National mortgage funder loanDepot announced plans to lay off thousands of workers in hopes of returning to profitability by the end of 2022 as part of a new strategic plan unveiled to investors earlier this month.
The three-year strategic plan, which the company is calling “Vision 2025,” is “a comprehensive program focused on addressing current and anticipated mortgage market conditions,” according to loanDepot President and CEO Frank Martell. It calls for the company to save between $375 million and $400 million on an annualized basis, primarily through the elimination of approximately 2,000 jobs.
According to company information, loanDepot began 2022 with approximately 11,300 employees, had 8,500 employees as of June 30, and plans to reduce that number to 6,500 by the end of the year.
“In 2020 and 2021, like other mortgage companies, we scaled our organization to meet the demands of unprecedented mortgage volumes, especially refinancing transactions,” Martell said. “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.”
In May, the company suspended dividends after reporting a first-quarter loss of $91 million. In June, the company laid off an undisclosed number of employees.
“We are executing our Vision 2025 plan on a foundation of a strong balance sheet and ample liquidity, with a current cash position of approximately $1 billion,” loanDepot CFO Patrick Flanagan said. “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.”
As part of the Vision 2025 plan, loanDepot is increasing its focus on purchase transactions while better serving increasingly diverse communities across the country. Company officials said that as loanDepot pivots to a more “purpose-based” lending organization, it expects to increase its focus on addressing persistent gaps in equitable housing through initiatives that expand access to credit, such as Special Purpose Credit Programs.
“I do want to make it clear that this does not mean we plan to lower our credit standards or employ practices that adversely impacted our industry in the past,” Martell said in a call to investors earlier this month. “We intend to expand our participation in programs sponsored by the GSEs and other government entities that promote these goals. At the same time, we will work to continue growing our existing geographic reach, particularly in our retail channel, to meet the needs of our more underserved borrowers.”