Originators and GSEs

Research evidence excerpt

Originators and GSEs

Investment Summary

The rate environment has been more challenging in 2026 than initially expected highlighting the importance of having a balanced

business model which can produce stable returns across the cycle. With the direction of rates remaining uncertain we continue to

have a fundamental preference for the balanced business model. From a stock perspective the expectations have certainly easedFINANCIALS in response to the increase in rates and the push out of the achievement of "normalized" earnings. The visibility into the timing

to achieve this concept of normalized earnings remains low (and likely always will be given the importance and unpredictability

of interest rates). However, our confidence in the ultimate level of normalized earnings power has actually improved over the

past months given continued progress on the scalability of the mortgage business. The combination of these factors lead us to

viewing the sector as attractive from a risk/reward over the medium-term.

Our top pick for 2H26 is RITM, and UWMC is our other preferred name for the sector; see below for our thoughts on each ofINDUSTRY the 9 companies.

Key Themes

■ Direction of Rates: The size of the mortgage market, both purchase and refi, is sensitive to the level of mortgage rates. ThisREPORT

factor is one of the bigger challenges of the sector as it limits the visibility into future volumes and earnings for the sector.

Our forward estimates are based on stable to modestly higher rates over the next year. The move higher in rates since the

beginning of March has introduced near-term downside risk to origination volumes/earnings, but we have been surprised by

the relative resilience of forward metrics (like mortgage applications).