LoanDepot terminates, reduces more funding agreements

LoanDepot is reducing its funding capacity for the third time in two months, citing current and projected origination volumes in making the series of large moves. 

The transactions, announced in Securities and Exchange Commission filings last week, mean the lender and servicer has slashed its origination-funding capacity by at least $1.5 billion since August. The Foothill Ranch, California-based mortgage giant is in the midst of a significant internal restructuring and also plans to close its wholesale channel by the end of the month.

The company trimmed a warehouse facility with JPMorgan Chase Bank to $600 million from an undisclosed prior amount, according to the disclosure dated Sept. 30. The agreement, which allows loanDepot to sell and repurchase mortgages from the bank, will expire next September. Dollar amounts associated with various terms of the arrangement were redacted from the amended agreement.

In the same filing, loanDepot said it is prepaying and terminating a separate securitization facility, known as Mello Warehouse Securitization Trust 2021-2. The facility issued $500 million of notes backed by a warehouse line of credit secured by newly originated mortgages in accordance with the government-sponsored entities or Ginnie Mae. 

LoanDepot said it had no outstanding borrowings under the facility and paid no termination fee. The exit was similar to two prior agreements the lender recently ended to forgo a combined $1 billion in funding.

A representative for the firm didn't return a request for comment Wednesday.

Executives in July announced a vast cost-cutting and reorganization plan in response to massive losses in the first half of the year and mortgage volumes that continue to slide. The company has already laid off over 4,000 workers since the beginning of the year, it said, and will end the year with a headcount of fewer than 6,500 employees. The measures were introduced to target annualized savings of $375 million to $400 million, and executives said the company is aiming for run-rate profitability by the end of the year.

The reductions come as at least two loanDepot executives received pay raises, according to a late September SEC disclosure. Jeff DerGurahian, chief capital markets officer, will receive a $600,000 base salary up from his $568,846 in earnings last year. Jeff Walsh, senior executive vice president and chief revenue officer, will receive a base salary bump to $750,000 compared to $715,385 in 2021. 

Both men are eligible for a maximum performance bonus of up to 300% of their base salary and retention bonuses of $1 million at the end of this year and $1.5 million at the end of 2023. Including bonuses and stock awards, Walsh and DerGurahian made $7.1 million and $5.8 million last year, respectively, according to a May SEC filing.

The company didn't respond to a request for comment about the executive salary raises. It has yet to announce a date to report its third quarter earnings.