• Key Insight: Learn why Northpointe Bank is selling its mortgage operations to an independent mortgage bank competitor. 
• What's at Stake: Hundreds of Northpointe Bank mortgage employees are awaiting employment decisions from CMG.
• Expert Quote: "It's hard to predict whether we're in the trough..." — Chuck Williams, Northpointe BankOverview bullets generated by AI with editorial review.   

A regional bank says it's selling its distributed retail and consumer direct channels to an independent mortgage bank, as the industry begins to reckon with the new high rate reality.Grand Rapids, Michigan-based Northpointe Bank has a non-binding letter of intent regarding the transaction with CMG Financial, the firm's holding company announced in its third quarter earnings yesterday. The move is another mortgage offloading by a lender in recent weeks as layoffs and business consolidation begin to ramp up across the space.

"We believe CMG would be a strong home for our origination team and a constructive path for our customers, referral partners and team members," said Northpointe Chairman and CEO Chuck Williams in a press release.

Another executive in the earnings call said the deal doesn't involve the sale or transfer of loans, servicing rights or other assets. The bank will retain other lending activity, including a Mortgage Purchase Program akin to warehouse lending. 

CMG did not comment on the Northpointe announcement by deadline.

Williams in an earnings call Wednesday said volumes could no longer carry the infrastructure overhead for the mortgage operations. He cited economic headwinds in explaining the move. 

"It's hard to predict whether we're in the trough or not," said Williams, referring to the mortgage industry. 

The deal is expected to close by the end of the year, and Northpointe expects to incur restructuring charges, including severance costs, between $6 million to $7 million. An executive during the call said the company expects annualized expense savings in the $50 million to $55 million sales range. 

The deal will affect approximately 337 positions across mortgage operations, a spokesperson for the bank told National Mortgage News Wednesday. Per the deal, CMG is expected to extend employment offers to a majority of Northpoint's mortgage teams, as well as a portion of operations staff, while branch locations are being evaluated for transfer. 

The bank is offering team members who don't transition compensation, healthcare benefits continuation, and comprehensive severance through at least Dec. 31, the spokesperson added. 

Loans in progress at Northpointe will be closed, the bank also confirmed. Northpointe originated over $2.5 billion in loan volume last year and reported 158 registered mortgage loan originators according to public databases. CMG is one of the nation's largest multichannel lenders, with reported loan volume of over $27.5 billion last year. 

The bank reported net income of $13.9 million in the recent period, down both quarterly and annually. It will retain first-lien home equity lending, and executives anticipate growth in its warehouse-lending type Mortgage Purchase Program. 

Industry stress rising

The Northpointe announcement follows Benchmark Mortgage shuttering its wholesale and corresponding division, Eleven Mortgage, late last month to focus on retail operations. The Dallas-based lender did not specifically blame market conditions for the move, but did disclose to state officials that it will lay off 81 employees. 

While closures by lenders have been few and far between, layoffs are beginning to spread among industry peers. Providence, Rhode Island-based Beeline Loans this week announced $250,000 in monthly cost reductions involving unspecified workforce reductions. Kind Lending and eXp World Holdings' shutdown of their joint venture, Success Lending, resulted in the layoff of 121 workers, according to a Worker Adjustment and Retraining Notification.