Ann Arbor mortgage lender Home Point Capital Inc. reported a net loss of $94.3 million in the third quarter after a round of layoffs in September as competition increases in the mortgage market.
Hiked interest rates mean fewer applications for home loans and refinances, triggering a blow to the industry and consolidation. Home Point's total funded origination volume fell 80% to $4.142 billion in the July-to-September quarter.
The company toward the end of the quarter announced layoffs of hundreds of employees throughout the country, including 217 at its headquarters. That helped reduce expenses by $59.5 million year-over-year, a 34% decline to $115.7 million.
"We continue to take strategically proactive steps to navigate the current environment by significantly reducing expenses, building liquidity, and focusing on margins over loan volume," CEO Willie Newman said in a statement. "In the third quarter, we made considerable progress in boosting our liquidity profile and reducing expenses, positioning our company to create long-term value even in a reduced-volume environment."
The results mark the second consecutive quarter of losses for Home Point. In the third quarter of 2021, its net income was $71.5 million. Its gain-on-sale margin fell to 0.04% from 0.84%.
Home purchases versus refinances now represent 81% of its loans compared to 35% a year ago. To help with the decline in originations, many lenders have emphasized their servicing portfolios as an avenue for consistent income. Home Point's servicing revenue, however, was down 31% to $64.2. million. Delinquencies of 60 days or more of that totaled 1%, roughly consistent with last year.
The company closed September with $569.1 million in liquidity, including $130.3 million in cash and cash equivalents, a 24% decline year-over-year.
Home Point is a wholesale lender, which means it originates loans through independent brokers who work directly with homeowners and buyers to find the best product for them. It did increase its broker network by 22% to 9,116 brokers from last year. In the third quarter, 2,569 were active.
Home Point's loss comes amid increasing competition across town. Pontiac-based United Wholesale Mortgage Holdings Corp. surpassed Rocket Mortgage LLC of Detroit's Rocket Cos. Inc. in closed loan volume in the third quarter for the first time with $33.5 billion compared to Rocket's $25.6 billion. UWM's $325.6 million net income declined 1.3% year-over-year. Rocket's was down 93% to $96 million.
