According to HousingWire, loanDepot had a much better second quarter than its first. The company went from losing over fifty million dollars in the first quarter to losing just six point six million in the second quarter, while bringing in three hundred thirty-seven million in revenue. That revenue number climbed eighteen percent from the quarter before, and the company originated nearly eight billion dollars in loans, up four percent from Q1.
The lender's shift toward home equity lending is playing a big role in this turnaround. When homeowners face higher mortgage rates, they're looking for ways to tap into their home equity without refinancing into a new loan at a worse rate. That business line grew substantially in Q2, and it's helping the company charge higher margins on what it's originating. The company said it saw a twenty-five percent jump in loan units, and its profit margins on each loan improved significantly.
loanDepot is also rebuilding its traditional mortgage business. The company expanded its partnerships with builders and added retail locations, and it's paying off. Purchase loans went from representing forty-one percent of their originations in Q1 to fifty-seven percent in Q2. The company is also managing its costs better, keeping expense growth below one percent even as it grew revenue substantially.
The company's loan servicing portfolio, which represents loans it services for other owners, grew to over one hundred twenty-three billion dollars in unpaid principal. That's growing steadily quarter over quarter and year over year. The company also sold off mortgage servicing rights to help with liquidity and is working to manage its debt structure, buying back some of its bonds at discounts when possible.
CEO Anthony Hsieh, who returned as full-time leader a year ago, described this as progress on a transformation plan to position the company for sustainable growth. The company is forecasting slightly lower origination volume for the third quarter but expects its profit margins to improve even further, which suggests management sees momentum in their strategy.
What I am seeing locally here in the Bay Area and throughout the East Bay is that home equity lending is becoming more important as rates stay elevated. Sellers who might have refinanced a few years back are now looking at home equity lines as a way to access capital without taking on a new first mortgage at today's rates. For buyers trying to compete in our market, this opens another tool for putting together down payments or closing costs. It's a reminder that when the traditional mortgage market tightens up, creative financing solutions become more valuable for both sides of a transaction.
