Home Point posts $133.8 million net loss in last quarter as a lender

Home Point Capital funded nearly $900 million in originations but posted a nine-figure net loss in its final quarter as a mortgage lender.

The parent company of Home Point Financial Corp. reported its first quarter earnings Friday on the heels of selling parts of its business to both Mr. Cooper and The Loan Store, and ending its nine-year run as a mortgage lender. Home Point recorded a $133.8 million net loss between January and March, a 72% decline from the fourth quarter last year.

The Ann Arbor, Michigan-based wholesale giant originated $891.2 million in the first quarter, a 47% quarterly decline and 93% drop off from the $12.5 billion it funded in the first quarter of 2021. Earlier this month, The Loan Store, which originated $302 million in mortgage volume in 2022, closed on its purchase of the firm's wholesale business. Home Point had a rising number of third-party originators, totaling 9,351at the end of March. 

Home Point didn't host a conference call or release a statement with the earnings report Friday.

Mr. Cooper announced earlier this week it would pay $324 million for all outstanding shares of Home Point Capital, giving the buyer an $84 billion servicing portfolio. The Dallas-based giant will also assume approximately $1.1 billion of conventional mortgage servicing rights, $600 million of tangible equity and $500 million in outstanding Home Point 5% senior notes due February 2026.

The Mr. Cooper acquisition is expected to close in the third quarter this year, and the buyer will wind down the firm's operations once customers are onboarded.

Home Point showed signs of distress last spring, when it reported a $44 million net loss it attributed to market factors competitive wholesale pricing. The lender in September also initiated layoffs of over 1,000 workers in a bid to save it over $100 million per year. Executives as recently as March, on the heels of its fourth quarter report, suggested the company could reach cash-flow positivity in 2023.

The cost-cutting move made an impact, shaving company expenses from $136.7 million in the first quarter last year to $69.9 million to begin 2023, although the first quarter mark was a 10% quarterly increase. 

Home Point reduced its warehouse lines of credit 17% in the past six months, ending with $409.5 million of availability at the end of March. It also retained $100 million in cash and cash equivalents to close the quarter, a slight uptick from $97.2 million to end 2022.

The company also reported a $159.2 million loss in the change in MSR fair value in the first quarter, a mark partially offset from a decrease in prepayments among other factors, it said. 

Revenues also dove to a $107.5 million net loss in the first quarter, after staying afloat with $19.2 million in the prior period. At the end of March 2022, the lender's revenues sat at $158.2 million. 

Friday's report is a somber ending to the firm which launched its IPO in January 2021, trading then at $11.32 per share. Home Point originated $96.2 billion that year, before posting a $27.7 billion origination mark in 2022.

The wholesale giant was battered by both fading home buying activity and a fierce pricing war that knocked other lenders in the space out of business.