Pettiford provided MPA with the official corporate statement related to the upcoming layoffs: “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. It is difficult to say goodbye to associates whose dedication to our partners and customers have greatly contributed to our company’s success in our first seven years of business. 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. While these decisions are difficult, we remain committed to building a sustainable company that provides a best-in-class experience to the partners and customers we serve.”
Willie Newman, the company’s president and CEO, previously commented on industry woes that have prompted the cuts: “Looking at 2022, the mortgage industry is entering a challenging part of the mortgage cycle with higher rates leading to a shrinking refinance market, while industry capacity remains at an all-time high,” he said. “We are focused on navigating through this downturn while continuing to enable future growth. As such, these are Home Point’s priorities. Liquidity, we have thoroughly evaluated our balance sheet and are monetizing nonstrategic assets at attractive levels.”
Homepoint’s parent company reported a net loss of $73 million, or $0.53 per share, for the quarter ending June 30, compared to net income of $169 million, or $1.07 per share, in the first quarter. The company said that the loss was mainly due to competitive pressure, agency pricing and product actions, and a $29 million reduction in the mark-to-market fair value, net of hedge, of the mortgage servicing rights portfolio.
Home Point’s net revenue also took a hit during the quarter, down to $84 million in Q2, from $422 million in Q1, and $345 million in Q2 2020. Its total origination segment fell from $347 million to $117 million quarter over quarter, while its gain on sale margin plunged 51 basis points quarter over quarter to 74 basis points.
“During the second quarter, we were confronted with a challenging operating environment caused by significant competitive pressure and volatility in the capital markets,” Newman said last month as the earnings report was released. “These challenges led to a sequential decrease in quarterly revenues, resulting in a net loss of $73 million for the second quarter.”