Open Hypotheek closes distributed retail channel, will focus on TPO
Open a mortgage closed its distributed retail channel on Friday and laid off more than two dozen employees. The division’s closure comes 1.5 years after the Texas-based lender changed ownership and nine months after it exited the reverse mortgage business. The company will focus on the third-party origination (TPO) space going forward.
Employees told me HousingWire, anonymously, fearing retaliation, that leadership announced the closure of its facilities on Friday during an “all-hands” call. They received the invitation to the meeting 30 minutes in advance. CEO and President Christopher D’Auria confirmed the decision, saying it was not made “quickly or easily.”
“Earlier today, we announced to our team members that we have made the strategic decision to close the company’s distributed retail channel with immediate effect,” D’Auria wrote in a letter to counterparties reviewed by HousingWire.
“Those of you who have worked with us over the years have seen us operate in a profitable manner, and we will continue to do so with an increased focus on our TPO channel, ahead of the retail realignment in the future ”, he added.
D’Auria said in a statement to HousingWire GenHome Mortgage Company acquired Open Mortgage in February 2024. Open was founded in 2003 by Scott and Tana Gordon.
Open, which has laid off 25 loan officers at a monthly production rate of $5 million, will retain store employees to close the division’s pipeline. This will likely be followed by two more layoffs. The employees have already been informed and will receive severance pay in the event of dismissal.
“Each loan officer has been paid according to their compensation agreement. We have no outstanding compensation complaints with any state regulator. Any claim to the contrary would be plainly untrue,” D’Auria said. “For those affected by this closure, we will pay out their full commission on the closed pipeline for applications received through August 9. In addition, all suppliers have been paid current and on time, per confirmation with our CFO.”
According to D’Auria, the retail division’s production represented less than 10% of the company’s total production. The Nationwide multi-state licensing system (NMLS) showed that Open had seven LOs and 16 branches as of Monday morning.
Sources told HousingWire that Open’s decision to exit the distributed retail channel came as financial problems mounted. They mentioned that the company lost a number of warehouse lines, which prevented it from complying with agency covenants.
D’Auria said the company “may have lost warehouse lines since before our acquisition because they were not operating profitably.” However, D’Auria said $150 million in additional warehouse capacity has been added since February 2023.
In fact, Open closed the warehouse line used for reverse mortgages since it exited this business in November 2023 after lower volumes combined with lower rollover rates made reverse loan underwriting costs too high.
In June the U.S. Department of Housing and Urban Development (HUD) has the Federal Housing Administration (FHA) direct approval of Open in Iowa. Modex data shows that the state was only responsible for 3.2% of the company’s total volume over the past 12 months.
The TPO business is where Open’s future lies. According to D’Auria, wholesale volumes are up 150% this year and the company’s current pipeline is on track to double production in the coming months.
“The company has made significant investments in our DREAM portal technology, coinciding with the upcoming release of our new Dream Builder product (GNMA DPA) and our enhanced non-QM offering,” D’Auria wrote to counterparties. “In addition, Open Mortgage will expand its TPO channel offering to include non-delegated correspondent for our loyal and growing base of lenders.”
