“This is a fundamental change in the landscape of mortgage lending”

A permanent disruption of the mortgage space 

In light of less volume due to fewer loan originations, many mortgage lenders have had to lay off thousands of workers since 2022. The current market is beset by higher interest rates, ever-increasing property values and stubborn inflation, which have further exacerbated lenders’ bottom lines. Adding to the strange mix: An untold number of homeowners who secured historically low mortgage rates in the 2%-3% during the spread of COVID-19 are now in ‘golden handcuffs’, unable or unwilling to relinquish rates by moving.

“This is not just a cycle,” Hanson reiterated. “This is a permanent disruption of the mortgage space. Companies like Rocket [TPO] and UWM [United Wholesale Mortgage] – a lot of companies are looking at those kinds of models to see if that makes sense.” 

Hanson noted that loanDepot itself has had to dramatically adjust to the times, chiefly by exiting the wholesale channel altogether. In the process, the company laid off some 3,000 workers as it sought to readjust to the altered landscape.

“We pulled out of wholesale,” Hanson said. “We’re out. A lot of companies just got out. But retail, direct lending and joint ventures are the three platforms we’re going to maintain and continue to grow, and we are investing technology money, investment money, to stay. We may never get into the wholesale space in the future.”

Aberrations have been thrown into the works

Having surveyed the fractured landscape, he wonders what could have been. “I look at what’s happening with interest rates. I often wonder if somebody very smart years ago had said the lowest rate the US is going to have is 4% and the highest rate the US is going to have is 6% and we will never get below or above it – I wonder if we would have been better off then, than if we had gone to 0% to 8% to 13% – that really ravages our business.”