Add Homepoint to the list of lenders entering the non-QM market in 2022 amid a fall in origination volume.
The wholesale lender is preparing to launch two non-qualified mortgage products this year, including bank statement and investor cash flow loans.
“We’re currently in the process of assessing our entry point into non-QM loans. Our team has experience working with those products,” Phil Shoemaker, Homepoint’s president of originations, told HousingWire.
The non-QM sector, which largely includes self-employed borrowers and those who work in the gig economy, is expected to take off in a landscape in which accelerating home prices and higher interest rates push borrowers outside the Fannie Mae and Freddie Mac credit boxes.
So far, United Wholesale Mortgage (UWM), the nation’s largest wholesale lender, has launched new non-QM offers. In March, the lender announced a bank statement product for self-employed borrowers and loans for real estate investors. Current government-sponsored enterprise guidelines make it difficult for these borrowers who don’t have a traditional salary to qualify for agency-backed loans.
According to Shoemaker, Homepoint will also pursue borrowers who fall into those buckets: one that allows borrowers to qualify for loans based on their bank statements as opposed to a traditional W2 salary; and the other for real estate investors, a business purpose loan that considers the investor cash flow.
The executive said Homepoint will not rush to launch the products because it requires an efficient operational infrastructure, as it is not “something you can haphazardly jump into.”
“We do believe that in a purchase market, products will become more and more important,” Shoemaker said. “We’ve been focused on jumbo, and then we will be leaning into non-QM in a very responsible way because there’s a lot of borrowers out there that are underserved by either the prime jumbo market or the agency market.”
Based on the recent home appreciation across the country, the Michigan-based lender launched the Homepoint Jumbo Preferred in January, with flexibilities such as delayed financing and loan amounts for qualified borrowers that begin with $1 above conforming county loan limits up to $2.5 million.
The product does not require mortgage insurance on primary residential loans with up to 90% loan-to-value (LTV). It is available in 15- year and 30-year fixed terms, on purchases and rate-and-term on primary, secondary, and investment properties. Shoemaker said the home appreciation is “here to stay” due to the imbalance between supply and demand.
Another product Homepoint is preparing to launch is a partnership with a company to help homebuyers compete in cash offers – the executive did not share more details about the product. “You do see several startups out there trying to solve this. We want to be on the leading edge of solving this problem. But you will see a pretty rapid expansion of these options across all vendors.”
The higher-rate landscape has chipped away at the profitability of Homepoint’s parent company, Home Point Capital, in recent quarters as margins in wholesale have declined. The company turned a $19.3 million profit in the fourth quarter, a sequential decline from the $71 million it notched in the third quarter. But Home Point Capital was largely saved by a sale of $13.1 billion in Ginnie Mae servicing rights, which generated nearly $175 million. Homepoint is exiting the Ginnie Mae servicing space, and recently announced it would also move all of its mortgage servicing processing work to ServiceMac, another cost-cutting move.