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February 29, 2024 | Premium Service | Happy Leap Year. Now almost 60 days since the end of 2023, the earnings continue to roll in from the less attractive parts of the reporting group. The mortgage sector is still led by Fannie Mae and Freddie Mac, both up more than 140% over the past year, but the odds of a release of the GSEs from conservatorship are very long indeed.
One of our favorite examples of outlier business models is United Wholesale Mortgage Corp (UWMC), a leading aggregator of residential loans. UWMC is presently locked in a life and death struggle with Rocket Mortgage (RKT) for ownership of the wholesale mortgage channel. And despite a lot of bluff and bravado from UWMC, RKT may be winning. While UWMC had the biggest market share in conventional conforming loans in 2023, that just means that they are losing more money per loan than everyone else.