Mikhail Goberman • Citizens JMP

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Chairman, CEO & President Mat Ishbia attributed the guidance increase to a comprehensive analysis of the market, including housing inventory, interest rates, and bond trading. He stated he felt confident for the first time in years to raise the margin guidance to a new level that he believes UWM can sustain and control in the wholesale channel.

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Chairman and CEO Mathew Ishbia explained that while technology and AI investments will continue, they are expected to drive down costs and increase revenue over time. He emphasized that the current higher expense level is a strategic investment to prepare for future growth and market dominance, stating that fixed costs are near a peak and the company is positioned to handle significantly more volume with minimal added expense.

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CEO Mathew Ishbia described this scenario as a "massive" opportunity. He explained the primary interplay is a timing issue, where an MSR write-down could occur in one quarter before the offsetting origination profits are booked in the next. However, he stressed that UWM is uniquely prepared to double its origination volume to capitalize on the opportunity, with profits that would far outweigh the MSR valuation impact.

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Robert Cauley, Chairman, President & CEO, responded that he expects prepayment speeds to be 'very muted.' He explained that Q2 is a seasonal peak and the recent spike was due to a brief market rally that is not expected to continue. He also mentioned that the addition of newer issue specified pools should help lower the weighted average prepayment speed going forward.

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Executive Robert Cauley stated the Rocket/Nationstar merger is a negative for the mortgage universe's convexity, but the ultimate impact on specified pool pay-ups is yet to be determined. CIO/CFO George Haas added that he doesn't expect a material impact on their portfolio. Regarding supply, Cauley anticipates a below-average summer for MBS issuance, citing low housing affordability, high rates, and economic uncertainty as significant headwinds.

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Executive Robert Cauley confirmed the book value update was inclusive of the declared dividend. Both Cauley and CIO George Haas view GSE reform as highly unlikely, citing the political risk of making housing less affordable and the severe capital implications it would create for banks holding agency MBS under current regulations. Regarding supply, they noted that street estimates are already being revised lower, a trend they expect to continue.

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Executive Robert Cauley reported that book value was down approximately 3.7% quarter-to-date due to mortgage spread widening. He explained that a bear steepening is the primary risk because it could erode premiums on their higher-coupon assets. In that scenario, Cauley noted they could reduce leverage to maintain the dividend, given modest NIM improvement. Executive George Haas added that leverage reduction would likely occur via adding TBA shorts or slowing reinvestment, not outright asset sales.

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Executive Terry Schmidt stated that while Guild is constantly vetting potential acquisitions, the company is highly selective, and organic growth has been stronger in the first half of the year. President and COO David Neylan added that Guild is benefiting from a 'flight to quality' in organic recruiting, noting that Guild's loan officers are on average 30% more productive than the industry average, which makes the company an attractive destination for top talent.

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President & CIO Bryan Wulfsohn stated that Lima One's focus remains on single-family transitional and term rental loans, with 2025 originations projected around $1.5 billion. He confirmed the Lima One team reports collectively to MFA's senior management. Executive Harold Schwartz added that economic book value was effectively unchanged since year-end, net of the dividend accrual.

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Desmond Macauley stated that ARMOUR is comfortable with its current leverage. An increase would require more clarity on GSE reform and QT tapering, while a decrease could be triggered by tail risks like significant yield curve flattening. Sergey Losyev noted that swap spreads have widened and ARMOUR's 75% swap hedge position is a comfortable base case. Desmond Macauley confirmed the book value was $19.18.

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Chief Investment Officer Nicholas Letica stated that mortgage spreads have shown a more controlled response due to a predictable Fed path, and he remains constructive on mortgage returns, noting the firm does not need spreads to tighten to achieve performance. He also confirmed that the MSR allocation is expected to remain steady. Interim CFO William Dellal addressed GSE reform, stating the company has no special insight and declined to speculate on the status of privatization or the government guarantee.

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