- The "COVID era" has created an anomaly of high mortgage originations combined with high forbearance/delinquency.
- The boom in home sales led to stellar earnings for non-bank lenders like loanDepot - allowing for near-perfect IPO timing.
- Recent months have seen a reversal of last year's boom with pending home sales declining and mortgage rates spiking.
- With this in mind, I believe loanDepot's 2021 EPS will be much lower than last year's.
- loanDepot operates at relatively high leverage which may exacerbate counter-party risks if there is a sharp decline in loan demand (or a sharp rise in rates).
For further details see:
loanDepot: Rising Mortgage Rates Create A Precarious Lending Environment