Exclusive: UWM’s Blake Kolo breaks down the strategy behind the Two Harbors deal

The move by United Wholesale Mortgage’s (UWM) parent company to acquire Two Harbors Investment Corp. for $1.3 billion — the first acquisition in its history — marks a shift towards a more balanced business model between origination and servicing for the nation’s top mortgage lender.

UWM will continue to focus on its broker channel, while a direct-to-consumer origination platform launched by Two in 2024 “will probably go away” if the deal closes. Employees would be given the opportunity to reallocate to other areas of the business, Blake Kolo, UWM’s chief business officer and head of investor relations, said in an exclusive interview.

Meanwhile, servicing would transition from primarily a defensive hedge for origination to also serve as a growth engine, providing a steady source of cash flow while creating opportunities to cross-sell products through the broker channel.

How big will UWM become in servicing?

“We will always be the No. 1 originator. Is our goal to be the largest servicer? No – but to have a good size servicing book that supplements the origination business.” 

At the end of the third quarter, Two had a $176 billion owned mortgage servicing rights (MSR) portfolio, which will be added to UWM’s $216 billion book. Together, the companies would service approximately 1.3 million loans. That remains well below the scale of Rocket Mortgage and Mr. Cooper ($1.2 trillion), as well as Bayview and Guild Mortgage ($886 billion).
The deal comes as UWM remains on track to bring servicing in-house by 2026, with all new loans closed next year to be serviced internally. Loans currently subserviced by Cenlar will transition by the end of 2026, except those UWM elects not to retain, the company said in its third-quarter earnings call. The integration of RoundPoint Mortgage Servicing, which Two agreed to acquire from Freedom Mortgage Corp. in 2022, would provide more flexibility.

There are still six months until the deal closes for UWM to decide which structure is the most efficient and how they will co-exist moving forward, Kolo said. UWM expects to introduce its servicing platform in the first quarter of 2026.

A cash-flow opportunity 

UWM views Two’s portfolio as a “high-quality servicing book,” composed largely of Fannie Mae and Freddie Mac loans with a low weighted average loan rate of 3.58%. Two had acquired UWM assets in the past, many years ago, composed of low WAC and seasoned loans, Kolo said.

“We’ve always been homegrown,” Kolo said. “But with bringing servicing in house, this deal puts a little gasoline on the fire in terms of doubling that servicing portfolio overnight. That’s a positive, because there’s a lot of efficiency that comes with that.”

According to Kolo, UWM will continue to sell MSRs opportunistically, but the cash flow generated by the servicing book — estimated at more than $1 billion in recurring servicing revenue with Two’s deal— reduces the need to sell as frequently.

“Rocket has a different strategy, they’re trying to buy high-WAC servicing to recapture, and they’re paying a lot of money for that expensive lead,” Kolo said. “We don’t have to do that. We originate at scale, and we’re the ones producing those MSRs. It’s a little bit of a different strategy. For us, it’s all about efficiency, or being able to close loans cheaper than anybody, and being able to do it at scale.”
In terms of valuation, Rocket acquired Mr. Cooper Group for $14.2 billion at roughly 2x book value, while Bayview Asset Management paid  $1.3 billion for Guild Holdings Company in a 1.3x book value transaction. UWM is paying approximately 1.13x book value.

How to distribute leads? 

Given the low-WAC nature of the portfolio, refinancing opportunities are likely to emerge over time. However, Kolo said the primary appeal lies in the consistency of cash flow.

“We originate, depending on what you look at, 8%-11% of all loans in America, but we only service 2%,” Kolo said. “The concept of recapture of the servicing book, there’s some validity to it, but the way we look at it is we’re going to go out and originate at scale regardless, and we want to protect our servicing book that’s for sure, and give those leads to the broker.” 

Kolo declined to detail how leads will be distributed, noting the company is still evaluating its options. However, he confirmed that leads will not flow into Two’s retail origination arm launched last year. “We won’t be moving forward in terms of having a retail division under their origination arm, so we will be responsible for all the recapture,” he added.

Kolo added that most refinancings currently involve loans originated in the past four years, meaning borrowers still remember their brokers. As a result, UWM is confident the business will return regardless of who owns the servicing.

$150M in synergies 

UWM estimates that bringing servicing in-house will generate $50 million to $100 million in savings and the deal with Two can accelerate and enhance this.

Another attractive feature of the deal is the chance for UWM to double its float, which will allow it to attract more investors. The public float will increase 93% to approximately 513 million shares ($2.6 billion). The pro forma will be 87% for UWMC holders and 13% for Two.
“Now that we have a considerable amount more of float, we should start to get more eyes. And our investors that are big investors can make larger positions. It also helps with liquidity of the stock,” Kolo said.  

Regarding future transactions, Kolo said the deal was an opportunistic chance to strengthen UWM’s equity profile, acquire a valuable servicing platform at an attractive price, and add a seasoned capital markets team. It does not mean UWM is in acquisition mode. But, if another opportunity comes up, “we would consider it,” he added.

The transaction is expected to close in the second quarter of 2026.