LoanDepot alters another financing agreement amid mortgage rollouts

LoanDepot again cut its financing capacity ahead of its third quarter earnings report, quietly disclosing another adjustment while announcing a home equity line of credit product and joint venture with a homebuilder. 

The lender and servicer last week amended a warehouse facility where it sells and repurchases mortgage loans from investment banking firm Jefferies Funding LLC, according to a Securities and Exchange Commission filing. The update to the master repurchase agreement decreased the facility's uncommitted limit from $1.1 billion to $350 million while maintaining a committed financing amount of $400 million.

LoanDepot in a statement Thursday said it regularly evaluates and adjusts its funding capacity on expected market conditions, which it forecasts at $1.5 trillion for 2023 down from 2021's $4.4 trillion.

"This was both an extension of our contract and a reduction of our funding capacity, which is in line with volume projections," the firm's statement said. "It's also a way to reduce expenses as many of our lending facilities charge non-usage fees. We are confident in our ability to increase our funding capacity in the future as market conditions change."

The MRA's expiration date was also extended from late October of this year to Oct. 26, 2023.

It's loanDepot's fourth financial facility adjustment since August, through which it has reduced its origination funding capacity by a combined $1.5 billion. loanDepot reported a net loss of $223.8 million in the second quarter and announced massive cost-cutting measures including an exit from its wholesale channel.

The funding adjustment came less than a week before loanDepot reports its third quarter performance, and days before the lender announced a long-anticipated loan product and new lending joint venture. 

LoanDepot claims its new digital HELOC can deliver a turnaround from application to closing in as little as seven days. The product, which the company has hinted at rolling out since May, is available in five states and will be available across the country by early 2023. 

Homeowners using the HELOC can access between $50,000 to $250,000 of equity through a 10-year interest-only line of credit before entering a 20-year variable rate repayment term with no prepayment penalty, the lender said. The offering comes as homebuyers hold sky-high levels of equity off rising property values, which appear to have peaked this summer.

"We've developed an end-to-end digital experience, leveraging cutting edge technology for property valuation, credit and income verification, that gives customers access to funds with speed and convenience to improve their financial position," said Zeenat Sidi, loanDepot's president of digital products and services. 

The financing capacity reduction announcement also comes on the heels of a joint venture partnership with single-family affordable homebuilder National HomeCorp to form NHC Mortgage. The newly-formed business, operating as of Wednesday, offers mortgage services in Florida, Iowa and North Carolina, with plans to expand to nine states, mostly in the Sun Belt, in 2023. 

"LoanDepot's industry-leading expertise, technology and infrastructure will allow us to quickly scale and streamline the homebuying process to ensure a terrific experience as our customers embark on their homebuying and building journey," said Wade Jurney, CEO and co-founder of National HomeCorp, in a press release. 

Interest rate and affordability headwinds are also impacting homebuilders, as single-family housing starts declined 8.1% in September and are down 5.6% year-to-date, according to data from the Department of Housing and Urban Development and U.S. Census Bureau.