LoanDepot shed more than half of its employees in 2022, an earnings report filed with the Securities and Exchange Commission Thursday revealed. Rocket Mortgage and United Wholesale Mortgage took similar measures in reaction to market volatility and low origination volume last year.
The Foothill Ranch, California-based megalender let 6,113 employees go, trimming its headcount from 11,307 to 5,194 as of Dec. 31, 2022.
Because of the “aggressive right-sizing,” the lender incurred $18.6 million in severance payment expenses.
The reduction of 54.1% employees was part of loanDepot’s restructuring blueprint announced in July 2022. The plan dubbed “Vision 2025” aims to restructure and downsize operations, while increasing the company’s focus on servicing the purchase market, particularly first-time homebuyers.
In 2022, the lender outlined its goal of shrinking non-volume related expenses by an annualized $375 million to $400 million, primarily achieved through headcount reduction, attrition, business process optimization and reducing marketing and third party spending.
By the fourth quarter 2022, the company’s actual non-volume related cost reduction totaled an annualized $519 million, the SEC filing said.
Granularly, from the third to the fourth quarter of 2022, the lender exceeded its reduction goals by more than 25%, cutting expenses by $91.4 million. But despite going above and beyond to decrease spending, layoffs at the company are likely to continue.
What is also likely to continue – at least in 2023 – is the lack of profits, said Frank Martell, CEO of loanDepot, during the company’s quarterly earnings call in March. But he added that he believes the company will be able to “grow out of the challenging market.”
In its fourth quarter earnings, loanDepot reported a net loss of $156.8 million, more than the $137.5 million loss recorded in the third quarter.
Overall, loanDepot’s total revenue fell by more than half in 2022 to $1.3 billion, a decline from $3.7 billion in 2021 as a result of “dramatic volatility” that impacted virtually all parts of the housing ecosystem.