UWM - Q4 2023

Transcript

Operator (participant)

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation fourth quarter 2023 and full year 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's 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 the number 1 on your telephone keypad. If at any time 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 fourth quarter and full year 2023 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 the earnings release that we issued this morning. 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. Let's jump right in. A couple of thoughts. First off, 2023 was one of the best years in UWM's history. It wasn't the year that stood out from a financial perspective, but will stand out from a dominance perspective. We separated from our competitors significantly on market share, growth, operational earnings, and strategic investments. It was our second year as the number one overall lender. It was our third consecutive year as the number one purchase lender, and our ninth consecutive year as the number one wholesale lender. As you heard me say many times before, the best mortgage companies shine in high-rate markets, and that's exactly what we have done consistently here at UWM.

While there have been a lot of commentary about higher interest rates on the overall mortgage environment this year, UWM delivered our best purchase year of all time with almost $94 billion of purchase, about $20.7 of that being the fourth quarter. We ended the year with over $108 billion of overall production and record market share across the board. In short, I'm incredibly proud of our team's performance throughout the year and believe this performance is also clear evidence of the strength of the broker channel. UWM and our broker partners have succeeded during times when many have failed, and now we are uniquely positioned to take advantage of the lower rates and increased housing inventory and demand that I believe we will see over the next six, 12, and 18 months. Before talking about the fourth quarter, I'd like to emphasize a few key messages.

First and foremost, the broker channel is strong and continues to grow its overall share of the industry. Loan officers continue to join the broker channel, and real estate agents and consumers continue to see that brokers are the best choice for a mortgage. Second is our investment technology continues to give our brokers a competitive advantage on speed, price, and process. Always making the process faster, easier, and cheaper is our focus, and the GAAP between UWM and our competitors is only getting larger. It's becoming that much harder to catch up given our relentless effort to continuously improve. Third, I've always stressed that UWM only competes for two out of 10 loans. The good news is the broker channel keeps growing, and now we are competing for almost 2.5 out of 10 loans.

Soon that will be three out of 10 loans and maybe then four out of 10 loans. This is a tremendous upside to the broker channel, and UWM is prepared to make the most of that opportunity in the future. Fourth, and the point I'm most proud of is, unlike other mortgage companies, we have continued to invest in our people and grow our team. Since the beginning of 2023, we've grown our team by about 15%. We've never laid off a single team member in our 38-year history. The strength of our business gives us the ability to hire and invest in our people, and we look forward to even more growth in 2024. Our culture and our team is a differentiator, and people that have been to our office have been able to see that firsthand. Finally, we remain committed to sharing our success with our shareholders.

For the 13th consecutive quarter, we'll be paying a $0.10 per share dividend. As I've said multiple times before, the dividend will be paid out in good times and in tougher times, and it's paying out in a year like 2023, should give complete confidence to the industry and to the market that it will continue going forward. Both UWM and the broker channel are ready to dominate in 2024. There's no doubt in my mind that we are strategically positioned to seize the opportunity ahead. Let's look closer at the fourth quarter. We closed $24.4 billion in production for the quarter at the higher end of the guidance, with $20.7 billion of that coming from just purchase. Gain margin was 92 basis points, also well within guidance.

After adjusting for changes in the fair value MSRs due to valuation inputs or assumptions, we generated pretax earnings of $39.2 million in the fourth quarter and $253.7 million for the year, both significant increases from 2022. In sum, we had a great quarter and a higher-rate environment than fourth quarter 2022, and I'm confident 2024 will be a better year in this industry than 2023. Volume and margin should be higher, but even whether they are or not, UWM will be successful and dominate with technology and service. I'm now going to turn the call over to our CFO, Andrew Hubacker.

Andrew Hubacker (CFO)

Thank you, Mat. Amidst the doom and gloom that many others have espoused during 2023, we were pleased with our operational performance during Q4 and for the entire year. Purchase business continued to lead the way as our total 2023 purchase originations were higher than both 2022 and 2021, even with the higher interest rate environment for all of 2023 and the significant decrease in industry-wide origination volumes. While our fourth quarter and full-year GAAP results were negatively impacted by the significant Q4 market rate declines and resulting impact to the estimated fair value of our MSRs, our operational income, before considering changes in the fair value of MSRs, increased significantly in Q4 and for the full year. Adjusted EBITDA for 2023 was $478.3 million as compared to $282.4 million in 2022, and for Q4, Adjusted EBITDA was $99.6 million as compared to $60.4 million in Q4 of 2022.

With respect to MSRs, unlike some of our competitors, we have not historically specifically hedged the MSR portfolio. Rather, we maintain our portfolio at levels such that we are confident that fair value impacts due to interest rate declines will, over time, be more than offset by an increase in origination income. We also hedge our MSR portfolio in what we believe to be the most efficient manner by regularly selling MSRs, which we continue to opportunistically do throughout the year. Notwithstanding the gap net loss for the fourth quarter and full year, our capital and leverage ratios remain within expected ranges in the current environment.

Furthermore, our liquidity and access to liquidity, including cash and accessible borrowing capacity, approximated $2.2 billion as of the end of the year, which is a significant increase from the end of each of the last two years despite, what many would agree, were challenging market conditions for mortgage originators in those years. We believe that our current financial strength positions us well for different market cycles. Okay. I will 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 jumping into Q&A with all of you guys. We've been a public company for over three years now. In that time, we hope you see that we consistently deliver on what we say we're going to do. We made a lot of different comments through the years, and you can go back and listen in, and we've always hit those consistently. We believe in 2024 will be a better overall year for the housing and mortgage industry, but regardless of the market, we'll remain the best mortgage lender in America, and that recipe will not change. We will continue to build the best technology and provide the best service to the broker channel, take incredible care of our 7,000-plus team members by treating them like family, dominate purchase business, and reward our shareholders with a consistent dividend.

I'll conclude by saying I have zero doubt that the broker channel is the fastest, easiest, and cheapest way for consumers to get a mortgage and undoubtedly the best part of the business for the loan officer to work, and we remain 100% committed to the success of this channel. We expect Q1 production to be between $22 billion-$28 billion. Also, I've always said the toughest mortgage environment, that the lowest you'd ever see our margin would be 75-100 basis points, and I've been guiding towards those numbers for a while now. As I see the purchase market stabilizing and the refinance market starting to come on, I believe that the margins will increase. So I'm going to take off our recent lows and move it to 80-105 basis points going forward.

You can take that as me calling bottom or officially coming off the bottom with regard to our margins. I want to thank our amazing team members and our clients for a great year, and I look forward to growing in 2024 together. Now I'm going to turn it back over to the Q&A.

Operator (participant)

At this time, I would like to remind everyone, in order to ask a question, press star, 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. Our first question will come from the line of Kyle Joseph with Jefferies. Please go ahead.

Kyle Joseph (Equity Research Analyst in Specialty Finance)

Hey. Good morning, Mat and Andrew. Thanks for taking my question. Just want to get a sense for kind of activity quarter to date. Obviously, you guys have your guidance, but give us a sense for the cadence of originations, kind of pre and post CPI print, and how that and potential implications for the more active spring season.

Mat Ishbia (Chairman and CEO)

Yeah. Thanks for the question, Kyle. Appreciate it. So overall, I think we're, I can't go into all the details, but I think we're off to a great, great start this year. I think the interest rates, as we saw such a massive decline in the fourth quarter, which hit the MSRs, as you know, a lot of it has come back up. So you obviously kept some of that income back on the first quarter, but we have not seen a decline from a perspective of business. That's why I guided actually higher on production and guided higher on margins than the fourth quarter. And if you compare that to first quarter of 2023, I think you'll see it very favorable based on my guidance and hopefully the execution of that.

So I think this quarter will be a great quarter, and I think, like I said in the call, 2024 is going to be a great year. It's kind of like everyone kind of feels not only the rates will drop a little bit, but also inventory will open up a little bit. The purchase season usually starts March, April. We feel like it didn't even stop in January and February. We're pretty good from a purchase perspective, and so we're feeling excited about what this year looks like.

Kyle Joseph (Equity Research Analyst in Specialty Finance)

Got it. And then just one follow-up there. You mentioned kind of the refi channel was opening up a little bit with rate movements in December, but just based on the forward curve right now, how do you expect the mix of originations in 2024 to compare to 2023? And are there any sort of implications there in terms of margins, or are you guys kind of agnostic to channel?

Mat Ishbia (Chairman and CEO)

Well, yeah. I mean, usually when rates go down, margins will go up, and that's because there's more action, more volume. A lot of our competitors have taken capacity out of the industry. Therefore, they're not able to handle the volume. So when you get a lot of volume, when refis come in and rates drop, they slow it down by adding margin. And so I think margins usually go up in a refi environment, and I think we've seen that in the past as well. And so I do think that the purchase refi mix, I think you saw last year, we were 85%-88% in that range of purchase and having record numbers. That will change to where there'll be more refis in 2024. We'll go down to 70% purchase or 80% or 50%. I don't know.

That depends on when rates drop and how much they drop, but we're still going to continue to focus on doing a lot of purchase business because that's what the best mortgage companies do, and that's what we've been able to do even in this higher-rate environment.

Kyle Joseph (Equity Research Analyst in Specialty Finance)

Got it. Thanks for taking my questions. I can hop back in the queue.

Mat Ishbia (Chairman and CEO)

Thank you.

Operator (participant)

Your next question comes from the line of Bose George with KBW. Please go ahead.

Bose George (Managing Director in Equity Research)

Hey. Good morning. Mat, from your commentary on the broker share, it sounds like the broker share now is up to around 25% of the market. Is that right? And where do you see that going in the next couple of years?

Mat Ishbia (Chairman and CEO)

Yeah. So thanks for the question, Bose. I appreciate it. No, I don't think it's at 25%. I think it's almost there. I think it's getting there. I think one of the last readings I saw was 22.84%. And so I've always been saying two out of 10 loans, and now it's getting closer to two, 2.5 out of loans. And I haven't seen the fourth quarter numbers, but I expect it to be right around that 23% number. So it's definitely going. But my point really is we're competing for two or 2.5 loans out of 10, and we're still in a dominant position. As the broker channel continues to grow and gets to three out of 10 or four out of 10 loans that we can compete for, UWM is going to grow as well.

And so we feel like we have the upside of the market from a rate perspective, but the upside of the broker channel as well that none of our competitors really have, at least none of the public competitors.

Bose George (Managing Director in Equity Research)

Okay. Great. Thanks. And actually, I wanted to ask also about the Ginnie Mae percentage that trended up a little more. Are they doing more on the purchase side? Is it streamlined refis kind of a mix of everything, or just any commentary that would be great?

Mat Ishbia (Chairman and CEO)

Yeah. No, it's mostly purchase. The great majority of our business in the fourth quarter was still purchase, and so streamlined refinances aren't really relevant all day. They will become very relevant when rates drop a little bit. Right now, they're still not relevant. They're still a little bit of ways out. There's different rules and requirements around FHA streamlines and VA IRRRLs, but they're both in the government bucket, which you have to show enough savings to a consumer. I don't think the market has dictated that yet, but when rates get down to the low sixes or high fives, I think you'll see a frenzy of activity. And so I wouldn't say it's tied to that. I think it's still majority purchase, but that will start to come here soon.

Bose George (Managing Director in Equity Research)

Okay. Great. Thank you.

Operator (participant)

Your next question comes from the line of Steve Delaney with Citizens JMP. Please go ahead.

Steve Delaney (Managing Director)

Thanks. Good morning, Mat. How low? The year not built around refis. We've been hung up here around 7% and haven't seen a refi market for what, three, four years. How low do you think a 30-year rate has to go to really spur any kind of a material refi event in the industry?

Mat Ishbia (Chairman and CEO)

Yeah. Thanks for the question. So I think it's got to make sense for consumers, and I think it's got to be it depends on where they did their last loan. So usually, it ties to, "Can you save the consumer 0.5 point in rate?" is usually how you think about it. And so borrowers that in October of this past year that were doing rates at 7.75, right, and then rates dropped to where you're doing them at 6.75, those different borrowers will have different times that they'll refinance. But generally-speaking, when rates get to 5.75-6.25, you're going to see a lot of refi activity because it's been a couple of years now where people have been doing loans at 6.5, 7, 7.5.

Even, that's why our MSR book. We're doing the most loans of everyone. So I know where the loans are being done. They're being done at 6.5, 7, 7.5. So when rates get to 6.25, or I call it 5.99, I think that will create enough of a benefit for a consumer to refinance. But beyond that, Steve, as the number one purchase lender, you're going to see when rates get to 5.99, now all of a sudden, those purchases will start to pick up even more too. And so we think purchase will open up, inventory will open up, and rates will drop for refis. I think it's going to be a very, very positive environment, whether it happens tomorrow or in three months or six months or nine months. It's going to happen.

We just don't know when. That also will then dictate margins will go up, which is why I guided off the bottom.

Steve Delaney (Managing Director)

Yeah. That's great color about having we thought about the purchase benefit in addition because that's a lot of people going to qualify now that may not have. So when the shift comes, and it comes, will UWM continue to work back to borrowers through your brokers? You seem to be resolute on that, that you work with the broker to get to the customer as opposed to creating your own call center like so many have tried to do over the years to capture the borrower. Thanks.

Mat Ishbia (Chairman and CEO)

Yeah. 100%, we're going to go through our brokers. It's the right thing to do. It's inappropriate what some of my competitors do and how they attack the broker's business. It's just they're downright wrong, and they run poor companies. Sorry to tell you that. It's just not the right thing to do. And so to attack your client, your client sends you a loan, and then you refinance that client, it's just the wrong thing to do. And obviously, we know Rocket and some of those other guys have done that for years, and they're just doing the wrong thing to brokers. And that's why the brokers know that. And so we will never. You can mark my words, never do that. We always give them back to the broker. We'll help the brokers. We'll show them how to refinance. We'll do trainings. We'll coach them.

We'll show them how to call and how to sell it. We do all the things, but it's the broker's client, not ours, and that's the right way to run a business. That's why we've been so dominant in the broker channel and this industry for years.

Steve Delaney (Managing Director)

Thanks for the comments, Mat.

Mat Ishbia (Chairman and CEO)

Thank you.

Operator (participant)

Your next question comes from the line of Doug Harter with UBS. Please go ahead.

Doug Harter (Managing Director in Equity Research)

Thanks, Mat. Hoping, as you're seeing gain margins come off the lows, how to think about what are the different types of environments that would cause you to kind of be low, middle, high end of your new range?

Mat Ishbia (Chairman and CEO)

Yeah. So the 75-100, I think I said in a—I don't know how many quarters I guided towards it, but probably five, six, seven quarters is my guess. I don't remember exactly. But the reality is, in the toughest mortgage market, UWM, we are kind of the bellwether for what happens in the margins and how the business goes. And we've said, "Hey, 75-100 is where it's going to be." Now, as the market starts to get better, I'm basically calling bottom. It's not going to get worse than it was. We're going to move it to 80-105. And then whether I stay like that for a couple of quarters or maybe I go to 85-110, and maybe it's going to continue to go.

Eventually, it gets back to more normalized numbers when it's a refi environment or a more normalized market. Right now, we're not there. But what I'm trying to signal to you and everybody else is it's on the way. It's on the way. We're off the 75-100. It'll be 80-105. Will I go to 85-110 next quarter? I don't know. Maybe I go 80-105 for the next couple of quarters, or maybe I go to 90-115. It's on the way up. It's not going back. And you see we've been consistently at the middle to high range of the range, and now I can move the range up, and I expect that that will continue to move the range up, whether it's next quarter or the quarter after or sometime in the near future.

Doug Harter (Managing Director in Equity Research)

Appreciate that, Mat. And then as you're thinking about the landscape as kind of all the realtor lawsuits and changes going on there, I guess, how do you think that impacts or does that impact the broker, and what challenges or opportunities does that create?

Mat Ishbia (Chairman and CEO)

Usually, real estate agents and brokers are really tied at the hip. So mortgage brokers and real estate agents do a lot of the same things. They're great for consumers. They're on the ground talking to people. And so obviously, when impacts happen to comp or potentially happen, they haven't happened, and I don't know if they will for years, to be honest with you. But when impacts potentially happen, that creates opportunity for the best real estate agents, the best brokers to take advantage of it and create a new opportunity to grow their business. Just like years ago, LO comp changed in the mortgage market. Brokers were supposedly going to lose comp, and all this stuff happened, and brokers have actually thrived because of it. And so I look at these things as opportunities. How in the weeds are you in that business?

Real estate professionals are resilient, just like mortgage brokers are resilient. So I'm not really concerned about that impacting the business. Brokers and real estate agents are tied at the hip. They will help each other grow, help each other succeed. And hey, maybe you know what you have to do is they'll do more business. And if they do more business, that helps them and helps loan officers and helps UWM and helps consumers. And so we'll see how it all shakes out. I think it's too early to really get a read on what will happen, but I do think that usually, people that are very involved in the business, very in the weeds of the business like UWM is and like brokers are and real estate agents, usually capitalize on change more than get hurt by change.

Doug Harter (Managing Director in Equity Research)

Appreciate those insights. Thanks, Mat.

Mat Ishbia (Chairman and CEO)

Thank you.

Operator (participant)

Your next question comes from the line of James Fawcett with Morgan Stanley. Please go ahead.

Jeff Adelson (Executive Director in Equity Research)

Yes. Hi. Good morning. This is actually Jeff Adelson on for James Fawcett. Good morning. Just wanted to circle back on some of the pricing initiatives you guys have talked about. I know about a month ago, you launched this Refi 100 initiative. Just curious what the uptake on that has been like with your brokers and volumes, how meaningful that's been for your volume so far this quarter, and just maybe your appetite for additional pricing initiatives going forward.

Mat Ishbia (Chairman and CEO)

Yeah. So first off, talking about pricing initiatives and different things we've done through the years, and I think it's good because I think a lot of you guys have been following us for years and seeing from when we said Game On, what was that 15 months ago and what we would do with that as a pricing initiative and how is that working. And obviously, if you look at the fourth quarter of 2022 versus the fourth quarter of 2023, we had Game On in the fourth quarter of 2022, which means half the margins, and it was a lower interest rate environment. And this year, in the fourth quarter of 2023, we had much bigger margins, higher interest rate environment, and we still did more business. So I think it talks to some of these initiatives that create stickiness. What we know is this for facts.

UWM is the best mortgage company in America. We are, without question, the best wholesaler in the country. The game for us is we want to get loan officers to leave the retail channel and join the broker channel, which they are happening all the time. I talk to them all the time. It's happening right now. And on top of that, we want brokers that are in the broker channel to try UWM. When they use UWM, they become sticky because UWM is the best. We help them grow their business. We help train them. We help them partner with real estate agents. We help them market. We do all the stuff. And so it's all about getting them in. So pricing incentives and different initiatives are always focused on long term. I'm never focused on the short-term impacts. I'm focused on what does that mean long term.

And I think if you go back and read what I said maybe in June or whatever it was in 2022 about what success looks like on Game On, it's going to be broker channel growth, loan officers converting, which has happened, and then does UWM gain market share and then also retain the market share when we go back to normalized margins? And I think the data shows that we've done that and then some. And so I look at these things as all positive, help brokers differentiate, help brokers grow. Our whole game is helping the brokers win, help more consumers because, by the way, brokers are better for consumers. They save the consumer. You go to mortgagematchup.com, and it saves consumers thousands and thousands and thousands of dollars. It's crazy. And so it's crazy that consumers don't know this. And so we're very excited.

How do we educate consumers? How do we educate realtors? How do we help LOs succeed and all those things? Sometimes pricing initiatives on a refi help. Sometimes pricing initiatives on a purchase. Sometimes on a free appraisal. Sometimes we do none of that stuff. But I'm always open to those things, anything to help brokers win and succeed. And that's what we've been doing, and that's why we're winning too.

Jeff Adelson (Executive Director in Equity Research)

Okay. Great. Thanks for that call, Larry. And just on the MSR, I don't think I heard anything so far, but it seems like from the disclosures, you didn't do any MSR sales this quarter. Is that right? And why was that? And maybe what's your appetite looking like going forward there?

Mat Ishbia (Chairman and CEO)

Yeah. We did one excess trade in the fourth quarter, and we've done some trades already this year. Like Andrew said, is hedging MSRs. We had a bigger MSR markdown, I think, $600+ million in the fourth quarter, which is obviously just paper moving. It means nothing. And you'll see some of that come back this quarter. But once again, don't give me credit for that then. Just I hope we don't give me it doesn't matter. But the truth is, we have a bigger write-down or write-up than other people because we're actually the only one actually originating loans at these rates. So if you look at our book, we have more higher rate of our book because we actually did loans in the third and fourth quarter when everyone else did.

Those loans actually took a bigger write-down, which is why we had a bigger write-off than most people in the fourth quarter. And then coincidentally, you'll see that or conversely, you'll see that in the first quarter, a write-off of those because rates have gone back up since January 1st. Obviously, we'll have to see what happens in March. I can't control all that stuff, but that stuff's irrelevant. But we are selling MSRs, and we'll continue to sell MSRs and getting good prices for it, bringing in cash, and continue to build the business when we see an opportunity to do so.

Jeff Adelson (Executive Director in Equity Research)

Okay. Great. Thanks for taking my question, Mat.

Mat Ishbia (Chairman and CEO)

Thank you.

Operator (participant)

Your next question comes from the line of Mark DeVries with Deutsche Bank. Please go ahead.

Mark DeVries (Senior Research Analyst)

Yeah. Thanks. Just had a follow-up question on the origination guidance for the first quarter. It's a pretty wide range just given we're almost 2/3 of the way through the quarter. Can you just give us a better sense as to why that is, kind of what scenario brings you to the low end of that range and what scenario brings you to the high end?

Mat Ishbia (Chairman and CEO)

Yeah. Actually, I think I closed the range down. I usually give a $7 billion range. I think I gave a $6 billion one. So I actually gave a smaller range this time. But the truth is, I try to be consistent, $6 billion or $7 billion range. Obviously, I have a good feeling of where we're going to be, and that's why I guided to that range. And I think we'll be in the range. I'm always in the range of my guidance from margins and volume perspective. And so you've got to realize that compared to last year's first quarter and even the fourth quarter, I'm basically guiding that we're going to do more business in a much higher rate environment in the top mortgage industry. January, February, March are usually the slowest months.

Actually, November, December, January, February are the toughest months, specifically January and February, especially when you're a purchase lender. When you're refis, it doesn't matter when you're doing it, but your purchases, it's slower in January and February. People aren't moving while they're in school. It's cold in the northern part of the country. There's a lot of reasons that purchases slow down. So I think 2022-2028 is a good guidance. I think 80-105 is a good guidance. And as I've done every single quarter, we always hit those guidances, and consistently, we'll do that. I plan on doing that the first quarter as well.

Doug Harter (Managing Director in Equity Research)

Okay. That's helpful. Thanks.

Operator (participant)

Again, if you would like to ask a question, press star, then the number one on your telephone keypad. Your next question will come from the line of Eric Hagen with BTIG. Please go ahead.

Eric Hagen (Managing Director and Specialty Finance Analyst)

Hey. Thanks. Good morning. Hope you guys are well. A couple more follow-ups on the MSR. I mean, are you still targeting an MSR portfolio around, call it, $300 billion of UPB? And can you also remind us, does your MSR fair value mark include an estimate for recapture? Thank you.

Mat Ishbia (Chairman and CEO)

Yeah. So good question. You're obviously in the weeds. You know the game. No, we do not put an estimate for recapture in there. So therefore, that's what all of my other competitors do to beef up their numbers, which is a false way of doing it. But you get that and understand the business well enough to ask the question, so you know that. On the other side of it, MSRs, $300 billion, we look at it, what's the right range? There's not an exact range, but I think it's important if you have an MSR book that you can originate. I think at least half of your origination book, if not a little bit more. So I think we look at, can we do more than $150 billion? Yes, we can.

So I wouldn't want to go much higher than $350 billion or $400 billion on the book, but I probably won't go below $200 billion in that. So I think $250 billion-$350 billion is the right range. That's kind of where we'll sit. We're doing a lot of business right now. We'll sell some here and there. But $250 billion-$350 billion is the right range. If you want me to tighten it up, I'd probably say $275 billion-$325 billion, but I think you were saying $300 billion. So plus or minus, that's right.

Doug Harter (Managing Director in Equity Research)

Love it. Great. Thank you very much for that. We know that there's a lot of competition between broker and retail, a lot of migration, loans going back and forth between the channels sometimes. But how aggressive or how much market share do you feel like you could take out of the correspondent channel this year?

Mat Ishbia (Chairman and CEO)

Well, so honestly, the correspondent channel is not really a channel. I know some of our competitors like to say that they originate loans in the correspondent channel. But if you don't underwrite the loan or don't originate the loan, you didn't do the loan, right? You can't do the loan twice. And so I don't really look at any volume in the correspondent channel. I know some places report correspondent volume, but honestly, there's retail, and there's wholesale. That's all the originations because the correspondent is some retail lenders do the loan, and then they sell it to a Chase or a Wells. And then Wells and Chase report that as their volume, and then so does the retail guy. So it's really double counting. So I really don't look at correspondent as an opportunity to grow the business.

I look at it as it's actually just people reporting numbers incorrectly. But on the flip side, there's a lot of banks that are getting out of the market because of different capital rules, different things. But also, if you always like to blame the capital rules, and the banks will tell you, "Oh, the capital rules are harder to originate mortgage. Mortgage doesn't make sense." But the truth is, it's really hard to compete. All we do is mortgage. We live, eat, sleep, mortgage. And banks and other places do a lot of business, a lot of different things. And by the way, they're great partners and a lot of do a lot of great things for all of America, but it's hard to be great at 28 things. It's really hard to be great at one thing also.

We are not only great, we are the best at one thing in mortgage. So what we're focusing on is brokers growing their business, building more relationships with real estate agents. We're teaching brokers how to handle scale because when refis come, how can they double their business in a month, literally? So we're doing things. We built PA Plus. We built different things out to help brokers handle scale, which is a big part of our initiatives. You'll hear more and more of it in the second quarter and third quarter of what we're doing tied to technology and initiatives to help brokers handle scale. Then the other part is converting loan officers over from retail to wholesale. I think you'll see in the media here in the near future that some of the top loan officers in retail have converted over to broker.

That's not been reported yet, but you'll see it come out that some of the top five, top 10 loan officers that used to be all retail now have converted. By the way, when you're all retail, I can get 0 of your business. When you become wholesale, now I have a chance. Usually, they'll come over because they know how strong UWM is. I've met with some of these people, and we're going to get 60%, 70%, 80%, 90% of their business. So you're starting to see that transition. There's a bunch of different buckets, but I really don't look at correspondent as one of them to answer your question. I really look at broker and retail, and that's the competition, and how do we help brokers grow and succeed? That's what we're focused on.

Doug Harter (Managing Director in Equity Research)

Great stuff. Great detail. Thank you so much.

Mat Ishbia (Chairman and CEO)

Hey. Thanks for the question. Appreciate you. Is that all the questions, I think?

Jeff Adelson (Executive Director in Equity Research)

Yep.

Mat Ishbia (Chairman and CEO)

Moderator, all the questions. We're good. All of those leave with, "Thank you, guys, for the time." Appreciate all of you guys and gals for jumping on the call. Hopefully, it was valuable, and we'll talk to you after the first quarter for the next quarterly call. Have a great day.

Operator (participant)

This concludes today's conference call, and you may now disconnect.