UWM - Q2 2024
August 6, 2024
Transcript
Operator (participant)
Ladies and gentlemen, good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation Second Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to remove yourself from the queue, please re-press star one. Thank you. Blake Kolo, you may begin your conference.
Blake Kolo (Chief Business Officer and Head of Investor Relations)
Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the second quarter 2024 UWM 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 forward-looking statements, please refer to our earnings release that we issued this morning. Our commentary today will also include non-GAAP financial measures. For information on our non-GAAP metrics and the reconciliations between the GAAP and non-GAAP metrics for the reported results, please refer to the earnings release issued earlier today, as well as our filings with the SEC. I will now turn the call over to Mat Ishbia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage.
Mat Ishbia (Chairman and CEO)
Thanks, Blake, and thank you everyone for joining us today. For a while now, we've been saying 2024 would be a better year for the industry than 2023, and although it hasn't been that much better yet, our production at UWM has been winning. The market might be getting better soon, which we'll talk about a little bit later, but industry volume in the first half of 2024 versus 2023 is about the same. Most people are living in a purchase-driven market, but there's still tremendous upside that lies ahead. UWM has been winning. We had an amazing quarter, which we'll go through the details, but the market might be getting better here soon. While rates have stayed higher for longer, the broker channel continues to post share increases, as the latest data shows the highest channel market share since 2008.
Andrew Hubacker (CFO)
We continue to see the data on mortgage loan officers migrating from retail to wholesale. We're excited about that upside, and it's starting to happen. Now, there's tremendous buzz on our campus, as many of you saw at UWM Live. Those that were here saw firsthand our continued focus and investment in technology, which put UWM and the broker community in position to handle the significant increases in production that we anticipate when the Fed cuts rate multiple times over the next 12-15 months. Now, let's look at the second quarter performance. Whether we compare year-over-year or sequentially, the second quarter was a great quarter. We closed $33.6 billion in total production within our guidance, with over $27 billion coming from purchase.
Our production is up 6% from the second quarter of 2023, and more impressive, up 22% compared to the first quarter this year. In fact, it was our highest quarterly production since the first quarter of 2022. Our gain margin was 106 basis points at the higher end of the guidance, and we generated net income of over $76 million, and that includes a decline of $115 million on fair value of MSRs, which is tied to interest rates and out of our control. In the second quarter, we announced a number of products and technologies that add speed and capacity to broker channel that really just didn't exist in 2020 and 2021. We're really excited to see these things come into action.
First, Mortgage Matchup, our consumer-facing website, is now the official mortgage partner of the NBA and WNBA, and we're seeing more and more people going to this website every single day. Track+, which enables UWM to handle everything in the closing process, from title, closing, disbursement, so the broker no longer has to go outside and work with a third-party title company or anyone outside, and it saves the consumer thousands of dollars many times. This is a huge game changer, and we're taking advantage of it right now, and so are our brokers. We scaled PA+, which is Processor Assist+, allowing brokers and their processors to choose which part of the loan process UWM loan coordinator handle. This immediately adds capacity to our brokerage, which will become more critical as rates come down. Finally, we continue to invest heavily in our Bolt underwriting system.
This allows brokers to get initial approval in as little as 15 minutes, and also is allowing our underwriters to do more business every single day with technology pulling the weight on a lot of the underwriting processes. The full impact of these investments will be apparent when we enter a refi market, where you will see UWM and the brokers able to add significantly more increase in volume than the rest of the market, while still maintaining speed and the service we are known for. To put it bluntly, UWM and the broker community are thriving and are ready for when rates drop, and they will drop. You guys know me and know I'm excited about the business, and I'm excited as ever. But my 21 years of work, I've never felt UWM is more prepared for the opportunity we are right now.
We are prepared, and we've been building for this opportunity, and we're super excited. Now I'm going to turn things over to Andrew Hubacker, our CFO, and then I'll come back and chat later.
Thank you, Mat. We were pleased with our second quarter financial performance, reporting positive GAAP net income for the quarter and year-to-date. Importantly, we also remained profitable operationally and on an adjusted EBITDA basis before considering the net change in fair value of MSRs, which is largely outside of our control. Total production volume of $61.3 billion year to date is an approximate 13% increase from the first 6-months of 2023, and gain margin of 107 basis points is up from 90 basis points in the same period last year. These increases in volume and gain margin have allowed us to continue to invest significantly in our people, our technology, and in the growth of the broker channel while maintaining profitability.
During the second quarter, we continued to execute on our consistent strategy of opportunistically selling MSRs, and we have generated close to $2.4 billion in net proceeds from bulk and excess sales through the end of the second quarter. Proceeds from these sales have been used to delever our balance sheet, increase production, and invest in our business, while also maintaining a consistent dividend for our shareholders. These sales have been targeted at our higher coupon MSRs and allowed us to significantly de-risk the portfolio. Most of our bulk and excess sales in the first 6 months of 2024 were of servicing rights on loans with coupons above 5.5%, and approximately one-third of our bulk sales were Ginnie Mae collateral.
The weighted average coupon of our portfolio declined from the end of 2023 to 4.31%, even with year-to-date new production at higher rates. As at the end of the quarter, our capital and leverage ratios continue to fall within expected and targeted ranges in the current environment. We ended Q2 with total cash of just under $700 million and no outstanding borrowings on our MSR or unsecured lines of credit, so liquidity and access to liquidity remain very strong. We continue to be prepared, operationally and financially, for different market cycles. Okay, I'll now turn things back over to our Chairman, President, and CEO, Mat Ishbia, for some closing remarks.
Mat Ishbia (Chairman and CEO)
Thanks, Andrew. I'll close with a few points before the Q&A. You know, more and more American consumers are seeing the advantage of getting their mortgage through a mortgage broker channel. It's undeniably the fastest, easiest, and most affordable way to get a mortgage, and the latest share numbers validate this. As I said before, in Q1, we saw the broker channel achieve the highest share of industry in the last 15 years. I would say that UWM and the broker community are in a much stronger position heading into the next refi market than we were in 2020. But regardless of the market, we'll remain the best mortgage lender in America. Our focus will continue to be on providing elite service and technology to mortgage brokers, so they continue to serve the American consumers.
Andrew Hubacker (CFO)
Having been the number 1 wholesale lender for a decade now, and number 1 overall lender for the last 3 years, we, as well as the top purchase lender in America, our focus turns to making the broker channel number 1. To us, the broker channel is achieving over 50% market share. That may take us 3 years, 5 years, or 20 years, but this is the target, and this is what we're going to focus on because it's best for the consumers, it's best for mortgage brokers, it's also best for UWM. We're going to win as a team. Now, turning to guidance, we expect Q3 production to be anywhere between $31 billion and $38 billion, and our gain margin between 85 and 110 basis points.
With that being said, the last couple of days of the market has really made an inflection point where we can look at, could the refi boom be here right now? Now, if the 10-year stays where it's at right now and mortgage interest rates stay where they're at right now, we will beat this guidance from a production perspective. But I'm more excited about the fourth quarter and beyond if the 10-year and rates stay where they're at. Obviously, rates could go back up five minutes after I talk on this call, and it will be exactly what I guided you. I want to make sure you guys know 31-38 and 85-110 is in line, and we expect to be in those numbers, but there is a lot of upside ahead.
The best part about the upside is this: we are the most prepared mortgage company in America. We've been building for this. We did not lay people off. We have been prepared for the opportunity. I always said, the mini refi boom or a full refi boom, the first 6 months is when you make all the money, and if that's what we're about to hit, we are in the best position ever at UWM, and I'm proud to share that with the shareholders and excited about the future. If the market turns back, we're still going to dominate in the purchase market we have been for the last couple of years. We're excited about what's ahead. We'll see what happens. I'm really excited to see the third quarter, fourth quarter, and the upside and the possibilities ahead with UWM.
Now, at this time, I'll turn it over to the Q&A, and we'll, we'll go through there.
Operator (participant)
Thank you. At this time, I would like to remind everyone, in order to ask a question, press star and then the number one on your telephone keypad. If at any time you would like to remove yourself from the queue, please re-press star one. At this time, we will pause momentarily to assemble our roster. We will now begin the Q&A session. Your first question comes from the line of Bose George with KBW. Your line is open.
Bose George (Analyst)
Hey, good morning. Actually, in terms of rate expectations in the market, if the Fed does cut by 200 basis points as the forward curve is suggesting, but the yield curve steepens and say the 10-year doesn't go down that much, do you think we could see a pickup in ARM production and that sort of contributes to overall volume increases?
Mat Ishbia (Chairman and CEO)
Yeah. Well, thanks for the question. Obviously, it's hard to predict all the, all the opportunities and possibilities out there. The Fed cutting rates as much as you just described, would be a, a massive movement in the markets in general. I'd have a hard time thinking the 10-year would not follow in some impactful way. Also understand the difference between, you know, how much 10-year versus the 30-year fixed. So could ARMs become more relevant? Yes. I still believe 30-year fixed will be the prevalent product, for the foreseeable future. But the Fed cutting rates, even 25 basis points, which everyone in the market expects, September 17, 18, whatever, will move the markets from a perspective of consumer demand, consumer awareness. It's the best marketing piece in the world right there.
Andrew Hubacker (CFO)
When the Fed cuts rate, it'll lead every news station, and every consumer will call their mortgage broker, and we think that will be more impactful than even the rate movement down. So we'll see how that all shakes out and what the impact will be. But we're on the cusp. We're not quite there yet, but we're on the cusp of a potential very interesting time here that we are very, very well prepared for and we've been waiting for here at UWM.
Bose George (Analyst)
Okay, great. Thanks. And then actually on, on the Track+ program, like, how much do borrowers save from that? And then, like, in terms of how you. You know, do you guys essentially sort of work with title insurers to sort of, you know, I guess, reinsure that, or how does the structure of that program work?
Mat Ishbia (Chairman and CEO)
Yeah, well, there's a bunch of different nuances and parts to it, but the key is the consumer saves thousand or thousands with an S at the end on many transactions, if not all transactions through Track+. It's a really simple, easy way to close your loan. We're trying to make the process faster, easier, and cheaper. It does all three. There's all different nuances with how we handle the risk, but from a perspective is, we look at it as we're taking on little to zero risk at all in our organization, and we're saving consumers a lot of money, and it's disrupting the title world. And it's gonna happen because it's better for consumers. We're always what's better for consumers, and I'm sure you read about FHFA's title pilot.
Andrew Hubacker (CFO)
That's gonna be better for consumers. Like, what's better for consumers wins, and that's why we're winning, because brokers are better for consumers. It doesn't happen overnight, but it's all happening, and title is another example of that.
Bose George (Analyst)
Okay, great. Thank you.
Mat Ishbia (Chairman and CEO)
Thank you.
Operator (participant)
Your next question comes from the line of Derek Sommers with Jefferies. Your line is open.
Derek Sommers (Analyst)
Hey, good morning, everyone. To follow on to kind of Track, Track+, and PA+, could you provide any kind of incremental color on maybe adoption rates by your broker partners or any other color on how those products are trending?
Mat Ishbia (Chairman and CEO)
Yeah, thanks for the question. So a couple of things. The adoption rates actually have gone up significantly in the last 2-3 months. What's happening is they're really just built for scale. There's two parts of the equation. Back in 2020 and 2021, when refis hit, brokers lost market share. They didn't gain as much because, one, we were well prepared. I would say pretty well prepared, not as good as we are today, but brokers were not. What we built with PA+ and Track+ is we're taking the, the guesswork out of it. The brokers don't have to hire up. The title companies don't have to hire up. Nobody has to hire up because UWM's technology and innovation, and that we've hired up and are prepared, is able to handle the scale.
Andrew Hubacker (CFO)
Remember, it's not just UWM handling the scale, 'cause if brokers can't triple their business or double their business, how am I gonna do that, right? How am I gonna grow at a significant level if they can't? And so PA+, Track+ is basically taking the guesswork out of the game and saying, "We've got the scale for everybody, brokers and UWM included, and Track+ and PA+." So the adoption has been pretty great, but it's not gonna be at the levels that we expect, because right now they don't need a scale because the market doesn't warrant it right now. Right now, the market is still where the market was, where we're going through and going through the same numbers we've been seeing.
So it's not creating, it's not a huge scale right now, but it does remove a lot of bottlenecks in the industry, in the brokers world, and it makes it so it's faster, easier, and cheaper, and the word is scale. We're prepared for scale for not only for UWM, but for our brokers, and PA+ and Track+ does that.
Derek Sommers (Analyst)
Thank you. Helpful commentary there. And then just to circle back to your commentary on guidance, is there a 30-year mortgage rate in mind where, you know, when the floodgates really open on a refi rally, or how are you thinking about that?
Mat Ishbia (Chairman and CEO)
Yeah, you know me, I think it's—I don't know if I have an exact number to give you, but what I would say is, you know, the market where we're at now, if the 10-year ticks down a little bit more from where it is today, like, where, like, the range we're in right now is good, but we're on the, on the cusp, right? So I, I can't give an exact number, but I do think that if the 10-year drops, you know, you know, down below the 3.75 range, and we start getting in those ranges lower than that, it will spur a refinance boom.
Andrew Hubacker (CFO)
And so we're not there yet, and, you know, like I said, after I talk on this, in 10 minutes, it, it and it already has gone up a little bit today, that, you know, everything is exactly what I guided you, 31-38, but there is a lot of upside. And what I'll tell you is we're the most prepared company for that upside. And so if the, if the rates drop, more substantially and refis become relevant, you know, we could do a substantial amount of more business. And when I say substantial, I mean, like, significantly, significantly more, on a monthly basis. Not for this quarter, most likely, because this quarter is already almost baked. If you think about it, we're midway through August, almost.
But for the fourth quarter, it could be exorbitantly higher numbers and, with a rate drop of a little bit further.
Derek Sommers (Analyst)
Great. Thank you. That's all for me.
Mat Ishbia (Chairman and CEO)
Thank you.
Operator (participant)
Your next question comes from the line of Doug Harter with UBS. Your line is open.
Doug Harter (Analyst)
Thanks. Can you, Mat, can you just talk a little bit more about some of the investments you made this quarter and how you think about the incremental scale and volume and, you know, kind of how your expenses would look in a, you know, kind of in a significantly up volume environment?
Mat Ishbia (Chairman and CEO)
Yeah. No, thanks for the question. So my expenses look very similar in a very—you know, we built this in. Like, we didn't lay people off. We've been building, we've been preparing. I have about 8,000 people. I don't know the exact number, but roughly 8,000 people at our company right now. You know, we are prepared. We've built some amazing technology, which I don't even want to speak to on this because it's just, you'll see it when you see it. But we got some amazing things that we built and are ready for scale. And that's what I've been talking about, like, we are the most prepared. We've obviously been dominating for the last 2.5 years. Every quarter, I come out and tell you, what we're gonna hit, we hit it.
Andrew Hubacker (CFO)
We've been outperforming every other mortgage company in America, and it's not even close, and we are the most prepared mortgage company. Now, does that mean we're gonna do the most volume of everyone when refis come? There's a lot of refi-only shops out there, right? But we are extremely prepared. We are not gonna miss a beat. Like, the amount of volume that we got in today or yesterday versus what we've been getting in before is significantly higher, and we can maintain that and manage that and handle that. And so I guess my perspective is the technology, the investment in people, in training, in all aspects of a technology innovation process has been significant. And it's not just been the last 3 months I've been doing it. We've been doing it for the last 2.5 years, waiting for this day.
And like I said, I'm not saying we're at the day, but we're getting close to that day. And when that day comes, which we all know is gonna come, the best mortgage company in the country is gonna thrive, and we're excited about that, and the brokers are gonna thrive, and we're excited about that, and our shareholders will get that benefit.
Doug Harter (Analyst)
Appreciate the insights, Mat. Thank you.
Mat Ishbia (Chairman and CEO)
Thank you.
Operator (participant)
Your next question comes from the line of Brad Capuzzi with Piper Sandler. Your line is open.
Brad Capuzzi (Analyst)
Thank you for taking the question. Just following up on Track+, can you discuss a timeline or plan to extend this beyond online refi transactions?
Mat Ishbia (Chairman and CEO)
Say, say that again?
Brad Capuzzi (Analyst)
On Track+, like, I know you mentioned at UWM Live, that right now, it's the capabilities for it are, you know, just online refi transactions. Is there, like, a timeline or plan to extend that out beyond just refi transactions?
Mat Ishbia (Chairman and CEO)
Yeah, so there's two parts. There's Track and Track+. Track allows for purchases. Track+ is just refinance transactions right now. Once again, you know, we can handle the purchase business, title companies can handle the purchase business, brokers have been able to handle the purchase business. We all understand that market. What Track+, along with PA+, along with a lot of things, are built for is the market doubling in a week's notice, right? So think about, like, can the title companies handle double the volume? Can a broker handle double the volume? Can UWM handle double the volume? Well, the answer to the UWM question is, yes, we can. The answer to the broker question is, yes, they can, because of PA+.
Andrew Hubacker (CFO)
The answer to the title company question is, I have no idea, I don't really care, because UWM can handle it with Track+. So we're taking it into our own hands to handle double the volume in a one-day notice, right? And so Track+ is built for that. It's online refinances, virtual closings. It's making the process faster, easier, cheaper for consumers. I have not built, although I have the ability to build it, I'm focused on scale, and so we have not focused on, hey, can we advance it to in-person refinances or in-person purchases? Although, we can do some of that with Track, but my big focus is, what am I gonna do if the10-year or the rates drop overnight? And like I said, it almost happened Thursday, Friday.
We're getting close, and we're prepared for it, and that's what Track+ is built for. And so, and the adoption, back to the earlier question, the adoption has been, I won't give- I won't give a number, but substantially higher in the last 3-weeks or 4-weeks than it was 2 months ago. Because it's starting to. Like, people are starting to feel it. And I've been pushing people is, "Are you an early adopter? You better try this stuff and understand how Track+ and PA+, all this works, so when the rates do drop and that opportunity comes, you know, can you double your business? You don't have to worry about it, 'cause UWM's got your back, and we will see that happen." And so, we're very well prepared, and we're excited about it.
Brad Capuzzi (Analyst)
Thanks. And then, can you just give an update on the dynamics playing out within the broker channel? You know, have you seen, pricing be more rational, and are you still seeing continued pullback from, peers in that channel? Thanks.
Mat Ishbia (Chairman and CEO)
Yeah, I mean, I think pricing's been rational for a while. I feel like I'm not concerned about wholesale. Like, the truth is, all parts of the market, if the rates drop a little bit further than they are today, right, everyone's gonna get busy. And then what happens in rational pricing that maybe you're describing or pricing in general will change because people will start. You know, a lot of our competitors bring in 75 to 100 loans a day. That's how small they are, right? We're much bigger than all of them. Then going to 200 loans, can they double their business? I don't know if they can. And so what happens is they back off pricing, and so that will happen. But that's not just wholesale, that's retail, that's the whole industry.
Andrew Hubacker (CFO)
People that are not prepared, and that's why we want to be prepared, so we don't have to do that. Our pricing, our margins, I feel really good about where our margins are. I feel really good about our volumes. We're very, very profitable as it stands today. Now, the one thing to recognize, when rates do drop and all these things, and you say rational pricing, but MSR values are gonna plummet, right? So all these companies that have huge MSRs, and hopefully you've realized, Andrew, Blake, our team of people here did an amazing job with our MSRs. If anyone caught that our WAC is lower now than it was at the end of the first quarter, after we just did $33 billion of rates around the 7% range. Imagine that, right? And so we've de-risked significantly.
So we'll still have an MSR write down, but we'll have a origination write up, if you think of it that way. We're doing a lot of business. Everyone's gonna have an MSR write down. So balancing those things and understanding what's happening is important, going forward. But that, I think that it'll be interesting to see, can people handle. So pricing rational, like, margins will go up. They don't go down in a refi boom, they go up. How much they'll go up, I'll hopefully be able to guide you next quarter, if, if the rates drop a little bit further than they are. Right now, I feel good about our range because that we're still off. We're off the lows, which I was a couple of quarters ago, 75-100.
We're 85-110, and we're gonna be in that range this quarter. Now, the question is, if rates drop further, I expect margins to go up, and I'll guide to that for the next quarter if that happens.
Brad Capuzzi (Analyst)
Thanks for taking my questions.
Mat Ishbia (Chairman and CEO)
Thank you.
Operator (participant)
Your next question comes from the line of Eric Hagen with BTIG. Your line is open.
Eric Hagen (Analyst)
Hey, thanks. Good morning. Hope you guys are well. Hey, following up on that point, I mean, how stable do you feel like margins are if rates are lower? Like, even within the refi and purchase channels specifically, like, what do you feel like maybe accounts for differences in margins between those 2-channels if rates are lower?
Mat Ishbia (Chairman and CEO)
Capacity. It's just capacity. That's what accounts for the differences.
Eric Hagen (Analyst)
Yeah.
Mat Ishbia (Chairman and CEO)
People can't handle it. So what's gonna happen is rates are if rates do go lower. Right now, 85-110, it's all day. It's simple, it's easy, it's clean. I feel really good about hitting those numbers, $31 billion-$38 billion. Now, if rates drop, like I said, let's just make up a number. I'm not 3.50 on the 10-year, okay? 3.5, right? If it goes there, all bets are off, right? It could literally. You know, we could double our business, right? And the, and now, if rates drop and we and margins could go from the 100 range to the 130 range, like, it's, it could go those numbers. I don't want you to quote those numbers.
Andrew Hubacker (CFO)
I'm just giving you ranges that if it, the 10-year goes down substantially, that's not- that's gonna happen to everybody. Everyone's gonna get flooded with refinances, 'cause there's trillions of dollars of loans in the 7%, 6.5%-8% ranges. And so all of a sudden, 30-year fixed is 5.5, 5.75, man, people are going to refinance. And when the Fed lowers rates, people are going to think about refinancing. They're going to start calling and reaching out and, and MortgageMatchup.com, going to independent mortgage brokers. That's going to happen. And so MSR write-downs will be massive. Origination volumes and gain on sale will go up. And so how does that balance out? You can determine how you want. Obviously, nobody controls the MSR write-ups or write-downs. We never take credit when it goes up.
We don't want to take credit when it goes down. We want to focus on origination, and we're not that far away from those numbers. But, you know, but once again, I'm out watching the market this morning. It could be already at 4 for all I know, the 10-year, and we're in our 3.80, 3.90. I don't even know what it's at, but whatever it's at, you know, you can't control it. So we just have to be the most prepared company. That's my job as a CEO and Chairman, and I think we're doing it.
Eric Hagen (Analyst)
Hey, we like it. Following up on the MSRs, I mean, any perspective on how you see the demand for MSRs developing with lower rates? Like, do you see the risk of lower MSR values impacting the demand side from the folks who typically show up to buy MSRs?
Mat Ishbia (Chairman and CEO)
I don't know if I'll see it. So first off, we sold a lot, opportunistically and understanding the market and understanding where the system, the rates were. Do I see? You know, for us, we don't buy MSRs, we originate them. We originate loans where there's nobody in the country that originates more loans than us, obviously, which originates more MSR. And so, do I see a slowdown? I don't know if I'll see a slowdown of people buying MSRs, because that's the only way they can originate. They have to actually have the those servicing loan to have a chance. That's not how UWM is. We don't need the loan to have a chance. Our brokers get the loans because they're out there, and they're the best for the consumers.
Andrew Hubacker (CFO)
So I'm not as concerned about will people not buy? People are going to still be buying. I'm not really in the mood to sell right now. We feel like we've de-risked significantly, and we're all about origination. 1000% of our focus is on origination, being prepared, helping brokers be prepared, and making sure we deliver to the shareholders. Well, I've been telling everyone, and I think we've been doing that. It'll be interesting. I don't think it'll be a massive shift, but because a lot of those servicers buy beyond cash flows, they buy for a chance to refinance.
Eric Hagen (Analyst)
Yep, yep. I appreciate you guys. Thank you so much.
Operator (participant)
Our next question comes from the line of Mark DeVries with Deutsche Bank. Your line is open.
Mark DeVries (Analyst)
Yeah, thanks. I was hoping to get a sense of, you know, what kind of improvements you think you're making with the technology investments in your time to close, and kind of, you know, how durable that would be under significantly higher volumes, and what that might mean for your potential to take even more share within the broker channel, if we get a surge in volume.
Mat Ishbia (Chairman and CEO)
Yeah, so turn times are a huge deal. Speed to close with all the technology. So I'll talk about my technology saying, but in the world with trigger leads and all the things that go on, people need to close loans fast. They need to get a borrower bought in, close the loan fast and efficiently. When rates do drop, you're gonna see everyone's turn times back up. We're the fastest in the country right now, 13, 14, 15 days. Like, we're the fastest in the country by a long shot. We will maintain that across the board, or if we get a little bit worse, we get worse by a day. Everyone else is 40, 45. They might go to 50, 60 days. Some places might go to 70 days to close loans. That's, that's what happened before, and that's what will happen again.
Andrew Hubacker (CFO)
And so our gap will widen because of our technology, and because of our service levels, and because of our staffing levels. Now, with that being said, the technology we've invested in, I'm gonna hold some of that back, some of the things that we've done, because some of the stuff we've done, I think is gonna really wow a lot of people in some really interesting ways. I'd rather not get into all the details as of yet because it's not ready to be talked about. But we have 1,700 technology people at our company every day working on technology for one focus: growing the broker channel, helping brokers win, helping UWM win, making things faster, easier for consumers. Like, that's what we focus on all day.
We don't have people in different countries and all around the country, and all around America working from home. They're in our office, and we have one team, one focus, and one goal, and all in one building. So we're all focused on it. There's some great technology stuff. Some of it you've seen or heard about, PA+, Track, Track+, Bolt, a lot of these things. But then there's some you have not heard about, but we are really excited about it. But the biggest thing for you is just to know speed matters. Speed will matter for consumers, saving $100-$150 bucks, and for brokers and for originators, it matters. And they lose loans, they trade loans, they compete with people for loans, and closing loans fast matters, and we are the fastest in the country by a long shot.
Mark DeVries (Analyst)
Got it. Thank you.
Mat Ishbia (Chairman and CEO)
Yes.
Operator (participant)
Your next question comes from the line of Terry Ma with Barclays. Your line is open.
Terry Ma (Analyst)
Hey, thank you. Good morning. Just had to follow up on the gain on sale margin. It's been pretty consistent the last two quarters, above 100 basis points. So I guess the question is kind of what gets you to the low end? And maybe going forward, what gets you comfortable kind of raising the low end of the guide?
Mat Ishbia (Chairman and CEO)
Yeah, well, so obviously, a lot of things move. So people think, you know, we did, I think, 108, 106 back-to-back quarters, which were pretty good numbers. But if I felt confident that we would never be in the 85 range, I would move that off the bottom. I won't say that it's never- it cannot go back down. That's why I have the range between 85 and 110. There's a lot of movements, right? Like, with a lot of volatility in markets, which we've seen actually, as we're all aware of, that actually makes hedging and margins very, very tough to come by. MSR valuations go up and go down. That impacts the valuations on pricing on a day-to-day basis, hour-to-hour basis.
Andrew Hubacker (CFO)
And so I don't feel that it's like, if I felt more confident that, hey, it could never be 85, I would change the number. So 85-110 is the guidance. I feel good about that. Do we try to have bigger margins? Absolutely. Do I feel good about our margins? Absolutely. But there's still, you know, 50 days left in this quarter. There's a lot of movement that could happen. Rates could go up, rates could go down, volatility impacts things, hedges, a lot of aspects. And so keeping that range is good. We feel good about 85-110. And then to the question about what will make me move off the bottom, I think if the rates drop a little bit further, I could see myself moving off that bottom, next quarter.
I think that if we see a steadiness again this quarter and rates take a little bit more of a dip, I feel confident in our capacity ability that I could move that number the next quarter on the bottom up a couple different levels, 1 level or 2 level, potentially. And we'll look at that, but not yet. It's not there. I still think 85-110 is the number, and like I said, I haven't looked in the market. It could be 85-110 the next 3 quarters for all I know, based on what the market does. But I'm excited about moving off that number, hopefully next quarter, if the rates come down a little bit further.
Terry Ma (Analyst)
Okay, got it. That's helpful color. And then just on the MSR sales, you guys mentioned you'd be opportunistic, but you also mentioned you've de-risked meaningfully at this point. So I guess going forward, can you maybe just talk about your appetite to sell higher coupon loans, just given the demand still there?
Mat Ishbia (Chairman and CEO)
Yeah, we're opportunistic with everything with selling MSRs. Like, we're not really focused on it. Like, we, we had a strategy coming in this year. The strategy was to de-risk, was to sell MSRs in the first 3-6 months of the year and prepare for scale, technology, operationally, and it's playing out how we expected. And so I'm not saying we won't sell any more MSRs, because people call us all the time to try to buy them. However, it's not a focus of mine right now. My focus is on origination, on scale, and dominance in this industry right now, and that's what we're focused on right now. So will we sell more? Possibly, but it's not a focus of mine right now, or our organization, because we're focused on those other things.
Terry Ma (Analyst)
Okay, great. Thank you.
Mat Ishbia (Chairman and CEO)
Thank you.
Operator (participant)
Your final question comes from the line of Ryan Shelley with Bank of America. Your line is open.
Ryan Shelley (Analyst)
Hey, guys. Thanks for the question. I just had a quick one on expenses here. I noticed that direct loan production costs were up pretty significantly in the quarter. If you could just provide any color there, and as well as G&A. Just any color you could provide there and factors to consider looking forward, that'd be great. Thanks.
Mat Ishbia (Chairman and CEO)
Yeah, so there's a lot of nuances and a lot of different things, but I guess I'd say naturally, when you do more production, you're gonna have more loan production expenses, right? We, we help cover credit reports. The credit report costs have gone up. A lot of different things have gone up. But I really don't focus on expenses that much because I focus on winning and focus on growing, and right now is a growth mode, not an expense. Like, you've even heard a lot of my competitors who've been playing the game of cutting expenses. Kind of, you don't hear them talking about that anymore because the game's changed.
Andrew Hubacker (CFO)
We're focused on winning, which is revenue, which is origination, gain on sale, more brokers growing, loan officers converting the broker channel, and being prepared for the refinance opportunity, along with the purchase opportunity, which I haven't hit on as much because all I'm talking about refinances. When rates drop a little more, more people will sell their houses. Purchases will pick up, inventory will pick up. It's gonna be a big swing of opportunity. And so the expense game, our expenses will go up consistently with our volume. But it's like, it's tied to loan production, and it's not really relevant. Our G&A, and, like, our overall just expenses from payroll team members, like, we're in a pretty good spot.
We're still hiring, but we're not hiring extremely high numbers because we've got our team, we've got our technology, we've got our systems, and we feel really good about where we're at. So the focus right now is on growth, scale, and being prepared, and we are. Liquidity is great. We've de-risked on MSRs. Expenses, yeah, we'll watch them, but that's not the game right now. The game is winning, and we're gonna focus on winning right now. Thank you.
Ryan Shelley (Analyst)
Got it. Thanks.
Mat Ishbia (Chairman and CEO)
Appreciate the question.
Operator (participant)
That will wrap up our question and answer portion. I would like to turn the call back over to Mat Ishbia for closing remarks.
Mat Ishbia (Chairman and CEO)
Yeah. Well, thank you very much. Thanks for all the questions. Really appreciate the support, and the great questions that were there today. If you have any other follow-up, of course, Blake Kolo is always available in our team, and look forward to a great quarter and talk to you next quarter. Have a good one.
Operator (participant)
Ladies and gentlemen, this concludes today's conference call, and you may now disconnect.