Homepoint shrinks its lending capacity

Lender terminated warehouse lines of credit with Credit Suisse and Morgan Stanley

Home Point Financial Corp. has terminated a master repurchase agreement and securities contract with Credit Suisse First Boston Mortgage Capital and Morgan Stanley Bank, according to filings with the Securities and Exchange Commission.

The financing arrangement was struck on June 3, 2020 with the maximum aggregate borrowing authority totaling $300 million, according to Home Point’s 8-K filing disclosed on Tuesday. 

Another SEC filing from last month showed that Home Point, the corporate entity that controls wholesale lender Homepoint, terminated a master repurchase agreement and securities contract with Morgan Stanley Bank. The financing arrangement was also dated June 3, 2020. The agreement provided for a maximum aggregate purchase price of $325 million and committed financing of $162.5 million, SEC filings revealed. 

Both terminations were mutually agreed prior to its scheduled maturity date of Feb. 23, 2023 for Credit Suisse and March 3, 2023 for Morgan Stanley. 

Homepoint declined to comment on the credit line terminations, but has been open about shrinking its footprint as the mortgage market contracts from about $4 trillion to roughly $1.6 trillion this year and $1.3 trillion in 2023.

As of June 30, the company had $1.91 billion in capacity to fund loans, down from the first quarter’s $2.72 billion. In the fourth quarter of 2021, the company had $4.72 billion in credit from warehouse lenders.

On the back of sharply decreasing originations, lenders have been reducing their credit lines. loanDepot, for example, cut its capacity by a total of $1.5 billion over the past two months, citing “current and projected mortgage loan originations.” After reporting a $223 million financial loss in the second quarter, loanDepot shut down its wholesale channel. 

In response to the current market headwinds, Michigan-based lender Homepoint shrunk its employee headcount dramatically. The company cut about 75% of its workforce from the summer of 2021 to about 1,000 in the fall of 2022. Over the past year, Homepoint sold off large chunks of its business including selling its delegated correspondent business to Planet Home Lending. 

Home Point Financial ranked as the 14th largest lender in the country, according to Inside Mortgage Finance. It originated a mortgage volume of $21.7 billion in the first six months of 2022, with $9.1 billion accounting for the second quarter of this year.

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