KBRA Maintains Watch Developing Status for United Wholesale Mortgage, LLC’s Ratings

KBRA maintains the Watch Developing status for United Wholesale Mortgage, LLC’s (“United Wholesale Mortgage” or “UWM”) issuer and senior unsecured debt ratings of BBB- following the May 28, 2026, adjournment of Two Harbors Investment Corp.'s (NYSE: TWO) shareholder meeting to vote on the proposed acquisition of TWO by CrossCountry Mortgage, LLC (“CrossCountry”; not KBRA rated).

Key Credit Considerations

KBRA initially placed United Wholesale’s ratings on Watch Developing on December 29, 2025, based on what we then considered to be a strategically favorable proposed acquisition of TWO by UWM’s ultimate parent, UWM Holdings Corporation (NYSE: UWMC; not KBRA rated), with likely positive balance sheet leverage ramifications for the acquirer, based upon the exclusively common stock, merger consideration, the price of the initial transaction (~1.1x TWO’s tangible book value), and expected limited (at most) purchase accounting marks. Much has changed since UWMC’s proposed transaction last December, principally stemming from the emergence of another TWO suitor (CrossCounty), which, following an initial offer for TWO announced on March 19, 2026, has increased its offer to acquire the company twice, with UWMC responding in kind, with subsequent offers to purchase TWO, including proposed remuneration changes. Accordingly, the merger, should it occur for UWMC, will have decidedly different financial ramifications, at a minimum. In addition to this obvious uncertainty regarding the ultimate acquirer, as well as the price and terms that TWO shareholders ultimately vote in favor of (majority needed), any potential related UWMC capital plans are not known by us at this juncture. With that said, for UWMC, the company’s recent quarter, standalone core leverage metrics have increased recognizably, noting that a near-term deleveraging would be necessary to maintain current ratings; either post- a completed TWO merger or not.

Given that it remains unclear how such a necessary deleveraging would take shape, but also, importantly, considered in the context that the company’s controlling shareholder maintains financial resources that are believed to be quite substantial, we consider the maintenance of the Watch Developing the most appropriate course of action at this time given meaningful strategic and financial uncertainty surrounding UWMC’s proposed acquisition of TWO.

Rating Sensitivities

A meaningful reduction in UWMC’s recent core leverage metrics (including corporate debt-to-equity stabilizing distinctly and consistently below 2x), together with stronger production earnings / cash flows would be considered favorably. Maintenance of core leverage above 2x would likely facilitate a negative rating action.

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Methodology