When banks retreated from US mortgage lending after the 2008 crisis, shadow banks filled the gap. But even these non-bank lenders can stumble. United Wholesale Mortgage recently disclosed a hedging mistake costing over $600mn, prompting a $2bn rescue package led by Oaktree Capital, which holds $227bn of assets.

UWM and Rocket Mortgage dominate US homebuying, selling loans to agencies like Fannie Mae. Non-bank lenders now account for two-thirds of US mortgage volume, up from 20% in 1990. Their growth shows how finance adapts, but also reveals vulnerabilities.

UWM's error stemmed from a hedge taken before abandoning an acquisition. CEO Mat Ishbia insists the core business remains strong. Oaktree's rescue includes preferred shares with a 10% coupon and warrants for 15% ownership, while UWM suspends its dividend to shareholders.