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Homepoint files for IPO

Lender originated over $38 billion through the first three quarters of 2020

Correspondent and wholesale lender Homepoint is the latest mortgage company to aim for an IPO.

The Ann Arbor, Michigan-based lender filed an S-1 with the Securities and Exchanges Commission on Friday afternoon.

The company indicated in the S-1 that its price offering was $100 million, generally a placeholder for a larger offering. The company is expected to go public in the first quarter, sources told HousingWire.

In its S-1, Homepoint revealed incredible growth over the past year, driven by low interest rates that have made many executives in the industry rich in 2020.

Homepoint originated $46.3 billion in originations through its broker network in the 12 months that ended Sept. 30, 2020. It originated a total of $38 billion in loans through the first three quarters of 2020, according to the S-1. It’s a phenomenal rise for a lender that originated just $10.6 billion in 2018 and at one point had a retail operation.

The $38 billion origination figure makes Homepoint the third-largest wholesale lender in America, behind United Wholesale Mortgage and Rocket Pro TPO, and ahead of Caliber Home Loans. Overall, Home Point is the 10th largest non-bank originator in the United States.

Led by CEO Willie Newman, Homepoint has operated somewhat differently to other wholesale lenders, opting to service all of its loans.

According to the S-1, its servicing book rose to $74 billion from $48 billion in 2019, with 307,000 mortgages being serviced. Homepoint’s MSR multiple checked in at 2.6x in the first nine months of 2020, down from 3.2x during the same period in 2019, according to the disclosures. Homepoint also has a delinquency rate of 60 days-plus at 6.6%.

Though it’s best known for its wholesale channel, Homepoint also operates in the correspondent channel, purchasing loans already issued to end-borrower customers, as well as the direct channel.

Homepoint’s potential IPO won’t come as a surprise to most observers, given its backing by private equity firm Stone Point Capital.

Now is a historically great time for the industry: an estimated $4 trillion in originations in 2020, and margins sometimes well above 350 basis points. Going public now not only gives the lenders cheaper access to capital than warehouse lines of credit, it also enables the various private equity backers to enjoy a cash-out.

The lender’s Wall Street debut also would follow that of local rival UWM, the largest lender in the wholesale channel, and overall king of the hill, Rocket Companies, which went public over the summer.

UWM, led by Mat Ishbia, is expected to debut via a special acquisition company on Jan. 22 at a valuation of $16.1 billion. Caliber, which is a multichannel lender, also planned to go public but postponed its IPO following Guild Mortgage’s choppy debut.

In its S-1, Homepoint disclosed that its adjusted net income for the first three quarters of 2020 was $494.6 million. That stands in stark contrast to the prior two years, in which the lender lost money.

Just 31.7% of the mortgages Homepoint originated during the first three quarters was purchase. That’s down from 2019, when purchase comprised 54% of its mix.

Homepoint will be listed on the NASDAQ under the ticker symbol “HMPT.” Goldman Sachs, Wells Fargo, Morgan Stanley and UBS Investment Bank are acting as lead book-running managers for the proposed offering.

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