LoanDepot's cost-cutting measures did not prevent the mortgage lender from landing in the red in the fourth quarter. The Foothill Ranch, California-based mortgage company disclosed Wednesday a net loss of $156.8 million in the fourth quarter, more than the $137.5 million loss recorded in the third quarter.
Executives at the company pointed to market volatility, year-end seasonality and the company's exit from the
From the previous quarter, the company reduced total expenses by $91.4 million, exceeding its reduction goal by more than 25%. And more cost reductions, primarily in the form of layoffs, are planned for this year, as the "mortgage market [continues] to be challenged," said Frank Martell, CEO of loanDepot, during the company's quarterly earnings call.
It is unlikely that the company will turn a profit in 2023, though the company "feels confident that it can grow out of the challenging cycle," Martell said.
Between October and December, the lender churned out $6 billion worth of loans. Of that sum, $5 billion were purchase originations and close to $1 billion were refinances. The mortgage lender predicts that mortgage origination volume in the first quarter will be on the lower spectrum, between $3 to $5 billion.
Overall, LoanDepot's total revenue fell by more than half in 2022 to $1.3 billion, a decline from $3.7 billion in 2021 as a result of "dramatic volatility" that impacted virtually all parts of the housing ecosystem.
The lender's gain-on-sale margin slightly dropped in the fourth quarter by 35 basis points to 1.45%, while the pull-through weighted GOS margin was 2.21%, up from 2.03% in the third quarter.
Going forward, the company plans to turn its attention to becoming a more purchase-heavy shop, with a focus on first-time homebuyers. However, leadership also touted its
"Our balance sheet management strategy will keep in place our various forms of capital, preserving cash until operating losses are reduced and industry wide gain on sale margins normalize," said Patrick Flanagan, chief financial officer at loanDepot, during the company's earnings call. "We enter 2023 financially sound with $921 million of tangible equity, $864 million of unrestricted cash. and what we believe are excellent relationships and the support of our financing partners, the agencies and our other investors."
Discussion of loanDepot's former CEO and president Anthony Hseih was not permitted by the company during the call, which started with a warning that "questions regarding Anthony Hseih's submission of a nomination notice" will not be answered.
In early February, Hseih
The move was seen as a "disruptive proxy contest" aimed at circumventing the company's process for assessing potential director nominees by executives at the company.
This kerfuffle resulted in Hseih stepping down as executive chairman of loanDepot, though he remains as loanDepot's board chairman.
Following the earnings call, Hsieh issued a statement, calling on the company's board to shake things up by reconsidering the nomination of Ozonian. The former CEO plans to use "approximately 57% of combined voting power" to push his candidate of choice forward.
"LoanDepot cannot maintain the status quo if we are to succeed over the long-term," Hsieh wrote. "The company's board would benefit from a fresh perspective amidst [market challenges] to ensure we emerge stronger relative to our competition. I have nominated Steve Ozonian for election to the loanDepot board precisely for this reason."
