Beleaguered lender ekes out $2.67 million third quarter profit, with loan originations up 9 percent from a year ago as refinancings bounce back on retreat in rates.
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Shares in beleaguered mortgage lender loanDepot surged in after hours trading Tuesday after the company posted its first quarterly profit in nearly three years.
At $6.66 billion, loanDepot’s third quarter loan originations were up 9 percent from a year ago, aided by a resurgence in refinancings as mortgage rates came down from 2024 highs during the third quarter.
That, along with higher profit margins on mortgages loanDepot sold to investors, helped push revenue up 18 percent from a year ago to $315 million.
But the final push needed to get loanDepot back to profitability was $18.9 million in expected insurance proceeds related to the settlement of a class action lawsuit over a January cyberattack that affected nearly 17 million people.
While modest, loanDepot’s $2.67 million Q3 profit was a dramatic turnaround from the $65.8 million Q2 loss and the first time the company was not in the red since Q4 2021.
Shares in loanDepot, which in the last year have traded for as little as $1.35 and as much as $3.71, closed at $2.16 Tuesday before the company’s earnings were released. After earnings were published, shares in loanDepot climbed more than 10 percent in after-hours trading.
LoanDepot President and CEO Frank Martell — the former CoreLogic executive who succeeded founder Anthony Hsieh as CEO in 2022 — credited the company’s Vision 2025 strategic plan with helping turn the company around.
“Through the successful implementation of our Vision 2025 strategic program, loanDepot returned to profitability in the third quarter on modest improvements in market volumes, which resulted in higher revenue,” Martell said in a statement.
“We are also realizing the benefits of our ongoing cost management and productivity programs, which helped to fund strategic investments in our platforms, solutions and people. These investments should help position the company for success in 2025 and beyond.”
Launched in July 2022, cost-cutting and layoffs were major components of Vision 2025. The company posted $611 million in losses in 2022 and 2023 despite shedding more than 7,000 workers through layoffs and attrition, kicking off 2024 with 4,250 employees.
Now the company is growing again and ready to turn the page with the launch of “Project North Star,” which is aimed at making loanDepot the “lending partner of choice for homeowners, with an emphasis on first time homebuyers,” the company outlined in an investor presentation.
Developing and launching an AI-powered customer relationship management and engagement platform will allow customers “to optimize their home buying, selling, equity optimization and home management experience,” the company said.
Project North Star, which is intended to serve as the company’s roadmap from 2025 through 2027, also envisions the company building its purchase mortgage volume by expanding its geographic footprint and partnerships.
LoanDepot’s focus on purchase mortgages
Source: loanDepot earnings reports.
During the pandemic, loanDepot and other mortgage lenders saw profits soar as they refinanced trillions in mortgages as interest rates hit historic lows.
Now mortgage lenders are more focused on homebuyers, with the $4.38 billion in purchase mortgages originated by loanDepot in Q3 accounting for 66 percent of its business. While purchase originations were essentially flat from Q2, refinancing volume was up 33 percent, to $2.28 billion.
LoanDepot on Monday announced that it will partner with Smith Douglas Homes in a joint venture, Ridgeland Mortgage, serving homebuyers in the South and Southeast.
Ridgeland Mortgage is the latest addition to a stable of joint ventures with homebuilders, which “typically experience their highest level of activity during November and December as home builders focus on completing and selling homes prior to year-end,” the company said in its annual report to investors.
In issuing guidance for Q4, loanDepot executives said they expect to originate between $6 billion and $8 billion in home loans.
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