Homepoint files for an IPO

Home Point Capital is the latest mortgage company to file for an initial public offering, continuing the rush of activity among nonbank lenders looking to take advantage of investor interest in the sector.

It would be the third Michigan-based independent mortgage banker to go public in recent months, following Rocket Cos. and United Wholesale Mortgage, which is expected to start trading on Jan. 22 following the completion of its merger with Gores Holdings IV.

Home Point Capital is looking to list on the Nasdaq Global Select Market using the ticker symbol HMPT.

Goldman Sachs & Co., Wells Fargo Securities, Morgan Stanley and UBS Investment Bank are the lead bookrunning managers, while Credit Suisse, JPMorgan and BofA Securities are also acting in that capacity. JMP Securities, Piper Sandler & Co., R. Seelaus & Co., SPC Capital Markets, Wedbush Securities and Zelman Partners are co-managers for the proposed offering.

The Ann Arbor, Mich.-based company rebranded its operating unit as Homepoint in December. It was founded in 2015 by President and CEO Willie Newman, after he left Cole Taylor Bank, where he headed up that bank's mortgage unit. Prior to that, he was the executive vice president of ABN Amro Mortgage Group.

Newman took steps to expand the company starting in 2017 when Homepoint acquired Stonegate Mortgage. In April 2019, it purchased the wholesale operation of Platinum Mortgage.

In addition, Home Point Capital owns 49.7% of reverse mortgage lender Longbridge Financial.

For the first nine months of 2020, Home Point Capital earned $442.6 million, compared with a loss of $45.3 million for the same period in 2019, according to the prospectus.

It originated $38.05 billion for the nine months ended Sept. 30, 2020, with a gain-on-sale margin of 253.1 basis points. During the same time frame in 2019, it produced just under $14 billion, with a gain-on-sale margin of 96.8 basis points.

Of that 2020 production total, $23.8 billion came from wholesale, $12.7 billion from correspondent loan purchases and $1.6 billion from a consumer-direct channel that is focused on servicing retention.

As of Sept. 30, Homepoint had seven warehouse lines totaling $3.1 billion. With the exception of one evergreen line, those facilities are currently set to expire between May and September.

Homepoint serviced approximately $74 billion at the end of the third quarter, up from $52.6 billion on Dec. 31, 2019. There was a reduction of $98.3 million in the fair value of its mortgage servicing rights for the first nine months of the year, compared with a reduction of $84.9 million for the same period in 2019.