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Home Point Capital bounces back in Q3 thanks to MSR sale

The company reported a net income of $71 million in 3Q, rebounding from a $73.2 million net loss in 2Q

HW+ Willie Newman
Willie Newman, president and CEO of Home Point Capital

Home Point Capital, parent entity of Michigan-based wholesale lender Homepoint, bounced back from a brutal second quarter, posting a net income gain of $71 million in Q3.

This is a notable improvement from the $73.2 million net loss posted by the company in the second quarter. Helping the lender rebound was Home Point’s sale of its mortgage servicing rights (MSR) portfolio of single-family mortgage loans guaranteed by Ginnie Mae for proceeds close to $122 million.

The company, which went public earlier in the year, noted in its third quarter earnings report that “the transaction further streamlined Home Point’s servicing operations, reduced overall portfolio delinquencies, and provided incremental liquidity which was used to reduce outstanding debt.”

Total servicing portfolio delinquencies improved to 0.9% compared to 1.6% in the second quarter, the company’s third quarter earnings revealed.

Home Point Capital’s gain on sale margin also grew thanks to the sale, increasing by 26 basis points to 84 basis points in the third quarter.

As of Sept. 31, 2021, quarterly funded origination volume came in at $21 billion, a dip from $25 billion in the second quarter of 2021. During the company’s third quarter conference call, Willie Newman, president and CEO of Home Point Capital, said that the results reflected a “solid quarter.”

Despite the industry-wide slowdown of refinances, 65.4% of the company’s origination business came from refis, while purchase volume was only 34.6%.

From July to September, the company’s total expenses were $175 million, down 11% compared to the second quarter. The dip was driven by a “16% reduction in origination segment direct expenses and a 7% decline in servicing segment direct expenses,” the lender said.

Newman also noted that “competitive dynamics” in the wholesale channel “created a strategic opportunity” to attract new broker partners, with the number of partners now totaling 7,452, a 50% increase year-over-year.  

“Our financial and operating results for the third quarter demonstrate the flexibility of Home Point Capital’s business model and team, particularly as we navigate through a challenging and competitive environment,” said Newman.

He added, “We executed on a number of priorities during the third quarter including expanding our broker partner network, continuing to roll out productivity and efficiency initiatives, enhancing Homepoint’s partner and customer experience, and diversifying our capital markets execution alternatives.”

After reporting its earnings, Home Point Capital’s stock was trading 10% higher at $5.01.

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