In this hot housing market, the Michigan-based wholesale lender Attachment point understands that the key to getting more home loans is to make sure more sellers accept the offers made by its buyers. It does this by leaning on the two words sellers increasingly want to hear: “All cash.”
But how does an all-cash offer benefit a mortgage lender?
Dubbed “Homepoint Cash Compete,” the fintech platform provides home buyers with the cash to compete with investors and other more attractive offers, according to the lender. He also plans to entice potential buyers by increasing their bottom line: they get lower wholesale mortgage rates that can cost the buyer an average of $8,000 less over the life of the loan.
Homepoint partners with fintech mortgage company Accept.inc, which turns bids from qualified buyers into an all-cash auction. The company expects homebuyers to secure a cash loan for the purchase of a home in as fast as 10 business days without an appraisal or the possibility of financing.
“Cash offers from competing buyers or investors are the biggest hurdle facing finance home buyers in today’s hypercompetitive markets,” said Phil Shoemaker, president of originations at Homepoint in a communicated.
“By combining all-cash offers with lower rates and fees associated with wholesale lending, independent originators offer homebuyers and their real estate agents the best chance to close deals and save money” , added Shoemaker.
With lower wholesale mortgage rates and other expenses and fees, borrowers can save an average of $8,000 over the life of their loan with the Homepoint offer compared to big banks or direct-to-consumer lenders, according to Residential Mortgage Disclosure Act The data.
Once the cash purchase is complete, the buyer will refinance. He or she will apply for a conventional loan and complete the underwriting process with their loan originator — turning the cash home purchase loan into a permanent traditional mortgage, according to Homepoint.
Homepoint Cash Compete is offered in five states, including California, Oregon and Minnesota, with plans to expand. Its business strategy has focused on wholesale trade, origination business and cost reduction.
Planet Home Lending last month reached a $2.5 million cash deal to buy assets from Homepoint following a huge drop in profits in the correspondent channel last year. While the lender had $20.7 billion in correspondent channel volume in 2021, sell-on margins in the correspondent channel were 31 basis points compared to 234 basis points in the wholesale channel.
In order to focus on growing its origination business and reducing costs, Homepoint announced the outsourcing of service operations to ServiceMac in the second trimester. The company has worked to reduce the cost of originating a loan to $900 per loan this year, from $1,700 in the first quarter of 2021, through staff reductions and process improvements.
In June, Homepoint also rolled out “Homepoint Amplify,” a new regionalized staffing model for broker partners intended to create fewer touchpoints and improve efficiency. The company expected the change in operational structure to result in the elimination of less than 10% of its workforce, which sources said would be around 4,000 workers.
Homepoint is the third largest wholesale mortgage lender in the country, generating $96 billion in mortgage volume last year, up 55% from 2020, according to the firm. The company is due to release its first quarter results on Thursday.