This article first appeared on GuruFocus .
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Adjusted Net Loss:Reported an adjusted net loss of $29 million in Q2 2026, compared to a $34 million loss in Q1 2026.
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Loan Origination Volume:Totaled $8.0 billion for Q2 2026, a 4% increase from $7.7 billion in the prior quarter.
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Unit Volume Growth:Increased 25% quarter-over-quarter, driven by the mix shift towards smaller home equity (5x5) loan products.
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Pull-Through Weighted Rate Lock Volume:Came in at $6.6 billion, a 20% decrease from $8.3 billion in Q1 2026, primarily due to the product mix shift to HELOCs.
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Adjusted Total Revenue:Reached $308 million in Q2 2026, up from $299 million in Q1 2026.
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Pull-Through Weighted Gain on Sale Margin:Improved to 345 basis points in Q2 2026, up from 271 basis points in the prior quarter.
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Origination Income:Increased 60% from the prior quarter, reflecting higher demand for HELOC products.
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Servicing Fee Income:Rose to $112 million in Q2 2026 from $109 million in Q1 2026, due to a larger portfolio size and higher interest credit on escrow balances.
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Total Expenses:Increased by $2 million, or less than 1%, from the prior quarter, driven by higher commissions and direct origination expenses.
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Cash Position:Ended Q2 2026 with $229 million in cash, a decrease of $48 million from Q1 2026.
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Senior Notes Repurchase:Repurchased $16 million of senior notes at an average purchase price of 90% of par during the quarter.
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Q3 2026 Guidance:Expects pull-through weighted lock volume between $5.25 billion and $7.25 billion, origination volume between $6.25 billion and $8.25 billion, and pull-through weighted gain on sale margin between 360 and 390 basis points.
Release Date: August 04, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue increased and net loss narrowed substantially in Q2 2026, with June showing the strongest results of the year.
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Unit volume grew 25% quarter-over-quarter, driven by successful expansion into home equity lending (5x5 HELOC products).
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Purchase market share increased 33% in Q2, supported by growth in builder partners and retail branch locations.
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Gain on sale margin improved to 345 basis points in Q2, up from 271 basis points in Q1, due to product mix shift.
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Operating efficiency improved: marketing return increased 70%, marketing cost per funding decreased 34%, and total cost per funded loan decreased 12% year-over-year.
Negative Points
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Adjusted net loss remained at $29 million in Q2, indicating continued unprofitability.
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Pull-through weighted rate lock volume decreased 20% quarter-over-quarter to $6.6 billion, reflecting the mix shift to HELOC products.
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Cash balance declined by $48 million to $229 million in Q2, though mitigated by post-quarter MSR sale.
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Recapture rate declined sequentially by about 5 points, attributed to higher interest rates and competitive pressures.
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The company faces ongoing challenges from rising interest rates, which suppress traditional refinance and purchase demand, and it continues to address bond maturities and capital structure optimization.
Q & A Highlights
Q: How should we think about the mix between HELOC and first mortgage in the third quarter, and how does that influence the gain on sale margin and volume guidance? On a like-for-like basis, how are gain on sale margins trending quarter-over-quarter? A: Anthony Hsieh (CEO) stated that the product mix will depend on interest rate movements. If rates stay static, the company expects to continue growing its HELOC volume, which will skew margins upward. The home equity market is a new strategic focus, and the company is seeing strong momentum, adding loan officers and expanding its direct lending platform, including a new Miami center. He noted that traditional mortgage companies find it harder to compete in this space because loanDepot generates leads at the top of the funnel rather than relying solely on loan officers.
Q: Can you clarify the size of the MSR sale and the total dollars expected to be received from it? A: David Hayes (CFO) clarified that the sale was for $10 billion of servicing rights, not $12 billion as mentioned in a slide (which he said would be corrected). Jeff DerGurahian (CIO) added that the trade executed well through their marks and was a strategic decision based on market conditions, but did not disclose the specific dollar amount received.
Q: Recapture declined sequentially by about five points. Was that driven by customer behavior, competitive intensity, or the mix shift toward home equity products, and what level should we expect going forward? A: Anthony Hsieh (CEO) attributed the decline primarily to the rise in interest rates in Q2 versus Q1, which reduces consumer attractiveness for refinancing. He expects recapture to increase as the home equity offering develops further, but does not anticipate a material change in Q3.
Q: Can you provide quantitative metrics on the wholesale channel's performance since its reintroduction earlier this year, and is it tracking ahead of or behind expectations? A: Anthony Hsieh (CEO) stated that wholesale is a complementary business and is unlikely to be a major contributor. However, it is tracking ahead of schedule after five or six months, with positive responses from the broker community.
Q: What are your general thoughts on the competitive landscape, especially given some big banks reported strong origination numbers? Are they taking share at the margin? A: Anthony Hsieh (CEO) said the company has not seen increased competitive pressure. He highlighted that some competitors have exited the mortgage market or shifted to B2B structures. loanDepot's purchase share increased 33% from Q1 to Q2, with purchase volume up 44%. He also noted significant progress in the home equity market, reducing monthly losses from $15 million in April to $2 million in June.
Q: What are your plans for technology and AI initiatives, and how will they lead to further operating leverage? A: Dom Marchetti (Chief Digital Officer) outlined a focus on revenue-generating top-of-funnel tools, operational efficiency measures, and automation. The company is leveraging its proprietary platform to add diversified products like 5x5 and is seeing improved performance in verification processes. Anthony Hsieh (CEO) added that AI will fundamentally change the industry, and loanDepot's unique customer acquisition model positions it to benefit significantly from these investments.
Q: Can you provide more detail on the $12 million annualized productivity initiatives and the expected impact on expenses in the third quarter? A: David Hayes (CFO) noted that total expenses are expected to decrease somewhat in Q3, primarily due to the benefit of repurchasing corporate debt at a discount, partially offset by higher volume-related costs from HELOC growth. The $12 million in annualized productivity initiatives are being actioned through the remainder of the year as part of ongoing cost management.
Q: How is the company addressing its bond maturities and optimizing its capital structure? A: David Hayes (CFO) stated that addressing bond maturities remains a high priority. The company repurchased $16 million of senior notes at 90% of par during Q2 and an additional $27 million at 86% of par post-quarter end. Management continues to evaluate a range of options with retained advisers to optimize the capital structure.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
