UWM Holdings (UWMC) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01Our loan origination volume is highly dependent on macroeconomic and U.S. residential real estate market conditions which is outside of our control
2. 02Volatility from changes in prevailing interest rates can adversely affect the value of our MSR portfolio and servicing revenue and changes in the value, or inaccuracies in the estimates of their value, could adversely affect our financial condition and liquidity
3. 03We face intense competition that could adversely affect our business
4. 04Our business is highly dependent on Fannie Mae and Freddie Mac and certain U.S. government agencies, and any changes in these entities or their current roles could be detrimental to our business
5. 05Changes in the GSEs, FHA, VA, and USDA guidelines or GSE and Ginnie Mae guarantees could adversely affect our business
6. 06If the mortgage loans originated and sold by us do not comply with the guidelines established by the GSEs, Ginnie Mae or private investors to whom they are sold, we are required to repurchase or substitute these loans or indemnify for related losses
7. 07Our business is dependent on our ability to maintain and expand our relationships with our clients, the Independent Mortgage Brokers
8. 08Our acquisition of Two Harbors may not be consummated and we may incur significant time and expenses to consummate this strategic acquisitionNew
9. 09We may fail to realize all of the anticipated benefits of the Merger, or those benefits may take longer to realize than expectedNew
10. 10Our transition to in-house servicing operations for our MSR portfolio and the commencement of serving as a subservicer for third party owned MSRs may expose us to new and additional risksNew
11. 11All of our mortgage loans are initiated by third parties, which exposes us to business, competitive and underwriting risks73% rewritten
12. 12Our products rely on software and services from third-party vendors and if any of these services became unavailable or unreliable, it could adversely affect the quality and timeliness of our mortgage origination process27% rewritten
13. 13The conduct of the Independent Mortgage Brokers through whom we originate mortgage loans could subject us to fines or other penalties22% rewritten
14. 14The mortgage industry can be very cyclical, with loan origination volumes varying materially based on macroeconomic conditions. If we are unable to effectively manage our team members during periods of volatility, it could adversely affect our current business operations and our growth42% rewritten
15. 15We may not be able to detect or prevent cyberattacks and other data and security breaches, which could adversely affect our business and subject us to liability to third parties
16. 16Technology disruptions or failures, including a failure in our operational or security systems or infrastructure, or those of third parties with whom we do business, could disrupt our business, cause legal or reputational harm and adversely impact our results of operations and financial condition
17. 17The development, proliferation and use of AI could give rise to legal and/or regulatory action, damage our reputation or otherwise materially harm our business
18. 18We could be adversely affected if we do not adequately obtain, maintain, protect and enforce our intellectual property and proprietary rights and may encounter disputes from time to time relating to our use of the intellectual property of third parties
19. 19Loss of our key management could result in a material adverse effect on our business
20. 20We rely on a third party sub-servicer who services all the mortgage loans for which we hold MSRs, and our financial performance may be adversely affected by its inability to adequately perform its servicing functions47% rewritten
21. 21We are required to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances and could have a material adverse effect on our cash flows, business and financial condition
22. 22The success and growth of our business will depend upon our ability to be a leader in technological innovation in our industry
23. 23Fraud could result in significant financial losses and harm to our reputation
24. 24The majority of the mortgage loans we service are serviced on behalf of Fannie Mae, Freddie Mac and Ginnie Mae. These entities establish the base service fee to compensate us for servicing loans as well as the assessment of fines and penalties that may be imposed upon us for failing to meet servicing standards
25. 25If we cannot maintain our corporate culture, we could lose the innovation, collaboration and focus on the mission that contributes to our business
26. 26Substantially all of our operations are housed on one campus, and if the facilities are damaged or rendered inoperable by natural or man-made disasters, our business may be negatively impacted78% rewritten

Risks Related to our Financing

1. 27We rely on our warehouse facilities, structured as repurchase agreements, to finance our loan originations. These instruments are short-term and subject us to various risks different from other types of credit facilities21% rewritten
2. 28We depend on our ability to sell loans and MSRs in the secondary market to fund our operations
3. 29A substantial portion of our assets are measured at fair value, and if our estimates with respect to the determination of the fair value of those assets prove to be incorrect, we may be required to write down the value of such assets, which could adversely affect our earnings, financial condition and liquidity
4. 30Our financing arrangements subject us to risk in volatile interest rate environments23% rewritten
5. 31Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates
6. 32Our rights under our repurchase agreements may be subject to the effects of bankruptcy laws in the event of the bankruptcy or insolvency of us or our lenders under the repurchase agreements, which may allow our lenders to repudiate our repurchase agreements75% rewritten
7. 33Our financing arrangements contain certain financial and restrictive covenants that limit our ability to operate our businessNew

Risks Related to our Regulatory Environment

1. 34We operate in a heavily regulated industry, and our mortgage loan origination and servicing activities expose us to risks of noncompliance with an increasing and inconsistent body of complex laws and regulations at the U.S. federal, state and local levels
2. 35Changes in regulatory capital, liquidity, and net worth requirements applicable to non-bank mortgage companies could materially affect our ability to operate and grow our businessNew
3. 36The CFPB has traditionally been active in its monitoring of the loan origination and servicing sectors, and to the extent that it continues its path of regulation and examination it will impact our regulatory compliance burden and associated costs51% rewritten
4. 37The state regulatory agencies, GSEs and others continue to be active in their supervision of the loan origination and servicing sectors and the results of these examinations may be detrimental to our business
5. 38If we do not obtain and maintain the appropriate state licenses, we will not be allowed to originate or service loans in some states, which would adversely affect our operations
6. 39appraisals, we may be subject to additional licenses or regulations
7. 40If new laws and regulations lengthen foreclosure times or introduce new regulatory requirements regarding foreclosure procedures, our operating costs could increase and we could be subject to regulatory action
8. 41Our servicing policies and procedures are subject to examination by our regulators, and the results of these examinations may be detrimental to our business
9. 42From time to time, we are subject to various legal actions that if decided adversely, could be detrimental to our business
10. 43We are subject to various consumer protection regulatory regimes which expose us to liability directly from consumers
11. 44Accounting rules for certain of our transactions are highly complex and involve significant judgment and assumptions. Changes in accounting interpretations or assumptions could impact our financial statements
12. 45Risks Associated with Our Corporate Structure and our Capital StructureNew
13. 46We are required to pay SFS Corp. for certain tax benefits we may claim, and the amounts we may pay could be significant
14. 47Future payments under the tax receivable agreement could be substantial. The payments under the tax receivable agreement are not conditioned upon SFS Corp.’s continued ownership of us
15. 48We are controlled by SFS Corp., whose interests may conflict with our interests and the interests of other stockholders
16. 49Resales of the outstanding shares of Class A common stock, future issuances of Class A common stock or shares issuable upon an Exchange Transaction could depress the market price of our Class A common stock or result in dilution60% rewritten
17. 50As a “controlled company” within the meaning of NYSE listing rules, we qualify for exemptions from certain corporate governance requirements. We have the opportunity to elect any of the exemptions afforded a controlled company
18. 51Anti-takeover provisions contained in our Charter and Amended and Restated Bylaws, as well as provisions of Delaware law, could impair a takeover attempt
19. 52Our Charter contains a provision renouncing our interest and expectancy in certain corporate opportunities
20. 53The provision of our Charter requiring exclusive forum in the state courts in the State of Michigan or the State of Delaware for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers
21. 54Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations