LoanDepot narrows Q2 loss on spring mortgage demand

Publish Date: August 08, 2023

Written by Matt Carter

- Originally published at Inman News - Matt Carter

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Struggling mortgage lender loanDepot trimmed its second-quarter losses by 46 percent to $49.8 million as the spring homebuying season helped the Irvine, California-based lender boost purchase loan demand.

At $4.55 billion, loanDepot’s Q2 purchase loan originations were up 30 percent from the first quarter, thanks in part to the seasonal boost provided by spring homebuyers. Looking back to the same quarter a year ago, purchase loan originations were down 52 percent.

With Q2 revenue up 31 percent from the first three months of the year to $63.9 million, loanDepot delivered its second successive quarter of top-line growth and margin expansion, CEO Frank Martell said Tuesday.

At $330.1 million, Q2 expenses were down 39 percent from a year ago under the “Vision 2025” cost-cutting initiative Martell launched last year. But that’s a 5 percent increase from Q1, which the company attributed to costs associated with layoffs and getting out of leases, but also increased origination volumes.

“While we continue the work of resetting our cost structure to align with generationally low unit volumes, we are also focused on the other pillars of Vision 2025, including capturing opportunities inherent in our strategy to expand purpose-driven lending that supports first-time homebuyers and diverse communities,” Martell said in a statement.

Q2 purchase loans down 52 percent from 2022

With refinancing volume also down 73 percent from a year ago to $1.72 billion, the $6.27 billion in total mortgage originations represented a 61 percent year-over-year decline.

Gain on sale margin — the total gain on origination and sale of loans plus origination income, divided by loan origination volume — was up 32 basis points to 2.75 percent.

For the third quarter, loanDepot expects to originate between $5 billion and $7 billion in mortgages, with pull-through weighted gain on sale margin of between 2.45 percent and 2.85 percent.

As it struggles to regain its footing, loanDepot has laid off thousands of workers and shuffled its executive ranks.

Martell, who succeeded loanDepot founder Anthony Hsieh as CEO last year, recruited his former CoreLogic colleague David Hayes in June as chief financial officer, while four executives hired by Hsieh were shown the door.

David Hayes

Hayes said loanDepot plans to continue maintaining a strong liquidity position and aggressively reducing its costs during the second half of 2023.

“Importantly, we are also investing in critical operating platforms, which we expect will deliver higher levels of automation and operating leverage and position us for additional growth and margin expansion in 2024,” Hayes said in a statement.

LoanDepot began 2022 with 11,300 employees and since has eliminated more than 6,600 positions. After shedding about 400 employees during the first three months of this year, loanDepot cut another 151 positions in Q2, leaving the company with 4,683 workers as of June 30.

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