After growing into the nation’s fourth-largest mortgage lender largely by refinancing loans provided directly to consumers, loanDepot is looking to build its purchase loan business by forming more joint venture partnerships with homebuilders.

A joint venture with Woodlands, Texas-based LGI Homes announced Thursday is the third such deal inked by loanDepot in a little more than four months. The company announced joint ventures with Schell Brothers in March and Brookfield Residential in December.

Each of the joint ventures will utilize loanDepot’s end-to-end digital lending platform, mello, which the company introduced in 2017 after pouring $80 million into its development over 18 months.

Mike Snider

Mello provides a “seamless borrowing experience” ensuring that “our customers will enjoy an exceptional homebuying experience from first visit through loan close,” said LGI Homes Chief Operating Officer Mike Snider in a statement. Schell Brothers general counsel Jon Horner sounded a similar note in March, calling mello “the finest fintech platform in the industry.”

The newest joint venture, LGI Mortgage Solutions, will do business in 20 states and Washington, D.C.: Alabama, Arizona, California, Colorado, Florida, Georgia, Maryland, Minnesota, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Washington.

Dan Peña

“Having been a preferred lender with LGI Homes since 2015, we have been extremely impressed by each other’s ability to scale while still delivering industry-leading customer service,” said Dan Peña, executive vice president of national joint ventures for loanDepot, in a statement.

The joint venture loanDepot has formed with Schell Brothers is Henlopen Mortgage, while the partnership between loanDepot and Brookfield Residential is BRP Mortgage. In the past, loanDepot has formed joint ventures with several other builders and at least one real estate brokerage, including:

In 2017, loanDepot announced a partnership to provide a mello-powered mortgage option through iBuyer pioneer Offerpad. But it’s unclear if that partnership remains in effect.

In a regulatory filing associated with the company’s February initial public offering, loanDepot referenced an affiliate, Offerpad Home Loans LLC. And in an August, 2020 blog post, Offerpad said it had “worked to streamline the home loan process” through its mortgage loan arm, Offerpad Home Loans.

Although Offerpad partnered with loanDepot in 2017, the site does not currently offer users a home loan option.

But the website the blog post links to, OfferpadHomeLoans.com, is flagged by web browsers as not secure. A landing page on Offerpad’s website, Offerpad.com, says “Offerpad Home Loans” is “Coming Soon.”

Neither loanDepot or Offerpad responded to requests for comment about the status of the 2017 partnership agreement.

In its most recent annual report to investors, loanDepot noted that its share of net earnings from its joint ventures fell 19 percent in 2020, to $10.4 million, primarily due to the “sale and wind down” of two joint ventures in 2019.

LoanDepot net earnings from joint ventures

Source: LoanDepot regulatory filings.

That’s just a fraction of the $2 billion in net income loanDepot reported in 2020, after originating $100.8 billion in mortgages and generating $4.3 billion in revenue. Most of that business — 80 percent — comes through a retail strategy that employs digital marketing and more than 2,300 loan officers to reach consumers directly.

But according to preliminary Home Mortgage Disclosure Act data analyzed by iEmergent, only about 28 percent of loanDepot’s 2020 business was made up of purchase loans. So while loanDepot was the fourth biggest lender overall in 2020, it was the nation’s seventh largest provider of purchase loans.

With mortgage lenders expecting the refi boom to taper off, and purchase mortgage originations expected to hit a new all-time high this year, the scramble to connect with homebuyers is on.

For loanDepot, that means growing the 20 percent of its business that comes from referral partners like mortgage brokers, Realtors, and home builders. In addition to joint ventures, loanDepot operates a wholesale lending channel that gives mortgage brokers access to the same technology that powers the company’s retail strategy.

Email Matt Carter

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