LoanDepot’s profit in Q4 sinks 91% to $14.7M

California-based loanDepot greatly increased loan origination volume in 2021, which guaranteed gains in marketshare compared to its competitors. But the multichannel lender’s gain-on-sale margin and net income fell significantly in the fourth quarter, reflecting changing market conditions.

Overall, net income for the mortgage lender decreased all the way down to $623.1 million in 2021, compared to $2 billion the previous year. LoanDepot also reported a massive quarter-over-quarter decrease in net income: it made $14.7 million in profit in the last three months of the year, down 90.5% from the $154.2 million it made in the third quarter. A year ago, loanDepot made $547.2 million in profit.

The decrease in net income was primarily driven by a dramatic decline in gain-on-sale margins – down to 2.61% in 2021, from 4.13% in the previous year. In the last quarter of 2021, the gain-on-sale margin was 2.23%, down about 60 basis points from Q3.

Higher expenses also impacted the net income. LoanDepot’s total expenses in 2021 increased to $3 billion, from $2.3 billion the previous year (it’s worth noting that personnel expenses increased to $1.929 billion, up from $1.531 billion the previous year). However, the company reduced the total expenses from $744.7 million to $694.1 million from the third to the fourth quarter of 2021, which likely stemmed from a decision to redesign compensation, which took effect in the second quarter.

More money was also pumped into marketing and advertising, with the company spending $467.5 million in 2021, compared to $264.3 million the previous year.  The company highlighted its advertising campaigns and partnerships with Major League Baseball and the Miami Marlins.  


The originations landscape is shifting – is your business ready?

HousingWire recently spoke with Jon Gerretsen, SitusAMC Managing Director of Residential New Originations and Fulfillment Services, about the home buying boom and how lenders can gain market share and drive profitability in a white-hot purchase mortgage market.

Presented by: SitusAMC

Anthony Hsieh, loanDepot’s founder and CEO, said in a statement that the company’s industry is a cyclical one, but the business was “purpose-built with period of pressure in mind,” considering its proprietary tech stack, diverse mix of channels, and a marketing machine.

“We control our lead flow, our customer contact strategy and the point of loan origination. This is a critical competitive advantage, enabling us to pivot and adjust our production as market trends demand.”

The loan origination volume achieved $137 billion in 2021, an increase of 36% from the previous year. Refinances represented 71.2% of the total, growing from $72.4 billion to $97.6 billion in the period. Purchase loans grew 39% last year to $39 billion, with the number of retail loan officers up by 18%.

The company achieved a market share of 3.4% for the full year, up from 2.5% in 2020.

Regarding the servicing activity, loanDepot ended the year with a servicing portfolio of $162.1 billion in unpaid principal balance. The company recently announced it is bringing the servicing of FHA, VA and USDA funded Ginnie Mae loans in-house.

The lender’s earnings report shows that conventional conforming loans, as expected, made up the bulk of loanDepot’s business. The company originated $108.1 billion worth of conventional conforming loans in 2021, up from $79.9 billion in the previous year.

Loan origination of FHA/VA/USDA loans was the second-largest share of the pie. LoanDepot originated $18.3 billion government-insured loans in 2021, up from $17.5 billion in 2020.

The stock price of loanDepot on Tuesday at 10 a.m. EST was trading around $4.24 a share, down 9.6% after the company published the earnings.

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