LoanDepot posted another eight-figure loss in the second quarter, but the firm slashed the amount by nearly half from earlier this year on the strength of higher origination volume.
The national lender and servicer posted a $49.7 million net loss to close June, an improvement from
The independent mortgage bank saw origination volume rise 26% quarterly to $6.2 billion. While the production was far below last spring's $16 billion in loan activity, loanDepot posted its best pull-through weighted gain-on-sale margin in almost two years. The firm reported a pull-through weighted GOS margin of 2.85%, up from the first quarter's 2.26% and last year's 1.50% figure.
"Our higher gain-on-sale margin was primarily due to wider profit margins on our production, a shift in mix favoring more profitable FHA loans and a lower provision for loan losses," said David Hayes, the firm's new chief financial officer, in an earnings conference call.
Hayes, a former executive at CoreLogic alongside current loanDepot CEO Frank Martell, was part of
Vision 2025 costs totaled $6.8 million over the spring, split between $4.5 million of personnel-related expenses and $2.3 million of lease and other asset impairment charges, the firm said. Another $7.5 million was accrued for legal charges related to a lawsuit settlement.
In all, loanDepot's expenses rose 5% quarterly to $330 million, with commissions and direct origination costs adding $13 million more in the volume-related category.
The company's operating expenses, excluding the volume, Vision 2025 and litigation costs, decreased $10 million from the first quarter, the firm touted.
"We had a couple of pretty large investments that we're making despite the choppiness of the market in our LOS platform and in our underwriting areas as well that we think will add significant productivity gains when they come online in 2024," said Hayes.
LoanDepot posted revenue of $271.8 million for the second quarter, up 31% from the end of March. In the second quarter of 2022, the business recorded $308.6 million in revenue. It's projecting origination volume to come in between $5 billion to $7 billion in the third quarter.
The company's servicing portfolio remained relatively unchanged at $142.5 billion, while just 0.1%, or around $115.3 million, of its servicing portfolio was in active forbearance. That share also declined from the beginning of the year, in line with
During the quarter, loanDepot also renewed one of its mortgage servicing rights lines, but Hayes didn't provide further details, citing a proprietary negotiated deal.
"We did expand some capacity," he said. "We renewed all lines that were in the quarter, and we don't see any concerns about upcoming renewals through the third quarter."
Martell added that loanDepot hasn't been in the market to sell off its portfolio assets.
The firm also retained sizable liquidity, with $719 million in unrestricted cash to end June. The war chest continues to dwindle from the $1.14 billion in unrestricted cash in the third quarter last year, but Hayes said loanDepot expects to maintain excess liquidity.
"We had a fortress balance sheet last year to navigate through these challenging markets," he said. "We do have target liquidity goals of maintaining at least 5% of our assets in liquidity."
