loanDepot cuts net debt $114 million as Q3 loss widens to $29 million

loanDepot (NYSE: LDI) widened its third-quarter net loss to $29 million, up from $7 million in the second quarter, even as it cut net debt obligations by roughly $114 million. The company filed results for the quarter ended Sept. 30 on Nov. 9. The story for finance teams is a balance-sheet trade: management sold servicing rights and repurchased debt at a discount, while the operating business still lost money.

Adjusted net loss (excluding servicing-rights valuation changes and one-time items) widened to $31 million. Origination volume fell 12% from the second quarter to $7.05 billion, while unit volume rose 7% on growth in home equity lending. Revenue fell 9% to $307 million; adjusted revenue fell 2% to $302 million.

Where did the revenue gap come from?

Total revenue and adjusted revenue moved by very different amounts, and the difference is servicing-rights valuation. By calculation from the filing's tables, total revenue fell $30.18 million from the second quarter, while adjusted revenue fell only $5.13 million.

The reconciliation backs out valuation changes in servicing rights (the amortizing asset a lender retains when it sells a loan), net of hedging. Those changes added $4.94 million to revenue in the third quarter, against $29.98 million in the second. That smaller gain explains most of the drop in the headline figure.

Other operating metrics:

• Adjusted EBITDA slipped to $17 million from $20 million.
• Total expense fell to $335.74 million from $343.94 million.
• Adjusted net loss excludes a one-time $4.12 million gain on debt extinguishment, so the buybacks do not flatter that measure.

What changed on the debt side?

The company repurchased $87 million of senior notes at an average of 88% of par. It completed the sale of $10 billion of Agency mortgage servicing rights (MSRs) and agreed to sell $9 billion of Government MSRs; that deal closed in October.

Chief Financial Officer David Hayes said the Agency sale and the discounted note repurchases together cut net debt obligations by approximately $114 million. Debt obligations, net, stood at $2.02 billion, down from $2.13 billion at June 30.

Hayes said the company is pursuing several financing alternatives to refinance or extend its debt, with the focus on extending the maturity profile. That matters because liquidity thinned over the year: cash and cash equivalents were $214.4 million on Sept. 30, down 53.3% from $459.2 million a year earlier, and total equity fell 28.2% to $310.9 million from $433.3 million.

How did the home equity shift play out?

Pull-through weighted gain on sale margin rose 54 basis points to 399 basis points, which the company attributed to a deliberate shift toward higher-margin home equity loans. The same shift cut pull-through weighted lock volume 15% to $5.6 billion, because HELOC production carries no interest rate lock.

Costs moved in the right direction. The company raised the estimated impact of its productivity initiatives to $25 million of annualized savings from $12 million. Against the third quarter of 2025, origination volume rose 8%, unit volume rose 33%, and cost to produce fell 16% on internal management metrics.

Credit quality in the servicing book weakened. Loans 60 or more days delinquent reached 2.0% of the servicing portfolio, versus 1.7% at June 30 and 1.5% a year earlier.

What does the quarter say about the recovery?

The refinance side showed no recovery. The preliminary organic refinance consumer direct recapture rate fell to 52% from 68% in the second quarter. Founder and Chief Executive Officer Anthony Hsieh said elevated interest rates remain a headwind for mortgage demand.

The quarter is mixed on the central test: whether the platform can capture a housing and refinancing recovery profitably before cash and book equity erode further. Margins and unit volume improved; losses widened and cash fell. The debt reduction came from servicing sales and discounted buybacks, both treated as one-time items, and better margins have not yet reached the bottom line.

What happens next?

Fourth-quarter guidance will frame the next test. The company expects:

• Origination volume of $4.5 billion to $6.5 billion; even the top end sits below the third quarter.
• Gain on sale margin of 315 to 355 basis points, bracketing the third quarter's 3.18%.
• Pull-through weighted gain on sale margin of 425 to 465 basis points, against 399 in the third quarter.

Margins at or above the guided range, plus a completed refinancing or extension of debt, would strengthen the case. Another drop in cash and equity without either would weaken it.