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While the rest of the nation prepared for margin compressions, Home Point continued to expand, allegedly overestimating its business and financial prospects.
Home Point Capital Inc, a residential mortgage originator and service provider, is faced with a class-action lawsuit from Pomerantz Law Firm for allegedly making false and misleading statements within the Offering Documents, causing damage to investors.
This lawsuit is filed on behalf of all persons and entities that purchased Home Point common stock pursuant and/or traceable to the Company's January 29, 2021, initial public offering (the "IPO" or "Offering"), seeking to recover compensable damages caused by the defendants' violations of the federal securities laws.
Allegedly, the Offering Documents misstated Home Point’s aggressive expansion of brokers, which significantly increased the company’s expenses. From late 2018 to mid-2020, Home Point increased the network of 1,623 brokers to nearly 5,000 brokers, representing an annualized growth rate of 88%. While the rest of the nation prepared for margin compressions due to rising interest rates in 2021, Home Point continued to expand, allegedly overestimating its business and financial prospects.
In the fourth quarter of 2020, lenders industry-wide began to expect decreased gain-on-sale margins. Only 19% of lenders foresaw a spike in profit margins, according to the Fannie Mae Q4 2020 Mortgage Lender Sentiment Survey. In the prior quarter, 48% of lenders expected an increase in profit.
In early 2021, Home Point issued 7.25 million shares of common stock to the public at the Offering price of $13.00 per share for proceeds of $88,123,750 to the selling stockholders. This is calculated before expenses and after applicable underwriting discounts and commissions.
On May 6, 2021, Home Point announced the company's financial results for the first quarter of 2021. It reported revenue of $324.2 million, missing consensus estimates by $41.72 million. On the same day, Home Point’s stock price fell 17.7% per share to close at $7.72 per share.
Ever since the complaint was filed Home Point’s stock price has been floating below $13 per share, damaging investors.
Over the years, Pomerantz Law Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. For more information visit www.pomerantzlaw.com.
