Home Point slips into the red as price war intensifies
Home Point slips into the red as price war intensifies
Abstract
Home Point Capital on Thursday recorded a second-quarter loss as it struggled with a challenging origination market that was particularly competitive in the growing loan broker channel. Losses mounted at the company due to higher rates, competitive wholesale pricing and the sale of its stake in Longbridge Financial, outweighing an increase in broker partners and savings from efficiency initiatives like the pending outsourcing of its servicing operations to ServiceMac. Although the company is outsourcing management of loan payments, it plans to generally retain the mortgage servicing rights on its loans, he added in response to an analyst's question. "The default is always to retain MSR and that's what we do, and then we'll opportunistically sell. Right now, our leverage is in a reasonably good place."The price war in the broker channe, that's been ongoing for more than a year, has posed a significant challenge to the company's production. Home Point plans to use service levels to woo a mortgage broker network it sees as ripe for growth. "The migration from retail to broker is accelerating," said Newman. "In 2021, 6,353 loan originators migrated from retail to broker, or 529 per month. Year-to-date in 2022, the average is over 800, with July being the highest month so far as 1,022 loan originators migrated from retail to broker."Although challenges related to margins exist in the loan broker channel relative to lender margins, those numbers give it relative advantages, Newman added.