.
Give us a sense for where you see honestly, we address your second quarter guidance, but you know longer term is this kind of a steady state in terms of where you see your margins guidance.
Yeah.
Yeah. Thanks for the question I appreciate it.
My quick perspective, as I think you were going to be in line also so I think you know what I kind of answered. It similarly, but you might thought is that in the tough times in the mortgage market, which a lot of people are seeing right now, we're actually winning and with that being said I believe the margins in these trough times is probably more like 75 to 100 basis points, which is where we guided towards.
I think thats, what youll see while the rest of industry is laying people off the rest of the other companies or whether they're going out of business or making massive changes to their businesses that will continue to happen and that's kind of the margin level that it will be in and so game on as you know was.
Strategy has been exceedingly successful and which continue to be successful with what we've done.
And as we talked about we have complete control of our business always and we told you what we would do and Thats kind of where the margins are right now and that's why we're gotten the same exact area for next quarter.
Got it and then.
Follow up for me I'd like to and you. Obviously, you guys did a nice job of enhancing the balance sheet and liquidity in the quarter.
As we're thinking about leveraging kind of in this rate environment.
It's kind of around <unk> nine.
Nine non funding debt to equity kind of that kind of a steady state you should think of Atlanta.
Yes, Kyle Andrew Thanks, Thanks for the question.
I think thats, where we have maintained sort of.
50 to 100.
One five to one.
Ratio after the last.
Several quarters and I think.
Less than one to one is likely where we.
We target that and where I would expect we have remained for the for the foreseeable future.
Got it thanks, a lot for answering my questions.
Okay.
Your next question comes from the line of Steve Delaney with JMP.
JMP Securities. Please go ahead, thanks, good morning, Matt and Andrew Congrats.
Congrats on meeting your production guidance, but that should not be a surprise.
Now that the fed is done with rate hikes, and futures is expecting materially lower rates in 2020 for.
How impactful do you think to your current business volumes.
If the 30 year mortgage rate was to drop to say, 5% from what low sixes or whatever right now I mean.
How impactful is just 100 basis points 150 basis points, Matt is what I guess, I'm, asking and kind of your outlook for 'twenty 'twenty four as well.
Yes. Thanks for the question appreciate it Steve.
So real quick on that is how example, if rates drop 100 basis points to your example on a 5% interest rates.
There's a good chance our business doubled and our margins are higher.
I try to explain to people that in 'twenty four 'twenty five 'twenty six will make multiple billion dollars is our expectation.
It just depends on when that happens I don't control right now with the flip side as a lot of people realized when rates go down slightly like they just did you take the MSR Mark down where.
Silly reporters out there not you guys had your analyst you understand we've talked about still be reporter say Oh. It looks like you lost money. This quarter, we made a lot of money this quarter, the MSR, mark going down $337 million and it still is.
It's just silly people don't understand the business, so theres realized when that happens when rates dropped 100 basis points.
Volume could double margins could go up and and we'd make exceeding the amount of money excessive amount of money and a really profitable for our shareholders and do some great things. However, the MSR Mark will go down and I'm sure. Some quarters that don't know what theyre doing and talking about will headline UWS loses money on UW only makes this much money because they don't understand the business and so.
That's kind of my perspective on it is yes, it will be a massive massive opportunity.
Providing not just for us the firm what else and actually yes. It will help us will help a lot of other lenders, even more because they're actually losing money right now actually laying off people right now and we're actually winning and as you saw on guiding even to do more volume in the second quarter than the first quarter. So a lot of positive at UW. So it will help us significantly, but it will help a lot of other people industry.
So early 'twenty four mid 'twenty four late 'twenty, two I don't know when it's going to be but it is happening we all understand that anyway that understand the mortgage business or just the economy in general realizes that rates are going up too much more from all of our prospectus.
Well, thanks for that insight I appreciate it.
Thank you.
Yeah.
Yeah.
Your next question comes from the line of Bose George with <unk>. Please go ahead.
Yes, good morning.
Your market share obviously grew last year it looks like again drove the first quarter.
As you dialed down programs like came on do you think we could see the share dip a little how do you sort of see the share outlook.
Yeah. Good question My perspective, I think we're running around 30% to 32% market share pre a pregame on demand was designed to help originators joined the broker channel its been a massive success thousands of loan officers joining continue to join Youre starting to see some of that production come through starting to see some of the success come through it's been fantastic.
However, with that being said.
Your question on market share. We went from 32 I think it's a 55% in the wholesale channel that was more than we expected.
I said always that with game on after Gmod, which Q1 after he amount as you can see.
If our margin stayed in the 40% range that would be a massive success I think youre going to see it higher than that as you point and so if we were in the 40% to 45% range and think about what we just did we just went from 32% to four.
40% to 45% of massive market share gain and a very tough market without the game on pricing. So just realizing that we were looking for it if it stays in the 40 range.
We think it's excessively successful however.
I think it's gonna be even higher than that in the first quarter just like it was in the fourth quarter.
Okay, great. Thanks, and then just on the MSR sales was that done at carrying value with any any sort of gains or losses on the MSR sales.
Yes.
It's really tough to tell there is there are some losses. It just depends on what day you sell it and what date, you're marketing it comparing to if youre looking at from December 31.
And there might be the loss if you will get from the day, we sold it it might be some gains I don't know the exact detail on each deal, but it's hard to really track. It. That's why we just it's all part of the fair value Mark down which is a $337 million.
And in reality, if you take that out of the $130 million loss, where the number is we obviously you can tell from a core earnings perspective had an amazing quarter as I pointed in my comments, even better in the first quarter. So once again as our reporters. They don't know they are talking about I'm sure. Some of you guys listening.
We made $450 million in the first quarter of last year and this quarter, we lost $130 million whatever the number is however, if you look at core and existing made more money in the first quarter. This year than last year's first quarter, and then top of that we had less volume and lower margins, but I still made more money. So think about how we're doing that we're monitoring.
And manage our business beyond what other people understand but headline news in sickbay doesn't explain that stuff. So it's good for you to understand and see that.
The first quarter has been extremely successful from that perspective.
Okay. Thanks for that.
Your next question comes from the line of James Faucette with Morgan Stanley . Please go ahead.
Hi, Good morning. This is Blake matter on the line for James Thanks for taking my questions.
First off I'm wondering what size of the mortgage market are you managing the business for and are there any particular areas of the business, where you see opportunities for expense efficiencies.
As a nation zions come in lower than expected.
Yes. So thanks for the question I don't think origination Roger to come in lower.
<unk> I think they're going to be as I've described and I think it's going to be a great year.
From the way, we look at and manage the business and so.
All round mortgage market is definitely smaller than it was last year and the year before however.
Most lenders out there have tried to right size their business as our business has been pretty size well prepared for scale and so I'm more prepared for the future and what two questions ago was about the 'twenty four 'twenty five and the dominance that we're going to.
So at that time, and so like I said I think we hired 100 plus people hired joining this week alone and so we're hiring people. We're growing we're preparing for doubling this business over the next couple of years right from the volumes that Youre seeing right now and I'd be shocked if that didn't happen.
Got it and as a quick follow up on your MSR portfolio, you guys highlighted the delinquency rates and your servicing portfolio our lora.
More than the industry average.
That said are there any pockets of the portfolio, where you see a risk rising.
And as the broader macro environment normalizes do you think youll see a need to increase staffing in servicing to help manage bone workouts and modifications.
No. So if you look at our delinquency rate I think we were the lowest for one of the lowest I'll say one of them because everyone's data one of the lowest delinquency rates in America.
The loan quality, we still don't do loans that everyone else does everyone else goes to 580 FICO scores of $5 50, FICO scores theyre all digging deep to try to just get a couple of loans. We're still at 620 FICO. We have the lowest delinquency rates are really low delinquencies alcohol, but one of the lowest and one of the highest FICO scores of anyone in the market and so our loan quality will get hit a lot less.
Our our delinquency get hit lot left that everyone else do I see it being a massive issue in the industry. The answer is no even without us being on the more conservative side of the credit profile. So I don't see it as a big thing I think it's overblown.
And I'm not as concerned about it.
Other people would be talking but in general I think our book our servicing book is strong our strategy is strong and I feel really great about where we're at.
But thank you for the question.
Thank you.
Your next.
Question comes from the line of Eric Hagen with BTG. Please go ahead.
Hey, Thanks, Good morning, I hope you're doing well.
I think a follow up on the MSR. How are you guys thinking about the size of the MSR portfolio, what you consider to be maybe a sustainable and comfortable level level for you to manage that the composition of that portfolio. I don't think we saw any MSR sales in the quarter, but you know how you guys are thinking about that too.
Thanks.
Hey, Thanks, a lot Eric I. Appreciate the question there actually were some MSR sales in the quarter, but.
Andrew I think we're trying to figure out how big MSR book going to be and so what I would tell you I think it finished around 300 billion and I will just tell people.
We're originating a lot of volume I basically assume even with if.
If we do MSR sales.
If we don't do as our sales I think the book basis days, plus or minus 10%, 15% of it where it's at right now. So if we don't do any sales, but will grow 15%, 20%, maybe but if we do if we do about sales. It can go down to 15%, but it's basically think $300 seems like a good target I think we're at 297, if I could be it could be off by slightly but call. It 300.
That's kind of what we're looking at it going forward so.
I look at it is it's been pretty consistent with that number.
Our liquidity is so strong right now that the need for selling MSR does not there as you can see <unk> catheter, which is a critical focus of ours, Andrew Zach or a job for us on that along with Blake and the team.
Managing that and so looking at those numbers our liquidity to reposition so we don't need to sell any MSR. So our MSR book could grow.
So we want to offer a good price and as other opportunistic out there we will do it.
As long as we're doing the right things by our brokers and by our business and by our shareholders.
That's great detail can you say, how many would be U P. B of Msr's that you sold in the quarter was.
It's not that clean so I don't know the exact number because it doesn't really represent it because theres, sometimes youre not selling the PV or selling the excess servicing and so therefore, it's really not actually any UBB because I still hold the servicing what I told to access which is a capital markets transaction. If you think of it that way. So I don't have the exact.
If I told you we did 20 billion, but we brought in $500 million say that that math doesn't work out that's kind of how I think about it so it's not apples to apples and that's why I got if you look at the overall MSR book as <unk>, 300 billion, plus or minus 10% to 2% and el driving pretty consistent in that number.
Yes, yes, that's really helpful.
One more how are you guys thinking about managing the interest rate risk in the origination pipeline I guess, both from the perspective of hedging the pipeline before delivery and anything you're doing maybe to mitigate the higher interest expense from holding the loans on warehouse.
Thanks, guys.
Yes, I mean, so we hedge our pipeline every day, we don't take any risk at any of our pipeline. So that's been a constant for years and years and years and so we tried to be risk free and that obviously theres no there's always risk with your hedging and <unk>.
Handle things in the capital markets World that we have an amazing capital markets team and feel really great about what we're doing there.
So thats kind of how I think about.
That risk.
Sorry, your second part of the question, Eric if Youre still on the line.
Yeah, just mitigating anything you guys are doing to mitigate the higher interest expense from holding the loans on warehouse and the the NIM that you're kind of already there.
Yes, so I mean, the interest expense I know, it's hard to see it but it is actually pretty low relative to the market. However, we have we have that and so the interest expense includes that debt. So a lot of us up there, but where do we self warehousing with some of our excess cash to drive that number down and we will continue to do that and take advantage of that opportunity because there's so much.
Quiddity.
And just sitting there we're just sitting there looking at it so how do we use it and ethylene co lo and his team and Andrew and his team do a great job of managing that so I think the interest expense versus the interest income. The fact that it's a positive number shows that we are doing a really great job managing that because remember it's not just a warehouse line.
And lower interest expense in there from a from our servicing.
Servicing from our our debt that we have out there yes.
Yes.
Really helpful. Thank you guys.
Yes.
Okay.
Again, if you would like to ask a question. Please press star one on your telephone keypad.
Your next question comes from the line of Doug Harter with Credit Suisse. Please go ahead.
Okay.
Thanks.
Quarter it looked like the the G&A expense fell by a meaningful amount. So I was just hoping you can give some detail as to what drove that.
Well I think the reality, Doug as we've been managing this for years, everyone thinks everyone kind of wants to comment every time <unk> not laying anyone off of course about laying in a while but actually hiring but the G&A expenses not just people. There's a lot of things we managing once again, Andrew our CFO to the heck of a job and I'll, let him make a comment here in a second so you can give you his thoughts in addition, but <unk>.
Reality is we manage our cost we manage our business to the <unk> to the dollar understand everything we are spending and it's not people whichever you like to talk about a lot of times, it's vendors a lot of time negotiating new deals and we've done a great job of that and you'll actually see that some of those things come through throughout the year that we've been working on not just in the first quarter, but last year in the second third and fourth quarter.
And so the way I look at it is the most important thing Doug is to look at it.
Operating core anchor income, we make more money this year's first quarter and last year's first quarter last year's first quarter, we did significantly more volume more gain on sale. So obviously, we're managing the business very well and all of these details are coming through in a positive way as I said it would over the last four or five quarters I've been getting that question. So Andrew I don't view any comment to throw in that I, maybe I didnt hit.
Yeah.
I think you covered it well, Matt I think Joe just on the sequential basis, it's down.
Partially there was there was a slight increase to our repurchase reserve in Q4 of last year on a year over year basis, its down a little bit relatively flat, but matts comments remain the same.
Okay.
Okay. Thank you.
Okay.
Our next question comes from the line of Kevin Barker with Piper Sandler. Please go ahead.
Hi, This is <unk> Margaret Thanks for taking my question. So I see you guys continue to guide the high production stable margins.
Most of my questions been answered just following up on Doug's question.
With G&A coming down how do you guys view expenses.
Going forward.
Well I.
I guess my perspective, depending on how you look at the volumes.
Volume is going to go up right and so there are a lot of our expenses that are variable. So some of those numbers will go up obviously, we're going to continue to manage that I. Just told you. We're hiring so some of those expenses will go up but overall the the thing I focus on less and less on expenses.
And more on are we profitable and we're extremely profitable core earnings were great.
Especially in one of the hardest markets.
Because that was the first quarter was up at the fourth quarter ended December was a slow month and so that really leads into the first two first quarter across the board and so I feel really good about it are we managing expenses yet to have more expenses that are coming out of the business that you guys that aren't tied to anything besides vendors in partnerships and things we have outside yes, but I will not sacrifice I'm not trying to save one.
Jump over dollar stood up pace and so I'm going to make sure we run our business the right way and if I'm going to make investments in people and technology and in business strategies, we're going to continue to do that so I spend very little time focused on expenses, while we're making a lot of money what I do focus on is how do we drive revenue and help our brokers grow their business.
From the brokers grow new Wm grows and Thats whats happening Thats why I talked at the beginning of the call about <unk> and I don't think you were there, but fewer at UW module to seen the broker channel the camaraderie the culture the opportunity the innovation and the upside and I think youll see some of that in the second quarter, but it will have a great quarter as already guided to but on top of that.
It is going to continue to roll and so expenses is important but it's one of the first five things I talked about and I'm not doing my job as CEO , because I'm jumping over pennies of dollars picking up pennies and Thats not who we are and never who we will be.
Thanks for taking my question.
Your final question comes from the line of Michael Kaye with Wells Fargo. Please go ahead.
Hi, Good morning, that's a Q1 gain on sale margin 92 basis points was towards the high end up your guidance last quarter, but for Q2, you're still guiding to that original 75 to 100 basis point range. So the question is why aren't you why are you not taking more of that gain on sale moment.
I mean, Q1, and maybe top up the bottom end up at Q2 gain on sell margin guidance is it more general control your own price program in Q2, or maybe other factors like trying to provide extra pricing support for the brokers and important per arm sprint purchase season or is this just more conservatism as you have a good track.
Record of coming in toward the high end of guidance.
Yes, I don't know if its conservatism.
We always come up with our guidance I'd say always but we always have been 10 quarters now I believe.
Just like we pay our dividend for 10 straight quarters, the way I look at it I am guiding you what I think the numbers will be margins can change things can change up and down we control how we price on a daily basis, but also there's different products have different margins different opportunities to do more conventional more government more jumbo margins are different on those different loans.
And so I think the 75 to 100 is a good number.
I would assume that's going to be in the middle of that number could be on a little on the lower end or higher end Thats why guide given 25 basis points, but we make sure. The same thing with a 20% to $30 billion could we be in the low end of that at the middle or the high.
If I felt really confident we'd be in a different part of it I'd guide to a lower number however, honestly Michael Nuomi.
I'm not that focused on.
Exactly those guidance I'll focus on a range of bids on a day to day basis, I see an opportunity to do more volume and margins go down, but I'll do it I see an opportunity for margins will take advantage of that and maybe we'll do less volume. There is a lot of things, we do but the reality of our business is running at for the broker success, we want to bring on more mortgage brokers to the channel we want to help more brokers.
Loan officers grow their business and we can do that in many ways as you saw at UW lifecycle you were here.
Training coaching the opportunity to work that's available, but there's also things on price. There is also things on helping them do social media and so there's all of these things we're doing and so I guess, a long way of saying I feel confident and $23 to $30 billion I feel competent 75 to 100 basis points and as I said at the very beginning of this call.
<unk> the mortgage industry wholesale will be between 75% to 100, I think I said that last year and saying.
Say it again this year now that the mortgage market comes out of the trough then I'll move the guidance up a little bit more.
Or if it goes.
If it changes in a way I'll move it up as we see fit but that's my best estimate at this point 75 to 123 to 30.
We're working extremely hard to hit those targets to make sure that we deliver what we tell you we're going to deliver like we have every single time I've spoken on these calls and I plan on continuing to do.
So what would it take for you to be towards that bottom end and they got it so youre, saying its more mix or maybe ill push.
Pricing programs and we're just trying to understand.
That Delta what would you go from like 92 basis points towards that low end.
Once again, there's a lot of things that vary theres things that happened maybe they pushed it upstanding too that it could've made at 78 this quarter rates industry thing that can make it next quarter could be 99% or 76, right. There I have to give a range because gain on sale is not is clean there is derivatives and theres a lot of different numbers coming in theirs.
A lot of different things there is timing of issues when we sell loans as timing of hedges as market movement is a lot more complex than just like he did you put a number IV paper and it just goes through and so I want to give a little bit of a range for you and so 75 to 100 I feel really strong about it.
We'll deliver that once again, you can be confident in that but to drive him here, albeit at a high rent and lower than the range I'm not going to be able to do it for you Michael I Love you and I. Appreciate the question 75 to 123 to 30 and I will deliver once again for the 11th straight quarter with what I told you.
Okay. Thank you so much.
And do you have a final follow up question from Bose George <unk>. Please go ahead.
Hey, Matt This is actually Mike Smith on for Bose.
You kind of hit on this at <unk>, but was wondering if you could just touch on kind of the opportunity set in jumbo or any other products for that matter just with some of the stuff going on with banks. Thanks a lot.
Yes. Thanks for the question appreciate it and so yes, I think jumbo was one of the spot that we're really focused on to hopefully help gains of opportunity for our broker community. The only reason the retail loan officers stays at a bank would be because they can't generate any visit themselves or be they do a lot of jumbo loans and sometimes banks can offer.
Jumbo product as a loss leader I think with some of the bank failures recently as we've talked about I think some of the banks are to back off that strategy, a little bit, which actually gives an opportunity upside for your wm and the broker community how that will play out I don't know to be honest with you as you know, it's a focus and we'd like to figure. It out we don't have it solved yet but with that being said.
That's all upside because right now our jumbo production is very low on the product side in general we're looking for high quality loans like looking for high quality loans that can be done faster easier and cheaper because brokers and find the mortgage broker dot com, which is the website where consumers are going to is growing and we want to continue to drive people there and educate.
The fastest easiest cheapest way to get a mortgage through broker. They are the experts that will show up on your behalf and if I can add a couple of our products jumbo being one of them and a better product of jumbo will that help that website will that help brokers. Yes, yes. So we are working on it but at the same time, that's all upside because what you saw in the first quarter and what you see my guidance for the second quarter is assuming that thats not really.
By that time.
Great. That's helpful. Thanks, a lot for taking the question.
Yes. Thank you for the question.
No that was last question I believe and so I just want to say thank you to everyone jumps on these calls I. Appreciate your questions I. Appreciate your thoughts. We appreciate all of you that came out of <unk> to really understand our culture and our team in the broker community. We're excessively exceedingly if thats better we're excited about the broker community. The broker community is growing and everyone that was that GW alive in a lot of you on this call I see.
And so hopefully you guys feel that energy and that passion, we have and the brokers have and so we're going to keep winning together Q2 is going to be a heck of a quarter and we're excited to share with you I'll be talking to you guys. After the quarter and do you have anything in between Blake's available I'm available Andrew and our team. We appreciate your guys and gals have a fantastic day.
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