loanDepot job cuts – what’s behind the ‘rightsizing’ effort?

“Similar to most mortgage originators, loanDepot scaled up its operations to support record 2020 and 2021 volumes,” Martell continued. “Like other market participants, loanDepot is now reducing its costs in the first half of this year to address market conditions as they have evolved. The launch of the Vision 2025 expands the scope and scale of our transformational efforts and cost reduction programs. In the coming months, we expect to take aggressive action to improve profitability and position the company to gain greater share of purchase transactions. We will right-size the business, including headcount reductions, the use of normal attrition, business process optimization, lower marketing and third-party spending, as well as real estate consolidation. The combination of cost management efforts taken in the first half of this year, plus our Vision 2025 plan, is expected to generate an annualized $375 million to $400 million in run rate expense savings by the end of 2022.”

He reiterated the overarching point of Vision 2025: “I want to emphasize that Vision 2025 is far more than a cost cutting exercise. It’s an important next step in our strategic evolution.”

The cuts come after loanDepot went public in February 2021, during which time it raised $54 million in gross proceeds in an IPO that priced at $14 a share. Following the firm’s public debut with a stock symbol of LDI, Wall Street analysts anticipated the cutbacks. “LDI has seen a sharp market fall-off so far in 2022 and needs to sharply reduce headcount and cut costs to properly scale the company to reduced market activity,” analysts at Seeking Alpha, a crowd-sourced content service for financial markets, wrote on July 7.

The company telegraphed its digital push – now a prong of its ambitious Vision 2025 plan – during a March 2022 interview with MPA. Sidi – tasked with oversight of all digital lending and mortgage-adjacent products and services under the Vision 2025 revamping as president of LDI digital products and services – detailed creation of a then-new business unit called mello, which was meant to develop digital-first products and services to complement its core mortgage origination platform. At the time of mello’s creation, Sidi was appointed as the unit’s president and COO.

“The creation of mello as its own operating unit is really the next evolution in our journey as a company,” Sidi told MPA at the time, adding that “loanDepot, over the last 12 years, has really built strength in serving customers in all aspects of their homeownership journey. This move is designed to build on that foundation and recognize that we want to build on that trusted relationship with customers and offer them products and services that extend beyond the homeownership journey and really build customers for life.”