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loanDepot’s Jumbo Performance Strong, Conv Weak

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loanDepot LLC does an excellent job of using technology to generate new business. But while its jumbo performance is strong, its conforming performance is considered weak.

loanDepot is differentiates itself from other residential loan originators through a technology-driven marketing strategy. The system generates leads through predictive science data.

The Foothill Ranch, California-based company’s sales and marketing practices are considered strong as a result of its effective oversight of marketing materials and technology driven marketing materials.

That is according to Moody’s Investors Service, which issued two reports on loanDepot Monday.

But the performance of loanDepot’s conventional conforming loans has been weak.

During the 80 months ended Dec. 1, 2017, loanDepot originated $44.76 billion in mortgages for Fannie Mae and Freddie Mac.

The performance of those loans has been worse than the two companies’ overall single-family books of business — with most of the weakness lying in the Fannie Mae mortgages.

According to the New York-based ratings agency, loanDepot’s originations had lower FICO scores and higher debt-to-income ratios that the overall government-sponsored enterprise pool.

loanDepot’s financial stability is below average because of its rapid growth, key man risk and reliance on short-term funding, Moody’s said. It’s management strength is considered below average because of high turnover, a lack of a formal code of ethics and low management tenure.

Overall, Moody’s gave loanDepot an average rating for its ability to originate conventional conforming mortgages.

But the rating was better on the non-conforming side.

According to Moody’s, loanDepot originated 8,646 prime jumbo mortgages for $5.53 billion from June 2015 through May 2017.

Moody’s rated loanDepot’s early loan performance as strong as a result of low delinquencies and repurchase requests.

Moody’s handed loanDepot an average jumbo rating.

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