LoanDepot is shuttering its wholesale mortgage business, the California-based lender revealed as part of its second-quarter 2022 financial results.
The closing is the latest expense-shedding measure by LoanDepot, which a few weeks ago shared a “Vision 2025” plan launched to streamline its business model and return to profitability by the end of 2022. Lower origination volumes held LoanDepot’s revenues to $308.6 million during the second quarter, down from $503.3 million in the previous quarter and down from $780 million in Q2 2021. But the company’s total expenses of $560.6 million in Q2 2022 also declined (from $606.3 million in Q1 2022 and from $749.4 million in Q2 2021).
Still, LoanDepot’s net loss of $223.8 million last quarter was more than double the financial setback ($91.3 million) it sustained in the previous three-month period.
LoanDepot president and CEO Frank Martell said that the workforce trimming outlined in the Vision 2025 plan was already underway.
“We have already made significant progress by consolidating management spans to create operating efficiencies and reducing headcount from approximately 11,300 at year-end 2021, to approximately 8,500 at the end of June 2022, to approximately 7,400 at the beginning of August 2022,” he said. “We are accelerating our execution of the plan and expect to end the third quarter of 2022 with headcount below our previously stated year-end goal of 6,500.
“In addition, we are exiting our wholesale channel, consistent with our strategy of becoming a more purpose-driven organization with direct customer engagement throughout the entire lending process,” he added. “Our exit from wholesale will also enable us to direct resources to other origination channels, reduce operational complexities and increase margins.”
A statement from LoanDepot called the exit a “strategic decision.” Despite the losses and cost-cutting measures, the company maintains a stout balance sheet, with unrestricted cash and equivalents at $954.9 million at the end of June.
“As we move into the second half of the year, we are confident in the growing momentum of our Vision 2025 plan and we look forward to sharing our progress in the coming months and beyond,” Martell said.