PrimeLending launches new mortgage business with Texas homebuilder

PrimeLending, the mortgage arm of PlainsCapital Bank, launched a new home lending joint venture alongside a Texas homebuilder to serve buyers of newly constructed properties in some of the state's markets.

Kindred Home Loans, the business created by Southlake, Texas-based builder Kindred Homes, and PrimeLending Ventures Management will provide mortgage services to buyers of new properties built by its namesake parent company in the Dallas/Fort Worth and San Antonio communities. Ronald Faulkner will serve as managing director of the new home loan operation. 

"This partnership allows Kindred Homes to provide our home buyers with a hassle-free loan process to match each borrower with the right loan package to fit their needs," said Carol Horton, chief marketing officer at Kindred Homes, in a press release.

Founded in 2009, Kindred Homes is currently led by construction industry veterans whose background includes leadership experience at D.R. Horton and Beazer Homes, among other companies.

In its third-quarter earnings call, Hilltop Holdings, the parent company of PrimeLending, reported a loss of $23.1 million in mortgage operations, with loan production falling by over 46% year-over-year. The company has also joined scores of others that have reduced their headcounts as origination volumes severely contracted in 2022. 

As market conditions worsen, lenders have turned to joint ventures with realtors or builders to drum up business.  

In early November, loanDepot partnered with homebuilding company National HomeCorp to form NHC Mortgage, while other lenders have made deals with realtors and brokers in establishing new companies.

The mortgage industry overall has seen loan applications come in at their slowest pace in decades, with volumes now down by 64% on an annual basis, according to the most recent data coming from the Mortgage Bankers Association. Many industry analysts expect current conditions to linger well into 2023. 

Meanwhile, homebuilders also find themselves in the bleakest environment in years, based on surveys conducted by the National Association of Home Builders and Wells Fargo. Industry sentiment tracking sales, traffic and future outlook decreased every month this year, the association said, with the December reading coming in at its lowest level in over a decade, excluding initial COVID-impacted months. 

The NAHB/Wells Fargo index came in lower this month despite a pick-up in new-home sales in November as reported by the U.S. Census Bureau and Department of Housing and Urban Development. The MBA also saw the pace of new-home mortgages increase for the first time since August, suggesting buyers might be slowly returning to the market as interest rates come down. But new housing starts and permits also dwindled in November, a potential sign that future demand is expected to be limited.  

The sudden pullback in home purchases this year has led some builders to slash prices and provide other incentives as they try to move inventory. Lennar, among other companies, has gone as far as opening up more sales to single-family rental investors and landlords.