Betting on the Future: My $1 Million Wager on Mortgage Lenders and Banks for 2028 Profitability

By Matt Slonaker, May 31, 2025

As we hit the halfway mark of 2025, the U.S. mortgage market is a whirlwind of opportunity and risk. With Independent Mortgage Bank (IMB) losses narrowing to $28 per loan in Q1 2025, delinquencies creeping up to 4.04%, and first-time homebuyers (FTHBs) and Gen Z driving demand, I’ve been digging into which players are best positioned to thrive. If I had $1 million to bet on lenders and banks achieving at least 33% higher profitability by 2028, I’d spread my chips across five institutions: three IMBs and two banks. Here’s my take on who’s got the edge, why, and how they align with the trends shaping the market. Buckle up—this is where strategy meets opportunity.

The 2025 Mortgage Landscape: A Quick Snapshot

Before I dive into my picks, let’s set the stage. My analysis, built on data from my 2025 market study, the MBA, ICE Mortgage Monitor, Ginnie Mae, HousingWire, and web insights, paints a clear picture:

• IMBs Are Bouncing Back: After a brutal $1,056 per-loan loss in 2023, IMBs and bank subsidiaries hit a $443 profit per loan in 2024, though Q1 2025 dipped to a $28 loss. Smaller lenders (<$500M volume) are bleeding $1,000+ per loan, but the industry’s nearing breakeven [Navigating-the-2025-US-Mortgage-Market, Page 2; MBA Press Release, May 16, 2025].
• Banks Are Struggling: Large banks lost $4,803 per loan in 2018 retail channels, weighed down by $13,628/loan expenses and $3,654 in corporate overhead, compared to IMBs’ $376 profit. Portfolio retention (58% of loans) limits their revenue from sales [STRATMOR Insights].
• Delinquencies and Foreclosures: Q1 2025 saw delinquencies at 4.04%, with FHA loans (10.62% seriously delinquent) driving half of serious cases. VA foreclosures spiked 54% year-over-year to 0.84% [Navigating-the-2025-US-Mortgage-Market, Page 4].
• FTHBs and Gen Z Surge: FTHBs make up 58% of agency loans (72% for Ginnie Mae), and Gen Z accounts for 25% of FTHB purchases, especially in Midwest markets [Navigating-the-2025-US-Mortgage-Market, Page 5].
• Rate and Volume Outlook: Rates dropped to 6.67% in April 2025, with forecasts of 5.9% by late 2025 and 3.77-5.64% by 2028. Origination volume is expected to climb from $1.79T in 2024 to $2.5T by 2027 [HousingWire, May 15, 2025; Fannie Mae Forecast].

To hit a 33% profitability boost by 2028, IMBs need to scale per-loan profits from $443 to ~$589, while banks must slash losses or turn profitable. With these trends in mind, I’ve picked five institutions to bet on, each getting $200,000 of my hypothetical $1 million.

My Top Five Picks: Where I’m Placing My Bets

I evaluated lenders and banks based on 2024 origination volume, profitability, alignment with FTHB/Gen Z trends, digital capabilities, and risk management. Here’s who I’m backing and why they’re poised to outperform.

1. United Wholesale Mortgage (UWM): The Market Leader

UWM, the top U.S. lender by volume in 2024, is my safest bet. Its wholesale model, leveraging broker networks, keeps overhead low, aligning with IMBs’ $443/loan profit in 2024. Despite mortgage servicing rights (MSR) valuation hiccups, UWM’s streamlined refinance processes capitalize on the 0.59% prepayment spike and projected 6.6% rates by Q3 2025 [HousingWire, May 15, 2025; Navigating-the-2025-US-Mortgage-Market, Page 8].

Why I’m bullish:

• Digital Efficiency: UWM’s tech investments mirror Zillow’s 32% revenue growth, appealing to Gen Z’s 25% FTHB share [HousingWire, May 15, 2025].
• Scale Advantage: With $488M average production volume, UWM spreads fixed costs better than smaller IMBs facing $1,000+/loan losses [Navigating-the-2025-US-Mortgage-Market, Pages 2-3].
• Nonbank Dominance: UWM thrives in the 95.4% nonbank share of Ginnie Mae originations, handling lower FICO loans (687) [Navigating-the-2025-US-Mortgage-Market, Page 6].

By 2028, with volumes hitting $2.5T and rates potentially at 4.25%, UWM’s market leadership and cost efficiency make a 33% profit jump a strong bet [Fannie Mae Forecast].

2. Rocket Mortgage: The Digital Powerhouse

Rocket, the second-largest lender, is my next pick. Its tech-driven platform and growing originations, bolstered by M&A activity, position it to ride the FTHB wave (58% of agency loans). Rocket’s 2024 IMB profit of $443/loan sets a solid foundation for scaling to ~$589 [HousingWire, May 15, 2025; MBA Report].

Why I’m confident:

• Refinance Expertise: Rocket’s streamlined processes align with the 16% refinance share and 6.6% rate forecast, boosting revenue [Navigating-the-2025-US-Mortgage-Market, Page 8].
• Servicing Buffer: A robust servicing portfolio mitigates risks from FHA delinquencies (10.62%) and VA foreclosures (0.84%) [Navigating-the-2025-US-Mortgage-Market, Page 4].
• Gen Z Appeal: Rocket’s digital-first approach resonates with Gen Z’s 25% of FTHB purchases [Navigating-the-2025-US-Mortgage-Market, Page 5].

Rocket’s M&A costs add some risk, but by 2028, its scale and digital prowess should drive a 33% profit increase as rates stabilize [DMI Forecast].

3. Finance of America: The Niche Innovator

Finance of America stands out for its reverse mortgage profits in 2024—a bright spot when banks lost $4,803/loan in retail. Its niche focus on reverse mortgages and focus on affordability tackle high DTI (44.3%) and LTV (97.1%) ratios for Ginnie Mae FTHBs [HousingWire, May 15, 2025; Navigating-the-2025-US-Mortgage-Market, Page 6].

Why I’m investing:

• Niche Strength: Reverse mortgages tap aging demographics, offering stability as origination volumes grow.
• Nonbank Agility: As part of the 95.4% nonbank Ginnie Mae share, it handles riskier loans profitably [Navigating-the-2025-US-Mortgage-Market, Page 6].
• Low Overhead: Smaller expenses compared to banks’ $13,628/loan support profitability [STRATMOR Insights].

Finance of America’s smaller scale is a slight concern, but its diversified products and FTHB alignment make a 33% profit boost achievable by 2028, especially with lower rates spurring demand [Fannie Mae Forecast].

4. U.S. Bank: The FTHB Champion

U.S. Bank is my first bank pick, driven by its American Dream loan for low-income FTHBs, offering up to $10,000 in assistance. While retail losses persist due to high expenses, its servicing portfolio ($346,714 average balance) and digital improvements offer hope [Consumer Reports, May 2025; Navigating-the-2025-US-Mortgage-Market, Page 4].

Why I’m optimistic:

• FTHB Focus: Aligns with 72% FTHB share in Ginnie Mae programs [Navigating-the-2025-US-Mortgage-Market, Page 5].
• Rate Tailwind: Rate declines to 5.9% in 2025 and 3.77-5.64% in 2028 reduce portfolio costs [Fannie Mae Forecast].
• Cost-Cutting Potential: AI and outsourcing (e.g., via Sourcepoint) can trim expenses, narrowing the gap with IMBs [PMA Forecasting].

U.S. Bank needs aggressive cost reductions to hit 33% profitability, but its FTHB programs and servicing income make it a contender by 2028 [STRATMOR Insights].

5. Wells Fargo: The Scale Play

Wells Fargo, a top 10 lender, rounds out my picks. Its competitive rates and large servicing portfolio offset high corporate overhead, but it’s my riskiest bet [HMDA Data, 2024]. Wells Fargo’s rate forecast above 6.4% through 2027 suggests caution, but its scale positions it for growth [Wells Fargo Outlook].

Why I’m taking the risk:

• Market Presence: Benefits from 6.7M loans projected by 2027 and $2.5T in volume [MBA Forecast].
• FHA/VA Exposure: Aligns with 72% Ginnie Mae FTHB share, though VA foreclosures (0.84%) are a risk [Navigating-the-2025-US-Mortgage-Market, Pages 4-5].
• Tech Investments: AI and digital platforms can cut expenses ($13,628/loan in 2018) [Deloitte Banking Outlook].

Wells Fargo’s 33% profit increase hinges on cost reductions, but its servicing stability and scale make it viable by 2028 [Fannie Mae Forecast].

Why IMBs Over Banks?

IMBs like UWM, Rocket, and Finance of America get my top three spots because they’re leaner, with $1,213/loan corporate costs versus banks’ $3,654. Their 2024 profitability, digital agility, and dominance in Ginnie Mae’s 95.4% nonbank share give them an edge [STRATMOR Insights; Navigating-the-2025-US-Mortgage-Market, Page 6]. Banks like U.S. Bank and Wells Fargo, while stable due to servicing income, need to overcome structural cost disadvantages. I’ve included them to diversify my bets, banking on their ability to streamline operations.

Risks to Watch

• Delinquencies and Foreclosures: Rising FHA (10.62%) and VA (0.84%) risks could hit profits [Navigating-the-2025-US-Mortgage-Market, Page 4]. My picks’ servicing portfolios and diversified products mitigate this.
• Rate Swings: Rates may climb to 7.29% by 2026 before dropping to 3.77% by 2028, affecting refinances [DMI Forecast]. IMBs’ refinance expertise and banks’ stability counter this.
• Economic Headwinds: Unemployment may hit 4.7% by 2025, dampening demand [Fannie Mae]. FTHB/Gen Z focus and rate declines offset this risk.

My Final Take

If I’m wagering $1 million, UWM and Rocket are my strongest bets, with their scale, digital leadership, and IMB profitability paving the way for a 33% profit surge by 2028. Finance of America’s niche reverse mortgage play adds diversification, while U.S. Bank and Wells Fargo offer upside if they tame expenses. The 2025-2028 market will reward those who lean into FTHBs, Gen Z, and digital efficiency while managing delinquency risks. I’m excited to see how these players navigate the road ahead.

Want to dive deeper into these trends or tailor strategies for your team? Let’s schedule a briefing to explore how Sourcepoint/Firstsource can turn these insights into action. Reach out to me at [email protected] to book a session.

Sources: Navigating-the-2025-US-Mortgage-Market-Key-Trends-and-Opportunities.pdf, May 2025; MBA Press Release, May 16, 2025; HousingWire, May 15, 2025; STRATMOR Insights, 2024; Fannie Mae Forecast, 2025; DMI Forecast, 2025; HMDA Data, 2024; Consumer Reports, May 2025; Deloitte Banking Outlook, 2025; MBA Forecast, 2025; Wells Fargo Outlook, 2025.