Fitch trims Home Point

Fitch Ratings said it downgraded the long-term issuer default ratings of Home Point Capital Inc. and the debt issuing entity, Home Point Financial Corp. (collectively Home Point), to B from B+. Concurrently, Fitch lowered the senior unsecured debt ratings of Home Point to B-/RR5 from B/RR5.

The agency also revised the outlook to negative from stable.

“The downgrade and outlook revision reflect Home Point's increase in leverage above Fitch's stated negative rating sensitivity, stemming from weaker than expected 2Q21 financial performance and a lower profitability outlook in the near term driven by heightened market competition in the mortgage originations market, compounded by recent shareholder distributions that reduced its tangible capital base. Fitch believes there is significant execution risk associated with Home Point's plan to improve profitability and increase retained earnings and paydown debt, to sufficiently reduce leverage over the outlook horizon,” the agency said in a press release.

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