loanDepot, Inc.

Good afternoon and welcome everyone to Lone Depot's third quarter 2022 conference call. All lines have been placed on mute to prevent any background noise. If you would like to ask a question during the call, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press star one. I would now like to turn the call over to Gerhard Erdely, Senior Vice President, Investor Relations. Sir, please go ahead.

Good afternoon, everyone, and thank you for joining our call. I'm Gerhard Erdely, Investor Relations Officer at Loan Depot. Today, we will discuss Loan Depot's third quarter 2022 results. Before we begin, I would like to remind everyone that this conference call may include forward-looking statements regarding the company's operating and financial performance in future periods. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to guidance to our pull-through weighted rate lock volume, origination volume, pull-through weighted gain on sale margin, and expenses. These statements are based on the company's current expectations and available information. Actual results for future periods may differ materially from these forward-looking statements due to risks or other factors that are described in the risk factors section of our filings with the SEC. The webcast and transcript of this call will be posted on the company's investor relations website at investors.loandepot.com under the Events and Presentations tab. On today's call, we have Loan Depot President and Chief Executive Officer Frank Martell and Chief Financial Officer Patrick Flanagan to provide an overview of our quarter as well as our financial and operational results, outlook, and to answer your questions. We are also joined by our Chief Investment Officer, Jeff DeGurian, and LDI Mortgage President, Jeff Walsh, to help address any questions you might have after our prepared remarks. And with that, I'll turn things over to Frank to get us started.

Frank? Thank you, Gerhard. On today's call, I look forward to sharing my perspectives on the market conditions, our results, and our outlook. The Loan Depot team has made significant progress on many fronts over the past quarter as we executed against our previously announced Vision 2025 strategic program. As you may recall, Vision 2025, which we formally launched in July, has four pillars. Pillar number one focuses on transforming our originations business to drive purchase money transactions with an expanded emphasis on purpose-driven lending. Pillar 2 calls for aggressively right-sizing our cost structure in line with current and anticipated market conditions and internally set targets to achieve first quartile operating performance. Pillar 3 covers investing in profitable growth-generating initiatives, which for this year focuses on launching our innovative digital HELOC solution. And finally, Pillar 4 relates to optimizing our organizational structure. I will focus the balance of my prepared remarks today on significant progress we have made against each Vision 2025 pillar. Pat will provide additional context and related financial metrics during his remarks. In the third quarter, we substantially narrowed our operating losses in line with our previously announced goals for Vision 2025. Our net loss of $137 million in the third quarter was down from $224 million in the second quarter as we aggressively lowered internal and third-party expenses and exited the wholesale channel. For the quarter, we reduced our sequential cost base by $126 million, or 22%, which more than offset a $34 million, or 11%, decline in revenues. Despite this expected seasonal dip in housing activity, as Pat will discuss a bit later, we expect to continue to narrow our operating loss in the fourth quarter as we realize the flow-through benefits of actions already taken, as well as new actions planned during the fourth quarter. As we committed in our Vision 2025 plan, we're on pace to meet our expense reduction goal of an annual $400 million for the second half of 2022. With market conditions likely to remain challenged for some time, we built our expense reduction plan to size the company appropriately for a mortgage market which we believe will approximate $1.5 trillion in 2023. In addition to aggressive cost reduction, we've also been hard at work on profitable revenue-generating opportunities which fit the strategic imperatives I outlined in Vision 2025. In May of this year, we announced that we would launch a digital HELOC solution in the second half of 2022. I'm pleased to confirm that we have commenced our digital HELOC rollout in several important markets with a progressive launch across our footprint expected in the coming months. We believe our HELOC solution will be a meaningful contributor to revenues in 2023. This unique digital solution provides our customers with an attractive option to access their home equity. With the value of home equity at an all-time high, many homeowners would greatly benefit from an easy and fast, in some cases as fast as seven days, way to access cash while preserving their historically low interest rate on their first mortgage. Synergistically, our growing in-house servicing portfolio contains many borrowers with low interest rates today, providing us with a ready-made opportunity to provide a HELOC solution to those customers. Our digital HELOC, backed by the strength of our national network of licensed loan officers, sophisticated lead generation capabilities, and trusted consumer brand puts us in an outstanding position to help homeowners. The launch of our digital HELOC is an important step in advancing our goal of adding more products and services that will benefit our customers, diversify our revenues, and generate profitable revenue growth. The HELOC launch also reinforces our commitment to continue being an innovative, technology-driven organization at our roots. In addition to our HELOC launch, we're also making progress against our stated goal of building a purpose-driven origination business. One important demonstration is our recent partnership with National Home Corp, a Georgia-based home builder specializing in affordable single-family homes. Together, we launched NHC Mortgage, which is Loan Depot's 10th joint venture partnership. We believe that this venture will advance our stated goal of increasing our purpose-driven lending and providing credit to underserved communities. Our joint venture channel is a unique and differentiated business that generates high-quality customers, and we are going to continue to aggressively invest in this channel. In addition to driving profitable growth and returning to run rate profitability, Loan Depot is also making important and significant investments in our quality, delivery, compliance, and risk management capabilities. In this regard, we recently completed the process of bringing virtually all of our loan servicing portfolios onto our in-house platform, which is expected to drive higher levels of customer satisfaction at lower costs. In addition, we added Joe Grassi as our Chief Risk Officer and Gregory Smallwood as our Chief Legal Officer to continue to help optimize our organizational structure and increase the effectiveness of our quality and compliance initiatives. Both executives have extensive industry and professional experience and are already making their marks as valuable additions to our senior management team. I want to conclude my prepared remarks today by thanking the Loan Depot team and our other key stakeholders for their support. The past six months have been challenging, no doubt, but they've also been a very important period of change and progress for the company. Against the backdrop of one of the most challenging housing markets in a generation, We have significantly reset our cost structure, which has resulted in a substantial narrowing of our operating losses. We've also aggressively shifted our revenue profile towards purchase transactions, developed an innovative digital HELOC solution, and launched our 10th JV. With $1.14 billion of cash on hand, approximately $400 million in run rate cost reductions identified so far, and several new growth factors in flight, we believe are increasingly positioned to navigate through the market downturn this year and next. With that, I'll now turn the call over to Pat Flanagan, who will take you through our financial results in more detail.