loanDepot’s net loss more than quadrupled in the third quarter to $28.7 million, from $6.6 million in the second quarter, as lower mortgage volume cut into revenue and the lender kept shifting toward home equity lines of credit. The Irvine, Calif.-based company reported the results on Nov. 9 in an earnings release filed with the Securities and Exchange Commission, and guided to a smaller fourth quarter.
Origination volume fell 12% from the prior quarter to $7.05 billion. The number of loans rose 7%, which the company attributed to “continued momentum” in its expansion of home equity lending. Total revenue fell 9% to $307.1 million. The company attributed the drop to “lower origination income resulting from reduced mortgage volumes.” Adjusted revenue slipped 2% to $302.2 million.
A smaller, higher-margin loanDepot mortgage business
The mix of what loanDepot originates moved sharply in a single quarter. Rate-and-term refinances, the loans borrowers take out to lower their rate, fell to $287.1 million from $782.5 million in the second quarter. Cash-out refinances eased to $2.43 billion from $2.65 billion. Purchase loans were $4.33 billion, or 61% of originations, up from 57% three months earlier. Jumbo volume rose to $931 million from $795 million, and the “other” category in the company’s product table grew to $1.63 billion from $1.12 billion.
That mix lifted pricing. The pull-through weighted gain-on-sale margin, the company’s preferred measure of what it earns on each loan it locks, rose 54 basis points to 3.99%, which loanDepot said was “driven by deliberate shift toward higher-margin home equity loans.” The plain gain-on-sale margin rose to 3.18% from 2.86%. Because HELOCs do not carry a rate lock, pull-through weighted lock volume fell 15% to $5.6 billion.
Founder and Chief Executive Officer Anthony Hsieh framed the quarter against a year earlier rather than three months earlier. Compared with the third quarter of 2025, he said, the company “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%.” The filing shows third-quarter 2025 originations of $6.53 billion.
Hsieh said home equity lending serves “homeowners seeking access to liquidity while preserving their low-rate first mortgages,” and that, based on the company’s analysis of public industry data and internal estimates, loanDepot believes it “ranked among the top three non-bank home equity lenders during the third quarter based on volume.” That ranking is the company’s own estimate. The demand he describes shows up in industry data: ICE’s latest Mortgage Monitor counted 2.4 million mortgage holders with $1 million or more in equity, and New York Fed figures earlier this year showed HELOC balances climbing as owners tapped equity without giving up low first-mortgage rates.
Weaker profits, a shrinking servicing book
The bottom line moved the other way. Adjusted net loss was $30.8 million, compared with $29.4 million in the second quarter and $2.7 million a year earlier. Adjusted EBITDA fell to $16.9 million from $20.3 million in the second quarter and $49.0 million in the third quarter of 2025. For the first nine months of 2026, the net loss totaled $90.3 million, compared with $74.7 million in the same period last year. Net loss attributable to loanDepot, Inc. shareholders was $19.7 million, or 8 cents a share, for the quarter.
Hedging also weighed. The company recorded a $74.1 million net loss on derivatives used to hedge its mortgage servicing rights, against $6.3 million in the second quarter, which absorbed most of an $80.4 million gain in the value of those rights from changed valuation assumptions. Including the runoff of loans that paid off, the net change in the fair value of servicing rights was a loss of $37.5 million, compared with $19.6 million in the second quarter.
The company also sold part of its servicing portfolio to raise cash and reduce debt. It completed the sale of about $10 billion of agency mortgage servicing rights during the quarter and sold another $9 billion of government servicing rights in October. The unpaid balance of the loans it services fell 6.2% from June to $115.8 billion across 441,209 loans. Loans 60 or more days delinquent rose to 2.0% of that balance, from 1.7% at the end of June and 1.5% a year earlier.
Its own consumer-direct refinance recapture rate, the share of refinancing customers it keeps, fell to a preliminary 52% from 68% in the second quarter.
Debt, cash and the fourth quarter
loanDepot repurchased $87 million of its senior notes at an average of 88% of face value. Chief Financial Officer David Hayes said the servicing sale and the note buybacks together cut net debt obligations by about $114 million. Debt obligations stood at $2.02 billion on Sept. 30, down from $2.13 billion at the end of June.
Cash and equivalents were $214.4 million, down from $229.1 million at midyear and $459.2 million a year earlier. Total equity was $310.9 million, against $433.3 million a year earlier. Funding capacity with warehouse lenders was $4.4 billion, of which $2.5 billion was available.
“We continue to actively work to address our upcoming debt maturities and are pursuing several financing alternatives to refinance or extend our debt with financing counterparties,” Hayes said. “Our focus is on extending our debt maturity profile.” The release does not say which maturities or what terms are under discussion.
The company raised the expected annualized savings from productivity programs, including automated underwriting and digital closings, to $25 million from $12 million.
For the fourth quarter, loanDepot projected origination volume of $4.5 billion to $6.5 billion, below the third quarter’s $7.05 billion even at the top of the range, and pull-through weighted lock volume of $3.25 billion to $5.25 billion. It expects the pull-through weighted gain-on-sale margin to rise again, to between 4.25% and 4.65%. On our reading, that pairing, fewer dollars of loans at a richer margin, is the HELOC strategy in a nutshell: the open question for the company is whether margin gains can outrun the volume decline while it refinances its debt.
Management scheduled a conference call for 1 p.m. ET on Nov. 9 to discuss the results. Coverage of other lenders’ third-quarter reports is on RealtyWire’s mortgage page.
