Planet Home Lending on Friday announced that it agreed to buy certain assets of Homepoint delegated correspondent channel, into which other lenders have been selling closed loans underwritten to the buyer’s standards.
Under the terms of the deal, Homepoint’s publicly-traded parent company will receive $2.5 million in cash plus an earnout based on origination volume during the two years after the deal closes, according to a Securities and Exchange Commission filing. It’s slated to close in the second quarter of this year.
“In a rising rate environment where other correspondent lenders are pulling back, we’re reinvesting our funds to seize opportunities,” said Michael Dubeck, president and CEO at Planet Home Lending, in a press release.
The transaction is aimed at helping Planet scale up and operate more efficiently in both originations and servicing as it adds to volume in both business lines.
The acquisition will be “additive, not duplicative,” Dubeck said in an interview, noting that thanks to the recent expansion of the liquidity available from a mortgage servicing rights facility and subordinated debt, the company’s see potential to significantly grow originations.
“It was very fortuitous that this opportunity came up shortly thereafter,” he said of the planned acquisition. “It will support the increased volume.”
Personnel from Homepoint will join Planet as well, said John Bosley, president of lending. Technology is being acquired as well, Dubeck said.
For Homepoint’s corporate parent, the sale of the assets is aimed at allowing the company to refocus on funding loans sourced through the broker channel, which has grown more competitive as rates have risen, and includes some originators that prefer working with more monoline lenders
“We made this decision strategically and purposefully, as part of our continued effort to prioritize our focus and resources around the wholesale channel,” the seller said in an emailed statement.