loanDepot hit with $91.3 million net loss

“Our results reflected the sharp and rapid increase in market interest rates, which led to significantly lower profit margins during the latter half of the quarter,” loanDepot founder and executive chairman Anthony Hsieh explained. “While we made progress toward our goal of reducing the expense base to align with earlier expectations, our volumes have continued to decline, and expense reductions have not kept pace with the rapidly changing environment.”

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Unlike its rival, United Wholesale Mortgage, loanDepot has no mortgage servicing markups to fall back on. UWM posted a $172 million increase in the asset value of its MSRs during the first quarter. loanDepot, on the other hand, saw a net loss of $68.4 million in the fair value of its servicing rights, bringing its MSR portfolio to $153.4 billion of unpaid principal balance.

Frank Martell, who was recently brought in to lead the nonbank as president and CEO, said he recognizes that there are “short-term [market] challenges” that will have “adverse impacts” on the company’s profitability in the near term.

loanDepot expects its origination volume to slide further in the second quarter, landing somewhere between $13 billion and $18 billion. The lender forecasted its Q2 gain on sale margin to hover between 160 bps and 210 bps.