XML 41 R9.htm IDEA: XBRL DOCUMENT v3.21.2
Derivatives
 9 Months Ended 12 Months Ended
Sep. 30, 2021
Dec. 31, 2020
Derivatives
NOTE 3 – DERIVATIVES
The Company enters into interest rate lock commitments (“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 88% and 92%, as of
September
 30, 2021 and December 31, 2020, respectively. The Company primarily uses forward mortgage backed security contracts, which are known as forward loan sale commitments (“FLSCs”), to economically hedge the IRLC
s.
The notional amounts and fair values of derivative financial instruments not designated as hedging instruments were as follows (in thousands):
 
 
  
September 30, 2021
 
 
December 31, 2020
 
 
  
Fair value
 
  
 
 
 
Fair value
 
  
 
 
 
  
Derivative
assets
 
  
Derivative
liabilities
 
  
Notional
Amount
 
 
Derivative
assets
 
  
Derivative
liabilities
 
  
Notional
Amount
 
IRLCs
   
$
14,476
     
$
50,510
     
$
16,908,591
(a)
   $ 60,248      $ 670      $ 10,594,329 (a)
FLSCs
   
 
129,331
     
 
10,924
     
 
27,265,436
 
     824        65,567        16,602,739  
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
           
Total
   
$
143,807
     
$
61,434
     
 
 
     $ 61,072      $ 66,237           
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
           
 
(a)
Adjusted for pullthrough rates of 88% and 92%, respectively.
 
United Wholesale Mortgage L L C [Member]    
Derivatives  
NOTE 3 – DERIVATIVES
The Company enters into interest rate lock commitments (“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 the IRLC is to become a loan. The blended average pullthrough rate was 92% and 81%, as of December 31, 2020 and 2019, respectively. The Company uses forward mortgage backed security contracts, which are known as forward loan sale commitments (or “FLSCs”), to economically hedge the IRLCs.
The following summarizes derivative instruments (in thousands):
 
                                 
     December 31, 2020     December 31, 2019  
     Fair
Value		      Notional
Amount		     Fair
Value		      Notional
Amount		  
IRLCs, net
    $
59,579
      $
10,594,329
 (a)   $
16,786
      $
6,727,739
 (a)
FLSCs, net
     
(64,743
 )      
16,602,739
      
(14,506
 )      
10,674,680
  
    
 
 
             
 
 
           
Total
    $
(5,164
 )             $
2,280
           
    
 
 
             
 
 
           
 
(a)
Adjusted for pullthrough rates of 92% and 81%, respectively.