Housing MarketMortgageOriginationReal Estate

loanDepot moved $225M out of Signature, maintains credit lines

The company said it has access to $600M in warehouse facilities

One day after Signature Bank collapsed, an affiliate of loanDepot moved $225 million of cash balances to a large money center bank, the mortgage company disclosed Wednesday morning.

With the transfer, the lender said all cash and cash equivalents are now distributed across large money center banks, according to an 8k filing with the Securities and Exchange Commission (SEC). 

“The Company still maintains fully insured custodial deposit accounts at Signature,” the document says. “We expect to have full access to the deposits held at Signature and do not expect any material adverse effect on our financial condition or operations, as a result of these events.” 

Signature Bank collapsed on Sunday when New York state regulators closed its doors because it lacked the liquidity to pay for client’s withdrawals. It is now controlled by the Federal Deposit Insurance Corporation (FDIC). 

Signature’s closure followed Silicon Valley Bank’s collapse on Friday, the biggest bank failure since Washington Mutual in 2008. To avoid systemic risks, regulators approved depositors’ access to all their money and additional funding for banks on Sunday. 

loanDepot says it has no cash deposits or securities on Silicon Valley Bank. Top U.S. lenders, such as  Rocket Companies, United Wholesale Mortgage and Guild Mortgage, informed shareholders through SEC filings that they do not hold balances at Signature or Silicon Valley. 

loanDepot’s $600 million in credit lines

To calm its stakeholders, loanDepot also said that the company is a party to a $300 million warehouse facility in which Signature is a 50% participant. In addition, it has a $300 million mortgage servicing rights (MSRs) facility with Signature. Both expire in December 2023. 

“There are no acceleration rights under these facilities for a defaulting lender; therefore, we continue to have full access to these facilities under the terms and conditions set forth in the respective credit agreements,” the company said. 

HousingWire reported in early January that the lender changed its credit line agreements amid a shrinking origination volume. In 2021, when the refi business was strong, loanDepot produced $137 billion in loans. But in 2022, the lender originated just $53.7 billion. 

At that moment, New York-based Signature, a major multifamily and warehouse lender, continued to provide loanDepot with a revolving credit of $300 million and added “an option to increase up to $500 million upon mutual consent,” according to SEC filings. The agreement was secured by loanDepot’s mortgage servicing rights of Freddie Mac loans. 

Regarding its liquidity, loanDepot had $863.9 million in cash on hand at the end of 2022, down 24.5% from the third quarter but roughly double what it had at the end of 2021.

loanDepot share was trading at $1.78 on Wednesday morning, up 3.49% from the previous closing. 

The Wall Street Journal reported Wednesday that New York real estate investors yanked money out of Signature Bank last week, which played a significant role in the bank’s collapse. Several investors expressed concern about the bank’s exposure to crypto.

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