Several high-profile mortgage lenders have gone public in recent months, and Home Point Capital (HMPT 0.00%) just joined the party. The wholesale lender just completed its IPO last week at a significantly lower valuation than it had originally anticipated. In this Fool Live video clip, recorded on Jan. 25, Fool.com contributor Matt Frankel, CFP, and Industry Focus host Jason Moser talk about Home Point's business and what investors should know.
Jason Moser: But this is Home Point Capital, and I want you to tell me a little bit more about this because when I see mortgage lender, the first thing I think of is a company like Quicken Loans or Rocket (RKT 2.94%). Is this the same type of business as those?
Matt Frankel: Kind of. They rely more on their relationships with actual mortgage brokers to funnel them business. Everyone knows who Quicken Loans is, everyone knows what Rocket is, everyone knows Bank of America (BAC 0.95%) offers mortgages, things like that. Home Point, their ticker symbol, we already know, it's going to be HMPT. They haven't exactly gone public yet. They are the third-largest wholesale mortgage lender, which goes through brokers and stuff like that. They are the q0th largest non-bank mortgage lender in the country to give you an idea of their size. If you exclude all the Bank of Americas, and Wells Fargos (WFC 0.64%), and stuff like that, Rocket Mortgage is not a bank, they're in that group. They're the 10th largest non-bank mortgage lender in the country. The thing that really stood out to me is their growth. They've gone from doing $11 billion in mortgage volume in 2018 to $46 billion through the first three quarters of 2020.
Moser: Holy cow.
Frankel: Now, 2020 was an exceptionally strong mortgage market. People were refinancing and getting new mortgages more than ever before. I think you and I both refinanced in 2020.
Moser: Yeah. We did.
Frankel: Remember, that's compared to a year to three-quarters. When your volume jumps by that much, that's growth, that's not just because of the strong mortgage market. Couple of interesting tidbits. They've already announced our pricing range for their IPO. It is going to price between $19 and $21 a share. They didn't file confidentially so we know a lot more about their growth than a coin base. When a company announces the price range, that means expect the IPO soon. Try to expect this in the next week. They are selling 12-and-a-half million shares at those prices. What's really interesting, normally when companies go public through the traditional route, it's to raise capital. If a company is selling a million shares at $20 a share, they're going to make $20 million in the IPO. It's a way to get some new capital in the door. A hundred percent of the shares being sold are from existing investors. The company is not getting a dime out this IPO.
Moser: They're cashing out.
Frankel: Yeah, so a lot of people are cash it out. It's a really interesting company. Like I said, the growth is really what stood out to me. I mentioned the volume numbers, but their market share is growing from 0.7 percent of the mortgage market to 1.3 percent over the past couple of years. That's almost doubling their market share in two years, it's a pretty impressive growth rate to me. That's what's really prompting me to dig more into this company and see how the IPO shakes out. Like I said, they're pricing it between $19-$21. If it jumps to $40 on day 1, I'm probably out for the time being. [laughs] But it's one that I'm keeping on my radar.