Loandepot blames Q1 loss on market volatility, product mix

Loandepot slipped deeper into the red to start the year as executives blamed the firm's performance on market volatility and tighter margins from the product mix shift over the winter. 

The lender and servicer Tuesday posted a $54.9 million net loss for the first quarter, widening losses of $32.8 million and $40.7 million in the quarter- and year-ago periods. The lender's $7.6 billion in production volume was a jump from $5.1 billion in the year-ago period, but down slightly from $8 billion in fourth quarter volume.

Pull-through weighted gain on sale margins tumbled from 355 basis points a year ago, to 324 basis points in the fourth quarter, to 271 basis points in the first quarter. The company explained that fall on fewer originations of high-margin government loans and less home equity lines of credit. 

Rising interest rates also drove a $64.4 million decline in the fair value of Loandepot's mortgage servicing rights. Revenue was up annually at $286.4 million but down from $310.3 million in the fourth quarter. 

Investing in the future

Company leaders in Tuesday's earnings call touted Loandepot's long-running pivot, which included recently relaunching the wholesale business and partnering with Figure Technology Solutions on a speedy loan product. 

Founder, president and CEO Anthony Hsieh described green shoots, including a slight uptick in market share; the hiring of over 100 loan officers; and the company reducing marketing expenses by 12%. 

"The pieces are in place," said Hsieh. "We are executing on our strategy to compete at the highest levels by returning to our core strength."

The company's total expenses were near-flat quarterly at $341 million, as its savings from improved strategies for mid-funnel lead conversion were partially offset by the increased headcount and higher credit reporting costs.

The Southern California-based player also grew its servicing book to $120.6 billion in unpaid principal balance. The company drew down on its cash balance in the first quarter, from $337 million to $277 million, to invest in MSRs. It touts a recapture rate of 73%, which rose slightly from the end of 2025. 

Loandepot published second quarter guidance including a pull-through weighted GOS margin between 330 basis points and 360 basis points, which would represent a significant rebound. Chief Financial Officer David Hayes said the Figure-powered 5x5 Homeloan product should fuel that growth. 

"We're starting to see that (product) shift back towards FHA, VA, and overall, higher home equity volumes, which is also contributing to a higher gain on sale margin," said Hayes.