KBRA Places Ratings for United Wholesale Mortgage, LLC on Watch Developing

KBRA places the Issuer and senior unsecured debt ratings of BBB- for Pontiac, Michigan-based United Wholesale Mortgage, LLC (“UWM” or “the company”) on Watch Developing following the December 17, 2025 announcement of a definitive merger agreement between UWM’s ultimate parent, UWM Holdings Corporation (NYSE: UWMC) and Two Harbors Investment Corp. (NYSE: TWO).

Key Credit Considerations

KBRA considers the proposed transaction to be strategically favorable; one which should serve to rebalance UWM’s successful, origination-focused operation that has resulted both from the company’s position as the industry’s leading originator, as well as its most active seller of MSRs; a longstanding operating and financial strategy utilized, in part, to fund operations. Beyond a substantially larger combined company owned-servicing portfolio (~$400 billion UPB), the acquisition also, importantly, is expected to accelerate UWM’s transition to bring servicing in-house for its >$200 billion UPB owned-portfolio, as TWO, through its well-positioned, servicing platform operated by subsidiary, RoundPoint Mortgage Servicing LLC (“RoundPoint”), completed its own onboarding of a ~$200 billion UPB servicing portfolio (>800,000 of GSE loans) during 2024.

With respect to the initial company projected financial impact of the transaction, the combination should result in a somewhat less levered core balance sheet for UWMC, as well as stronger operating cash flow stemming from a substantially larger servicing portfolio. UWM’s pre-merger operating dynamics and related balance sheet trends are expected to be a more significant driver of the combined company’s leverage profile, as any merger-related purchase accounting marks are expected to be nominal for TWO’s largely “fair valued” and comparatively liquid balance sheet, including its derivatives positions. The combined company’s balance sheet leverage should also naturally benefit from all-stock remuneration and close-to-book value purchase price (~1.1x).

Rating Sensitivities

A seamless and efficient transfer of UWM’s servicing book to the RoundPoint platform, a moderate reduction in UWMC’s recent core leverage metrics (including corporate debt-to-equity stabilizing at ~1.5x), and solid production earnings / cash flows would be considered favorably. Similar-to-recent-period core leverage reflected by UWMC, as well as continued, operating cash flow burn, could facilitate a negative rating action.

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Methodologies