Home Point, soon to be defunct, delivers $28M loss in Q1


Home Point Capital reported another quarterly loss on Friday morning, just two days after announcing that it is being sold to Mr. Cooper Group for $324 million in cash. The transaction will result in the company shutting down in the coming months. 

In the first quarter, Home Point’s origination and servicing businesses were in the red amid declining production volumes and a negative change in the fair value of its mortgage servicing rights (MSR). 

Overall, Home Point delivered a non-GAAP adjusted net loss of $28.3 million from January to March, larger than the $21.7 million loss in the previous quarter. The GAAP net loss was $133.8 million, according to documents filed with the Securities and Exchange Commission (SEC).

Amid several quarterly losses, Home Point being sold wasn’t out of the realm of possibility, the company’s president and CEO, Willie Newman, said when announcing the 2022 earnings in early March. 

The company failed to adjust to a landscape of high mortgage rates, low inventory levels and fierce competition.

In April, Home Point announced it exited the origination business after nine years of operation by selling its wholesale lender Homepoint to Arizona-based lender The Loan Store, Inc

The buyer inherited a lender that produced $891 million in mortgage loans in Q1, compared to $1.7 billion in Q4 2022. 

Home Point’s gain-on-sale margin attributable to correspondent and wholesale channels, prior to the impact of capital markets and other activity, was 97 basis points in the first quarter of 2023, compared to 86 bps in the previous quarter and 61 bps in the same quarter in 2021. 

However, after the impact of capital markets and other activity, the gain-on-sale margin in the fourth quarter was just 12 bps, compared to 22 bps in the previous quarter. 

In total, the origination segment had a $20.1 million loss in Q1 2023, compared to $24.2 million in Q4 2022 and $8.4 million in Q1 2022.

The transaction with The Loan Store did not include the company’s MSR portfolio, which is the target of Mr. Cooper’s deal. The buyer will also assume $500 million in Home Point’s senior notes due in February 2026. The transaction is expected to close in the third quarter of 2023. 

Home Point’s servicing portfolio totaled $88.4 billion in unpaid principal balance as of March 31, 2023, down 0.3% quarter-over-quarter and 13% year-over-year. The company said it had 315,801 servicing customers in the first quarter, a decline of 9.6% from the same period in 2022. 

The company had a $109 million net loss with the servicing portfolio in Q1 2023, which was impacted by a $139.8 million negative change in MSR fair value, net of hedge. 

Regarding its liquidity, the company had $100 million in cash and cash equivalents as of March 31, 2022, and a total available liquidity of $663 million. 

After the earnings report, Home Point share was trading at $2.26 at 10:30 AM EST, down 0.44% from the previous closing.



Source link