loanDepot (NYSE:LDI) reported a wider adjusted net loss for the third quarter of 2026 as higher mortgage rates weighed on lending volumes, while growth in home equity loans helped boost margins and the number of loans originated.
The mortgage lender posted an adjusted net loss of $31 million, compared with $29 million in the second quarter. Adjusted total revenue fell to $302 million from $307 million, while total expenses declined by $8 million, Chief Financial Officer David Hayes said on the company’s earnings call.
Home Equity Loans Lift Units and Margins
Third-quarter originations totaled $7.0 billion, down 12% from $8.0 billion in the second quarter but within the company’s guidance range. Hayes attributed the decline in dollar volume to a shift toward the company’s 5×5 Home Loan product, a home equity line of credit, or HELOC, with a smaller average balance than traditional first-lien mortgages.
On a unit basis, originations increased 7% from the prior quarter. The shift toward higher-margin home equity loans also helped lift the pull-through weighted gain-on-sale margin to 399 basis points from 345 basis points in the second quarter, above the company’s guidance range of 360 to 390 basis points. Origination income increased 24% sequentially.
Pull-through weighted rate lock volume fell 15% to $5.6 billion, which Hayes said primarily reflected the product mix shift because HELOCs do not record a lock. The result was within loanDepot’s guidance range.
Hsieh said the company believes it ranked among the top three nonbank home equity lenders by volume in the third quarter, based on its analysis of public industry data and internal estimates. He described home equity lending as a permanent growth category that can serve homeowners seeking cash without refinancing low-rate first mortgages.
The company also increased its purchase mortgage market share by 9% year over year during the quarter, Hsieh said, citing additions of loan officers and expanded partnerships in its retail and joint venture channels.
Fourth-Quarter Outlook Reflects Seasonal Pressure
For the fourth quarter, loanDepot expects originations of $4.5 billion to $6.5 billion and pull-through weighted lock volume of $3.25 billion to $5.25 billion. The outlook reflects a seasonal decline in purchase activity and continued pressure from high interest rates, Hayes said.
The company expects a pull-through weighted gain-on-sale margin of 425 to 465 basis points and a gain-on-sale margin of 315 to 355 basis points. Total expenses are expected to decline somewhat, primarily because of lower volume-related costs and productivity initiatives.
Hsieh said higher rates late in the third quarter contributed to an unexpected decline in purchase lending, with some homebuyers canceling contracts. He also said the company was seeing competitors close locations, seek buyers or reduce staffing as mortgage volumes shrink.
Debt Refinancing and Servicing Sales
loanDepot ended the quarter with $214 million in cash, down $15 million from the second quarter. During the period, it repurchased $87 million of senior notes at an average price of 88% of par. Those repurchases and an agency mortgage servicing rights sale contributed to a $114 million reduction in net debt obligations, Hayes said.
The company sold approximately $10 billion of agency mortgage servicing rights during the quarter and another $9 billion of government mortgage servicing rights in October. Hayes said servicing fee income, which rose to $113 million in the third quarter from $112 million in the second, is expected to decline as those transactions settle.
Asked whether upcoming debt maturities could be refinanced without issuing equity or selling more servicing rights, Hayes declined to provide specifics. He said loanDepot was working with advisers and pursuing several alternatives to refinance or extend its debt, with an update hoped for in the near term.
On credit quality, Hsieh said he had not seen significant deterioration and characterized borrowers’ credit scores and home equity positions as favorable.
About loanDepot (NYSE:LDI)
loanDepot, Inc is a U.S.-based residential mortgage lender that originates home loans through digital, direct-to-consumer, retail, and partner channels. The company serves homebuyers and homeowners seeking financing for home purchases, mortgage refinancing, and other residential lending needs.
The company offers conventional, government-backed, and jumbo mortgage products, along with home equity lending and related technology-enabled services. loanDepot has also developed digital tools designed to streamline applications, underwriting, closing, and the overall mortgage experience for borrowers and lending partners.
Founded in 2010 by Anthony Hsieh, loanDepot operates primarily in the United States.
