loanDepot 2026 Q3 Earnings Call

Please go ahead. Good morning, everyone, and thank you for joining our third quarter 2026 earnings call.

Before we begin, I would like to remind everyone that this conference call may include forward-looking statements regarding the company's operating and financial performance in future periods. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued earlier today, which is available on our website at investors.loandepot.com. Our presentation today contains certain non-GAAP financial measures that we believe provide additional insight into analyzing and benchmarking the performance and value of our business, and facilitating company-to-company operating performance comparisons. For more details on these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP measures, please refer to today's earnings release. A webcast and a transcript of this call will be posted on our website after the conclusion of this call.

On today's call, we have loanDepot's Founder and Chief Executive Officer, Anthony Hsieh, and Chief Financial Officer, David Hayes. They will provide an overview of our quarter, a review of our operating results, and our outlook. We are also joined by Chief Investment Officer, Jeff DerGurahian, and Chief Digital Officer, Dominick Marchetti, to help answer your questions after our prepared remarks. With that, I'll turn things over to Anthony to get us started.

Anthony? Thank you, Gerhard. I appreciate everyone joining us on the call today.

Over the past year, we have remained disciplined in executing our turnaround strategy, which has focused on four priorities: expanding product diversification, increasing market share in attractive origination segments, driving productivity improvements through technology and automation, and strengthening our overall financial profile. We believe the progress we made this quarter demonstrates that these initiatives are working, despite a significantly more challenging mortgage market that continued to pressure housing activity and industry origination volumes throughout much of 2026. In the third quarter, our team remained focused on executing the strategic initiatives we put in place to strengthen our business across market cycles. As a result, we delivered meaningful improvements across many of our key operating metrics and continued to gain market share in important areas of the mortgage market.

Periods like the current market environment are when competitive advantages begin to reveal themselves. Despite higher rates and lower industry volumes, we grew originations, increased purchase market share, expanded our home equity business, and improved operating efficiency compared to a year ago. Since my return last year, we increased origination volume by 8%, grew unit volume by 33%, increased purchase volume by 10%, improved return on marketing by 14%, and reduced our cost to produce by 16%. These results reflect the success of our ongoing efforts to diversify revenue sources, increase operating efficiency, and improve the scalability of our platform. One area where we continue to seek significant opportunity is home equity lending. Our expansion into home equity lending is diversifying loanDepot beyond traditional rate-driven refinance activity, while allowing us to better serve homeowners seeking liquidity without giving up historically low first mortgage rates.

Combined with our growing purchase business, these products allow us to serve customers across a broader range of housing and interest rate environments. It also demonstrates the power of our direct-to-consumer channel, which we believe is one of only two scaled, branded fintech model direct-to-consumer mortgage platforms in the marketplace. Our success in home equity reinforces that loanDepot is more than a mortgage originator. We have built a marketing, sales, and distribution platform capable of delivering multiple products to customers throughout the homeownership lifecycle. As a result of our investments in this business, home equity lending has become an increasingly important contributor to our overall production platform. Based on our analysis of publicly available industry data and internal estimates, we believe loanDepot ranked among the top three non-bank home equity lenders during the third quarter based on volume. We accomplished this in less than a year.

We believe home equity remains a durable long-term opportunity, even if interest rates decline and refinance activity returns. Millions of homeowners with ultra-low pandemic-era mortgage rates are unlikely to benefit from a traditional refinance and may continue to view home equity products as the preferred way to access liquidity. Importantly, we view home equity as a permanent strategic growth category that complements rather than replaces our existing mortgage platform. It expands customer relationships, creates additional revenue opportunities, and allows us to engage borrowers regardless of where they are in the interest rate cycle. At the same time, we remain deeply committed to the purchase market. Purchase mortgages continue to represent a critical long-term growth strategy for loanDepot, and we have taken deliberate actions throughout the year to strengthen our position. We added loan officers and expanded partnerships across both our retail and joint venture channels.

These investments contributed to a 9% year-over-year increase in our purchase mortgage market share during the quarter and further strengthened our presence in local communities nationwide. We are also seeing the benefits of our continued investment in technology and process improvement. Our technology investments are delivering measurable operating leverage by automating routine workflows, reducing cycle times, improving customer experience, and enabling loanDepot to focus on higher value activities. These include expanded use of automated underwriting capabilities, digital closing technologies, and workflow automation. The combination of greater scale, improved productivity, and disciplined expense management continues to enhance operating leverage throughout the organization. With that, let me turn the call over to Dave to review our financial results in greater detail.

Dave. Thanks, Anthony, and good morning, everyone.

The third quarter reflected continued progress against our strategic priorities of improving operating efficiency, expanding revenue opportunities, and strengthening our path towards sustainable profitability despite persistent pressure on industry mortgage volumes driven by mortgage rates topping 7%. We report an adjusted net loss of $31 million in the third quarter compared to an adjusted net loss of $29 million in the second quarter, due primarily to lower adjusted revenue, offset somewhat by lower expenses. Importantly, adjusted net revenue less total expenses improved sequentially, reflecting continued progress in operating performance despite lower volumes. During the third quarter, our loan origination volume was $7.0 billion for the quarter, a decrease of 12% from the prior quarter's volume of $8.0 billion. This was within the guidance we issued of between $6.25 billion and $8.25 billion.

The decline in dollar volume reflects the continued shift toward our 5x5 Home Loan product, which carried a smaller average loan balance than traditional first lien mortgages. On a unit basis, we increased volume 7% during the quarter, reflecting the success of the product and the investment in our loan officers. Pull-through weighted rate lock volume was $5.6 billion, which represented a 15% decrease from the prior quarter's volume of $6.6 billion. As a reminder, pull-through weighted rate lock volume is down primarily due to the product mix shift to HELOC, which does not record a lock. Pull-through weighted rate lock volume also came in within the guidance we issued last quarter of $5.25 billion-$7.25 billion and contributed to adjusted total revenue of $302 million, which compared to $307 million in the second quarter.

Our pull-through weighted gain on sale margin for the third quarter came in at 399 basis points, exceeding our guidance range of 360 to 390 basis points, and up compared to 345 basis points in the prior quarter. Our higher gain on sale margin primarily reflected the product mix shift. The higher rate environment continued to suppress demand for first trust deed loans, but demand for higher margin 5x5 Home Loan HELOC products increased. Their contribution can be seen in the 24% increase in origination income from the prior quarter. Servicing fee income increased from $112 million in the second quarter to $113 million in the third quarter, primarily due to an increase in collections and higher interest credits on escrow funds. We hedge our servicing portfolio, so we do not record the full impact of the changes in fair value in the results of our operations.