Home Point sees mortgage broker interest increase after UWM ultimatum

Breana Noble
The Detroit News

Home Point Capital Inc. on Thursday said it has seen an increase in inquiries from brokers about working with the Ann Arbor-based mortgage lender since crosstown rival United Wholesale Mortage Holdings Corp. last week announced it would no longer work with brokers continuing doing business with Rocket Companies Inc.

The Monday ultimatum set by UWM, the country's largest wholesale lender, could be a boon to competitors like Home Point as brokers look to replace Pontiac-based UWM or Detroit-based Rocket Mortgage as a partner. Already the fastest-growing lender of the country's largest 35 in 2020, Home Point doubled its market share in the wholesale channel last year and plans to keep up the growth in 2021.

"We will focus on our own business practices," Maria Fregosi, chief investment officer, told The Detroit News. "Home Point has always been focused on the broker channel, and we will continue to take share in those markets, and we will continue to fight for the share. We will earn our fair share by serving the broker and consumer."

The country's third-largest wholesale lender, Home Point added 2,287 brokers to its network last year. But those 5,372 partners still pale in comparison to UWM's 12,000 and Rocket's 10,000.

Home Point reported a profit of $607 million in 2020 after losing money in 2019 as low interest rates spurred refinancing activity as well as home purchases. Shares were down less than 1% as major market indexes were on the rise in afternoon trading.

The financial results are the company's first time since going public in January on the Nasdaq. Founded in 2015, Home Point already is No. 15 in total originations after recording $62 billion in volume last year, up 178.5%.

No. 1 overall Rocket grew 122.5% last year, while No. 4 UWM increased its volume by 69.4%.

Home Point made $4.45 per share last year. Its net revenue was $1.377 billion, almost six times what it collected in 2019. Expenses, however, increased 144% to $588.6 million. Its workforce grew to 3,500 employees nationwide. That includes 517 people in Michigan.

The contribution margin of Home Point's originations segment was $1.479 billion, five times 2019's. Refinances represented 69.1% of Home Point's 2020 mix, up from 49.4% in 2019. The remaining 30.9% came from purchases. Home Point retains the servicing for most of its loans; that segment lost $65.8 million.

The company closed out the final three months of the year with $184.5 million in net income, a 10-fold increase, with its gain-on-sale margin increasing 1½ times. Origination volume totaled $23.956 billion, almost twice as much as the fourth quarter of 2019 and more than the value of all originations made last year.

Home Point ended the year with $281 million in available liquidity, including $165 million in cash and cash equivalents, a 113% increase. Although it entered the capital markets this year, Home Point did not actually see an influx in money to its coffers from the IPO. The offering came from private Home Point investors, but it provides the company an opportunity to tap public investors for funds in the future.

Rocket, which includes its Quicken Loans LLC lending business, title insurer Amrock LLC and more, made $9.4 billion in profit last year closing $323 billion in mortgages. UWM made $3.38 billion with $182.5 billion in volume.

bnoble@detroitnews.com

Twitter: @BreanaCNoble