Industry Insiders Ask, “Is loanDepot Slowly Imploding?” loanDepot Reduces Funding Capacity By $500M For The Second Time In Two Months
Is loanDepot slowly imploding? It certainly looks that way and it appears management is trying to control the coming implosion.
For the second time in two months, loanDepot is reducing its funding capacity by $500 million.
The lender told the SEC in a filing dated Sept. 23rd, that it based the decision on current and projected mortgage loan originations.
loanDepot states in the filing that the company is exercising its right to prepay in full its 2021-1 securitization facility and terminating its master repurchase agreement with Mello Warehouse Securitization Trust (MWST) 2021-1. It is also paying off its indenture among MWST, loanDepot, and U.S. Bank N.A. as trustee. loanDepot said it will also cancel certain related agreements.
MWST 2021-1 initially issued $500 million of notes. A revolving warehouse line of credit backed the notes. Newly originated residential mortgage loans secured the line of credit. The pool consisted loans with the capacity of being sold to Fannie Mae, Freddie Mac and Ginnie Mae.
Is loanDepot Imploding? Reducing Capacity Means They May Be Trying To Control The Implode
The filing announcing loanDepot’s decision to reduce its funding capacity in September followed a nearly identical filing on August 19th. In August, the company said it would prepay a securitization facility.
In all, loanDepot has reduced its funding capacity by $1 billion.
The reductions also follow the company’s announcement in August that it would exit the wholesale lending business. loanDepot announced the decision as it released its earnings for the second quarter of 2022. The earnings report showed the company had net loss of $223.8 million. This is a 66 cent decrease per share.
The company said loan origination volume in the quarter totaled just under $16 billion. This is down nearly 26% from the first quarter. It is also down nearly 54% from the second quarter of last year. Purchase volume increased to 59% of total originations.
President & CEO Frank Martell said during a second-quarter earnings call that loanDepot made a “strategic decision” to exit the wholesale business.
The company has eliminated nearly 4,000 jobs since the end of last year.