Home Point Capital Faces Class-Action Lawsuit From Pomerantz Law Firm

Home Point Capital Inc, a residential mortgage originator and service provider, is facing a class action lawsuit by the Pomerantz Law Firm for allegedly making false and misleading statements in the offering documents that are causing harm to investors.

This lawsuit is filed on behalf of all persons and entities that have registered Home Point common stock as of the company’s initial public offering on July 29 through defendants’ violations of federal securities laws.

Allegedly, the offer documents misrepresented Home Point’s aggressive expansion with brokers, which significantly increased the company’s spending. From late 2018 to mid-2020, Home Point expanded its network from 1,623 brokers to nearly 5,000 brokers, representing an annualized growth rate of 88%. As the rest of the nation prepared for margin compressions due to rising interest rates in 2021, Home Point continued to expand and allegedly overestimated its business and financial prospects.

In the fourth quarter of 2020, lenders across the industry began to see falling profit margins. According to the Fannie Mae Q4 2020 Mortgage Lender Sentiment Survey, only 19% of lenders anticipated an increase in profit margins. In the previous quarter, 48% of lenders expected earnings to grow.

In early 2021, Home Point issued 7.25 million common shares to the selling shareholders at the offering price of $ 13.00 per share for proceeds of $ 88,123,750. This is calculated before expenditure and after any insurance deductions and commissions.

On May 6, 2021, Home Point announced the company’s financial results for the first quarter of 2021. It reported sales of $ 324.2 million and missed consensus estimates by $ 41.72 million. On the same day, Home Point’s share price fell 17.7% per share, closing at $ 7.72 per share.

Since the filing of the lawsuit, Home Point’s share price has hovered below $ 13 per share, hurting investors.

Over the years, the Pomerantz Law Firm has collected numerous millions of dollars in damages on behalf of class members. More information is available at www.pomerantzlaw.com.

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