Ann Arbor's Home Point Capital bought by Mr. Cooper Group

Ann Arbor-based Home Point Capital Inc. will be acquired by Dallas-based Mr. Cooper Group Inc., the mortgage lenders said Wednesday, in a transaction that will purchase its outstanding shares for $324 million in cash and dissolve its remaining operations.

The sale comes after Home Point Capital said last month it was selling its Homepoint mortgage origination business to The Loan Store Inc., a private national wholesale lender headquartered in Arizona, and laying off hundreds of employees, including approximately 113 in Ann Arbor. Financial details of that transaction weren't disclosed.

Higher interest rates and an insufficient housing supply have squeezed the mortgage industry and made the market more competitive, taking a hit to Home Point and other lenders' balance sheets. In 2022, Home Point lost nearly $164 million.

After years of strong results powered by low interest rates, the mortgage industry is encountering headwinds. In Pontiac, United Wholesale Mortgage Holdings Corp. on Wednesday reported a $138.6 million net loss in the first three months of 2023. Detroit-based Rocket Mortgage's parent last week reported a net loss of $411 million in the first quarter.

Mr. Cooper, which is publicly traded on the Nasdaq, expects the deal to acquire Home Point will close in the third quarter of 2023 subject to regulatory approvals. Home Point's 301,000 customers will be transferred to Mr. Cooper, which will shut down the remaining Home Point operations, which mostly include $84 billion in unpaid principal balance mortgage servicing rights.

Home Point shares on the Nasdaq were up 15% in after-market trading to $2.20 per share. Mr. Cooper's stock was up 2% to $43.86.

As part of the transaction, Mr. Cooper will assume $500 million in outstanding Home Point's 5% senior notes, which are due in February 2026.

"This acquisition is consistent with our strategy of growing our customer base, deploying our capital with a focus on attractive risk-adjusted returns, and maintaining a very strong balance sheet," Jay Bray, Mr. Cooper chairman and CEO, said in a statement. "Home Point has amassed an impressive servicing portfolio, consisting of conventional loans to borrowers with high FICO scores, low coupons, and strong equity cushions. We look forward to welcoming these customers to Mr. Cooper and providing them with a high-quality, personalized, and friction-free experience."

bnoble@detroitnews.com

Twitter: @BreanaCNoble