Homepoint Has Laid Off 100+ Employees. Company Expects To Save $100 Million Per Year With Layoffs
Homepoint has laid off more than 100 employees this week. The company has been taking it to the gut with its price war with UWM.
The company confirmed the layoffs on Wednesday and Thursday. They say the layoffs are in line with the company’s “openness to get smaller to counter severe market pressures.
Homepoint eliminated employees that were mainly in operations positions. This included client support and underwriters.
Homepoint said impacted employees have been given a 60-day notification. The workforce reduction is expected to save more than $100 million annually for the lender. Homepoint’s parent company Home Point Capital reported losses of more than $44 million in the second quarter of 2022.
Reduced volume and lower margins are due to an aggressive pricing strategy from its rival United Wholesale Mortgage.
UWM cut prices across all loans from 50 basis points to 100 bps in late June to increase market share. The aggressive pricing is wreaking havoc on other lenders.
Homepoint said it won’t engage in a price war. However, it did start offering a 75 bps pricing bonus for conforming conventional loans at no additional costs to borrowers in a specified number of ZIP codes in 20 states.
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.