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Home Point Capital reports decrease in 1Q revenue

Despite reporting record quarterly origination volume of $29 billion

Home Point Capital reported $29 billion in origination volume in the first quarter of 2021 and a net income of $149 million, per the company’s earnings report. That origination volume is a 260% increase year over year, said Willie Newman, CEO and president of Home Point Capital, parent company of wholesale lender Homepoint, and up 23% over the fourth quarter.

However, the company’s gain on sale margin in Q1 fell to 128 basis points from 200 million basis points in Q4. And revenue and net income both decreased as well — from $453 million to $422 million, and from $184 million to $149 million, respectively.

Revenue for the first quarter of 2021 includes a $102 million net mark-to-market gain in the fair value of the Homepoint’s mortgage servicing rights (MSR) portfolio, as a result of the significant increase in interest rates during the quarter.

Total expenses increased to $227 million, from $223 million last quarter.

Newman said the company’s results reflected its diversified business model, and noted the growth in its broker channel.

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“We entered 2021 with significant momentum and this was reflected in the first quarter, as we originated a record $29 billion of funded volume. We also significantly increased the pace of new broker partner additions to our platform, which we believe will drive long-term growth in our market share,” Newman said. “Looking forward, we remain focused on expanding our market share and partner network, driving efficiency across our business, and building sustainable long-term value for our stakeholders.”

Homepoint has experienced a sharp uptick in new broker partners since United Wholesale Mortgage CEO Mat Ishbia said in March that brokers who worked with Rocket Pro TPO and Fairway Independent Mortgage couldn’t work with UWM. Broker partners totaled 6,023 as of March 31, 2021, a 72% increase from the end of the first quarter of 2020, and a 12% increase from year-end 2020.

Homepoint’s market share in the wholesale channel for the fourth quarter rose to 8.2% from 7.3% in the prior quarter.

Homepoint’s origination segment generated a contribution margin of $189 million for the first quarter of 2021, up from $63 million for the first quarter of 2020, and down from $302 million for the fourth quarter of 2020. The servicing segment generated a contribution margin of $65 million for the first quarter of 2021, compared to $-56 million for the first quarter of 2020 and $-17 million for the fourth quarter of 2020.

The company reported $443 million of liquidity as of March 31, 2021, comprising $219 million of cash and cash equivalents. It also reported $224 million of undrawn capacity from mortgage servicing rights lines of credit and other credit facilities.

Correction: A prior version of this story incorrectly reported Homepoint’s gain-on-sale margins.

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