Homepoint laid off more than 500 employees on Aug. 31 and Sept. 1 as it grapples with the effects of the price war in the wholesale lending space.
The company confirmed workforce reductions are in line with the company’s “openness to get smaller as an organization to effectively counter severe market pressures,” a spokesperson said on Thursday.
Positions that were eliminated were mainly operations positions including client support, underwriters and loan coordinators, according to former employees.
“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,” a spokesperson said.
“Over the last several months, we have executed multiple strategic actions to minimize the human impact as much as possible, but continually worsening market conditions make this additional step necessary.”
A WARN notice in Texas dated Aug. 31 revealed that the company laid off 526 workers overall.
Impacted employees have been given a 60-day notification with their employment termination in November, the firm said. The workforce reduction is expected to save more than $100 million annually for the lender, whose parent company Home Point Capital reported losses of more than $44 million in the second quarter of 2022. The figure is a decline from a profit of about $12 million from the previous quarter.
Reduced volume and lower margins due to surging rates and an aggressive pricing strategy from its rival United Wholesale Mortgage were attributed to the losses.
“Competitor actions have added to the challenges of a down origination cycle resulting in historical lows in market level margins,” Willie Newman, Home Point Capital CEO, said in the company’s second-quarter earnings conference call. “We’re not afraid to get smaller as an organization.”
UWM, in an effort to increase market share, cut prices across all loans from 50 basis points to 100 bps in late June. The aggressive pricing is wreaking havoc on other lenders, such as Mountain West Financial and loanDepot, forcing them to exit the wholesale channel.
While Homepoint said it won’t engage in a price war, it did start offering a 75 bps pricing bonus for conforming conventional loans at no additional costs to borrowers for a specified number of ZIP codes in 20 states.
The goal is to enhance access to affordable homeownership for consumers when working with a mortgage broker, Phil Shoemaker, president of originations at Homepoint said regarding the launch in August.
Homepoint’s total funded originations fell to $9.3 billion in the second quarter, down from $12.5 billion in the previous quarter and $25.5 billion in the same period of 2021.
Revenue dropped to $70 million in the second quarter from the previous quarter’s $158 million. Expenses dropped by a lesser degree to $119 million from $137 million during the same period.
Homepoint is pessimistic about the outlook for the latter half of the year. Executives at the lender forecast more margin pressure and plan on cutting costs, improving liquidity and selling mortgage servicing rights.
Editor’s note: This story was updated on Wednesday, Sept. 7 at 3:39 p.m. EST to include more comprehensive layoff figures, which a WARN notice in Texas revealed was 526 from the Dallas, Texas office.
