Real Estate

LoanDepot Forms Joint Venture With Farm Bureau Bank

As lenders pivot from refinancings to purchase loans, loanDepot builds on its track record of partnering with homebuilders.

Building on its track record in forming joint ventures with homebuilders, loanDepot is partnering with Farm Bureau Bank on a new joint venture that will provide home loans and mortgage refinancing to more than 5 million Farm Bureau members in 45 states.

Dominick Deorio

Dominick Deorio, loanDepot vice president of national account management, will serve as president of the joint venture, Farm Bureau Mortgage.

Based in Reno, Nevada, Farm Bureau Bank is a federally chartered savings bank that provides banking services in all but five states — Illinois, Michigan, Missouri, New York and Wyoming. Farm Bureau Bank had previously referred mortgage borrowers to Cornerstone Home Lending, which provided loans in 16 states.

William Hileman

“Farm Bureau Mortgage brings great value to our customers, and loanDepot’s technology ensures a seamless and straightforward transaction that will enable them to achieve their dreams of homeownership on their terms,” Farm Bureau Bank CEO William Hileman said in a statement.

LoanDepot’s technology was also cited as selling point by homebuilders who have formed three separate joint ventures with the lender since December. The joint ventures, with builders LGI Homes, Schell Brothers and Brookfield Residential, will each utilize loanDepot’s $80 million end-to-end digital lending platform, mello.

Anthony Hsieh | Photo credit: LoanDepot

In a May 3 investor call, loanDepot founder and CEO Anthony Hsieh said the mello platform allows the company “to scale our operations for changes in volume in a highly efficient manner,” alluding to forecasts that mortgage lenders will need to grow their purchase loan business if interest rates rise and refinancings taper off, as expected.

LoanDepot, which went public in February, had a banner year in 2020. Thanks in large part to growth in its refinancing business, loanDepot was the fourth biggest mortgage lender overall in 2020, but ranked seventh in purchase loan originations, according to preliminary Home Mortgage Disclosure Act data analyzed by iEmergent.

During the first three months of 2021, loanDepot reported that 81 percent of the $41.5 billion in mortgages it originated were refinancings. But Hsieh said that “when I am asked what my purchase-to-refi ratio is, I completely ignore that question,” because he considers purchase loans and mortgage refinancing to be separate “penetrations.”

With business coming from three channels — direct-to-consumer via, plus roughly 2,600 “in-market” retail loan officers and more than 200 partner loan officers as of March 31 — Hsieh said loanDepot is seeing “tremendous momentum” in its purchase loan business.

LoanDepot growing purchase loan and refinancing businesses

Source: LoanDepot quarterly report to investors.

LoanDepot’s purchase loan originations were up more than 80 percent during the first quarter of 2021 from a year ago, to $7.92 billion. But refinancing posted even more dramatic growth over the same period, rising 211 percent to $33.56 billion.

In addition to being the largest joint venture homebuilder lender, loanDepot plans to grow its purchase loan business through acquisitions, Hsieh told investors.

“We made the decision to be in this business back in 2012, when the world thought that we were nuts by going back into what you want to perhaps call brick-and-mortar, but it’s not,” Hsieh said. “These are in-market loan officers that are remote, that work and live in the communities that they serve. We have tremendous momentum here, with organic growth, and we have some conversations with potential meaningful acquisition targets.”

Jeff Walsh

Jeff Walsh, loanDepot’s chief revenue officer, said on the same investor call that, during the first three months of the year, the company has “really aggressively stepped up our hiring of what we call qualified in-market originators, which is specifically focused around the percentage of purchased business that they’ve historically done.”

In the first four months of the year, Walsh said, loanDepot has “added over $4 billion of net origination through organic hire of in-market originators.”

If those new hires help loanDepot grow its purchase loan business, that could translate into more refinancings down the road, with the company “recapturing” 72 percent of existing borrowers who refinance.

For now, joint ventures represent a small, but growing, portion of loanDepot’s net earnings, rising from $1.3 million during the first quarter of 2020 to $2.2 million in the first three months of 2021.

LoanDepot net earnings from joint ventures

Source: LoanDepot regulatory filings.

In its annual report to investors, loanDepot said net earnings from joint ventures fall 19 percent in 2020, to $10.4 million, following the sale and wind down of two joint ventures in 2019.

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