California-based mortgage lender loanDepot terminated a master repurchase agreement (MRA) with J.V.B. Financial Group, reducing its funding capacity amid sharply decreasing originations.
“The maximum amount available for financing of mortgage loans and mortgage-related securities available under the MRA and certain ancillary documents was $750 million,” according to loanDepot’s 8-K filing disclosed on Tuesday.
No borrowings are currently outstanding under the J.V.B. Financial Group, and loanDepot didn’t incur any termination penalties, the SEC filing said.
The MRA termination follows loanDepot’s renegotiation of an MRA it had with Jefferies Funding in late October, reducing the overall borrowing authority by about two-thirds to $1.1 billion.
loanDepot, which reported a $137.5 million loss in the third quarter due to shrinking loan origination volume, has been selling mortgage servicing rights and reducing employee headcount to boost liquidity levels.
loanDepot’s cash and cash equivalents increased by $1.1 billion in the third quarter from the previous quarter. This includes proceeds from MSR sales and loans sold in excess of loans originated during the quarter ended September 30, according to its most recent earnings release.
As a result, total funding capacity with its lending partners decreased by 42.4%, dropping from $9.9 billion on June 30 to $5.7 billion on September 30.
“The decrease of $4.2 billion was primarily due to our decision to reduce our borrowing capacity, reflecting lower volume expectations,” the company’s 8-K filing showed.
Available borrowing capacity was $3.1 billion on September 30.
loanDepot is the seventh largest mortgage lender based on rankings from Inside Mortgage Finance. It has been aggressively cutting expenses, particularly its workforce size. Total employee headcount nearly halved to about 6,100 at the end of September from 11,300 at year-end 2021. The California-based lender also exited the wholesale channel in the second quarter.
Going forward, loanDepot plans a pivot to diversifying its less interest rate-sensitive mortgage products.
Most recently, loanDepot launched its home equity line of credit (HELOC) product and formed a joint venture with National HomeCorp., a Georgia-based homebuilder specializing in affordable single-family homes, to create NHC Mortgage, with the goal to provide credit to underserved communities.