Automating Verifications Allows loanDepot To OK Some Mortgages In Minutes

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Fully digital verifications are allowing loanDepot to automate the underwriting process for many of its customers, allowing the mortgage lender to issue conditional loan approvals to those who qualify for the process in minutes, the company said Tuesday.

LoanDepot said it’s been beta-testing its fully automated melloNow underwriting engine for the last several quarters, using it to analyze credit reports, detect fraud, and validate income and employment data.

Jeff Walsh

“We’re now able to provide our customers with the certainty and peace of mind that comes with quick loan approval, bypassing the delays and friction points typical of traditional loan evaluation and approval processes while improving overall loan quality,” LDI Mortgage President Jeff Walsh said in a statement. “Today’s consumers expect a fast and seamless digital experience, and with melloNow, we are delivering it.”

Rival Better Mortgage kicked off the year by launching a “One Day Mortgage” product, and within three months of its January launch said 40 percent of applicants were qualifying for the streamlined process.

Rocket Mortgage introduced a program called “overnight underwrite” in 2021, guaranteeing that eligible borrowers who submit the paperwork for a purchase application by 7 p.m. receive a verified approval by morning.

LoanDepot has long had a focus on technology, launching its end-to-end digital lending platform, mello, in 2017 after investing 18 months and $80 million in the project.

But more recently, rising mortgage rates have all but wiped out the company’s profitable refinancing business, and the company has struggled to grow its share of the purchase loan business even as it shed thousands of workers.

LoanDepot’s pivot to purchase loans

Source: loanDepot investor reports.

Based in Irvine, California, loanDepot is licensed in all 50 states, sponsoring 1,625 mortgage loan originators working out of 247 branch locations, according to records maintained by the Nationwide Mortgage Licensing System and Registry.

In announcing a $34 million third-quarter loss on Nov. 7, loanDepot said it continues to slash costs and rebuild its business as outlined in last year’s “Vision 2025” plan.

At $4.34 billion, loanDepot’s third quarter purchase mortgage originations were down 5 percent from Q2 and 37 percent from a year ago. Company executives said they expect Q4 mortgage originations to total between $4 billion and $6 billion.

LoanDepot has shed about 60 percent of its workforce since the start of 2022, employing 4,532 workers as of Sept. 30. Chief Financial Officer David Hayes told investment analysts last month that more layoffs were in store, but on a smaller scale, as part of plans to trim another $120 million in annual expenses.

In an initiative aimed at boosting purchase loan production, in October, LoanDepot began offering second mortgages to help would-be homebuyers who can’t come up with the 3.5 percent minimum down payment required to qualify for FHA purchase mortgages.

Last month, loanDepot announced it had joined EXIT Realty Corp. International’s strategic partner network, giving EXIT agents “full access to the expertise of loanDepot’s local market loan consultants to support customers’ homeownership goals.”

Under the leadership of founder Anthony Hsieh, who relinquished his CEO responsibilities to CoreLogic veteran Frank Martell last year, loanDepot had entered into a number of joint ventures with homebuilders.

LoanDepot’s joint ventures include LGI Mortgage Solutions (with LGI Homes), Henlopen Mortgage (with Schell Brothers), BRP Mortgage (with Brookfield Residential), MTH Mortgage (Meritage Homes), MSC Mortgage (with Michael Saunders & Company), TRI Pointe Connect (with Tri Pointe Homes) and Day 1 Mortgage (with Century 21 Redwood Realty). Last year, loanDepot announced a new joint venture, NHC Mortgage, with homebuilder National HomeCorp.

While new home sales have been a bright spot in many housing markets this year, joint ventures tend to be relatively small, regional operations. TRI Pointe Connect, the affiliated mortgage company for Tri Pointe Homes, sponsors 65 mortgage loan originators working out of 16 branch offices, according to the Nationwide Mortgage Licensing System and Registry.

LoanDepot announced the formation of Farm Bureau Mortgage, a joint venture with Farm Bureau Bank, in 2021. According to the Nationwide Mortgage Licensing System and Registry, Farm Bureau Mortgage sponsors three mortgage loan originators and employs two.

In its most recent quarterly report to investors, loanDepot said its share of the net earnings of its joint ventures totaled $15.1 million for the first nine months of 2023, up 40 percent from the same point in 2022.

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