Nonbank lender loanDepot is making what appears to be the largest series of cuts in the mortgage industry this year, eliminating 4,800 jobs over the course of 2022.
Overall, the California-based lender is implementing a program dubbed “Vision 2025” to save between $375 million and $400 million on an annual basis, including headcount reduction, process optimizations, real estate consolidation and reduction in marketing and third-party spending.
The company will go from 11,300 employees at the end of 2021 to 6,500 by the end of 2022, loanDepot said in a filing with the Securities and Exchange Commission on Monday. The workforce reduction will result in the lender paying $3.5 million to $4.5 million in severance and benefits in the second quarter and $25 million to $28 million in the year’s second half.
As of July 12, the company had 8,500 employees.
“In 2020 and 2021, like other mortgage companies, we scaled our organization to meet the demands of unprecedented mortgage volumes, especially refinancing transactions,” Frank Martell, president and CEO, said in a statement. “After two years of record-breaking volumes, the market has contracted sharply and abruptly in 2022. We are taking decisive action to meet this challenge head on.”
The company reported a net loss of $91.3 million in the first quarter, compared to a net income of $14.7 million from the previous quarter. In 2021, loanDepot made $427.9 million in profit. With the cost reduction, the company continues to target a return to run-rate operating profitability exiting 2022.
“We anticipate continued challenging market conditions, with mortgage originations projected to decline by roughly half in 2022 from 2021, including an accelerated decline in the second half of 2022, followed by a further decline in 2023,” Patrick Flanagan, chief financial officer, said in a statement.
LoanDepot expects to save $2 million of real estate office costs and $2.5 million to $3 million outside service expenses in the second quarter. For the year’s second half, it says the moves will save between $2.5 million and $3.5 million in real estate and $9 million in outside service costs.
The company has $1 billion in cash, according to SEC filings.
LoanDepot is also making some leadership changes. Jeff Walsh, mortgage president, will lead mortgage origination functions. Zeenat Sidi, digital products and services president, will be responsible for digital lending and mortgage-adjacent products and services. Meanwhile, Dan Binowitz, the managing director of operations and servicing, will lead loan fulfillment and servicing functions.
The company’s stock was trading at $1.50 around 9:45 am on July 12, up 4.35% from the previous day.
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