Real Estate

January cyber attack weighs on Loan Depot Q1 results.

In addition to the $15 million in direct costs, Loan Depot says it lost an additional $22 million in revenue while the systems were down, resulting in a net loss of $72 million.

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LoanDepot executives say they are continuing to make progress in their quest to return to profitability, but a January cyberattack that exposed the personal information of 16.6 million people hurt the company’s first quarter. Eliminated speed.

Irvine, California-based mortgage lender reported on Tuesday That first-quarter revenue rose 7 percent to $223 million from a year ago, while expenses fell 2 percent to $308 million. Those numbers still added up to a $72 million net loss for the quarter, down 22 percent from a year ago.

The January security breach — which ransomware group ALPHV/Blackcat claimed responsibility for — weighed on first-quarter results.

LoanDepot said it incurred $15 million in direct costs to deal with the incident and estimated the company lost an additional $22 million in revenue while its systems were offline and customers were unable to receive rate locks. . The company had Reported earlier that many of its systems, including a customer portal for taking online loan applications, were offline for 10 days after the January 8 incident.

Frank Martel

The company was able to resume operations relatively quickly. However, the decrease in revenue and additional costs related to the incident impacted our first quarter financial results,” Loan Depot President and CEO Frank Martell said in a statement. Don’t expect any more obstacles.”

LoanDepot also disclosed that it incurred $1.1 million in legal expenses “related to the anticipated settlement of legacy litigation.” In March, the company announced that it had agreed to settle a 2022 appraisal bias lawsuit filed by a Baltimore couple who claimed their home was undervalued because they They were black.

Shares in Loan DepotThe stock, which has traded at a low of $1.14 and a high of $3.71 in the past year, was unchanged at $2.28 in after-hours trading after Tuesday’s earnings release.

Q1 mortgage originations are down 9% from a year ago.

At $4.56 billion, mortgage originations were down 15 percent from Q4 2023 and 9 percent from a year ago. As has been the case since rising mortgage rates took away the incentive for many homeowners to refinance, purchase loans accounted for the majority (72 percent) of Loan Depot’s business.

While Loan Depot made fewer loans, the margin on sales — a measure of profit when Loan Depot sells loans to investors — was 2.84 percent, up from 2.43 percent a year earlier.

LoanDepot said it expects business to pick up in Q2, with an expected origination of $5 billion to $7 billion.

David Hayes

“Despite recent increases in interest rates that have reduced industry forecasts for market volume in 2024, we remain aggressive in our plan to return to profitability,” CFO David Hayes said in a statement. are focused on.”

After cutting costs by $693 million last year as part of its “Vision 2025” strategy to return to profitability, Loan Depot has continued to reduce its payroll, albeit at a slower pace than in previous quarters.

LoanDepot ended the quarter with 4,188 employees, down from 4,250 on Dec. 31 and 4,630 on June 30. LoanDepot started 2022 with 11,300 employees.

“We exit 2023 with positive top-line momentum and continue to make progress toward our Vision 2025 goals, including forward-looking investments in our people, products and technology platforms,” ​​Martell said.

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