The mortgage servicing wars 🪖 are undeniably upon us. UWM has agreed to buy MSR-focused REIT Two Harbors in an all-stock deal valued at $1.3B, a retort to Rocket Companies’ $14.2B purchase of Mr. Cooper & Lakeview’s $1.3B purchase of Guild.

Whereas many mortgage M&A plays are designed around the origination channel feeding the servicing book, it’s quite the opposite in UWM’s case. Mat Ishbia’s M&A deal appears to be part of an All-In bet that UWM can reverse the historic underperformance of brokers in refi.

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The pending acquisition of Two Harbors (Roundpoint), which services about 850,000 loans, should roughly double UWM’s servicing book to about $400B UPB. That’s still a good distance behind Rocket/Mr. Cooper’s roughly $1.6T book (some of which is seeded by UWM-originated loans), but puts UWM at #8 overall among servicers in America.

The acquisition speaks to UWM’s supreme confidence that it can independently overcome a channel-wide challenge that has persisted for decades: Brokers don’t do a great job w/ refis b/c their businesses aren’t designed to compete w/ call centers. A broker w/ a processor & LOA is more likely to pursue new business than try to compete with a Freedom or Mr. Cooper that can call/text/mail their past clients 50 times before breakfast.

With technology like Mia & a better servicing experience for customers (Bilt should help), UWM clearly sees an opportunity to capture far more than 11% of the refis up for grabs. The wholesale king is spending upwards of $100M to bring servicing in-house by the end of ‘26 & loading the funnel w/ leads for its army of broker-mini corr partners to attack.

(Make sure to check out The Scoop’s story Nov. 7 story on the math behind UWM’s servicing play.)

UWM hasn’t yet detailed how they’d distribute leads from Two Harbors’ book or what will happen to Roundpoint’s port retention team, but wholesale execs told The Scoop they expect a chunk of refi opportunities to go to the growing number of affiliated call center shops that are pumping out serious volume. Companies like Swift Home Loans, Independence Home Loans, Imperium Lending & others will likely benefit, sources said.

Ishbia & Crew had a supreme challenge on their hands by standing up a massive servicing operation from scratch. Adding real know-how from Two Harbors’ staff is a smart move & it wouldn’t surprise me if they found a way to acquire more MSRs in the near-future.

But this gamble is not without risk: If the economy worsens, UWM will be responsible for handling ugly loss mitigation matters at a scale they’ve never had to deal with.

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Tim Bowler is leaving his post as President of ICE Mortgage Technology at the end of the year. Stepping in is Bob Hart, an Ellie Mae vet who’s been spearheading the SDK transition for the mortgage tech giant (among other things). 

While Bowler is seen as a politically savvy operative who crucially helped ICE get through the Biden-era antitrust challenges, Hart is a proper OG mortgage tech guy w/ a real sales pedigree. 

“The old Ellie swagger is back,” is how one source described the swap.