United Wholesale Mortgage (UWM)’s strategy to protect assets is under scrutiny following recent analyses of public filings, which questions whether the lender’s derivatives book functioned as a true hedge or as a bet that amplified existing risks.

Last week, UWM reported a $451.9 million net loss for the second quarter, including a $603.2 million derivatives loss. The financials were announced alongside a $2.05 billion capital raise, which included funding from distressed debt group Oaktree Capital Management.

UWM first explained the hedge position was established mainly to mitigate the risk of acquiring Two Harbors Investment Corp. (TWO)’s mortgage servicing rights details ⇒

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