LoanDepot Prepares for Mortgage Industry Rebound

LoanDepot is investing in technology as it prepares for a rebound in industrywide mortgage origination volumes.

While the provider of home lending solutions reduced its expenses by 36% in 2023, right-sizing itself for today’s lower market volumes, it also invested in platforms and systems to boost productivity, loanDepot President and CEO Frank Martell said Tuesday (March 12) during the company’s quarterly earnings call.

“Looking ahead, we expect higher levels of automation and the benefit of productivity programs will support expanded operating leverage and fund important reinvestment in our servicing and origination platforms,” Martell said during the call.

Investing in critical business operating platforms and processes is a key element of the company’s plan to return to profitability, Martell said. These platform and process improvements will continue to benefit the company after the market recovers.

As an example of the tangible benefits the company has already garnered from these investments, Martell pointed to loanDepot’s new digital underwriting engine, melloNow, which was introduced in December 2023 after several quarters of beta testing.

“MelloNow utilizes a digital verification process that swiftly analyzes credit reports, detects fraud, validates income and employment data at the point of sale, and delivers a conditional loan approval to customers in minutes, rather than hours or days,” Martell said during the call.

The company is making these investments in technology at a time when its revenues were down 22% for the full year of 2023, according to a Tuesday earnings release.

During the earnings call, Martell attributed the drop to lower market volumes and loanDepot’s exit from the wholesale market in the middle of 2022.

Looking ahead, mortgage origination unit volumes are expected to increase 17% in 2024, Martell said, citing a forecast from the Mortgage Bankers Association.

“We’re entering 2024 with a more durable revenue model built around a strong multichannel origination business and an efficient, high-quality servicing platform that underpins our strategy to become a trusted partner for the entire home ownership journey,” Martell said.

During the call, Martell also addressed a January data breach in which an unauthorized third party acquired the personal information of 16.9 million loanDepot customers.

“The challenge presented by the increasing sophistication of the perpetrators of cyberattacks requires unprecedented focus and close coordination between the public and private sectors to ensure the private sector’s ability to prevent these types of intrusions in the future,” Martell said.