Home Point Capital, Inc. is a leading residential mortgage originator and servicer. The company’s business model focuses on leveraging a nationwide network of partner relationships to drive sustainable originations. The company supports its origination operations through a robust operational infrastructure and a highly responsive customer experience.
The company’s primary focus is its Wholesale channel, a business-to-business-to-customer distribution model in which it utilizes its relationships...
Home Point Capital, Inc. is a leading residential mortgage originator and servicer. The company’s business model focuses on leveraging a nationwide network of partner relationships to drive sustainable originations. The company supports its origination operations through a robust operational infrastructure and a highly responsive customer experience.
The company’s primary focus is its Wholesale channel, a business-to-business-to-customer distribution model in which it utilizes its relationships with independent mortgage brokerages, which it refers to as its Broker Partners, to reach its end-borrower customers. In this channel, while the company’s Broker Partners establish and maintain the relationship with the end-borrower, it as the lender underwrite the loan in-house and act as the original lender. To emphasize focus on the Wholesale channel, on June 1, 2022, the company completed the sale of its Delegated Correspondent channel and subsequently redirected its Direct channel resources to wholesale.
According to Inside Mortgage Finance, the company is the third largest wholesale lender by origination volume for the year ended December?31, 2022. In February 2022, the company announced an agreement with ServiceMac, LLC (ServiceMac), a wholly owned subsidiary of First American Financial Corporation, pursuant to which ServiceMac will subservice all mortgage loans underlying MSRs it holds. ServiceMac began subservicing loans for the company in the second quarter of 2022. While ServiceMac is performing the servicing functions on the company behalf, it continues to hold the MSRs. The transition of the company’s servicing operation to ServiceMac enables the redeployment of technology and process resources to support its Wholesale channel, including expanding product offerings and enhancing the partner experience. Strategically retaining the servicing on the company’s originations gives it the opportunity to establish productive relationships with its customers.
Business
The company’s business model focuses on growing originations by leveraging a network of partner relationships that it supports through reliable loan origination infrastructure and a highly responsive customer experience. The company’s operations are organized into two separate segments: Origination and Servicing.
Origination
This segment originates mortgages in the Wholesale channel and chooses to operate in this channel.
The company’s originations consist of both purchase and refinance originations. While refinancing origination levels in the market vary based on a number of market dynamics, including interest rate levels, inflation, unemployment and the strength of the overall economy, it focuses on maintaining steady purchase origination volumes.
Wholesale Channel
The company originates residential mortgages in its Wholesale channel through a nationwide network of more than 9,000 Broker Partners. The company is strategically focused on this channel given that the underlying cost structure is more efficient than that of Distributed Retail channel.
The company’s Broker Partners has local and personal relationships with their customers and therefore can provide tailored and thoughtful advice. The company provides these resources, which allow them to operate with scale. This enables the company’s Broker Partners to be nimble and run their business in an entrepreneurial fashion.
Legacy Correspondent and Direct Channels
In mid-2022, the company sold its delegated correspondent channel and redirected its direct channel resources to focus solely on its Wholesale channel.
Correspondent Channel
In its Correspondent channel, the company purchased closed and funded mortgages from a trusted network of its Correspondent Partners. The company’s Correspondent Partners included primarily small- to medium-sized independent mortgage banks, builder affiliates and financial institutions. The company’s partners underwrote, processed and funded loans, but typically lacked the scale to economically retain servicing.
Direct Channel
In its Direct channel, the company originated residential mortgages primarily for existing servicing customers who are seeking new financing options. The company’s Direct strategy was focused on maximizing the customer retention opportunity in its servicing portfolio.
Servicing
While it initiates its customer relationships at the time the mortgage is originated, this segment maintains ongoing connectivity with its nearly 317,000 servicing portfolio customers. Additionally, retaining the MSR provides the company with opportunities to strategically manage liquidity. The company’s Servicing segment is authorized to conduct business in all 50 states and D.C.
In February 2022, the company announced an agreement with ServiceMac, pursuant to which ServiceMac began to subservice all mortgage loans underlying MSRs the company holds in the second quarter of 2022. They perform servicing functions on its behalf, but the company continues to hold the MSRs. The transition of its servicing operation to ServiceMac enables the redeployment of technology and process resources to support its Wholesale channel, including expanding product offerings and enhancing the partner experience.
As of December 31, 2022, the company had approximately 317,000 servicing portfolio customers.
Regulation
The company’s business is subject to extensive oversight and regulation by federal, state and local governmental authorities, including the CFPB, HUD and various state agencies that license and conduct examinations of its origination, loan servicing, loss mitigation, and collection activities. The GSEs and Ginnie Mae, and various investors and lenders also conduct periodic reviews and audits of the company’s operations.
The company must comply with a large number of federal, state and local consumer protection laws and regulations including, among others:
the Real Estate Settlement Procedures Act (RESPA) and Regulation X, which require certain disclosures to be made to the borrower at application, as to the lender’s good faith estimate of loan origination costs, and at closing with respect to the real estate settlement statement, apply to certain loan servicing practices, including escrow accounts, customer complaints, servicing transfers, lender-placed insurance, error resolution and loss mitigation, and prohibit giving or accepting any fee, kickback or a thing of value for the referral of real estate settlement services;
The Truth In Lending Act (TILA), Home Ownership and Equity Protection Act of 1994, and Regulation Z, which regulate mortgage loan origination activities, require certain disclosures be made to borrowers throughout the loan process regarding terms of mortgage financing, provide for a three-day right to rescind some transactions, regulate certain higher-priced and high-cost mortgages, require lenders to make a reasonable and good faith determination that consumers have the ability to repay the loan, mandate home ownership counseling for mortgage applicants, impose restrictions on loan originator compensation, and apply to certain loan servicing practices;
Regulation N, covering Mortgage Acts and Practices, prohibits certain unfair and deceptive acts and practices related to mortgage advertising;
certain provisions of the Dodd-Frank Act, including the Consumer Financial Protection Act, which, among other things, prohibit unfair, deceptive or abusive acts or practices;
the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, and Regulation V, which regulate the use and reporting of information related to the credit history of consumers, require disclosures to consumers regarding the use of credit report information in certain credit decisions and require lenders to undertake remedial actions if there is a breach in the lender’s data security;
the Equal Credit Opportunity Act and Regulation B, which prohibit discrimination on the basis of age, race and certain other characteristics in the extension of credit and require certain disclosures to applicants for credit;
the Homeowners Protection Act, which requires certain disclosures and the cancellation or termination of mortgage insurance once certain equity levels are reached;
the Home Mortgage Disclosure Act and Regulation C, which require reporting of loan origination data, including the number of loan applications taken, approved, denied and withdrawn;
the Fair Housing Act, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics;
the Fair Debt Collection Practices Act, which regulates the timing and content of third-party debt collection communications;
the Gramm-Leach-Bliley Act, which requires initial and periodic communication with consumers on privacy matters and the maintenance of privacy safeguards regarding certain consumer data in its possession;
the Bank Secrecy Act and related regulations from the Office of Foreign Assets Control, and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, or the USA PATRIOT Act, which impose certain due diligence and recordkeeping requirements on lenders to detect and block money laundering that could support terrorist or other illegal activities;
the Secure and Fair Enforcement for Mortgage Licensing Act (the “SAFE Act”), which imposes state licensing requirements on mortgage loan originators;
the Military Lending Act, or MLA, which restricts, among other things, the interest rate and other terms that can be offered to active military personnel and their dependents on most types of consumer credit, requires certain disclosures and prohibits certain terms, such as mandatory arbitration if a dispute arises concerning the consumer credit product;
the Servicemembers Civil Relief Act, which provides financial protections for eligible service members;
the Federal Trade Commission Act, the FTC Credit Practices Rules and the FTC Telemarketing Sales Rule, which prohibit unfair or deceptive acts or practices and certain related practices;
the Telephone Consumer Protection Act, which restricts telephone and text solicitations and communications and the use of automatic telephone equipment;
the Electronic Signatures in Global and National Commerce Act, or ESIGN, and similar state laws, particularly the Uniform Electronic Transactions Act, or UETA, which require businesses that use electronic records or signatures in consumer transactions and provide required disclosures to consumers electronically, to obtain the consumer’s consent to receive information electronically;
the Electronic Fund Transfer Act of 1978, or EFTA, and Regulation E, which protect consumers engaging in electronic fund transfers;
the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 and the FTC’s rules promulgated pursuant to such Act, or the CAN-SPAM Act, which establish requirements for certain “commercial messages” and “transactional or relationship messages” transmitted via email; and
the Bankruptcy Code and bankruptcy injunctions and stays, which can restrict collection of debts.
The company also must comply with federal, state, and local laws related to data privacy and the handling of personally identifiable information and other sensitive, regulated, or non-public data. These include the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act which amends and expands on the CCPA (together, the Amended CCPA), and it expects other states to enact legislation similar to the Amended CCPA. The Amended CCPA limits how companies can use customer data and impose obligations on companies in their management of such data, and requires the company to modify its data processing practices and policies and to incur costs and expenses in an effort to fully comply. The Amended CCPA allows consumers to submit verifiable consumer requests regarding their personal information and requires its business to implement procedures to comply with such requests. The Amended CCPA provides for civil money penalties for violations, as well as a private right of action for certain data breaches that result from a failure to implement reasonable safeguards. In response to COVID-19, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) imposed several new compliance obligations on the company’s mortgage servicing activities, including but not limited to, mandatory forbearance offerings, altered credit reporting obligations, and moratoriums on foreclosure actions and late fee assessments.
Seasonality
The company’s business is generally subject to seasonal trends with activity generally decreasing during the winter months, especially home purchase loans and related services.
History
Home Point Capital Inc., a Delaware corporation, was incorporated in 2014.
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