UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to _____

Commission File Number: 001-40003

loanDepot, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

85-3948939

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

~~26642 Towne Centre~~6561 Irvine Center Drive,

~~Foothill Ranch,~~Irvine,

California

~~92610~~92618

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (888) 337-6888

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol

Name of each exchange

on which registered

Class A Common Stock, $0.001 per value per share

LDI

The New York Stock Exchange

~~Securities registered pursuant to Section 12(g) of the Act: None~~

~~Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May ~~12, 2022, 62,612,079~~10, 2023, 76,789,232 shares of the registrant’s Class A common stock, par value $0.001 per share, were outstanding. No shares of registrant’s Class B common stock were outstanding, ~~152,073,819~~144,080,314 shares of registrant’s Class C common stock were outstanding and 97,026,671 shares of registrant’s Class D common stock were outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, including our Vision 2025 plan, technology developments, financing and investment plans, financial condition and liquidity, dividend policy, competitive position, industry and regulatory environment, potential growth opportunities and the effects of competition. Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” "seek," “should,” “will,” “would” or similar expressions and the negatives of those terms.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You should read this report with the understanding that our actual future results may be materially different from what we expect.

Important factors that could cause actual results to differ materially from our expectations are included in Part I, Item 2 “Management's Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A "Risk Factors" in this report as well as Part I, Item 1A “Risk Factors” and Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the Securities and Exchange Commission (“SEC”) on March ~~18, 2022.~~16, 2023.

Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

loanDepot, Inc.

Table of Contents




PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022			1
Consolidated Statements of Operations for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022			2
Consolidated Statements of Equity for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022			3
Consolidated Statements of Cash Flows for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022			4
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			3630
Item 3. Quantitative and Qualitative Disclosures About Market Risk			5041
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			5344
Item 1A. Risk Factors			5345
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5345
Item 3. Defaults Upon Senior Securities			5445
Item 4. Mine Safety Disclosures			5445
Item 5. Other Information			5445
Item 6. Exhibits			5445
Signatures			48

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

loanDepot, Inc.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS	(Unaudited)				ASSETS	(Unaudited)
Cash and cash equivalents	Cash and cash equivalents	$	554,135	$	419,571	Cash and cash equivalents	$	798,119	$	863,956
Restricted cash	Restricted cash	153,700		201,025		Restricted cash	90,084		116,545
Accounts receivable, net	Accounts receivable, net	115,976		56,183		Accounts receivable, net	99,381		145,279
Loans held for sale, at fair value (includes $2,210,984 and $2,557,490 pledged to creditors in securitization trusts at March 31, 2022 and December 31, 2021, respectively)		6,558,668		8,136,817
Loans held for sale, at fair value (includes $506,808 and $497,574 pledged to creditors in securitization trusts at March 31, 2023 and December 31, 2022, respectively)						Loans held for sale, at fair value (includes $506,808 and $497,574 pledged to creditors in securitization trusts at March 31, 2023 and December 31, 2022, respectively)	2,039,367		2,373,427
Derivative assets, at fair value	Derivative assets, at fair value	351,097		194,665		Derivative assets, at fair value	84,624		39,411
Servicing rights, at fair value (includes $433,148 and $400,678 pledged to creditors in securitization trusts at March 31, 2022 and December 31, 2021, respectively)		2,086,022		2,006,712
Servicing rights, at fair value (includes $553,236 and $544,729 pledged to creditors in securitization trusts at March 31, 2023 and December 31, 2022, respectively)						Servicing rights, at fair value (includes $553,236 and $544,729 pledged to creditors in securitization trusts at March 31, 2023 and December 31, 2022, respectively)	2,028,788		2,037,447
Trading securities, at fair value	Trading securities, at fair value	93,466		72,874		Trading securities, at fair value	95,561		94,243
Property and equipment, net	Property and equipment, net	108,135		104,262		Property and equipment, net	88,877		92,889
Operating lease right-of-use assets	Operating lease right-of-use assets	52,818		55,646		Operating lease right-of-use assets	35,362		35,668
Prepaid expenses and other assets	Prepaid expenses and other assets	116,338		140,315		Prepaid expenses and other assets	139,904		155,982
Loans eligible for repurchase	Loans eligible for repurchase	389,140		363,373		Loans eligible for repurchase	672,458		634,677
Investments in joint ventures	Investments in joint ventures	18,559		18,553		Investments in joint ventures	18,266		20,410

Goodwill and intangible assets, net		42,194		42,317

Total assets	Total assets	$	10,640,248	$	11,812,313	Total assets	$	6,190,791	$	6,609,934

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY

Warehouse and other lines of credit	Warehouse and other lines of credit	$	5,806,907	$	7,457,199	Warehouse and other lines of credit	$	1,830,319	$	2,146,602
Accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities	804,405		624,444		Accounts payable, accrued expenses and other liabilities	449,641		488,696
Derivative liabilities, at fair value	Derivative liabilities, at fair value	113,366		37,797		Derivative liabilities, at fair value	35,662		67,492
Liability for loans eligible for repurchase	Liability for loans eligible for repurchase	389,140		363,373		Liability for loans eligible for repurchase	672,458		634,677
Operating lease liability	Operating lease liability	67,681		71,932		Operating lease liability	57,837		61,675
Debt obligations, net	Debt obligations, net	1,947,580		1,628,208		Debt obligations, net	2,303,712		2,289,319
Total liabilities	Total liabilities	9,129,079		10,182,953		Total liabilities	5,349,629		5,688,461
Commitments and contingencies (Note 15)		0		0
Commitments and contingencies (Note 14)						Commitments and contingencies (Note 14)

Class A common stock, $0.001 par value, 2,500,000,000 authorized, 45,232,624 and 38,060,302 issued at March 31, 2022 and December 31, 2021, respectively		$	45	$	38
Class B common stock, $0.001 par value, 2,500,000,000 authorized, none issued at March 31, 2022 and December 31, 2021, respectively		—		—
Class C common stock, $0.001 par value, 2,500,000,000 authorized, 170,690,888 and 172,729,168 issued at March 31, 2022 and December 31, 2021, respectively		171		173
Class D common stock, $0.001 par value, 2,500,000,000 authorized, 97,026,671 and 100,822,084 issued at March 31, 2022 and December 31, 2021, respectively		97		101
Preferred stock, $0.001 par value, 50,000,000 authorized, none issued at March 31, 2022 and December 31, 2021, respectively		—		—
Treasury stock at cost, 1,632,206 and 1,593,366 shares at March 31, 2022 and December 31, 2021, respectively		(13,015)		(12,852)
Class A common stock, $0.001 par value, 2,500,000,000 authorized, 77,170,094 and 74,277,152 issued at March 31, 2023 and December 31, 2022, respectively						Class A common stock, $0.001 par value, 2,500,000,000 authorized, 77,170,094 and 74,277,152 issued at March 31, 2023 and December 31, 2022, respectively	$	77	$	74
Class B common stock, $0.001 par value, 2,500,000,000 authorized, none issued at March 31, 2023 and December 31, 2022, respectively						Class B common stock, $0.001 par value, 2,500,000,000 authorized, none issued at March 31, 2023 and December 31, 2022, respectively	—		—
Class C common stock, $0.001 par value, 2,500,000,000 authorized, 144,983,025 and 145,693,119 issued at March 31, 2023 and December 31, 2022, respectively						Class C common stock, $0.001 par value, 2,500,000,000 authorized, 144,983,025 and 145,693,119 issued at March 31, 2023 and December 31, 2022, respectively	145		146
Class D common stock, $0.001 par value, 2,500,000,000 authorized, 97,026,671 and 97,026,671 issued at March 31, 2023 and December 31, 2022, respectively						Class D common stock, $0.001 par value, 2,500,000,000 authorized, 97,026,671 and 97,026,671 issued at March 31, 2023 and December 31, 2022, respectively	97		97
Preferred stock, $0.001 par value, 50,000,000 authorized, none issued at March 31, 2023 and December 31, 2022, respectively						Preferred stock, $0.001 par value, 50,000,000 authorized, none issued at March 31, 2023 and December 31, 2022, respectively	—		—
Treasury stock at cost, 2,068,924 and 1,780,141 shares at March 31, 2023 and December 31, 2022, respectively						Treasury stock at cost, 2,068,924 and 1,780,141 shares at March 31, 2023 and December 31, 2022, respectively	(13,853)		(13,282)
Additional paid-in capital	Additional paid-in capital	656,267		565,073		Additional paid-in capital	802,251		788,601
Retained deficit	Retained deficit	(77,151)		(28,976)		Retained deficit	(384,843)		(342,137)
Noncontrolling interest	Noncontrolling interest	944,755		1,105,803		Noncontrolling interest	437,288		487,974
Total equity	Total equity	1,511,169		1,629,360		Total equity	841,162		921,473
Total liabilities and equity	Total liabilities and equity	$	10,640,248	$	11,812,313	Total liabilities and equity	$	6,190,791	$	6,609,934

See accompanying notes to the unaudited consolidated financial statements.

loanDepot, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands except per share amounts)
(Unaudited)


		Three Months Ended March 31,				Three Months Ended March 31,
		2022		2021				2023		2022

REVENUES:	REVENUES:						REVENUES:
Interest income	Interest income	$	52,965	$	54,730		Interest income	$	27,958	$	52,965
Interest expense	Interest expense	(39,889)		(53,497)			Interest expense	(26,760)		(39,889)
Net interest income	Net interest income	13,076		1,233			Net interest income	1,198		13,076

Gain on origination and sale of loans, net	Gain on origination and sale of loans, net	363,131		1,133,575			Gain on origination and sale of loans, net	108,152		363,131
Origination income, net	Origination income, net	59,073		101,599			Origination income, net	12,016		59,073
Servicing fee income	Servicing fee income	111,059		82,568			Servicing fee income	118,961		111,059
Change in fair value of servicing rights, net	Change in fair value of servicing rights, net	(68,383)		(43,635)			Change in fair value of servicing rights, net	(52,806)		(68,383)
Other income	Other income	25,355		40,668			Other income	20,380		25,355
Total net revenues	Total net revenues	503,311		1,316,008			Total net revenues	207,901		503,311

EXPENSES:	EXPENSES:						EXPENSES:
Personnel expense	Personnel expense	345,993		603,735			Personnel expense	141,027		345,993
Marketing and advertising expense	Marketing and advertising expense	101,513		109,626			Marketing and advertising expense	35,914		101,513
Direct origination expense	Direct origination expense	53,157		46,976			Direct origination expense	17,378		53,157
General and administrative expense	General and administrative expense	49,748		51,317			General and administrative expense	56,134		49,748
Occupancy expense	Occupancy expense	9,396		9,988			Occupancy expense	6,081		9,396
Depreciation and amortization	Depreciation and amortization	10,545		8,454			Depreciation and amortization	10,026		10,545
Servicing expense	Servicing expense	21,511		26,611			Servicing expense	4,834		21,511
Other interest expense	Other interest expense	14,393		13,171			Other interest expense	43,090		14,393

Total expenses	Total expenses	606,256		869,878			Total expenses	314,484		606,256

(Loss) income before income taxes		(102,945)		446,130
Loss before income taxes							Loss before income taxes	(106,583)		(102,945)

Income tax (benefit) expense		(11,627)		18,277
Income tax benefit							Income tax benefit	(14,862)		(11,627)

Net (loss) income		(91,318)		427,853
Net loss							Net loss	(91,721)		(91,318)

Net (loss) income attributable to noncontrolling interests		(56,577)		382,978
Net loss attributable to noncontrolling interests							Net loss attributable to noncontrolling interests	(48,814)		(56,577)

Net (loss) income attributable to loanDepot, Inc.		$	(34,741)	$	44,875
Net loss attributable to loanDepot, Inc.							Net loss attributable to loanDepot, Inc.	$	(42,907)	$	(34,741)

(Loss) earnings per share:
Loss per share:							Loss per share:
Basic	Basic	$	(0.25)	$	0.36		Basic	$	(0.25)	$	(0.25)
Diluted	Diluted	$	(0.25)	$	0.36		Diluted	$	(0.25)	$	(0.25)

Weighted average shares outstanding:	Weighted average shares outstanding:						Weighted average shares outstanding:
Basic	Basic	139,007,890		125,772,797			Basic	170,809,818		139,007,890
Diluted	Diluted	139,007,890		125,772,797			Diluted	170,809,818		139,007,890

See accompanying notes to the unaudited consolidated financial statements.

loanDepot, Inc.

CONSOLIDATED STATEMENTS OF EQUITY

(Dollars in thousands)


	Common stock outstanding		Common stock $			Treasury Shares			Additional paid-in capital		Retained Deficit			Non-controlling Interests		Total Equity
	Class A	Class C	Class D	Class A				Class C					Class D
Balance at December 31, 2021	36,466,936	172,729,168	100,822,084	$	38	$	173		$	101	$	(12,852)		$	565,073	$	(28,976)	$	1,105,803	$	1,629,360



Deferred taxes and other tax adjustments associated with the Reorganization and IPO	—	—	—	—		—			—		—			681		—		—		681



Net issuance of common shares under stock based compensation plans	7,133,482	(2,038,280)	(3,795,413)	7		(2)			(4)		(163)			89,479		—		(89,479)		(162)
Dividends to Class A and Class D shareholders ($0.08 per share)	—	—	—	—		—			—		—			—		(5,310)		(6,442)		(11,752)
Distributions to Class C shareholders	—	—	—	—		—			—		—			—		(6,338)		(7,665)		(14,003)
Stock-based compensation	—	—	—	—		—			—		—			1,034		—		1,275		2,309
Distributions for taxes on behalf of shareholders, net	—	—	—	—		—			—		—			—		(1,786)		(2,160)		(3,946)
Net loss	—	—	—	—		—			—		—			—		(34,741)		(56,577)		(91,318)
Balance at March 31, 2022	43,600,418	170,690,888	97,026,671	$	45	$	171		$	97	$	(13,015)		$	656,267	$	(77,151)	$	944,755	$	1,511,169

Balance at December 31, 2022	72,497,011	145,693,119	97,026,671	$	74	$	146		$	97	$	(13,282)		$	788,601	$	(342,137)	$	487,974	$	921,473
Deferred taxes and other tax adjustments related to conversions and exchanges	—	—	—	—		—			—		—			5,181		—		—		5,181
Net issuance of common stock under stock-based compensation plans	2,604,159	(710,094)	—	3		(1)			—		(571)			5,265		—		(4,767)		(71)
Forfeiture of accrued dividend equivalents on unvested Class A RSUs	—	—	—	—		—			—		—			—		9		12		21

Stock-based compensation	—	—	—	—		—			—		—			3,204				2,722		5,926
Refund of tax distributions, net	—	—	—	—		—			—		—			—		192		161		353
Net loss	—	—	—	—		—			—		—			—		(42,907)		(48,814)		(91,721)
Balance at March 31, 2023	75,101,170	144,983,025	97,026,671	$	77	$	145		$	97	$	(13,853)		$	802,251	$	(384,843)	$	437,288	$	841,162

Common stock issued Common stock $ Treasury Shares Additional paid-in capital Retained Earnings (Deficit) Non-controlling Interests Total Equity
Class A Class C Class D Class A Class C Class D
Balance at December 31, 2020 — — — $ — $ — $ — $ — $ — $ — $ 1,656,613 $ 1,656,613
Distributions prior to the Reorganization — — — — — — — — — (160,617) (160,617)
Equity compensation prior to the Reorganization — — — — — — — — — 338 338
Net income prior to the Reorganization — — — — — — — — — 294,598 294,598
Deferred taxes and other tax adjustments associated with the Reorganization and IPO — — — — — — — (203,741) — — (203,741)
Effect of the Reorganization 2,215,687 181,789,329 121,368,600 2 182 121 — 740,629 — (740,934) —
Effect of the IPO 3,850,000 (2,394,000) (1,456,000) 4 (2) (2) — — — —
Effect of the Greenshoe 577,500 (359,100) (218,400) 1 (1) — — — — — —
Vested Class C shares — 709,961 — — 1 — — (1) —
Stock-based compensation — — — — — — — 24,607 — 34,872 59,479
Distributions for state taxes on behalf of shareholders, net — — — — — — — — (2,463) (3,504) (5,967)
Net income subsequent to the Reorganization and IPO — — — — — — — — 44,875 88,380 133,255
Balance at March 31, 2021 6,643,187 179,746,190 119,694,200 $ 7 $ 180 $ 119 $ — $ 561,494 $ 42,412 $ 1,169,746 $ 1,773,958
Balance at December 31, 2021 36,466,936 172,729,168 100,822,084 $ 38 $ 173 $ 101 $ (12,852) $ 565,073 $ (28,976) $ 1,105,803 $ 1,629,360
Deferred taxes and other tax adjustments associated with the Reorganization and IPO — — — — — — — 681 — — 681
Net issuance of common stock under stock-based compensation plans 7,133,482 (2,038,280) (3,795,413) 7 (2) (4) (163) 89,479 — (89,479) (162)
Dividends to Class A and Class D shareholders ($0.08 per share) — — — — — — — — (5,310) (6,442) (11,752)
Distributions to Class C shareholders — — — — — — — — (6,338) (7,665) (14,003)
Stock-based compensation — — — — — — — 1,034 — 1,275 2,309
Distributions for taxes on behalf of shareholders, net — — — — — — — — (1,786) (2,160) (3,946)
Net income — — — — — — — — (34,741) (56,577) (91,318)
Balance at March 31, 2022 43,600,418 170,690,888 97,026,671 $ 45 $ 171 $ 97 $ (13,015) $ 656,267 $ (77,151) $ 944,755 $ 1,511,169

See accompanying notes to the unaudited consolidated financial statements.

loanDepot, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income		$	(91,318)	$	427,853
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:
Net loss						Net loss	$	(91,721)	$	(91,318)
Adjustments to reconcile net loss to net						Adjustments to reconcile net loss to net
cash provided by operating activities:						cash provided by operating activities:
Depreciation and amortization expense	Depreciation and amortization expense	10,545		8,454		Depreciation and amortization expense	10,026		10,545
Amortization of operating lease right-of-use asset	Amortization of operating lease right-of-use asset	5,597		5,895		Amortization of operating lease right-of-use asset	3,386		5,597
Amortization of debt issuance costs	Amortization of debt issuance costs	4,195		2,685		Amortization of debt issuance costs	1,855		4,195
Gain on origination and sale of loans	Gain on origination and sale of loans	(442,771)		(990,904)		Gain on origination and sale of loans	(43,016)		(442,771)
(Gain) loss on sale of servicing rights		(20,134)		39

Gain on sale of servicing rights						Gain on sale of servicing rights	(191)		(20,134)
Fair value change in trading securities	Fair value change in trading securities	7,592		—		Fair value change in trading securities	(2,486)		7,592
Provision for loss obligation on sold loans and servicing rights	Provision for loss obligation on sold loans and servicing rights	23,347		857		Provision for loss obligation on sold loans and servicing rights	9,725		23,347
Increase in provision for deferred income taxes		(14,269)		203,892
Decrease in provision for deferred income taxes						Decrease in provision for deferred income taxes	(14,874)		(14,269)
Fair value change in derivative assets	Fair value change in derivative assets	(63,176)		(92,879)		Fair value change in derivative assets	(25,763)		(63,176)
Fair value change in derivative liabilities	Fair value change in derivative liabilities	75,569		(72,980)		Fair value change in derivative liabilities	(31,830)		75,569
Premium paid on derivatives	Premium paid on derivatives	(93,256)		(19,700)		Premium paid on derivatives	(19,450)		(93,256)

Fair value change in loans held for sale	Fair value change in loans held for sale	225,137		178,844		Fair value change in loans held for sale	(38,751)		225,137
Fair value change in servicing rights	Fair value change in servicing rights	(121,874)		(112,917)		Fair value change in servicing rights	56,025		(121,874)
Stock-based compensation expense	Stock-based compensation expense	2,309		59,817		Stock-based compensation expense	5,926		2,309

Originations of loans	Originations of loans	(21,373,625)		(41,401,575)		Originations of loans	(4,891,247)		(21,373,625)
Proceeds from sales of loans	Proceeds from sales of loans	22,948,300		40,380,774		Proceeds from sales of loans	5,366,139		22,948,300
Proceeds from principal payments	Proceeds from principal payments	60,287		23,300		Proceeds from principal payments	15,097		60,287
Payments to investors for loan repurchases	Payments to investors for loan repurchases	(141,146)		(556,870)		Payments to investors for loan repurchases	(148,589)		(141,146)

Gain on extinguishment of debt	Gain on extinguishment of debt	(10,528)		—		Gain on extinguishment of debt	—		(10,528)

Disbursements from joint ventures	Disbursements from joint ventures	922		819		Disbursements from joint ventures	3,919		922

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Other changes in operating assets and liabilities	Other changes in operating assets and liabilities	156,736		76,795		Other changes in operating assets and liabilities	41,172		156,736
Net cash provided by (used in) operating activities		1,148,439		(1,877,801)
Net cash provided by operating activities						Net cash provided by operating activities	205,352		1,148,439

CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	Purchase of property and equipment	(14,295)		(14,163)		Purchase of property and equipment	(6,275)		(14,295)
Proceeds from sale of servicing rights	Proceeds from sale of servicing rights	303,777		635		Proceeds from sale of servicing rights	12,029		303,777

Cash flows received on trading securities	Cash flows received on trading securities	1,894		—		Cash flows received on trading securities	1,168		1,894
Investments in joint ventures	Investments in joint ventures	(350)		—		Investments in joint ventures	—		(350)

Return of capital from joint ventures		—		189
Net cash flows provided by (used in) investing activities		291,026		(13,339)

Net cash flows provided by investing activities						Net cash flows provided by investing activities	6,922		291,026

See accompanying notes to the unaudited consolidated financial statements.

loanDepot, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(Dollars in thousands)

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings on warehouse lines of credit		$	24,542,427	$	45,606,028
Repayment of borrowings on warehouse lines of credit		(26,192,719)		(43,874,006)
Proceeds from borrowings on warehouse and other lines of credit						Proceeds from borrowings on warehouse and other lines of credit	$	4,566,739	$	24,542,427
Repayment of borrowings on warehouse and other lines of credit						Repayment of borrowings on warehouse and other lines of credit	(4,883,022)		(26,192,719)

Proceeds from debt obligations	Proceeds from debt obligations	1,131,952		776,743		Proceeds from debt obligations	19,067		1,131,952
Payments on debt obligations	Payments on debt obligations	(800,092)		(175,935)		Payments on debt obligations	(6,108)		(800,092)
Payments of debt issuance costs	Payments of debt issuance costs	(3,402)		(11,260)		Payments of debt issuance costs	(14)		(3,402)

Payments on financing lease obligation		—		(689)

Treasury stock purchased to net settle and withhold taxes on vested shares	Treasury stock purchased to net settle and withhold taxes on vested shares	(162)		—		Treasury stock purchased to net settle and withhold taxes on vested shares	(570)		(162)
Dividends and shareholder distributions	Dividends and shareholder distributions	(30,230)		(166,584)		Dividends and shareholder distributions	(664)		(30,230)
Net cash (used in) provided by financing activities		(1,352,226)		2,154,297
Net cash used in financing activities						Net cash used in financing activities	(304,572)		(1,352,226)

Net change in cash and cash equivalents and restricted cash	Net change in cash and cash equivalents and restricted cash	87,239		263,157		Net change in cash and cash equivalents and restricted cash	(92,298)		87,239

Cash and cash equivalents and restricted cash at beginning of the period	Cash and cash equivalents and restricted cash at beginning of the period	620,596		488,689		Cash and cash equivalents and restricted cash at beginning of the period	980,501		620,596

Cash and cash equivalents and restricted cash at end of the period	Cash and cash equivalents and restricted cash at end of the period	$	707,835	$	751,846	Cash and cash equivalents and restricted cash at end of the period	$	888,203	$	707,835

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
SUPPLEMENTAL DISCLOSURES:						SUPPLEMENTAL DISCLOSURES:
Cash paid (received) during the period for:						Cash paid (received) during the period for:
Interest	Interest	$	51,080	$	49,901	Interest	$	57,822	$	51,080
Income taxes	Income taxes	5,858		3		Income taxes	(3,474)		5,858

Supplemental disclosure of noncash investing and financing activities	Supplemental disclosure of noncash investing and financing activities					Supplemental disclosure of noncash investing and financing activities
Operating leases right-of-use assets obtained in exchange for lease liabilities	Operating leases right-of-use assets obtained in exchange for lease liabilities	$	2,768	$	2,669	Operating leases right-of-use assets obtained in exchange for lease liabilities	$	2,734	$	2,768
Trading securities retained in securitizations	Trading securities retained in securitizations	30,076		—		Trading securities retained in securitizations	—		30,076
Purchase of equipment under financing leases		—		168

See accompanying notes to the unaudited consolidated financial statements.

loanDepot, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ are in thousands, unless otherwise indicated)

(Unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS ~~PRESENTATION~~ AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements were prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation were included. The results of operations for the three months ended March 31, ~~2022~~2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report of loanDepot, Inc. on Form 10-K for the year ended December 31, ~~2021~~2022 (“~~2021~~2022 Form 10-K”).

Nature of Operations

loanDepot, Inc. was incorporated in Delaware on November 6, 2020 to facilitate the initial public offering (“IPO”) of its Class A common stock and related transactions in order to carry on the business of LD Holdings Group LLC (“LD Holdings”) and its consolidated subsidiaries. loanDepot, Inc.’s common stock began trading on the New York Stock Exchange on February 11, 2021 under the ticker symbol “LDI.” loanDepot, Inc. is a holding company and its sole material asset is its equity interest in LD Holdings. As of March 31, ~~2022~~2023 the consolidated subsidiaries of LD Holdings included loanDepot.com, LLC, (“LDLLC”), Artemis Management LLC (“ART”), LD Settlement Services, LLC (“LDSS”), mello Holdings, LLC (“Mello”), and mello Credit Strategies LLC (“MCS”). Unless otherwise noted or indicated by the context, the term, the “Company,” refers (1) prior to the consummation of the IPO to LD Holdings and its consolidated subsidiaries, and (2) after the IPO to loanDepot, Inc. and its consolidated subsidiaries, including LD Holdings.

The Company engages in the originating, financing, selling, and servicing of residential mortgage loans, and engages in title, escrow, and settlement services for mortgage loan transactions. The Company derives income primarily from gains on the origination and sale of loans to investors, income from loan servicing, and fees charged for settlement services related to the origination and sale of loans.

Summary of Significant Accounting Policies

Our accounting policies are described below and in Note 1- Description of Business ~~Presentation~~ and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our ~~2021~~2022 Form 10-K.

Consolidation and Basis of Presentation

The Company's consolidated financial statements are prepared in accordance with ~~U.S. Generally Accepted Accounting Principles (“GAAP”)~~GAAP as codified in the ~~Financial Accounting Standards Board's (“FASB”)~~FASB’s Accounting Standards Codification (“ASC” or the “Codification”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

~~ASC 250 requires that~~loanDepot, Inc. is a change in the reporting entity or the consummation of a transaction accounted for in a manner similar to a pooling of interests, i.e., a reorganization of entities under common control, be retrospectively applied to the financial statements of all prior periods when the financial statements are issued for a period that includes the date the change in reporting entity or the transaction occurred. Prior to the IPO, the Company completed a reorganization where LLC unitsholding company, its sole material asset is its equity interest in LD Holdings ~~held by certain members (“Continuing LLC Members) were exchanged on a 1-for-one basis for Class A holding units (“Holdco Units”)~~ and ~~Class C common stock.~~as the sole managing member of LD Holdings, ~~continues to be~~loanDepot, Inc. indirectly operates and controls all of LD Holdings’ business and affairs. LD Holdings is also a holding company and has no material assets other than its equity interests in its direct subsidiaries consisting of a 99.99% ownership in LDLLC (the majority asset of the group), and 100% equity ownership in ART, LDSS, Mello, and MCS. As a result of the IPO and reorganization, loanDepot, Inc. became a holding company, its sole material asset is its equity interest in LD Holdings and as the sole managing member of LD Holdings, loanDepot, Inc. indirectly operates and controls all of LD Holdings’ business and affairs. The IPO and reorganization were considered transactions between entities under common control. The financial results of LD Holdings and

its subsidiaries are consolidated with loanDepot, ~~Inc,~~Inc., and the consolidated net earnings or loss are allocated to ~~the~~ noncontrolling interest to reflect the entitlement of ~~the~~ certain members that still hold Class A holdings units (“Holdco Units”) and Class C common stock, (“Continuing LLC ~~Members.~~Members”) as of the periods presented.

The accompanying consolidated financial statements include all of the assets, liabilities, and results of operations of the Company and consolidated variable interest entities (“VIEs”) in which the Company is the primary beneficiary. VIEs are entities that have a total equity investment at risk that is insufficient to permit the entity to finance its activities without additional subordinated financial support, whose equity investors at risk lack the ability to control the entity's activities, or is structured with non-substantive voting rights. The Company evaluates its associations with VIEs, both at inception and when

there is a change in circumstance that requires reconsideration, to determine if the Company is the primary beneficiary and consolidation is required. A primary beneficiary is defined as a variable interest holder that has a controlling financial interest. A controlling financial interest requires both: (a) the power to direct the activities that most significantly impact the ~~VIEs’~~VIE’s economic performance, and (b) the obligation to absorb losses or receive benefits of a VIE that could potentially be significant to the VIE. The Company has not provided financial or other support during the periods presented to any VIE that it was not previously contractually required to provide. Other entities that the Company does not consolidate, but for which it has significant influence over operating and financial policies, are accounted for using the equity method. All intercompany accounts and transactions have been eliminated in consolidation.

Certain items in prior periods were reclassified to conform to the current presentation. Gain on the origination and sale of loans, net for the three months ended March 31, 2021, was adjusted to exclude the change in fair value of forward sale contracts, including pair offs hedging MSRs, which are now included in the change in fair value of servicing rights, net on the consolidated statements of operations. During the second quarter of 2021, the Company determined that this change would more appropriately reflect the hedged item and better align with industry practice. Gain on origination and sale of loans, net and change in fair value of servicing rights, net, in the current and prior periods along with the related financial statement disclosures were adjusted to reflect this reclassification in all reports that were issued after the first quarter of 2021.

~~To conform to the current period presentation, servicing expense on the consolidated statements of operations includes subservicing expense and in-house servicing expense.~~

The Company has evaluated subsequent events for recognition or disclosure through the date of this report and has not identified any recordable or disclosable events that were not already reported in these consolidated financial statements or notes thereto.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Management has made significant estimates in certain areas, including determining the fair value of loans held for sale, servicing rights, derivative assets and derivative liabilities, trading securities, awards granted under the incentive equity plan, ~~and~~ determining the loan loss obligation on sold ~~loans.~~loans and MSRs. Actual results could differ from those estimates.

Concentration of Risk

The Company has concentrated its credit risk for cash by maintaining deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the Federal Deposit Insurance Corporation (“FDIC”). The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to cash.

Due to the nature of the mortgage lending industry, changes in interest rates may significantly impact revenue from originating mortgages and subsequent sales of loans to investors, which are the primary source of income for the Company. The Company originates mortgage loans on property located throughout the United States, with loans originated for property located in California totaling approximately ~~25%~~17% of total loan originations for the three months ended March 31, ~~2022.~~2023.

The Company sells mortgage loans to various third-party investors. Three investors accounted for ~~36%~~11%, 29%, and ~~16%~~33% of the Company’s loan sales for the three months ended March 31, ~~2022.~~2023. No other investors accounted for more than 5% of the loan sales for the three months ended March 31, ~~2022.~~2023.

The Company funds loans through warehouse and other lines of credit. As of March 31, ~~2022, 18%~~2023, 17% and ~~13%~~12% of the Company's warehouse lines were payable to two separate lenders.

NOTE 2 – FAIR VALUE

The Company's consolidated financial statements include assets and liabilities that are measured based on their estimated fair values. Refer to Note 1 - Description of Business, Presentation and Summary of Significant Accounting Policies in the ~~2021~~2022 Form 10-K for information on the fair value hierarchy, valuation methodologies, and key inputs used to measure financial assets and liabilities recorded at fair value, as well as methods and assumptions used to estimate fair value disclosures for financial instruments not recorded at fair value in their entirety on a recurring basis.

The following tables present the carrying amount and estimated fair value of financial instruments included in the consolidated financial statements.

March 31, 2022
Carrying Amount Estimated Fair Value
Level 1 Level 2 Level 3
Assets
Cash and cash equivalents $ 554,135 $ 554,135 $ — $ —
Restricted cash 153,700 153,700 — —
Loans held for sale, at fair value 6,558,668 — 6,558,668 —
Derivative assets, at fair value 351,097 — 272,802 78,295
Servicing rights, at fair value 2,086,022 — — 2,086,022
Trading securities, at fair value 93,466 — 93,466 —
Loans eligible for repurchase 389,140 — 389,140 —
Liabilities
Warehouse and other lines of credit $ 5,806,907 $ — $ 5,806,907 $ —
Derivative liabilities, at fair value 113,366 47,071 — 66,295
Servicing rights, at fair value 7,835 — — 7,835
Debt obligations:
Secured credit facilities 337,260 — 340,269 —
Other secured financings 421,303 — 422,930 —
Term Notes 199,290 — 200,000 —
Senior Notes 989,727 — 919,780 —
Liability for loans eligible for repurchase 389,140 — 389,140 —


		December 31, 2021																	March 31, 2023
		Carrying Amount				Estimated Fair Value													Carrying Amount				Estimated Fair Value
				Level 1				Level 2				Level 3									Level 1				Level 2				Level 3

Assets	Assets															Assets
Cash and cash equivalents	Cash and cash equivalents			$	419,571			$	419,571			$	—			$	—	Cash and cash equivalents			$	798,119			$	798,119			$	—			$	—
Restricted cash	Restricted cash	201,025				201,025				—				—		Restricted cash			90,084				90,084				—				—
Loans held for sale, at fair value	Loans held for sale, at fair value	8,136,817				—				8,136,817				—		Loans held for sale, at fair value			2,039,367				—				2,039,367				—
Derivative assets, at fair value	Derivative assets, at fair value	194,665				4,924				5,358				184,383		Derivative assets, at fair value			84,624				10,008				13,597				61,019
Servicing rights, at fair value	Servicing rights, at fair value	2,006,712				—				—				2,006,712		Servicing rights, at fair value			2,028,788				—				—				2,028,788
Trading securities, at fair value	Trading securities, at fair value	72,874				—				72,874				—		Trading securities, at fair value			95,561				—				95,561				—
Loans eligible for repurchase	Loans eligible for repurchase	363,373				—				363,373				—		Loans eligible for repurchase			672,458				—				672,458				—

Liabilities	Liabilities															Liabilities
Warehouse and other lines of credit	Warehouse and other lines of credit	$	7,457,199			$	—			$	7,457,199			$	—	Warehouse and other lines of credit			$	1,830,319			$	—			$	1,830,319			$	—
Derivative liabilities, at fair value	Derivative liabilities, at fair value	37,797				31,070				2,964				3,763		Derivative liabilities, at fair value			35,662				5,166				28,199				2,297
Servicing rights, at fair value	Servicing rights, at fair value	7,310				—				—				7,310		Servicing rights, at fair value			12,220				—				—				12,220
Debt obligations:	Debt obligations:															Debt obligations:
Secured credit facilities	Secured credit facilities	343,759				—				345,596				—		Secured credit facilities			1,111,366				—				1,111,812				—

Term Notes	Term Notes	199,133				—				200,000				—		Term Notes			199,791				—				200,000				—

Senior Notes	Senior Notes	1,085,316				—				1,057,977				—		Senior Notes			992,555				—				554,723				—
Liability for loans eligible for repurchase	Liability for loans eligible for repurchase	363,373				—				363,373				—		Liability for loans eligible for repurchase			672,458				—				672,458				—


	December 31, 2022
	Carrying Amount		Estimated Fair Value
			Level 1		Level 2		Level 3

Assets
Cash and cash equivalents	$	863,956	$	863,956	$	—	$	—
Restricted cash	116,545		116,545		—		—
Loans held for sale, at fair value	2,373,427		—		2,373,427		—
Derivative assets, at fair value	39,411		—		10,037		29,374
Servicing rights, at fair value	2,037,447		—		—		2,037,447
Trading securities, at fair value	94,243		—		94,243		—
Loans eligible for repurchase	634,677		—		634,677		—

Liabilities
Warehouse and other lines of credit	$	2,146,602	$	—	$	2,146,602	$	—
Derivative liabilities, at fair value	67,492		18,226		43,482		5,784
Servicing rights, at fair value	12,311		—		—		12,311
Debt obligations:
Secured credit facilities	1,097,831		—		1,098,853		—
Term Notes	199,666		—		200,000		—


Senior Notes	991,822		—		645,495		—
Liability for loans eligible for repurchase	634,677		—		634,677		—

Financial Statement Items Measured at Fair Value on a Recurring Basis

The following tables presents the Company’s assets and liabilities that are measured at fair value on a recurring basis by fair value hierarchy as of the dates indicated.


	March 31, 2023
	Level 1		Level 2		Level 3		Total
Fair value through net income:
Assets:
Loans held for sale	$	—	$	2,039,367	$	—	$	2,039,367
Trading securities	—		95,561		—		95,561
Derivative assets:
Interest rate lock commitments	—		—		61,019		61,019
Forward sale contracts	—		10,977		—		10,977
Interest rate swap futures	10,008		—		—		10,008
MBS put options	—		2,620		—		2,620
Servicing rights	—		—		2,028,788		2,028,788
Total assets at fair value	$	10,008	$	2,148,525	$	2,089,807	$	4,248,340
Liabilities:
Derivative liabilities:
Interest rate lock commitments	$	—	$	—	$	2,297	$	2,297

Forward sale contracts	—		28,199		—		28,199
Put options on treasuries	5,166		—		—		5,166

Servicing rights	—		—		12,220		12,220
Total liabilities at fair value	$	5,166	$	28,199	$	14,517	$	47,882


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Fair value through net income:
Assets:
Loans held for sale	$	—	$	2,373,427	$	—	$	2,373,427
Trading securities	—		94,243		—		94,243
Derivative assets:
Interest rate lock commitments	—		—		29,374		29,374
Forward sale contracts	—		6,676		—		6,676


MBS put options	—		3,361		—		3,361
Servicing rights	—		—		2,037,447		2,037,447
Total assets at fair value	$	—	$	2,477,707	$	2,066,821	$	4,544,528
Liabilities:
Derivative liabilities:
Interest rate lock commitments	$	—	$	—	$	5,784	$	5,784
Forward sale contracts	—		43,482		—		43,482
Put options on treasuries	10,831		—		—		10,831
Interest rate swap futures	7,395		—		—		7,395

Servicing rights	—		—		12,311		12,311

Total liabilities at fair value	$	18,226	$	43,482	$	18,095	$	79,803

109

March 31, 2022
Recurring Fair Value Measurements of Assets and Liabilities Using:
Quoted Market Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Total Fair Value Measurements
Fair value through net income:
Assets:
Loans held for sale $ — $ 6,558,668 $ — $ 6,558,668
Trading securities — 93,466 — 93,466
Derivative assets:
Interest rate lock commitments — — 78,295 78,295
Forward sale contracts — 272,802 — 272,802
Servicing rights — — 2,086,022 2,086,022
Total assets at fair value $ — $ 6,924,936 $ 2,164,317 $ 9,089,253
Liabilities:
Derivative liabilities:
Interest rate lock commitments $ — $ — $ 66,295 $ 66,295
Interest rate swap futures 1,528 — — 1,528
Put options on treasuries 45,543 — — 45,543
Servicing rights — — 7,835 7,835
Total liabilities at fair value $ 47,071 $ — $ 74,130 $ 121,201

December 31, 2021
Recurring Fair Value Measurements of Assets and Liabilities Using:
Quoted Market Prices in Active Markets for Identical Assets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Unobservable Inputs
(Level 3) Total Fair Value Measurements
Fair value through net income:
Assets:
Loans held for sale $ — $ 8,136,817 $ — $ 8,136,817
Trading securities — 72,874 — 72,874
Derivative assets:
Interest rate lock commitments — — 184,383 184,383
Forward sale contracts — 5,358 — 5,358
Interest rate swap futures 4,924 — — 4,924
Servicing rights — — 2,006,712 2,006,712
Total assets at fair value $ 4,924 $ 8,215,049 $ 2,191,095 $ 10,411,068
Liabilities:
Derivative liabilities:
Interest rate lock commitments $ — $ — $ 3,763 $ 3,763
Forward sale contracts — 2,964 — 2,964
Put options on treasuries 31,070 — — 31,070
Servicing rights — — 7,310 7,310
Total liabilities at fair value $ 31,070 $ 2,964 $ 11,073 $ 45,107

The following presents the changes in the Company’s assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


		Three Months Ended March 31, 2022
		IRLCs, net				Servicing Rights, net							Three Months Ended March 31, 2023
										IRLCs, net	Servicing Rights, net
Balance at beginning of period	Balance at beginning of period			$	180,620			$	1,999,402					Balance at beginning of period	$	23,590	$	2,025,136

Total net gains or losses included in earnings (realized and unrealized)	Total net gains or losses included in earnings (realized and unrealized)	142,958				411,768						Total net gains or losses included in earnings (realized and unrealized)	97,184		3,461
Sales and settlements	Sales and settlements											Sales and settlements

Sales	Sales	0				(332,983)						Sales			(12,029)
Settlements (1)	Settlements (1)	(232,922)				—						Settlements (1)	(43,664)		—
Transfers of IRLCs to closed loans	Transfers of IRLCs to closed loans	(78,656)				—						Transfers of IRLCs to closed loans	(18,388)		—
Balance at end of period	Balance at end of period	$	12,000			$	2,078,187					Balance at end of period	$	58,722	$	2,016,568

(1)Funded amount for IRLCs.


		Three Months Ended March 31, 2021
		IRLCs, net				Servicing Rights, net							Three Months Ended March 31, 2022
										IRLCs, net	Servicing Rights, net
Balance at beginning of period	Balance at beginning of period			$	647,045			$	1,124,302					Balance at beginning of period	$	180,620	$	1,999,402

Total net gains or losses included in earnings (realized and unrealized)	Total net gains or losses included in earnings (realized and unrealized)	388,548				642,421						Total net gains or losses included in earnings (realized and unrealized)	142,958		411,768
Sales and settlements	Sales and settlements											Sales and settlements

Sales	Sales	—				(635)						Sales			(332,983)
Settlements (1)	Settlements (1)	(593,703)				—						Settlements (1)	(232,922)		—
Transfers of IRLCs to closed loans	Transfers of IRLCs to closed loans	(195,112)				—						Transfers of IRLCs to closed loans	(78,656)		—
Balance at end of period	Balance at end of period	$	246,778			$	1,766,088					Balance at end of period	$	12,000	$	2,078,187

(1)Funded amount for IRLCs.

The following presents the gains and losses included in earnings relating to the Company’s assets and liabilities that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

Three Months Ended March 31, 2022
IRLCs, net (1)
Servicing
Rights, net(2)
Total net (losses) gains included in earnings $ (168,620) $ 411,768
Change in unrealized gains relating to assets and liabilities still held at period end $ 12,000 $ 408,140

~~(1)Gains (losses) included in gain on origination and sale of loans, net.~~


	Three Months Ended March 31, 2023
	IRLCs, net		Servicing Rights, net


Total net gains (losses) included in:
Gain on origination and sale of loans, net	$	35,132	$	59,295
Change in fair value of servicing rights, net	—		(55,834)
Total	35,132		3,461

Change in unrealized gains (losses) relating to assets and liabilities still held at period end	$	58,722	$	(37,820)

~~(2)~~Includes $269.8 million in gains included in gain on origination and sale of loans, net and $142.0 million of gains included in change in fair value of servicing rights, net, for the three months ended March 31, 2022.

1210

Three Months Ended March 31, 2021
IRLCs, net (1)
Servicing
Rights, net(2)
Total net (losses) gains included in earnings $ (400,267) $ 642,421
Change in unrealized gains relating to assets and liabilities still held at period end $ 246,778 $ 741,791

~~(1)Gains (losses) included in gain on origination and sale of loans, net.~~

~~(2)~~Includes $529.5 million in gains included in gain on origination and sale of loans, net and $112.9 million in gains included in change in fair value of servicing rights, net, for the three months ended March 31, 2021.














	Three Months Ended March 31, 2022
	IRLCs, net		Servicing Rights, net


Total net gains (losses) included in:
Gain on origination and sale of loans, net	$	(168,620)	$	269,760
Change in fair value of servicing rights, net	—		142,008
Total	(168,620)		411,768

Change in unrealized gains relating to assets and liabilities still held at period end	$	12,000	$	408,140

The following table presents quantitative information about the valuation techniques and unobservable inputs applied to Level 3 fair value measurements for financial instruments measured at fair value on a recurring basis:


		March 31, 2022				December 31, 2021					March 31, 2023				December 31, 2022
Unobservable Input	Unobservable Input	Range of inputs			Weighted Average (2)	Range of inputs			Weighted Average (2)	Unobservable Input	Range of inputs			Weighted Average (2)	Range of inputs			Weighted Average (2)
IRLCs:	IRLCs:									IRLCs:
Pull-through rate	Pull-through rate	6.7%	-	99.9%	79.6%	0.3%	-	99.3%	74.2%	Pull-through rate	7.6%	-	99.9%	73.9%	8.4%	-	99.9%	75.3%

Servicing rights	Servicing rights									Servicing rights
Discount rate(1)	Discount rate(1)	4.2%	-	10.3%	5.8%	4.5%	-	9.0%	5.8%	Discount rate(1)	4.9%	-	16.1%	6.4%	5.0%	-	16.1%	6.5%
Prepayment rate(1)	Prepayment rate(1)	6.1%	-	16.8%	8.1%	8.4%	-	18.7%	10.2%	Prepayment rate(1)	5.7%	-	18.8%	7.6%	5.8%	-	17.6%	7.2%
Cost to service (per loan)	Cost to service (per loan)	$64	-	$133	$83	$70	-	$114	$82	Cost to service (per loan)	$63	-	$136	$88	$63	-	$138	$87

(1)The Company estimates the fair value of MSRs using an option-adjusted spread (“OAS”) model, which projects MSR cash flows over multiple interest rate scenarios in conjunction with the Company’s prepayment model, and then discounts these cash flows at risk-adjusted rates.

(2)Weighted average inputs are based on the committed amounts for IRLCs and the UPB of the underlying loans for servicing rights.

Financial Statement Items Measured at Fair Value on a Nonrecurring Basis

The Company did not have any material assets or liabilities that were recorded at fair value on a non-recurring basis as of March 31, ~~2022~~2023 or December 31, ~~2021.~~2022.

Financial Statement Items Measured at Amortized Cost

Warehouse and other lines of credit - The Company’s warehouse and other lines of credit bear interest at a rate that is periodically adjusted based on a market index. The carrying value of warehouse and other lines of credit approximates fair value.

Debt obligations, net - Debt consists of secured credit facilities, ~~other secured financings,~~ Term Notes, and Senior Notes. The Company’s secured credit facilities ~~other secured financings,~~ and Term Notes accrue interest at a stated ~~rate of 30-day or 90-day LIBOR, or other alternative~~ base rate, ~~such as SOFR,~~ plus a margin, they are highly liquid and short-term in nature and as a result, their carrying value approximated fair value as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. Fair value of the Company’s Senior Notes issued in October 2020 and March 2021 were estimated using the quoted market prices at March 31, ~~2022.~~2023. The debt obligations are classified as Level 2 in the fair value hierarchy.

~~NOTE 3 – BALANCE SHEET NETTING~~

Certain derivatives, loan warehouse and repurchase agreements are subject to master netting arrangements or similar agreements. In certain circumstances the Company may elect to present certain financial assets, liabilities, and related collateral subject to master netting arrangements in a net position on the consolidated balance sheets.

March 31, 2022
Gross amounts recognized Gross amounts offset in consolidated balance sheet Net amounts presented in consolidated balance sheet Gross amounts not offset in consolidated balance sheet Net amount
Financial instruments Cash collateral
Assets:
Forward sale contracts $ 376,695 $ (103,893) $ 272,802 $ — $ (185,041) $ 87,761
Total Assets $ 376,695 $ (103,893) $ 272,802 $ — $ (185,041) $ 87,761
Liabilities:
Forward sale contracts $ 103,893 $ (103,893) $ — $ — $ — $ —
Put options on treasuries 45,543 — 45,543 — — 45,543
Interest rate swap futures 1,528 — 1,528 — — 1,528
Warehouse lines of credit 5,806,907 — 5,806,907 (5,806,907) — —
Secured debt obligations (1)
965,449 — 965,449 (965,449) — —
Total Liabilities $ 6,923,320 $ (103,893) $ 6,819,427 $ (6,772,356) $ — $ 47,071

~~(1)Secured debt obligations as of March 31, 2022 included secured credit facilities, other secured financings, and Term Notes.~~

December 31, 2021
Gross amounts recognized Gross amounts offset in consolidated balance sheets Net amounts presented in consolidated balance sheets Gross amounts not offset in consolidated balance sheets Net amount
Financial instruments Cash collateral
Assets:
Forward sale contracts $ 29,497 $ (24,139) $ 5,358 $ — $ (1,447) $ 3,911
Interest rate swap futures 4,924 — 4,924 — — 4,924
Total Assets $ 34,421 $ (24,139) $ 10,282 $ — $ (1,447) $ 8,835
Liabilities:
Forward sale contracts $ 27,103 $ (24,139) $ 2,964 $ — $ (1,736) $ 1,228
Put options on treasuries 31,070 — 31,070 — — 31,070
Warehouse lines of credit 7,457,199 — 7,457,199 (7,457,199) — —
Secured debt obligations (1)
545,596 — 545,596 (545,596) — —
Total Liabilities $ 8,060,968 $ (24,139) $ 8,036,829 $ (8,002,795) $ (1,736) $ 32,298

~~(1)Secured debt obligations as of December 31, 2021 included secured credit facilities and Term Notes.~~

The Company has entered into agreements with counterparties, which include netting arrangements whereby the counterparties are entitled to settle their positions on a net basis. In certain circumstances, the Company is required to provide certain counterparties financial instruments and cash collateral against derivative financial instruments, warehouse lines of credit or debt obligations. Cash collateral is held in margin accounts and included in restricted cash on the Company's consolidated balance sheets.

1411

NOTE 3 – LOANS HELD FOR SALE, AT FAIR VALUE

The following table represents the unpaid principal balance of LHFS by product type of loan as of March 31, 2023 and December 31, 2022:



	March 31, 2023				December 31, 2022
	Amount		%		Amount		%
Conforming - fixed	$	1,202,885	59	%	$	1,441,497	59	%
Conforming - ARM	22,479		1		52,513		2
Government - fixed	748,674		37		815,921		34
Government - ARM	6,037		—		17,788		1
Other - residential mortgage loans	69,731		3		101,137		4
Consumer loans	1,748		—		1,774		—
Total	2,051,554		100	%	2,430,630		100	%
Fair value adjustment	(12,187)				(57,203)
Loans held for sale, at fair value	$	2,039,367			$	2,373,427

A summary of the changes in the balance of loans held for sale is as follows:


	Three Months Ended March 31,
		2023		2022
Balance at beginning of period		$	2,373,427	$	8,136,817
Origination and purchase of loans		4,891,247		21,373,625
Sales		(5,382,419)		(22,805,365)
Repurchases		133,458		139,015
Principal payments		(15,097)		(60,287)
Fair value gain (loss)		38,751		(225,137)
Balance at end of period		$	2,039,367	$	6,558,668

Gain on origination and sale of loans, net is comprised of the following components:



	Three Months Ended March 31,
		2023		2022
Discount on loan sales		$	(26,669)	$	(236,096)
Servicing rights additions		59,295		269,760
Unrealized gains from derivative assets and liabilities		36,060		158,743
Realized (losses) gains from derivative assets and liabilities		(47,057)		349,040
Discount points, rebates and lender paid costs		57,446		60,067
Fair value gain (loss)		38,751		(225,137)
Provision for loan loss obligation for loans sold		(9,674)		(13,246)
Total gain on origination and sale of loans, net		$	108,152	$	363,131

The Company had $18.3 million and $24.8 million of loans held for sale on non-accrual status as of March 31, 2023 and December 31, 2022, respectively.

NOTE 4 ~~– LOANS HELD FOR SALE, AT FAIR VALUE~~

~~The following table represents the unpaid principal balance of LHFS by product type of loan as of March 31, 2022 and December 31, 2021:~~

March 31,
2022 December 31,
2021
Amount % Amount %
Conforming - fixed $ 4,074,157 62% $ 4,881,222 61%
Conforming - ARM 216,503 3 351,408 4
Government - fixed 1,262,582 19 1,156,890 15
Government - ARM 30,831 — 10,906 —
Other - residential mortgage loans 1,040,272 16 1,576,858 20
Consumer loans 1,881 — 1,942 —
6,626,226 100% 7,979,226 100%
Fair value adjustment (67,558) 157,591
Total $ 6,558,668 $ 8,136,817

~~A summary of the changes in the balance of loans held for sale is as follows:~~

Three Months Ended
March 31,
2022 2021
Balance at beginning of period $ 8,136,817 $ 6,955,424
Origination and purchase of loans 21,373,625 41,401,575
Sales (22,805,365) (39,919,413)
Repurchases 139,015 552,314
Principal payments (60,287) (23,300)
Fair value loss (225,137) (178,844)
Balance at end of period $ 6,558,668 $ 8,787,756

~~Gain on origination and sale of loans, net is comprised of the following components:~~

Three Months Ended
March 31,
2022 2021
(Discount) premium from loan sales $ (236,096) $ 470,572
Servicing rights 269,760 529,544
Unrealized gains from derivative assets and liabilities 158,743 328,322
Realized gains from derivative assets and liabilities 349,040 99,636
Discount points, rebates and lender paid costs 60,067 (114,855)
Fair value loss (225,137) (178,844)
Provision for loan loss obligation for loans sold (13,246) (800)
Total gain on origination and sale of loans, net $ 363,131 $ 1,133,575

~~The Company had $42.8 million and $28.8 million of loans held for sale on non-accrual status as of March 31, 2022 and December 31, 2021, respectively.~~

~~NOTE 5~~ – SERVICING RIGHTS, AT FAIR VALUE

The outstanding principal balance of the servicing portfolio was comprised of the following:

March 31,
2022 December 31,
2021
Conventional $ 116,922,133 $ 127,270,097
Government 36,463,684 34,842,868
Total servicing portfolio $ 153,385,817 $ 162,112,965

~~A summary of the unpaid principal balance underlying servicing rights is as follows:~~

March 31,
2022 December 31,
2021
Current loans $ 151,624,478 $ 160,302,966
Loans 30 - 89 days delinquent 514,200 504,467
Loans 90 or more days delinquent or in foreclosure 1,247,139 1,305,532
Total servicing portfolio (1)
$ 153,385,817 $ 162,112,965

~~(1)~~At March 31, 2022 and December 31, 2021 0.6% of the servicing portfolio was in forbearance as a result of payment relief efforts afforded to borrowers as a result of the Coronavirus Aid, Relief, and Economic Security Act and other regulatory guidance.


	March 31, 2023		December 31, 2022
Conventional	$	104,029,019	$	104,074,252
Government	37,644,445		37,096,679
Total servicing portfolio	$	141,673,464	$	141,170,931

A summary of the changes in the balance of servicing rights, net of servicing rights liability is as follows:

Three Months Ended
March 31,
2022 2021
Balance at beginning of period $ 1,999,402 $ 1,124,302
Additions 269,760 529,543
Sales proceeds, net (312,849) (674)
Changes in fair value:
Due to changes in valuation inputs or assumptions 198,996 231,023
Other changes in fair value (1)
(77,122) (118,106)
Balance at end of period $ 2,078,187 $ 1,766,088

~~(1)Other changes in fair value includes fall out and decay from loan payoffs and principal amortization.~~


	Three Months Ended March 31,
	2023		2022
Balance at beginning of period	$	2,025,136	$	1,999,402
Additions	59,295		269,760
Sales proceeds, net	(11,838)		(312,849)
Changes in fair value:
Due to changes in valuation inputs or assumptions	(21,368)		198,996
Due to collection/realization of cash flows	(34,657)		(77,122)
Balance at end of period	$	2,016,568	$	2,078,187

The following is a summary of the components of loan servicing fee income as reported in the Company’s consolidated statements of operations:


		Three Months Ended March 31,				Three Months Ended March 31,
		2022		2021				2023		2022
Contractual servicing fees	Contractual servicing fees	$	108,826	$	79,571		Contractual servicing fees	$	101,132	$	108,826
Late, ancillary and other fees	Late, ancillary and other fees	2,233		2,997			Late, ancillary and other fees	17,829		2,233
Servicing fee income	Servicing fee income	$	111,059	$	82,568		Servicing fee income	$	118,961	$	111,059

The following is a summary of the components of ~~changes~~change in fair value of servicing rights, net as reported in the Company’s consolidated statements of operations:
Three Months Ended
March 31,
2022 2021
Changes in fair value:
Due to changes in valuation inputs or assumptions $ 198,996 $ 231,023
Other changes in fair value (1)
(77,122) (118,106)
Realized gains (losses) on sales of servicing rights 10,034 (97)
Net loss from derivatives hedging servicing rights (200,291) (156,455)
Changes in fair value of servicing rights, net $ (68,383) $ (43,635)

~~(1) Other changes in fair value includes fall out and decay from loan payoffs and principal amortization.~~


	Three Months Ended March 31,
	2023		2022
Changes in fair value:
Due to changes in valuation inputs or assumptions	$	(21,368)	$	198,996
Due to collection/realization of cash flows	(34,657)		(77,122)
Realized gains on sales of servicing rights, net of provision	140		10,034
Net gain (loss) from derivatives hedging servicing rights	3,079		(200,291)
Changes in fair value of servicing rights, net	$	(52,806)	$	(68,383)

1713

The table below illustrates hypothetical changes in fair values of servicing rights, caused by assumed immediate changes to key assumptions that are used to determine fair value.


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Fair Value of Servicing Rights, net	Fair Value of Servicing Rights, net	$	2,078,187	$	1,999,402	Fair Value of Servicing Rights, net	$	2,016,568	$	2,025,136
Change in Fair Value from adverse changes:	Change in Fair Value from adverse changes:					Change in Fair Value from adverse changes:
Discount Rate:	Discount Rate:					Discount Rate:
Increase 1%	Increase 1%	(83,963)		(85,066)		Increase 1%	(80,524)		(81,431)
Increase 2%	Increase 2%	(162,469)		(163,255)		Increase 2%	(155,548)		(157,281)
Cost of Servicing:	Cost of Servicing:					Cost of Servicing:
Increase 10%	Increase 10%	(20,114)		(20,843)		Increase 10%	(19,333)		(19,017)
Increase 20%	Increase 20%	(40,403)		(41,727)		Increase 20%	(38,772)		(38,127)
Prepayment Speed:	Prepayment Speed:					Prepayment Speed:
Increase 10%	Increase 10%	(46,009)		(76,532)		Increase 10%	(23,181)		(18,863)
Increase 20%	Increase 20%	(90,211)		(148,556)		Increase 20%	(45,837)		(37,546)

Sensitivities are hypothetical changes in fair value and cannot be extrapolated because the relationship of changes in assumptions to changes in fair value may not be linear. Also, the effect of a variation in a particular assumption is calculated without changing any other assumption, whereas a change in one factor may result in changes to another. Accordingly, no assurance can be given that actual results would be consistent with the results of these estimates. As a result, actual future changes in servicing rights values may differ significantly from those displayed above.

NOTE 5 – DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Derivatives instruments utilized by the Company primarily include interest rate lock commitments, forward sale contracts, MBS put options, put options on treasuries, and interest rate swap futures. Derivative financial instruments are recognized as assets or liabilities and are measured at fair value. The Company accounts for derivatives as free-standing derivatives and does not designate any derivative financial instruments for hedge accounting. All derivative financial instruments are recognized on the consolidated balance sheets at fair value with changes in the fair values being reported in current period earnings. The Company does not use derivative financial instruments for purposes other than in support of its risk management activities. Refer to Note 1- Description of Business and Summary of Significant Accounting Policies and Note 2- Fair Value for further details on derivatives in the 2022 Form 10-K.

The following summarizes the Company’s outstanding derivative instruments:


				Fair Value
	Notional		Balance Sheet Location	Asset		Liability
March 31, 2023:
Interest rate lock commitments	$	2,840,324	Derivative asset, at fair value	$	61,019
Interest rate lock commitments	318,091		Derivative liabilities, at fair value	—		2,297

Forward sale contracts	341,310		Derivative asset, at fair value	10,977		—
Forward sale contracts	3,165,075		Derivative liabilities, at fair value	—		28,199

Put options on treasuries	—		Derivative asset, at fair value	—		—
Put options on treasuries	5,750		Derivative liabilities, at fair value	—		5,166

MBS put options	300,000		Derivative asset, at fair value	2,620		—
MBS put options	—		Derivative liabilities, at fair value	—		—

Interest rate swap futures	607		Derivative asset, at fair value	10,008		—
Interest rate swap futures	—		Derivative liabilities, at fair value	—		—
			Total derivative financial instruments	$	84,624	$	35,662


				Fair Value
	Notional		Balance Sheet Location	Asset		Liability
December 31, 2022:
Interest rate lock commitments	$	1,591,807	Derivative asset, at fair value	$	29,374	$	—
Interest rate lock commitments	622,706		Derivative liabilities, at fair value	—		5,784

Forward sale contracts	309,809		Derivative asset, at fair value	6,676		—
Forward sale contracts	2,963,685		Derivative liabilities, at fair value	—		43,482

Put options on treasuries	—		Derivative asset, at fair value	—		—
Put options on treasuries	8,050		Derivative liabilities, at fair value	—		10,831

MBS put options	400,000		Derivative asset, at fair value	3,361		—
MBS put options	—		Derivative liabilities, at fair value	—		—

Interest rate swap futures	—		Derivative asset, at fair value	—		—
Interest rate swap futures	211		Derivative liabilities, at fair value	—		7,395
			Total derivative financial instruments	$	39,411	$	67,492

Because many of the Company’s current derivative agreements are not exchange-traded, the Company is exposed to credit loss in the event of nonperformance by the counterparty to the agreements. The Company controls this risk through credit monitoring procedures including financial analysis, dollar limits and other monitoring procedures. The notional amount of the contracts does not represent the Company’s exposure to credit loss.

The following summarizes the realized and unrealized net gains or losses on derivative financial instruments and the consolidated statements of operations line items where such gains and losses are included:


		Three Months Ended March 31,
Derivative instrument	Statements of Operations Location	2023		2022
Interest rate lock commitments, net	Gain on origination and sale of loans, net	$	35,132	$	(168,620)
Forward sale contracts	Gain on origination and sale of loans, net	(43,136)		664,519
Interest rate swap futures	Gain on origination and sale of loans, net	(60)		(33,682)
Put options	Gain on origination and sale of loans, net	(2,933)		45,566
Forward sale contracts	Change in fair value of servicing rights, net	(2,791)		(74,227)
Interest rate swap futures	Change in fair value of servicing rights, net	1,238		(126,663)
Put options	Change in fair value of servicing rights, net	4,632		599
Total realized and unrealized (losses) gains on derivative financial instruments		$	(7,918)	$	307,492

NOTE 6 – ~~DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES~~BALANCE SHEET NETTING

~~Derivatives instruments utilized by~~The Company has entered into agreements with counterparties, which include netting arrangements whereby the counterparties are entitled to settle their positions on a net basis. In certain circumstances, the Company ~~primarily include interest rate lock commitments, forward sale contracts, MBS put options, put options on treasuries, and interest rate swap futures. Derivative~~is required to provide certain counterparties financial instruments ~~are recognized as assets or liabilities~~ and ~~are measured at fair value. The Company accounts for derivatives as free-standing derivatives and does not designate any~~cash collateral against derivative financial instruments, ~~for hedge accounting. All derivative~~warehouse and other lines of credit, or debt obligations. Cash collateral is held in margin accounts and included in restricted cash on the Company's consolidated balance sheets.

The table below represents financial assets and liabilities that are subject to master netting arrangements or similar agreements categorized by financial instrument, together with corresponding financial instruments and corresponding collateral received or pledged. In circumstances where right of set off criteria is met, the related asset and liability are ~~recognized~~presented in a net position on the consolidated balance sheets. Warehouse and other lines of credit and secured debt obligations were secured by financial instruments and cash collateral with fair values that exceeded the liability amount recorded on the consolidated balance sheets ~~at fair value with changes in the fair values being reported in current period earnings. The Company does not use derivative financial instruments for purposes other than in support~~as of ~~its risk management activities.~~March 31, 2023 and December 31, 2022, respectively. Refer to Note ~~1- Description~~8 – Warehouse and Other Lines of ~~Business, Presentation and Summary of Significant Accounting Policies and Note 2- Fair Value~~Credit for further details on ~~derivatives in the 2021 Form 10-K.~~cash collateral requirements.


	March 31, 2023
	Gross amounts recognized		Gross amounts offset in consolidated balance sheet		Net amounts presented in consolidated balance sheet		Gross amounts not offset in consolidated balance sheet				Net amount

							Financial instruments		Cash collateral


Assets:
Forward sale contracts	$	26,662	$	(15,685)	$	10,977	$	—	$	—	$	10,977

MBS put options	2,620		—		2,620		—		—		2,620
Interest rate swap futures	10,008		—		10,008		—		—		10,008
Total assets	$	39,290	$	(15,685)	$	23,605	$	—	$	—	$	23,605

Liabilities:
Forward sale contracts	$	43,884	$	(15,685)	$	28,199	$	—	$	(25,904)	$	2,295
Put options on treasuries	5,166		—		5,166		—		(5,166)		—


Warehouse and other lines of credit	1,830,319		—		1,830,319		(1,830,319)		—		—
Secured debt obligations (1)	1,311,812		—		1,311,812		(1,311,812)		—		—
Total liabilities	$	3,191,181	$	(15,685)	$	3,175,496	$	(3,142,131)	$	(31,070)	$	2,295

(1)Secured debt obligations as of March 31, 2023 included secured credit facilities and Term Notes.

1816

~~The following summarizes the Company’s outstanding derivative instruments:~~


					Fair Value
		Notional		Balance Sheet Location	Asset		Liability
March 31, 2022:
Interest rate lock commitments		$	6,594,828	Derivative asset, at fair value	$	78,295	$	—
Interest rate lock commitments		4,926,107		Derivative liabilities, at fair value	—		66,295

Forward sale contracts		32,877,196		Derivative asset, at fair value	272,802		—
Forward sale contracts		—		Derivative liabilities, at fair value	—		—

Put options on treasuries		—		Derivative asset, at fair value	—		—
Put options on treasuries		10,250		Derivative liabilities, at fair value	—		45,543

										December 31, 2022
										Gross amounts recognized				Gross amounts offset in consolidated balance sheets			Net amounts presented in consolidated balance sheets		Gross amounts not offset in consolidated balance sheets				Net amount

																Financial instruments			Cash collateral

Assets:									Assets:
Forward sale contracts									Forward sale contracts			$	39,386						$	(32,710)	$	6,676	$	—	$	—	$	6,676

MBS put options									MBS put options			3,361					—		3,361		—		—		3,361

Total assets									Total assets			$	42,747				$	(32,710)	$	10,037	$	—	$	—	$	10,037

Liabilities:									Liabilities:
Forward sale contracts									Forward sale contracts	$	76,192			$	(32,710)		$	43,482	$	—	$	(36,270)	$	7,212
Put options on treasuries									Put options on treasuries	10,831				—			10,831		—		(10,831)		—
Interest rate swap futures	Interest rate swap futures	—		Derivative asset, at fair value	—		—		Interest rate swap futures	7,395				—			7,395		—		(7,395)		—
Interest rate swap futures		7,217		Derivative liabilities, at fair value	—		1,528
				Total derivative financial instruments	$	351,097	$	113,366
Warehouse and other lines of credit									Warehouse and other lines of credit	2,146,602				—			2,146,602		(2,146,602)		—		—
Secured debt obligations (1)									Secured debt obligations (1)	1,298,853				—			1,298,853		(1,298,853)		—		—
Total liabilities									Total liabilities	$	3,539,873			$	(32,710)		$	3,507,163	$	(3,445,455)	$	(54,496)	$	7,212

(1)

Fair Value
Notional Balance Sheet Location Asset Liability
December 31, 2021:
Interest rate lock commitments $ 11,530,721 Derivative asset, at fair value $ 184,383 $ —
Interest rate lock commitments 1,125,911 Derivative liabilities, at fair value — 3,763
Forward sale contracts 19,482,705 Derivative asset, at fair value 5,358 —
Forward sale contracts 13,171,462 Derivative liabilities, at fair value — 2,964
Put options on treasuries — Derivative asset, at fair value — —
Put options on treasuries 16,980 Derivative liabilities, at fair value — 31,070
Interest rate swap futures 2,640 Derivative asset, at fair value 4,924 —
Interest rate swap futures — Derivative liabilities, at fair value — —
Total derivative financial instruments $ 194,665 $ 37,797

~~Because many~~Secured debt obligations as of ~~the Company’s current derivative agreements are not exchange-traded, the Company is exposed to~~December 31, 2022 included secured credit ~~loss in the event of nonperformance by the counterparty to the agreements. The Company controls this risk through credit monitoring procedures including financial analysis, dollar limits~~facilities and ~~other monitoring procedures. The notional amount of the contracts does not represent the Company’s exposure to credit loss.~~

Term Notes.

Three Months Ended
March 31,
Derivative instrument Statements of Operations Location 2022 2021
Interest rate lock commitments, net Gain on origination and sale of loans, net $ (168,620) $ (400,267)
Forward sale contracts Gain on origination and sale of loans, net 664,519 824,346
Interest rate swap futures Gain on origination and sale of loans, net (33,682) (29,991)
Put options Gain on origination and sale of loans, net 45,566 33,870
Forward sale contracts Change in fair value of servicing rights, net (74,227) (112,930)
Interest rate swap futures Change in fair value of servicing rights, net (126,663) (41,016)
Put options Change in fair value of servicing rights, net 599 (2,511)
Total realized and unrealized gains on derivative financial instruments $ 307,492 $ 271,501

NOTE 7 – VARIABLE INTEREST ENTITIES

The determination of whether the assets and liabilities of the VIEs are consolidated ~~in the consolidated balance sheets~~ or not consolidated in the consolidated balance sheets depends on the terms of the related transaction and the Company’s continuing involvement, if any, with the VIE. The Company is deemed the primary beneficiary and therefore consolidates VIEs for which it has both (a) the power, through voting rights or similar rights, to direct the activities that most significantly impact the VIE's economic performance, and (b) benefits, as defined, from the VIE. The Company determines whether it holds a significant variable interest in a VIE based on a consideration of both qualitative and quantitative factors regarding the nature, size, and form of its involvement with the VIE. The Company assesses whether it is the primary beneficiary of a VIE on an ongoing basis. The Company did not provide any non-contractual financial support to VIEs for the three months ended March 31, ~~2022~~2023 and year ended December 31, ~~2021.~~2022.

Consolidated VIEs

The Company is a holding company, its sole material asset is its equity interest in LD Holdings and as the sole managing member of LD Holdings, the Company indirectly operates and controls all of LD Holdings’ business and affairs. LD Holdings is considered a VIE and the financial results of LD Holdings and its subsidiaries are consolidated. A portion of net earnings or loss is allocated to noncontrolling interest to reflect the entitlement of the Continuing LLC Members.

The Company is involved in several types of securitization and financing transactions that utilize special purpose entities (“SPEs”). The Company’s principal use of SPEs is to obtain liquidity by securitizing certain of its financial and non-financial assets. SPEs involved in the Company’s securitization and other financing transactions are often considered VIEs.

The Company consolidates ~~warehouse~~ securitization facilities that finance mortgage loans held for sale, and SPEs established as trusts to finance mortgage servicing rights and servicing advance receivables. The Company sells assets to a securitization or trust, which ~~issues~~issue beneficial interests ~~which~~that are collateralized by the transferred assets and entitle the investors to specified cash flows generated therefrom. The Company may retain beneficial interests in the assets sold. The Company also holds certain conditional repurchase options specific to these securitizations that allow it to repurchase assets from the securitization entity. The Company’s economic exposure to loss from outstanding third-party financing is generally limited to the carrying value of the assets financed. The Company has retained risks in the ~~warehouse~~ securitizations including customary representations and warranties. For ~~warehouse~~ securitization facilities, the Company, as seller, has an option to prepay and to redeem outstanding classes of issued notes ~~at the Company’s discretion~~ after

a set time period has elapsed. ~~The Company generally has discretion regarding when or if it will exercise these options, but would do so only when it was in the Company’s best interest.~~ The Company’s exposure to these entities is primarily through its role as seller, servicer, and administrator. Servicing functions include, but are not limited to, general collection activity, ~~on current~~preparing and ~~noncurrent accounts,~~furnishing statements, and loss mitigation efforts including repossession and sale of collateral, as well as preparing and furnishing statements. The Company also holds certain conditional repurchase options specific to warehouse securitizations that allow it to repurchase assets from the securitization entity.

collateral.

The Company ~~sells~~may sell mortgage loans to investors through private label securitizations which are accounted for either as sales or secured borrowings. The Company may retain economic interests in the securitized and sold assets, which are generally retained in the form of senior or subordinated interests, residual interests, and/or servicing rights. The Company evaluates its interests in each private label securitization for classification as a VIE. The Company accounts for a securitization as a sale when it has relinquished control over the transferred financial assets and does not hold other interests in the VIE that individually, or in the aggregate, would absorb more than an insignificant amount of the VIE’s expected losses or receive more than an insignificant amount of the VIE’s expected residual returns. The Company has an option to exercise a cleanup call to purchase the remaining mortgage loans and any trust property when the remaining aggregate principal balance is less than 10% of the initial aggregate principal balance. The Company completed a private label securitization in the first quarter of 2022 and determined it was the primary beneficiary of the VIE as it retained subordinate interests that expose the Company to more than an insignificant amount of expected losses. The Company consolidated the securitization and accounted for the transaction as a secured borrowing reported in debt obligations, net on the consolidated balance sheets. Refer to Note 9-Debt obligations - Other Secured Financings for further information.

The table below presents a summary of the carrying value and balance sheet classification of assets and liabilities in the Company’s consolidated securitization and SPE ~~VIEs~~VIEs.


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022

Assets	Assets					Assets
Loans held for sale, at fair value	Loans held for sale, at fair value	$	2,210,984	$	2,557,490	Loans held for sale, at fair value	$	506,808	$	497,574
Restricted cash	Restricted cash	31,429		100,494		Restricted cash	3,547		6,735
Servicing rights, at fair value	Servicing rights, at fair value	433,148		400,678		Servicing rights, at fair value	553,236		544,729
Prepaid expenses and other assets	Prepaid expenses and other assets	34,270		17,756		Prepaid expenses and other assets	55,819		54,887
		$	2,709,831	$	3,076,418
Total						Total	$	1,119,410	$	1,103,925

Liabilities	Liabilities					Liabilities
Warehouse and other lines of credit	Warehouse and other lines of credit	$	1,800,000	$	2,600,000	Warehouse and other lines of credit	$	500,000	$	500,000
Debt obligations, net:	Debt obligations, net:					Debt obligations, net:
MSR Facilities	MSR Facilities	18,987		15,000		MSR Facilities	126,874		116,874
Servicing advance facilities	Servicing advance facilities	29,569		15,070		Servicing advance facilities	50,316		48,484
Term notes	Term notes	199,290		199,133		Term notes	199,791		199,666
Other secured financings		421,303		—

Total						Total	$	876,981	$	865,024
		$	2,469,149	$	2,829,203

Non-Consolidated VIEs

The nature, purpose, and activities of non-consolidated VIEs currently encompass the Company’s investments in retained interests from securitizations and joint ventures. The table below presents a summary of the nonconsolidated VIEs for which the Company holds variable interests.

2118


		March 31, 2022												March 31, 2023
		Carrying value				Maximum exposure to loss				Total assets in VIEs				Carrying value						Maximum exposure to loss			Total assets in VIEs
		Assets		Liabilities							Assets				Liabilities
Retained interests	Retained interests	$	93,466	$	—			$	93,466			$	1,984,088	Retained interests		$	95,561		$	—		$	95,561	$	2,285,471
Investments in joint ventures	Investments in joint ventures	18,559		—		18,559				13,541	Investments in joint ventures			18,266			—			18,266			18,622
		$	112,025	$	—	$	112,025
Total											Total			$	113,827		$	—		$	113,827

		December 31, 2021												December 31, 2022
		Carrying value				Maximum exposure to loss				Total assets in VIEs				Carrying value						Maximum exposure to loss			Total assets in VIEs
		Assets		Liabilities							Assets				Liabilities
Retained interests	Retained interests	$	72,874	$	—			$	72,874			$	1,424,857	Retained interests		$	94,243		$	—		$	94,243	$	2,309,739
Investments in joint ventures	Investments in joint ventures	18,553		—		18,553				20,783	Investments in joint ventures			20,410			—			20,410			38,682
Total											Total			$	114,653		$	—		$	114,653
		$	91,427	$	—	$	91,427

Retained interests

~~The~~In 2022 and 2021, the Company completed the sale and securitization of non-owner occupied residential mortgage loans. Pursuant to the credit risk retention requirements, the Company, as sponsor, is required to retain at least a 5% economic interest in the credit risk of the assets collateralizing the securitization transactions. The retained interests represent a variable interest in the securitizations. The ~~carrying value of~~ ~~retained interests is included within trading securities, at fair value on the consolidated balance sheets.~~ ~~The~~ Company determined it was not the primary beneficiary of the VIE. The Company’s continuing involvement is limited to customary servicing obligations as ~~servicing administrator~~servicer associated with retained servicing rights and the receipt of principal and interest associated with the retained interests. The investors and the securitization trusts have no recourse to the Company’s assets; holders of the securities issued by each trust can look only to the loans owned by the trust for payment. The retained interests held by the Company are subject principally to the credit risk stemming from the underlying transferred loans. The securitization trusts used to effect these transactions are variable interest entities that the Company does not consolidate. The Company remeasures the carrying value of its retained interests at each reporting date to reflect their current fair value which is included in trading securities, at fair value on the consolidated balance sheets, with corresponding gains or losses included in other income on the consolidated statements of operations. As of March 31, ~~2022,~~2023, the remaining principal balance of loans transferred to these securitization trusts was ~~$2.0~~$2.3 billion ~~and no loans were~~of which $10.6 million was 90 days or more past due.

Investments in joint ventures

The Company’s joint ventures include investments with home builders, real estate brokers, and commercial real estate companies to provide loan origination services and real estate settlement services to customers referred by the Company’s joint venture partners. The Company is generally not determined to be the primary beneficiary in its joint venture VIEs because it does not have the power, through voting rights or similar rights, to direct the activities that most significantly impact the economic performance of the VIE. The Company’s pro rata share of net earnings of joint ventures was $3.8 million for the three months ended March 31, 2023, and $2.0 million for the three months ended March 31, 2022, ~~and $2.2 million for the three months ended March 31, 2021, respectively~~ and is included in other income in the consolidated statements of operations.

NOTE 8 – WAREHOUSE AND OTHER LINES OF CREDIT

At March 31, ~~2022,~~2023, the Company iswas a party to 149 revolving lines of credit with lenders providing ~~$10.9~~$4.1 billion of warehouse and ~~revolving credit~~securitization facilities. The ~~warehouse and revolving credit~~ facilities are used to fund, and are secured by, residential mortgage loans held for sale. The facilities are repaid using proceeds from the sale of loans. Interest is generally payable monthly in arrears or on the

repurchase date of a loan, and outstanding principal is payable upon receipt of loan sale proceeds or on the repurchase date of a loan. Outstanding principal related to a particular loan must also be repaid after the expiration of a contractual period of time or, if applicable, upon the occurrence of certain events of default with respect to the underlying loan. Interest expense ~~on warehouse and revolving lines of credit~~ is recorded to interest expense on the consolidated statements of operations.

~~The warehouse and revolving lines of credit are repaid using proceeds from the sale of loans.~~ The base interest rates on the ~~Company’s warehouse lines~~facilities bear interest at ~~30-day LIBOR,~~SOFR, or other alternative base rate, ~~such as SOFR,~~ plus a margin. Some of the ~~lines~~facilities carry additional ~~fees in the form of annual facility~~ fees charged on the total line amount, commitment fees charged on the committed portion of the line, and non-usage fees charged when monthly usage falls below a certain utilization percentage. ~~The weighted average~~As of March 31, 2023, the interest rate ~~at March 31, 2022 totaled 2.14%~~was comprised of the applicable base rate plus a spread ranging from 1.37% to 2.25%. ~~The Company’s warehouse lines are~~

~~scheduled to expire through 2023 under~~ ~~one~~ ~~or two year terms and all lines are subject to renewal based on an annual credit review conducted by the lender. The Company’s securitization facilities’ notes have~~ ~~two~~ ~~to three year terms.~~

The base interest ~~rates~~rate for ~~all~~ warehouse ~~lines of credit are~~facilities is subject to increase based upon the characteristics of the underlying loans collateralizing the lines of credit, including, but not limited to product type and number of days held for sale. The warehouse lines are scheduled to expire through 2023. As of March 31, 2023 there was one securitization facility with an original three year term scheduled to expire in 2024. All warehouse lines and other lines of credit are subject to renewal based on an annual credit review conducted by the lender.

Certain warehouse line lenders require the Company to maintain cash accounts with minimum required balances at all times. As of March 31, ~~2022~~2023 and December 31, ~~2021, there was $7.0~~2022, the Company had posted a total of $7.8 million and ~~$8.0~~$11.0 million, ~~respectively, held in these accounts which are recorded as a component of~~ restricted cash onas collateral with our warehouse lenders and securitization facilities of which $4.3 million and $4.3 million were the ~~consolidated balance sheets.~~minimum required balances.

Under the terms of these warehouse lines, the Company is required to maintain various financial and other covenants. As of March 31, ~~2022,~~2023, the Company amended certain warehouse lines related to certain profitability covenants, following which the Company was in compliance with ~~all warehouse lending related~~those financial covenants.

Securitization Facilities

In May 2019, the Company issued notes through a securitization facility (“2019-1 Securitization Facility”) backed by a revolving warehouse line of credit. The 2019-1 Securitization Facility is secured by newly originated, first-lien, fixed rate or adjustable rate, residential mortgage loans which are originated in accordance with the criteria of Fannie Mae or Freddie Mac for the purchase of mortgage loans or in accordance with the criteria of Ginnie Mae for the guarantee of securities backed by mortgage loans. The 2019-1 Securitization Facility issued $300.0 million in notes and certificates that bear interest at 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin. The 2019-1 Securitization Facility will terminate on the earlier of (i) the two-year anniversary of the initial purchase date, (ii) the Company exercising its right to optional prepayment in full and (iii) the date of the occurrence and continuance of an event of default. In May 2021, the Company repaid the notes and certificates of the 2019-1 Securitization Facility.

In October 2019, the Company issued notes through an additional securitization facility (“2019-2 Securitization Facility”) backed by a revolving warehouse line of credit. The 2019-2 Securitization Facility is secured by newly originated, first-lien, fixed rate or adjustable rate, residential mortgage loans which are originated in accordance with the criteria of Fannie Mae or Freddie Mac for the purchase of mortgage loans or in accordance with the criteria of Ginnie Mae for the guarantee of securities backed by mortgage loans. The 2019-2 Securitization Facility issued $300.0 million in notes and certificates that bear interest at 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin. The 2019-2 Securitization Facility will terminate on the earlier of (i) the two-year anniversary of the initial purchase date, (ii) the Company exercising its right to optional prepayment in full and (iii) the date of the occurrence and continuance of an event of default. In October 2021, the Company repaid the notes and certificates of the 2019-2 Securitization Facility.

In October 2020, the Company issued notes through an additional securitization facility (“2020-1 Securitization Facility”) backed by a revolving warehouse line of credit. The 2020-1 Securitization Facility is secured by newly originated, first-lien, residential mortgage loans eligible for purchase by Fannie Mae and Freddie Mac for the purchase of mortgage loans or in accordance with the criteria of Ginnie Mae for the guarantee of securities backed by mortgage loans. The 2020-1 Securitization Facility issued $600.0 million in notes and certificates that bear interest at 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin. The 2020-1 Securitization Facility will terminate on the earlier of (i) the two-year anniversary of the initial purchase date, (ii) the Company exercising its right to optional prepayment in full and (iii) the date of the occurrence and continuance of an event of default. In March 2022, the Company exercised its right to optional prepayment in full and terminated the 2020-1 Securitization Facility.

In December 2020, the Company issued notes through an additional securitization facility (“2020-2 Securitization Facility”) backed by a revolving warehouse line of credit. The 2020-2 Securitization Facility is secured by newly originated, first-lien, fixed rate residential mortgage loans eligible for purchase by the GSEs or in accordance with the criteria of Ginnie Mae for the guarantee of securities backed by mortgage loans. The 2020-2 Securitization Facility issued $500.0 million in notes and certificates that bear interest at 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin. The 2020-2 Securitization Facility will terminate on the earlier of (i) the three year anniversary of the initial purchase date, (ii) the Company exercising its right to optional prepayment in full and (iii) the date of the occurrence and continuance of an event of default.

In February 2021, the Company issued notes and a class of owner trust certificates through an additional securitization facility (“2021-1 Securitization Facility”) backed by a revolving warehouse line of credit. The 2021-1 Securitization Facility is secured by newly originated, first-lien, fixed-rate or adjustable-rate, residential mortgage loans which are originated in

accordance with the criteria of Fannie Mae and Freddie Mac for the purchase of mortgage loans or in accordance with the criteria of Ginnie Mae for the guarantee of securities backed by mortgage loans. The 2021-1 Securitization Facility issued $500.0 million in notes that bear interest at 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin. The 2021-1 Securitization Facility will terminate on the earlier of (i) the three-year anniversary of the initial purchase date, (ii) the Company exercising its right to optional prepayment in full and (iii) the date of the occurrence and continuance of an event of default.

In April 2021, the Company issued notes and a class of owner trust certificates through an additional securitization facility (“2021-2 Securitization Facility”) backed by a revolving warehouse line of credit. The 2021-2 Securitization Facility is secured by newly originated, first-lien, fixed-rate or adjustable-rate, residential mortgage loans which are originated in accordance with the criteria of Fannie Mae and Freddie Mac for the purchase of mortgage loans or in accordance with the criteria of Ginnie Mae for the guarantee of securities backed by mortgage loans. The 2021-2 Securitization Facility issued $500.0 million in notes that bear interest at 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin. The 2021-2 Securitization Facility will terminate on the earlier of (i) the three-year anniversary of the initial purchase date, (ii) the Company exercising its right to optional prepayment in full and (iii) the date of the occurrence and continuance of an event of default.

In October 2021, the Company issued notes and a class of owner trust certificates through an additional securitization facility (“2021-3 Securitization Facility”) backed by a revolving warehouse line of credit. The 2021-3 Securitization Facility is secured by newly originated, first-lien, fixed-rate or adjustable-rate, residential mortgage loans ~~which are~~ originated in accordance with the criteria of Fannie Mae and Freddie Mac for the purchase of mortgage loans or in accordance with the criteria of Ginnie Mae for the guarantee of securities backed by mortgage loans. The 2021-3 Securitization Facility issued $500.0 million in notes that bear interest at 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin. The 2021-3 Securitization Facility will terminate on the earlier of (i) the three-year anniversary of the initial purchase date, (ii) the Company exercising its right to optional prepayment in full, and (iii) the date of the occurrence and continuance of an event of default.

The following table presents information on warehouse ~~borrowings~~and securitization facilities and the outstanding balance as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


									Outstanding Balance									Outstanding Balance
		Committed Amount		Uncommitted Amount		Total Facility Amount		Expiration Date	March 31, 2022		December 31, 2021			Committed Amount		Uncommitted Amount		Total Facility Amount		Expiration Date	March 31, 2023		December 31, 2022
Facility 1(1)	Facility 1(1)	$	400,000	$	1,100,000	$	1,500,000	10/29/2022	$	757,583	$	851,088	Facility 1(1)	$	400,000	$	350,000	$	750,000	10/26/2023	$	212,349	$	382,098
Facility 2(2)	Facility 2(2)	—		600,000		600,000		9/26/2022	181,643		295,743		Facility 2(2)	—		300,000		300,000		9/25/2023	182,777		236,144
Facility 3~~(6)~~(3)	Facility 3~~(6)~~(3)	—		500,000		500,000		4/19/2022	388,686		459,018		Facility 3~~(6)~~(3)	—		300,000		300,000		4/18/2023	214,915		177,900
Facility 4	Facility 4	—		900,000		900,000		11/14/2022	544,493		266,230		Facility 4	—		300,000		300,000		12/28/2023	94,960		202,548
Facility 5(2)	Facility 5(2)	—		200,000		200,000		N/A	476		391		Facility 5(2)	—		200,000		200,000		N/A	—		—
Facility 6(2)	Facility 6(2)	100,000		1,000,000		1,100,000		10/10/2022	449,383		583,449		Facility 6(2)	100,000		500,000		600,000		9/29/2023	93,942		180,273
Facility 7~~(3)~~(4)	Facility 7~~(3)~~(4)	750,000		1,250,000		2,000,000		5/5/2023	1,038,237		1,410,367		Facility 7~~(3)~~(4)	400,000		400,000		800,000		5/5/2023	307,683		295,064

Facility 8	Facility 8	—		750,000		750,000		N/A	150,395		361,783		Facility 8	—		300,000		300,000		9/21/2023	223,693		172,575
Facility 9(4)(5)		—		—		—		10/25/2022	—		600,000
Facility 10(4)		300,000		—		300,000		12/17/2023	300,000		500,000
Facility 11		—		1,000,000		1,000,000		9/23/2022	222,345		263,516

Facility 12(4)		500,000		—		500,000		2/2/2024	500,000		500,000
Facility 13(4)		500,000		—		500,000		4/23/2024	500,000		500,000
Facility 14		—		500,000		500,000		9/22/2022	273,666		365,614
Facility 15(4)		500,000		—		500,000		10/21/2024	500,000		500,000
Facility 9(5)													Facility 9(5)	500,000		—		500,000		10/21/2024	500,000		500,000
Total	Total	$	3,050,000	$	7,800,000	$	10,850,000		$	5,806,907	$	7,457,199	Total	$	1,400,000	$	2,650,000	$	4,050,000		$	1,830,319	$	2,146,602

(1)The total facility is available both to fund loan originations and also provide liquidity under a gestation facility to finance recently sold MBS up to the MBS settlement date.

2420

(2)In addition to the warehouse line, the lender provides a separate gestation facility to finance recently sold MBS up to the MBS settlement date.

(3)In May 2023, this facility was extended to April 2024.

(4)In addition to the outstanding balance secured by mortgage loans, the Company has ~~$19.0~~$126.9 million outstanding to finance servicing rights included within debt obligations in the consolidated balance sheets. In May 2023, this facility was extended to November 2023 and total facility reduced to $600.0 million of which $250.0 million is committed.

~~(4)~~(5)Securitization backed by a revolving warehouse facility to finance newly originated first-lien fixed and adjustable rate mortgage loans.

~~(5)This facility was prepaid and terminated in March 2022.~~

~~(6)In April 2022, this facility was extended to mature in April 2023.~~

The following table presents ~~certain~~ information on borrowings under warehouse ~~borrowings:~~and securitization facilities:


		Three Months Ended March 31,							Three Months Ended March 31,
		2022			2021					2023			2022
Maximum outstanding balance during the period	Maximum outstanding balance during the period	$	7,672,559		$	9,109,780		Maximum outstanding balance during the period		$	2,152,855		$	7,672,559
Average balance outstanding during the period	Average balance outstanding during the period	6,290,744			7,507,914			Average balance outstanding during the period		1,518,210			6,290,744
Collateral pledged (loans held for sale)	Collateral pledged (loans held for sale)	6,431,228			8,514,329			Collateral pledged (loans held for sale)		1,909,375			6,431,228
Weighted average interest rate during the period	Weighted average interest rate during the period	2.01		%	2.34		%	Weighted average interest rate during the period		6.62		%	2.01		%

NOTE 9 – DEBT OBLIGATIONS

The following table presents the outstanding debt as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Secured debt obligations, net:	Secured debt obligations, net:					Secured debt obligations, net:
Secured credit facilities	Secured credit facilities					Secured credit facilities
MSR facilities	MSR facilities	$	217,406	$	262,250	MSR facilities	$	974,410	$	963,834
Securities financing facilities	Securities financing facilities	90,285		66,439		Securities financing facilities	86,640		85,513
Servicing advance facilities	Servicing advance facilities	29,569		15,070		Servicing advance facilities	50,316		48,484
Total secured credit facilities	Total secured credit facilities	337,260		343,759		Total secured credit facilities	1,111,366		1,097,831
Term Notes	Term Notes	199,290		199,133		Term Notes	199,791		199,666
Other secured financings		421,303		—

Total secured debt obligations, net	Total secured debt obligations, net	957,853		542,892		Total secured debt obligations, net	1,311,157		1,297,497
Unsecured debt obligations, net:	Unsecured debt obligations, net:					Unsecured debt obligations, net:

Senior Notes	Senior Notes	989,727		1,085,316		Senior Notes	992,555		991,822

Total debt obligations, net	Total debt obligations, net	$	1,947,580	$	1,628,208	Total debt obligations, net	$	2,303,712	$	2,289,319

Certain of the Company’s secured debt obligations require us to satisfy financial covenants including minimum levels of profitability, tangible net worth, liquidity, and maximum levels of consolidated leverage. The Company obtained amendments relating to certain profitability covenants. As a result, the Company was in compliance with all such financial covenants as of March 31, 2023.

Secured Credit Facilities

Secured credit facilities ~~include~~are revolving facilities collateralized by MSRs, trading securities, and servicing advances.

MSR Facilities

In October 2014, the Company entered into a $25.0 million credit facility to finance servicing rights and for other working capital needs and general corporate purposes. The Company has entered into subsequent amendments to increase and decrease the size of the facility and extend the maturity date. The facility is secured by Freddie Mac mortgage servicing rights

with a fair value of ~~$368.9~~$275.9 million as of March 31, ~~2022~~2023 and accrues interest at a base rate per annum of 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin. As of March 31, ~~2022,~~2023, there was ~~$50.6~~$200.0 million outstanding on this facility with a maturity of June ~~2022.~~2023. At March 31, ~~2022,~~2023, capacity under the facility was ~~$268.0~~$200.0 million. Advances for

servicing rights are determined using a borrowing base formula calculated against the fair market value of the pledged servicing rights. In April 2023, capacity under this facility was lowered to $185.0 million.

In December 2021, the Company entered into a credit facility agreement which provides $300.0 million in borrowing capacity, with an option to increase up to $500.0 million upon mutual consent, available to the Company. The facility is secured by Freddie Mac mortgage servicing rights with a fair value of ~~$536.9~~$514.4 million as of March 31, ~~2022, and~~2023. The facility bears interest at ~~30-day LIBOR, or other alternative base rate such as~~ SOFR, plus a margin per ~~annum.~~annum and matures in December 2023. At March 31, ~~2022,~~2023, there was ~~$50.0~~$300.0 million outstanding on this facility and ~~$0.6~~$0.4 million in unamortized deferred financing costs.

In January 2022, the Company entered into a credit facility agreement which provides $500.0 million in borrowing capacity. The facility is secured by Fannie Mae mortgage servicing rights with a fair value of ~~$658.0~~$627.0 million as of March 31, ~~2022 and~~2023. The facility bears interest at SOFR, ~~or other alternative base rate,~~ plus a margin per ~~annum.~~annum and matures in January 2025. At March 31, ~~2022,~~2023, there was ~~$100.0~~$348.0 million outstanding on this facility and ~~$1.6~~$0.1 million in unamortized deferred financing costs.

In August 2017, the Company ~~entered into~~established the GMSR Trust to finance Ginnie Mae mortgage servicing rights owned by the Company ~~pursuant to~~through issuance of either variable funding notes or term notes, in each case secured by participation certificates held by the ~~terms~~GMSR Trust. As of ~~a base indenture. The~~March 31, 2023, the Company had pledged participation certificates representing beneficial interests in Ginnie Mae mortgage servicing rights to the GMSR ~~Trust. The Company is party to an acknowledgment agreement~~Trust with ~~Ginnie Mae whereby it may, from time to time pursuant to~~a fair value of $553.2 million. At March 31, 2023 the ~~terms~~maximum borrowing capacity of ~~any supplemental indenture, issue to institutional investors~~the variable funding notes or one or more series of term notes, in each case secured by the participation certificates. In August 2017, the Company, issued a variable funding note in the initial amount of $65.0 million with a maximum amount of $150.0was $200.0 million. The variable funding ~~note bears~~notes bear interest at ~~30-day LIBOR, or other alternative base rate such as~~ SOFR plus a margin per ~~annum. The Company has entered into subsequent agreements to amend certain terms of the variable funding note~~annum and ~~extend the maturity date. In October 2021, the maturity date was extended to November 2022.~~mature in May 2023. As of March 31, ~~2022,~~2023, there ~~was $19.0~~were $126.9 million in variable funding notes ~~outstanding.~~

~~The Company is required~~outstanding to ~~satisfy certain financial covenants for its MSR facilities. As of March 31, 2022,~~finance Ginnie Mae mortgage servicing rights owned by the ~~Company was in compliance with all such covenants.~~Company.

Securities Financing Facilities

The Company has entered into master repurchase agreements to finance retained interest securities related to its securitizations. Each of the securities financing facilities has a 90 day term and accrues interest at a rate of 90-day SOFR, plus a margin. The securities financing facilities have an advance rate between ~~60%~~50% and ~~92%~~90% based on classes of the securities and ~~accrue interest at a rate of 90-day LIBOR, or other alternative base rate such as SOFR, plus a margin. The securities financing facilities~~ are secured by ~~the~~ trading securities which represent our retained interests in the credit risk of the assets collateralizing certain securitization transactions. As of March 31, ~~2022,~~2023, the trading securities had a fair value of ~~$93.5~~$95.6 million on the consolidated balance sheets and there ~~was $90.3~~were $86.6 million in securities financing facilities outstanding.

Servicing Advance Facilities

In September 2020, the Company, through its indirect-wholly owned subsidiary loanDepot Agency Advance Receivables Trust (the “Advance Receivables Trust”), entered into a variable funding note facility for the financing of servicing advance receivables with respect to residential mortgage loans serviced by it on behalf of Fannie Mae and Freddie Mac. Pursuant to an indenture, the Advance Receivables Trust can issue up to ~~$130.0~~$100.0 million in variable funding notes (the “2020-VF1 Notes”). The 2020-VF1 Notes accrue interest at ~~30-day LIBOR, or other alternative base rate such as~~ SOFR, plus a margin per annum and mature in September 2022 (unless earlier redeemed in accordance with their terms). The 2020-VF1 Notes are secured by servicing advance receivables made pursuant to Fannie Mae and Freddie Mac requirements and mature in September 20222023 (unless earlier redeemed in accordance with their terms). At March 31, ~~2022,~~2023, there was ~~$12.9~~$20.2 million in 2020-VF1 Notes outstanding. Under this facility, the Company is required to satisfy certain financial covenants including minimum levels of tangible net worth and liquidity and maximum levels of consolidated leverage. As of March 31, 2022, the Company was in compliance with all such covenants.

In November 2021, the Company, through the GMSR Trust issued ~~2 new series of~~ variable funding notes ~~for the financing of~~secured by principal and interest advance receivables and servicing advance receivables with respect to residential mortgage

loans serviced ~~by it~~ on behalf of Ginnie Mae. ~~Pursuant to an indenture, the Company can issue up to $150.00 million in variable funding notes secured by principal and interest advance reimbursement or servicing advance reimbursement amounts.~~ The variable funding notes bear interest at ~~30-day LIBOR, or other alternative base rate such as~~ SOFR plus a margin per ~~annum.~~annum and mature in May 2023. As of March 31, ~~2022,~~2023, there was ~~$17.5~~$30.1 million outstanding ~~balance~~ on the variable funding ~~notes and $0.8 million in unamortized deferred financing costs.~~notes.

Term Notes

In October 2018, the Company, through the GMSR Trust issued the Series 2018-GT1 Term Notes (“Term Notes”) under the GMSR Trust. The Term Notes are secured by certain participation certificates relating to Ginnie Mae mortgage servicing rights that also secure the variable funding notes described above with a fair value of $433.1 million as of March 31, 2022.. The Term Notes accrue interest at 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin per annum and

mature in October 2023 or, if extended pursuant to the terms of the related indenture supplement, October 2025 (unless earlier redeemed in accordance with their terms). At March 31, ~~2022,~~2023, there was $200.0 million in Term Notes outstanding and $0.7 million in unamortized deferred financing costs. Under this facility, the Company is required to satisfy certain financial covenants. As of March 31, 2022, the Company was in compliance with all such covenants.

~~Other Secured Financings~~

In March 2022, the Company completed a securitization to finance mortgage loans that was accounted for as a secured financing rather than a sale. The secured financing is collateralized by and indexed to the residential mortgage-backed loans held by a VIE. As of March 31, 2022, there was $422.9 million outstanding in other secured financings and $1.6$0.2 million in unamortized deferred financing costs.

Senior Notes

In October 2020, the Company issued $500.0 million in aggregate principal amount of 6.50% senior unsecured notes due 2025, (the “2025 Senior Notes”). The 2025 Senior Notes will mature on November 1, 2025. Interest on the 2025 Senior Notes accrues at a rate of 6.50% per annum, payable semi-annually in arrears on May 1 and November 1 of each year. At any time prior to November 1, 2022, the Company may redeem some or all of the 2025 Senior Notes at a price equal to 100% of the principal amount of the 2025 Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption plus a make-whole premium. The Company may ~~also~~ redeem the 2025 Senior Notes, ~~at our option,~~ in whole or in part, at ~~any time on or after November 1, 2022 at~~ various redemption prices. In addition, subject to certain conditions at any time prior to November 1, 2022, the Company may redeem up to 40% of the principal amount of the 2025 Senior Notes with the proceeds of certain equity offerings at a redemption price of 106.50% of the principal amount of the 2025 Senior Notes, together with accrued and unpaid interest, if any, to, but not including, the date of redemption. At March 31, ~~2022,~~2023, there was $500.0 million in 2025 Senior Notes outstanding and ~~$6.4~~$4.6 million in unamortized deferred financing costs.

In March 2021, the Company issued $600.0 million in aggregate principal amount of 6.125% senior unsecured notes due 2028 (the “2028 Senior Notes” and together with the 2025 Senior Notes, the "Senior Notes"). The 2028 Senior Notes will mature on April 1, 2028. Interest on the 2028 Senior Notes accrues at a rate of 6.125% per annum, payable semi-annually in arrears on April 1 and October 1 of each year. At any time prior to April 1, 2024, the Company may redeem some or all of the 2028 Senior Notes at a price equal to 100% of the principal amount of the 2028 Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption plus a make-whole premium. During the first quarter of 2022, the Company repurchased $97.5 million of 2028 Senior Notes at an average purchase price of 87.9% of par which resulted in a $10.5 million gain on extinguishment of debt recorded in other interest expense on the consolidated statement of operations. The Company may also redeem the 2028 Senior Notes, ~~at our option,~~ in whole or in part, at any time on or after April 1, 2024 at various redemption prices. In addition, subject to certain conditions at any time prior to April 1, 2024, the Company may redeem up to 40% of the principal amount of the 2028 Senior Notes with the proceeds of certain equity offerings at a redemption price of 106.125% of the principal amount of the 2028 Senior Notes, together with accrued and unpaid interest, if any, to, but not including, the date of redemption. During the first quarter of 2022, the Company repurchased $97.5 million of 2028 Senior Notes at an average purchase price of 87.9% of par which resulted in a $10.5 million gain on extinguishment of debt recorded in other interest expense on the consolidated statement of operations. At March 31, ~~2022,~~2023, there was $502.5 million in 2028 Senior Notes outstanding and ~~$6.4~~$5.3 million in unamortized deferred financing costs.

Interest Expense

Interest expense on all outstanding debt obligations with variable rates is paid based on ~~30-day or 90-day LIBOR,~~SOFR, or other alternative base rate, ~~such as SOFR,~~ plus a margin ranging from ~~0.45%~~0.80% - ~~4.75%~~3.50%.

NOTE 10 – EQUITY

The Company consolidates the financial results of LD Holdings and reports noncontrolling interest related to the interests held by the Continuing LLC Members. The noncontrolling interest of $437.3 million and $488.0 million as of March 31, 2023 and December 31, 2022, respectively, represented the economic interest in LD Holdings held by the Continuing LLC Members. The Continuing LLC Members have the right to exchange one Holdco Unit and one share of Class B common stock or Class C common stock, as applicable, together for cash or one share of Class A common stock at the Company’s election, subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications. As Continuing LLC Members convert shares, noncontrolling interest is adjusted to proportionately reduce the economic interest

in LD Holdings with an offset to additional paid-in-capital on the consolidated statements of equity. The following table summarizes the ownership of LD Holdings as of March 31, 2023 and December 31, 2022.


	March 31, 2023		December 31, 2022
Holding Member Interests:	Holdco Units	Ownership Percentage	Holdco Units	Ownership Percentage
loanDepot, Inc.	172,127,841	54.28%	169,523,682	53.78%
Continuing LLC Members	144,983,025	45.72%	145,693,119	46.22%
Total	317,110,866	100.00%	315,216,801	100.00%

NOTE 1011 – EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share of Class A common stock and Class D common stock is computed by dividing net income (loss) attributable to loanDepot, Inc. by the weighted-average number of shares of Class A common stock and Class D common stock, respectively, outstanding during the period. Diluted earnings (loss) per share of Class A common stock and Class D common stock is computed by dividing net income (loss) attributable to loanDepot, Inc. by the weighted-average number of shares of Class A common stock and Class D common stock respectively, outstanding adjusted to give effect to potentially dilutive securities.

There was no Class B common stock outstanding as of March 31, 2023 or 2022. The following table sets forth the calculation of basic and diluted earnings (loss) per share for Class A common stock and Class D common stock:


	Three Months Ended
	March 31, 2023
	Class A		Class D		Total


Net loss attributable to loanDepot, Inc.	$	(18,534)	$	(24,373)	$	(42,907)





Weighted average shares - basic	73,783,147		97,026,671		170,809,818

Loss per share - basic	$	(0.25)	$	(0.25)	$	(0.25)

Diluted loss per share:



Net loss allocated to common stockholders - diluted	$	(18,534)	$	(24,373)	$	(42,907)





Weighted average shares - diluted	73,783,147		97,026,671		170,809,818

Loss per share - diluted	$	(0.25)	$	(0.25)	$	(0.25)


	Three Months Ended
	March 31, 2022
	Class A		Class D		Total


Net loss attributable to loanDepot, Inc.	$	(10,367)	$	(24,374)	$	(34,741)





Weighted average shares - basic	41,480,725		97,527,165		139,007,890

Loss per share - basic	$	(0.25)	$	(0.25)	$	(0.25)

Diluted loss per share:



Net loss allocated to common stockholders - diluted	$	(10,367)	$	(24,374)	$	(34,741)





Weighted average shares - diluted	41,480,725		97,527,165		139,007,890

Loss per share - diluted	$	(0.25)	$	(0.25)	$	(0.25)

For the three months ended March 31, 2023 and March 31, 2022, 149,210,417 and 181,035,804 shares of Class C common stock were evaluated for the assumed exchange of noncontrolling interests and determined to be anti-dilutive, and thus were excluded from the computation of diluted loss per share.

For the three months March 31, 2023, 21,470,046 of Class A RSUs, nonqualified stock options, and ESPP shares were determined to be anti-dilutive, and thus excluded from the computation of diluted loss per share. For the three months ended March 31, 2022 and 2,608,518 of Class A RSUs were determined to be anti-dilutive, and thus excluded from the computation of diluted loss per share.

NOTE 12 – INCOME TAXES

The Company’s income tax expense varies from the expense that would be expected based on statutory rates due principally to its organizational structure. ~~As part of the completion of the IPO, the Company became a C Corporation subject to federal, state, and local income taxes with respect to its share of net taxable income of LD Holdings.~~

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had a deferred tax asset before any valuation allowance of ~~$0.1~~$127.2 million and ~~$0.4~~$70.5 million, respectively, and a deferred tax liability of ~~$178.1~~$230.4 million and ~~$193.4~~$191.6 million, respectively. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. The deferred tax liability as of March 31, ~~2022~~2023 and December 31, ~~2021 relate~~2022 relates to temporary differences in the book basis as compared to the tax basis of loanDepot, Inc.’s investment in LD Holdings, net of tax benefits from future deductions for payments made under a Tax Receivable Agreement (“TRA”) as a result of the IPO. Changes in tax laws and rates may affect recorded deferred tax assets and liabilities and the Company’s effective tax rate in the future. Deferred income taxes are measured using the applicable tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on the tax rates that have been enacted at the reporting date. The Company measured its deferred tax assets and liabilities at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 using the combined federal and state rate (less federal benefit) of ~~26%~~27.3%. The Company establishes a valuation allowance when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. As of March 31, ~~2022,~~2023, the Company had a valuation allowance of deferred tax assets $0.4 million on tax credits that have limited carryforward periods and may expire prior to the Company being able to utilize them. The Company did not ~~have~~establish a valuation allowance ~~on any~~for remaining deferred tax assets as the Company believes it is more-likely-than-not that the Company will realize the benefits of the deferred tax assets. The Company recognized a TRA liability of ~~$35.4~~$52.1 million and ~~$32.9~~$50.7 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, which represents the Company’s estimate of the aggregate amount that it will pay under the TRA, refer to Note ~~15-~~14- Commitments and Contingencies, for further information on the TRA liability.

NOTE 1113 – RELATED PARTY TRANSACTIONS

In conjunction with its joint ventures, the Company entered into agreements to provide services to the joint ventures for which it receives and pays fees. Services for which the Company earns fees comprise of loan processing and administrative services (legal, accounting, human resources, data processing and management information, assignment processing, post-closing, underwriting, facilities management, quality control, management consulting, risk management, promotions, public relations, advertising and compliance with credit agreements). The Company also originates eligible mortgage loans referred ~~to it~~ by ~~the~~its joint ventures for which the Company pays the joint ventures a broker fee.

~~Fees earned, costs incurred, and amounts payable to or receivable from joint ventures were as follows:~~

Three Months Ended
March 31,
2022 2021
Loan processing and administrative services fee income $ 3,330 $ 3,353
Loan origination broker fees expense 20,129 18,450

March 31,
2022 December 31,
2021
Amounts receivable from joint ventures $ 1,833 $ 1,855

The Company employed certain individuals who provided services to a shareholder whose salaries totaled $0.1 million during the three months ended March 31, 2022 and $0.2 million during three months ended March 31, 2021. The Company paid management fees to a shareholder of the Company of $0.2 million during the three months ended March 31, 2021.

~~NOTE 12 – EQUITY~~

As a result of the IPO and reorganization discussed in Note 1- Description of Business, Presentation and Summary of Significant Accounting Policies, the financial statements for the periods prior to the IPO were adjusted to combine the previously separate entities for presentation.

Prior to the IPO, the Company completed a reorganization by which it changed its equity structure to create a single class of LLC Units in LD Holdings. Prior to that transaction, the capital structure consisted of different classes of membership interests held by Continuing LLC Members. The LLC Units were then exchanged on a 1-for-one basis for Holdco Units and Class C common stock. The Continuing LLC Members have the right to exchange 1 Holdco Unit and 1 share of Class B common stock or Class C common stock, as applicable, together for cash or one share of Class A common stock at the Company’s election, subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications. The Company consolidates the financial results of LD Holdings and reports noncontrolling interest related to the interests held by the Continuing LLC Members.

The noncontrolling interest of $0.9 billion and $1.1 billion as of March 31, 2022 and December 31, 2021, respectively, represented the economic interest in LD Holdings held by the Continuing LLC Members. As Continuing LLC Members convert shares, noncontrolling interest is adjusted to proportionately reduce the economic interest in LD Holdings with an offset to additional paid-in-capital on the consolidated statements of equity. The following table summarizes the ownership of LD Holdings as of March 31, 2022.

Holding Member Interests: Holdco Units Ownership Percentage
loanDepot, Inc. 140,627,089 45.17%
Continuing LLC Members 170,690,888 54.83%
Total 311,317,977 100.00%

~~NOTE 13 – STOCK-BASED COMPENSATION~~

The stock-based compensation expense recognized on all share-based awards was $2.3 million for the three months ended March 31, 2022 and $59.8 million for the three months ended March 31, 2021. As of March 31, 2022, there was $39.0 million of unrecognized compensation related to all unvested awards.

~~LDI Awards~~

Effective upon the completion of the IPO, the Company adopted the 2021 Plan. The 2021 Plan allows for the grant of stock options, restricted stock, RSUs, and stock appreciation rights. The Company reserved a total of 16,250,000 shares of common stock for issuance pursuant to the 2021 Plan, which amount shall be increased on the first day of each fiscal year during the term of the 2021 Plan commencing with the 2022 fiscal year by (1) 2% of the total number of shares of common stock outstanding on the last day of the immediately preceding fiscal year, or (ii) a lesser amount determined by the Company's board of directors. There are currently only RSUs granted under the 2021 Plan. The following is a summary of RSU activity for the three months ended March 31, 2022 and March 31, 2021.

Three Months Ended
March 31,
2022
Weighted Average
Grant Date
Shares Fair Value
Unvested - beginning of period 1,765,763 $ 16.60
Granted 3,137,983 4.21
Vested (122,886) 25.66
Forfeited/Cancelled (154,066) 12.91
Unvested - end of period 4,626,794 8.08

Three Months Ended
March 31,
2021
Weighted Average
Grant Date
Shares Fair Value
Unvested - beginning of period — $ —
Granted 2,925,000 26.45
Vested (2,215,687) 26.45
Unvested - end of period 709,313 26.45

Total compensation expense for the LDI awards was $1.7 million and $59.1 million for the three months ended March 31, 2022 and 2021, respectively. At March 31, 2022 and December 31, 2021, the total unrecognized compensation cost was $34.0 million and $24.5 million, respectively. The cost as of March 31, 2022 is expected to be recognized over a weighted average period of 3.47 years.

~~Holdco Units~~

Prior to the IPO, the Company’s 2009 Incentive Equity Plan, 2012 Incentive Equity Plan, and 2015 Incentive Equity Plan (collectively, the “Plans”) provided for the granting of Class Z, Class Y, Class X, and Class W Common Units of LD Holdings to employees, managers, consultants, and advisors of the Company and its subsidiaries. Participants that received grants or purchased Class Z, Class Y, Class X, or Class W Common Units of LD Holdings pursuant to the Plans were required to become a party to the Limited Liability Company Agreement.

As part of the IPO and reorganization any outstanding units under the Plans were equitably adjusted and replaced with a single new class of LLC Units that were exchanged on a 1-for-one basis for Holdco Units. No further awards will be granted under the Plans as both the Plans and LLC Agreement were terminated.

3025

~~The following table presents a summary of the changes in awards subsequent~~Fees earned, costs incurred, and amounts payable to ~~the conversion into Holdco Units for the three months ended ended March 31, 2022 and March 31, 2021:~~joint ventures were as follows:
Three Months Ended
March 31,
2022
Shares Weighted Average Grant Date Fair Value
Unvested - beginning of period 11,610,142 $ 0.50
Vested (1,215,743) 0.49
Forfeited/Cancelled (405,242) 0.50
Unvested - end of period 9,989,157 0.50


	Three Months Ended March 31,
	2023		2022
Loan processing and administrative services fee income	$	4,177	$	3,330
Loan origination broker fees expense	26,786		20,129

Three Months Ended
March 31,
2021
Shares Weighted Average Grant Date Fair Value
Unvested - beginning of period 19,632,883 $ 0.50
Vested (709,961) 0.50
Unvested - end of period 18,922,922 0.49


	March 31, 2023		December 31, 2022
Amounts payable to joint ventures	$	(6,549)	$	(9,776)

The ~~following table presents~~Company has entered into a ~~summary of the changes in Class Z, Class Y, Class X, Class W~~TRA with Parthenon Stockholders and ~~Class V Common Units for the period January 1, 2021 through February 10, 2021 prior to the conversion to Holdco Units described above.~~

January 1, 2021
through
February 10, 2021
Shares Weighted Average Grant Date Fair Value
Unvested - beginning of period 610,497,758 $ 0.016
Vested (12,656,379) 0.016
Forfeited/Cancelled (3,552,286) 0.016
Unvested - end of period 594,289,093 0.016

~~Total compensation expense associated with the Holdco Units was $0.6 million and $0.8 million for~~certain Continuing LLC Members. There were no payments made during the three months ended March 31, ~~2022 and March 31, 2021, respectively.~~

At March 31, 2022 and December 31, 2021, the total unrecognized compensation cost related to unvested Holdco units was $5.0 million and $5.8 million, respectively. This cost as of March 31, 2022 is expected to be recognized over the next 2.61 years.

~~NOTE 14 – EARNINGS (LOSS) PER SHARE~~

~~The basic and diluted earnings per share period for~~2023 or the three months ended March 31, 2021 represents the period after February 11, 2021, wherein the Company had outstanding Class A common stock and Class D common stock. There was no Class B common stock outstanding as of March 31, 2022 and 2021. The following table sets forth the calculation of basic and diluted earnings (loss) per share for Class A common stock and Class D common stock:

Three Months Ended
March 31, 2022 March 31, 2021
Class A Class D Total Class A Class D Total
Net (loss) income attributable to loanDepot, Inc. $ (10,367) $ (24,374) $ (34,741) $ 2,108 $ 42,767 $ 44,875
Weighted average shares - basic 41,480,725 97,527,165 139,007,890 5,907,740 119,865,057 125,772,797
(Loss) earnings per share - basic $ (0.25) $ (0.25) $ (0.25) $ 0.36 $ 0.36 $ 0.36
Diluted earnings per share:
Net (loss) income allocated to common stockholders - diluted $ (10,367) $ (24,374) $ (34,741) $ 2,108 $ 42,767 $ 44,875
Weighted average shares - diluted 41,480,725 97,527,165 139,007,890 5,907,740 119,865,057 125,772,797
(Loss) earnings per share - diluted $ (0.25) $ (0.25) $ (0.25) $ 0.36 $ 0.36 $ 0.36

For the period from February 11, 2021 to March 31, 2021, 198,537,418 shares of Class C common stock were evaluated for the assumed exchange of noncontrolling interests and determined to be anti-dilutive, and thus were excluded from the computation of diluted earnings per share. For the three months ended March 31, 2022, 181,035,804 shares of Class C common stock were determined to be anti-dilutive, and thus excluded from the computation of diluted earnings per share.

For the period from February 11, 2021 to March 31, 2021, 636,934 of Class A RSUs were determined to be anti-dilutive, and thus excluded from the computation of diluted earnings per share. For the three months ended March 31, 2022, 2,608,518 of unvested Class A RSUs were determined to be anti-dilutive, and thus excluded from the computation of diluted earnings per share.2022.

NOTE ~~15–~~14– COMMITMENTS AND CONTINGENCIES

Escrow Services

In conducting its operations, the Company, through its wholly-owned subsidiaries, LDSS and ACT, routinely hold customers' assets in escrow pending completion of real estate financing transactions. These amounts are maintained in segregated bank accounts and are offset with the related liabilities resulting in no amounts reported in the accompanying consolidated balance sheets. The balances held for the Company’s customers totaled ~~$25.9~~$3.6 million and ~~$21.1~~$5.1 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Legal Proceedings

The Company is a defendant in, or a party to, legal actions and proceedings that arise in the ordinary course of business. In some of these actions and proceedings, claims for monetary damages are asserted against the Company. These matters include actions alleging improper lending practices, improper servicing, quiet title actions, improper foreclosure practices, violations of consumer protection laws, etc. and on account of consumer bankruptcies. In many of these actions, the Company may not be the real party of interest (because the Company is not the servicer of the loan or the holder of the note) but it may appear in the pleadings because it is in the chain of title to property over which there may be a dispute. Such matters may be indemnified and managed by the appropriate party, which ~~is generally~~may be the Company’s subservicer or a former subservicer. In other cases, such as lien avoidance cases brought in bankruptcy, the Company is insured by title insurance, and the case is turned over to the title insurer who tenders the Company’s defense. In some of these actions and proceedings, claims for monetary damages are asserted against the Company. In view of the inherent difficulty of predicting the outcome of such legal actions and proceedings, the Company generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss related to each pending matter may be, if any.

The Company seeks to resolve all litigation and regulatory matters in the manner management believes is in the best interest of the Company and contests liability, allegations of wrongdoing, and, where applicable, the amount of damages or scope of any penalties or other relief sought as appropriate in each pending matter. On at least a quarterly basis, the Company assesses its liabilities and contingencies in connection with outstanding legal and regulatory proceedings utilizing the latest information available. Any estimated loss is subject to significant judgment and is based upon currently available information, a variety of assumptions, and known and unknown uncertainties. Where available information indicates that it is probable a liability has been incurred and the Company can reasonably estimate the amount of the loss, an accrued liability is established. The actual costs of resolving these proceedings may be substantially higher or lower than the amounts accrued.

During the second quarter of 2021, the Company settled, on an individual basis, a putative Telephone Consumer Protection Act (“TCPA”) class action for a nominal amount. The Company previously disclosed a second putative TCPA class action where (i) the Company filed dispositive motions to dismiss the claims, (ii) the court granted the Company’s motion to stay the matter pending the outcome of a circuit court’s decision in a TCPA mater in which the Company is not a party, and (iii) the Company has determined that the legal action will not have a material adverse effect on the financial condition of the Company.Employment Litigation

On December 24, 2020, the Company received a demand letter from one of the senior members of its operations team alleging, among other things, loan origination noncompliance and various employment related claims, including hostile work environment and gender discrimination, with unspecified damages. The executive has since resigned her position with the

Company. ~~The parties participated in pre-litigation mediation in May 2021. The parties did not resolve the matter at mediation and a~~On September 21, 2021, Plaintiff filed her complaint ~~was filed~~led with the Superior Court of the State of California, County of Orange ~~on September 21, 2021~~ and an amended complaint was filed on December 21, 2021. ~~In response,~~Following some motion practice, on February 2, 2022 the Company filed a demurrer to the complaint with the Superior Court of the State of California, County of Orange, for failing to state facts sufficient to constitute a cause of action while still vigorously denying the claims within the complaint. On March 24, 2022, the plaintiff filed her opposition to loanDepot’s demurrer. On March 29,June 30, 2022, the Company filed its ~~reply~~answer and affirmative defenses to ~~Plaintiff’s opposition. A hearing was held~~the amended complaint. The Company deposed the Plaintiff and anticipates filing its Motion for Summary Judgment, or in the Alternative, Summary Adjudication on ~~the Company’s demurrer on~~or before May ~~12, 2022, at the Superior Court~~17, 2023. The plaintiff seeks damages in excess of ~~the State of California, County of Orange.~~$75 million. The ~~court sustained the Company’s demurrer~~Company believes this lawsuit is without merit continues to vigorously defend against it. Discovery in ~~full. Plaintiff will have 15 days to amend her claims for hostile work environment, intentional infliction of emotional distress, and defamation.~~this matter is still ongoing.

While the Company’s management does not believe these allegations have merit, defending such allegations ~~could~~has resulted in and will likely continue to result in substantial costs and a diversion of management’s attention and resources.

The ultimate outcome of the other legal proceedings is uncertain, and the amount of any future potential loss is not considered probable or estimable. The Company will incur defense costs and other expenses in connection with these legal proceedings. If the final resolution of any legal proceedings is unfavorable, it could have a material adverse effect on the Company’s business and financial condition.

Based on the Company’s current understanding of these pending legal actions and proceedings, management does not believe that judgments or settlements arising from pending or threatened legal matters, individually or in the aggregate, will have a material adverse effect on the consolidated financial position, operating results or cash flows of the Company. However, unfavorable resolutions could affect the consolidated financial position, results of operations or cash flows for the years in which they are resolved.

Regulatory Requirements

The Company is subject to various capital requirements by the U.S. Department of Housing and Urban Development (“HUD”); lenders of the warehouse lines of credit; and secondary markets investors. Failure to maintain minimum capital requirements could result in the inability to participate in HUD-assisted mortgage insurance programs, to borrow funds from warehouse line lenders or to sell or service mortgage loans. As of March 31, ~~2022,~~2023, the Company was in compliance with its selling and servicing capital requirements.

Commitments to Extend Credit

The Company enters into IRLCs with customers who have applied for residential mortgage loans and meet certain credit and underwriting criteria. These commitments expose the Company to market risk if interest rates change and the loan is not economically hedged or committed to an investor. The Company is also exposed to credit loss if the loan is originated and not sold to an investor and the customer does not perform. The collateral upon extension of credit typically consists of a first deed of trust in the mortgagor’s residential property. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon. Total commitments to originate loans as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 approximated ~~$11.5~~$3.2 billion and ~~$12.7~~$2.2 billion, respectively. These loan commitments are treated as derivatives and are carried at fair value, refer to Note 6-5- Derivative Financial Instruments and Hedging Activities for further information on derivatives.

Loan Loss Obligation for Sold Loans

When the Company sells mortgage loans, it makes customary representations and warranties to the purchasers about various characteristics of each loan such as the origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local law. The Company establishes a loan repurchase reserve for losses associated with ~~repurchased loans~~repurchase loan obligations if the Company breached a representation or warranty given to the loan purchaser. Additionally, the Company’s loan loss obligation for sold loans includes an estimate for losses associated with early payoffs and early payment defaults. There have been charge-offs associated with early payoffs, early payment defaults and losses related to representations, warranties, and other provisions for the three months ended March 31, ~~2022 and 2021.~~2023.

The activity related to the loan loss obligation for sold loans is as follows:


		Three Months Ended March 31,				Three Months Ended March 31,
		2022		2021				2023		2022
Balance at beginning of period	Balance at beginning of period	$	29,877	$	33,591		Balance at beginning of period	$	70,797	$	29,877
Provision for loan loss obligations	Provision for loan loss obligations	13,246		800			Provision for loan loss obligations	9,674		13,246
Charge-offs	Charge-offs	(1,964)		(4,339)			Charge-offs	(14,801)		(1,964)
Balance at end of period	Balance at end of period	$	41,159	$	30,052		Balance at end of period	$	65,670	$	41,159

Obligation for Sold MSRs

The Company recognizes sales of mortgage servicing rights as sales if title passes, if substantially all risks and rewards of ownership have irrevocably passed to the purchaser, and any protection provisions retained by the Company are minor and can be reasonably estimated. If a sale is recognized and only minor protection provisions exist, a liability for the estimated obligation associated with those provisions is recorded in accounts payable, accrued expenses and other liabilities on the consolidated balance sheet. The Company establishes a reserve related to the reimbursement of the purchase price for any loans

that are prepaid in full within 90 days of the MSR sale transaction. The obligation for sold MSRs was ~~$10.3~~$0.8 million and ~~$0.4~~$1.1 million as of March 31, ~~2022~~2023 and December 31, ~~2021, respectively~~2022, respectively.

TRA Liability

As part of the IPO and reorganization, the Company entered into a TRA with Parthenon Stockholders and certain Continuing LLC Members, whereby loanDepot, Inc. will be obligated to pay such parties or their permitted assignees, 85% of the amount of cash tax savings, if any, in U.S. federal, state, and local taxes that loanDepot, Inc. realizes, or is deemed to realize as a result of future tax benefits from increases in tax basis. The TRA liability is accounted for as a contingent liability with amounts accrued when deemed probable and estimable. The Company recognized a TRA liability of ~~$35.4~~$52.1 million and ~~$32.9~~$50.7 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, which represents the Company’s estimate of the aggregate amount that it will pay under the TRA as a result of the offering transaction. ~~The amounts payable under the TRA will vary depending on a number of factors, such as the amount and timing of taxable income attributable to loanDepot, Inc.~~

NOTE 1615 – REGULATORY CAPITAL AND LIQUIDITY REQUIREMENTS

The Company, through certain subsidiaries, is required to maintain minimum net worth, liquidity and other financial requirements specified in certain of its selling and servicing agreements, including:

•Ginnie Mae single-family issuers. The eligibility requirements include net worth of $2.5 million plus 0.35% of outstanding Ginnie Mae single-family obligations and a liquidity requirement equal to the greater of $1.0 million or 0.10% of outstanding Ginnie Mae single-family securities.

•Fannie Mae and Freddie Mac. The eligibility requirements for seller/servicers include tangible net worth of $2.5 million plus 0.25% of the Company’s total single-family servicing portfolio, excluding loans subserviced for others and a liquidity requirement equal to ~~0.35%~~0.035% of the aggregate UPB serviced for the agencies plus 2.0% of total nonperforming agency servicing UPB in excess of 6%.

•HUD. The eligibility requirements include a minimum adjusted net worth of $1.0 million plus 1% of the total volume in excess of $25.0 million of FHA Single Family Mortgages originated, underwritten, serviced, and/or purchased during the prior fiscal year, up to a maximum required adjusted net worth of $2.5 million.

•Fannie Mae, Freddie Mac and Ginnie Mae. The Company is also required to hold a ratio of Adjusted/Tangible Net Worth to Total Assets greater than 6%.

To the extent that these requirements are not met, the Company may be subject to a variety of regulatory actions which could have a material adverse impact on our results of operations and financial condition. The most restrictive of the minimum net worth and capital requirements require the Company to maintain a minimum adjusted net worth balance of ~~$126.1~~$132.0 million

as of March 31, ~~2022.~~2023. The Company was in compliance with the net worth, liquidity and other financial requirements of its selling and servicing requirements as of March 31, ~~2022.~~2023.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion provides an analysis of the Company's financial condition, cash flows and results of operations from management's perspective and should be read in conjunction with our consolidated financial statements and the accompanying notes included under Part I. Item 1 of this report. The results of operations described below are not necessarily indicative of the results to be expected for any future periods. This discussion includes forward-looking information that involves risks and assumptions which could cause actual results to differ materially from management’s expectations. See our cautionary language at the beginning of this report under “Special Note Regarding Forward-Looking Statements” and for a more complete discussion of the factors that could affect our future results refer to Part II. “Item 1A. Risk Factors” and elsewhere in this Form 10-Q and Part I, Item 1A "Risk Factors" in our ~~2021~~2022 Form 10-K. Capitalized terms used but not otherwise defined herein have the meanings set forth in the our Form 10-K.

Overview

~~loanDepot is~~We are a customer-centric, ~~and technology-enabled~~technology-empowered residential mortgage platform. ~~We launched our business in 2010~~Our goal is to ~~provide mortgage loan solutions to~~be the lender of choice for consumers ~~who were dissatisfied with~~and the ~~services offered~~employer of choice by ~~banks~~being a company that operates on sound principles of exceptional value, ethics, and ~~other traditional market participants.~~transparency. Since our inception, we have significantly expanded our origination platform ~~both in terms of size and capabilities.~~as well as developed an in-house servicing platform. Our primary sources of revenue are derived from the origination of conventional and government mortgage loans, servicing conventional and government mortgage loans, and providing ~~a growing suite of~~ ancillary services.

The Company's common stock began trading on the New York Stock Exchange on February 11, 2021 under the ticker symbol "LDI." The initial public offering consisted of 3,850,000 shares of Class A common stock, $0.001 par value per share, at an offering price of $14.00 per share, pursuant to a Registration Statement on Form S-1.

A summary of our critical accounting policies and estimates is included in Critical Accounting Policies and Estimates.

Key Factors Influencing Our Results of Operations

Market and Economic Environment

The consumer lending market and the associated loan origination volumes for mortgage loans are influenced by interest rates and economic conditions. While borrower demand for consumer credit has typically remained strong in most economic environments, general market conditions, including the interest rate environment, unemployment rates, home price appreciation and consumer confidence may affect borrower willingness to seek financing and investor desire and ability to invest in loans. For example, a significant interest rate increase or rise in unemployment could cause potential borrowers to defer seeking financing as they wait for interest rates to stabilize or the general economic environment to improve. Additionally, if the economy weakens and actual or expected default rates increase, loan investors may postpone or reduce their investments in loan products.

The volume of mortgage loan originations associated with home purchases is generally ~~less~~ affected by ~~interest rate fluctuations and more sensitive to~~ broader economic factors as well as the overall strength of the economy, housing prices, and ~~housing prices.~~interest rate fluctuations. Increases in interest rates may affect affordability and the ability for potential home buyers to qualify for a mortgage loan. Purchase mortgage loan origination volume can be subject to seasonal trends as home sales typically rise during the spring and summer seasons and decline in the fall and winter seasons. This is somewhat offset by purchase loan originations sourced from our joint ventures which experience their highest level of activity during November and December as home builders focus on completing and selling homes prior to year-end. Seasonality has less of an impact on mortgage loan refinancing volumes, which are primarily driven by fluctuations in mortgage loan interest rates.

~~Fluctuations in~~ Interest Rates

Our mortgage loan refinancing volumes (and to a lesser degree, our purchase volumes), balance sheets, and results of operations are influenced by changes in interest rates and how we effectively manage the related interest rate risk. As interest rates decline, mortgage loan refinance volumes tend to increase, while an increasing interest rate environment may cause a decrease in refinance volumes and purchase volumes. In addition, the majority of our assets are subject to interest rate risk, including LHFS, ~~which consist of mortgage loans held on our consolidated balance sheets for a short period of time after origination until we are able to sell them,~~ IRLCs, servicing rights and mandatory trades, forward sales contracts, interest rate

swap futures and put ~~options that we enter into to manage interest rate risk created by IRLCs and uncommitted LHFS.~~options. We refer to such mandatory trades, forward sales contracts, interest rate swap futures and put options collectively as “Hedging Instruments.” As interest rates increase, our LHFS and IRLCs generally decrease in value while our Hedging Instruments utilized to hedge against interest rate risk typically increase in value. Rising interest rates cause our expected

mortgage loan servicing revenues to increase due to a decline in mortgage loan prepayments which extends the average life of our servicing portfolio and increases the value of our servicing rights. Conversely, as interest rates decline, our LHFS and IRLCs generally increase in value while our Hedging Instruments decrease in value. In a declining interest rate environment, borrowers tend to refinance their mortgage loans, which increases prepayment speed and causes our expected mortgage loan servicing revenues to decrease, which reduces the average life of our servicing portfolio and decreases the value of our servicing rights. The changes in fair value of our servicing rights are recorded as unrealized gains and losses in changes in fair value of servicing rights, net, in our consolidated statements of operations.

~~When~~As interest rates ~~rise,~~increase, rate and term refinancings become less attractive to ~~consumers after a historically long period of low interest rates.~~consumers. However, rising interest rates ~~are also indicative~~during periods of ~~overall economic growth and inflation that should create more opportunities with respect to cash-out refinancings. In addition, inflation which~~inflationary pressures can make real assets, including real estate, an attractive investment. Demand for real estate may result ~~from increases~~ in ~~asset prices~~ongoing support for purchase mortgages and ~~stronger economic growth (leading to higher consumer confidence) typically should generate more purchase-focused transactions requiring loans and greater~~increasing home price appreciation creating borrower equity that may result in increasing opportunities for cash-out refinancings or home equity loans.

Current Market ~~Conditions:~~Conditions

~~According to~~In March 2023, the ~~MBA’s Mortgage Finance Forecast published April 13, 2022, there was approximately $12.7 trillion~~Federal Reserve raised the Federal Funds rate by another 0.25 percentage points for a total increase of ~~residential~~4.75 percentage points since the beginning of 2022. The resulting increase in mortgage ~~debt outstanding in the United States at March 31, 2022~~interest rates has impacted mortgage transaction volumes, which is forecasted to increase to $13.5 trillion by March 31, 2023. During the year ended December 31, 2021, annual one-to-four family residential mortgage origination volumes were $4.0 trillion, of this $2.3 trillion was comprised of refinance volume. Annual one-to-four family residential mortgage origination volumes are expected to ~~decrease by 39%~~continue to ~~$2.4 trillion by December 31, 2023.~~decline for 2023 relative to 2022. As a result of market conditions, in July 2022 we announced our Vision 2025 plan. The plan’s four primary ~~driver~~elements included: 1) Increase focus on purchase transactions while serving increasingly diverse communities across the country; 2) Execute previously announced growth-generating initiatives; 3) Centralize management of ~~this decrease is refinance volume, which is expected~~loan originations and loan fulfillment to ~~decrease by $1.7 trillion, partially offset by~~enhance quality and effectiveness; and 4) Aggressively rightsize our cost structure. During the second half of 2022 we consolidated our retail and corporate locations and completed the exit of our wholesale business. During the first quarter of 2023 we completed the transition of our servicing portfolio to our in-house platform lowering our servicing expense, expanded the offerings on our digital HELOC platform, and announced a ~~$127.0 billion expected increase in purchase volume.~~new partnership with Habitat for Humanity to support the organization's mission to help families build and improve places to call home.

Key Performance Indicators

We manage and assess the performance of our business by evaluating a variety of metrics. Selected key performance metrics include loan originations and sales and servicing metrics.

Loan Origination and Sales

Loan originations and sales by volume and units are a measure of how successful we are at growing sales of mortgage loan products and a metric used by management in an attempt to isolate how effectively we are performing. We believe that originations and sales are an indicator of our market penetration in mortgage loans and that this provides useful information because it allows investors to better assess the ~~underlying growth rate~~strength of our core business. Loan originations and sales include brokered loan originations not funded by us. We enter into IRLCs to originate loans, at specified interest rates, with customers who have applied for a mortgage and meet certain credit and underwriting criteria. We believe the volume of our IRLCs is another measure of our ~~growth in originations.~~overall market share.

Gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by loan origination volume during period. Gain on the origination and sale of loans, net was adjusted to exclude the change in fair value of forward sale contracts, including pair-offs, hedging MSRs, which are now included in the change in fair value of servicing rights, net on the consolidated statements of operations. We determined that this change would more appropriately reflect the hedged item and better align with industry practices. Gain on origination and sale of loans, net and change in fair value of servicing rights, net, in the current and prior periods along with the related disclosures have been adjusted to reflect this reclassification.

Pull through weighted gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by the pull through weighted rate lock volume. Pull through weighted rate lock volume is the unpaid principal balance of loans subject to interest rate lock commitments, net of a pull-through factor for the loan funding probability.

Servicing Metrics

Servicing metrics include the unpaid principal balance of our servicing portfolio and servicing portfolio units, which represent the number of mortgage loan customers we service. We believe that the net additions to our portfolio and number of units are indicators of the growth of our mortgage loans serviced and our servicing income, but may be offset by sales of servicing rights.

Three Months Ended
March 31,
(Dollars in thousands) 2022 2021
Financial statement data
Total revenue $ 503,311 $ 1,316,008
Total expenses 606,256 869,878
Net (loss) income (91,318) 427,853
(Loss) earnings per share of Class A and Class D common stock:
Basic $ (0.25) $ 0.36
Diluted $ (0.25) $ 0.36
Non-GAAP financial measures(1)
Adjusted total revenue $ 504,606 $ 1,241,441
Adjusted net (loss) income (81,732) 319,527
Adjusted (LBITDA) EBITDA (74,403) 458,098
Adjusted diluted (loss) earnings per share $ (0.26) $ 0.99
Loan origination and sales
Loan originations by channel:
Retail $ 16,479,390 $ 33,427,789
Partner 5,071,341 8,051,362
Total $ 21,550,731 $ 41,479,151
Loan originations by purpose:
Purchase $ 8,030,766 $ 7,916,512
Refinance 13,519,965 33,562,639
Total $ 21,550,731 $ 41,479,151
Loan originations (units) 64,951 111,400
Licensed loan officers:
Retail 2,960 2,568
Partner 301 239
Total 3,261 2,807
Loans sold:
Servicing retained $ 17,122,716 $ 37,435,791
Servicing released 5,745,322 2,492,886
Total $ 22,868,038 $ 39,928,677
Loans sold (units) 68,149 108,687

3831


		Three Months Ended March 31,						Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2022			2021				(Dollars in thousands)	2023			2022

Loan originations by purpose:									Loan originations by purpose:
Purchase									Purchase	$	3,512,771		$	8,030,766
Refinance									Refinance	1,431,566			13,519,965
Total loan originations									Total loan originations	$	4,944,337		$	21,550,731
Loan originations (units)									Loan originations (units)	16,338			64,951

Licensed loan officers									Licensed loan officers	1,716			3,261
Loans sold:									Loans sold:
Servicing retained									Servicing retained	$	3,277,707		$	17,122,716
Servicing released									Servicing released	2,118,874			5,745,322
Total loans sold									Total loans sold	$	5,396,581		$	22,868,038
Loans sold (units)									Loans sold (units)	17,218			68,149
Gain on sale margin	Gain on sale margin	1.96		%	2.98		%		Gain on sale margin	2.43		%	1.96		%
Gain on sale margin - retail		2.24			3.25
Gain on sale margin - partner		1.07			1.85

Pull through weighted gain on sale margin	Pull through weighted gain on sale margin	2.13			3.69				Pull through weighted gain on sale margin	2.26			2.13

IRLCs	IRLCs	$	29,991,452		$	45,762,661			IRLCs	$	8,468,435		$	29,991,452
IRLCs (units)	IRLCs (units)	91,020			131,551				IRLCs (units)	27,993			91,020

Pull through weighted lock volume	Pull through weighted lock volume	$	19,800,045		$	33,462,355			Pull through weighted lock volume	$	5,325,488		$	19,800,045

Servicing metrics	Servicing metrics								Servicing metrics
Total servicing portfolio (unpaid principal balance)	Total servicing portfolio (unpaid principal balance)	$	153,385,817		$	129,709,892			Total servicing portfolio (unpaid principal balance)	$	141,673,464		$	153,385,817
Total servicing portfolio (units)	Total servicing portfolio (units)	496,868			414,540				Total servicing portfolio (units)	475,765			496,868
60+ days delinquent ($)	60+ days delinquent ($)	$	1,444,779		$	2,125,573			60+ days delinquent ($)	$	1,282,432		$	1,444,779
60+ days delinquent (%)	60+ days delinquent (%)	0.94		%	1.64		%		60+ days delinquent (%)	0.91		%	0.94		%
Servicing rights at fair value, net(2)		$	2,078,187		$	1,766,088
Weighted average servicing fee (3)		0.29		%	0.30		%
Multiple(3) (4)		4.9			4.7
Servicing rights at fair value, net(1)									Servicing rights at fair value, net(1)	$	2,016,568		$	2,078,187
Weighted average servicing fee (2)									Weighted average servicing fee (2)	0.30		%	0.29		%
Multiple(2) (3)									Multiple(2) (3)	5.1			4.9

(1)~~Refer to the section titled “Non-GAAP Financial Measures” for a discussion and reconciliation of our Non-GAAP financial measures.~~

~~(2)~~Amount represents the fair value of servicing rights, net of servicing liabilities, which are included in accounts payable, accrued expenses, and other liabilities in the consolidated balance sheets.

~~(3)~~(2)Agency only.

~~(4)~~(3)Amounts represent the fair value of servicing rights, net, divided by the weighted average annualized servicing fee.

Results of Operations

The following table sets forth our consolidated financial statement data for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022.

3932


		Three Months Ended March 31,				Change $	Change %	Three Months Ended March 31,											Change $			Change %
(Dollars in thousands)	(Dollars in thousands)	2022		2021								(Dollars in thousands)		2023		2022							Change $	Change %
		(Unaudited)							(Unaudited)

REVENUES:	REVENUES:														REVENUES:

Net interest income	Net interest income	$	13,076	$	1,233					$	11,843		960.5	%	Net interest income		$	1,198		$	13,076				$	(11,878)	(90.8)	%
Gain on origination and sale of loans, net	Gain on origination and sale of loans, net	363,131		1,133,575						(770,444)			(68.0)		Gain on origination and sale of loans, net		108,152			363,131					(254,979)		(70.2)
Origination income, net	Origination income, net	59,073		101,599						(42,526)			(41.9)		Origination income, net		12,016			59,073					(47,057)		(79.7)
Servicing fee income	Servicing fee income	111,059		82,568						28,491			34.5		Servicing fee income		118,961			111,059					7,902		7.1
Change in fair value of servicing rights, net	Change in fair value of servicing rights, net	(68,383)		(43,635)						(24,748)			(56.7)		Change in fair value of servicing rights, net		(52,806)			(68,383)					15,577		22.8
Other income	Other income	25,355		40,668						(15,313)			(37.7)		Other income		20,380			25,355					(4,975)		(19.6)
Total net revenues	Total net revenues	503,311		1,316,008						(812,697)			(61.8)		Total net revenues		207,901			503,311					(295,410)		(58.7)

EXPENSES:	EXPENSES:														EXPENSES:
Personnel expense	Personnel expense	345,993		603,735						(257,742)			(42.7)		Personnel expense		141,027			345,993					(204,966)		(59.2)
Marketing and advertising expense	Marketing and advertising expense	101,513		109,626						(8,113)			(7.4)		Marketing and advertising expense		35,914			101,513					(65,599)		(64.6)
Direct origination expense	Direct origination expense	53,157		46,976						6,181			13.2		Direct origination expense		17,378			53,157					(35,779)		(67.3)
General and administrative expense	General and administrative expense	49,748		51,317						(1,569)			(3.1)		General and administrative expense		56,134			49,748					6,386		12.8
Occupancy expense	Occupancy expense	9,396		9,988						(592)			(5.9)		Occupancy expense		6,081			9,396					(3,315)		(35.3)
Depreciation and amortization	Depreciation and amortization	10,545		8,454						2,091			24.7		Depreciation and amortization		10,026			10,545					(519)		(4.9)
Servicing expense	Servicing expense	21,511		26,611						(5,100)			(19.2)		Servicing expense		4,834			21,511					(16,677)		(77.5)
Other interest expense	Other interest expense	14,393		13,171						1,222			9.3		Other interest expense		43,090			14,393					28,697		199.4

Total expenses	Total expenses	606,256		869,878						(263,622)			(30.3)		Total expenses		314,484			606,256					(291,772)		(48.1)

(Loss) income before income taxes		(102,945)		446,130						(549,075)			(123.1)
Loss before income taxes															Loss before income taxes		(106,583)			(102,945)					(3,638)		(3.5)

Income tax (benefit) expense		(11,627)		18,277						(29,904)			(163.6)
Income tax benefit															Income tax benefit		(14,862)			(11,627)					(3,235)		(27.8)

Net (loss) income		(91,318)		427,853						(519,171)			(121.3)
Net loss															Net loss		(91,721)			(91,318)					(403)		(0.4)

Net (loss) income attributable to noncontrolling interests		(56,577)		382,978						(439,555)			(114.8)
Net loss attributable to noncontrolling interests															Net loss attributable to noncontrolling interests		(48,814)			(56,577)					7,763		13.7

Net (loss) income attributable to loanDepot, Inc.		$	(34,741)	$	44,875					$	(79,616)		(177.4)
Net loss attributable to loanDepot, Inc.															Net loss attributable to loanDepot, Inc.		$	(42,907)		$	(34,741)				$	(8,166)	23.5

The results for the three months ended March 31, 2023 reflect lower volume. The Federal Reserve raised the target federal funds rate seven times in 2022 ~~reflected a sharp~~and two times during the first quarter of 2023 which drove an increase in mortgage ~~rates which resulted~~interest rates. The $295.4 million decrease in total net revenues reflects a ~~decrease to our profit margins. The decrease of $519.2 million, or 121.3% in net income is primarily from a $770.4~~$255.0 million decrease in gain on origination and sale of loans, net ~~partially offset by a $263.6~~and $47.1 million decrease in ~~total expenses. The increased interest rate environment during the first quarter~~origination income, net from lower transaction volumes. Total expenses decreased $291.8 million as a result of ~~2022 resulted in a decrease in margins~~lower loan origination volumes, cost reduction efforts directed towards personnel, and ~~volume of mortgage loan originations and IRLCs from the comparable 2021 period.~~lower marketing expense.

Revenues

Net Interest Income. Net interest income isrepresents income earned on LHFS offset by interest expense on amounts borrowed under warehouse and other lines of credit to finance such loans until sold. ~~The increase~~A $4.7 billion decrease in ~~net interest income reflected lower utilization~~the average balance of LHFS coupled with higher costing warehouse lines ~~and higher yield on LHFS, partially offset by a $1.3 billion~~drove the decrease in ~~average LHFS.~~net interest income.

Gain on Origination and Sale of Loans, Net. Gain on origination and sale of loans, net, was comprised of the following components:

4033


		Three Months Ended March 31,				Change $				Change %				Three Months Ended March 31,				Change $		Change %
(Dollars in thousands)	(Dollars in thousands)	2022		2021				(Dollars in thousands)			2023				2022
(Discount) premium from loan sales		$	(236,096)	$	470,572			$	(706,668)			(150.2)	%
Servicing rights		269,760		529,544		(259,784)				(49.1)
Fair value losses on IRLC and LHFS		(393,759)		(579,111)		185,352				32.0
Fair value gains from Hedging Instruments		676,405		828,225		(151,820)				(18.3)
Discount from loan sales											Discount from loan sales			$	(26,669)	$	(236,096)	$	209,427	88.7	%
Servicing rights additions											Servicing rights additions			59,295		269,760		(210,465)		(78.0)
Fair value gains (losses) on IRLC and LHFS											Fair value gains (losses) on IRLC and LHFS			73,884		(393,759)		467,643		118.8
Fair value (losses) gains from Hedging Instruments											Fair value (losses) gains from Hedging Instruments			(46,130)		676,405		(722,535)		(106.8)

Discount points, rebates and lender paid costs	Discount points, rebates and lender paid costs	60,067		(114,855)		174,922				152.3	Discount points, rebates and lender paid costs			57,446		60,067		(2,621)		(4.4)

Provision for loan loss obligation for loans sold	Provision for loan loss obligation for loans sold	(13,246)		(800)		(12,446)				(1,555.8)	Provision for loan loss obligation for loans sold			(9,674)		(13,246)		3,572		27.0
Total gain on origination and sale of loans, net	Total gain on origination and sale of loans, net	$	363,131	$	1,133,575	$	(770,444)			(68.0)	Total gain on origination and sale of loans, net			$	108,152	$	363,131	$	(254,979)	(70.2)

• (Discount) premium from loan sales represent the net premium or discount we receive or pay in excess of the loan principal amount and certain fees charged by investors upon sale of the loans.

The decrease in ~~premiums from loan sales~~gain on origination and sale of loans, net was primarily driven by a ~~result of lower~~reduction in volume ~~and margins~~ due to ~~increasing~~higher interest rates ~~during the three months ended March 31, 2022 compared to decreasing rates during the three months ended March 31, 2021.~~

• Servicing rights represent the fair value of servicing rights from loans sold on a servicing-retained basis. The 49.1% decrease in servicing rights was driven by the 54.3% decrease in volume of loans sold on a servicing-retained basis.

•Fair value losses on IRLC and LHFS decreased $185.4 million or 32.0%. The decrease in loss was primarily due to the decrease in volume, partially offset by increasing interest rates during the three months ended March 31, 2022 compared to decreasing rates during the three months ended March 31, 2021.

• Fair value gains on Hedging Instruments represent the net unrealized gains or losses on mandatory trades, forward sales contracts, interest rate swap futures, and put options hedging IRLCs and LHFS as well as realized gains or losses from pair-off settlements. The decrease of $151.8 million reflects lower volumes and changes in interest rates during the period.

•Discount points, rebates, and lender paid costs represent discount points collected, rebates paid to borrowers, and lender paid costs for the origination of loans (including broker fee compensation paid to independent wholesale brokers and brokerage fees paid to our joint ventures for referred loans). The increase of $174.9 million or 152.3% was driven by an increase in discount points collected and a decrease in ~~lender paid costs.~~

•Provision for loan loss obligation related to loans sold represents the provision to establish our estimated liability for loan losses that we may experience as a result of a breach of representation or warranty provided to the purchasers or insurers of loans that we have sold. The increase of $12.4 million reflects an $8.0 million reversal during the first quarter of 2021 due tofair value gains from Hedging Instruments, partially offset by a decrease in ~~estimated~~fair value losses on ~~repurchase requests and decreased severity of losses on repurchased loans.~~IRLCs.

Origination Income, Net. Origination income, net, reflects the fees that we earn, net of lender credits we pay, from originating loans. Origination income includes loan origination fees, processing fees, underwriting fees, and other fees collected from the borrower at the time of funding. Lender credits typically include rebates or concessions to borrowers for certain loan origination costs. The ~~$42.5~~$47.1 million or ~~41.9%~~79.7% decrease in origination income was the result of a ~~48.0%~~77.1% decrease in loan origination volumes.

Servicing Fee Income. Servicing fee income reflects contractual servicing fees and ancillary and other fees (including late charges) related to the servicing of mortgage loans. The increase of ~~$28.5~~$7.9 million or ~~34.5%~~7.1% in servicing income ~~was the result of an increase of$45.7 billion in the average UPB of our servicing portfolio due to~~reflects an increase in ~~servicing-retained loan sales.~~the weighted average servicing fee, our transition to in-house servicing, and higher ancillary income from the increase in interest rates.

Change in Fair Value of Servicing Rights, Net. Change in fair value of servicing rights, net includes (i) fair value gains or losses net of Hedging Instrument gains or losses; (ii) ~~fallout and decay,~~collection/realization of cash flows, which includes principal amortization and prepayments; and (iii) realized gains or losses on the sales of servicing rights. ~~Change in fair value~~The increase of ~~servicing rights, net was a loss~~$15.6 million reflects lower prepayments of ~~$68.4~~$42.5 million ~~for the three months ended March 31, 2022, as compared to $43.6 million for the three months ended March 31, 2021;~~

~~the increase in loss reflects $75.9 million in fair value gains, net of hedging losses, partially offset by a $41.0 million decrease in fallout and decay~~ due to the increasing rate environment, ~~for the three months ended March 31, 2022.~~partially offset by an increase in fair value losses, net of hedge of $17.0 million.

Other Income. Other income includes our pro rata share of ~~the~~ net earnings from joint ventures, ~~and~~ fee income from title, escrow and settlement services for mortgage loan transactions performed by LDSS, ~~and~~the fair value changes in our trading ~~securities.~~securities, and interest on cash deposits. The decrease of ~~$15.3~~$5.0 million or ~~37.7%~~19.6% was primarily the result of a decrease of ~~$8.7~~$25.5 million in escrow and title fee income due to decreased mortgage loan settlement ~~services and~~activity, partially offset by a decrease in fair value losses ~~of $6.8 million~~ on ~~our~~ trading securities ~~due to the~~of $10.1 million, and an $8.4 million increase in income on cash deposits from increasing ~~rate environment.~~interest rates.

~~Expenses~~

Personnel Expense. Personnel expense ~~reflects employee compensation related to~~includes salaries, commissions, incentive compensation, benefits, and other employee ~~costs~~costs.. The ~~$257.7~~$205.0 million or ~~42.7%~~59.2% decrease ~~was the result~~in personnel expense included volume-related declines in commissions of a$98.3 million. The remaining decrease of ~~$146.6~~$106.6 million was attributable to lower salaries & benefits from the 51.9% decrease in ~~commissions due~~headcount related to ~~the decreases in loan origination volumes and decreases in salaries and benefits expense of $111.1 million.~~previously announced cost savings initiatives. As of March 31, ~~2022,~~2023, we had ~~10,054~~4,834 employees compared to ~~11,037~~10,054 employees as of March 31, ~~2021, representing a decrease of 8.9%.~~2022.

Marketing and Advertising Expense. Marketing and advertising expense primarily reflects online advertising costs, including fees paid to search engines, television, print and radio, distribution partners, master service agreements with brokers, and desk rental agreements with realtors. The ~~$8.1~~$65.6 million or ~~7.4%~~64.6% decrease in marketing expense ~~was driven by~~reflects lower lead aggregators from a ~~reduction~~decline in the total addressable market and cost savings measures affecting national television ~~campaigns, partially offset by an increase in acquired leads.~~campaigns.

Direct Origination Expense. Direct origination expense reflects the unreimbursed portion of direct out-of-pocket expenses that we incur in the loan origination process, including underwriting, appraisal, credit report, loan document and other expenses paid to non-affiliates.The ~~$6.2~~$35.8 million or ~~13.2%~~67.3% decrease in direct origination expense was the result of decreased loan originations during the period.

General and Administrative Expense. General and administrative expense includes professional fees, data processing expense, communications expense, and other operating expenses. The $6.4 million or 12.8% increase in general and administrative expense included ~~$3.8~~$2.6 million of ~~operational write-offs~~software and ~~$2.0~~subscription charges and $2.6 million ~~of investor due diligence fees.~~in professional and consulting services.

Servicing Expense. S~~ervicing expense reflects in-house~~In early 2023, we completed the transition of our servicing ~~costs as well as amounts that we pay~~portfolio to our ~~sub-servicers to service our mortgage loan servicing portfolio.~~in-house platform. The ~~$5.1~~decrease of $16.7 million or ~~19.2% decrease~~77.5% in ~~subservicing~~servicing expense reflects our shift to in-house servicing.

Other Interest Expense. The ~~$1.2~~$28.7 million or ~~9.3%~~199.4% increase in other interest expense ~~between periods~~ was the result of a ~~$985.0~~$395.9 million increase in average ~~outstanding debt obligations primarily resulting from a $225.6 million increase in~~balances, higher rates on secured credit facilities, and ~~issuance of the 2028 Senior Notes in March 2021 with an initial balance of $600.0 million. The increase in interest expense during the three months ended March 31, 2022 was partially offset by~~ a $10.5 million gain on extinguishment of debt from the repurchase of $97.5 million of the 2028 Senior Notes ~~at an average purchase price~~during the first quarter of ~~87.9%.~~2022.

~~Income Tax Expense (Benefit).~~ Benefit for income taxes was $11.6 million for the three months ended March 31, 2022, as compared to expense of $18.3 million for the three months ended March 31, 2021. The decrease represents the Company’s share of net taxable loss of LD Holdings for three months ended March 31, 2022 compared to net taxable income of LD Holdings for the three months ended March 31, 2021.

Balance Sheet Highlights

March 31, ~~2022~~2023 Compared to December 31, ~~2021~~2022

The following table sets forth our consolidated balance sheets as of the dates indicated:
(Dollars in thousands) March 31,
2022 December 31,
2021 Change
$ Change
%
(Unaudited)
Cash and cash equivalents $ 554,135 $ 419,571 $ 134,564 32.1 %
Loans held for sale, at fair value 6,558,668 8,136,817 (1,578,149) (19.4)
Derivative assets, at fair value 351,097 194,665 156,432 80.4
Servicing rights, at fair value 2,086,022 2,006,712 79,310 4.0
Trading securities, at fair value 93,466 72,874 20,592 28.3
Total assets 10,640,248 11,812,313 (1,172,065) (9.9)
Warehouse and other lines of credit $ 5,806,907 $ 7,457,199 $ (1,650,292) (22.1)
Derivative liabilities, at fair value 113,366 37,797 75,569 199.9
Debt obligations, net 1,947,580 1,628,208 319,372 19.6
Total liabilities 9,129,079 10,182,953 (1,053,874) (10.3)
Total equity 1,511,169 1,629,360 (118,191) (7.3)

~~Cash and Cash Equivalents.~~ ~~The~~$134.6 million or 32.1% increase in cash and cash equivalents included $303.8 million in proceeds from the bulk sale of MSRs, partially offset by the repurchase of $97.5 million of 2028 Senior Notes and $30.2 million of dividends and distributions.


(Dollars in thousands)	March 31, 2023		December 31, 2022		Change $		Change %
	(Unaudited)
ASSETS
Cash and cash equivalents	$	798,119	$	863,956	(65,837)		(7.6)	%
Restricted cash	90,084		116,545		(26,461)		(22.7)
Accounts receivable, net	99,381		145,279		(45,898)		(31.6)
Loans held for sale, at fair value	2,039,367		2,373,427		(334,060)		(14.1)
Derivative assets, at fair value	84,624		39,411		45,213		114.7
Servicing rights, at fair value	2,028,788		2,037,447		(8,659)		(0.4)
Trading securities, at fair value	95,561		94,243		1,318		1.4
Property and equipment, net	88,877		92,889		(4,012)		(4.3)
Operating lease right-of-use assets	35,362		35,668		(306)		(0.9)
Prepaid expenses and other assets	139,904		155,982		(16,078)		(10.3)
Loans eligible for repurchase	672,458		634,677		37,781		6.0
Investments in joint ventures	18,266		20,410		(2,144)		(10.5)



Total assets	$	6,190,791	$	6,609,934	$	(419,143)	(6.3)

LIABILITIES & EQUITY
Warehouse and other lines of credit	$	1,830,319	$	2,146,602	$	(316,283)	(14.7)
Accounts payable, accrued expenses and other liabilities	449,641		488,696		(39,055)		(8.0)
Derivative liabilities, at fair value	35,662		67,492		(31,830)		(47.2)
Liability for loans eligible for repurchase	672,458		634,677		37,781		6.0
Operating lease liability	57,837		61,675		(3,838)		(6.2)
Debt obligations, net	2,303,712		2,289,319		14,393		0.6
Total liabilities	5,349,629		5,688,461		(338,832)		(6.0)
Total equity	841,162		921,473		(80,311)		(8.7)
Total liabilities and equity	$	6,190,791	$	6,609,934	$	(419,143)	(6.3)

Loans Held for Sale, at Fair Value.Loans held for sale, at fair value, are primarily fixed and variable rate, 15- to 30-year term first-lien loans that are secured by residential property. The ~~$1.6 billion~~$334.1 million or ~~19.4%~~14.1% decrease ~~was primarily the result of $22.9~~reflects $5.4 billion in loan sales, partially offset by ~~$21.6~~$4.9 billion in ~~originations.~~loan originations, an increase in the fair value, and loan repurchase activity.

Derivative Assets, at Fair Value. The ~~$156.4~~$45.2 million or ~~80.4%~~114.7% increase ~~was primarily the result of~~reflects a ~~$262.5~~$31.6 million increase in IRLCs from higher volume and a $13.6 million increase in Hedging Instruments from increasing interest rates, partially offset by a $106.1 million decrease in IRLCs assets from the decrease in IRLC volume. At March 31, 2022, derivative assets included Hedging Instruments with fair value of $272.8 million compared to $10.3 million at December 31, 2021.

~~Servicing Rights, at Fair Value.~~ The $79.3 million or 4.0% increase included $269.8 million in capitalized servicing rights from the sale of loans on a servicing-retained basis and a $199.0 million increase in estimated fair value due to a decrease in prepayment speed assumptions from increased interest rates, partially offset by a $312.8 million~~decrease in servicing rights from the sale of $20.9 billion in UPB of servicing rights and $77.1 million of principal amortization and prepayments.~~

~~Trading Securities.~~ The $20.6 million or 28.3% increase was due to Mello Mortgage Capital Acceptance securitizations completed in 2022. We retained a five percent economic interest in the credit risk of the assets collateralizing the securitization pursuant to the U.S. credit risk retention rules.Instruments.

Warehouse and Other Lines of Credit. The decrease of $~~1.7 billion~~316.3 million or ~~22.1%~~14.7% was the result of loan sales outpacing originations by ~~$1.3 billion~~$452.2 million during the three months ended March 31, ~~2022 and $422.9 million in proceeds from other secured financings used to repay a securitization facility.~~2023.

Derivative Liabilities, at Fair Value. The ~~increase~~decrease of ~~$75.6~~$31.8 million or ~~199.9%~~47.2% reflects a ~~$62.5~~$28.3 million ~~increase in IRLCs and a $13.0 million increase~~decrease in Hedging Instrument liabilities ~~due to increasing interest rates.~~

~~Debt Obligations, net.~~ ~~The increase of $319.4~~and a $3.5 million ~~or 19.6% included an increase~~decrease in ~~other secured financings of $422.9 million partially offset by the repurchase of $97.5 million of our 2028 Senior Notes.~~

~~Equity~~. Total equity was $1.5 billion and $1.6 billion as of March 31, 2022 and December 31, 2021, respectively. The decrease was attributed to net loss of $91.3 million, dividends and distributions totaling $29.7 million, and the repurchase of treasury shares, at cost of $0.2 million to net settle and withhold tax on vested RSUs, partially offset by stock-based compensation of $2.3 million and increases to additional paid in capital of $0.7 million for tax adjustments associated with the IPO and reorganization.IRLCs.

Liquidity and Capital Resources

Liquidity

Our liquidity reflects our ability to meet our current obligations, ~~(including~~including our operating expenses and, when applicable, the retirement of our debt and margin calls relating to our Hedging Instruments, warehouse and other lines ~~and~~of credit, secured credit ~~facilities),~~facilities, fund new originations and purchases, meet servicing advance requirements, and make investments as we identify them. We forecast the need to have adequate liquid funds available to operate and grow our business. As of March 31, ~~2022,~~2023, unrestricted cash and cash equivalents were ~~$554.1~~$798.1 million and committed and uncommitted available capacity under our warehouse and other lines of credit was ~~$5.0~~$2.1 billion.

We fund substantially all of the mortgage loans we close through borrowings under our warehouse ~~lines.~~and other lines of credit. Our mortgage origination liquidity could be affected as our lenders reassess their exposure to the mortgage origination industry and either curtail access to uncommitted mortgage warehouse financing capacity or impose higher costs to access such capacity. Our liquidity may be further constrained as there may be less demand by investors to acquire our mortgage loans in the secondary market. ~~In response to the COVID-19 pandemic, we increased our cash position and total loan funding capacity with our current and new lending partners.~~

As a servicer, we are required to advance principal and interest to the investor for up to four months on GSE backed mortgages and longer on other government agency backed mortgages on behalf of clients who have entered a forbearance plan. As of March 31, ~~2022,~~2023, approximately ~~0.6%~~0.1%, or ~~$898.5~~$174.0 million UPB, of our servicing portfolio was in active forbearance. While these advance requirements have decreased from the higher levels during 2020, the economic impact of COVID-19 could continue to result in additional advance requirements related to forbearance plans.

Sources and Uses of Cash

Our primary sources of liquidity have been as follows: (i) funds obtained from our warehouse ~~lines;~~and other lines of credit; (ii) proceeds from debt obligations; (iii) proceeds received from the sale and securitization of loans; (iv) proceeds from the sale of servicing rights; (v) loan fees from the origination of loans; (vi) servicing fees; (vii) title and escrow fees from settlement services; (viii) real estate referral fees; and (ix) interest income from LHFS.

Our primary uses of funds for liquidity have included the following: (i) funding mortgage loans; (ii) funding loan origination costs; (iii) payment of warehouse line haircuts required at loan origination; (iv) payment of interest expense on warehouse ~~lines;~~and other lines of credit; (v) payment of interest expense under debt obligations; (vi) payment of operating expenses; (vii) repayment of warehouse ~~lines;~~and other lines of credit; (viii) repayment of debt obligations; (ix) funding of servicing advances; (x) margin calls on warehouse and other lines of credit or Hedging Instruments; (xi) ~~payment of tax distributions to holders of Holdco Units; (xii) payments of cash dividends or distributions subject to the discretion of our board of directors, (xiii)~~ repurchases of loans under representation and warranty breaches; and ~~(xiv)~~(xii) costs relating to ~~servicing and subservicing.~~servicing.

We rely on the secondary mortgage market as a source of long-term capital to support our mortgage lending operations. Approximately ~~82%~~73% of the mortgage loans that we originated during the three months ended March 31, ~~2022~~2023 were sold in the secondary mortgage market to Fannie Mae or Freddie Mac or, in the case of MBS guaranteed by Ginnie Mae, are mortgage loans insured or guaranteed by the FHA or VA. We also sell loans to many private investors.

At this time, we currently believe that ~~there are no material market trends that would affect~~ our ~~access to long-term or short-term borrowings~~cash on hand, as well as the sources of liquidity described above, will be sufficient to maintain our current operations ~~or that would likely cause us to cease to be in compliance with applicable covenants for our indebtedness or that would inhibit our ability to~~and fund our loan operations and capital commitments for the next twelve months. However, ~~should those trends change,~~ we ~~believe~~will continue to review our liquidity needs in light of current and anticipated mortgage market conditions and we ~~could retain less or sell additional servicing rights, scale back growth or take other actions~~have taken various steps to ~~mitigate any significant increase in demands on~~align our ~~liquidity.~~cost structure with current and expected mortgage origination volumes.

4436

Warehouse Lines and Debt Obligations

Warehouse lines are discussed in Note 8- Warehouse and Other Lines of Credit and debt obligations are discussed in Note 9- Debt Obligations of the Notes to Consolidated Financial Statements contained in ~~Item~~“Part 1. Financial information”

Our lenders require us to comply with various financial covenants including tangible net worth, liquidity, leverage ratios and profitability. As a result of net losses during 2022 and in the first quarter of 2023, we were required to amend certain of our warehouse lines or debt obligations or obtain waivers of profitability related to financial covenants in certain of our debt obligations. We expect that we will need to further amend or obtain waivers in order to maintain compliance with such financial covenants. Our lenders are not required to grant any such amendments or waivers and may determine not to do so. As of March 31, 2023, following certain amendments, we were in full compliance with all financial covenants. Although these financial covenants limit the amount of indebtedness that we may incur and affect our liquidity through minimum cash reserve requirements, we believe that these covenants currently provide us with sufficient flexibility to operate our business and obtain the financing necessary to achieve that purpose.

We finance most of our loan originations on a short-term basis using our warehouse ~~lines.~~and other lines of credit. Under ~~our warehouse lines,~~these facilities, we agree to transfer certain loans to our counterparties against the transfer of funds by them, with a simultaneous agreement by the counterparties to transfer the loans back to us at the date loans are sold, or on demand by us, against the transfer of funds from us. We do not recognize these transfers as sales for accounting purposes. OnDuring the three months ended March 31, 2023, our loans remained on warehouse lines for an average ~~loans are repurchased within~~of 19 ~~days of funding.~~days. Our warehouse ~~lines~~facilities are generally short-term borrowings ~~which mature in less than~~with original maturities between one ~~year with the exception of our~~and two years. Our securitization facilities ~~which~~are generally ~~have terms of~~ two ~~and~~or three ~~years.~~year terms. We utilize both committed and uncommitted loan funding facilities and we evaluate our needs under these facilities based on forecasted volume of loan originations and sales.

As of March 31, ~~2022,~~2023, we maintained revolving lines of credit with nine counterparties providing warehouse ~~lines~~and securitization facilities with ~~fourteen counterparties, our~~ borrowing capacity ~~was $10.9~~totaling $4.1 billion of which ~~$3.1~~$1.4 billion was committed. Our ~~$10.9~~$4.1 billion of capacity as of March 31, ~~2022~~2023 was comprised of ~~$7.1~~$3.6 billion with maturities staggered throughout ~~2022, $2.3 billion maturing in~~ 2023 and ~~$1.5~~$0.5 billion maturing in 2024. As of March 31, ~~2022,~~2023, we had ~~$5.8~~$1.8 billion of borrowings outstanding and ~~$5.0~~$2.1 billion of additional availability under our facilities.

When we draw on ~~the~~our warehouse ~~lines,~~and securitization facilities we must pledge eligible loan ~~collateral and~~collateral. Our warehouse line providers require us to make a capital investment, or ~~“haircut,~~“haircut.” upon financing the ~~loans,~~loan, which is generally ~~determined by the type of collateral provided and the warehouse line terms. Our warehouse line providers require a haircut~~ based on product types and the market value of the loans. The haircuts are normally recovered from sales proceeds. As of March 31, ~~2022,~~2023, we had ~~$42.5~~a total of $7.8 million in restricted cash posted as ~~additional~~ collateral with our warehouse ~~lenders~~ and securitization facilities, ~~as compared to $122.4~~of which $4.3 million ~~as of December 31, 2021.~~

~~Interest on our warehouse lines varies by facility and depends on~~was the type of loan that is being financed or the period of time that a loan is transferred to our warehouse line counterparty. As of March 31, 2022, interest expense under our warehouse lines was generally based on 30-day LIBOR, or other alternative base rate such as SOFR, plus a margin and in some cases a minimum interest rate and certain commitment and utilization fees apply. Interest is generally payable monthly in arrears or on the repurchase date of a loan, and outstanding principal is payable upon receipt of loan sale proceeds or on the repurchase date of a loan. Outstanding principal related to a particular loan must also be repaid after the expiration of a contractual period of time or, if applicable, upon the occurrence of certain events of default with respect to the underlying loan.

Our warehouse lines require us to comply with various financial covenants including tangible net worth, liquidity, leverage ratios and net income. As of March 31, 2022, we were in compliance with all of our warehouse lending covenants. Although these financial covenants limit the amount of indebtedness that we may incur and affect our liquidity through minimum cash reserve requirements, we believe that these covenants currently provide us with sufficient flexibility to successfully operate our business and obtain the financing necessary to achieve that purpose.requirement.

In addition to our warehouse lines, we fund our balance sheet through our secured and unsecured debt obligations. The availability and cost of funds to us can vary depending on market conditions. From time to time, and subject to any applicable laws or regulations, we may take steps to reduce or repurchase our debt through redemptions, tender offers, cash purchases, prepayments, refinancing, exchange offers, open market or privately-negotiated transactions. The amount of debt, if any, that may be reduced or repurchased will depend on various factors, such as market conditions, trading levels of our debt, our cash positions, our compliance with debt covenants, and other considerations.

Secured debt obligations as of March 31, ~~2022~~2023 included secured credit facilities and Term Notes that totaled ~~$957.9 million~~$1.3 billion net of ~~$5.3~~$0.7 million of deferred financing ~~costs, as compared to $542.9 million net of $2.7 million of deferred financing costs as of December 31, 2021.~~costs. Secured ~~debt obligations as of March 31, 2022 included secured~~ credit ~~facilities, other secured financings, and Term Notes. Secured credit facilities included MSR facilities, securities financing facilities, and servicing advance facilities. MSR~~ facilities are secured by Ginnie Mae, Fannie Mae, ~~and~~or Freddie Mac ~~MSRs. Securities financing facilities are secured by trading securities which represent our retained interest in the credit risk of the assets collateralizing~~MSRs, certain ~~securitization transactions. Servicing advance facilities are secured by~~ servicing advance receivables, ~~made pursuant to Fannie Mae and Freddie Mac requirements~~ or ~~other principal and interest or servicing advance reimbursement amounts. The~~trading securities. Term Notes are secured by certain participation certificates relating to Ginnie Mae ~~mortgage servicing rights pursuant to the terms of a base indenture. Our secured debt obligations require us to~~

~~satisfy certain financial covenants and we were in compliance with all such covenants as of March 31, 2022 and December 31, 2021.~~MSRs.

Unsecured debt obligations as of March 31, ~~2022 totaled~~2023 consisted of Senior Notes totaling $1.0 billion net of ~~$12.7~~$9.9 million of deferred financing costs, as compared to $1.1 billion, net of $14.7 million of deferred financing costs as of December 31, 2021. Unsecured debt obligations as of March 31, 2022 and December 31, 2021 consisted of our Senior Notes.costs. During the first quarter of 2022, we repurchased $97.5 million of 2028 Senior Notes at an average purchase price of 87.9% of par which resulted in a $10.5 million gain on extinguishment of debt recorded in other interest expense on the consolidated ~~statement~~statements of operations.

Dividends and Distributions

~~During the three months ended~~As part of our balance sheet and capital management strategies, we suspended our regular quarterly dividend effective March 31, 2022 ~~we paid dividends~~ and ~~distributions of $30.2 million.~~

On December 13, 2021, we declared a regular cash dividend of $0.08 per share on our Class A common stock and Class D common stock. The board of directors of LD Holdings authorized a simultaneous cash distribution on its units. The dividend was paid on January 18, 2022 tofor the ~~Company's stockholders of record as of the close of business on January 3, 2022.~~

On March 14, 2022, we declared a regular cash dividend of $0.08 per share on our Class A common stock and Class D common stock. The board of directors of LD Holdings authorized a simultaneous cash distribution on its units. The dividend was paid on April 18, 2022 to the Company's stockholders of record as of the close of business on April 4, 2022.foreseeable future.

Cash dividends are subject to the discretion of our board of directors and our compliance with applicable law, and depend on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, including the satisfaction of our obligations under the TRA, restrictions in our debt agreements, business prospects and other factors that our board of directors may deem relevant.

Our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization or agreements of our subsidiaries, including agreements governing our indebtedness. Future agreements may also limit our ability to pay dividends.

~~As part of our balance sheet and capital management strategies, we have suspended our regular quarterly dividend for the three months ended March 31, 2022 and for the foreseeable future.~~

Contractual Obligations and Commitments

Our estimated contractual obligations as of March 31, ~~2022~~2023 are as follows:


		Payments Due by Period											Payments Due by Period
(Dollars in thousands)	(Dollars in thousands)	Total		Less than 1 Year		1-3 years		3-5 Years		More than 5 Years		(Dollars in thousands)	Total		Less than 1 Year		1-3 years		3-5 Years		More than 5 Years

Warehouse lines		$	5,806,907	$	2,968,670	$	2,838,237	$	—	$	—
Warehouse and other lines of credit												Warehouse and other lines of credit	$	1,830,319	$	1,330,319	$	500,000	$	—	$	—
Debt obligations (1)	Debt obligations (1)											Debt obligations (1)
Secured credit facilities	Secured credit facilities	340,269		240,269		100,000		—		—		Secured credit facilities	1,111,812		763,830		347,982		—		—
Term Notes	Term Notes	200,000		—		200,000		—		—		Term Notes	200,000		200,000		—		—		—
Senior Notes	Senior Notes	1,002,475		—		—		500,000		502,475		Senior Notes	1,002,475		—		500,000		—		502,475

Operating lease obligations (2)	Operating lease obligations (2)	77,656		21,726		35,883		13,584		6,463		Operating lease obligations (2)	69,489		22,621		30,207		15,006		1,654
Naming and promotional rights agreements	Naming and promotional rights agreements	117,358		22,600		45,442		23,066		26,250		Naming and promotional rights agreements	87,069		20,630		37,939		12,000		16,500
Total contractual obligations	Total contractual obligations	$	7,544,665	$	3,253,265	$	3,219,562	$	536,650	$	535,188	Total contractual obligations	$	4,301,164	$	2,337,400	$	1,416,128	$	27,006	$	520,629

(1) Amounts exclude deferred financing costs.

(2) Represents lease obligations for office space under non-cancelable ~~operation~~operating lease agreements.

In addition to the above contractual obligations, we also have interest rate lock commitments and forward sale contracts. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon and, therefore, those commitments have been excluded from the table above. Refer to Note 6-

5- Derivative Financial Instruments and Hedging Activities and Note 14- Commitments & Contingencies of the Notes to Consolidated Financial Statements contained in Item 1 for further discussion on ~~derivatives.~~derivatives and other contractual commitments.

Off-Balance Sheet Arrangements

As of March 31, ~~2022,~~2023, we were party to mortgage loan participation purchase and sale agreements, pursuant to which we have access to uncommitted facilities that provide liquidity for recently sold MBS up to the MBS settlement date. These facilities, which we refer to as gestation facilities, are a component of our financing strategy and are off-balance sheet arrangements.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with GAAP, which requires us to make judgments, estimates and assumptions that affect: (i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent assets and liabilities at the end of each reporting period; and (iii) the reported amounts of revenues and expenses during each reporting period. We continually evaluate these judgments, estimates and assumptions based on our own historical experience, knowledge and assessment of current business and other conditions and our expectations regarding the future based on available information which together form our basis for making judgments about matters that are not readily apparent from

other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application. Our accounting policies are described in Note 1 to the consolidated financial statements included in the Company's ~~2021~~2022 Form 10-K. At December 31, ~~2021,~~2022, the most critical of these significant accounting policies were policies related to the fair value of loans held for sale, servicing rights, and derivative financial instruments. As of the date of this report, there have been no significant changes to the Company's critical accounting policies or estimates.

When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions.

~~Reconciliation of~~ Non-GAAP Measures

To provide investors with information in addition to our results as determined by GAAP, we disclose ~~Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) as~~certain non-GAAP ~~measures.~~measures to assist investors in evaluating our financial results. We believe these non-GAAP measures provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting ~~net~~ interest ~~expense)~~expense on non-funding debt), taxation, the age and book depreciation of facilities (affecting relative depreciation expense), and ~~the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance, as well as certain historical~~other cost ~~(benefit)~~or benefit items which may vary for different companies for reasons unrelated to operating performance. These non-GAAP measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.

~~We define “Adjusted~~include our Adjusted Total Revenue” as total revenues, net of the change in fair value of mortgage servicing rights (“MSRs”) and the related hedging gains and losses. We define “Adjusted Net Income (Loss)” as tax-effected earnings (loss) before change in fair value of contingent consideration, stock compensation expense and management fees, IPO expense, and the change in fair value of MSRs, net of the related hedging gains and losses, and the tax effects of those adjustments. We define “Adjusted Diluted Earnings (Loss) per Share” asRevenue, Adjusted Net Income (Loss) ~~divided by the diluted weighted average number of shares of Class A common stock~~, Adjusted Diluted Earnings (Loss) Per Share, and ~~Class D common stock outstanding for the applicable period, which assumes the proforma exchange of all outstanding Class C common shares for shares of Class A common stock. We define “Adjusted~~Adjusted EBITDA (LBITDA)” as earnings (loss) before interest expense and amortization of debt issuance costs on non-funding debt, income taxes, depreciation and amortization, change in fair value of MSRs, net of the related hedging gains and losses, change in fair value of contingent consideration, stock compensation expense and management fees, and IPO related expense.

Adjustments for income taxes are made to reflect historical results of operations on the basis that it was taxed as a corporation under the Internal Revenue Code, and therefore subject to U.S. federal, state and local income taxes.. We exclude from each of these non-GAAP financial measures the change in fair value of MSRs and related hedging gains and losses as ~~this represents a non-cash non-realized adjustment to our total revenues, reflecting changes in assumptions including discount rates~~they add volatility and ~~prepayment speed assumptions, mostly due to changes in market interest rates, which is~~are not indicative of ~~our~~the Company’s operating performance or results of ~~operations.~~operation. We also exclude ~~stock~~stock-based compensation expense, which is a non-cash expense, ~~management fees~~gains or losses on extinguishment of debt and ~~IPO expenses~~disposal of fixed assets, non-cash goodwill impairment, and other impairment charges to intangible assets and operating lease right-of-use assets as management does not consider these costs to be indicative of our performance or results of operations. Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense)”, as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted ~~EBITDA.~~

~~Adjusted Total~~EBITDA (LBITDA). Adjustments for income taxes are made to reflect historical results of operations on the basis that it was taxed as a corporation under the Internal Revenue ~~Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share,~~Code, and ~~Adjusted EBITDA (LBITDA)~~therefore subject to U.S. federal, state and local income taxes. These non-GAAP measures have limitations as analytical tools, and ~~you~~ should not ~~consider them~~be considered in isolation or as a substitute for ~~analysis of our results as~~revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported ~~under U.S. GAAP.~~by other companies. Some of these limitations are:

•they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;

•Adjusted EBITDA (LBITDA) does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;

•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Total Revenue, Adjusted Net Income (Loss), and Adjusted EBITDA (LBITDA) do not reflect any cash requirement for such replacements or improvements; and

•they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

Because of these limitations, Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) are not intended as alternatives to total revenue, net income (loss), net income (loss) attributable to the Company, or Diluted Earnings (Loss) Per Share or as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below for a reconciliation of these non-GAAP measures to their most comparable U.S. GAAP measures.

Reconciliation of Total Revenue to Adjusted Total Revenue
(Dollars in thousands)
(Unaudited):
Three Months Ended
March 31, 2022 March 31, 2021
Total net revenue $ 503,311 $ 1,316,008
Change in fair value of servicing rights net, of hedging gains and losses(1)
1,295 (74,567)
Adjusted total revenue $ 504,606 $ 1,241,441


Reconciliation of Total Revenue to Adjusted Total Revenue (Dollars in thousands) (Unaudited):	Three Months Ended
	March 31, 2023		March 31, 2022
Total net revenue	$	207,901	$	503,311
Change in fair value of servicing rights net, of hedging gains and losses(1)	18,289		1,295
Adjusted total revenue	$	226,190	$	504,606

(1)Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)
(Dollars in thousands)
(Unaudited):
Three Months Ended
March 31, 2022 March 31, 2021
Net (loss) income attributable to loanDepot, Inc. $ (34,741) $ 44,875
Net (loss) income from the pro forma conversion of Class C common shares to Class A common shares(1)
(56,577) 382,978
Net (loss) income (91,318) 427,853
Adjustments to the benefit (provision) for income taxes(2)
14,710 (101,221)
Tax-effected net (loss) income (76,608) 326,632
Change in fair value of servicing rights, net of hedging gains and losses(3)
1,295 (74,567)
Stock-based compensation expense and management fees 2,309 60,076
IPO expenses — 4,834
Gain on extinguishment of debt (10,528) —
Tax effect of adjustments(4)
1,800 2,552
Adjusted net (loss) income $ (81,732) $ 319,527


Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) (Dollars in thousands) (Unaudited):	Three Months Ended
	March 31, 2023		March 31, 2022
Net loss attributable to loanDepot, Inc.	$	(42,907)	$	(34,741)
Net loss from the pro forma conversion of Class C common shares to Class A common shares(1)	(48,814)		(56,577)
Net loss	(91,721)		(91,318)
Adjustments to the benefit for income taxes(2)	13,316		14,710
Tax-effected net loss	(78,405)		(76,608)
Change in fair value of servicing rights, net of hedging gains and losses(3)	18,289		1,295

Stock-based compensation expense	5,926		2,309

Gain on extinguishment of debt	—		(10,528)
Loss on disposal of fixed assets	261		—

Other (recovery) impairment	(345)		—
Tax effect of adjustments(4)	(5,973)		2,140
Adjusted net loss	$	(60,247)	$	(81,392)

(1)Reflects net ~~income (loss)~~loss to Class A common stock and Class D common stock from the pro forma exchange of Class C common stock.

(2)loanDepot, Inc. is subject to federal, state and local income taxes. Adjustments to income tax (benefit) reflect the effective income tax rates below, and the pro forma assumption that loanDepot, Inc. owns 100% of LD Holdings.

Three Months Ended
March 31, 2022 March 31, 2021
Statutory U.S. federal income tax rate 21.00 % 21.00 %
State and local income taxes (net of federal benefit) 5.00 5.43
Effective income tax rate 26.00 % 26.43 %


	Three Months Ended
	March 31, 2023		March 31, 2022
Statutory U.S. federal income tax rate	21.00	%	21.00	%
State and local income taxes (net of federal benefit)	6.28		5.00
Effective income tax rate	27.28	%	26.00	%

(3)Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.

(4)Amounts represent the income tax effect ~~of (a) change in fair value of servicing rights, net of hedging gains and losses, (b) stock compensation expense and management fees, (c) IPO expense, and (d) gain on extinguishment of debt at~~using the aforementioned effective income tax ~~rates.~~rates, excluding certain discrete tax items. Reporting periods after June 30, 2022 include the income tax effect of excess tax benefits or deficiencies on vested RSUs. Prior periods were adjusted to conform to current presentation.

4940

Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding
(Dollars in thousands except per share)
(Unaudited)
Three Months Ended
March 31, 2022 March 31, 2021
Net (loss) income attributable to loanDepot, Inc. $ (34,741) $ 44,875
Adjusted net (loss) income (81,732) 319,527
Share Data:
Diluted weighted average shares of Class A and Class D common stock outstanding 139,007,890 125,772,797
Assumed pro forma conversion of Class C shares to Class A common stock (2)
181,035,804 198,537,418
Adjusted diluted weighted average shares outstanding 320,043,694 324,310,215
Diluted (loss) earnings per share $ (0.25) $ 0.36
Adjusted diluted (loss) earnings per share (0.26) 0.99


Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding (Dollars in thousands except per share) (Unaudited)	Three Months Ended
	March 31, 2023		March 31, 2022
Net loss attributable to loanDepot, Inc.	$	(42,907)	$	(34,741)
Adjusted net loss	(60,247)		(81,392)

Share Data:
Diluted weighted average shares of Class A and Class D common stock outstanding	170,809,818		139,007,890
Assumed pro forma conversion of weighted average Class C shares to Class A common stock (1)	149,210,417		181,035,804
Adjusted diluted weighted average shares outstanding	320,020,235		320,043,694

Diluted loss per share	$	(0.25)	$	(0.25)
Adjusted diluted loss per share (2)	N/A		(0.25)

(1)Reflects the assumed pro forma conversion of all outstanding shares of Class C common stock to Class A common stock.

Reconciliation of Net Income (Loss) to Adjusted EBITDA (LBITDA)
(Dollars in thousands)
(Unaudited):
Three Months Ended
March 31, 2022 March 31, 2021
Net (loss) income $ (91,318) $ 427,853
Interest expense — non-funding debt(1)
14,393 13,171
Income tax (benefit) expense (11,627) 18,277
Depreciation and amortization 10,545 8,454
Change in fair value of servicing rights, net of hedging gains and
losses(2)
1,295 (74,567)
Stock-based compensation expense and management fees 2,309 60,076
IPO expenses — 4,834
Adjusted (LBITDA) EBITDA $ (74,403) $ 458,098
(2)Omitted adjusted diluted loss per share measures that included the impact of the assumed exchange of shares to the extent the exchange was antidilutive.


Reconciliation of Net Income (Loss) to Adjusted EBITDA (LBITDA) (Dollars in thousands) (Unaudited):	Three Months Ended
	March 31, 2023		March 31, 2022
Net loss	$	(91,721)	$	(91,318)
Interest expense — non-funding debt(1)	43,090		14,393
Income tax benefit	(14,862)		(11,627)
Depreciation and amortization	10,026		10,545
Change in fair value of servicing rights, net of hedging gains and losses(2)	18,289		1,295

Stock-based compensation expense	5,926		2,309

Loss on disposal of fixed assets	261		—

Other (recovery) impairment	(345)		—
Adjusted LBITDA	$	(29,336)	$	(74,403)

(1)Represents other interest expense, which includes gain on extinguishment of debt and amortization of debt issuance costs, in the Company’s consolidated statement of operations.

(2)Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to various risks which can affect our business, results and operations. The primary market risks to which we are exposed include interest rate risk, credit risk, prepayment risk and inflation risk.

We manage our interest rate risk and the price risk associated with changes in interest rates pursuant to the terms of an Interest Rate Risk Management Policy which (i) quantifies our interest rate risk exposure, (ii) lists the derivatives eligible for use as Hedging Instruments and (iii) establishes risk and liquidity tolerances.

Interest Rate Risk

Our principal market exposure is to interest rate risk as our business is subject to variability in results of operations due to fluctuations in interest rates. We anticipate that interest rates will remain our primary benchmark for market risk for the foreseeable future. Changes in interest rates affect our assets and liabilities measured at fair value, including LHFS, IRLCs, servicing rights and Hedging Instruments. In a declining interest rate environment, we ~~would~~ expect ~~our results of operations to be positively impacted by~~ higher loan origination volumes, ~~and~~higher loan ~~margins. However, we would expect our results of operations to be negatively impacted by higher actual and projected loan prepayments related to our loan servicing portfolio and a decrease~~margins, increases in the value of our ~~servicing rights. As interest rates decline, our~~ LHFS and IRLCs, ~~generally increase~~and decreases in the value ~~while~~

of our Hedging Instruments ~~utilized to hedge against interest rate risk decrease in value.~~and servicing rights. In a rising interest rate environment, we ~~would~~ expect ~~a negative impact on the results of operations of our production activities and a positive impact on the results of operations of our servicing activities (principally through an increase~~lower loan origination volumes, lower loan margins, decreases in the ~~fair~~ value of ~~our servicing rights). As interest rates increase,~~ our LHFS and IRLCs, ~~generally decrease~~and increases in the value ~~while~~of our Hedging Instruments ~~typically increase in value.~~and servicing rights. The interaction between the results of operations of our various activities is a core component of our overall interest rate risk strategy.

IRLCs represent an agreement to extend credit to a potential customer, whereby the interest rate on the loan is set prior to funding. Our LHFS, which are held in inventory awaiting sale into the secondary market, and our IRLCs, are subject to changes in interest rates from the date of the commitment through the sale of the loan into the secondary market. Accordingly, we are exposed to interest rate risk and related price risk during the period from the date of the lock commitment through (i) the lock commitment cancellation or expiration date, or (ii) the date of sale into the secondary mortgage market. The average term for outstanding interest rate lock commitments at March 31, ~~2022~~2023 was 5838 days; and our average holding period of the loan from funding to sale was 2026 days ~~during~~for the three months ended March 31, ~~2022.~~2023.

We manage the interest rate risk associated with our outstanding IRLCs, LHFS and servicing rights by entering into Hedging Instruments. Management expects these Hedging Instruments will experience changes in fair value opposite to changes in fair value of the IRLCs and LHFS, thereby reducing earnings volatility. We take into account various factors and strategies in determining the portion of IRLCs, LHFS, and servicing rights that we want to economically hedge. Our expectation of how many of our IRLCs will ultimately close is a key factor in determining the notional amount of Hedging Instruments used in hedging the position.

Credit Risk

We are subject to credit risk in connection with our loan sale transactions. While our contracts vary, we provide representations and warranties to purchasers and insurers of the mortgage loans sold that typically are in place for the life of the loan. In the event of a breach of these representations and warranties, we may be required to repurchase a mortgage loan or indemnify the purchaser, and any subsequent loss on the mortgage loan may be borne by us. The representations and warranties require adherence to applicable origination and underwriting guidelines (including those of Fannie Mae, Freddie Mac, and Ginnie Mae), including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements, and compliance with applicable federal, state and local law.

We record a provision for losses relating to such representations and warranties as part of our loan sale transactions. The level of the liability for losses from representations and warranties is difficult to estimate and requires considerable management judgment. The level of loan repurchase losses is dependent on economic factors, trends in property values, investor repurchase demand strategies, and other external conditions that may change over the lives of the underlying loans. We evaluate the adequacy of our liability for losses from representations and warranties based on our loss experience and our assessment of incurred losses relating to loans that we have previously sold and which remain outstanding at the balance sheet date. As our portfolio of loans sold subject to representations and warranties grows and as economic fundamentals change, such adjustments can be material. However, we believe that our current estimates adequately approximate the losses incurred on our sold loans subject to such representations and warranties.

Additionally, we are exposed to credit risk associated with our ~~customers from our LHFS as well as credit risks related to our counterparties including our subservicer, Hedging Instrument~~borrowers, counterparties, and other significant vendors. Our ability to operate profitably is dependent on both our access to capital to finance our assets and our ability to profitably originate, sell, and service loans. Our ability to hold loans pending sale and/or securitization depends, in part, on the availability to us of adequate financing lines of credit at suitable interest rates and favorable advance rates.

In general, we manage such risk by selecting only counterparties that we believe to be financially strong, dispersing the risk among multiple counterparties, placing contractual limits on the amount of unsecured credit extended to any single counterparty and entering into netting

agreements with the counterparties, as appropriate. During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, we incurred no losses due to nonperformance by any of our counterparties.

Prepayment Risk

Prepayment risk is affected by interest rates (and their inherent risk) and borrowers’ actions relative to their underlying loans. To the extent that the actual prepayment speed on the loans underlying our servicing rights differs from what we projected when we initially recognized them and when we measured fair value as of the end of each reporting period, the carrying value of our investment in servicing rights will be affected. In general, an increase in prepayment expectations will decrease our estimates of the fair value of the servicing right, thereby reducing expected servicing income. We monitor the servicing portfolio to identify potential refinancings and the impact that would have on associated servicing rights.

~~Inflation Risk~~

Almost all of our assets and liabilities are interest rate sensitive in nature. As a result, interest rates and other factors will influence our performance more than inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. Additionally, our financial statements are prepared in accordance with GAAP and our activities and balance sheets are measured with reference to historical cost and/or fair value without considering inflation.

5243

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Form 10-Q. Based on such evaluation, our CEO and CFO have concluded that as of March 31, ~~2022,~~2023, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we and certain of our subsidiaries are involved in various lawsuits in state or federal courts regarding violations of state or federal statutes, regulations or common law related to matters arising out of the ordinary course of business. ~~We are not currently subject to any other material legal proceedings.~~ For a further discussion of our material legal proceedings, see Note 1514 - Commitments and Contingencies of the Notes to Consolidated Financial Statements included in “Item 1 Financial Statements.” Additionally, below we have described certain other significant legal proceedings.

Securities Class Action Litigation

Beginning in September 2021, two putative class action lawsuits were filed in the United States District Court for the Central District of California asserting claims under the U.S. securities laws against the Company, certain of its directors, and certain of its officers regarding certain disclosures made in connection with the Company’s IPO. The two actions were consolidated in May 2022. A consolidated amended complaint was filed in June 2022, which, in addition to challenging disclosures made in connection with the IPO, alleges that certain disclosures made after the IPO were false and/or misleading. The Company’s motion to dismiss was filed on August 24, 2022. On January 24, 2023, the Court granted, in part, and denied, in part, the Company’s motion to dismiss. The Company’s answer to the consolidated amended complaint was filed on March 3, 2023. The plaintiffs seek unspecified monetary damages. The Company believes this lawsuit is without merit and intends to vigorously defend against it. The Company does not believe that a loss is probable or that the amount of loss is reasonably estimable in this matter at this time.

Stockholder Derivative Litigation

Beginning in October 2021, four shareholder derivative complaints were filed in the United States District Court for the Central District of California against certain of the Company’s directors and officers, alleging, among things, that these defendants breached their fiduciary duties by causing the Company to make the disclosures being challenged in the putative securities class action described above and seeking unspecified monetary damages for the

Company and that the Company make certain changes to its corporate governance. These derivative actions subsequently were consolidated into a single action (the “California Action”). The California Action currently is stayed pending resolution of a forthcoming motion for summary judgment in the putative securities class action. Beginning in March 2022, two substantially similar shareholder derivative complaints were filed in the United States District Court for the District of Delaware, and then were consolidated into a single action (the “Delaware Action”). The Delaware Action currently is stayed pending resolution of a forthcoming motion for summary judgment in the putative securities class action. The Company believes these lawsuits are without merit. The Company does not believe that a loss is probable or that the amount of loss is reasonably estimable in this matter at this time.

Item 1A. Risk Factors

There have been no material changes ~~or updates to~~in the risk factors ~~that were previously disclosed in~~discussed under Part I. "Item 1A. Risk Factors" of our ~~2021~~2022 Form 10-K filed with the SEC on March ~~18, 2022.~~

16, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Shares of the Company's Class B common stock or Class C common stock may each be converted, together with a corresponding ~~Holding~~Holdco Unit, as applicable, at any time and from time to time at the option of the holder of such share of Class B common stock or Class C common stock, as applicable, for one fully paid and non-assessable share of Class A common stock. Each share of the Company’s Class D common stock may be converted into one fully paid and non-assessable share of Class A common stock at any time at the option of the holder of such share of Class D common stock. There is no cash or other consideration paid by the holder converting such shares and, accordingly, there is no cash or other consideration received by the Company. The shares of Class A common stock issued by the Company in such conversions are exempt from registration pursuant to Section 3(a)(9) of the Securities Act.

On January 3, ~~2022,~~2023, we issued to stockholders ~~632,809~~391,186 shares of Class A common stock upon the conversion of the same number of shares of our Class C common stock and corresponding ~~Holding~~Holdco Units held by such stockholders.

On ~~January 12, 2022,~~February 1, 2023, we issued to stockholders ~~3,795,413 shares of Class A common stock upon the conversion of the same number of shares of our Class D common stock.~~

~~On February 1, 2022, we issued to stockholders 526,958~~613,801 shares of Class A common stock upon the conversion of the same number of shares of our Class C common stock and corresponding ~~Holding~~Holdco Units held by such stockholders.

On March 1, ~~2022,~~2023, we issued to stockholders ~~2,094,256~~550,883 shares of Class A common stock upon the conversion of the same number of shares of our Class C common stock and corresponding ~~Holding~~Holdco Units held by such stockholders.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The following documents are filed as a part of this report:


Exhibit No.			Description
3.1			Amended and Restated Certificate of Incorporation of loanDepot, Inc., dated February 11, 2021(incorporated herein by reference to exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 16, 2021).
3.2			Amended and Restated Bylaws of loanDepot, Inc., ~~dated February 11, 2021~~effective November 10, 2022 (incorporated herein by reference to ~~exhibit 3.2~~Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on ~~February 16, 2021)~~November 15, 2022).
~~4.1~~10.1*+			~~Registration Rights~~Seventh Amendment dated March 30, 2023, to Amended and Restated Master Repurchase Agreement, dated ~~February 16,~~as of November 15, 2021, by and among ~~loanDepot, Inc.~~TIAA, FSB, formerly known as EverBank, as administrative agent for the Buyers and as buyer, Flagstar Bank, N.A., ~~LD Holdings Group~~as purchaser of the rights and obligations hereunder from Signature Bridge Bank, N.A., as successor in interest to Signature Bank, as a buyer, and loanDepot.com LLC, ~~and certain holders identified therein (incorporated herein by reference to exhibit 4.1 to~~as the ~~Company’s Current Report on Form 8-K filed on February 16, 2021).~~seller.
~~4.2~~10.2+			~~Indenture,~~Omnibus Assignment, Assumption, and Amendment, dated ~~as of~~ March ~~26, 2021,~~16, 2023, by and among ~~LD Holdings Group~~Credit Suisse First Boston Mortgage Capital LLC, ~~the guarantors party thereto and Wilmington Trust, National Association, as trustee (Form of 6.125% Senior Notes due 2028 included as Exhibit A thereto)~~ ~~(incorporated herein by reference to exhibit 4.1 to the Company’s Current Report on Form 8-K filed on April 1, 2021).~~
~~4.3~~			Indenture dated as of April 23, 2021, by and among Mello Warehouse Securitization Trust 2021-2, loanDepot.com, LLC and U.S. Bank National Association (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 28, 2021).
~~4.4~~			Indenture dated as of October 21, 2021, by and among Mello Warehouse Securitization Trust 2021-3, as issuer, loanDepot.com, LLC, as servicer, and U.S. Bank National Association, as indenture trustee, note calculation agent, standby servicer and initial securities intermediary (Credit Suisse AG, a company incorporated ~~herein by reference to exhibit~~ 10 ~~.1 to the Company’s Current Report on Form 8-K filed on~~ ~~October~~26 ~~, 2021).~~
~~10.1~~			~~2021 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.~~1 ~~to the Company’s Registration Statement on Form S-~~8 on ~~February~~16 ~~, 2021).~~


~~Exhibit No.~~			~~Description~~
~~10.2~~			~~Form of Restricted Stock Unit Agreement~~ ~~(incorporated herein by reference to Exhibit 10.~~2 ~~to the Company’s Registration Statement on Form S-8 on February 16, 2021).~~
~~10.3~~			~~Form Incentive Stock Option Agreement (incorporated herein by reference to Exhibit 10.~~3 ~~to the Company’s Registration Statement on Form S-8 on February 16, 2021).~~
~~10.4~~			~~Form Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.~~4 ~~to the Company’s Registration Statement on Form S-8 on February 16, 2021).~~
~~10.5~~			~~Form Restricted Stock Agreement (incorporated herein by reference to Exhibit 10.~~5 ~~to the Company’s Registration Statement on Form S-8 on February 16, 2021).~~
~~10.6~~			~~Form Stock Appreciation Rights Agreement (incorporated herein by reference to Exhibit 10.~~6 ~~to the Company’s Registration Statement on Form S-8 on February 16, 2021).~~
~~10.7~~			~~Amendment No. 1, dated as of April 19, 2022, by and between UBS AG, by and~~in Switzerland, acting through its ~~branch office at 1285 Avenue of Americas~~Cayman Islands Branch, Alpine Securitization LTD., Atlas Securitized Products, L.P., Atlas Securitized Products Investments 3, L.P., Atlas Securitized Products Funding 2, L.P., Nexera Holding LLC, and loanDepot.com, LLC to the Master Repurchase Agreement, dated as of March 10, 2017, the Amended and Restated ~~Master~~Pricing Side Letter, dated as of May 21, 2021, the Repo Administration and Allocation Agreement, dated as of March 10, 2017, and the Repurchase Agreement and Pricing Side Letter (incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed ~~April 25, 2022)~~March 22, 2023).
10.8*10.3+			~~Executive Employment~~Joint Omnibus Assignment, Assumption and Amendment No. 3 to the Series 2017-VF1 Repurchase Agreement, ~~dated April 21, 2022,~~Amendment No.2 to the Series 2021-SAVF1 Repurchase Agreement, Amendment No. 1 to the Series 2021-PIAVF1 Repurchase Agreement, Amendment No. 4 to the Series 2017-VF1 Pricing Side Letter, Amendment No.2 to the Series 2021-SAVF1 Pricing Side Letter and the Series 2021-PIAVF1 Pricing Side Letter (incorporated herein by ~~and between Frank Martell and loanDepot, Inc.~~reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed March 22, 2023).
10.9*10.4			~~Amended~~Settlement and ~~Restated Executive Employment~~Cooperation Agreement, dated as of April ~~21, 2022, by and between loanDepot, Inc. and Anthony Hsieh.~~
10.10*			~~Amended and Restated Stockholders Agreement, dated April 21, 2022,~~4, 2023, by and among loanDepot, Inc., ~~Parthenon Investors III, L.P., PCap Associates, Parthenon Capital Partners Fund, L.P., Parthenon Investors IV, L.P., Parthenon Capital Partners Fund II, L.P. PCP Managers, L.P.,~~Anthony Hsieh, The JLSSAA Trust, established September 4, 2014, JLSA, LLC, Trilogy Mortgage Holdings, Inc., Trilogy Management Investors Six, LLC, Trilogy Management Investors Seven, LLC and Trilogy Management Investors Eight, ~~LLC.~~
~~10.11~~			~~2022 Inducement~~ ~~Plan~~LLC (incorporated ~~herein by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed April 2~~6 ~~, 2022).~~
~~10.12~~			Amendment No. 3, dated April 27, 2022, by and among Bank of America, N.A., loanDepot BA Warehouse, LLC and loanDepot.com, LLC to the Second Amended and Restated Master Repurchase Agreement, dated as of August 20, 2021 ~~(incorporated~~ herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed ~~May~~3 ~~, 2022)~~April 5, 2023).
~~10.13~~10.5			~~Amendment No. 1,~~Settlement Agreement and Release, dated as of April ~~27, 2022,~~4, 2023, by and between ~~Bank of America, N.A.~~loanDepot, Inc. and ~~loanDepot.com, LLC to the Second Amended and Restated Mortgage Loan Purchase Agreement, dated as of February 2, 2022(incorporated~~Anthony Hsieh (incorporated herein by reference to Exhibit ~~10.~~2 10.2 of the Company’s Current Report on Form 8-K filed ~~May~~3 ~~, 2022)~~April 5, 2023).
~~10.14~~10.6+			Seventeenth Amendment ~~No. 2, dated April 28, 2022, by~~to Credit and ~~between Barclays Bank PLC and loanDepot, Inc. to the Master Repurchase~~Security Agreement, dated as of ~~August 25, 2020(incorporated~~April 13, 2023, between loanDepot.com, LLC and NexBank (incorporated herein by reference to Exhibit ~~10.~~3 10.1 of the Company’s Current Report on Form 8-K filed ~~May~~3 ~~, 2022)~~April 19, 2023).
~~10.15~~10.7+			Amendment ~~No. 2, dated April 28, 2022, by~~Number Two to Credit and ~~between Barclays Bank PLC and loanDepot, Inc. to the Mortgage Loan Participation Purchase and Sale~~Security Agreement, dated as of ~~August 25, 2020(incorporated~~April 13, 2023, between loanDepot.com, LLC and Flagstar Bank, National Association (incorporated herein by reference to Exhibit ~~10.~~4 10.2 of the Company’s Current Report on Form 8-K filed ~~May~~3 ~~, 2022).~~
~~10.16~~			~~Fourteenth Amendment,~~ April 28, 2022, by and between Nexbank and loanDepot, Inc. to the Credit and Security Agreement, dated as of October 29, 2014 (incorporated herein by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed May 3, 2022)19, 2023).
~~10.17*+~~			~~Amendment 2 dated May 5, 2022 to Master Repurchase Agreement and Securities Contract by and between loanDepot.com, LLC and Bank of Montreal.~~
31.1*			Section 302 Certification of Principal Executive Officer.
31.2*			Section 302 Certification of Principal Financial Officer.
32.1*			Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


~~Exhibit No.~~			~~Description~~
101.0			Inline XBRL Document
101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			Inline XBRL Taxonomy Extension Schema Document.
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document.


Exhibit No.			Description
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104.0			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

** Furnished herewith

+ Confidential information has been omitted because it is both (i) not material and (ii) ~~would be competitively harmful if publicly disclosed.~~is the type of information that the Company treats as private or confidential pursuant to Item 601(b)(10) of Regulation S-K. Certain schedules, exhibits and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K or constitutes a clearly unwarranted invasion of personal privacy pursuant to Item 601(a)(6) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the staff of the Securities and Exchange Commission upon request.

5647

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	LOANDEPOT, INC.


Dated: May ~~13, 2022~~10, 2023	By:	/s/ Frank Martell
	Name:	Frank Martell
	Title:	President and Chief Executive Officer

Dated: May ~~13, 2022~~10, 2023	By:	/s/ Patrick Flanagan
	Name:	Patrick Flanagan
	Title:	Chief Financial Officer

5748


	Common stock issued		Common stock $			Treasury Shares			Additional paid-in capital		Retained Earnings (Deficit)			Non-controlling Interests		Total Equity
	Class A	Class C	Class D	Class A				Class C					Class D
Balance at December 31, 2020	—	—	—	$	—	$	—		$	—	$	—		$	—	$	—	$	1,656,613	$	1,656,613
Distributions prior to the Reorganization	—	—	—	—		—			—		—			—		—		(160,617)		(160,617)
Equity compensation prior to the Reorganization	—	—	—	—		—			—		—			—		—		338		338
Net income prior to the Reorganization	—	—	—	—		—			—		—			—		—		294,598		294,598
Deferred taxes and other tax adjustments associated with the Reorganization and IPO	—	—	—	—		—			—		—			(203,741)		—		—		(203,741)
Effect of the Reorganization	2,215,687	181,789,329	121,368,600	2		182			121		—			740,629		—		(740,934)		—
Effect of the IPO	3,850,000	(2,394,000)	(1,456,000)	4		(2)			(2)		—					—		—		—
Effect of the Greenshoe	577,500	(359,100)	(218,400)	1		(1)			—		—			—		—		—		—
Vested Class C shares	—	709,961	—	—		1			—		—			(1)						—
Stock-based compensation	—	—	—	—		—			—		—			24,607		—		34,872		59,479
Distributions for state taxes on behalf of shareholders, net	—	—	—	—		—			—		—			—		(2,463)		(3,504)		(5,967)
Net income subsequent to the Reorganization and IPO	—	—	—	—		—			—		—			—		44,875		88,380		133,255
Balance at March 31, 2021	6,643,187	179,746,190	119,694,200	$	7	$	180		$	119	$	—		$	561,494	$	42,412	$	1,169,746	$	1,773,958
Balance at December 31, 2021	36,466,936	172,729,168	100,822,084	$	38	$	173		$	101	$	(12,852)		$	565,073	$	(28,976)	$	1,105,803	$	1,629,360
Deferred taxes and other tax adjustments associated with the Reorganization and IPO	—	—	—	—		—			—		—			681		—		—		681
Net issuance of common stock under stock-based compensation plans	7,133,482	(2,038,280)	(3,795,413)	7		(2)			(4)		(163)			89,479		—		(89,479)		(162)
Dividends to Class A and Class D shareholders ($0.08 per share)	—	—	—	—		—			—		—			—		(5,310)		(6,442)		(11,752)
Distributions to Class C shareholders	—	—	—	—		—			—		—			—		(6,338)		(7,665)		(14,003)
Stock-based compensation	—	—	—	—		—			—		—			1,034		—		1,275		2,309
Distributions for taxes on behalf of shareholders, net	—	—	—	—		—			—		—			—		(1,786)		(2,160)		(3,946)
Net income	—	—	—	—		—			—		—			—		(34,741)		(56,577)		(91,318)
Balance at March 31, 2022	43,600,418	170,690,888	97,026,671	$	45	$	171		$	97	$	(13,015)		$	656,267	$	(77,151)	$	944,755	$	1,511,169


	March 31, 2022
	Recurring Fair Value Measurements of Assets and Liabilities Using:
	Quoted Market Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value Measurements
Fair value through net income:
Assets:
Loans held for sale	$	—	$	6,558,668	$	—	$	6,558,668
Trading securities	—		93,466		—		93,466
Derivative assets:
Interest rate lock commitments	—		—		78,295		78,295
Forward sale contracts	—		272,802		—		272,802


Servicing rights	—		—		2,086,022		2,086,022
Total assets at fair value	$	—	$	6,924,936	$	2,164,317	$	9,089,253
Liabilities:
Derivative liabilities:
Interest rate lock commitments	$	—	$	—	$	66,295	$	66,295
Interest rate swap futures	1,528		—		—		1,528

Put options on treasuries	45,543		—		—		45,543
Servicing rights	—		—		7,835		7,835
Total liabilities at fair value	$	47,071	$	—	$	74,130	$	121,201


	Three Months Ended March 31, 2022
	IRLCs, net (1)		Servicing Rights, net(2)


Total net (losses) gains included in earnings	$	(168,620)	$	411,768

Change in unrealized gains relating to assets and liabilities still held at period end	$	12,000	$	408,140


	March 31, 2022		December 31, 2021
Current loans	$	151,624,478	$	160,302,966
Loans 30 - 89 days delinquent	514,200		504,467
Loans 90 or more days delinquent or in foreclosure	1,247,139		1,305,532
Total servicing portfolio (1)	$	153,385,817	$	162,112,965


	March 31, 2022		December 31, 2021
Amounts receivable from joint ventures	$	1,833	$	1,855


	Three Months Ended March 31,
	2022
		Weighted Average
		Grant Date
	Shares	Fair Value
Unvested - beginning of period	1,765,763	$	16.60
Granted	3,137,983	4.21
Vested	(122,886)	25.66
Forfeited/Cancelled	(154,066)	12.91
Unvested - end of period	4,626,794	8.08


	January 1, 2021 through February 10, 2021

	Shares	Weighted Average Grant Date Fair Value


Unvested - beginning of period	610,497,758	$	0.016

Vested	(12,656,379)	0.016
Forfeited/Cancelled	(3,552,286)	0.016
Unvested - end of period	594,289,093	0.016


	Three Months Ended
	March 31, 2022						March 31, 2021
	Class A		Class D		Total			Class A		Class D		Total


Net (loss) income attributable to loanDepot, Inc.	$	(10,367)	$	(24,374)	$	(34,741)		$	2,108	$	42,767	$	44,875





Weighted average shares - basic	41,480,725		97,527,165		139,007,890			5,907,740		119,865,057		125,772,797

(Loss) earnings per share - basic	$	(0.25)	$	(0.25)	$	(0.25)		$	0.36	$	0.36	$	0.36

Diluted earnings per share:



Net (loss) income allocated to common stockholders - diluted	$	(10,367)	$	(24,374)	$	(34,741)		$	2,108	$	42,767	$	44,875





Weighted average shares - diluted	41,480,725		97,527,165		139,007,890			5,907,740		119,865,057		125,772,797

(Loss) earnings per share - diluted	$	(0.25)	$	(0.25)	$	(0.25)		$	0.36	$	0.36	$	0.36