Homepoint, the nation's third-largest wholesale mortgage lender, plans to lay off more than 900 employees spanning four of its U.S. offices, including remote workers, in a move expected to help the Ann Arbor, Michigan-based firm save more than $100 million a year as higher interest rates and competitive pressures upend the business.
Most of the layoffs totaling about 526 workers in Texas are tied to its Dallas-area office in Farmers Branch, even though Homepoint, also known as Home Point Financial Corp., has "a very large fully remote workforce," said Brad Pettiford, director of public relations, in an email to CoStar News.
For the purposes of Worker Adjustment and Retraining Notification letters sent to state officials, the company grouped each associate to a physical site, Pettiford said. Most of the employees associated with the layoffs in Texas "do not live in the state of Texas," with "less than 100 of these 526 associates living within 30 miles of our Dallas office," he said. The Texas layoffs are expected to begin Nov. 1 and conclude by Nov. 15, according to the letter sent to the Texas Workforce Commission.
Homepoint isn't the only mortgage lender facing challenges with the Federal Reserve raising rates to fight inflation. Plano, Texas-based mortgage lender First Guaranty Mortgage Corp. filed for Chapter 11 bankruptcy protection after laying off hundreds of its employees and putting its leased office space on the sublease market.
In the case of Homepoint, the 7-year-old company has also issued WARN letters in Arizona, Florida and its home state of Michigan. According to the notices, Homepoint plans to lay off 217 employees at two addresses in Ann Arbor as well as 113 employees at an office in Chandler, Arizona, and 57 employees at an office property in Clearwater, Florida. Like employees tied to the Dallas-area office, the offices in the other states don't necessarily house the employees being laid off.
In all, Homepoint plans to lay off about 913 employees, which is nearly a third of its workforce of about 3,000 employees as of August.
"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," Pettiford said in a statement. "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."
Parent company Home Point Capital Inc. posted a second-quarter net loss of $44.4 million last month for the quarter that ended June 30. The lender told investors the loss was because of market volatility and competitive pressures experienced during the quarter.
During the company's second-quarter earnings call with investors, President and CEO Willie Newman said the market volatility and competitive pressures the industry faced in the first quarter intensified in the second quarter.
"This is greatly larger, more systemic challenge for the entire industry as excess capacity becomes more of a drag on expenses and ultimately, profitability," Newman added. "The overall mortgage market was down over 40% year over year in the first half of 2022."
Newman told investors he expects by the end of the year to be "the right size as an organization for whatever the market presents to us."
Even though Homepoint considers itself to be a "remote-based company," the company leases office space at various locations. It was not immediately clear how the layoffs would affect its leased real estate.