UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
 CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): August 11, 2022
 


Home Point Capital Inc.
(Exact name of registrant as specified in its charter)
 


Delaware
001-39964
90-1116426
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)

2211 Old Earhart Road, Suite 250
Ann Arbor, Michigan 48105
 (Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (888) 616-6866

Not applicable
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8−K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 

Soliciting material pursuant to Rule 14a−12 under the Exchange Act (17 CFR 240.14a−12)
 

Pre−commencement communications pursuant to Rule 14d−2(b) under the Exchange Act (17 CFR 240.14d−2(b))
 

Pre−commencement communications pursuant to Rule 13e−4(c) under the Exchange Act (17 CFR 240.13e− 4(c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol
 
Name of each exchange on which
registered
Common Stock, par value $0.0000000072 per share
 
HMPT
 
The Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02
Results of Operations and Financial Condition.
 
On August 11, 2022, Home Point Capital Inc. (the “Company”) published an earnings release reporting its financial results for the second quarter ended June 30, 2022. A copy of the earnings release is attached as Exhibit 99.1 hereto and is incorporated by reference herein.
 
The investor presentation materials used on the Company’s earnings call are attached as Exhibit 99.2 hereto and are incorporated by reference herein. On August 11, 2022, the Company posted the materials attached as Exhibits 99.1 and 99.2 on its website (www.investors.homepoint.com).
 
The foregoing information (including the exhibits hereto) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act.
 
Item 9.01
Financial Statements and Exhibits.
 
(d)          Exhibits.
 
Exhibit No.
 
Description
 
Earnings release dated August 11, 2022.
 
Investor presentation materials dated August 11, 2022.
104
 
The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.


Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned hereunto duly authorized.
 
 
HOME POINT CAPITAL INC.
     
Date: August 11, 2022
   
     
 
By:
/s/ Mark E. Elbaum
     
 
Name:
Mark E. Elbaum
 
Title:
Chief Financial Officer




Exhibit 99.1

Home Point Capital Reports Second Quarter 2022 Financial Results
 
– Quarterly Origination Volume of $9.3 Billion –

– 3,573 Active Broker Partners in Second Quarter –

– Second Quarter 2022 Net Loss of $(44.4) Million, or $(0.32) per Share –
 
ANN ARBOR, Mich., August 11, 2022 -- Home Point Capital Inc. (NASDAQ: HMPT) (together with its subsidiaries, “Home Point Capital” or the “Company”), the parent entity of Home Point Financial Corporation (“Homepoint”), today announced its financial results for the second quarter ended June 30, 2022.
 
“We continued in the second quarter to focus on the key actions critical to navigating this cycle: further reducing expenses, enhancing our liquidity position and solely focusing on the origination channel that is best for consumers – wholesale,” said Willie Newman, President and Chief Executive Officer. “We were successful in our efforts to further strengthen our liquidity position by completing MSR sales. We also finalized the sale of our delegated correspondent channel and took incremental action to generate additional cost savings of $31 million on an annualized basis. All of these actions are intended to help Home Point navigate through an extremely challenging environment.”

1

Second Quarter 2022 Financial and Key Performance Indicator Summary
 
($mm, except per share values)
 
For the quarter ended
 
   
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
Total Funded Origination Volume
 
$
9,291.9
   
$
12,555.1
   
$
25,465.8
 
Total Fallout Adjusted Lock Volume
 
$
8,878.2
   
$
12,589.1
   
$
20,364.8
 
Gain on sale margin (bps)1
   
42
     
58
     
58
 
Servicing portfolio - Units
   
320,215
     
349,261
     
449,029
 
Servicing portfolio - UPB
 
$
90,516.4
   
$
101,984.8
   
$
124,258.9
 
                         
Total revenue, net
 
$
70.0
   
$
158.2
   
$
84.4
 
Origination segment direct expenses
   
67.1
     
81.2
     
138.1
 
Servicing segment direct expenses
   
14.5
     
15.8
     
18.7
 
Corporate expenses
   
37.8
     
39.7
     
41.2
 
Total expenses
   
119.4
     
136.7
     
198.0
 
Net (loss) income
 
$
(44.4
)
 
$
11.9
   
$
(73.2
)
Net (loss) income per share
 
$
(0.32
)
 
$
0.09
   
$
(0.53
)

(1) Calculated as gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale includes gain on loans, net, loan fee income, interest income (expense), net, and loan servicing fees (expense) for the Origination segment.
 
Second Quarter 2022 Highlights
 

Quarterly funded origination volume was $9.3 billion, compared to $25.5 billion in the second quarter of 2021, and $12.6 billion in the first quarter of 2022.
 

Total revenue, net of $70.0 million, compared to $84.4 million in the second quarter of 2021 and $158.2 million in the first quarter of 2022.
 

Total revenue in the Origination segment of $37.2 million, compared to $117.2 million in the second quarter of 2021 and $72.8 million in the first quarter of 2022.
 

Gain on sale margin attributable to channels, before giving effect to the impact of capital markets and other activity, was 60 basis points in the second quarter of 2022, compared to 74 basis points in the second quarter of 2021 and 61 basis points in the first quarter of 2022.
 

Total expenses of $119.4 million for the second quarter of 2022 improved 39.7% versus the second quarter of 2021 and were 12.7% lower compared to the first quarter of 2022. The sequential quarter improvement was due to a 17.4% reduction in Origination segment direct expenses.
 

Net loss of $(44.4) million (or $(0.32) per basic and diluted share), compared to net loss of $(73.2) million (or $(0.53) per basic and diluted share) in the second quarter of 2021, and net income of $11.9 million (or $0.09 and $0.08 per basic and diluted share, respectively) in the first quarter of 2022.
 

Broker Partners of 8,744 as of June 30, 2022 increased by 2,006 from the second quarter of 2021, and increased by 368 from the first quarter of 2022.

2


In the second quarter of 2022, we had 3,573 active broker partners, an increase of 9.8% from the prior year and consistent with the first quarter of 2022.
 

During the quarter, Homepoint completed sales of mortgage servicing rights (“MSR”) portfolios of single-family mortgage loans for a total sale price of approximately $257.3 million.
 

Servicing customers of 320,215, down 28.7% from the second quarter of 2021, and down 8.3% compared to the first quarter of 2022.
 

Servicing portfolio UPB totaled $90.5 billion as of June 30, 2022, down 27.2% from the second quarter of 2021, and a reduction of 11.2% from the first quarter of 2022.
 

Total servicing portfolio delinquencies of 0.9%, compared to 1.6% in the second quarter of 2021 and 0.8% in the first quarter of 2022, primarily due to the servicing portfolio sales in the third and fourth quarters of 2021 and first two quarters of 2022 and a decline in COVID-related forbearance. The MSR multiple for the second quarter of 2022 of 5.8x increased from 3.7x in the second quarter of 2021 and 5.6x in the first quarter of 2022, primarily driven by slower prepayment speeds due to higher mortgage interest rates.
 
Origination Segment
 
Home Point Capital’s Origination segment originates and sells residential real estate mortgage loans. These loans are sourced through three channels. The primary channel is Wholesale, where the Company works with mortgage brokerages to source new customers. In the Correspondent channel, customers are acquired through a network of mortgage banks and financial institutions. On June 1, 2022, the Company completed the previously announced sale of the Correspondent channel. The Direct channel retains serviced customers in the Home Point Capital ecosystem.
 
The Origination segment recorded a contribution loss of $29.9 million in the second quarter of 2022, compared to contribution losses of $20.9 million in the prior-year quarter and $8.4 million in the first quarter of 2022.

3

Origination Segment – Financial Highlights and Summary of Key Performance Indicators
 
($mm)
 
For the quarter ended
 
   
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
Gain on loans, net
 
$
13.2
   
$
45.4
   
$
75.0
 
Loan fee income
   
15.3
     
19.9
     
39.5
 
Interest income, net and other income
   
8.7
     
7.5
     
2.7
 
Total Origination segment revenue
   
37.2
     
72.8
     
117.2
 
Directly attributable expense
   
67.1
     
81.2
     
138.1
 
Contribution margin
 
$
(29.9
)
 
$
(8.4
)
 
$
(20.9
)


 
For the quarter ended
 
Key Performance Indicators1
 
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
Total Funded Origination Volume
 
$
9,291.9
   
$
12,555.1
   
$
25,465.8
 
Total Fallout Adjusted Lock Volume
 
$
8,878.2
   
$
12,589.1
   
$
20,364.8
 
                         
Gain on Sale Margin (bps)2
   
42
     
58
     
58
 
                         
Origination Volume by Purpose:
                       
Purchase
   
71.3
%
   
44.4
%
   
35.2
%
Refinance
   
28.7
%
   
55.6
%
   
64.8
%
                         
Third Party Partners:
                       
Number of Broker Partners
   
8,744
     
8,376
     
6,738
 
Number of Correspondent Partners3
   
670
     
669
     
642
 

(1) See Appendix for additional volume and gain on sale information by channel.
 
(2) Calculated as gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale includes gain on loans, net, loan fee income, interest income (expense), net, and loan servicing fees (expense) for the Origination segment.
 
(3) Number of Correspondent Partners from whom the Company purchased loans prior to the completion of the previously announced sale of the Correspondent channel on June 1, 2022.
 
Servicing Segment
 
Home Point Capital’s Servicing segment generates revenue through contractual fees earned by performing daily administrative and management activities for mortgage loans that were primarily sourced by the Company’s Originations segment. These loans are serviced on behalf of investors/guarantors, primarily Fannie Mae, Freddie Mac and Ginnie Mae. In February 2022, Homepoint announced an agreement with ServiceMac, LLC (“ServiceMac”) pursuant to which ServiceMac will subservice all mortgage loans underlying MSRs held by Homepoint. Substantially all of Homepoint’s servicing staff has or will transition to ServiceMac providing customers with continuity and the same high-quality service. ServiceMac began subservicing newly originated agency loans for Homepoint in the second quarter of 2022. The balance of the agency portfolio and all of the Ginnie Mae portfolio will transition to ServiceMac in the third quarter of 2022. ServiceMac performs servicing functions on Homepoint’s behalf, but Homepoint will continue to hold the MSRs.

4

The Servicing segment generated a contribution margin of $20.0 million in the second quarter of 2022, compared to $(39.6) million in the second quarter of 2021 and $83.2 million in the first quarter of 2022.
 
Servicing Segment – Financial Highlights and Key Performance Indicators
 
($mm)
 
For the quarter ended
 
   
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
Loan servicing fees
 
$
62.9
   
$
81.1
   
$
85.6
 
Interest income, net and other income
   
1.5
     
0.7
     
0.4
 
Total Servicing segment revenue
   
64.4
     
81.8
     
86.0
 
Directly attributable expense
   
14.5
     
15.8
     
18.7
 
Primary Margin
   
49.9
     
66.0
     
67.3
 
Change in MSR fair value: amortization
   
(33.4
)
   
(49.0
)
   
(77.7
)
Adjusted contribution margin
   
16.5
     
17.1
     
(10.4
)
Change in MSR fair value: mark-to-market, net of hedge
   
3.5
     
66.1
     
(29.2
)
Contribution margin
 
$
20.0
   
$
83.2
   
$
(39.6
)


 
For the quarter ended1
 
Key Performance Indicators
 
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
MSR servicing portfolio - UPB
 
$
90,516
   
$
101,985
   
$
124,259
 
Average MSR servicing portfolio - UPB
 
$
96,251
   
$
115,172
   
$
106,268
 
MSR servicing portfolio - Units
   
320,215
     
349,261
     
449,029
 
Weighted average coupon rate
   
3.18
%
   
3.00
%
   
3.09
%
60+ days delinquent, incl. forbearance
   
0.9
%
   
0.8
%
   
1.6
%
MSR multiple
   
5.8
     
5.6
     
3.7
 

(1) Figures as of period end, except "Average MSR servicing portfolio - UPB" which is average for the period.
 
Balance Sheet and Liquidity Highlights
 
Home Point Capital had available liquidity of $632.7 million as of June 30, 2022, comprising $135.8 million of cash and cash equivalents and $496.9 million of undrawn capacity from its mortgage servicing rights line of credit and other credit facilities. The Company had total warehouse capacity of $6.0 billion, and unused capacity of $4.1 billion as of June 30, 2022, compared to total capacity of $6.6 billion, and unused capacity of $3.9 billion as of March 31, 2022.
 
5

($mm)
 
As of
 
   
6/30/2022
   
3/31/2022
   
12/31/2021
 
                   
Cash and cash equivalents
 
$
135.8
   
$
160.7
   
$
171.0
 
Mortgage servicing rights (at fair value)
 
$
1,419.1
   
$
1,490.2
   
$
1,525.1
 
Warehouse lines of credit
 
$
1,910.4
   
$
2,724.9
   
$
4,718.7
 
Term debt and other borrowings, net
 
$
845.5
   
$
942.2
   
$
1,226.5
 
Total shareholders' equity
 
$
732.3
   
$
783.2
   
$
776.6
 
 
Dividend and Stock Repurchase Program
 
As previously reported, Home Point Capital’s board of directors declared a cash dividend of $0.04 per share for the first quarter of 2022, payable to all stockholders of record at the close of business on May 24, 2022. This cash dividend was paid out on June 7, 2022. Home Point Capital’s board of directors has determined not to declare a dividend for the second quarter. The board’s determination reflects the Company’s desire to maintain a strong liquidity position to support operations in the current macroeconomic environment, including rising interest rates and inflationary pressure, and the potential impact on the Company’s results of operations and financial condition.
 
During the quarter, the Company repurchased 718,106 shares at a weighted average price of $3.13 per share. The Company has $4.3 million of availability remaining under its $8.0 million stock repurchase program.
 
Conference Call and Webcast
 
Members of Home Point Capital’s management team will host a conference call and live webcast on Thursday, August 11, 2022 at 8:30 a.m. ET to review the Company’s financial results for the second quarter ended June 30, 2022.
 
The conference call may be accessed by dialing (877) 423-9813 (toll-free) or (201) 689-8573 (international), using the passcode 13730417. The number should be dialed at least ten minutes prior to the start of the call. A simultaneous webcast will also be available and can be accessed through the Investor Relations section of Home Point Capital’s website at investors.homepoint.com.
 
An investor presentation will be referenced during the call, and it will be available prior to the call through the Investor Relations section of Home Point Capital’s website.
 
A telephonic replay of the call will be available approximately two hours after the live call through Thursday, August 18, 2022 by dialing (844) 512-2921 (toll-free) or (412) 317-6671 (international), passcode 13730417. To access a replay of the webcast, please visit Events in the Investor Relations section of Home Point Capital’s website.
 
About Home Point Capital
 
Home Point Capital is the parent company of Homepoint, one of the nation’s leading mortgage originators and servicers, putting people front and center of the homebuying and homeownership experience. The Company supports successful homeownership as a crucial element of broader financial security and well-being through delivering long-term value beyond the loan. Founded in 2015 and headquartered in Ann Arbor, Michigan, Homepoint works with a nationwide network of more than 8700 mortgage broker partners with deep knowledge and expertise about the communities and customers they serve. Today, Homepoint is the nation’s third-largest wholesale mortgage lender and the 7th-largest non-bank mortgage lender.

6

Home Point Financial Corporation d/b/a Homepoint. NMLS No. 7706 (For licensing information, go to: nmlsconsumeraccess.org). Home Point Financial Corporation does not conduct business under the name, "Homepoint" in IL, KY, LA, MD, NY, or WY. In these states, the company conducts business under the full legal name, Home Point Financial Corporation, 2211 Old Earhart Road, Suite 250, Ann Arbor, MI 48105. Toll-Free Tel: 888-616-6866.
 
Forward Looking Statements

This press release contains certain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, statements relating to our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs, the industry in which we operate and other similar matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should” and the negative of these terms or other comparable terminology often identify forward-looking statements. Forward-looking statements are not guarantees of future performance, are based upon assumptions, and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors, risks, and uncertainties that could cause actual outcomes and results to be materially different from those contemplated include, among others: our reliance on our financing arrangements to fund mortgage loans and otherwise operate our business; the dependence of our loan origination and servicing revenues on macroeconomic and U.S. residential real estate market conditions; the requirement to repurchase mortgage loans or indemnify investors if we breach representations and warranties; counterparty risk; the requirement to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances; risks related to any subservicer; competition for mortgage assets that may limit the availability of desirable originations, acquisitions and result in reduced risk-adjusted returns; our ability to continue to grow our loan origination business or effectively manage significant increases in our loan production volume; difficult conditions or disruptions in the mortgage-backed securities (“MBS”), mortgage, real estate and financial markets; competition in the industry in which we operate; our ability to acquire loans and sell the resulting MBS in the secondary markets on favorable terms in our production activities; our ability to adapt to and implement technological changes; the effectiveness of our risk management efforts; our ability to detect misconduct and fraud; any failure to attract and retain a highly skilled workforce, including our senior executives; our ability to obtain, maintain, protect and enforce our intellectual property; any cybersecurity risks, cyber incidents and technology failures; material changes to the laws, regulations or practices applicable to reverse mortgage programs operated by the Federal Housing Administration (“FHA”) and the U.S. Department of Housing and Urban Development; our vendor relationships; our failure to deal appropriately with various issues that may give rise to reputational risk, including legal and regulatory requirements; any employment litigation and related unfavorable publicity; exposure to new risks and increased costs as a result of initiating new business activities or strategies or significantly expanding existing business activities or strategies; the impact of changes in political or economic stability or by government policies on our material vendors with operations in India; our ability to fully utilize our net operating loss (“NOL”) and other tax carryforwards; any challenge by the Internal Revenue Service of the amount, timing and/or use of our NOL carryforwards; possible changes in legislation and the effect on our ability to use the tax benefits associated with our NOL carryforwards; the impact of other changes in tax laws; the impact of interest rate fluctuations; risks associated with hedging against interest rate exposure; the impact of any prolonged economic slowdown, recession or declining real estate values; risks associated with financing our assets with borrowings; risks associated with a decrease in value of our collateral; the dependence of our operations on access to our financing arrangements, which are mostly uncommitted; risks associated with the financial and restrictive covenants included in our financing agreements; risks associated with changes in the London Inter-Bank Offered Rate reporting practices and the use of alternative reference rates; our ability to raise the debt or equity capital required to finance our assets and grow our business; risks associated with derivative financial instruments; our ability to comply with continually changing federal, state and local laws and regulations; the impact of revised rules and regulations and enforcement of existing rules and regulations by the Consumer Financial Protection Bureau; the impact of revised rules and regulations and enforcement of existing rules and regulations by state regulatory agencies; our ability to comply with the Government-Sponsored Enterprises (“GSE”), FHA, U.S. Department of Veterans Affairs (“VA”) and U.S. Department of Agriculture (“USDA”) guidelines and changes in these guidelines or GSE and Government National Mortgage Association (“Ginnie Mae”) guarantees; changes in regulations or the occurrence of other events that impact the business, operations or prospects of government agencies such as Ginnie Mae, the FHA or the VA, the USDA, or GSEs such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or such changes that increase the cost of doing business with such entities; our ability to obtain and/or maintain licenses and other approvals in those jurisdictions where required to conduct our business; our ability to comply with the regulations applicable to our investment management subsidiary; the impact of private legal proceedings; risks associated with our acquisition of mortgage servicing rights; the impact of our counterparties terminating our servicing rights under which we conduct servicing activities; risks associated with higher risk loans that we service; our ability to foreclose on our mortgage assets in a timely manner or at all; and the effects of the COVID-19pandemic on our business. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those listed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, as such risk factors may be amended, supplemented, or superseded from time to time by other reports filed by the Company with the Securities and Exchange Commission. Many of the important factors that will determine these results are beyond our ability to control or predict. You are cautioned not to put undue reliance on any forward-looking statements, which speak only as of the date thereof. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

7

Consolidated Statements of Income (Loss)
($ in millions, except per share data)
(Unaudited)
 
($mm, except per share values)
 
For the quarter ended
 
   
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
Gain on loans, net
 
$
13.2
   
$
45.4
   
$
75.0
 
Loan fee income
   
15.3
     
19.9
     
39.5
 
Interest income
   
27.5
     
27.1
     
34.6
 
Interest expense
   
(28.9
)
   
(33.1
)
   
(44.1
)
Interest expense, net
   
(1.4
)
   
(6.0
)
   
(9.5
)
Loan servicing fees
   
62.9
     
81.1
     
85.6
 
Change in fair value of mortgage servicing rights
   
(29.9
)
   
17.2
     
(106.9
)
Other income
   
9.9
     
0.6
     
0.7
 
Total revenue, net
   
70.0
     
158.2
     
84.4
 
                         
Compensation and benefits
   
75.6
     
89.4
     
127.3
 
Loan expense
   
7.0
     
9.0
     
17.5
 
Loan servicing expense
   
7.1
     
5.7
     
7.5
 
Production technology
   
4.3
     
4.9
     
8.2
 
General and administrative
   
17.0
     
19.7
     
26.5
 
Depreciation and amortization
   
2.6
     
2.7
     
2.4
 
Other expenses
   
5.8
     
5.3
     
8.6
 
Total expenses
   
119.4
     
136.7
     
198.0
 
                         
(Loss) income before income tax
   
(49.4
)
   
21.5
     
(113.6
)
Pre-tax margin
   
(70.6
)%
   
13.6
%
   
(134.6
)%
Income tax benefit (expense)
 
$
14.1
   
$
(4.3
)
 
$
27.2
 
(Loss) income from equity method investment
 
$
(9.1
)
 
$
(5.3
)
 
$
13.2
 
Net (loss) income
 
$
(44.4
)
 
$
11.9
   
$
(73.2
)
Net margin
   
(63.4
)%
   
7.5
%
   
(86.7
)%
(Loss) earnings per share:
                       
Basic
 
$
(0.32
)
 
$
0.09
   
$
(0.53
)
Diluted
 
$
(0.32
)
 
$
0.08
   
$
(0.53
)
Basic weighted average common stock outstanding (mm)
   
138.5
     
139.2
     
139.0
 
Diluted weighted average common stock outstanding (mm)
   
138.5
     
140.6
     
139.0
 
                         
Adjusted income statement metrics 1:
                       
Adjusted revenue
 
$
57.4
   
$
86.8
   
$
126.8
 
Adjusted net loss
 
$
(46.9
)
 
$
(41.0
)
 
$
(51.0
)
Adjusted net margin
   
(81.7
)%
   
(47.2
)%
   
(40.2
)%

(1) Non-GAAP measures. See non-GAAP reconciliation for a reconciliation of each measure to the nearest GAAP measure.

8

Consolidated Balance Sheet
($ in millions)
 
($mm)
 
As of
 
   
6/30/2022
   
3/31/2022
   
12/31/2021
 
   
(Unaudited)
       
Assets:
                 
Cash and cash equivalents
 
$
135.8
   
$
160.7
   
$
171.0
 
Restricted cash
   
27.1
     
37.0
     
36.8
 
Cash and cash equivalents and Restricted cash
   
162.9
     
197.7
     
207.8
 
Mortgage loans held for sale (at fair value)
   
2,018.6
     
2,889.0
     
5,107.1
 
Mortgage servicing rights (at fair value)
   
1,419.1
     
1,490.2
     
1,525.1
 
Property and equipment, net
   
18.0
     
21.4
     
21.9
 
Accounts receivable, net
   
177.0
     
218.0
     
129.1
 
Derivative assets
   
59.3
     
183.5
     
84.4
 
Goodwill
   
10.8
     
10.8
     
10.8
 
Government National Mortgage Association loans eligible for repurchase
   
117.1
     
81.3
     
65.2
 
Assets held for sale
   
50.7
     
58.4
     
63.7
 
Other assets
   
40.9
     
48.7
     
43.2
 
Total assets
 
$
4,074.4
   
$
5,199.0
   
$
7,258.3
 
                         
Liabilities and Shareholders’ Equity:
                       
Warehouse lines of credit
   
1,910.4
     
2,724.9
     
4,718.7
 
Term debt and other borrowings, net
   
845.5
     
942.2
     
1,226.5
 
Accounts payable and accrued expenses
   
106.0
     
135.5
     
138.2
 
Government National Mortgage Association loans eligible for repurchase
   
117.1
     
81.3
     
65.2
 
Deferred tax liabilities
   
214.9
     
232.7
     
229.8
 
Derivative liabilities
   
60.3
     
219.4
     
26.7
 
Other liabilities
   
87.9
     
79.8
     
76.6
 
Total liabilities
   
3,342.1
     
4,415.8
     
6,481.7
 
                         
Shareholders’ Equity:
                       
Common stock
   
     
     
 
Additional paid in capital
   
511.6
     
525.6
     
523.8
 
Retained earnings
   
220.7
     
259.1
     
252.8
 
Treasury stock
   
     
(1.5
)
   
 
Total shareholders' equity
   
732.3
     
783.2
     
776.6
 
Total liabilities and shareholders' equity
 
$
4,074.4
   
$
5,199.0
   
$
7,258.3
 

9

Volume and Margin Detail by Channel
 
VOLUME DETAIL BY CHANNEL
           
($mm)
 
For the quarter ended
 
   
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
Funded Origination Volume by Channel
                 
Wholesale
 
$
7,382.4
   
$
9,317.7
   
$
18,380.0
 
Correspondent
   
1,731.8
     
2,733.3
     
5,695.1
 
Direct
   
177.7
     
504.1
     
1,390.7
 
Total Funded Origination Volume
 
$
9,291.9
   
$
12,555.1
   
$
25,465.8
 
                         
Fallout Adjusted Lock Volume by Channel
                       
Wholesale
 
$
7,483.3
   
$
9,563.7
   
$
15,566.2
 
Correspondent
   
1,269.1
     
2,610.8
     
3,962.6
 
Direct
   
125.9
     
414.6
     
836.0
 
Total Fallout Adjusted Lock Volume
 
$
8,878.3
   
$
12,589.1
   
$
20,364.8
 
 
10

GAIN ON SALE MARGIN DETAIL BY CHANNEL
 
($mm)
 
For the quarter ended
 
   
6/30/2022
   
3/31/2022
   
6/30/2021
 
   
$ Amount
   
Basis Points
   
$ Amount
   
Basis Points
   
$ Amount
   
Basis Points
 
Gain on Sale Margin by Channel
                         
Wholesale
 
$
47.7
     
64
   
$
62.6
     
65
   
$
114.5
     
74
 
Correspondent
   
2.0
     
16
   
$
3.5
     
13
     
9.3
     
23
 
Direct
   
3.2
     
256
   
$
10.7
     
258
     
26.3
     
315
 
Margin Attributable to Channels
   
52.9
     
60
   
$
76.8
     
61
     
150.1
     
74
 
Other Loss on Sale1
   
(15.7
)
   
(18
)
 
$
(4.0
)
   
(3
)
   
(32.9
)
   
(16
)
Gain on Sale Margin2
 
$
37.2
     
42
   
$
72.8
     
58
   
$
117.2
     
58
 

(1) Includes interest income (expense), net, realized and unrealized gains (losses) on locks and mortgage loans held for sale, net hedging results, the provision for the representation and warranty reserve, and differences between modeled and actual pull-through.
 
(2) Calculated as gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale includes gain on loans, net, loan fee income, interest income (expense), net, and loan servicing fees (expense) for the Origination segment.
 
11

Summary Segment Results
 
($mm)
 
For the quarter ended June 30, 2022
 
   
Origination
   
Servicing
   
Segments
Total
   
All Other
   
Total
   
Reconciliat
ion Item1
   
Segments
Total
 
                                           
Revenue:
                                         
Gain on loans, net
 
$
13.2
   
$
   
$
13.2
   
$
   
$
13.2
   
$
   
$
13.2
 
Loan fee income
   
15.3
     
     
15.3
     
     
15.3
     
     
15.3
 
Loan servicing fees
   
     
62.9
     
62.9
     
     
62.9
     
     
62.9
 
Change in fair value of mortgage servicing rights
   
     
(29.9
)
   
(29.9
)
   
     
(29.9
)
   
     
(29.9
)
Interest income (expense), net
   
8.6
     
1.5
     
10.1
     
(11.5
)
   
(1.4
)
   
     
(1.4
)
Other income
   
0.1
     
     
0.1
     
0.7
     
0.8
     
9.1
     
9.9
 
Total Revenue
 
$
37.2
   
$
34.5
   
$
71.7
   
$
(10.8
)
 
$
60.9
   
$
9.1
   
$
70.0
 
                                                         
Contribution margin
 
$
(29.9
)
 
$
20.0
   
$
(9.9
)
 
$
(48.7
)
 
$
(58.6
)
               

($mm)
 
For the quarter ended March 31, 2022
 
   
Origination
   
Servicing
   
Segments
Total
   
All Other
   
Total
   
Reconcilia
tion Item1
   
Segments
Total
 
                                           
Revenue:
                                         
Gain on loans, net
 
$
45.4
   
$
   
$
45.4
   
$
   
$
45.4
   
$
   
$
45.4
 
Loan fee income
   
19.9
     
     
19.9
     
     
19.9
     
     
19.9
 
Loan servicing fees
   
     
81.1
     
81.1
     
     
81.1
     
     
81.1
 
Change in fair value of mortgage servicing rights
   
     
17.2
     
17.2
     
     
17.2
     
     
17.2
 
Interest income (expense), net
   
7.5
     
0.7
     
8.2
     
(14.2
)
   
(6.0
)
   
     
(6.0
)
Other (expense) income
   
     
     
     
(4.7
)
   
(4.7
)
   
5.3
     
0.6
 
Total Revenue
 
$
72.8
   
$
99.0
   
$
171.8
   
$
(18.9
)
 
$
152.9
   
$
5.3
   
$
158.2
 
                                                         
Contribution margin
 
$
(8.4
)
 
$
83.2
   
$
74.8
   
$
(58.7
)
 
$
16.1
                 

12

($mm)
 
For the quarter ended June 30, 2021
 
   
Origination
   
Servicing
   
Segments
Total
   
All Other
   
Total
   
Reconciliati
on Item1
   
Segments
Total
 
                                           
Revenue:
                                         
Gain on loans, net
 
$
75.0
   
$
   
$
75.0
   
$
   
$
75.0
   
$
   
$
75.0
 
Loan fee income
 
$
39.5
   
$
   
$
39.5
   
$
   
$
39.5
   
$
   
$
39.5
 
Loan servicing fees
 
$
   
$
85.6
   
$
85.6
   
$
   
$
85.6
   
$
   
$
85.6
 
Change in fair value of mortgage servicing rights
 
$
   
$
(106.9
)
 
$
(106.9
)
 
$
   
$
(106.9
)
 
$
   
$
(106.9
)
Interest income (expense), net
 
$
2.7
   
$
0.4
   
$
3.1
   
$
(12.6
)
 
$
(9.5
)
 
$
   
$
(9.5
)
Other income (expense)
 
$
   
$
   
$
   
$
13.8
   
$
13.8
   
$
(13.1
)
 
$
0.7
 
Total Revenue
 
$
117.2
   
$
(20.9
)
 
$
96.3
   
$
1.2
   
$
97.5
   
$
(13.1
)
 
$
84.4
 
                                                         
Contribution margin
 
$
(20.9
)
 
$
(39.6
)
 
$
(60.5
)
 
$
(40.0
)
 
$
(100.5
)
               

(1) The Company includes the income from its equity method investments in the All Other category. In order to reconcile to Total net revenue on the condensed consolidated statements of operations, it must be removed as is presented above.
 
13

GAAP to Non-GAAP Reconciliations

RECONCILIATION OF ADJUSTED REVENUE TO TOTAL REVENUE, NET
 
       
($mm)
 
For the quarter ended
 
   
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
Total  revenue, net
 
$
70.0
   
$
158.2
   
$
84.4
 
(Loss) income from equity method investment
   
(9.1
)
   
(5.3
)
   
13.2
 
Change in fair value of MSR, net of hedge
   
(3.5
)
   
(66.1
)
   
29.2
 
Adjusted revenue
 
$
57.4
   
$
86.8
   
$
126.8
 

RECONCILIATION OF ADJUSTED NET INCOME TO TOTAL NET (LOSS) INCOME
 
       
($mm)
 
For the quarter ended
 
   
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
Total net (loss) income
 
$
(44.4
)
 
$
11.9
   
$
(73.2
)
Change in fair value of MSR, net of hedge
   
(3.5
)
   
(66.1
)
   
29.2
 
Income tax effect of change in fair value of MSR, net of hedge
   
1.0
     
13.2
     
(7.0
)
Adjusted net loss
 
$
(46.9
)
 
$
(41.0
)
 
$
(51.0
)

RECONCILIATION OF ADJUSTED NET MARGIN TO NET MARGIN
 
       
($mm)
 
For the quarter ended
 
   
6/30/2022
   
3/31/2022
   
6/30/2021
 
                   
Total  revenue, net
 
$
70.0
   
$
158.2
   
$
84.4
 
Total net (loss) income
   
(44.4
)
   
11.9
     
(73.2
)
Net margin
   
(63.4
)%
   
7.5
%
   
(86.7
)%
                         
Adjusted revenue
 
$
57.4
   
$
86.8
   
$
126.8
 
Adjusted net loss
   
(46.9
)
   
(41.0
)
   
(51.0
)
Adjusted net margin
   
(81.7
)%
   
(47.2
)%
   
(40.2
)%

14

Non-GAAP Financial Measures
 
To provide investors with information in addition to our results as determined under Generally Accepted Accounting Principles (“GAAP”), we disclose Adjusted revenue, Adjusted net Income, and Adjusted net margin as “non-GAAP measures,” which management believes provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.
 
We define Adjusted revenue as Total net revenue exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge and adjusted for Income from equity method investment.
 
We define Adjusted net income as Net income (loss) exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge.
 
We exclude changes in fair value of MSRs, net of hedge from each of Adjusted revenue and Adjusted net income (loss) as they add volatility and are not indicative of the Company’s operating performance or results of operation. This adjustment does not include changes in fair value of MSRs due to realization of cash flows, which remain in each of Adjusted revenue and Adjusted net income (loss). Realization of cash flows occurs when cash is collected as customers make scheduled payments, partial prepayments of principal, or pay their mortgage in full.
 
We define Adjusted net margin by dividing Adjusted net income by Adjusted revenue.
 
We believe that Adjusted revenue, Adjusted net Income, and Adjusted net margin can provide useful information to investors and others in understanding and evaluating our operating results. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, or any other operating performance measure calculated in accordance with GAAP and may not be comparable to a similarly titled measure reported by other companies.
 
We believe that the presentation of Adjusted revenue, Adjusted net Income, and Adjusted net margin provides useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted revenue, Adjusted net Income, and Adjusted net margin provide indicators of performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period, and management relies on these measures for planning and forecasting of future periods. The Company measures the performance of the segments primarily on a contribution margin basis. Additionally, these measures allow management to compare our results with those of other companies that have different financing and capital structures. However, other companies may define Adjusted revenue, Adjusted net Income, and Adjusted net margin differently, and as a result, our measures of Adjusted revenue, Adjusted net Income, and Adjusted net margin may not be directly comparable to those of other companies.
 
Investor Relations Contact:
Home Point Capital:
Lesley Alli
investor@hpfc.com
 
Media Contact:
Home Point Capital:
Brad Pettiford
media@hpfc.com


15


Exhibit 99.2


 Second Quarter 2022 Earnings Presentation  August 11, 2022 
 

 Forward-Looking Statements  2  This presentation contains certain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, statements relating to the future financial performance of Home Point Capital Inc. (“we,” “our,” “us” or the “Company”), our business prospects and strategy, anticipated financial position, liquidity and capital needs, the industry in which we operate and other similar matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should” and the negative of these terms or other comparable terminology often identify forward-looking statements. Forward-looking statements are not guarantees of future performance, are based upon assumptions, and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors, risks, and uncertainties that could cause actual outcomes and results to be materially different from those contemplated include, among others: our reliance on our financing arrangements to fund mortgage loans and otherwise operate our business; the dependence of our loan origination and servicing revenues on macroeconomic and U.S. residential real estate market conditions; the requirement to repurchase mortgage loans or indemnify investors if we breach representations and warranties; counterparty risk; the requirement to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances; risks related to any subservicer; competition for mortgage assets that may limit the availability of desirable originations, acquisitions and result in reduced risk-adjusted returns; our ability to continue to grow our loan origination business or effectively manage significant increases in our loan production volume; difficult conditions or disruptions in the mortgage-backed securities (“MBS”), mortgage, real estate and financial markets; competition in the industry in which we operate; our ability to acquire loans and sell the resulting MBS in the secondary markets on favorable terms in our production activities; our ability to adapt to and implement technological changes; the effectiveness of our risk management efforts; our ability to detect misconduct and fraud; any failure to attract and retain a highly skilled workforce, including our senior executives; our ability to obtain, maintain, protect and enforce our intellectual property; any cybersecurity risks, cyber incidents and technology failures; material changes to the laws, regulations or practices applicable to reverse mortgage programs operated by the Federal Housing Administration (“FHA”) and the U.S. Department of Housing and Urban Development; our vendor relationships; our failure to deal appropriately with various issues that may give rise to reputational risk, including legal and regulatory requirements; any employment litigation and related unfavorable publicity; exposure to new risks and increased costs as a result of initiating new business activities or strategies or significantly expanding existing business activities or strategies; the impact of changes in political or economic stability or by government policies on our material vendors with operations in India; our ability to fully utilize our net operating loss (“NOL”) and other tax carryforwards; any challenge by the Internal Revenue Service of the amount, timing and/or use of our NOL carryforwards; possible changes in legislation and the effect on our ability to use the tax benefits associated with our NOL carryforwards; the impact of other changes in tax laws; the impact of interest rate fluctuations; risks associated with hedging against interest rate exposure; the impact of any prolonged economic slowdown, recession or declining real estate values; risks associated with financing our assets with borrowings; risks associated with a decrease in value of our collateral; the dependence of our operations on access to our financing arrangements, which are mostly uncommitted; risks associated with the financial and restrictive covenants included in our financing agreements; risks associated with changes in the London Inter-Bank Offered Rate reporting practices and the use of alternative reference rates; our ability to raise the debt or equity capital required to finance our assets and grow our business; risks associated with derivative financial instruments; our ability to comply with continually changing federal, state and local laws and regulations; the impact of revised rules and regulations and enforcement of existing rules and regulations by the Consumer Financial Protection Bureau; the impact of revised rules and regulations and enforcement of existing rules and regulations by state regulatory agencies; our ability to comply with the Government-Sponsored Enterprises (“GSE”), FHA, U.S. Department of Veterans Affairs (“VA”) and U.S. Department of Agriculture (“USDA”) guidelines and changes in these guidelines or GSE and Government National Mortgage Association (“Ginnie Mae”) guarantees; changes in regulations or the occurrence of other events that impact the business, operations or prospects of government agencies such as Ginnie Mae, the FHA or the VA, the USDA, or GSEs such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or such changes that increase the cost of doing business with such entities; our ability to obtain and/or maintain licenses and other approvals in those jurisdictions where required to conduct our business; our ability to comply with the regulations applicable to our investment management subsidiary; the impact of private legal proceedings; risks associated with our acquisition of mortgage servicing rights; the impact of our counterparties terminating our servicing rights under which we conduct servicing activities; risks associated with higher risk loans that we service; and our ability to foreclose on our mortgage assets in a timely manner or at all. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those listed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, as such risk factors may be amended, supplemented, or superseded from time to time by other reports filed by the Company with the Securities and Exchange Commission. Many of the important factors that will determine these results are beyond our ability to control or predict. You are cautioned not to put undue reliance on any forward-looking statements, which speak only as of the date thereof. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.  
 

 3   Quarterly origination volume of $9.3 billion; GOS Margin attributable to channels was 60 bps  Second Quarter 2022 Results  Financial Performance                Quarterly net loss of $44.4 million ($(0.32) basic and diluted loss per share)                   Quarterly total net revenue of $70.0 million   Approximately 3,600 active broker partners in quarter                     Servicing portfolio of $90.5 billion as of June 30, 2022  Operational Results   More than 8,700 Broker Partners at quarter end, 30% year-over-year increase 
 

 Delivering on Key Priorities  4  Focus on Wholesale     Continued focus on broker partner growth and activation  Optimize operational efficiency and further reduce costs  Improve leverage and liquidity positions  Second Quarter Milestones  Added 368 broker partners in Q2; Broker activation consistent with the First Quarter of 2022 and up 9.8% from the prior year  Reduced quarterly expenses by 12.7% since First Quarter of 2022 and 39.7% year-over-year, driven by 17.4% quarterly reduction in origination expenses (expected to generate annualized savings of $31mm)  Consolidating servicing platform into ServiceMac, converting a fixed cost into a lower, variable cost  Sold assets of delegated correspondent channel, focusing resources on wholesale channel  Sold MSR portfolios totaling ~$257.3mm to streamline servicing and bolster liquidity 
 

 Performance Across the Platform in Q2 2022  5  Last twelve months for the period ended June 30. Second quarter 2022 LTM information is derived from a numerical calculation of our last two quarters of fiscal year 2021 financial information plus first two quarters of 2022 financial   information. Home Point Capital does not prepare or present separate LTM financial statements.  
 

 Second Quarter 2022 Financial Results  6  Total revenue, net of $70.0 million, compared to $84.4 million in the second quarter of 2021 and $158.2 million in the first quarter of 2022  Total expenses of $119.4 million for the second quarter of 2022 improved 39.7% versus the second quarter of 2021 and were 12.7% lower compared to the first quarter of 2022. The sequential quarter improvement was due to a 17.4% reduction in Origination segment direct expenses  Second quarter 2022 net loss of $44.4 million, compared to net loss of $73.2 million year-over-year and net income of $11.9 million in the first quarter of 2022  ($mm, except per share values)  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  Gain on loans, net  $ 13.2   $ 45.4   $ 75.0   Loan fee income   15.3    19.9    39.5   Loan servicing fees   62.9    81.1    85.6   Change in fair value of mortgage servicing rights   (29.9)    17.2    (106.9)   Other income (loss)   8.5    (5.4)    (8.8)   Total revenue, net   70.0    158.2    84.4   Total expenses   119.4    136.7    198.0   (Loss) income before income tax   (49.4)    21.5    (113.6)   Income tax benefit (expense)   14.1    (4.3)    27.2   (Loss) income from equity method investment   (9.1)    (5.3)    13.2   Net (loss) income  $ (44.4)   $ 11.9   $ (73.2)    Net margin   (63) %   8 %   (87) %  (Loss) earnings per share:  Basic  $ (0.32)   $ 0.09   $ (0.53)   Diluted   (0.32)    0.08    (0.53)   Basic weighted average common stock outstanding (mm)   138.5    139.2    139.0   Diluted weighted average common stock outstanding (mm)   138.5    140.6    139.0  
 

 Funded Volume by Channel  7  Wholesale funded volume of $7.4 billion in the second quarter of 2022, compared to $18.4 billion in the second quarter of 2021, and $9.3 billion in the first quarter of 2022  Correspondent volume of $1.7 billion in the second quarter of 2022, versus $5.7 billion year-over-year and $2.7 billion in the first quarter of 2022  Direct volume of $177.7 million in the second quarter of 2022, compared to $1.4 billion year-over-year and $504.1 million in the prior quarter 
 

 Origination Segment Highlights  8  Second quarter Origination segment revenue of $37.2 million compared to $117.2 million in the second quarter of 2021 and $72.8 million in the first quarter of 2022  Gain on sale margin attributable to channels, before giving effect to the impact of capital markets and other activity, was 60 basis points in the second quarter of 2022, compared to 74 basis points in the second quarter of 2021 and 61 basis points in the prior quarter  Second quarter contribution margin of $(29.9) million compared to $(20.9) million year-over-year and $(8.4) million in the prior quarter  Broker Partners of 8,744 as of June 30, 2022, increased by 2,006 from the end of the second quarter of 2021, and increased by 368 from the end of the first quarter of 2022  In the second quarter of 2022, we had 3,573 active broker partners, which is consistent with the prior quarter   ($mm)  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  Gain on loans, net  $ 13.2   $ 45.4   $ 75.0   Loan fee income   15.3    19.9    39.5   Interest income, net and other income   8.7    7.5    2.7   Total Origination segment revenue   37.2    72.8    117.2   Directly attributable expense   67.1    81.2    138.1   Contribution margin  $ (29.9)   $ (8.4)   $ (20.9)   Key Performance Indicators1  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  Total Funded Origination Volume  $ 9,292   $ 12,555   $ 25,466   Total Fallout Adjusted Lock Volume  $ 8,878   $ 12,589   $ 20,365   Gain on Sale Margin (bps)2   42    58    58   Origination Volume by Purpose:   Purchase   71.3 %   44.4 %   35.2 %   Refinance   28.7 %   55.6 %   64.8 %  Third Party Partners:   Number of Broker Partners   8,744    8,376    6,738    Number of Correspondent Partners   670    669    642   (1) See Appendix for additional volume and gain on sale information by channel.  (2) Calculated as gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale includes gain on loans, net, loan fee income, interest income (expense), net, and loan servicing fees (expense) for the Origination segment. 
 

 Servicing Segment Highlights  9  Loan servicing fees of $62.9 million in the second quarter of 2022, compared to $85.6 million year-over-year and $81.1 million in the first quarter of 2022  Servicing segment adjusted contribution margin in the second quarter of 2022 was $16.5 million, up from $(10.4) million in the year-ago quarter and down from $17.1 million in the prior quarter  The Servicing segment generated a contribution margin of $20.0 million, in the second quarter of 2022, compared to $(39.6) million in the second quarter of 2021 and $83.2 million in the first quarter of 2022  During the second quarter of 2022, Home Point completed sales of mortgage servicing rights (“MSR”) portfolios of single-family mortgage loans for a total purchase price of approximately $257.3 million  Servicing portfolio customers of 320,215, down 28.7% from the second quarter of 2021, and down 11.2% compared to the first quarter of 2022; the sequential quarter decrease in servicing customers was primarily due to the MSR sales  ($mm)  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  Loan servicing fees  $ 62.9   $ 81.1   $ 85.6   Interest income, net and other income   1.5    0.7    0.4   Total Servicing segment revenue   64.4    81.8    86.0   Directly attributable expense   14.5    15.8    18.7   Primary Margin   49.9    66.0    67.3   Change in MSR fair value: amortization   (33.4)    (49.0)    (77.7)   Adjusted contribution margin   16.5    17.1    (10.4)   Change in MSR fair value: mark-to-market, net of hedge   3.5    66.1    (29.2)   Contribution margin  $ 20.0   $ 83.2   $ (39.6)   Key Performance Indicators  For the quarter ended1  6/30/2022  3/31/2022  6/30/2021   MSR servicing portfolio - UPB  $ 90,516   $ 101,985   $ 124,259    Average MSR servicing portfolio - UPB  $ 96,251   $ 115,172   $ 106,268    MSR servicing portfolio - Units   320,215    349,261    449,029    Weighted average coupon rate   3.18 %   3.00 %   3.09 %   60+ days delinquent, incl. forbearance   0.9 %   0.8 %   1.6 %   MSR multiple  5.8  5.6  3.7  (1) Figures as of period end, except "Average MSR servicing portfolio - UPB" which is average for the period. 
 

 Balance Sheet Highlights  10  $632.7 million of available liquidity at the end of the second quarter of 2022, including $135.8 million of cash and cash equivalents and $496.9 million of undrawn capacity from MSR line of credit and other credit facilities  MSR balance of $1.4 billion as of June 30, 2022, down 7.0% year-end 2021, and in line with the prior quarter  Total assets of $4.1 billion as of June 30, 2022, compared to $7.3 billion as of year-end 2021, and $5.2 billion as of March 31, 2022  Total equity of $732.3 million as of June 30, 2022, down from $776.6 million as of year-end 2021, and down from $783.3 million at the end of the first quarter of 2022  Total warehouse capacity of $6.0 billion as of June 30, 2022  Summary Balance Sheet  As of  ($mm)  6/30/2022  3/31/2022  12/31/2021  Assets:  Cash and cash equivalents and Restricted cash  $ 162.9   $ 197.7   $ 207.8   Mortgage loans held for sale (at fair value)   2,018.6    2,889.0    5,107.1   Mortgage servicing rights (at fair value)   1,419.1    1,490.2    1,525.1   Assets held for sale   50.7    58.4    63.7   Other assets   423.1    563.7    354.6   Total assets  $ 4,074.4   $ 5,199.0   $ 7,258.3   Liabilities and Shareholders' Equity:  Warehouse lines of credit   1,910.4    2,724.9    4,718.7   Term debt and other borrowings, net   845.5    942.2    1,226.5   Other liabilities   586.2    748.7    536.5    Total liabilities   3,342.1    4,415.8    6,481.7   Shareholders' Equity:  Additional paid in capital   511.6    525.6    523.8   Retained earnings   220.7    259.1    252.8   Treasury stock   —    (1.5)   —    Total shareholders' equity   732.3    783.2    776.6    Total liabilities and shareholders' equity  $ 4,074.4   $ 5,199.0   $ 7,258.3  
 

 

 Detailed Income Statement   (Unaudited)  12  ($mm, except per share values)  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  Gain on loans, net  $ 13.2   $ 45.4   $ 75.0   Loan fee income   15.3    19.9    39.5   Interest income   27.5    27.1    34.6   Interest expense   (28.9)    (33.1)    (44.1)   Interest expense, net   (1.4)    (6.0)    (9.5)   Loan servicing fees   62.9    81.1    85.6   Change in fair value of mortgage servicing rights   (29.9)    17.2    (106.9)   Other income   9.9    0.6    0.7   Total revenue, net   70.0    158.2    84.4   Compensation and benefits   75.6    89.4    127.3   Loan expense   7.0    9.0    17.5   Loan servicing expense   7.1    5.7    7.5   Production technology   4.3    4.9    8.2   General and administrative   17.0    19.7    26.5   Depreciation and amortization   2.6    2.7    2.4   Other expenses   5.8    5.3    8.6   Total expenses   119.4    136.7    198.0   (Loss) income before income tax   (49.4)    21.5    (113.6)    Pre-tax margin   (71) %   14 %   (135) %  Income tax benefit (expense)  $ 14.1   $ (4.3)   $ 27.2   (Loss) income from equity method investment  $ (9.1)   $ (5.3)   $ 13.2   Net (loss) income  $ (44.4)   $ 11.9   $ (73.2)    Net margin   (63) %   8 %   (87) %  (Loss) earnings per share:  Basic  $ (0.32)   $ 0.09   $ (0.53)   Diluted  $ (0.32)   $ 0.08   $ (0.53)   Basic weighted average common stock outstanding (mm)   138.5    139.2    139.0   Diluted weighted average common stock outstanding (mm)   138.5    140.6    139.0   Adjusted income statement metrics 1:   Adjusted revenue  $ 57.4   $ 86.8   $ 126.8    Adjusted net loss  $ (46.9)   $ (41.0)   $ (51.0)    Adjusted net margin   (82) %   (47) %   (40) % 
 

 Detailed Balance Sheet  13  ($mm)  As of  6/30/2022  3/31/2022  12/31/2021  (Unaudited)  Assets:  Cash and cash equivalents  $ 135.8   $ 160.7   $ 171.0   Restricted cash   27.1    37.0    36.8   Cash and cash equivalents and Restricted cash   162.9    197.7    207.8   Mortgage loans held for sale (at fair value)   2,018.6    2,889.0    5,107.1   Mortgage servicing rights (at fair value)   1,419.1    1,490.2    1,525.1   Property and equipment, net   18.0    21.4    21.9   Accounts receivable, net   177.0    218.0    129.1   Derivative assets   59.3    183.5    84.4   Goodwill   10.8    10.8    10.8   Government National Mortgage Association loans eligible for repurchase   117.1    81.3    65.2   Assets held for sale   50.7    58.4    63.7   Other assets   40.9    48.7    43.2   Total assets  $ 4,074.4   $ 5,199.0   $ 7,258.3   Liabilities and Shareholders’ Equity:  Warehouse lines of credit   1,910.4    2,724.9    4,718.7   Term debt and other borrowings, net   845.5    942.2    1,226.5   Accounts payable and accrued expenses   106.0    135.5    138.2   Government National Mortgage Association loans eligible for repurchase   117.1    81.3    65.2   Deferred tax liabilities   214.9    232.7    229.8   Derivative liabilities   60.3    219.4    26.7   Other liabilities   87.9    79.8    76.6    Total liabilities   3,342.1    4,415.8    6,481.7   Shareholders’ Equity:  Common stock   —    —    —   Additional paid in capital   511.6    525.6    523.8   Retained earnings   220.7    259.1    252.8   Treasury stock   —    (1.5)   —    Total shareholders' equity   732.3    783.2    776.6    Total liabilities and shareholders' equity  $ 4,074.4   $ 5,199.0   $ 7,258.3  
 

 Summary Segment Results  14  ($mm)  For the quarter ended June 30, 2022  Origination  Servicing  Segments Total  All Other  Total  Reconciliation Item1  Segments Total  Revenue:  Gain on loans, net  $ 13.2   $ —   $ 13.2   $ —   $ 13.2   $ —   $ 13.2   Loan fee income   15.3    —    15.3    —    15.3    —    15.3   Loan servicing fees   —    62.9    62.9    —    62.9    —    62.9   Change in fair value of mortgage servicing rights   —    (29.9)   (29.9)   —    (29.9)   —    (29.9)  Interest income (expense), net   8.6    1.5    10.1    (11.5)   (1.4)   —    (1.4)  Other income   0.1    —    0.1    0.7    0.8    9.1    9.9   Total Revenue  $ 37.2   $ 34.5   $ 71.7   $ (10.8)  $ 60.9   $ 9.1   $ 70.0   Contribution margin  $ (29.9)  $ 20.0   $ (9.9)  $ (48.7)  $ (58.6)  ($mm)  For the quarter ended March 31, 2022  Origination  Servicing  Segments Total  All Other  Total  Reconciliation Item1  Segments Total  Revenue:   Gain on loans, net  $ 45.4   $ —   $ 45.4   $ —   $ 45.4   $ —   $ 45.4    Loan fee income   19.9    —    19.9    —    19.9    —    19.9    Loan servicing fees   —    81.1    81.1    —    81.1    —    81.1   Change in fair value of mortgage servicing rights   —    17.2    17.2    —    17.2    —    17.2    Interest income (expense), net   7.5    0.7    8.2    (14.2)   (6.0)   —    (6.0)   Other (expense) income   —    —    —    (4.7)   (4.7)   5.3    0.6   Total Revenue  $ 72.8   $ 99.0   $ 171.8   $ (18.9)  $ 152.9   $ 5.3   $ 158.2   Contribution margin  $ (8.4)  $ 83.2   $ 74.8   $ (58.7)  $ 16.1   ($mm)  For the quarter ended June 30, 2021  Origination  Servicing  Segments Total  All Other  Total  Reconciliation Item1  Segments Total  Revenue:  Gain on loans, net  $ 75.0   $ —   $ 75.0   $ —   $ 75.0   $ —   $ 75.0   Loan fee income  $ 39.5   $ —   $ 39.5   $ —   $ 39.5   $ —   $ 39.5   Loan servicing fees  $ —   $ 85.6   $ 85.6   $ —   $ 85.6   $ —   $ 85.6   Change in fair value of mortgage servicing rights  $ —   $ (106.9)  $ (106.9)  $ —   $ (106.9)  $ —   $ (106.9)  Interest income (expense), net  $ 2.7   $ 0.4   $ 3.1   $ (12.6)  $ (9.5)  $ —   $ (9.5)  Other income (expense)  $ —   $ —   $ —   $ 13.8   $ 13.8   $ (13.1)  $ 0.7   Total Revenue  $ 117.2   $ (20.9)  $ 96.3   $ 1.2   $ 97.5   $ (13.1)  $ 84.4   Contribution margin  $ (20.9)  $ (39.6)  $ (60.5)  $ (40.0)  $ (100.5)  (1) The Company includes the income from its equity method investments in the All Other category. In order to reconcile to Total net revenue on the condensed consolidated statements of operations, it must be removed as is presented above. 
 

 Volume & Margin Detail by Channel  15  VOLUME DETAIL BY CHANNEL  ($mm)  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  Funded Origination Volume by Channel   Wholesale  $ 7,382   $ 9,318   $ 18,380.0    Correspondent   1,732    2,733    5,695    Direct   178    504    1,391   Total Funded Origination Volume  $ 9,292   $ 12,555   $ 25,466   Fallout Adjusted Lock Volume by Channel   Wholesale  $ 7,483   $ 9,563.7   $ 15,566    Correspondent   1,269    2,610.8    3,963    Direct   126    415    836   Total Fallout Adjusted Lock Volume  $ 8,878   $ 12,589   $ 20,365   GAIN ON SALE MARGIN DETAIL BY CHANNEL  ($mm)  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  $ Amount  Basis Points  $ Amount  Basis Points  $ Amount  Basis Points  Gain on Sale Margin by Channel   Wholesale  $ 47.7    64   $ 62.6    65   $ 114.5    74    Correspondent   2.0    16   $ 3.5    13    9.3    23    Direct   3.2    256   $ 10.7    258    26.3    315    Margin Attributable to Channels   52.9    60   $ 76.8    61    150.1    74    Other Loss on Sale1   (15.7)   (18)  $ (4.0)   (3)   (32.9)   (16)   Gain on Sale Margin2  $ 37.2    42   $ 72.8    58   $ 117.2    58   (1) Includes interest income (expense), net, realized and unrealized gains (losses) on locks and mortgage loans held for sale, net hedging results, the provision for the representation and warranty reserve, and differences between modeled and actual pull-through.  (2) Calculated as gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale includes gain on loans, net, loan fee income, interest income (expense), net, and loan servicing fees (expense) for the Origination segment. 
 

 Non-GAAP to GAAP Reconciliations  16  RECONCILIATION OF ADJUSTED REVENUE TO TOTAL REVENUE, NET  ($mm)  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  Total revenue, net  $ 70.0   $ 158.2   $ 84.4   (Loss) income from equity method investment   (9.1)    (5.3)    13.2   Change in fair value of MSR, net of hedge   (3.5)    (66.1)    29.2   Adjusted revenue  $ 57.4   $ 86.8   $ 126.8   RECONCILIATION OF ADJUSTED NET INCOME TO TOTAL NET (LOSS) INCOME  ($mm)  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  Total net (loss) income  $ (44.4)   $ 11.9   $ (73.2)   Change in fair value of MSR, net of hedge   (3.5)    (66.1)    29.2   Income tax effect of change in fair value of MSR, net of hedge   1.0    13.2    (7.0)   Adjusted net loss  $ (46.9)   $ (41.0)   $ (51.0)   RECONCILIATION OF ADJUSTED NET MARGIN TO NET MARGIN  ($mm)  For the quarter ended  6/30/2022  3/31/2022  6/30/2021  Total revenue, net  $ 70.0   $ 158.2   $ 84.4   Total net (loss) income   (44.4)    11.9    (73.2)    Net margin   (63) %   8 %   (87) %  Adjusted revenue  $ 57.4   $ 86.8   $ 126.8   Adjusted net loss   (46.9)    (41.0)    (51.0)    Adjusted net margin   (82) %   (47) %   (40) % 
 

    To provide investors with information in addition to our results as determined under Generally Accepted Accounting Principles (“GAAP”), we disclose Adjusted revenue, Adjusted net Income, and Adjusted net margin as “non-GAAP measures,” which management believes provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.  We define Adjusted revenue as Total net revenue exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge and adjusted for Income from equity method investment.   We define Adjusted net income as Net income (loss) exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge.   We exclude changes in fair value of MSRs, net of hedge from each of Adjusted revenue and Adjusted net income (loss) as they add volatility and are not indicative of the Company’s operating performance or results of operation. This adjustment does not include changes in fair value of MSRs due to realization of cash flows, which remain in each of Adjusted revenue and Adjusted net income (loss). Realization of cash flows occurs when cash is collected as customers make scheduled payments, partial prepayments of principal, or pay their mortgage in full.   We define Adjusted net margin by dividing Adjusted net income by Adjusted revenue.   We believe that the presentation of Adjusted revenue, Adjusted net Income, and Adjusted net margin provides useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted revenue, Adjusted net Income, and Adjusted net margin provide indicators of performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period, and management relies on these measures for planning and forecasting of future periods. The Company measures the performance of the segments primarily on a contribution margin basis. Additionally, these measures allow management to compare our results with those of other companies that have different financing and capital structures. However, these measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, or any other operating performance measure calculated in accordance with GAAP and may not be comparable to a similarly titled measure reported by other companies.   17  Non-GAAP Financial Measures