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Having already cut 88 percent of its workforce in two years and sold off its retail title operations, title tech provider Doma’s headway in stemming its losses ran out of steam in the first quarter, with the company reporting a $20.6 million Q1 net loss Tuesday.

That’s down 46 percent from the $42.1 million net loss Doma posted a year ago, but only a slight improvement from Q3 and Q4 2023 when the company reported losses of $22.2 million and $20.8 million.

While Doma is on track to improve on its $124 million 2023 net loss, the company’s accumulated deficit grew to $639.7 million as of March 31.

Shares in Doma Holdings Inc., which in the last year have traded for as little as $3.86 and as much as $9.82, closed at $6.05 in light trading after Tuesday’s earnings release, unchanged from Monday.

Doma shares now trading in a tight range

The San Francisco-based company’s shares have been trading in a tight range since the end of March when Doma announced an agreement to go private through a merger with Dallas, Texas-based title insurance underwriter Title Resources Group (TRG).

If the deal closes as expected in the second half of 2024, Doma’s fortunes will no longer be a concern to stock market investors, with TRG planning to acquire all of the outstanding shares of Doma for $6.29 per share.

Doma is allowed to solicit alternative acquisition proposals from third parties during a 50-day “go-shop” period. But funds associated with Homebuilder Lennar Corp.’s LENx investment division, which hold 25 percent of the voting power of Doma’s common stock, have already signed off on TRG acquiring Doma.

With the TRG deal pending, Doma did not hold an earnings call Tuesday or provide forward guidance.

Founded in 2016 with a goal of revolutionizing the title insurance industry, Doma has developed a machine learning platform, Doma Intelligence, and other technology to automate the title and escrow processes. Initially launched to support mortgage refinancing, Doma has pivoted to adapt its technology to enable “instant underwriting” of title insurance for purchase loans.

Doma founder and CEO Max Simkoff sees a push by the Biden administration to reduce closing costs for borrowers as an opportunity to utilize the company’s technology.

Max Simkoff

“With mortgage rates at 20-year highs and housing supply severely constrained, many of the largest participants in the mortgage ecosystem — the government-sponsored enterprises, software providers, and national lenders — are seeking new and innovative solutions to reduce closing costs for consumers,” Simkoff said in a statement Tuesday.

“We have long advocated the importance of title insurance and the protection it provides for homebuyers but also the potential for innovation around lenders’ title to lower costs for homeowners. We welcome the focus of Fannie Mae in this area, and believe our scale- and market-tested technology puts us in a leading position to participate in their pilot program.”

Doma’s ups and downs

Doma gained a foothold as a national title insurance underwriter in 2019 with the $171.7 million acquisition of Lennar Corp. subsidiary North American Title Insurance Company (NATIC) and went public in a 2021 merger with a special purpose acquisition company (SPAC) that raised $350 million.

By the end of 2021, Doma employed 2,049 workers, most of whom were located in California, Florida and Texas.

But when the Federal Reserve started raising interest rates to fight inflation in March 2022 and mortgage rates soared, Doma’s mortgage clients saw much of their refinancing business evaporate.

As Doma’s losses mounted, it laid off 1,076 workers in 2022 and eliminated another 70 positions last year in four separate rounds of layoffs. As of Dec. 31, 2023, Doma employed 239 workers, roughly 12 percent of its previous workforce.

Last year, Doma sold 22 retail title locations and operations centers employing 123 workers in Northern and Central California to Williston Financial Group LLC (WFG) for up to $24.5 million — $10.5 million upfront and up to $14 million in earnout payments that come due in June.

Doma also sold title agency and retail title offices located in the Midwest, Texas and Florida to Hamilton National Title LLC, which does business as Near North Title Group and Capital Title of Texas LLC. Those deals provide for up to $2.1 million in earnout payments, the company disclosed in an April 1 regulatory filing.

Doma’s losses peaked in 2022

Source: Doma Holdings Inc. regulatory filings.

Since selling its local retail title agency offices and associated operations nationwide, Doma no longer includes those businesses in reporting headline financial results.

In its latest earnings release, the company reported a $19 million Q1 2024 net loss from continuing operations, compared to a net loss of $18 million in Q4 2023 and a $31.2 million Q1 2023 net loss.

However, Doma’s Q1 2024 net loss using generally accepted accounting principles (GAAP) was $20.6 million, down from $20.8 million in Q4 2023 and $42.1 million in Q1 2023.

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More than two-thirds of Americans polled by Fannie Mae in April said it was a good time to sell a home — the highest level in nearly two years. But would-be homebuyers remain less than thrilled about their prospects, with only 20 percent of consumers saying it was a good time to buy.

Fannie Mae’s latest National Housing Survey, a monthly poll of more than 1,100 household decision makers, found consumers were more certain than they were in March that home prices will keep climbing, and less certain that mortgage rates will come down.

More Americans are getting nervous about keeping their jobs, and fewer said that their income is much higher than it was a year ago.

Doug Duncan

“Overall, housing sentiment increased from November through February, driven largely by consumer belief that mortgage rates would move lower,” Fannie Mae Chief Economist Doug Duncan said in a statement. “However, recent data showing stickier-than-expected inflation, rising mortgage rates, and continued home price appreciation appear to have given consumers pause regarding the market’s direction.”

Source: Fannie Mae National Housing Survey, April 2024.

The Fannie Mae Home Purchase Sentiment Index, which distills six questions from the National Housing Survey into a single number, was unchanged from March to April at 71.9, but up 5.1 points from a year ago. Before the pandemic, the index was often above 90 and hadn’t been below 80 since 2014.

Source: Fannie Mae National Housing Survey, April 2024.

Most consumers (67 percent) agreed that April was a good time to sell, up from 66 percent in March, and the share who said it was a bad time to sell dropped from 34 percent to 32 percent. The net share of those who said it was a good time to sell increased three percentage points from March to April and 12 percent from a year ago.

“We think consumers’ generally improved sense of home-selling conditions bodes well for listings and housing activity, particularly for the segment of the population who may need to move for lifestyle reasons and have already begun adjusting their financial expectations to the current mortgage rate and price environment,” Duncan said.

Source: Fannie Mae National Housing Survey, April 2024.

Homebuyer sentiment declined slightly in April, with only 20 percent saying it was a good time to buy, down from 21 percent in March. With the percentage saying it was a bad time to buy unchanged at 79 percent, the net share of those who said it was a good time to buy fell by one percentage point from March to April and was down 5 percent from a year ago.

The percentage saying it was a good time to buy hit an all-time low of 14 percent in November 2023, when mortgage rates were near 2023 highs.

Ongoing affordability challenges may continue to keep many would-be homebuyers who aren’t in a rush on the sidelines, Duncan said, “one reason why we expect home sales to tick up only gradually over the course of the year.”

Last month Fannie Mae economists predicted that growth in new listings coming onto the market should help boost 2024 sales of existing homes by 4.3 percent, to 4.27 million, followed by more dramatic 10 percent growth in 2025 sales to 4.69 million.

Fannie Mae economists projected a similar trajectory for growth of new home sales, which are forecast to rise by 4 percent in 2024 to 693,000 homes and by 12.8 percent in 2025 to 782,000 homes.

Source: Fannie Mae National Housing Survey, April 2024.

With mortgage rates again on the rise in April, only 26 percent of consumers said they expected rates to come down in the next 12 months, compared to 29 percent in March. But the percentage who expected rates to go up in the next year also fell by a percentage point from March to April, to 33 percent.

Four in 10 (40 percent) of consumers think rates will stay the same over the next year, up from 36 percent in March. The net share who expect mortgage rates to come down dropped 1 percentage point from March to April but was up 20 percentage points from a year ago.

Source: Fannie Mae National Housing Survey, April 2024.

Consumers were increasingly convinced in April that home prices will keep going up over the next 12 months (42 percent) rather than down (18 percent), although 39 percent think they’ll remain unchanged. The net share of those expecting home prices to rise in the next year was up three percentage points from March to April, and 18 percentage points from a year ago.

Source: Fannie Mae National Housing Survey, April 2024.

Few Americans who have jobs said they were concerned about losing them in the next 12 months (23 percent), although the percentage who said they were not concerned dropped from 77 percent in March to 76 percent in April. The net share who were not concerned about losing their job was down two percentage points from March to April, and six percentage points from a year ago.

Source: Fannie Mae National Housing Survey, April 2024.

While Federal Reserve policymakers remain concerned about inflation and wage growth, only 17 percent of consumers said their income was higher than it was a year ago, down from 19 percent in March. Most Americans (70 percent) said their income was unchanged from a year ago.

The net share who said their income was higher than a year ago decreased by two percentage points from March to April and was down eight percentage points from a year ago.

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LoanDepot executives say they continue to make strides in their quest to return to profitability, but a January cyberattack that exposed the personal information of 16.6 million people sapped some of the company’s first-quarter momentum.

The Irvine, California-based mortgage lender reported Tuesday that Q1 revenue was up 7 percent from a year ago, to $223 million, while expenses were down by 2 percent, to $308 million. Those numbers still added up to a $72 million net loss for the quarter, down 22 percent from a year ago.

The January security breach — which ransomware group ALPHV/Blackcat has claimed responsibility for — weighed on first quarter results.

LoanDepot said it racked up $15 million in direct costs dealing with the incident and estimates that the company lost an additional $22 million in revenue while its systems were offline and unable to take customer rate locks. The company had previously reported that many of its systems, including a customer portal for taking online loan applications, were offline for 10 days following the Jan. 8 incident.

Frank Martell

“The company was able to restore operations relatively quickly; however lost revenue and additional expenses related to the incident impacted our first quarter financial results,” loanDepot President and CEO Frank Martell said in a statement. “We do not expect further disruptions in our operations stemming from this incident.”

LoanDepot also disclosed that it incurred $1.1 million of legal expenses “related to the expected settlement of legacy litigation.” In March, the company announced it had agreed to settle a 2022 appraisal bias lawsuit filed by a Baltimore couple who claimed their home was undervalued because they were Black.

Shares in loanDepot, which in the last year have traded for as little as $1.14 and as much as $3.71, were unchanged at $2.28 in after-hours trading following the release of earnings Tuesday.

Q1 mortgage originations down 9% from a year ago

At $4.56 billion, mortgage originations were down 15 percent from Q4 2023 and 9 percent from a year ago. As has been the case since rising mortgage rates took away the incentive for many homeowners to refinance, purchase loans accounted for the majority (72 percent) of loanDepot’s business.

While loanDepot made fewer loans, gain on sale margin — a measure of profitability when loanDepot sells the loans it originates to investors — was 2.84 percent, up from 2.43 percent a year ago.

LoanDepot said it expects business to pick up in Q2, with projected originations of $5 billion to $7 billion.

David Hayes

“Despite recent increases in interest rates that have reduced industry forecasts for 2024 market volumes, we continue to aggressively focus on our plan to return to profitability,” CFO David Hayes said, in a statement.

After slashing $693 million in costs last year as part of its “Vision 2025” strategy to return to profitability, loanDepot continues to trim its payroll, although at a slower pace than in previous quarters.

LoanDepot finished the quarter with 4,188 employees, down from 4,250 on Dec. 31 and 4,630 workers on June 30. LoanDepot started 2022 with 11,300 employees.

“We exited 2023 with positive top-line momentum and continued to make progress toward our Vision 2025 goals, including forward-looking investments in our people, products and technology platforms,” Martell said.

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Mortgage rates retreated for the third day in a row Friday as the latest numbers from the Labor Department showed employers added fewer jobs than expected in April, pushing unemployment closer to 4 percent, a level not seen in more than two years.

The U.S. economy added 175,000 jobs in April, down from 315,000 in March and the most anemic growth since October 2023. Economists had expected April employment growth of 240,000 jobs.

The report came on the heels of Wednesday’s announcement by Federal Reserve policymakers that they intend to slow the pace of “quantitative tightening” — an unwinding of the central bank’s $7 trillion balance sheet — to $40 billion a month, less than half the pace envisioned two years ago.

Job growth cooled in April

Change in employment, by month. Red bars are the latest forecast, including revisions to previous estimates for February and March. Source: U.S. Bureau of Labor Statistics.

“This report is nothing like bad enough to trigger a wholesale rethink at the Fed, but things will be different if the July numbers are weaker still, as we expect,” economists at Pantheon Macroeconomics said in a note to clients. “The downshift in payroll growth has come exactly when the [National Federation of Independent Business] suggested it would, and the signal for the future is unambiguous.”

Futures markets tracked by the CME FedWatch Tool last week predicted that the odds were against the Fed making more than one 25-basis point rate cut this year. On Friday, investors had repositioned their bets in line with expectations that there’s a 61 percent chance of two or more Fed rate cuts by the end of the year, with the first move now expected in September rather than December.

Pantheon economists are sticking to their forecast that the central bank will bring the federal funds rate down by a full percentage point, starting in September.

“Businesses — especially small firms — are responding to the lagged effect of the huge increase in interest rates and the tightening in lending standards, which have made working capital much more expensive and harder to obtain,” Pantheon economists said. “At the margin, this is depressing hiring and lowering the bar to layoffs.”

Unemployment, which dipped below 4 percent in February 2022, is once again flirting with that level, hitting 3.9 percent in April, up half a percentage point from a year ago.

The Fed doesn’t have direct control over long-term rates, but bond market investors who fund most mortgage loans are reacting to this week’s news.

10-year Treasury yields down 25 basis points

Yields on 10-year Treasurys, which often predict trends in mortgage rates, fell 7 basis points Friday to 4.50 percent, a 25-basis point drop from the 2024 high of 4.75 percent registered on April 25.

Surveys of lenders by Mortgage News Daily showed rates for 30-year fixed-rate loans dropping for a third day in a row Friday, to 7.28 percent, down 24 basis points from a 2024 high of 7.52 percent, also registered on April 25.

Mortgage rates retreat from 2024 highs

Data tracked by Optimal Blue, which lags by one day, showed borrowers were locking in rates on 30-year fixed-rate mortgages Thursday at an average rate of 7.21 percent, down 6 basis points from the 2024 high of 7.27 percent recorded on April 25.

Borrowers taking out jumbo loans have seen spreads over conventional mortgages widen as higher interest rates and defaults on commercial loans weigh on regional banks that are often the source of those loans.

The rates published by Mortgage News Daily (MND) are higher than those reported by Optimal Blue because MND’s rate index is adjusted to account for points that borrowers often pay to get a lower rate. Optimal Blue uses actual rates provided to borrowers for rate locks, whether they paid points or not.

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Mortgage rates looked poised to drop Wednesday after Federal Reserve policymakers said they’ll slow the pace of “quantitative tightening” — an unwinding of the central bank’s $7 trillion balance sheet that’s helped keep rates elevated — to less than half the pace envisioned two years ago.

At its latest meeting, the Fed left the short-term federal funds rates unchanged at its current target of 5.25 percent to 5.5 percent, as expected.

But following through on guidance Fed Chair Jerome Powell provided in March, on June 1 the Fed will slow the pace at which it trims its holdings of long-term Treasurys by $35 billion a month.

Because the Fed hasn’t been able to hit its targets for reducing its holdings of mortgage-backed securities (MBS), the Fed’s balance sheet easing will soon total only $40 billion a month — less than half of the $95 billion target set by policymakers in 2022.

“The decision to slow the pace of runoff does not mean that our balance sheet will ultimately shrink by less than it would otherwise, but rather allows us to approach its ultimate level more gradually,” Powell said at a press conference following the Fed’s latest meeting.

“In particular, slowing the pace of runoff will help ensure a smooth transition, reducing the possibility that money markets experience stress, and thereby facilitating the ongoing decline in our securities holdings that are consistent with reaching the appropriate level of ample reserves.”

10-year Treasury yields retreat from 2024 highs

Source: Yahoo Finance.

Yields on 10-year Treasury notes, which are a useful barometer of where mortgage rates are headed next, dropped nine basis points Wednesday, to 4.59 percent, a 15-basis-point decline from the 2024 high of 4.74 registered on April 25.

But Marty Green, principal at mortgage law firm Polunsky Beitel Green, noted that the odds of Fed rate cuts this year appear to be dwindling.

Marty Green

“With inflation data continuing to show a bumpy road toward the Fed’s 2 percent inflation target, it isn’t surprising that the Fed chose to leave interest rates unchanged and is delaying the prospect of interest rate cuts until later this year,” Green said in a statement.

“The question now is whether inflation proves to be so sticky that the Fed decides that rate cuts in 2024 are no longer in the cards and will instead be delayed into 2025.”

The CME FedWatch Tool, which tracks futures markets to predict the odds of future Fed moves, on Wednesday puts the odds of the Fed making more than one rate cut this year at just 42 percent, down from 85 percent on April 1.

Green characterized the Fed’s decision to scale back the pace of balance sheet tightening as “good news.”

“Over time, this adjustment should have some positive impact on interest rates without the Fed needing to adjust the Fed funds rate,” Green said.

Fed to slow pace of ‘quantitative tightening’

Source: Board of Governors of the Federal Reserve System, Federal Reserve Bank of St. Louis.

While the Fed has tight control over short-term interest rates, long-term interest rates on government debt and MBS are driven by supply and investor demand.

To keep the economy from imploding during the pandemic, the Fed not only brought short-term interest rates down to 0 percent but was buying $120 billion in debt every month — $80 billion in long-term Treasury notes and $40 billion in MBS.

As its balance sheet neared $9 trillion, the Fed reversed course on “quantitative easing” and instituted “quantitative tightening” as part of its efforts to fight inflation.

In 2022, the Fed ramped up “quantitative tightening” with a goal of trimming $60 million in Treasurys and $35 billion in MBS from its balance sheet each month. Instead of replacing $95 billion in maturing assets to maintain the status quo, the Fed would let those assets roll off its books.

Now, instead of letting $60 billion in government debt roll of the books every month, the Fed has set a new cap on Treasury redemptions at $25 billion a month.

Although the Fed is leaving the $35 billion runoff cap on MBS in place, it’s been unable to hit that target. Because elevated mortgage rates have slowed the pace at which borrowers refinance their mortgages, the Fed has only been able to trim its mortgage holdings by $15 billion a month for some time.


Asked if there was a contradiction in the Fed holding short-term rates steady to try to cool the economy while reducing the pace of quantitative tightening, Powell said that rates are “the active tool of monetary policy.”

Fed policymakers are tapering the pace of quantitative tightening to avoid the kind of disruption that money markets experienced the last time it tried to trim its balance sheet in 2019, he said.

“This is a plan we’ve long had in place … not in order to provide accommodation to the economy or to be less restrictive to the economy,” Powell said. “Really it’s to ensure that the process of shrinking the balance sheet down to where we want to get it is a smooth one, and doesn’t wind up with financial market turmoil the way it did the last time the last time we did this — and the only other time we’ve ever done this.”

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