Ann Arbor wholesale mortgage firm Home Point Capital to go public

Another Southeast Michigan mortgage company intends to go public amid a housing market boom.

Ann Arbor-based Home Point Capital Inc. on Friday filed a registration statement with the U.S. Securities and Exchange Commission to make an initial public offer on the Nasdaq stock market under the ticker HMPT. The number of shares of common stock to be offered, their price range and when the offering will happen has not yet been determined, according to a news release.

Founded in 2015, Home Point is mostly a wholesale mortgage originator. It works with a network of 5,500 middlemen mortgage brokers nationwide that work with homeowners and buyers to find the best mortgages for them.

Pontiac-based United Shore Financial Services LLC, which is scheduled to go public on Jan. 22 by merging with a blank-check company, is the largest wholesale mortgage lender in the country. Home Point says it is third. Detroit's Rocket Companies Inc., which offered its IPO in August, also sells in the wholesale market, though its business is primarily directly with the consumer.

These decisions to go public come as the housing market booms due to low interest rates. The 30-year fixed-rate average this week sank to 2.65%, its lowest on record, according to data released Thursday by Freddie Mac.

Where Home Point differs from some of its competitors is with the servicing, Phil Shoemaker, Home Point's president of originations, previously told The Detroit News. Other lenders often sell mortgages to other banks or government-sponsored enterprises such as Fannie Mae or Freddie Mac.

"We retain the servicing of 99% of all the loans we originate," Shoemaker said, noting the industry spends roughly $8,000 per new customer, but retains only about 20% of them. "They're never building relationships with the customer."

Additionally, while interest rates remain low now, eventually they will rise, he said. Continuing to service its loans means the company is "retaining a cash flow when times are bad."

The company's revenues in the first nine months of 2020 were up eight times that of 2019 to $922 million. Its net income was nearly $423 million after losing more than $45 million in 2019.

In the first nine months of 2020, Rocket, the country's largest mortgage originator, posted a net income of $6.559 billion. Its stock closed Friday up almost 11% from its $18 IPO price.