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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________

Commission file number 001-39189

UWM HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
84-2124167
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
585 South Boulevard E.
Pontiac,MI48341
(Address of Principal Executive Offices)
(Zip Code)
(800) 981-8898
Registrant's telephone number, including area code
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareUWMCNew York Stock Exchange
Warrants, each warrant exercisable for one share of Class A Common StockUWMCWSNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x   No  o 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
Accelerated filer
  
Non-accelerated filer  
o
Smaller reporting company
  
Emerging growth company
  
        
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes        No  x

As of May 6, 2022, the registrant had 92,531,737 shares of Class A common stock outstanding and 1,502,069,787 shares of Class D common stock outstanding.


Table of Contents





PART I
Item 1. Financial Statements
UWM HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and per share amounts)
 March 31,
2022
December 31, 2021
Assets(Unaudited)
Cash and cash equivalents$901,174 $731,088 
Mortgage loans at fair value5,208,167 17,473,324 
Derivative assets241,932 67,356 
Investment securities at fair value, pledged 138,417 152,263 
Accounts receivable, net617,608 415,691 
Mortgage servicing rights (see Note 5)3,514,102 3,314,952 
Premises and equipment, net151,206 151,687 
Operating lease right-of-use asset, net
(includes $103,513 and $104,595 with related parties)
103,670 104,828 
Finance lease right-of-use asset
(includes $28,416 and $28,619 with related parties)
53,857 57,024 
Other assets60,820 60,145 
Total assets$10,990,953 $22,528,358 
Liabilities and equity
Warehouse lines of credit$4,076,829 $15,954,938 
Derivative liabilities115,430 36,741 
Borrowings against investment securities118,786 118,786 
Accounts payable, accrued expenses and other1,207,145 1,087,411 
Accrued distributions and dividends payable159,460 9,171 
Senior notes1,981,106 1,980,112 
Operating lease liability
(includes $110,854 and $111,999 with related parties)
111,010 112,231 
Finance lease liability
(includes $29,015 and $29,087 with related parties)
54,945 57,967 
Total liabilities7,824,711 19,357,357 
Equity
Preferred stock, $0.0001 par value - 100,000,000 shares authorized, none issued and outstanding as of March 31, 2022
  
Class A common stock, $0.0001 par value - 4,000,000,000 shares authorized, 92,531,073 shares issued and outstanding as of March 31, 2022
9 9 
Class B common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of March 31, 2022
  
Class C common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of March 31, 2022
  
Class D common stock, $0.0001 par value - 1,700,000,000 shares authorized, 1,502,069,787 shares issued and outstanding as of March 31, 2022
150 150 
Additional paid-in capital542 437 
Retained earnings138,834 141,805 
Non-controlling interest3,026,707 3,028,600 
Total equity3,166,242 3,171,001 
Total liabilities and equity$10,990,953 $22,528,358 

See accompanying Notes to the Condensed Consolidated Financial Statements.
2


UWM HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except shares and per share amounts)
(Unaudited)
 For the three months ended March 31,
 20222021
Revenue
Loan production income$383,871 $1,074,665 
Loan servicing income198,565 123,789 
Change in fair value of mortgage servicing rights
(see Note 5)
171,963 (59,259)
Gain on sale of mortgage servicing rights 4,763 
Interest income67,395 45,912 
Total revenue, net821,794 1,189,870 
Expenses
Salaries, commissions and benefits160,609 213,061 
Direct loan production costs26,718 13,162 
Marketing, travel, and entertainment12,837 10,495 
Depreciation and amortization10,915 7,289 
General and administrative38,323 16,778 
Servicing costs47,184 20,508 
Interest expense60,374 52,990 
Other expense/(income)7,502 (17,304)
Total expenses364,462 316,979 
Earnings before income taxes457,332 872,891 
Provision for income taxes4,045 12,886 
Net income453,287 860,005 
Net income attributable to non-controlling interest431,357 812,020 
Net income attributable to UWM Holdings Corporation$21,930 $47,985 
Earnings per share of Class A common stock
 (see Note 17):
Basic$0.24 $0.47 
Diluted$0.22 $0.33 
Weighted average shares outstanding:
Basic92,214,594 103,104,205 
Diluted1,594,284,381 1,605,173,992 

See accompanying Notes to the Condensed Consolidated Financial Statements.
3


UWM HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands, except shares and per share amounts)
(Unaudited)
Class A Common Stock SharesClass A Common Stock AmountClass D Common Stock SharesClass D Common Stock AmountAdditional 
Paid-in Capital
Retained
Earnings
Non-controlling InterestTotal
Balance, January 1, 2021— $— — $— $24,839 $2,349,441 $— $2,374,280 
Cumulative effect of change to fair value accounting for mortgage servicing rights— — — — — 3,440 — 3,440 
Net income prior to business combination transaction— — — — — 183,756 — 183,756 
Member distributions to SFS Corp. prior to business combination transaction— — — — — (1,100,000)— (1,100,000)
Net proceeds received from business combination transaction— — — — — 879,122 — 879,122 
Cumulative effect of reorganization post business combination transaction103,104,205 10 1,502,069,787 150 (24,839)(2,164,975)2,189,654  
Opening net liabilities of Gores Holdings IV, Inc. acquired— — — — — (75,381)— (75,381)
Dividend and distribution declared February 3, 2021 and payable April 6, 2021— — — — — (10,310)(150,207)(160,517)
Member distributions to SFS Corp. post business combination transaction— — — — — — (2,913)(2,913)
Net income subsequent to business combination transaction— — — — — 47,985 628,264 676,249 
Balance, March 31, 2021103,104,205 $10 1,502,069,787 $150 $ $113,078 $2,664,798 $2,778,036 
Balance, January 1, 202291,612,305 $9 1,502,069,787 $150 $437 $141,805 $3,028,600 $3,171,001 
Net income     21,930 431,357 453,287 
Dividend declared on February 25, 2022 and payable on April 11, 2022     (9,253) (9,253)
Member distributions to SFS Corp.      (450,621)(450,621)
Stock-based compensation expense918,768    105  1,723 1,828 
Re-measurement of non-controlling interest due to change in parent ownership and other     (15,648)15,648  
Balance, March 31, 202292,531,073 $9 1,502,069,787 $150 $542 $138,834 $3,026,707 $3,166,242 

See accompanying Notes to the Condensed Consolidated Financial Statements.
4


UWM HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 For the three months ended March 31,
 20222021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$453,287 $860,005 
Adjustments to reconcile net income to net cash provided by operating activities:
Reserve for representations and warranties7,762 9,818 
Capitalization of mortgage servicing rights(645,437)(599,389)
Change in fair value of mortgage servicing rights(171,963)59,259 
Depreciation and amortization of premises & equipment, finance lease assets and debt issuance costs11,909 7,981 
Stock-based compensation expense 1,828  
Decrease in fair value of investment securities10,934  
Decrease in fair value of warrants liability(4,132)(17,304)
(Increase) decrease in:
Mortgage loans at fair value12,265,157 2,413,244 
Derivative assets(174,576)(52,096)
Other assets(173,090)(309,033)
Increase (decrease) in:
Derivative liabilities78,689 (10,758)
Other liabilities91,395 275,290 
Net cash provided by operating activities11,751,763 2,637,017 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of premises and equipment(6,102)(9,815)
Net proceeds from sale of mortgage servicing rights613,532 2,582 
Proceeds from principal payments on investment securities3,068  
Net cash provided by (used in) investing activities610,498 (7,233)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under warehouse lines of credit(11,878,109)(2,117,657)
Repayments of finance lease liabilities(4,225)(2,857)
Borrowings under equipment notes payable 453 
Repayments under equipment notes payable(226)(1,557)
Borrowings under operating lines of credit 79,700 
Proceeds from business combination transaction 895,134 
Costs incurred related to business combination transaction (11,260)
Dividends paid(9,171) 
Member distributions to SFS Corp. (300,444)(1,102,914)
Net cash used in financing activities(12,192,175)(2,260,958)
INCREASE IN CASH AND CASH EQUIVALENTS170,086 368,826 
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD731,088 1,223,837 
CASH AND CASH EQUIVALENTS, END OF THE PERIOD$901,174 $1,592,663 
SUPPLEMENTAL INFORMATION
Cash paid for interest$37,923 $36,077 
See accompanying Notes to the Condensed Consolidated Financial Statements.
5



UWM HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
UWM Holdings Corporation, through its consolidated subsidiaries (collectively, the "Company"), engages in the origination, sale and servicing of residential mortgage loans. The Company is organized in Delaware but based in Michigan, and originates and services loans throughout the U.S. The Company is approved as a Title II, non-supervised direct endorsement mortgagee with the U.S. Department of Housing and Urban Development (or “HUD”). In addition, the Company is an approved issuer with the Government National Mortgage Association (or “Ginnie Mae”), as well as an approved seller and servicer with the Federal National Mortgage Association (or “Fannie Mae”) and the Federal Home Loan Mortgage Corporation (or “Freddie Mac”).
The Company (f/k/a Gores Holdings IV, Inc.) was incorporated in Delaware on June 12, 2019. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On September 22, 2020, the Company entered into a Business Combination Agreement (the "Business Combination Agreement") by and among the Company, SFS Holding Corporation, a Michigan corporation (“SFS Corp.”), United Wholesale Mortgage, LLC, a Michigan limited liability company (“UWM”), and UWM Holdings, LLC, a newly formed Delaware limited liability company (“Holdings LLC” and, together with UWM, the “UWM Entities”). The business combination with the UWM Entities closed on January 21, 2021.
Prior to the closing of the business combination with the UWM Entities, SFS Corp. was the sole member of UWM, which had one unit authorized, issued and outstanding. On January 21, 2021, SFS Corp. contributed its equity interest in UWM to Holdings LLC and adopted the Amended and Restated Operating Agreement to admit Holdings LLC as UWM's sole member and its manager. Upon completion of the business combination transaction, (i) Holdings LLC issued approximately 6% of its units (Class A Common Units) to the Company, (ii) SFS Corp. retained approximately 94% of the units (Class B Common Units) in Holdings LLC and accordingly retained approximately 94% of the economic ownership interest of the combined company and (iii) Holdings LLC became a consolidated subsidiary of the Company, as the Company is the sole managing member of Holdings LLC. The economic interest in Holdings LLC owned by SFS Corp. is presented as a non-controlling interest in these condensed consolidated financial statements (see Note 11 - Non-Controlling Interests for further information).
Following the consummation of the transactions contemplated by the Business Combination Agreement, the Company is organized in an “Up-C” structure in which UWM (the operating subsidiary) is held directly by Holdings LLC and the Company’s only material direct asset consists of Class A Common Units in Holdings LLC. The Company's current capital structure authorizes Class A common stock, Class B common stock, Class C common stock and Class D common stock. The Class A common stock and Class C common stock each provide holders with one vote on all matters submitted to a vote of stockholders, and the Class B common stock and Class D common stock each provide holders with 10 votes on all matters submitted to a vote of stockholders. The holders of Class C common stock and Class D common stock do not have any of the economic rights (including rights to dividends and distributions upon liquidation) provided to holders of Class A common stock and Class B common stock. Immediately following the business combination transaction, there were 103,104,205 shares of Class A common stock outstanding, and 1,502,069,787 shares of non-economic Class D common stock outstanding (all of which were held by SFS Corp.), and no shares of Class B or Class C common stock outstanding. As of March 31, 2022, following the buyback of 11,498,330 shares offset by the issuance of 925,198 shares as equity compensation, there were 92,531,073 shares of Class A common stock outstanding and 1,502,069,787 shares of Class D common stock outstanding. Each Holdings LLC Class B Common Unit held by SFS Corp. may be exchanged, along with its stapled share of Class D common stock, for either, at the option of the Company, (a) cash or (b) one share of the Company’s Class B common stock (See Note 11 - Non-Controlling Interests). Each share of Class B Stock is convertible into one share of Class A Stock upon the transfer or assignment of such share from SFS Corp. to a non-affiliated third-party. Pursuant to the Business Combination Agreement, SFS Corp. is entitled to receive an aggregate of up to 90,761,687 earn-out shares in the form of Class B Common Units in Holdings LLC and Class D common shares upon attainment of certain stock price targets prior to January 2026. There are four different triggering events that affect the number of earn-out shares that will be issued based upon the per share price of Class A common stock ranging from $13.00 to $19.00 per share. The Company accounts for the potential earn-out shares as a component of stockholders’ equity in accordance with the applicable guidance in U.S. GAAP. See Note 17 - Earnings Per Share for further information.

6


Basis of Presentation and Consolidation
The business combination transaction was accounted for as a reverse recapitalization in accordance with U.S. GAAP as UWM was determined to be the accounting acquirer, primarily due to the fact that SFS Corp. continues to control the Company through its ownership of the Class D common stock. Under this method of accounting, while the Company was the legal acquirer, it was treated as the acquired company for financial reporting purposes. Accordingly, the business combination transaction was treated as the equivalent of UWM issuing stock for the net assets of the Company, accompanied by a recapitalization, with the net assets of the Company stated at historical cost, with no goodwill or other intangible assets recorded. The net proceeds received from Gores Holdings IV, Inc. in the business combination transaction approximated $895.1 million, and the Company incurred approximately $16.0 million in costs related to the transaction which were charged to stockholders' equity upon the closing of the transaction. As part of the business combination transaction, the Company assumed the liability related to the Public and Private Warrants (described below) of $45.6 million. The Company’s financial statement presentation included in these condensed consolidated financial statements include the condensed consolidated financial statements of UWM and its subsidiaries for periods prior to the completion of the business combination transaction with the UWM Entities and of the Company for periods from and after the business combination transaction.
The condensed consolidated financial statements are unaudited and presented in U.S. dollars. They have been prepared in accordance with U.S. GAAP pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In our opinion, these condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair statement of our results of operations, financial position and cash flows for the periods presented. However, our results of operations for any interim period are not necessarily indicative of the results that may be expected for a full fiscal year or for any other future period.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Loans Eligible for Repurchase from Ginnie Mae
When the Company has the unilateral right to repurchase Ginnie Mae pool loans it has previously sold (generally loans that are more than 90 days past due) and the call option results in a more than trivial benefit to the Company, the previously sold assets are required to be re-recognized on the condensed consolidated balance sheets, regardless of the Company's intent to exercise its option to repurchase. The recognition of previously sold loans does not impact the accounting for the previously recognized MSRs. At March 31, 2022 and December 31, 2021, the Company had recorded Ginnie Mae pool loans as part of "Mortgage loans at fair value" totaling $391.1 million and $563.4 million, respectively, with related purchase liabilities equal to the gross amount of the loan recorded in "Accounts payable, accrued expenses and other" on the condensed consolidated balance sheets. At March 31, 2022 and December 31, 2021, the fair values of the Ginnie Mae pool loans were $384.0 million and $555.1 million, reflecting fair value adjustments of $7.1 million and $8.3 million, respectively.
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under applicable U.S. GAAP. Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. We are subject to income taxes in the U.S. and various state and local jurisdictions. The tax laws are often complex and may be subject to different interpretations. To determine the financial statement impact of accounting for income taxes, the Company must make assumptions and judgements about how to interpret and apply complex tax laws to numerous transactions and business events, as well as make judgements regarding the timing of when certain items may affect taxable income.
Deferred income taxes arise from temporary differences between the financial statement carrying amount and the tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all available positive and negative evidence including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent results of operations. If based upon all available positive and negative evidence, it is more likely than not that the deferred tax assets will not be realized, a valuation allowance is established. The valuation
7


allowance may be reversed in a subsequent reporting period if the Company determines that it is more likely than not that all or part of the deferred tax asset will become realizable.
Our interpretations of tax laws are subject to review and examination by various taxing authorities and jurisdictions where the Company operates, and disputes may occur regarding its view on a tax position. These disputes over interpretations with the various tax authorities may be settled by audit, administrative appeals or adjudication in the court systems of the tax jurisdictions in which the Company operates. We regularly review whether we may be assessed additional income taxes as a result of the resolution of these matters, and the Company records additional reserves as appropriate. In addition, the Company may revise its estimate of income taxes due to changes in income tax laws, legal interpretations, and business strategies. We recognize the financial statement effects of uncertain income tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. We record interest and penalties related to uncertain tax positions as a component of the income tax provision. See Note 15 – Income Taxes for further information.
Tax Receivable Agreement
In connection with the Business Combination Agreement, the Company entered into a Tax Receivable Agreement with SFS Corp. that will obligate the Company to make payments to SFS Corp. of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes as a result of (i) certain increases in tax basis resulting from exchanges of Holdings LLC Common Units; (ii) imputed interest deemed to be paid by the Company as a result of payments it makes under the tax receivable agreement; (iii) certain increases in tax basis resulting from payments the Company makes under the tax receivable agreement; and (iv) disproportionate allocations (if any) of tax benefits to the Company which arise from, among other things, the sale of certain assets as a result of section 704(c) of the Internal Revenue Code of 1986. The Company will retain the benefit of the remaining 15% of these tax savings. The Company recognized a liability of approximately $1.9 million for estimated amounts due under the Tax Receivable Agreement in connection with the business combination transaction. Subsequently, the liability is accounted for as a loss contingency, with changes in the liability measured and recorded when estimated amounts due under the Tax Receivable Agreement are probable and can be reasonably estimated and reported as part of other (income) expense in the condensed consolidated statements of operations. During the three months ended March 31, 2022, the Company recorded an additional liability of $0.7 million, representing 85% of the estimated tax benefits to the Company resulting from additional sales of MSRs during the first quarter of 2022. As of March 31, 2022, the total liability recorded for the Tax Receivable Agreement was approximately $14.6 million.
Related Party Transactions
The Company enters into various transactions with related parties. See Note 14 – Related Party Transactions for further information.
Public and Private Warrants
As part of Gores Holdings IV, Inc.'s initial public offering ("IPO") in January 2020, Gores Holdings IV, Inc. issued to third party investors 42.5 million units, consisting of one share of Class A common stock of Gores Holdings IV, Inc. and one-fourth of one warrant, at a price of $10.00 per unit. Each whole warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share (the “Public Warrants”). Simultaneously with the closing of the IPO, Gores Holdings IV, Inc. completed the private sale of 5.25 million warrants to Gores Holdings IV, Inc.'s sponsor at a purchase price of $2.00 per warrant (the “Private Warrants”). Each Private Warrant allows the sponsor to purchase one share of Class A common stock at $11.50 per share. Upon the closing of the business combination transaction, the Company had 10,624,987 Public Warrants and 5,250,000 Private Warrants outstanding.
The Private Warrants and the shares of common stock issuable upon the exercise of the Private Warrants were not transferable, assignable or salable until after the completion of the business combination, subject to certain limited exceptions. Additionally, the Private Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Company evaluated the Public and Private Warrants under applicable U.S. GAAP and concluded that they do not meet the criteria to be classified in stockholders’ equity due to certain terms of the warrants. Since the Public and Private Warrants meet the definition of derivatives, the Company recorded these warrants as liabilities on the balance sheet at fair value upon the closing of the business combination transaction and subsequently (recorded within "Accounts payable, accrued expenses and other"), with the change in their respective fair values recognized in the condensed consolidated statement of operations (recorded within "Other (income)/expense").

8


Stock-Based Compensation
Effective upon the closing of the business combination transaction, the Company adopted the UWM Holdings Corporation 2020 Omnibus Incentive Plan (the “2020 Plan”) which was approved by stockholders on January 20, 2021. The 2020 Plan allows for the grant of stock options, restricted stock, restricted stock units (“RSUs”), and stock appreciation rights. The Company's Compensation Committee approved, effective April 2, 2021, the issuance of 3.2 million restricted stock units to the Company's team members. The restricted stock units had a grant date fair value of approximately $25.2 million. The restricted stock units vest over three years, 33% on each of February 1, 2022 and 2023 and 34% on February 1, 2024. In addition, the Compensation Committee approved the issuance of 1,000 RSUs to each of the Company's four non-employee directors which were fully vested upon issuance. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period based on the fair value of the award on the date of grant and is included in "Salaries, commissions and benefits" on the condensed consolidated statements of operations. The Company made a policy election to recognize the effects of forfeitures as they occur.
Recently Adopted Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which was subsequently amended by ASU No. 2021-1, Reference Rate Reform (Topic 848): Scope, which was issued in January 2021 and will remain effective through December 31, 2022. This guidance provides practical expedients to address existing guidance on contract modifications due to the expected market transition from the London Inter-bank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate ("SOFR"). The ASU was effective upon issuance on a prospective basis beginning January 1, 2020 and the Company may elect certain practical expedients as reference rate activities occur. The Company will evaluate its debt and other applicable contracts that are modified in the future to ensure they are eligible for modification relief and apply the practical expedients as needed. The Company does not anticipate this will have a material impact on its condensed consolidated financial statements and related disclosures.
NOTE 2 – MORTGAGE LOANS AT FAIR VALUE
The table below includes the estimated fair value and unpaid principal balance (“UPB”) of mortgage loans that have contractual principal amounts and for which the Company has elected the fair value option. The fair value option has been elected for mortgage loans, as this accounting treatment best reflects the economic consequences of the Company’s mortgage origination and related hedging and risk management activities. The difference between the UPB and estimated fair value is made up of the premiums paid on mortgage loans, as well as the fair value adjustment as of the balance sheet date. The change in fair value adjustment is recorded in the “Loan production income” line item of the condensed consolidated statements of operations.
(In thousands)March 31,
2022
December 31,
2021
Mortgage loans, unpaid principal balance$5,263,246 $17,194,330 
Premiums paid on mortgage loans47,047 238,963 
Fair value adjustment(102,126)40,031 
Mortgage loans at fair value$5,208,167 $17,473,324 
NOTE 3 – DERIVATIVES
The Company enters into IRLCs to originate residential mortgage loans at specified interest rates and terms within a specified period of time with customers who have applied for a loan and may meet certain credit and underwriting criteria. To determine the fair value of the IRLCs, each contract is evaluated based upon its stage in the application, approval and origination process for its likelihood of consummating the transaction (or “pullthrough”). Pullthrough is estimated based on changes in market conditions, loan stage, and actual borrower behavior using a historical analysis of IRLC closing rates. Generally, the further into the process the more likely that the IRLC will convert to a loan. The blended average pullthrough rate was 83% and 86%, as of March 31, 2022 and December 31, 2021, respectively. The Company primarily uses forward loan sale commitments ("FLSCs") to economically hedge the IRLCs.
The notional amounts and fair values of derivative financial instruments not designated as hedging instruments were as follows (in thousands):
9


 March 31, 2022December 31, 2021 
Fair valueFair value
 Derivative
assets
Derivative
liabilities
Notional
Amount
Derivative
assets
Derivative
liabilities
Notional
Amount
 
IRLCs$9,511 $108,475 $11,494,354 (a) $24,899 $11,138 $13,450,967 
(a) 
FLSCs232,421 6,955 15,927,461 42,457 25,603 28,887,178  
Total$241,932 $115,430 $67,356 $36,741 
(a)Adjusted for pullthrough rates of 83% and 86%, respectively.
NOTE 4 – ACCOUNTS RECEIVABLE, NET
The following summarizes accounts receivable, net (in thousands):
 March 31,
2022
December 31,
2021
Derivative settlements receivable$184,601 $21,987 
Servicing fees169,433 136,981 
Servicing advances131,288 135,117 
Investor receivables49,796 44,192 
Receivables from sale of servicing 44,810 13,503 
Warehouse bank receivable22,102 8,510 
Origination receivables19,057 56,569 
Other receivables111 127 
Provision for current expected credit losses(3,590)(1,295)
Total Accounts Receivable, Net$617,608 $415,691 
The Company periodically evaluates the carrying value of accounts receivable balances with delinquent receivables being written-off based on specific credit evaluations and circumstances of the debtor.
NOTE 5 – MORTGAGE SERVICING RIGHTS
Mortgage servicing rights are recognized on the condensed consolidated balance sheets when loans are sold and the associated servicing rights are retained. The Company has elected the fair value option for all current classes of its MSRs. The Company determined its classes of MSRs based on how the Company manages risk. The Company's MSRs are measured at fair value, which is determined using a valuation model that calculates the present value of estimated future net servicing fee income. The model includes estimates of prepayment speeds, discount rate, cost to service, float earnings, contractual servicing fee income, and ancillary income and late fees, among others. These estimates are supported by market and economic data collected from various outside sources.
The unpaid principal balance of mortgage loans serviced approximated $303.4 billion and $319.8 billion at March 31, 2022 and December 31, 2021, respectively. Conforming conventional loans serviced by the Company have previously been sold to Fannie Mae and Freddie Mac on a non-recourse basis, whereby credit losses are generally the responsibility of Fannie Mae and Freddie Mac, and not the Company. Loans serviced for Ginnie Mae are insured by the FHA, guaranteed by the VA, or insured by other applicable government programs. While the above guarantees and insurance are the responsibility of those parties, the Company is still subject to potential losses related to its servicing of these loans. Those estimated losses are incorporated into the valuation of MSRs.
The following table summarizes changes in the MSR assets for the three months ended March 31, 2022 and 2021 (in thousands):
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For the three months ended March 31,
20222021
Fair value, beginning of period$3,314,952 $1,760,304 
Capitalization of mortgage servicing rights645,437 599,389 
MSR sales(656,670) 
Changes in fair value:
Due to changes in valuation inputs or assumptions
390,980 197,802 
Due to collection/realization of cash flows/other(180,597)(257,061)
Fair value, end of period$3,514,102 $2,300,434 

The following is a summary of the components of change in fair value of servicing rights as reported in the condensed consolidated statements of operations (in thousands):
For the three months ended March 31,
20222021
Changes in fair value:
Due to changes in valuation model or assumptions$390,980 $197,802 
Due to collection/realization of cash flows/other(180,597)(257,061)
Reserves and transaction costs on sales of servicing rights(38,420) 
Changes in fair value of mortgage servicing rights$171,963 $(59,259)

During the the first quarter of 2022, the Company sold MSRs on loans with an aggregate UPB of approximately $56.6 billion for proceeds of approximately $656.7 million. Additionally, on March 31, 2022, the Company entered into an agreement to sell MSRs with an aggregate UPB of approximately $16.1 billion for proceeds of approximately $215.1 million, and the initial proceeds were not received until April 1, 2022. Accordingly, these MSR assets remained on the balance sheet at March 31, 2022. In connection with the sales of these MSRs, the Company recorded $38.4 million for its estimated obligation for protection provisions granted to the buyer and transaction costs, which is reflected as part of the change in fair value of MSRs in the condensed consolidated statements of operations.
The following table summarizes the loan servicing income recognized during the three months ended March 31, 2022 and 2021, respectively (in thousands):
For the three months ended March 31,
20222021
Contractual servicing fees$195,950 $122,306 
Late, ancillary and other fees2,615 1,483 
Loan servicing income
$198,565 $123,789 
The key unobservable inputs used in determining the fair value of the Company’s MSRs were as follows at March 31, 2022 and December 31, 2021, respectively:
 March 31,
2022
December 31,
2021
RangeWeighted AverageRangeWeighted Average
Discount rates8.5 %14.5 %9.2 %9.0 %14.5 %9.6 %
Annual prepayment speeds8.3 %32.3 %9.7 %8.3 %45.4 %10.5 %
Cost of servicing$74 $145 $81 $74 $162 $81 
The hypothetical effect of an adverse change in these key assumptions would result in a decrease in fair values as follows at March 31, 2022 and December 31, 2021, respectively, (in thousands):
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 March 31,
2022
December 31,
2021
Discount rate:
+ 10% adverse change – effect on value$(107,944)$(107,992)
+ 20% adverse change – effect on value(208,454)(208,567)
Prepayment speeds:
+ 10% adverse change – effect on value$(127,337)$(138,807)
+ 20% adverse change – effect on value(245,820)(267,964)
Cost of servicing:
+ 10% adverse change – effect on value$(34,885)$(37,370)
+ 20% adverse change – effect on value(69,770)(74,741)
These sensitivities are hypothetical and should be used with caution. As the table demonstrates, the Company’s methodology for estimating the fair value of MSRs is highly sensitive to changes in assumptions. For example, actual prepayment experience may differ and any difference may have a material effect on MSR fair value. Changes in fair value resulting from changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption of the fair value of the MSRs is calculated without changing any other assumption; in reality, changes in one factor may be associated with changes in another (for example, decreases in market interest rates may indicate higher prepayments; however, this may be partially offset by lower prepayments due to other factors such as a borrower’s diminished opportunity to refinance), which may magnify or counteract the sensitivities. Thus, any measurement of MSR fair value is limited by the conditions existing and assumptions made as of a particular point in time. Those assumptions may not be appropriate if they are applied to a different point in time.
NOTE 6 – OTHER ASSETS
The following summarizes other assets (in thousands):
March 31,
2022
December 31,
2021
Prepaid insurance$24,920 $28,249 
Prepaid IT service and maintenance24,540 26,236 
Other11,360 5,660 
Total other assets$60,820 $60,145 
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NOTE 7 – WAREHOUSE LINES OF CREDIT
The Company had the following warehouse lines of credit with financial institutions as of March 31, 2022 and December 31, 2021, respectively, (in thousands):
Warehouse Lines of Credit 1
Date of Initial Agreement With Warehouse LenderCurrent Agreement Expiration DateMarch 31,
2022
December 31,
2021
Master Repurchase Agreement ("MRA") Funding:
$150 Million2/29/20125/24/2022$50,853 $144,534 
$200 Million3/30/20189/5/202277,558 197,976 
$400 Million8/21/201210/20/202294,692 372,895 
$300 Million8/19/201611/9/202239,859 280,637 
$250 Million2/26/201612/22/202221,491 192,614 
$1 Billion7/10/20121/9/2023131,988 963,495 
$3.5 Billion2
12/31/20142/22/2023916,427 3,349,395 
$500 Million
3/7/20192/22/2023108,875 1,230,017 
$1 Billion4/23/20214/23/2023337,926 755,539 
$2 Billion10/30/20205/26/2023232,987 1,163,447 
$4 Billion
5/9/20197/28/20231,733,732 4,482,245 
$700 Million7/24/20208/30/202361,363 673,471 
$1.5 Billion3
9/8/20209/18/202347,776 913,247 
Early Funding:
$500 Million (ASAP + - see below)No expiration92,318 516,889 
$1.5 Billion (EF - see below)No expiration128,984 718,537 
$4,076,829 $15,954,938 
All interest rates are variable based on a spread to the one-month LIBOR rate.
1 An aggregate of $401.0 million of these line amounts is committed as of March 31, 2022.
2 Available line amount was reduced to $2.5 billion in April 2022.
3 Available line amount was reduced to $500 million in April 2022.
We are an approved lender for loan early funding facilities with Fannie Mae through its As Soon As Pooled Plus (“ASAP+”) program and Freddie Mac through its Early Funding (“EF”) program. As an approved lender for these early funding programs, we enter into an agreement to deliver closed and funded one-to-four family residential mortgage loans, each secured by related mortgages and deeds of trust, and receive funding in exchange for such mortgage loans in some cases before the lender has grouped them into pools to be securitized by Fannie Mae or Freddie Mac. All such mortgage loans must adhere to a set of eligibility criteria to be acceptable. As of March 31, 2022, the amount outstanding through the ASAP+ program was approximately $92.3 million and $129.0 million was outstanding under the EF program.
In addition to the arrangements with Fannie Mae and Freddie Mac, we are also party to one early funding (or “gestation”) line with a financial institution. Through this arrangement, we enter into agreements to deliver certified pools consisting of mortgage loans securitized by Ginnie Mae, Fannie Mae, and/or Freddie Mac, as applicable, for the gestation line. As with the ASAP+ and EF programs, all mortgage loans under this gestation line must adhere to a set of eligibility criteria.
The gestation line has a transaction limit of $150.0 million, and it is an evergreen agreement with no stated termination or expiration date, but can be terminated by either party upon written notice. As of March 31, 2022, no amount was outstanding under this line.
As of March 31, 2022, the Company had pledged mortgage loans at fair value as collateral under the above warehouse lines of credit. The above agreements also contain covenants which include certain financial requirements, including maintenance of minimum tangible net worth, minimum liquidity, maximum debt to net worth ratio, and net income, as defined in the agreements. The Company was in compliance with all debt covenants as of March 31, 2022.

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NOTE 8 – SENIOR NOTES
The following is a summary of the senior unsecured notes issued by the Company (in thousands):
Facility TypeMaturity DateInterest RateOutstanding Balance at March 31, 2022Outstanding Balance at December 31, 2021
2025 Senior unsecured notes(1)
11/15/20255.50 %$800,000 $800,000 
2029 Senior unsecured notes(2)
04/15/20295.50 %700,000 700,000 
2027 Senior unsecured notes(3)
06/15/20275.75 %500,000 500,000 
Total Unsecured Senior Notes$2,000,000 $2,000,000 
Weighted average interest rate5.56 %5.56 %
(1) Unamortized debt issuance costs and discounts are presented net against the 2025 Senior Notes reducing the amount reported on the condensed consolidated balance sheets by $7.9 million and $8.5 million as of March 31, 2022 and December 31, 2021, respectively.
(2) Unamortized debt issuance costs and discounts are presented net against the 2029 Senior Notes reducing the amount reported on the condensed consolidated balance sheets by $6.2 million and $6.4 million as of March 31, 2022 and December 31, 2021, respectively.
(3) Unamortized debt issuance costs and discounts are presented net against the 2027 Senior Notes reducing the amount reported on the condensed consolidated balance sheets by $4.8 million and $5.0 million as of March 31, 2022 and December 31, 2021, respectively.
On November 3, 2020, the Company's consolidated subsidiary, UWM, issued $800.0 million in aggregate principal amount of senior unsecured notes due November 15, 2025 (the “2025 Senior Notes”). The 2025 Senior Notes accrue interest at a rate of 5.500% per annum. Interest on the 2025 Senior Notes is due semi-annually on May 15 and November 15 of each year, beginning on May 15, 2021.
On or after November 15, 2022, the Company may, at its option, redeem the 2025 Senior Notes in whole or in part during the twelve-month period beginning on the following dates at the following redemption prices: November 15, 2022 at 102.750%; November 15, 2023 at 101.375%; or November 15, 2024 until maturity at 100%, of the principal amount of the 2025 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest. Prior to November 15, 2022, the Company may, at its option, redeem up to 40% of the aggregate principal amount of the 2025 Senior Notes originally issued at a redemption price of 105.500% of the principal amount of the 2025 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. In addition, the Company may, at its option, redeem the 2025 Senior Notes prior to November 15, 2022 at a price equal to 100% of the principal amount redeemed plus a “make-whole” premium, plus accrued and unpaid interest.
On April 7, 2021, the Company's consolidated subsidiary, UWM, issued $700.0 million in aggregate principal amount of senior unsecured notes due April 15, 2029 (the “2029 Senior Notes”). The 2029 Senior Notes accrue interest at a rate of 5.500% per annum. Interest on the 2029 Senior Notes is due semi-annually on April 15 and October 15 of each year, beginning on October 15, 2021.
On or after April 15, 2024, the Company may, at its option, redeem the 2029 Senior Notes in whole or in part during the twelve-month period beginning on the following dates at the following redemption prices: April 15, 2024 at 102.750%; April 15, 2025 at 101.375%; or April 15, 2026 until maturity at 100%, of the principal amount of the 2029 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest. Prior to April 15, 2024, the Company may, at its option, redeem up to 40% of the aggregate principal amount of the 2029 Senior Notes originally issued at a redemption price of 105.500% of the principal amount of the 2029 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. In addition, the Company may, at its option, redeem the 2029 Senior Notes prior to April 15, 2024 at a price equal to 100% of the principal amount redeemed plus a “make-whole” premium, plus accrued and unpaid interest.
On November 22, 2021, the Company's consolidated subsidiary, UWM, issued $500.0 million in aggregate principal amount of senior unsecured notes due June 15, 2027 (the "2027 Senior Notes"). The 2027 Senior Notes accrue interest at a rate
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of 5.750% per annum. Interest on the 2027 Senior Notes is due semi-annually on June 15 and December 15 of each year, beginning on June 15, 2022.

On or after June 15, 2024, the Company may, at its option, redeem the 2027 Senior Notes in whole or in part during the twelve-month period beginning on the following dates at the following redemption prices: June 15, 2024 at 102.875%; June 15, 2025 at 101.438%; or June 15, 2026 until maturity at 100.000%, of the principal amount of the 2027 Senior Notes to be redeemed on the redemption date plus accrued and unpaid interest. Prior to June 15, 2024, the Company may, at its option, redeem up to 40% of the aggregate principal amount of the 2027 Senior Notes originally issued at a redemption price of 105.75% of the principal amount of the 2027 Senior Notes redeemed on the redemption date plus accrued and unpaid interest with the net proceeds of certain equity offerings. In addition, the Company may, at its option, redeem the 2027 Senior Notes prior to June 15, 2024 at a price equal to 100% of the principal amount redeemed plus a "make-whole" premium, plus accrued and unpaid interest.
The indentures governing the 2025, 2029 and 2027 Senior Notes contain operating covenants and restrictions, subject to a number of exceptions and qualifications. The Company was in compliance with the terms of the indentures as of March 31, 2022.

NOTE 9 – COMMITMENTS AND CONTINGENCIES
Representations and Warranties Reserve
Loans sold to investors which the Company believes met investor and agency underwriting guidelines at the time of sale may be subject to repurchase in the event of specific default by the borrower or subsequent discovery that underwriting or documentation standards were not explicitly satisfied. The Company may, upon mutual agreement, indemnify the investor against future losses on such loans or be subject to other guaranty requirements and subject to loss. The Company initially records its exposure under such guarantees at estimated fair value upon the sale of the related loan, within "Accounts payable, accrued expenses, and other" as well as within loan production income, and continues to evaluate its on-going exposures in subsequent periods. The reserve is estimated based on the Company’s assessment of its contingent and non-contingent obligations, including expected losses, expected frequency, the overall potential remaining exposure, as well as an estimate for a market participant’s potential readiness to stand by to perform on such obligations. The Company repurchased $88.2 million and $41.6 million of loans during the three months ended March 31, 2022 and 2021, respectively, related to its representations and warranties obligations.
The activity of the representations and warranties reserve was as follows (in thousands):
 For the three months ended March 31,
 20222021
Balance, beginning of period$86,762 $69,542 
Reserve charged to operations7,762 9,818 
Losses realized, net(10,472)(10,063)
Balance, end of period$84,052 $69,297 
Commitments to Originate Loans
As of March 31, 2022, the Company had agreed to extend credit to potential borrowers for approximately $28.3 billion. These contracts represent off balance sheet credit risk where the Company may be required to extend credit to these borrowers based on the prevailing interest rates and prices at the time of execution.

NOTE 10 – VARIABLE INTEREST ENTITIES
Upon completion of the business combination transaction described in Note 1, the Company became the managing member of Holdings LLC with 100% of the management and voting power in Holdings LLC. In its capacity as managing member, the Company has the sole authority to make decisions on behalf of Holdings LLC and bind Holdings LLC to signed agreements. Further, Holdings LLC maintains separate capital accounts for its investors as a mechanism for tracking earnings and subsequent distribution rights.
Management concluded that the Company is Holdings LLC’s primary beneficiary. As the primary beneficiary, the Company consolidates the results and operations of Holdings LLC for financial reporting purposes under the variable interest entity (VIE) consolidation model.
15


The Company's relationship with Holdings LLC results in no recourse to the general credit of the Company. Holdings LLC and its consolidated subsidiaries represents the Company's sole investment. The Company shares in the income and losses of Holdings LLC in direct proportion to the Company's ownership interest. Further, the Company has no contractual requirement to provide financial support to Holdings LLC.
The Company's financial position, performance and cash flows effectively represent those of Holdings LLC and its consolidated subsidiaries as of and for the three months ended March 31, 2022.
In 2021, the Company's consolidated subsidiary, UWM, began selling some of the mortgage loans that it originates through private label securitization transactions. In executing these transactions, the Company sells mortgage loans to a securitization trust for cash and, in some cases, retained interests in the trust. The securitization entities are funded through the issuance of beneficial interests in the securitized assets. The beneficial interests take the form of trust certificates, some of which are sold to investors and some of which may be retained by the Company due to regulatory requirements. Retained beneficial interests consist of a 5% vertical interest in the assets of the securitization trusts, in order to comply with the risk retention requirements applicable to certain of the Company's securitization transactions. The Company has elected the fair value option for subsequently measuring the retained beneficial interests in the securitization trusts, and these investments are presented as “Investment securities at fair value, pledged” in the condensed consolidated balance sheet as of March 31, 2022 and December 31, 2021. Changes in the fair value of these retained beneficial interests are reported as part of "other (income)/expense" in the condensed consolidated statements of operations for the three months ended March 31, 2022. The Company also retains the servicing rights on the securitized mortgage loans. The Company has accounted for these transactions as sales of financial assets.
The securitization trusts that purchase the mortgage loans from the Company and securitize those mortgage loans are VIEs, and the Company holds variable interests in certain of these entities. Because the Company does not have the obligation to absorb the VIEs’ losses or the right to receive benefits from the VIEs’ that could potentially be significant to the VIEs, the Company is not the primary beneficiary of these securitization trusts and is not required to consolidate these VIEs. The Company separately entered into sale and repurchase agreements for a portion of the retained beneficial interests in the securitization trusts, which have been accounted for as borrowings against investment securities. As of March 31, 2022, $135.7 million of the $138.4 million of investment securities at fair value have been pledged as collateral for these borrowings against investment securities. The outstanding principal balance of these borrowings was approximately $118.8 million with remaining maturities ranging from approximately four to eight months as of March 31, 2022, and interest rates based on twelve-month LIBOR plus a spread. Our maximum exposure to loss in these non-consolidated VIEs is limited to the retained beneficial interests in the securitization trusts.

NOTE 11 – NON-CONTROLLING INTERESTS
The non-controlling interest balance represents the economic interest in Holdings LLC held by SFS Corp. The following table summarizes the ownership of units in Holdings LLC as of March 31, 2022:

Common UnitsOwnership Percentage
UWM Holdings Corporation ownership of Class A Common Units 92,531,073 5.8 %
SFS Corp. ownership of Class B Common Units1,502,069,787 94.2 %
Balance at end of period1,594,600,860 100.0 %
The non-controlling interest holders have the right to exchange Class B Common Units, together with a corresponding number of shares of our Class D common stock or Class C common stock (together referred to as “Stapled Interests”), for, at the Company's option, (i) shares of the Company's Class B common stock or Class A common stock or (ii) cash from a substantially concurrent public offering or private sale (based on the price of the Company's Class A common stock). As such, future exchanges of Stapled Interests by non-controlling interest holders will result in a change in ownership and reduce or increase the amount recorded as non-controlling interest and increase or decrease additional paid-in-capital or retained earnings when Holdings LLC has positive or negative net assets, respectively. As of March 31, 2022, SFS Corp. has not exchanged any Stapled Interests.
During the three months ended March 31, 2022, the Company issued 918,768 shares of Class A common stock related to the vesting of RSUs under its stock-based compensation plan. The Company did not repurchase nor retire any shares of Class A common stock during the three months ended March 31, 2022, pursuant to the Board's authorization of the share repurchase program on May 9, 2021. This resulted in an equivalent increase in the number of Class A Common Units of Holdings LLC held by the Company, and a remeasurement of the non-controlling interest in Holdings LLC due to the change in relative ownership of Holdings LLC with no change in control. The impact of the re-measurement of the non-controlling interest is reflected in the condensed consolidated statement of changes in equity.
16



NOTE 12 – REGULATORY NET WORTH REQUIREMENTS
Certain secondary market agencies and state regulators require UWM to maintain minimum net worth and capital requirements to remain in good standing with the agencies. Noncompliance with an agency’s requirements can result in such agency taking various remedial actions up to and including terminating UWM’s ability to sell loans to and service loans on behalf of the respective agency.
UWM is required to maintain a minimum net worth, minimum capital ratio and minimum liquidity requirements established by HUD, Ginnie Mae, Freddie Mac and Fannie Mae. As of March 31, 2022, the most restrictive of the these requirements require UWM to maintain a minimum net worth of $761.1 million, liquidity of $98.5 million and a minimum capital ratio of 6%. At March 31, 2022, UWM exceeded all of these requirements for all three of these entities.

NOTE 13 – FAIR VALUE MEASUREMENTS
Fair value is defined under U.S. GAAP as the price that would be received if an asset were sold or the price that would be paid to transfer a liability in an orderly transaction between willing market participants at the measurement date. Required disclosures include classification of fair value measurements within a three-level hierarchy (Level 1, Level 2 and Level 3). Classification of a fair value measurement within the hierarchy is dependent on the classification and significance of the inputs used to determine the fair value measurement. Observable inputs are those that are observed, implied from, or corroborated with externally available market information. Unobservable inputs represent the Company’s estimates of market participants’ assumptions.
Fair value measurements are classified in the following manner:
Level 1—Valuation is based on quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2—Valuation is based on either observable prices for identical assets or liabilities in inactive markets, observable prices for similar assets or liabilities, or other inputs that are derived directly from, or through correlation to, observable market data at the measurement date.
Level 3—Valuation is based on the Company’s or others’ models using significant unobservable assumptions at the measurement date that a market participant would use.
In determining fair value measurements, the Company uses observable inputs whenever possible. The level of a fair value measurement within the hierarchy is dependent on the lowest level of input that has a significant impact on the measurement as a whole. If quoted market prices are available at the measurement date or are available for similar instruments, such prices are used in the measurements. If observable market data is not available at the measurement date, judgment is required to measure fair value.
The following is a description of measurement techniques for items recorded at fair value on a recurring basis. There were no material items recorded at fair value on a nonrecurring basis as of March 31, 2022 or December 31, 2021.

Mortgage loans at fair value