"The worst hedge of all time"

On Friday, I wrote that several mortgage CEOs & capital markets execs were skeptical of UWM’s $603M hedging oopsie explanation. 

The Two Harbors deal died March 27, but UWM’s $27.5B derivative position didn’t. Then it lost another $603M. One mortgage CEO I spoke w/ called it “the worst hedge of all time.” Some in the industry believe the loss is connected to a misplaced bet on rates falling.

Maybe UWM’s explanation that it was tied to Two Harbors’ book is right. But the filings, the timeline & the trade itself raise some very thorny questions. That story today is exclusively for paid subscribers of The Mortgage Scoop.

Also: Wall Street mortgage LOs basically saying “who gives a shit?” about the Morgan Stanley allegations, what it’s actually like to sling mortgages in private wealth, & what June’s MBS numbers tell us about the market.

Total agency mortgage-backed securities issuance was $118.7 billion in June 2026, compared to $122.6 billion in May 2026 (a decrease of 3.2%) and $109.2 billion a year earlier in June 2025 (an increase of 8.7%).

Purchase mortgage issuance in June 2026 was $80.4 billion, a 7.5% increase month-over-month and 4.2% decrease year-over-year. Refinance issuance in June 2026 was $38.3 billion, a 19.9% decrease month-over-month and 51.4% increase year-over-year.

Fannie Mae issued $34.0 billion in June 2026, compared to $32.8 billion in May 2026 (an increase of 3.7%) and $30.4 billion a year earlier in June 2025 (an increase of 11.8%). Freddie Mac issued $32.6 billion in June 2026, compared to $37.2 billion in May 2026 (a decrease of 12.4%) and $32.9 billion a year earlier in June 2025 (a decrease of 0.9%). Fannie Mae accounted for 51.1% of the conventional market share in June 2026 compared to 46.9% in May 2026 and 48.0% in June 2025.

Ginnie Mae issued $52.1 billion in June 2026, compared to $52.6 billion in May 2026 (a decrease of 1.0%) and $45.9 billion a year earlier in June 2025 (an increase of 13.5%). Ginnie Mae accounted for 43.9% of total agency securitizations in June 2026, up from 42.9% in June 2025.

This report is brought to you by Milliman. Milliman provides strategic and quantitative consulting services across the mortgage market with expertise in origination, servicing and capital investment.

Source: Fannie Mae, Freddie Mac, and Ginnie Mae MBS Data Disclosure

A guy who once ran resi mortgage sales for a bunch of investment banks read the WSJ’s Morgan Stanley story & immediately started texting friends still there.

Their reaction, he told me: "Nobody fucking cares."

Why? Well, private wealth lending is straight-up a different sport from IMB & broker LOs arguing about bps & Realtor relationship dynamics.

Start w/ the job itself, b/c these guys are not eat-what-you-kill types. The LO at one of these desks doesn't source a single loan. Like, ever, he said. They sit in a call center as the single point of contact — take the app, process it, close it — & run maybe five loans a month. "Those guys are making a buck 35 to sit in their seat," he said. Salary's around $110K, all-in lands near $140K. Morgan Stanley, for example, doesn't even keep conforming; it refers that business to Rocket, he said.

"Most of the people that are on Morgan Stanley would never survive for five minutes out on the street generating their own business," he said. "They're all technical experts." The money job is the banker role, a rainmaker who works the FAs for mortgage, credit card, ABL, margin, then hands it off. Totally different animal w/ different comp, he said.

So when you read that these LOs felt pressure, yeah they probably did. But it doesn’t compare. "If you think the mortgage people have it tough w/ real estate agents, that's child's play," he said. He described an investment bank setup where any FA w/ a grievance could call the chairman of the bank directly, & the guy fielding those calls sat right outside his cube. He once watched a top investment bank eat a $400K pricing concession on a $40M mortgage b/c an LO never quoted the point. Cost of keeping a billion-dollar relationship.

Which is the point, right? These are balance-sheet loans. Nobody's repping occupancy to an investor. "If they want to price it as a primary loan, they can," he said.

Hunterbrook Media published a piece Tuesday digging through UWM’s filings & asking a pretty simple question: What exactly was that $27.5B “hedge”?

At year-end ‘25, UWM’s derivatives disclosures showed the usual stuff: rate locks, forward sale commitments and no other standing interest-rate positions.

Then the Q1’26 10-Q showed up. Suddenly, there was a new line: “other interest rate derivatives.” Notional value: $27.5B.