Homepoint has launched a new program to reduce rates for borrowers with lower income, the wholesale lender announced Wednesday.
The initiative comes after the company reported a loss in the second quarter of 2022 amid a price war, mainly from its wholesale-only rival United Wholesale Mortgage (UWM).
Homepoint is offering a 75 basis point pricing bonus for conforming conventional loans, with no additional cost to borrowers. The offer is available in specified zip codes in 20 states where the lender identified a high percentage of loans originated to people below the area median income.
The following states are included: Alabama, Connecticut, Georgia, Iowa, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Nebraska, New York, Ohio, Oklahoma, Pennsylvania, Texas, and Virginia.
“Our goal is to enhance access to affordable homeownership by opening more consumers’ eyes to the savings that are available when working with a mortgage broker,” Phil Shoemaker, president of originations at Homepoint, said in a statement.
The initiative follows fierce pricing competition in the wholesale space, mainly from UWM, which has been more aggressive in its pricing strategy. In June, the nation’s top wholesale lender dropped rates by 50 to 100 basis points across all loan types.
Executives from Homepoint, however, said they want to be more prudent.
“Our bias right now is towards more margins and less volume – that said, obviously, the volume opportunity on a macro basis is relatively limited,” Willie Newman, Home Point Capital CEO, told analysts during a conference call on August 11. “We’re not afraid to get smaller as an organization.”
Homepoint’s gain on sale margin in the wholesale channel came in at 64 bps in the second quarter, lower than the 75 bps pricing bonus for the lower income borrowers.
In the second quarter, Homepoint reported a $44.4 million loss, a decline from the $11.9 million profit in the first quarter of 2022. Total funded originations fell to $9.3 billion in the second quarter, down from $12.5 billion in the first quarter, due to higher mortgage rates.
Regarding its liquidity, the company had $135.8 million in cash and cash equivalents as of June 30, 2022, and total available liquidity of $632.3 million. Homepoint’s board of directors decided not to declare a dividend for the second quarter to maintain a strong liquidity position.
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