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loanDepot Again Reduces Funding Capacity By $500M

David Krechevsky
Oct 03, 2022
loanDepot

Reduction is the second in two months following a similar move in August.

For the second time in two months, loanDepot has told federal regulators it is reducing its funding capacity by $500 million.

In a filing with the Securities & Exchange Commission dated Sept. 23, the nation’s second-largest retail mortgage lender said it based the decision “on current and projected mortgage loan originations.”

In the filing, loanDepot states that it will reduce its funding capacity by “exercising its right to prepay in full” its 2021-1 securitization facility and terminating its master repurchase agreement, dated Feb. 2, 2021 with Mello Warehouse Securitization Trust (MWST) 2021-1, as well as its indenture, also dated Feb. 2, 2021, among MWST, loanDepot, and U.S. Bank N.A. as trustee. loanDepot said it will also cancel certain related agreements. 

MWST 2021-1 initially issued $500 million of notes, the filing states. The notes were “backed by a revolving warehouse line of credit that was secured by newly originated, first-lien, fixed-rate or adjustable rate, residential mortgage loans, which are originated in accordance with the criteria of Fannie Mae or Freddie Mac for the purchase of mortgage loans or in accordance with the criteria of Ginnie Mae for the guarantee of securities backed by mortgage loans and other eligibility criteria set forth in the MRA.”

The company added that “no borrowings are currently outstanding under the 2021-1 securitization facility and the company did not incur any termination penalties as a result of the termination of the 2021-1 securitization facility.”

The filing announcing loanDepot’s decision to reduce its funding capacity in September followed a nearly identical filing on Aug. 19, when it also said it would prepay a securitization facility.

In all, loanDepot has reduced its funding capacity by $1 billion. 

The reductions follow the company’s announcement on Aug. 9 that it would exit the wholesale lending business. That decision was announced as it released its earnings for the second quarter of 2022, which showed a net loss of $223.8 million, or 66 cents per diluted share, its second-consecutive quarterly loss.

The company said loan origination volume in the quarter totaled just under $16 billion, down nearly 26% from the first quarter and down nearly 54% from the second quarter of last year. Purchase volume increased to 59% of total originations, the company said.

President & CEO Frank Martell said during a second-quarter earnings call that loanDepot made a “strategic decision” to exit the wholesale business.

The company has eliminated nearly 4,000 jobs since the end of last year.

Published
Oct 03, 2022
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