Fitch gives Home Point, notes B

Fitch Ratings said it published Home Point Financial Corp.’s long-term issuer default rating of B and placed it on rating watch positive. Fitch also gave an expected long-term IDR of B+ to Home Point Capital Inc., the parent of Home Point and debt-issuing entity, and an expected rating of B/RR5 to the proposed $500 million of senior unsecured notes.

“Home Point’s ratings reflect its growing market position as a wholesale and correspondent lender in the U.S. non-bank residential mortgage sector, an improved earnings profile, which has benefited from the growing platform scale, strong asset quality performance, given below market forbearance rates, the maintenance of sufficient liquidity despite growth in servicing advance requirements, an experienced management team with extensive industry background, sufficient reserves to cover potential representation and warranty claims, and an appropriate risk control framework,” Fitch said in a press release.

The RWP reflects an estimate of increased funding flexibility after the notes’ sale. “Fitch expects to upgrade Home Point’s IDR by one notch following completion of the unsecured debt issuance,” the agency said.

Proceeds are expected to be used to fund a distribution to owners and to pay down a portion of the company’s mortgage servicing rights facility borrowings.

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