Home Point Financial Corp. has sued seven correspondent lending firms over claims they failed to repurchase 10 loans and refund an amount owed on another as required by their contract.
Home Point, which does business as Homepoint and signed a deal in May to be acquired by Mr. Cooper Group Inc. for $324 million, filed all seven lawsuits between Jan. 23 and June 26 in U.S. District Court for the Eastern District of Michigan in Ann Arbor. Homepoint is based in Ann Arbor.
Watch it on The Interest: Home Point Financial Corp. Sues Seven Lending Firms Seeking $4.6M in Restitution
The lawsuits seek repayment for 11 loans totaling a combined $4.6 million, as well as interest and attorneys’ fees, from the seven correspondent lenders:
- AHL Funding in Irvine, Calif.;
- AmRes Corp. in Trevose, Pa.;
- Continental Mortgage Bankers Inc. in Westbury, N.Y.;
- Fidelity Direct Mortgage in Gaithersburg, Md.;
- Lending 3 Inc. (formerly gotmortgage.com) in Fountain Valley, Calif.;
- Loan Factory Inc. in San Jose, Calif.; and
- Trans United Financial Services Inc.in Tustin, Calif.
Of the 11 loans, Homepoint was forced to repurchase 10 from Fannie Mae and Freddie Mac because they had “defects” that did not conform to their guidelines. The defects included delinquent loans; loans secured by properties ineligible to be purchased by Fannie or Freddie; or underwriting issues.
One of the loans, purchased from Lending 3, was paid off 126 days after Homepoint acquired it, which violated terms of the correspondent lending agreement between the two companies. According to the agreement, Lending 3 is required to refund “all consideration paid by Homepoint” for any loan that is paid off within 150 days of acquiring it. For the paid-off loan, Homepoint is seeking $21,275.40, plus interest and attorneys’ fees.
In the lawsuits against AHL Funding and Lending 3, the court clerk entered a default judgment for failure to provide a defense, ruling in favor of Homepoint in the amount of $752,401 for AHL Funding and $523,630 for Lending 3.
However, the judge in the Lending 3 lawsuit subsequently entered a show cause order for Homepoint, stating that the company “has made no effort to file a motion for default judgment against the defendant.”
The court ordered Homepoint to “show cause in writing, within fourteen (14) days of the entry of this order, why this case should not be dismissed for failure to prosecute under Federal Rule of Civil Procedure 41(b).” The order was signed June 23, so Homepoint has until July 7 to respond.
Officials with Mr. Cooper, which expects its acquisition of Homepoint to close in the third quarter of this year, did not respond to a request for comment.
It is not known whether Mr. Cooper will continue to pursue the lawsuits once it completes its acquisition of Homepoint.
In addition to the acquisition by Mr. Cooper, Homepoint announced in April that it would sell its wholesale origination business to The Loan Store.
Before that deal, Homepoint was the nations third-largest wholesale lender, trailing only United Wholesale Mortgage (UWM) and Rocket Mortgage.