LoanDepot had the best quarter ever for purchase credits in the second quarter

LoanDepot’s strategy of using its technology to build partnerships and grow side businesses like titles and fiduciary businesses appears to be bearing fruit – just as dwindling profit margins on a shrinking pool of mortgage refinancing threaten to cut profits to the bone.

LoanDepot’s net income for the second quarter was $ 26.3 million, down significantly from $ 427.9 million in the first quarter and $ 648.6 million a year ago. Although mortgage loans declined 17 percent from quarter to quarter to $ 34.49 billion, that represented a 64 percent year-over-year increase.

Lending by LoanDepot by purpose

Source: Data from LoanDepot’s approval applications compiled by Inman.

In fact, LoanDepot had its best-ever quarter for purchase credits, funding $ 10.38 billion in home sales in April, May and June. That’s 31 percent more than in the first quarter of this year and almost double the $ 5.55 billion purchase credits granted a year ago.

The surge in purchase credit shows “the strength of LoanDepot’s diversity of channels,” the company said. LoanDepot’s retail channel is complemented by a network of mortgage brokers and joint ventures with home builders and banks who market LoanDepot’s products through the company’s mello technology platform.

Lending by LoanDepot by channel

Source: Data from LoanDepot’s approval applications compiled by Inman.

In the second quarter of 2021, LoanDepot’s partner channel accounted for $ 6.61 of the company’s lending – nearly a fifth of the total.

The sharp drop in earnings was attributed to lower profit margins due to tougher competition, particularly in the wholesale partner channel, and higher interest rates, which put a strain on the refinancing volume. At 2.28 percent, the sales profit margin fell from 2.98 percent in the first quarter and less than half of the sales profit of 5.39 percent achieved in the same quarter last year.

In a conference call with investors, the company made predictions that capital gains will recover to around 245-295 basis points in the third quarter and that LoanDepot is expected to extend $ 30-36 billion in loans during that time.

“We continue to focus on our strategy of offering even more contiguous, non-mortgage-related real estate services that will help our clients through every phase of home ownership,” said LoanDepot CEO Anthony Hseih on the conference call. “We will continue to win over our customers through our proprietary technology, powerful data and analysis capabilities and exceptional service.

Last week, LoanDepot announced that it would offer a “Grand Slam Package” on October 1st, with cash discounts of up to $ 7,000 on bundled services when customers buy, sell, finance, and finance with LoanDepot with one of mellohome’s preferred real estate agents choose the company’s title insurance.

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