Home Point Capital reported another quarterly loss on Friday morning, two days after announcing it was being sold Mr. Cooper Group for $324 million in cash. The company will close in the coming months as a result of the transaction.
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 reported a non-GAAP adjusted net loss of $28.3 million from January to March, which was larger than the $21.7 million loss in the previous quarter. GAAP net loss was $133.8 million, according to documents filed with the Securities and Exchange Commission (SEC).
Announcing 2022 earnings in early March, Willie Neumann, the company’s chairman and CEO, said that amid multiple quarterly losses, Home Point being sold was not out of the question.
The company failed to adjust to a landscape of high mortgage rates, low inventory levels and fierce competition.
In April, Home Point announced that it exited the origination business by selling its wholesale lender after nine years of operations. home point For Lenders Based in Arizona Lending Store, Inc.,
The buyer inherited a lender that generated $891 million in mortgage lending in the first quarter, compared to $1.7 billion in the fourth quarter of 2022.
Home Point’s profit-on-sales margin, attributable to correspondent and wholesale channels, before the impact of capital markets and other activity, was 97 basis points in the first quarter of 2023, compared to 86 bps in the prior quarter and 61 bps in the prior quarter. same quarter in 2021.
However, after the impact of capital markets and other activity, the profit margin on sales in the fourth quarter was just 12 bps as compared to 22 bps in the previous quarter.
Overall, the origination segment had a loss of $20.1 million in the first quarter of 2023, $24.2 million in the fourth quarter of 2022 and $8.4 million in the first quarter of 2022.
The transaction with The Loan Store did not involve the company’s MSR portfolio, which is the target of Mr. Cooper’s transaction. The buyer will also assume $500 million in Home Point 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 balances 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, down 9.6% compared to the same period in 2022.
The company had a net loss of $109 million in the first quarter of 2023 with the servicing portfolio, which was impacted by a negative change in MSR fair value of $139.8 million, netting the hedge.
With respect to its liquidity, the Company had total available liquidity of $100 million and $663 million in cash and cash equivalents as of March 31, 2022.
Following the earnings report, Home Point’s stock was trading at $2.26 at 10:30 a.m. EST, down 0.44% from its previous close.
