Homepoint conducts layoffs
Homepoint had a layoff round last Friday impacting dozens of employees, though some estimate that the rightsizing measure may have been even bigger. The reduction comes weeks before the Ann Arbor, Michigan-based lender is set to report its fourth quarter earnings.
A person in the company confirmed the layoffs, but wouldn’t specify the amount of employees impacted.
The reduction hit all departments across the board from “senior management to sales to operations,” an account executive impacted by the layoffs said.
“It’s standard for Homepoint to do individual calls from HR and the direct manager, which is how we were notified and we received severance and only paid out PTO if the state requires it,” they added.
This is the second reduction round held by the lender since September 2022 when close to a thousand employees were let go.
The right-sizing was a result of a “high-rate, low-margin environment” and would save the company over $100 million, the Michigan-based wholesale lender said at the time. The reduction round happened a few weeks after its parent company, Home Point Financial, reported a $44 million net loss in the second quarter brought on by market factors that included competitive wholesale pricing. In the third quarter Home Point Financial reported a net loss of $93.4 million.
Analysts have questioned how Homepoint would stay afloat in a channel that has razor-thin margins and closures of other lenders in the sector.
“Profitability is going to continue to be challenged with very severe operating conditions for nonbank residential mortgage companies, particularly for companies in the wholesale origination channel,” Gene Berman, an analyst at Moody’s Investors Service, said in an email in November.
The wholesale lending channel has faced stiff competition, which has been ratcheted on by United Wholesale Mortgage’s aggressive pricing strategy to drive down gain on sale margins.
Since mid-2022 the wholesale lending channel has seen many mortgage players either shrink operations or exit altogether. Finance of America, Guaranteed Rate and U.S. Bank all announced that they would pull back from wholesale lending.