LoanDepot alters more credit lines ahead of earnings

A major industry player in the midst of a prolonged, difficult financial slide is adjusting two more credit lines ahead of its first quarter earnings report.

LoanDepot last week reduced a line of credit with Dallas-based NexBank to $185 million after decreasing the facility to $200 million four months ago, according to a Securities and Exchange Commission filing Friday. It also announced the transfer of a $300 million servicing rights facility from failed depository Signature Bank to Flagstar Bank.

The Foothill Ranch, California-based lender and servicer declined to comment Friday, citing the proximity of its first quarter earnings report at a yet-to-be announced date in early May. Executives in a March earnings conference call suggested first quarter origination volume would continue to decline.

The company has endured a tumultuous stretch in the past 12 months, which have included increasing financial losses, widespread staff cuts and a proxy war with its former CEO and chairman. The conflict reached a resolution on two weeks ago.

LoanDepot last October and November amended several other warehouse lines of credit, citing projected funding capacity requirements amid the market's decline.

NexBank has extended lines of credit to loanDepot since 2014, and the facility had a $268 million maximum amount before December's adjustment. The Signature Bank line, protected by the Federal Deposit Insurance Corp.'s established bridge bank last month, was signed in 2021 and has room to increase up to $500 million. Both lines are secured by mortgage servicing rights. 

The lender also has a $300 million warehouse facility in which Signature is a 50% participant, among lines from other financial partners. 

Earlier this month, loanDepot's board of directors announced a cooperating agreement with former leader Anthony Hsieh, who pushed for the appointment of now-director Steven Ozonian. Hsieh, who retains 57% voting power on the company board, agreed not to make any nominations at the firm's 2023 and 2024 meetings.

The company meanwhile projects first quarter origination volume to fall between $3 to $5 billion, according to executives discussing last month the firm's full year results. The lender reported a net loss of $156.8 million in the fourth quarter, and its net income has sat in the red since the first quarter of 2022.

LoanDepot has also let go thousands of employees since having a headcount of 11,000 following the refinance boom. CEO Frank Martell has suggested it's unlikely the company will turn a profit in 2023.