The Michigan-based and third-largest wholesale mortgage lender aims to cut costs by more than $100 million a year in response to an “extremely challenging” lending environment.

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The nation’s third-largest wholesale mortgage lender, Ann Arbor, Michigan-based Homepoint, is laying off hundreds of workers across the organization in a move to cut costs by more than $100 million a year in response to an “extremely challenging” lending environment.

In reporting a $44.1 million second-quarter loss on Aug. 11, parent company Home Point Financial Corp. said it had originated $21.8 billion in mortgages in the first half of the year — less than half of the $54.9 billion in loans funded during the same period of 2021 when low rates spurred a boom in refinancing.

While the company said it had reduced expenses in its originations department by 17 percent from the first quarter, it warned that it was preparing to implement additional cost-cutting measures.

Those additional measures include layoffs that will number in “the hundreds,” a company spokesperson confirmed to Inman Friday.

“We are in the process of taking the painful step of reducing our workforce to ensure Homepoint is best positioned to navigate the current high-rate, low-margin environment,” the company said in a statement. “It is difficult to say goodbye to associates whose dedication to our partners and customers have greatly contributed to our company’s success in our first seven years of business.”

According to Worker Adjustment and Retraining Notification (WARN) Act notices Homepoint filed with officials in Arizona, Florida, Michigan and Texas, the layoffs will begin Nov. 1 and affect at least 913 employees in those four states alone — 526 in Dallas, Texas; 217 in Ann Arbor, Michigan; 113 in Chandler, Arizona; and 57 in Clearwater, Florida.

Rising mortgage rates have prompted several mortgage lenders to lay off workers in response to a decline in demand for loans, particularly refinancing.

A spokesperson said affected workers were given 60-day notification that their jobs were being cut and that they will continue to be on the payroll until November.

Some Homepoint employees who were told they were being laid off posted on LinkedIn that Thursday was their “last day” at the company.

“I am sad to say that today was my last day with Homepoint,” Collateral Support Team Lead Jeff Shapard posted Thursday on the popular networking site. “Historically low volume has translated into significant restructuring and subsequent transition for myself as well as several other dedicated and experienced individuals.”

“Today, myself along with many other talented associates had our last day at Homepoint,” Mortgage Operations Leader Michael Masceri shared. “Industry mortgage volumes significantly declined this year and Homepoint was not immune to these unprecedented market conditions.”

Willie Newman

On an August earnings call with investment analysts, Homepoint President and CEO Willie Newman described an “extremely challenging environment in the mortgage industry,” as “market volatility and competitive pressures the industry faced in the first quarter intensified in the second quarter.”

On the same call, CFO Mark Elbaum said Homepoint had suspended its quarterly dividend and raised $257 million by selling mortgage servicing rights, moves that enabled the company to buy back $50 million in senior secured debt.

Elbaum said Homepoint was in the process of selling its interest in Longbridge, a reverse mortgage lender, but that the business had experienced “a material adjustment in valuation” as a result of a deterioration in the market for loans not eligible for purchase or guarantee by Fannie Mae and Freddie Mac.

Elbaum also said in August that Homepoint had implemented cost-cutting measures during the second quarter that were expected to generate $31 million in annual savings but warned that further measures would be needed.

“As we look at the third quarter of 2022, we expect the competitive pressure on margins that have existed in the first half of the year to continue,” Elbaum said in August. “In addition, overall mortgage origination volumes for the second half of the year will continue to be challenged, and the share of refinancing is expected to be low in an elevated interest rate environment. As such, we anticipate the need to take further cost reduction and liquidity actions. We will continue to optimize our operational efficiency and further reduce costs while focusing on our simplified wholesale-focused model.”

On Thursday, as the company informed many of its employees that they were being laid off, Elbaum submitted a regulatory filing indicating that Home Point Financial has now reduced its expenses by $100 million a year.

In May, Homepoint announced it was the first wholesale lender to market with a cash offer product, powered by Denver-based Although was acquired by agent matching service HomeLight in June, HomeLight CEO Drew Uher told Inman that the company would be “excited to continue”’s partnership with Homepoint. Many of the mortgage brokers who work with Homepoint are already connected to real estate agents who use HomeLight, Uher said in June.

As rising mortgage rates have gutted the refinancing business and forced lenders to focus on winning businesses from homebuyers, Homepoint has touted the wholesale lending model as a competitive advantage.

As of June 30, Homepoint said it had 8,744 mortgage brokerage partners with more than 43,000 loan originators in all 50 states, up from 6,738 brokerage partners at the same time a year ago.

On the company’s August earnings call, Newman said that so far this year, more than 800 mortgage originators have moved from retail lending shops to mortgage brokerages every month.

“Mortgage brokers have choices and retail officers do not,” helping them save clients an average of more than $9,400 over the life of a mortgage, he said.

“With interest at these dramatically heightened levels, we are very bullish on the growth prospects in wholesale,” Newman said.

Editor’s note: This story has been updated to include information from WARN Act notices Homepoint has filed with the states of Arizona, Florida, Michigan and Texas detailing plans to lay off a total of 913 workers in those states.

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Email Matt Carter

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