Joint ventures (JVs) are becoming all the rage as more mortgage lenders look to capture inventory of either builders, Realtors, or MSRs.
After loanDepot announced its third quarter earnings for 2024 — its best-performing quarter since 2021 — the California-based lender revealed its new joint venture with Smith Douglas Homes, a large nationwide home builder, to provide a streamlined financing option for new homebuyers.
The venture, called Ridgeland Mortgage, is part of loanDepot’s new strategy, Project North Star, and its Vision 2025, launched in July 2022. “Smith Douglas Homes’ approach to the new construction market is perfectly aligned with loanDepot’s commitment to serving the needs of first-time homebuyers," said Dan Peña, executive vice president of national joint ventures for loanDepot. “Our new joint venture...while providing Smith Douglas Homes with access to an unparalleled lending platform that will deliver an exceptional customer experience.”
loanDepot Befriends Builders
Ridgeland Mortgage is expected to expand loanDepot’s footprint in the purchase mortgage market, especially with Smith Douglas Homes’s strong presence in US Southeast and Southern regions. Meanwhile Smith Douglas Homes’ can continue building high quality homes at attractive prices in growing markets while capitalizing on loanDepot’s lending expertise and superior platform.
Ridgeland Mortgage plans to start operating in the following markets:
- Atlanta and Central GA
- Houston, TX
- Birmingham and Huntsville, AL
- Charlotte and Raleigh, NC
- Chattanooga and Nashville, TN
“Through the successful implementation of our Vision 2025 strategic program, loanDepot returned to profitability in the third quarter on modest improvements in market volumes, which resulted in higher revenue,” said loanDepot President and CEO Frank Martell. “These investments should help position the company for success in 2025 and beyond.”
loanDepot’s revenue for the third quarter of 2024 is up 18%, totaling $315 million, compared to the prior year. Adjusted revenue totaled $329 million, up 26% from last year. Meanwhile, loan origination volume was $6.7 billion, growing $0.6 billion or 9% from the third quarter last year. Purchase volume made up 66% of total loans originated by loanDepot during the third quarter, down from 71% the previous quarter.
Notably, loanDepot’s pull-through weighted gain on sale margin of 329 basis points, marking its highest margin since the beginning of the market downturn.
“The launch of Project North Star builds on the strategic pillars of Vision 2025, including our focus on durable revenue growth, positive operating leverage, productivity and investments in platforms and solutions that support our customer’s homeownership journey,” added Martell.
“Our partnership with loanDepot allows us to focus on what we do best — delivering incredible value to our customers with high quality homes at an affordable price point — while leveraging loanDepot’s mortgage lending expertise to provide a smooth and seamless home loan process,” said Smith Douglas Homes CEO Greg Bennett. “Our new joint venture will draw on the core strengths of both companies — including a shared commitment to operational excellence, quality, and innovation — so we can continue to meet the expectations of our customers.”
This is only the latest homebuilder joint venture loanDepot has launched after its joining with Woodlands, Texas-based LGI Homes in 2021 and entering joint ventures with Schell Brothers in March and Brookfield Residential in December 2020.
Recent Joint Ventures
Alternatively, lenders are joining forces with Realtors as a way to shore up more referrals. The Agency, a real estate brokerage, is forging its way into the mortgage business by entering into a joint venture with Barrett Financial Group, September 2024, to offer a variety of mortgage products and underwriting to The Agency’s luxury clients.
The Agency, the fastest-growing boutique, luxury real estate brands in the world, has closed more than $72 billion real estate transactions since 2011, comprising over 120 offices in 12 countries. Barrett Financial Group's nationwide coverage to The Agency's luxury clientele to offer lending services in 49 states.
Focused on residential purchase financing, Aclara Lending will provide a wide range of mortgage products from more than 140 wholesale lenders, including traditional programs, jumbo, super-jumbo, and Non-QM non-qualified mortgage options. The partnership also aims to empower real estate agents by offering continuous education, including regular updates on mortgage rates, news, and emerging products, ensuring they can better serve their clients.
"This represents a new era in real estate and mortgage services," said Trevor Barrett, Founder and President of Barrett Financial Group. "Together, we're setting a new standard for luxury home buying by providing clients with not only tailored lending solutions but also a seamless, integrated experience that supports their entire journey—from the initial search to closing the deal."
Aclara Lending debuts in the Southern California market, and plans to expand into other regions in the near future. The venture is poised to elevate the standard of service in the luxury real estate market by combining “top-tier mortgage expertise” with “exceptional real estate services.”
Another emerging strategy was shown in September when A&D Mortgage entered into a joint venture with investment firm Atlas Merchant Capital to expand its $7 billion mortgage securitization platform. The joint venture will purchase mortgage loans originated and serviced by A&D and other lenders with the goal of securitizing them, while investing across a range of securities in the sponsored transactions.
“Atlas Merchant Capital has sought ways to capitalize on the dislocation in the mortgage market caused by the rapid rise of interest rates throughout the last few years and we are thrilled to be partnering with A&D, a best-in-class lender, to execute on this opportunity,” said Bob Diamond, co-founder and chief executive officer at Atlas Merchant Capital.
A&D Mortgage sources its production primarily through the wholesale channel with over $10 billion in originations since 2020. As a national lender-servicer focused on the prime, non-Agency mortgage segment, its servicing portfolio exceeds $8 billion.
“Atlas Merchant Capital is an ideal partner to help us take our business to the next level,” said Max Slyusarchuk, founder and chief executive officer at A&D Mortgage. “Over the past two decades, we’ve expanded our operation to become the top non-agency mortgage lender nationwide. Our JV partnership with Atlas will accelerate A&D’s growth and our mission of helping more Americans achieve their dream of homeownership.”
