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Homepoint Exits Mortgage Origination, Sells Wholesale Division to The Loan Store

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More mortgage M&A activity today.

Homepoint announced this morning that it has entered into a definitive agreement to sell the company’s wholesale origination unit to The Loan Store, Inc.

As a result, the Ann Arbor-based mortgage lender will no longer be a direct participant in the loan origination space.

However, Homepoint will continue to manage its mortgage servicing rights (MSR) portfolio, which it expects “to generate significant returns and cash flow over time.”

Prior to this move, Homepoint was the third largest wholesale mortgage lender in the country, behind just United Wholesale Mortgage and Rocket Mortgage TPO.

Homepoint Was a Top-10 Mortgage Lender

Homepoint saw explosive growth since its founding in 2015 via the acquisition of Maverick Funding.

It took them less than a decade to grow out a 2,000+ employee workforce and become a top-10 mortgage lender.

In 2021, the company originated an impressive $96 billion in home loans, landing them in ninth place overall.

However, due to difficult market conditions, namely a doubling in mortgage rates, profitability became an issue, leading to a series of layoffs nationwide.

Prior to this announcement, the company operated solely in the wholesale channel via mortgage brokers, meaning they will no longer have a place in the mortgage origination business.

In the past, they also operated a correspondent and retail division before shrinking operations.

Today, Homepoint made what they felt was the “best decision for our company to continue to deliver value to Home Point shareholders.”

But due to the sale, “its nine-year tenure as a direct participant in the originations market” will come to an end.

As noted, the company will continue to manage “its high-performing MSR portfolio.”

Homepoint is publicly-traded on the Nasdaq stock exchange under the symbol NASDAQ: HMPT.

At last glance, Homepoint was up about 21% on the news, though the stock is down about 33% over the past 12 months, and 82% over the past five years.

The Loan Store Looks to Grow Its Mortgage Footprint

Despite being founded in 2019, The Loan Store, Inc. is acquiring the third largest wholesale lender in the mortgage space.

Those other two lenders, UWM and Rocket Mortgage, happen to be the largest mortgage lenders across all origination channels.

This should allow the Tucson, Arizona-based company to grow exponentially, despite industry headwinds related to higher mortgage rates.

The Loan Store, Inc. currently operates solely via the wholesale channel, offering a variety of loan products via mortgage broker partners.

This includes conforming loans, jumbo loans, VA loans, and non-QM offerings like bank statement loans and DSCR (Debt Service Coverage Ratio) loans.

The company prides itself on “fast, simple home loans,” and has funded over $10 billion since inception.

It does not retain loan servicing for any of the mortgages it originates.

Prior to the acquisition, The Loan Store did business in about two dozen states.

Those include Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Washington, and Wisconsin.

The merger should allow them extend their reach nationwide and potentially be licensed in all 50 states.

The company expects the sale to close in the second quarter of 2023, subject to customary closing conditions.

It’s unclear if any employees will be impacted as a result of the agreement.

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