loan Depot 2Q 2022 INVESTOR PRESENTATION August 9, 2022 DISCLAIMER 2 Forward-Looking Statements and Other Information This presentation may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, its business strategies, including the Vision 2025 plan, financial condition and liquidity, competitive position, industry and regulatory environment, potential growth opportunities, the effects of competition, operations and financial performance. You can ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____to _____ Commission File Number: 001-40003 loanDepot, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 85-3948939 FORM 10-Q (Mark One) (State or other jur ...

loanDepot, Inc.(NYSE:LDI) Q1 2022 Earnings Conference Call May 10, 2022 11:00 AM ET Company Participants Gerhard Erdelji - Senior Vice President, Investor Relations Anthony Hsieh - Founder, Executive Chairman Frank Martell - President and Chief Executive Officer Patrick Flanagan - Chief Financial Officer Jeff DerGurahian - Chief Capital Markets Officer Jeff Walsh - Chief Revenue Officer Conference Call Participants Doug Harter - Credit Suisse Kevin Barker - Piper Sandler Trevor Cranston - JMP Securities Bob ...

```markdown PART I [**Special Note Regarding Forward-Looking Statements**](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions readers that the report contains forward-looking statements subject to risks and uncertainties detailed in 'Item 1A Risk Factors' - Forward-looking statements are based on management's beliefs and assumptions and involve **known and unknown risks and uncertainties**[12](index=12&type=chunk)[13](index=13&type=chunk) - Actual future results may **differ materially** from expectations due to factors detailed in 'Item 1A Risk Factors'[13](index=13&type=chunk)[14](index=14&type=chunk) [**Glossary of Acronyms, Abbreviations, and Terms**](index=4&type=section&id=Glossary%20of%20Acronyms%2C%20Abbreviations%2C%20and%20Terms) This section defines key acronyms, abbreviations, and terms used in the Form 10-K to enhance clarity and understanding - The glossary defines **key terms and acronyms** used in the Form 10-K, including financial and governmental entities, to aid reader comprehension[16](index=16&type=chunk) [**Business Overview**](index=5&type=section&id=Item%201.%20Business) loanDepot is a leading technology-empowered residential mortgage platform, ranking as the **second-largest retail-focused non-bank** originator, with **$137.0 billion** in 2021 originations - loanDepot is a leading technology-empowered residential mortgage platform, ranking as the **second-largest retail-focused non-bank** and **third-largest overall retail originator** in the U.S[18](index=18&type=chunk) 2021 Financial and Operational Highlights | Metric | Value | | :--------------------------------- | :------------------- | | Originations (2021) | $137.0 billion | | Originations YoY Growth (2021) | **36%** | | Revenue (2021) | $3.7 billion | | Net Income (2021) | $623.1 million | | Servicing UPB (Dec 31, 2021) | $162.1 billion | | Organic Refinance Consumer Direct Recapture Rate (2021) | **72%** | - The company's **mello® platform** drives **streamlined customer experiences** and **operational efficiency** across the mortgage lifecycle, from lead generation to servicing[19](index=19&type=chunk)[20](index=20&type=chunk)[24](index=24&type=chunk) - Retail strategy accounted for **79%** of origination volume in 2021, with Partner strategy making up **21%**. Purchase originations were **29%** and refinance originations **71%**[28](index=28&type=chunk) [**Our Company**](index=5&type=section&id=Our%20Company) [**IPO and Reorganization**](index=5&type=section&id=IPO%20and%20Reorganization) [**mello® Platform**](index=5&type=section&id=mello%C2%AE%20Platform) [**Differentiated Contact Strategy—Lead Generation and Customer-Specific Matching**](index=6&type=section&id=Dif%20erentiated%20Contact%20Strategy%E2%80%94Lead%20Generation%20and%20Customer-Specific%20Matching) [**Streamlined Data Integration & Connectivity**](index=6&type=section&id=Streamlined%20Data%20Integration%20%26%20Connectivity) [**Intelligent Loan Underwriting & Funding**](index=6&type=section&id=Intelligent%20Loan%20Underwriting%20%26%20Funding) [**Retail and Partner Strategies**](index=6&type=section&id=Retail%20and%20Partner%20Strategies) [**Retail**](index=7&type=section&id=Retail) [**Partner**](index=7&type=section&id=Partner) [**Products**](index=7&type=section&id=Products) [**Ancillary Business**](index=8&type=section&id=Ancillary%20Business) [**Marketing Strategy**](index=8&type=section&id=Marketing%20Strategy) [**Servicing**](index=8&type=section&id=Servicing) [**Risk Management**](index=9&type=section&id=Risk%20Management) [**Regulatory Compliance**](index=9&type=section&id=Regulatory%20Compliance) [**Competition**](index=10&type=section&id=Competition) [**Supervision and Regulation**](index=10&type=section&id=Supervision%20and%20Regulation) [**Other Laws**](index=13&type=section&id=Other%20Laws) [**Human Capital**](index=13&type=section&id=Human%20Capital) [**Available Information**](index=13&type=section&id=Available%20Information) [**Risk Factors**](index=14&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks, including those related to the COVID-19 pandemic, growth, operations, and regulatory environment, that could materially impact loanDepot's business and financial results - The COVID-19 pandemic poses ongoing risks to mortgage originations, servicing operations, liquidity, and employees, with potential for prolonged economic downturns and increased compliance obligations[72](index=72&type=chunk)[73](index=73&type=chunk)[76](index=76&type=chunk) - Rapid growth may be difficult to sustain, requiring significant demands on operational, administrative, and financial resources, and growth in loan production volume is highly dependent on interest rates and market conditions[83](index=83&type=chunk)[86](index=86&type=chunk) - The company's hedging strategies may not **effectively mitigate interest rate risks**, and reliance on internal models for risk management could lead to **unexpected losses** if models fail to produce reliable results[104](index=104&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - Operating in a **highly regulated industry**, loanDepot faces risks from changing federal, state, and local laws, regulatory enforcement, and dependence on Agencies (Fannie Mae, Freddie Mac, Ginnie Mae) programs, which could **increase compliance costs** and **impact business models**[188](index=188&type=chunk)[189](index=189&type=chunk)[193](index=193&type=chunk) - **High indebtedness**, including warehouse lines of credit, **limits financial and operating flexibility** and exposes the company to **refinancing, interest rate, and counterparty risks**[233](index=233&type=chunk)[240](index=240&type=chunk) [**Summary of Risk Factors**](index=14&type=section&id=Summary%20of%20Risk%20Factors) [**Risks Related to the COVID-19 Pandemic**](index=14&type=section&id=Risks%20Related%20to%20the%20COVID-19%20Pandemic) [**Risks Related to our Growth Strategy**](index=16&type=section&id=Risks%20Related%20to%20our%20Growth%20Strategy) [**Risks Related to our Operations**](index=19&type=section&id=Risks%20Related%20to%20our%20Operations) [**Risks Related to Our Intellectual Property**](index=30&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) [**Risks Related to the Mortgage Industry**](index=32&type=section&id=Risks%20Related%20to%20the%20Mortgage%20Industry) [**Risks Related to Our Regulatory Environment**](index=34&type=section&id=Risks%20Related%20to%20Our%20Regulatory%20Environment) [**Risks Related to Our Indebtedness**](index=41&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) [**Risks Related to Our Organizational Structure**](index=44&type=section&id=Risks%20Related%20to%20Our%20Organizational%20Structure) [**Risks Related to Ownership of Our Class A Common Stock and Public Company Status**](index=47&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock%20and%20Public%20Company%20Status) [**Unresolved Staff Comments**](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) This section states that there are no unresolved staff comments from the SEC regarding the company's previous filings - **No unresolved staff comments were reported**[284](index=284&type=chunk) [**Properties**](index=52&type=section&id=Item%202.%20Properties) loanDepot's corporate headquarters are in Foothill Ranch, California, with **144,398 sq ft** of leased office space, plus additional facilities and over **240** sales offices nationwide - Corporate headquarters are in Foothill Ranch, California, consisting of **144,398 sq ft** of leased office space[285](index=285&type=chunk) - The company leases ten additional facilities and over **240 licensed sales offices** across the U.S[286](index=286&type=chunk) - All leases have terms of **10 years** or less, with **immaterial financial commitments**[287](index=287&type=chunk) [**Legal Proceedings**](index=53&type=section&id=Item%203.%20Legal%20Proceedings) loanDepot is routinely involved in legal actions concerning lending practices and consumer protection, with management believing outcomes will not materially affect financial position - The company is routinely involved in legal proceedings concerning lending practices, servicing, and consumer protection laws[289](index=289&type=chunk) - Management believes that the ultimate resolution of pending legal matters will **not have a material adverse effect** on the consolidated financial position, operating results, or cash flows[643](index=643&type=chunk) [**Mine Safety Disclosures**](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to loanDepot, Inc. as it is not involved in mining operations - This item is **not applicable**[290](index=290&type=chunk) PART II [**Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**](index=54&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) loanDepot's Class A common stock began trading on the NYSE under 'LDI' on February 11, 2021, with **34** stockholders of record as of March 17, 2022, and initiated a quarterly cash dividend in May 2021 - Class A common stock listed on NYSE under 'LDI' since February 11, 2021[292](index=292&type=chunk) - As of March 17, 2022, there were **34 stockholders** of record for Class A common stock[293](index=293&type=chunk) - The company initiated a quarterly cash dividend in May 2021, with **future payments at the board's discretion**[297](index=297&type=chunk) Unregistered Sales of Equity Securities (2021) | Date | Shares of Class A Common Stock Issued | | :----------------- | :------------------------------------ | | Oct 1, 2021 | 312,911 | | Nov 1, 2021 | 1,730,531 | | Nov 11, 2021 | 14,156,560 | | Dec 1, 2021 | 2,263,379 | [**[Reserved]**](index=55&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [**Management's Discussion and Analysis of Financial Condition and Results of Operations**](index=56&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews loanDepot's financial condition and operations, noting a significant decrease in 2021 net income to **$623.1 million** from **$2.0 billion** in 2020, driven by higher expenses - Net income for 2021 decreased by **$1.4 billion** to **$623.1 million**, compared to **$2.0 billion** in 2020, **primarily due to higher expenses**[327](index=327&type=chunk) Key Financial and Operational Data (2021 vs. 2020) | Metric | 2021 (in thousands) | 2020 (in thousands) | Change ($) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total revenue | $3,724,704 | $4,312,174 | $(587,470) | **(13.6%)** | | Total expenses | $3,058,187 | $2,296,816 | $761,371 | **33.1%** | | Net income | $623,146 | $2,013,110 | $(1,389,964) | **(69.0%)** | | Loan originations | $137,000,747 | $100,760,151 | $36,240,596 | **36.0%** | | Servicing portfolio (UPB) | $162,112,965 | $102,931,258 | $59,181,707 | **57.5%** | | Gain on sale margin | **2.61%** | **4.13%** | **-1.52%** | **(36.8%)** | - The company's liquidity is **primarily sourced from warehouse lines, debt obligations, and proceeds from loan sales**, with **$419.6 million** in cash and cash equivalents and **$4.3 billion** in **available capacity** under warehouse lines as of December 31, 2021[351](index=351&type=chunk)[354](index=354&type=chunk) [**Overview**](index=56&type=section&id=Overview) [**Key Factors Influencing Our Results of Operations**](index=56&type=section&id=Key%20Factors%20Influencing%20Our%20Results%20of%20Operations) [**Key Performance Indicators**](index=57&type=section&id=Key%20Performance%20Indicators) [**Results of Operations**](index=60&type=section&id=Results%20of%20Operations) [**Revenues**](index=60&type=section&id=Revenues) [**Expenses**](index=62&type=section&id=Expenses) [**Balance Sheet Highlights**](index=63&type=section&id=BBalance%20Sheet%20Highlights) [**Liquidity and Capital Resources**](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) [**Contractual Obligations and Commitments**](index=67&type=section&id=Contractual%20Obligations%20and%20Commitments) [**Off-Balance Sheet Arrangements**](index=67&type=section&id=Off-Balance%20Sheet%20Arrangements) [**Critical Accounting Policies and Estimates**](index=67&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) [**Recent Accounting Pronouncements**](index=68&type=section&id=Recent%20Accounting%20Pronouncements) [**Non-GAAP Financial Measures**](index=68&type=section&id=Non-GAAP%20Financial%20Measures) [**Quantitative and Qualitative Disclosures About Market Risk**](index=70&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) loanDepot's primary market risk is interest rate fluctuation, impacting assets and liabilities, which is mitigated by derivatives, alongside credit and prepayment risks - **Primary market risk exposure is to interest rate fluctuations**, impacting LHFS, IRLCs, servicing rights, and hedging instruments[397](index=397&type=chunk) - The company **manages interest rate risk using derivative instruments** like forward sale contracts, put options on treasuries, and interest rate swap futures[400](index=400&type=chunk) - **Credit risk arises from loan sale representations and warranties**, potentially requiring loan repurchases or indemnification, and from counterparty non-performance[401](index=401&type=chunk)[403](index=403&type=chunk) Sensitivity Analysis of Financial Assets and Liabilities (December 31, 2021) | Shift in Interest Rates | LHFS Change (%) | Servicing Rights, net Change (%) | IRLCs, net Change (%) | Net Derivative (Liabilities) Assets, excluding IRLCs Change (%) | Total Change (%) | | :---------------------- | :-------------- | :------------------------------- | :-------------------- | :------------------------------------------------------------ | :--------------- | | Down **75 bps** | **0.4%** | **(15.6%)** | **39.5%** | **(411.6%)** | **(3.0%)** | | Down **50 bps** | **0.6%** | **(9.5%)** | **52.5%** | **(494.4%)** | **(1.6%)** | | Down **25 bps** | **0.7%** | **(4.3%)** | **61.2%** | **(522.2%)** | **(0.4%)** | | **0 bps** | — % | — % | — % | — % | — % | | Up **25 bps** | **(0.9%)** | **3.7%** | **(78.5%)** | **686.8%** | **0.2%** | | Up **50 bps** | **(1.0%)** | **6.7%** | **(95.7%)** | **923.5%** | **0.9%** | | Up **75 bps** | **(1.2%)** | **9.2%** | **(112.4%)** | **1,149.2%** | **1.5%** | [**Financial Statements and Supplementary Data**](index=73&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section provides loanDepot's audited consolidated financial statements for 2021, 2020, and 2019, including balance sheets, statements of operations, equity, cash flows, and detailed accounting notes - The consolidated financial statements for 2021, 2020, and 2019 are presented in **conformity with U.S. GAAP** and have been **audited by Ernst & Young LLP**[414](index=414&type=chunk) Consolidated Balance Sheet Highlights (December 31, 2021 vs. 2020) | Metric | 2021 (in thousands) | 2020 (in thousands) | Change ($) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Cash and cash equivalents | $419,571 | $284,224 | $135,347 | **47.6%** | | Loans held for sale, at fair value | $8,136,817 | $6,955,424 | $1,181,393 | **17.0%** | | Servicing rights, at fair value | $2,006,712 | $1,127,866 | $878,846 | **77.9%** | | Total assets | $11,812,313 | $10,893,228 | $919,085 | **8.4%** | | Warehouse and other lines of credit | $7,457,199 | $6,577,429 | $879,770 | **13.4%** | | Debt obligations, net | $1,628,208 | $712,466 | $915,742 | **128.5%** | | Total liabilities | $10,182,953 | $9,236,615 | $946,338 | **10.2%** | | Total equity | $1,629,360 | $1,656,613 | $(27,253) | **(1.6%)** | Consolidated Statements of Operations Highlights (2021 vs. 2020) | Metric | 2021 (in thousands) | 2020 (in thousands) | Change ($) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total net revenues | $3,724,704 | $4,312,174 | $(587,470) | **(13.6%)** | | Personnel expense | $1,929,752 | $1,531,371 | $398,381 | **26.0%** | | Marketing and advertising expense | $467,590 | $264,337 | $203,253 | **76.9%** | | Total expenses | $3,058,187 | $2,296,816 | $761,371 | **33.1%** | | Net income | $623,146 | $2,013,110 | $(1,389,964) | **(69.0%)** | [**Report of Independent Registered Public Accounting Firm**](index=74&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm%20%28PCAOB%20ID%3A42%29) [**Consolidated Balance Sheets**](index=76&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20December%2031%2C%202021%20and%202020) [**Consolidated Statements of Operations**](index=77&type=section&id=Consolidated%20Statements%20of%20Operations%20for%20the%20years%20ended%20December%2031%2C%202021%2C%202020%20and%202019) [**Consolidated Statements of Equity**](index=78&type=section&id=Consolidated%20Statements%20of%20Equity%20for%20the%20years%20ended%20December%2031%2C%202021%2C%202020%20and%202019) [**Consolidated Statements of Cash Flows**](index=81&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20years%20ended%20December%2031%2C%202021%2C%202020%20and%202019) [**Notes to Consolidated Financial Statements**](index=83&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [**NOTE 1 – DESCRIPTION OF BUSINESS, PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**](index=83&type=section&id=NOTE%201%20%E2%80%93%20DESCRIPTION%20OF%20BUSINESS%2C%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) [**NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS**](index=93&type=section&id=NOTE%202%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) [**NOTE 3 – FAIR VALUE**](index=93&type=section&id=NOTE%203%20%E2%80%93%20FAIR%20VALUE) [**NOTE 4 – BALANCE SHEET NETTING**](index=99&type=section&id=NOTE%204%20%E2%80%93%20BALANCE%20SHEET%20NETTING) [**NOTE 5 – LOANS HELD FOR SALE, AT FAIR VALUE**](index=100&type=section&id=NOTE%205%20%E2%80%93%20LOANS%20HELD%20FOR%20SALE%2C%20AT%20FAIR%20VALUE) [**NOTE 6 – SERVICING RIGHTS, AT FAIR VALUE**](index=101&type=section&id=NOTE%206%20%E2%80%93%20SERVICING%20RIGHTS%2C%20AT%20FAIR%20VALUE) [**NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES**](index=103&type=section&id=NOTE%207%20%E2%80%93%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20HEDGING%20ACTIVITIES) [**NOTE 8 – GOODWILL AND OTHER INTANGIBLE ASSETS, NET**](index=105&type=section&id=NOTE%208%20%E2%80%93%20GOODWILL%20AND%20OTHER%20INTANGIBLE%20ASSETS%2C%20NET) [**NOTE 9 – VARIABLE INTEREST ENTITIES**](index=106&type=section&id=NOTE%209%20%E2%80%93%20VARIABLE%20INTEREST%20ENTITIES) [**NOTE 10 – ACCOUNTS RECEIVABLE, NET**](index=108&type=section&id=NOTE%2010%20%E2%80%93%20ACCOUNTS%20RECEIVABLE%2C%20NET) [**NOTE 11 – PROPERTY AND EQUIPMENT, NET**](index=108&type=section&id=NOTE%2011%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT%2C%20NET) [**NOTE 12 – WAREHOUSE AND OTHER LINES OF CREDIT**](index=109&type=section&id=NOTE%2012%20%E2%80%93%20WAREHOUSE%20AND%20OTHER%20LINES%20OF%20CREDIT) [**NOTE 13 – DEBT OBLIGATIONS**](index=113&type=section&id=NOTE%2013%20%E2%80%93%20DEBT%20OBLIGATIONS) [**NOTE 14 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES**](index=115&type=section&id=NOTE%2014%20%E2%80%93%20ACCOUNTS%20PAYABLE%20AND%20ACCRUED%20EXPENSES) [**NOTE 15 – INCOME TAXES**](index=115&type=section&id=NOTE%2015%20%E2%80%93%20INCOME%20TAXES) [**NOTE 16 – LEASES**](index=117&type=section&id=NOTE%2016%20%E2%80%93%20LEASES) [**NOTE 17 – RELATED PARTY TRANSACTIONS**](index=119&type=section&id=NOTE%2017%20%E2%80%93%20RELATED%20PARTY%20TRANSACTIONS) [**NOTE 18 – EQUITY**](index=119&type=section&id=NOTE%2018%20%E2%80%93%20EQUITY) [**NOTE 19 – STOCK-BASED COMPENSATION**](index=120&type=section&id=NOTE%2019%20%E2%80%93%20STOCK-BASED%20COMPENSATION) [**NOTE 20 – EARNINGS PER SHARE**](index=122&type=section&id=NOTE%2020%20%E2%80%93%20EARNINGS%20PER%20SHARE) [**NOTE 21 – EMPLOYEE BENEFIT PLAN**](index=122&type=section&id=NOTE%2021%20%E2%80%93%20EMPLOYEE%20BENEFIT%20PLAN) [**NOTE 22 – COMMITMENTS AND CONTINGENCIES**](index=122&type=section&id=NOTE%22%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) [**NOTE 23– REGULATORY CAPITAL AND LIQUIDITY REQUIREMENTS**](index=125&type=section&id=NOTE%2023%E2%80%93%20REGULATORY%20CAPITAL%20AND%20LIQUIDITY%20REQUIREMENTS) [**Changes in and Disagreements With Accountants on Accounting and Financial Disclosure**](index=126&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section states that there have been no changes in or disagreements with accountants on accounting and financial disclosure matters - **No changes in or disagreements with accountants** on accounting and financial disclosure[654](index=654&type=chunk) [**Controls and Procedures**](index=126&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management evaluated and deemed disclosure controls and internal control over financial reporting **effective** as of December 31, 2021, with no material changes during the last fiscal quarter - Disclosure controls and procedures were evaluated and **deemed effective** as of December 31, 2021[655](index=655&type=chunk) - Management assessed and determined **internal control over financial reporting was effective** as of December 31, 2021, based on the COSO framework[656](index=656&type=chunk) - **No material changes in internal control over financial reporting** occurred during the last fiscal quarter[658](index=658&type=chunk) [**Other Information**](index=126&type=section&id=Item%209B.%20Other%20Information) This section indicates that there is no other information required to be disclosed - **No other information is reported** in this section[660](index=660&type=chunk) [**Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**](index=126&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This disclosure regarding foreign jurisdictions that prevent inspections is not applicable to the company - This disclosure is **not applicable**[662](index=662&type=chunk) PART III [**Directors, Executive Officers and Corporate Governance**](index=127&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is **incorporated by reference from the definitive proxy statement** to be filed by April 30, 2022 - Information on directors, executive officers, and corporate governance is **incorporated by reference from the definitive proxy statement**[663](index=663&type=chunk) [**Executive Compensation**](index=127&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is **incorporated by reference from the definitive proxy statement** to be filed by April 30, 2022 - Information on executive compensation is **incorporated by reference from the definitive proxy statement**[664](index=664&type=chunk) [**Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**](index=127&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of certain beneficial owners and management, and related stockholder matters, is **incorporated by reference from the definitive proxy statement** to be filed by April 30, 2022 - Information on security ownership and related stockholder matters is **incorporated by reference from the definitive proxy statement**[665](index=665&type=chunk) [**Certain Relationships and Related Transactions, and Director Independence**](index=127&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships and related transactions, and director independence, is **incorporated by reference from the definitive proxy statement** to be filed by April 30, 2022 - Information on certain relationships, related transactions, and director independence is **incorporated by reference from the definitive proxy statement**[666](index=666&type=chunk) [**Principal Accounting Fees and Services**](index=127&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is **incorporated by reference from the definitive proxy statement** to be filed by April 30, 2022 - Information on principal accounting fees and services is **incorporated by reference from the definitive proxy statement**[667](index=667&type=chunk) PART IV [**Exhibits, Financial Statement Schedules**](index=127&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section **lists all exhibits and financial statement schedules** filed as part of the Form 10-K report, including various agreements and corporate governance documents - The section **lists all exhibits and financial statement schedules**, including corporate governance documents, various debt agreements, and operational contracts[668](index=668&type=chunk) [**Signatures**](index=139&type=section&id=Signatures) This section contains the **required signatures** for the Form 10-K report, including those of the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and Board members, certifying the report's submission as of March 18, 2022 - The report is signed by the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and Directors as of March 18, 2022[682](index=682&type=chunk)[683](index=683&type=chunk)[684](index=684&type=chunk) ```

loanDepot, Inc. (NYSE:LDI) Q4 2021 Earnings Conference Call February 1, 2021 11:00 AM ET Company Participants Gerhard Erdelji - SVP, IR Anthony Hsieh - Founder and CEO Patrick Flanagan - CFO Jeff Walsh - Chief Revenue Officer Conference Call Participants Doug Harter - Credit Suisse Kevin Barker - Piper Sandler James Faucette - Morgan Stanley Trevor Cranston - JMP securities Arren Cyganovich - Citigroup Stephen Sheldon - William Blair Mark DeVries - Barclays John Davis - Raymond James Ryan Nash - Goldman Sac ...

LOANDEPOT, INC. (NYSE: LDI) Q4 2021 EARNINGS PRESENTATION February 1, 2022 loan bepot DISCLAIMER Forward-Looking Statements and Other Information This presentation may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, its operations and financial performance. You can identify these statements by the use of words such as "outlook," "potential," "continue," "may," "seek," "approximately," "predict," "believe," "expect," "plan," "intend," "estima ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents loanDepot, Inc.'s unaudited consolidated financial statements for Q3 and 9M 2021, including balance sheets, operations, equity, cash flows, and detailed accounting notes [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) These statements detail the company's financial position, performance, and cash flows, showing asset growth but a significant decline in net income for Q3 and 9M 2021 Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$12,749,278** | **$10,893,228** | | Cash and cash equivalents | $506,608 | $284,224 | | Loans held for sale, at fair value | $8,873,736 | $6,955,424 | | Servicing rights, at fair value | $1,841,512 | $1,127,866 | | **Total Liabilities** | **$11,091,114** | **$9,236,615** | | Warehouse and other lines of credit | $8,212,142 | $6,577,429 | | Debt obligations, net | $1,408,751 | $712,466 | | **Total Equity** | **$1,658,164** | **$1,656,613** | Consolidated Statement of Operations Highlights (in thousands) | Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | :--- | :--- | | Total net revenues | $923,756 | $1,368,930 | $3,019,678 | $3,013,780 | | Gain on origination and sale of loans, net | $821,275 | $1,251,141 | $2,647,328 | $2,767,140 | | Total expenses | $744,771 | $640,014 | $2,364,054 | $1,546,384 | | Net income | $154,277 | $728,349 | $608,414 | $1,465,939 | | Diluted EPS | $0.40 | N/A | $0.82 | N/A | Consolidated Statement of Cash Flows Highlights (Nine Months Ended, in thousands) | Cash Flow Activity | Sep 30, 2021 | Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,058,838) | $(418,143) | | Net cash provided by (used in) investing activities | $288,792 | $(13,302) | | Net cash provided by financing activities | $1,885,770 | $1,021,847 | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes explain loanDepot's accounting policies, business operations, financial instruments, and significant concentration risks following its February 2021 IPO - The company's primary income sources are gains on the origination and sale of residential mortgage loans, loan servicing income, and fees from settlement services[30](index=30&type=chunk) - Following its IPO in February 2021, loanDepot, Inc. became a holding company whose sole material asset is an equity interest in LD Holdings. The company now consolidates LD Holdings' financial results and allocates a portion of net earnings to noncontrolling interests[31](index=31&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - The company has significant concentration risk, with three investors accounting for **41%**, **33%**, and **14%** of loan sales for the nine months ended September 30, 2021. Additionally, **29%** of total loan originations in Q3 2021 were for properties in California[56](index=56&type=chunk)[57](index=57&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, market conditions, and liquidity, noting strong origination volume but compressed gain-on-sale margins compared to the prior year [Key Performance Indicators](index=46&type=section&id=Key%20Performance%20Indicators) Key performance indicators track loan origination volumes, gain on sale margins, and servicing portfolio metrics, showing increased originations but compressed margins Key Performance Indicators (in thousands, except percentages and units) | Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :--- | :--- | :--- | :--- | :--- | | **Loan Originations** | **$31,985,805** | **$27,157,669** | **$107,959,122** | **$63,364,799** | | - Purchase | $11,008,399 | $8,546,295 | $29,307,875 | $18,487,155 | | - Refinance | $20,977,406 | $18,611,374 | $78,651,247 | $44,877,644 | | **Gain on sale margin** | **2.84%** | **4.87%** | **2.71%** | **4.63%** | | **Total servicing portfolio (UPB)** | **$145,305,182** | **$77,171,998** | **$145,305,182** | **$77,171,998** | | 60+ days delinquent (%) | 1.16% | 2.69% | 1.16% | 2.69% | [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Operating results show a significant decline in net income for Q3 and 9M 2021, driven by compressed gain-on-sale margins and increased operating expenses - **Q3 2021 vs. Q3 2020:** Net income decreased by **$574.1 million** (**78.8%**) primarily due to a **$429.9 million** decrease in gain on origination and sale of loans, net, and a **$104.8 million** increase in total expenses. Industry overcapacity and competitive pressure led to lower gain on sale margins[208](index=208&type=chunk)[209](index=209&type=chunk) - **9M 2021 vs. 9M 2020:** Net income decreased by **$857.5 million** (**58.5%**) as total expenses grew by **$817.7 million**, outpacing a **$5.9 million** increase in revenue. The expense increase was driven by higher personnel costs to support a **70.4%** increase in loan origination volume and higher marketing spend to build brand awareness[222](index=222&type=chunk) - Marketing and advertising expense increased by **118.4%** in Q3 2021 and **104.9%** in the first nine months of 2021 compared to the same periods in 2020. This was due to investments in acquired leads and major brand awareness campaigns, including partnerships with Major League Baseball (MLB)[216](index=216&type=chunk)[230](index=230&type=chunk) [Financial Condition](index=57&type=section&id=Financial%20Condition) Financial condition as of September 30, 2021, reflects asset growth primarily from loans held for sale and servicing rights, alongside increased liabilities from warehouse lines and debt - Loans Held for Sale increased by **27.6%** to **$8.9 billion**, reflecting loan originations of **$108.0 billion** outpacing sales of **$106.4 billion** during the first nine months of 2021[238](index=238&type=chunk)[242](index=242&type=chunk) - Servicing Rights, at fair value, grew by **63.3%** to **$1.8 billion**, driven by **$1.3 billion** in capitalized servicing rights from new originations[238](index=238&type=chunk)[244](index=244&type=chunk) - Debt obligations increased by **97.7%** to **$1.4 billion**, primarily due to the issuance of **$600.0 million** in 2028 Senior Notes[238](index=238&type=chunk)[251](index=251&type=chunk) [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is primarily sourced from warehouse lines, debt, and loan sales, with available capacity and cash supporting operations, while forbearance rates have decreased - As of September 30, 2021, the company had **$506.6 million** in unrestricted cash and cash equivalents and **$2.8 billion** in available capacity under its warehouse lines[253](index=253&type=chunk) - The active forbearance portion of the servicing portfolio decreased to **1.1%** (**$1.6 billion** UPB) as of September 30, 2021, from **2.4%** (**$2.4 billion** UPB) as of December 31, 2020[255](index=255&type=chunk) Contractual Obligations as of September 30, 2021 (in thousands) | Obligation | Total | Less than 1 Year | 1-3 years | 3-5 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Warehouse lines | $8,212,142 | $4,556,910 | $3,655,232 | $— | $— | | Secured debt obligations | $325,089 | $125,089 | $200,000 | $— | $— | | Senior notes | $1,100,000 | $— | $— | $500,000 | $600,000 | | Operating lease obligations | $84,749 | $26,515 | $36,184 | $14,650 | $7,400 | | Naming and promotional rights | $124,828 | $19,030 | $44,826 | $31,222 | $29,750 | | **Total** | **$9,846,808** | **$4,727,544** | **$3,936,242** | **$545,872** | **$637,150** | [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces primary market risks from interest rate fluctuations, credit risk on sold loans, and prepayment risk affecting servicing rights, managed through hedging and reserves - The company's main market exposure is interest rate risk, which affects the value of its **Loans Held for Sale (LHFS)**, **Interest Rate Lock Commitments (IRLCs)**, and **servicing rights**[297](index=297&type=chunk) - To manage interest rate risk associated with IRLCs and LHFS, the company enters into hedging instruments, such as forward sales contracts, with the expectation that their value will move opposite to the hedged items[299](index=299&type=chunk) - Credit risk is managed through a provision for losses on representations and warranties for sold loans. The level of this reserve requires significant management judgment and depends on economic factors and investor demand[300](index=300&type=chunk)[301](index=301&type=chunk) [Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2021, the company's disclosure controls and procedures were effective at a reasonable assurance level[308](index=308&type=chunk) - There were no changes during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[309](index=309&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course legal actions but is not currently subject to any material legal proceedings - The company is party to various legal actions that arise in the ordinary course of business but is not currently subject to any material legal proceedings[311](index=311&type=chunk) [Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) No material changes or updates have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes to the risk factors disclosed in the 2020 Form 10-K have occurred[312](index=312&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the conversion of Class C common stock into Class A common stock during Q3 2021, exempt from registration under Section 3(a)(9) of the Securities Act - During Q3 2021, the company issued shares of Class A common stock upon the conversion of Class C common stock and corresponding Holding Units on three separate occasions: - July 1, 2021: **1,606 shares** - August 2, 2021: **3,882,188 shares** - September 1, 2021: **3,136,229 shares**[314](index=314&type=chunk)[315](index=315&type=chunk) [Defaults Upon Senior Securities](index=69&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable [Mine Safety Disclosures](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable [Other Information](index=69&type=section&id=Item%205.%20Other%20Information) Not applicable [Exhibits](index=69&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q report, including corporate governance documents, debt agreements, and officer certifications

loanDepot, Inc. (NYSE:LDI) Q3 2021 Earnings Conference Call November 1, 2021 11:00 AM ET Company Participants Gerhard Erdelji - Senior Vice President, Investor Relations Anthony Hsieh - Founder and CEO Patrick Flanagan - Chief Financial Officer Jeff DerGurahian - Chief Capital Markets Officer John Lee - Chief Analytics Officer Jeff Walsh - Chief Revenue Officer Conference Call Participants Doug Harter - Credit Suisse Brock Vandervliet - UBS Kevin Barker - Piper Sandler Bob Napoli - William Blair Trevor Cran ...

LOANDEPOT, INC. (NYSE: LDI) Q3 2021 EARNINGS PRESENTATION November 1, 2021 loan Depot DISCLAIMER Forward-Looking Statements and Other Information This presentation may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, its operations and financial performance. You can identify these statements by the use of words such as "outlook," "potential," "continue," "may," "seek," "approximately," "predict," "believe," "expect," "plan," "intend," "estima ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The report presents unaudited consolidated financial statements for loanDepot, Inc as of June 30, 2021, and for the corresponding three and six-month periods [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $13.10 billion, driven by an increase in loans held for sale, while total equity slightly decreased to $1.57 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 (Unaudited) | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$13,097,643** | **$10,893,228** | | Cash and cash equivalents | $419,283 | $284,224 | | Loans held for sale, at fair value | $9,120,653 | $6,955,424 | | Servicing rights, at fair value | $1,781,686 | $1,127,866 | | **Total Liabilities** | **$11,528,809** | **$9,236,615** | | Warehouse and other lines of credit | $8,498,365 | $6,577,429 | | Debt obligations, net | $1,473,309 | $712,466 | | **Total Equity** | **$1,568,834** | **$1,656,613** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Net income for Q2 2021 fell to $26.3 million due to lower loan sale gains and higher expenses, with a similar trend for the six-month period Key Operational Results (in thousands) | Metric | Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Total net revenues | $779,914 | $1,158,730 | $2,095,922 | $1,644,850 | | Gain on origination and sale of loans, net | $692,479 | $1,076,410 | $1,826,054 | $1,515,999 | | Total expenses | $749,405 | $509,245 | $1,619,283 | $906,370 | | **Net income** | **$26,284** | **$648,595** | **$454,137** | **$737,590** | | Net income attributable to loanDepot, Inc | $8,561 | $— | $53,436 | $— | | **Diluted EPS** | **$0.07** | **N/A** | **$0.42** | **N/A** | [Consolidated Statements of Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Equity) Total equity decreased to $1.57 billion, reflecting the impact of the IPO, net income, and significant distributions and dividends - The equity structure changed significantly due to the **IPO and reorganization** in early 2021, establishing Class A, C, and D common stock[24](index=24&type=chunk) - For the six months ended June 30, 2021, total equity was impacted by **net income of $454.1 million**, offset by **dividends and distributions of $400.3 million** and other adjustments related to the IPO[24](index=24&type=chunk)[29](index=29&type=chunk)[273](index=273&type=chunk) - Noncontrolling interest decreased from **$1.66 billion at year-end 2020 to $1.05 billion** at June 30, 2021, reflecting the reorganization and distributions[15](index=15&type=chunk)[24](index=24&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company saw a significant net cash outflow from operations of $2.27 billion, offset by financing inflows from increased borrowings Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(2,270,273) | $710,023 | | Net cash provided by (used in) investing activities | $145,669 | $(3,384) | | Net cash provided by (used in) financing activities | $2,272,633 | $(210,956) | | **Net change in cash** | **$148,029** | **$495,683** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, the IPO reorganization, fair value measurements, debt obligations, and the Tax Receivable Agreement - The company completed its **IPO on February 11, 2021**, which involved a significant reorganization of its equity structure, creating multiple classes of common stock and a noncontrolling interest in LD Holdings[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - Significant estimates are used in determining the fair value of key assets and liabilities, including loans held for sale, servicing rights, and derivatives, which are primarily classified as **Level 2 and Level 3** in the fair value hierarchy[47](index=47&type=chunk)[64](index=64&type=chunk) - The company is exposed to concentration risk, with **three investors accounting for 43%, 35%, and 13% of loan sales** in the first six months of 2021[59](index=59&type=chunk) - A Tax Receivable Agreement (TRA) was established, obligating the company to pay 85% of certain realized tax savings to pre-IPO owners; a **TRA liability of $12.9 million** was recognized as of June 30, 2021[39](index=39&type=chunk)[185](index=185&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a transitional second quarter marked by lower gain on sale margins, strong origination volumes, and changes in financial condition [Key Factors and Performance Indicators](index=43&type=section&id=Key%20Factors%20and%20Performance%20Indicators) Company performance was impacted by competitive pressure on margins and interest rate changes, despite a significant increase in loan origination volume - The operating environment in Q2 2021 was characterized by **lower gain on sale margins** due to industry overcapacity and competitive pressure, particularly in the wholesale partner channel[196](index=196&type=chunk)[200](index=200&type=chunk) - The COVID-19 pandemic continues to pose risks, though the share of the servicing portfolio in active forbearance **decreased to 1.4% ($1.9B UPB)** as of June 30, 2021, from 2.4% at year-end 2020[197](index=197&type=chunk)[258](index=258&type=chunk) Key Performance Indicators (Q2 2021 vs Q2 2020) | Metric | Q2 2021 | Q2 2020 | | :--- | :--- | :--- | | Total Loan Originations | $34.5B | $21.0B | | Gain on Sale Margin | 2.28% | 5.39% | | Total Servicing Portfolio (UPB) | $138.8B | $57.9B | | 60+ Days Delinquent (%) | 1.42% | 2.66% | [Results of Operations](index=47&type=section&id=Results%20of%20Operations) Q2 2021 net income plummeted due to compressed gain on sale margins and higher operating expenses, which also impacted semi-annual results - **Q2 2021 net income decreased 95.9% YoY to $26.3 million**, primarily due to lower gain on sale margins and higher personnel and marketing expenses[212](index=212&type=chunk)[213](index=213&type=chunk) - Gain on origination and sale of loans for Q2 2021 **decreased by $383.9 million (35.7%) YoY**, driven by margin compression, despite a 64.0% increase in total origination volume[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk) - Total expenses for Q2 2021 **increased by $240.2 million (47.2%) YoY**, led by a $129.4 million rise in personnel expense and a $58.3 million increase in marketing and advertising[212](index=212&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - For the six months ended June 30, 2021, **net income decreased 38.4% YoY to $454.1 million**, as a $712.9 million (78.7%) increase in expenses overshadowed a $451.1 million (27.4%) increase in revenues[227](index=227&type=chunk) [Financial Condition, Liquidity, and Capital Resources](index=55&type=section&id=Financial%20Condition%2C%20Liquidity%2C%20and%20Capital%20Resources) The company maintained strong liquidity and available warehouse capacity despite significant growth in assets and liabilities funded by increased debt - Total assets grew to **$13.1 billion**, primarily due to a **$2.2 billion increase in Loans Held for Sale**, funded by a **$1.9 billion increase in Warehouse and other lines of credit**[242](index=242&type=chunk)[245](index=245&type=chunk)[250](index=250&type=chunk) - Servicing rights (MSRs) increased in fair value by **$653.8 million (58.0%) to $1.8 billion**, driven by $957.0 million in capitalized MSRs from new originations[242](index=242&type=chunk)[247](index=247&type=chunk) - As of June 30, 2021, the company had **$419.3 million in unrestricted cash** and **$9.5 billion in total warehouse line capacity**, with $8.5 billion outstanding[256](index=256&type=chunk)[266](index=266&type=chunk) - Total debt obligations increased by **$760.8 million (106.8%) to $1.5 billion**, mainly due to the issuance of **$600.0 million in 2028 Senior Notes**[254](index=254&type=chunk) - The company paid **dividends and distributions totaling $400.3 million** during the first six months of 2021[273](index=273&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market exposure is interest rate risk, which is managed through hedging, alongside credit and prepayment risks - The principal market exposure is **interest rate risk**, which impacts LHFS, IRLCs, and servicing rights; the company uses hedging instruments like forward sales contracts and options to manage this risk[299](index=299&type=chunk)[301](index=301&type=chunk)[303](index=303&type=chunk) - **Credit risk** arises from representations and warranties on sold loans, which could lead to repurchase obligations; the company maintains a reserve for these potential losses[304](index=304&type=chunk)[305](index=305&type=chunk) - **Prepayment risk** affects the value of servicing rights; an increase in prepayments, typically in a falling interest rate environment, reduces the fair value of MSRs[309](index=309&type=chunk) [Item 4. Controls and Procedures](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal controls - The CEO and CFO concluded that as of June 30, 2021, the company's **disclosure controls and procedures were effective** at a reasonable assurance level[312](index=312&type=chunk) - There were **no material changes in internal control** over financial reporting during the quarter ended June 30, 2021[313](index=313&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal actions and negotiations that are not expected to have a material adverse financial effect - The company is involved in routine lawsuits related to its business but is not currently subject to any proceedings **deemed to be material**[315](index=315&type=chunk) - A demand letter from a former executive alleging loan origination noncompliance and employment claims is in **pre-litigation negotiations** after mediation in May 2021 was unsuccessful[175](index=175&type=chunk) [Item 1A. Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) No material changes have been made to the risk factors previously disclosed in the company's 2020 Form 10-K - **No material changes** to the risk factors disclosed in the 2020 Form 10-K have occurred[316](index=316&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued Class A common stock through conversions of other stock classes, which were exempt from registration - On May 4, 2021, **4,715,556 shares of Class D common stock were converted into Class A common stock**[318](index=318&type=chunk) - On June 1, 2021, **1,164,487 shares of Class C common stock** (with corresponding Holding Units) were converted into Class A common stock[319](index=319&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including corporate governance documents, debt agreements, and required officer certifications - Exhibits filed with the report include various agreements, such as an Indenture for Senior Notes and amendments to Master Repurchase Agreements, as well as **required CEO and CFO certifications**[323](index=323&type=chunk)[324](index=324&type=chunk)