loanDepot came closer to profitability in the second quarter, according to financial results released Tuesday, Aug. 4, but the improvement was not as complete as its $6.6 million headline loss might suggest.
The multichannel lender sharply reduced its consolidated net loss from $54.9 million in the first quarter and $25.3 million a year earlier. Total revenue climbed 18% quarter over quarter to $337.3 million, while expenses increased less than 1% to $343.9 million.
Part of that improvement came from changes in the value of loanDepot’s mortgage servicing rights and related hedges. On an adjusted basis, the company lost $29.2 million, compared with $33.6 million in the first quarter and $16 million in the second quarter of 2025.
Adjusted EBITDA increased to $20.5 million from $14.3 million in the first quarter but remained below the $25.6 million recorded a year earlier.
The distinction matters: loanDepot moved much closer to GAAP break-even during the quarter, but its adjusted loss was still nearly twice what it reported a year ago.
During the company’s Aug. 4 earnings call, founder and CEO Anthony Hsieh said loanDepot was “making more loans, faster and at a lower cost.”
“We have moved decisively to reshape the business for profitable market share growth in any macro environment and are starting to see the signs of our progress,” Hsieh said.
More Loans, But Smaller Balances
loanDepot originated $7.99 billion during the quarter, up 4% from $7.66 billion in the first quarter and nearly 19% from $6.73 billion a year earlier.
That dollar-volume increase tells only part of the production story. Funded loan units rose 25% quarter over quarter as loanDepot increased production of its 5X5 HomeLoan home equity product, which carries a smaller average balance than a traditional first mortgage.
The company’s production gains, in other words, did not come solely from writing more purchase and refinance mortgages. They also reflected a deliberate move into smaller-balance, higher-margin home equity loans.
“Loan balances are smaller, but gain on sale and revenue are both typically higher,” Hsieh said. “Our cost to produce is significantly lower.”
The product shift helped increase loanDepot’s pull-through weighted gain-on-sale margin to 345 basis points from 271 basis points in the first quarter and 330 basis points a year earlier. Origination income rose 60% quarter over quarter to $52.2 million.
Pull-through weighted lock volume fell 20% to $6.63 billion, but CFO David Hayes said the decline largely reflected the home equity mix. HELOC production is included in closed-loan volume but does not carry the traditional interest-rate lock used to calculate pull-through weighted lock volume.
For Loan Originators, the strategy illustrates why funded units and dollar volume may increasingly move in different directions as lenders add home equity products. Smaller loans can contribute less volume while delivering stronger margins and more production opportunities.
Purchase Production Climbs
Purchase mortgages represented 57% of second-quarter originations, up from 41% in the first quarter. Based on the company’s reported totals, that equates to approximately $4.56 billion in purchase production, compared with roughly $3.14 billion in the previous quarter.
Hsieh said purchase volume increased 44% sequentially, while loanDepot’s purchase-market share rose 33%.
The company has been adding retail branches and builder relationships to create more controlled purchase pipelines. Hsieh said loanDepot believes it is the largest independent mortgage company financing new-home construction for builders.
Earlier this year, loanDepot launched Olive Branch Home Loans with Texas homebuilder Betenbough Companies. The venture was the first deployment of the company’s expanded partnership model, which allows builders and affiliated businesses to operate branded mortgage platforms backed by loanDepot’s technology, capital-markets capabilities, and fulfillment operation.
The model gives loanDepot a way to reach buyers within the builder’s ecosystem rather than competing for the borrower after a home has already been selected.
For independent originators, the underlying competitive message is that more purchase production is being captured through builder affiliations, joint ventures, centrally generated leads, and other relationships that put the lender closer to the borrower at the beginning of the transaction.
loanDepot Adds Originators — And Raises Their Output
loanDepot increased its net Loan Originator count by 18% over the past year. The additions included newly trained originators graduating from its ACES program in consumer direct and experienced originators with existing relationships in its retail channel.
The company also reported an 18% increase in funded units per originator, a 50% improvement in marketing lead-to-funded-loan conversion, and a 34% reduction in marketing cost per funding. Total cost per funded loan declined 12% from a year earlier.
Those figures reveal a strategy that extends beyond recruiting. loanDepot is trying to increase production from each originator by controlling lead generation, training, technology, and product allocation.
That model is particularly important to its home equity push. Hsieh said loanDepot centrally generates leads and directs them to its Loan Originators, allowing the company to shift sales capacity toward products showing the strongest demand.
The approach may be harder for referral-dependent originators to reproduce. It also shows why loanDepot views consumer acquisition and lead distribution — not simply headcount — as central to its effort to reach sustainable profitability.
Wholesale Is Ahead Of Plan, But Deliberately Small
loanDepot’s relaunched wholesale channel is performing ahead of management’s schedule, although the company declined to provide production figures for the business.
“Wholesale business is a complement for us,” Hsieh said in response to an analyst’s question. “It is never slated to be a major contributor.”
He said the business was “doing quite well” and had received a positive response from the broker community.
The remarks provide the company’s first substantive update since loanDepot returned to wholesale lending in March, nearly four years after exiting the channel during the 2022 mortgage downturn.
For brokers, “ahead of schedule” should not be confused with scale. Management disclosed neither wholesale volume nor its share of loanDepot’s $7.99 billion in quarterly production. Hsieh’s characterization suggests the channel is intended to widen distribution and put the company’s technology, capital, and fulfillment capacity to additional use, while its larger growth investments remain concentrated in consumer direct, retail, home equity, and builder-affiliated lending.
The strategy nevertheless makes loanDepot a more direct competitor for broker-generated loans. The company now operates across consumer direct, distributed retail, joint ventures and partnership lending, servicing, and wholesale, allowing it to shift resources among channels as rates and borrower demand change.
Servicing Provides Revenue — And Needed Liquidity
Servicing fee income increased to $112 million from $108.7 million in the first quarter. loanDepot ended June with a $123.4 billion servicing portfolio covering approximately 465,000 loans, up from $120.7 billion and roughly 456,000 loans at the end of March.
The company’s preliminary organic consumer-direct refinance recapture rate declined to 68% from 73%. Hsieh said rising rates likely made refinancing less attractive during the quarter and expects the home equity platform to support recapture as it develops.
After the quarter ended, loanDepot agreed to sell approximately $10 billion in mortgage servicing rights. Management expects the transaction to settle later this year but did not disclose the anticipated proceeds.
The sale takes on added significance because loanDepot’s cash and cash equivalents declined by $48.3 million during the quarter to $229.1 million. Management repeatedly emphasized liquidity and its upcoming bond maturities during the call.
loanDepot repurchased $16 million of senior notes during the quarter at an average 90% of par and another $27 million through July 30 at an average 86% of par. Hayes said addressing bond maturities remained a high priority and that the company was evaluating options with outside advisers.
The MSR transaction also follows an activist investor’s recent call for loanDepot to explore a sale. The investor argued that the company’s servicing operation and other assets could command greater value within a larger organization. Management did not address that campaign during the earnings call.
Guidance Points To Margin Growth, Not A Production Surge
loanDepot expects third-quarter origination volume between $6.25 billion and $8.25 billion. The $7.25 billion midpoint is below its second-quarter production of $7.99 billion.
Pull-through weighted lock volume is projected between $5.25 billion and $7.25 billion. Management expects pull-through weighted gain-on-sale margin to increase to between 360 and 390 basis points as home equity represents a greater share of the product mix.
The outlook suggests loanDepot’s next step toward profitability is expected to come from production economics rather than a major increase in overall mortgage volume.
Expenses are expected to decline somewhat, and the company has begun implementing approximately $12 million in annualized productivity measures.
Hsieh provided one of the clearest indications of the company’s progress when discussing monthly performance. Excluding fair-value effects, he said loanDepot reduced its monthly loss from approximately $15 million in April to $2 million in June.
That puts the company within reach of monthly operating break-even if the trend continues. But loanDepot still needs to prove that the improvement can be sustained while it invests in home equity, retail branches, builder partnerships, technology, and wholesale.
For Loan Originators, the quarter points to a broader competitive shift. loanDepot is not waiting for first-mortgage demand to recover. It is using centrally generated leads, smaller-balance home equity loans, builder relationships, retail expansion, and a supporting wholesale channel to keep its sales and fulfillment platform productive.
The strategy improved margins and sharply narrowed the company’s loss in the second quarter. It has not yet produced an adjusted profit.
