Earlier this year, California-based Point launched a third-party origination (TPO) channel to distribute its home equity investment (HEI) products through mortgage brokers, extending access to the equity-tapping product beyond its direct-to-consumer footprint.
But the company is targeting deliberate growth rather than rapid volume, said Samuel Bjelac, head of wholesale at Point, who joined the firm in April.
“We’re still in the early stages, so our focus over the next 12 to 18 months is on building the foundation for a scalable wholesale business, developing strong broker relationships, creating a great partner experience and executing consistently,” Bjelac told HousingWire’s Reverse Mortgage Daily. “We believe wholesale can become a meaningful contributor to Point’s overall growth. From my experience, when you get the fundamentals right, the volume will follow.”
The wholesale effort is aimed at mortgage brokers whose clients are equity rich but reluctant or unable to add new debt through a cash-out refinance or home equity line of credit. Point pitches HEIs as another option for these borrowers.
“These families trust loan officers every day to help them navigate their options, so leveraging our tools to make the product available to these trusted professionals is a no-brainer,” said Dan McPheeters, head of business development at Point.
Since 2015, Point has served more than 25,000 homeowners and funded more than $2.5 billion in HEIs, according to the company.
Why they’re drawing scrutiny
Under an HEI structure, a homeowner receives upfront cash in exchange for giving an investor a share of the home’s future value. The homeowner keeps title to the property, pays taxes, insurance and maintenance, and either settles the investment at sale or buys back the investor’s stake within a defined term. There are no monthly payment requirements tied to the investment.
That structure appeals to borrowers who want to preserve their current mortgage rate or who are shut out of traditional credit. But it also creates complexity for originators and regulators. Part of Point’s push into wholesale will involve training mortgage brokers on how the products are structured, disclosed and repaid.
HEIs have attracted increased attention from state regulators, who are examining whether they meet the definition of a mortgage or require different licensing and disclosures. And Sen. Jeff Merkley (D-Ore.) recently introduced a bill that would amend the Truth in Lending Act (TILA) to include HEIs within the laws’s definition of residential mortgages.
At the same time, some homeowners have challenged the products in court, raising questions about consumer protections amid regulatory uncertainty.
Macro backdrop and investor demand
Point’s move comes as U.S. homeowners sit on a record $34.5 trillion in home equity, while many remain reluctant to refinance out of low-rate mortgages or add new monthly obligations.
“Homeowners looking to access that equity increasingly don’t want to reset their mortgage rate or contend with a new monthly payment. That’s driving them to explore options like home equity investments,” said Isak Poirier, head of investor operations at Point.
“Investors are attuned to this heightened demand, and it’s one of many things drawing their attention to invest. As awareness and understanding grows, we expect demand to grow too — and investor interest to follow.”
On the secondary market side, Point in June closed a $508.6 million rated securitization backed by HEI assets, which the company said is the largest transaction completed to date in the sector. The firm said that transaction positions it to issue securitizations on a programmatic basis to support originations, including those sourced through brokers.
“Investor demand across our platform remains strong; over the past year, we’ve onboarded a number of new investors, letting us fund larger volumes and securitize more frequently,” said Jordan Fox, head of capital markets at Point. “With the asset class continuing to grow and our issuance now programmatic, investor demand shows no signs of slowing.”