In an industry facing headwinds, Connecticut-headquartered mortgage servicer and lender Planet Home Lending stands out among its peers, reporting double-digit increases in mortgage origination volume while competitors struggle to hit last year’s levels.
Planet Home Lending, founded in 2007, was the only firm among the country’s top-10 lenders that generated more year-over-year origination volume in the first half of this year, according to data from Inside Mortgage Finance.
The company originated $13.93 billion in the first half of this year, up 11.7% year over year. By contrast, America’s top 50 mortgage lenders, on average saw origination volume drop more than 50% during the same period.
The company’s strategy is to focus on acquisitions in both correspondent and retail channels, according to Michael Dubeck, CEO and president of parent company Planet Financial Group.
Planet’s acquisition of Homepoint’s delegated correspondent business in 2022 helped boost market share in the correspondent channel, Dubeck said in an exclusive interview with HousingWire. About 70% of the company’s origination volume comes from the correspondent channel, the company said.
Dubeck stressed the complementary nature of the acquisition, allowing the company to extend its reach into new areas.
“I think we had 450 sellers and they (Homepoint) had 450 sellers. About three quarters of the clients stayed with us,” he said. “We’ve certainly seen some lenders fall by the wayside or exit the industry, but it’s really paid off here a year later,” Dubeck said.
Planet Home Lending is the third-largest correspondent lender per IMF data — posting $6.2 billion in volume in that channel in Q1 2023. Its origination volume through the correspondent channel rose 20% from Q1 2022, making up for 7.2% market share in the channel. (PennyMac is the largest correspondent lender in America at 23.2% and AmeriHome Mortgage is a distant second at 9%.)
One boon for the company is the exit of a large market player. Planet Home Lending and other correspondent lenders are benefiting from Wells Fargo‘s exit from the correspondent channel in January, Dubeck said.
Margins have improved over the last six to eight weeks, with less pricing competition.
“You’re seeing the banks under hugely increased regulatory scrutiny and capital requirements, and I think that’s all adding up to a better opportunity for correspondent lenders,” Dubeck said.
Origination volume from the correspondent channel was $6.27 billion in Q1 2023, marginally down from Q4 2022’s $6.54 billion, and up 20% from $5.22 billion in Q1 2022, according to the company’s financial earnings release in May.
Acquisitions in tech and retail
Planet Home Lending is also getting ready to launch a new loan origination system for its correspondent channel, the result of a tech acquisition from a lender that was exiting the business. (Dubeck declined to name the lender due to a non-disclosure agreement.)
“It was a proprietary loan origination system developed by a correspondent lender. [We] closed on the deal earlier in the year and brought over some terrific developers that created the program,” Dubeck said.
“We’re good in the correspondent channel [in terms of M&A activity] but there’s plenty of opportunities.”
In June 2023, Planet Home Lending acquired Platinum Home Mortgage Corporation, bringing over 20 branches. Planet has brick-and-mortar branches across 21 states with about 250 loan officers.
“Where volumes are falling off, we added branches and we added LOs. As a result, it’s hugely complementary there in terms of footprint,” Dubeck said.
Platinum helped the company grow its footprint on the West Coast, he added.
Saving borrowers’ upfront costs through a temporary rate buydown and focusing on homebuilder strategies are key priorities for the company in the current environment.
“I think one reason that LOs and branches are attracted [to Planet] is the breadth of our product base and our ability to respond to changing markets by adding or modifying products,” he said.
Servicing portfolio
Planet Home Lending’s total servicing portfolio ended Q1 at $77.03 billion, up 5% from the end of 2022, according to the lender’s financial earnings release in May.
Total units rose to approximately 291,000 at the end of Q1 2023, increasing 3% from approximately 283,000 in Q4 2022.
More recently, Planet Home Lending acquired a $10 billion MSR bulk of Ginnie Mae loans from Village Capital & Investment LLC. The company anticipates that it will continue bidding for MSRs “opportunistically” in the second half of the year.
“The MSR market is alive and quite robust with sellers looking to monetize their portfolio to generate cash and liquidity to run their business,” Dubeck said.
Planet was the 29th largest servicer in the country in the first quarter of 2023, with a $68.5 billion owned mortgage servicing portfolio, according to IMF estimates. Servicing volume in Q1 2023 was 68.3% higher than in the same period last year, the data shows.
Looking to the future, Planet is exploring servicing as well as smaller merger and acquisition opportunities. “The acquisitions we’re doing are not huge, but they’re the right size for our platform,” Dubeck said.
