Northpointe Bank to shutter its correspondent lending business

Northpointe Bank, a regional bank headquartered in Michigan, will walk away from its correspondent lending business to focus on its retail lending, mortgage warehouse financing division and specialty loan servicing business.

“Due to the significant contraction in the overall mortgage industry, we have made the difficult decision to exit the correspondent lending business,” Chuck Williams, president and CEO, said in a statement. 

The last day for fundings is April 28, the regional bank said in an e-mailed response. 

Northpointe was the 24th largest correspondent lender, according to Inside Mortgage Finance. Correspondent production posted $2.45 billion in the first nine months of 2022, accounting for 41.7% of its total origination. Third quarter correspondent volume dropped to $552 million in Q2 2022, a decline of 29% from the previous quarter’s $780 million, IMF data showed. 

“Northpointe Bank appreciates its valued client relationships and remains committed to providing superior financing solutions to its retail lending consumers and warehouse financing clients,” Williams said. 

Northpointe, a private depository institution insured by the Federal Deposit Insurance Corporation (FDIC), was established in 1999 with a focus on residential mortgage loan origination and servicing. 

The regional bank conducts its mortgage origination business through a network of 62 retail lending loan production offices, according to a report from Fitch Ratings published in April 2022.

Last year, Northpointe expanded its home loan centers in eight states — Arizona, California, Florida, Georgia, Hawaii, Minnesota, Nevada and Texas, according to a release from Northpointe in October. 

Northpointe became an approved seller and servicer for Freddie Mac in 2013, Fannie Mae in 2014 and Ginnie Mae in 2016. With a national servicing footprint, the bank sells most of its mortgage servicing rights production on a flow basis to third-party investors with whom Northpointe negotiated sub-servicing agreements. 

The rising rate environment also had an impact on Northpointe’s origination in 2022. Production declined 25% to $5.49 billion in 2022 from the previous year’s volume of $7.29 billion, according to mortgage data platform Modex.

Northpointe is the latest depository lender to close its correspondent lending business after Wells Fargo announced its exit from the channel last month. Wells Fargo bank executives have continuously expressed concerns about “reputational risk” when financing large amounts of loans originated from other firms. 

PennyMac Financial is the largest correspondent lender, with $65.9 billion of origination in the channel in the nine months of 2022, according to IMF. AmeriHome Mortgage ranked second, with $38.2 billion of production in the correspondent channel during the same period, followed by Wells Fargo with $37.4 billion in correspondent production.