LoanDepot reports increasing losses and more staff cuts
LoanDepot’s cost-cutting efforts did not stop the mortgage lender from going into the red in the fourth quarter. The Foothill Ranch, California-based mortgage firm disclosed Wednesday a net loss in the fourth quarter of $156.8 millions. This is more than the $137.5million loss in the third quarter. The company’s executives cited market volatility, year end seasonality, and the company’s exit form the wholesale channel as the reasons for the loss. Further cost reductions are planned for this year, primarily through layoffs, as the mortgage market “continues to be challenged,” Frank Martell, CEO at loanDepot, said during the quarterly earnings call. The company issued $6 billion in loans between October and December. Close to $1 billion was refinances and $5 billion were purchase originations. The mortgage lender predicts that mortgage originations volume in the first quarter of 2022 will be lower than in previous quarters, with $5 billion being purchase originations and close to $1 billion being refinances. Leadership also praised its HELOC product which was launched late last year, and stressed its commitment to expanding its servicing portfolio. During the earnings call, Patrick Flanagan, chief financial officers at loanDepot, stated that “Our balance sheet management strategy will preserve cash until operating losses decrease and industry wide gains on sale margins normalize.” “We enter 2023 with $921 million in tangible equity and $864 million in unrestricted cash. We are proud of the relationships we have built with our financing partners, our agencies, and other investors. The company did not permit discussion of Anthony Hseih, loanDepot’s former CEO and president, during the call. It began with a warning about “questions regarding Anthony Hseih’s submission of a notice to the company” and ended with Hseih issuing a statement urging the board to reconsider the nomination of Ozonian. Hsieh plans to use “approximately57% of combined vote power” to elect his candidate. Hsieh stated that LoanDepot cannot continue to be the same if it wants to be successful in the long-term. “The company’s board would benefit greatly from a fresh perspective in the midst of [market challenges] to ensure that we emerge stronger relative our competition. This is precisely why I nominated Steve Ozonian to the loanDepot board.