LDI

Good afternoon, and welcome to loanDepot's first quarter 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I would now like to hand the call over to Gerhard Erdelji, Senior Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining our first quarter 2026 earnings call. 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. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued earlier today, which is available on our website at investors.loandepot.com. Our presentation today contains certain non-GAAP financial measures that we believe provide additional insight into analyzing and benchmarking the performance and value of our business and facilitating company-to-company operating performance comparisons. For more details on these non-GAAP financial measures, including reconciliation of the most directly comparable GAAP measures, please refer to today's earnings release. A webcast and transcript of this call will be posted on our website after the conclusion of this call.

On today's call, we have loanDepot's Founder and Chief Executive Officer, Anthony Hsieh, and Chief Financial Officer, David Hayes. They will provide an overview of our quarter, a review of our operating results, and our outlook. We're also joined by Chief Investment Officer, Jeff DerGurahian, and Chief Digital Officer, Dominick Marchetti, to help answer your questions after our prepared remarks. With that, I'll turn things over to Anthony to get us started. Anthony?

Thank you, Gerhard. I appreciate everyone joining us on the call today. We are now 3 quarters into the rebuild of our company, and I believe that all of our hard work will soon be reflected in our financial performance. We spent the most recent quarter focused on a series of long-term growth initiatives that we expect will accelerate our momentum in coming months, including the addition of over 100 new loan officers, the reimagining and relaunch of our wholesale business, and the completion of our game-changing partnership agreement with Figure. I'll talk about each of these initiatives in more detail in a moment, but I am pleased to share they are delivering promising early results. Since my return as CEO, I have been laser-focused on our digital transformation as a key enabler of our return to a market-leading position.

We have focused on fully leveraging our unique assets and strategy, including one of the most differentiated customer acquisition and retention business models in the marketplace today. This included rebuilding our management team with members that have deep mortgage technology and marketing IQ. With this team now largely in place, we have spent the past several quarters hiring and training more loan officers with the goal of growing market share and positioning ourselves for accelerated growth when demand increases. This growth is broad-based and consists of newly trained loan officers graduating from our proprietary ACES program in our direct channel and experienced loan officers with established businesses in our retail channel. We also recently reopened our wholesale channel as part of our strategy to offer more products to our customers and leverage our existing infrastructure while limiting incremental expenses.

Response from the broker community has been very positive, with many directly reaching out seeking to partner with loanDepot. Despite a volatile market environment, these initiatives help us increase market share during the quarter, which I consider vital to our goal of achieving consistent profitability in the current market. Behind the scenes, we remain focused on reducing unit costs through operating leverage and automation. As demonstrated this quarter, we sharpened our marketing strategies to drive more lock volume to the top of the funnel while reducing marketing costs, increasing our return on marketing. Looking forward, I believe the digital migration of the customer will continue to accelerate, and we plan to be there to meet the customer.

Led by our digital team, we are hard at work introducing cutting-edge technology and AI capabilities to our repeatable and scalable functions across each aspect of the origination and servicing life cycles, including lead acquisition and conversion, loan officer and servicing CRM management, and automated underwriting process. Our recently announced partnership with Figure Technology Solutions is expected to meaningfully accelerate our work and is delivering promising early results. As part of this partnership, we integrated Figure's proprietary credit and loan underwriting engine into our own proprietary mello technology platform, enabling us to seamlessly offer a variety of innovative home loan products to our customers.

Importantly, our partnership also positions us to introduce new and innovative products that expand the way we serve borrowers in the future and capitalize on market improvements. The 5x5 HomeLoan, which delivers approval in as little as 5 minutes and funding in as few as 5 days, brings real value to those seeking speed and convenience in their financial transaction. As we integrate this platform across our channels, we expect to lower our cost of production, improve the customer experience, close more loans quickly, and advance our long-term objective of profitable market share growth. We also believe that this product will be a consistent contributor to the earnings power of the company as customers with record levels of home equity, historically low interest rates on their first trust deeds, should remain a reliable source of demand even as interest rates fall.

As we look ahead with expectations of a larger market, our top of the funnel customer acquisition advantage uniquely positions us to outperform our competition in a rapidly evolving and consolidating marketplace. I am proud of the work that has been accomplished since my return to a full-time operating role. We plan to continue investing and growing our top of the funnel customer acquisition and origination capabilities, leveraging our brand and marketing muscle, along with introducing contemporary technology, including AI, which should lower our costs and increase our operating efficiency. Ultimately, our goal are to deliver profitable market share growth, improve the borrower experience, drive customer retention, and deliver long-term shareholder value. This is our mission and what we are working towards every day. Regardless of interest rate movements, we are focused on delivering consistent profitability. We believe we are well on our way towards that goal.

As rates fall, that timeline will be shortened. With that, I will now turn the call over to Dave, who will take us through our financial results in more detail. Dave?

Thanks, Anthony. Good afternoon, everyone. The quarter reflected continued progress towards sustainable profitability offset by geopolitically driven market volatility. We reported an adjusted net loss of $34 million in the first quarter compared to an adjusted net loss of $21 million in the fourth quarter of 2025, due primarily to lower pull-through weighted gain on sale margin, offset somewhat by lower expenses. During the first quarter, pull-through weighted rate lock volume was $8.3 billion, which represented a 14% increase from the prior quarter's volume of $7.3 billion.

Pull-through weighted rate lock volume came in within the guidance we issued last quarter of $7.75 billion to $8.75 billion, and contributed to adjusted total revenue of $299 million, which compared to $316 million in the fourth quarter of 2025. As Anthony mentioned, the growth in rate lock volume was achieved while reducing marketing expenses by 12% during the quarter. This positive operating leverage reflected improved strategies for mid-funnel lead conversion and our sharpened marketing strategies. Our pull-through weighted gain on sale margin for the fourth quarter came in at 271 basis points at the low end of our guidance range of 270-300 basis points, and down compared to 324 basis points prior to the prior quarter.

Our lower gain on sale margin primarily reflected interest rate volatility and product mix shift. The geopolitical environment created a sharp increase in interest rates during the first quarter, and we originated fewer higher margin FHA, VA, and HELOC loans and originated more conventional loans, both effects compressing our margin. Higher interest rates during the quarter also generated wider negative fair value marks on our mortgage servicing and trading securities, contributing to lower revenue. Our loan origination volume was $7.7 billion for the quarter, a decrease of 5% from the prior quarter's volume of $8 billion. This was at the high end of our guidance we issued last quarter of between $6.75 billion and $7.75 billion. Closed loan volume also represented a market share increase demonstrating success in investing in increasing our loan officers.

Servicing fee income decreased from $113 million in the fourth quarter of 2025 to $109 million in the first quarter. Primarily due to lower interest earnings from lower custodial balances along with fewer days in the quarter. Despite the lower servicing revenue, we're able to increase our market leading recapture rate to 73% from the prior quarter's 71%. We hedge our servicing portfolio. We do not report the full impact of the changes in fair value and results of our operations. We believe this strategy helps protect against volatility in our earnings and liquidity. Our strategy for hedging the servicing portfolio is dynamic. We adjust our hedge positions in reaction to the changing interest rate environments. Our total expenses for the first quarter decreased by $565,000 from the prior quarter.

We guided to higher expenses during the quarter, but ended up delivering a decrease. The primary drivers of the decrease were lower commissions due to the impact of implementing a more efficient commission strategies and lower marketing expenses as I previously discussed. Salary related expenses increased due to higher headcount as we build capacity and the impact from seasonal employment tax resets. We also experienced higher direct origination expenses as vendors increased the cost of credit reporting services. We believe that process and workflow improvements underway should mitigate some of the increased credit reporting costs going forward. Looking ahead to the second quarter, we expect pull-through weighted lock volume of between $5.75 billion and $7.75 billion, and origination volume of between $7.25 billion and $9.25 billion.

These ranges reflect a shift in mix as our 5x5 HomeLoan product ramps up, which has a very fast funding profile and which volume is not reflected in the lock volume, but is reflected in the closed loan volume. We expect our second quarter pull-through weighted gain on sale margin to be between 330 and 360 basis points. When evaluating our margin guidance, keep in mind that HELOC products are originated without an interest rate lock. Therefore, our guidance reflects the expected revenue contribution of those products in the numerator, but expected volume is not included in the denominator. They also generally carry a higher gain on sale margin but lower average loan balances, and combined with leveraging the Figure underwriting platform, have a lower cost structure.

Taken together, we believe the partnership will have a positive impact on our bottom line and a meaningful contributor to growth going forward. Our total expenses are expected to increase in the second quarter, primarily driven by higher volume related costs, reflecting higher expected originations quarter-over-quarter. We ended the quarter with $277 million in cash, decreasing by $60 million from the fourth quarter, reflecting our net loss, the investment in servicing rights, and timing differences related to our MSR secured loans. Anthony stated this earlier, but it bears repeating. Our goals are to continue investing in driving top line and market share growth, reducing our costs and increasing operating leverage, and applying automation and technology across the origination and servicing business to achieve consistent profitability in any environment.

With that, we're ready to turn it back over to the operator for Q&A. Operator?

We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Mihir Bhatia with Bank of America. Your line is open.

Hi. Thank you for taking my question. I wanted to start maybe with just the gain on sale margin guide. You have a reasonable step up in the guide between from the first quarter's 271 basis points level. Can you just talk about some of the factors that are driving that?

Sure. This is David Hayes. It's really reflective of a couple of things, but first and foremost, it's the introduction of our 5x5 product, which is a HELOC product. That carries a much stronger gain on sale margin with it. With the recent partnership with Figure, we've really started to ramp that production. We're seeing a higher percentage mix of volume coming from that product, which is averaging up our gain on sale margin. Additionally, on the first trust deed side of the house, we saw, you know, product mix shift that diluted our margin in the first quarter, and we're starting to see that shift back towards FHA, VA, and overall higher home equity volumes, which is also contributing to a higher gain on sale margin.

Got it. Okay. Then just on the volume and pull-through dynamics, you know, weighted locks, I think in one Q are $8 billion. You're obviously guiding to some good funded originations here in two Q. The locks for one Q is, like, $5.75 billion-$7.7 billion, like, a little bit smaller than first quarter. Are you making changes in your pull-through fallout or assumptions? Is something else happening there, or is this just every year seasonality from one to two Q?

No, this is kind of a pretty significant shift. I commented on the prepared remarks where with the ramping of this new five by five product, it's a HELOC, and there's no lock associated with it. Instead, when you look at our lock guidance there, that volume is not represented there. It is represented-

Okay.

in our funded volume. You'll see.

Got it.

where our lock volume came down is because all that volume is showing up in funded volume. It's a very quick turn time on that.

You know, app to fund is very quick. There is no lock associated with it.

There's no major change quarter-over-quarter in the base mortgage business. The changes are happening in the home equity business. Is that the right understanding?

Correct. We view the-

The changes are happening because of the.

To be clear?

Yeah.

It's the product mix shift between a higher percentage.

Got it.

of an expectation of higher percentage of HELOCs versus first trust deeds.

Yeah. This is Anthony Hsieh. I just want to chime in and add my two cents to what David described. It's not only a difference in how we measure revenue because the HELOC loan is not locked. However.

The bigger difference is that a locked loan, the normal cycle is around 25 to 33 days until you recognize the funding of that loan. Our 5x5 HomeLoan product is funding in 5 to 7 calendar days. It's a very fast process because it utilizes technology to fund loans and process loans. Ultimately, it's gonna drive down our cost to produce. It does change the pull-through as you look at it from the traditional way because we're not publishing the origination on these HELOC 5x5 HomeLoan loans.

Got it. Sorry, can I squeeze one more in just on the recapture rate and refinance volume? Obviously, a pretty volatile quarter from interest rates. Wondering what you saw happen? Was there differences between what recapture rate and competitive intensity looked like in Jan/February versus maybe March/April? Any comments just quarter to date also on that, and then I'll jump back in queue. Thank you.

I didn't understand that question. I'm sorry.

Uh, I think-

Oh, sorry.

dynamics.

Yeah, just intra-quarter dynamics between competitive intensity and recaptures just given the movement in interest rates.

No, we didn't see anything really different in recapture behavior and performance.

Okay. Thank you.

Thank you.

Our next question comes from Mikhail Goberman with Citizens JMP. Your line is open.

Hey, good afternoon, gentlemen. Thanks for taking the question. If I could get some color on how you guys see the mix between origination income and servicing fee income going forward. Also separately, to what extent do you guys think, or not, that a substantial decline in mortgage interest rates is needed to get a sort of a run rate of earnings that starts to trend in the right direction? Thank you.

I'll take the second question and perhaps, David, you can take the first question, the blend between servicing income and origination income. You know, it's been a solid 3 quarters since we have redirected and started to rebuild the organization. Of course, if yield was at 4.0 today on the 10-year, the environment here would be substantially different. However, understanding that we're at 4.4-4.5, we're still quite bullish based on all the hard work that we have done. We have shown tremendous progress in market share, top-line revenue growth, and more meaningfully is our efficiency in marketing. As we drive top of the funnel leads, our ability to convert mid-funnel and conversion to originations, that has changed in a meaningful way over the last 3 quarters.

As long as we continue, and we have every reason to believe that we will continue to drive that positive momentum. That really is the roots of this organization, and that is pro-producing lead flow at the top of the funnel and converting it in a best in class within the industry for us to scale and have profitable market share growth. That's exactly what we did from 2010 to 2022. We are resuming a playbook that has worked for decades. It just is going to take some time in order for us to build all the mechanics, the tools, the measuring, the monitoring, as well as personnel management. We're well on our way in doing that.

Yeah. I'll just add from sort of the mix question around servicing revenue relative to mortgage revenue. I would say, you know, obviously, the servicing revenue will be a function of rates and runoff. Generally speaking, I would expect that to grow quarter-over-quarter by two percentage points. We really think that the opportunity lies on the mortgage revenue side. We're heavily investing in loan officer additions across both the direct and retail side of the house. By virtue of that, we think that we should be able to grow mortgage revenue quarter-to-quarter from where we sit today, coupled with sort of the, you know, the seasonality of the business for 2nd and 3rd quarters.

Great. Fantastic cover. Thank you, guys. If I could just squeeze in one more as well. Just curious about the liability side of your balance sheet. Your thoughts on addressing upcoming debt maturities. Thanks.

Sure. Yeah, popular question. That is something that the management team and the board is very actively engaged in, and with discussions with bankers. We are looking at strategies to address that in a pretty comprehensive way. You know, the markets are quite turbulent, as you well know right now. We are trying to be very thoughtful about how we approach that. We were hoping to have a resolution on that in the coming months.

Thank you all. Best of luck going forward.

Thank you.

Thank you.

There are no further questions at this time. Anthony Hsieh, I turn the call back over to you.

Thank you. On behalf of Dave, Jeff, Dom, and the rest of our team, I want to thank you for joining us today. The pieces are in place. We are executing on our strategy to compete at the highest levels by returning to our core strength. Our strategy rests on four objectives. One, investing in the business through growth, operational efficiency and infrastructure. Two, becoming a best-in-class mortgage banker, or in other words, find another loan, close it faster, produce it cheaper, and maintain superior loan quality. Three, growing profitable market share by hiring and training sales professionals in each of our channels and by increasing our channel and distribution capabilities. We plan to grow our origination capacity to capture profitable market share growth across refinance, resale, and new home loans.

Finally, 4, returning to profitability by investing in our origination and new customer acquisition capabilities, growing our servicing portfolio, improving our recapture rates, growing our brand and marketing, and increasing our operating leverage. We believe we can return to consistent profitability. This is how we win. Executing these objectives positions us to create sustainable value for our shareholders while accelerating growth in a competitive landscape. Thanks again, everybody, and I appreciate your support. Operator.

This concludes today's conference call. You may now disconnect.

Good afternoon, everyone, and welcome to loanDepot's Year-end and Fourth Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Gerhard Erdelji, Senior Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining our year-end and fourth quarter 2025 earnings call. 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. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued earlier today, which is available on our website at investors.loandepot.com. Our presentation today contains certain non-GAAP financial measures that we believe provide additional insight into analyzing and benchmarking the performance and value of our business and facilitating company-to-company operating performance comparisons. For more details on these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP measures, please refer to today's earnings release. A webcast and a transcript of this call will be posted on our website after the conclusion of this call. On today's call, we have loanDepot's Founder and Chief Executive Officer, Anthony Hsieh; and Chief Financial Officer, David Hayes They will provide an overview of our quarter as well as our financial and operational results and outlook. We are also joined by Chief Investment Officer, Jeff DerGurahian; and Chief Digital Officer, Dominick Marchetti, to help answer your questions after our prepared remarks. With that, I'll turn things over to Anthony to get us started. Anthony?

Thank you, Gerhard. Hello, everybody. I appreciate everyone joining us on the call today. I am pleased with the early results of our work to increase our scale and market penetration. While the fourth quarter is typically a seasonally slow quarter, we originated the most volume since 2022, gained share in an expanding market and achieved a 71% recapture rate from our in-house servicing platform. These results reflect progress in our return to the core competencies that enable the scaling to become the second largest retailer lender nationally during our first decade. Not only did we fund the largest volume of loan originations since 2022, but we also increased our market share. We expect to continue this trend as the market consolidates and large-scale diversified customer-facing originators like loanDepot benefit. While the third-party origination and MSR markets have consolidated around scale and operating efficiency, the consumer-facing marketplace remains highly fragmented and inefficient. Post financial crisis and Dodd-Frank, no retail lender currently controls more than 5% market share, which presents a significant opportunity for a customer-facing scaled originator. Furthermore, I believe the digital migration of the customer will continue to accelerate, particularly the purchase customer as more digital advancements make the entire home buying process more automated. We believe our assets and strategy provide us with unique competitive advantages to meet the customer as they migrate to a more digital experience as well as consolidating the market fragmentation, leveraging the most differentiated customer acquisition and retention business model in today's marketplace. First, our distribution model consisting of digitally enabled direct-to-consumer nationwide end-market retail and partnership with homebuilders bring new customers into our ecosystem across a diversity of transactions and geographies. Combining these best-in-class origination capabilities, we provide our customers access to purchase, refinance and home equity lending opportunities across market cycles. Second, vertical integration means we control the consumer experience from end to end, turning the flywheel from application to closing to servicing and back again through our industry-leading recapture capabilities, which are enhanced by our technology assets, relentless pursuit of customer service and our nationally recognized brand. Said simply, our primary strategy focuses on being one of the only scaled originators primarily creating and servicing our own customers as opposed to acquiring customers from third parties. As we look ahead with expectation of a larger refinance market, our top-of-the-funnel customer acquisition advantage uniquely positions us to outperform our competition in a rapidly evolving and consolidating marketplace. Behind the scenes, we remain focused on reducing unit costs through operating leverage and automation while investing in our marketing engine to drive more opportunities to the top of the funnel. In terms of innovation, our digital team led by Dom and Sean have made positive impacts by introducing AI capabilities to some of our most repeatable and scalable functions that improve the performance of lead acquisition and conversion, loan officer, CRA management and new underwriting processes. Each of these initiatives are having positive impact on the business with wide user acceptance, including by our customers and should drive positive operating efficiencies as volume increase. I am proud of the work that has been accomplished since my return to a full-time operating role. We are just scratching the surface of what this team can do. As digital migration continues to gain momentum, the company is capable of deploying AI applications directly to consumers will define the productivity and efficiency standards for our industry. We plan to continue investing and growing our top of the funnel customer acquisition and origination capabilities, leveraging our brand and marketing muscle, along with introducing contemporary technologies, including AI, which should lower our costs and increase our operating efficiency. Ultimately, our goals are to deliver profitable market share growth, improve the customer experience, drive customer retention and deliver long-term shareholder value. This is our opportunity and what we are working towards every day. With that, I will now turn the call over to Dave, who will take us through our financial results in more detail. David?

Thanks, Anthony, and good afternoon, everyone. For the sake of time, I'll limit my commentary primarily to our fourth quarter results. The fourth quarter reflected the emerging benefits of our investment in technology and operating efficiency during a period of higher volumes. We reported an adjusted net loss of $21 million in the fourth quarter compared to an adjusted net loss of $3 million in the third quarter of 2025 due primarily to lower pull-through weighted gain on sale margin, higher amortization on our MSR portfolio and higher expenses, offset somewhat by higher pull-through weighted lock volume. During the fourth quarter, pull-through weighted lock volume was $7.3 billion, which represented a 4% increase from the prior quarter's volume of $7 billion. Pull-through weighted rate lock volume came in within the guidance we issued last quarter of $6 billion to $8 billion and contributed to adjusted total revenue of $316 million, which compared to $325 million in the third quarter of 2025. Our pull-through weighted gain on sale margin for the fourth quarter came in at 324 basis points at the high end of our guidance range of 300 to 325 basis points, but down compared to 339 basis points in the prior quarter. Our lower gain on sale margin primarily reflected product and loan purpose mix shift. During the fourth quarter, we originated relatively fewer higher-margin second trust deeds and FHA VA loans compared to the third quarter as part of our strategy to capture increased share of refinance volume. This resulted in larger average loan balances, resulting in decreasing our margin percentage. Our loan origination volume was $8.0 billion for the quarter, the highest level of origination since 2022, an increase of 23% from the prior quarter's volume of $6.5 billion. This was also within the guidance we issued last quarter of between $6.5 billion and $8.5 billion. Servicing fee income increased from $112 million in the third quarter of 2025 to $113 million in the fourth quarter of 2025 and primarily reflects an increase in collections due to the growth of the unpaid principal balance of our servicing portfolio. We hedge our servicing portfolio, so we do not record the full impact of the changes in fair value in the results of our operations. We believe this strategy helps protect against volatility in our earnings and liquidity. Our strategy for hedging the servicing portfolio is dynamic, and we adjust our hedge positions in reflection to the changing interest rate environment. Our total expenses for the fourth quarter of 2025 increased by $8 million or 3% from the prior quarter. The primary driver of this increase was due to higher personnel costs. Commissions increased as a result of the higher funded volume and salaries increased primarily due to loan officer hiring and the related operations staff. However, the remaining volume-related marketing and direct origination expenses were lower quarter-over-quarter despite higher volume, reflecting some of the benefits of our investments in process improvements and technology initiatives, including some of the early benefits from the initiatives that Anthony mentioned earlier. Looking ahead to the first quarter, we expect pull-through weighted lock volume of between $7.75 billion and $8.75 billion and origination volume of between $6.75 billion and $7.75 billion. We expect our first quarter pull-through weighted gain on sale margin to be between 270 and 300 basis points. Our guidance reflects market volatility, seasonality in the purchase volume, the affordability and availability of new and resale homes and the level of mortgage interest rates and our strategy of targeting larger average refinance loan balances. Our total expenses are expected to increase in the first quarter, primarily driven by personnel and G&A expenses, somewhat offset by lower volume-related expenses. The increase in personnel and G&A expenses are primarily associated with our investments in growth and the automation and innovation initiatives that Anthony mentioned. We remain focused on our commitment to profitability and continue to work with a discipline to grow revenue and manage costs while maintaining ample cash and a strong balance sheet. We ended the quarter with $337 million in cash, decreasing by $122 million from the third quarter, reflecting the investment in our loan inventory and the full repayment of our outstanding 2025 unsecured notes. During the full year 2025, we made significant year-over-year progress in investing in operating efficiencies that translated to positive financial results for the year. We were able to increase our adjusted revenue by 10% year-over-year while limiting expense growth by less than 1%, which has resulted in shrinking our adjusted net loss by 31%. Thanks to our progress, we are entering 2026 fundamentally a stronger company versus 2025. With that, we're ready to turn it back over to the operator for Q&A.

[Operator Instructions] Your first question is from Madison Suhr with Raymond James.

This is Taylor on for Madison. Maybe just to start on your comments around profitable share gains. It was good to see the uptick in market share this quarter. Could you maybe expand on this and share where you're seeing success, whether that's in certain regions or retail direct versus partner channel? And then on the flip side, where you're hoping to see improvement in 2026?

I didn't get the last statement there, Taylor, if you can repeat that.

Yes. Just to -- sorry, I don't know if my audio may be bad here, but just to expand on your profitable share gain comments and where you're seeing success, if there's any difference in certain regions or your different channels and then on the flip side, where you're hoping to see improvement in 2026?

Yes, I'll try to tackle that, Taylor. You faded again towards the end there. loanDepot has a diversified retail customer touch model. So just to remind everyone, we have our digital-first direct lending business. We have our in-market retail business, and we have our builder business. So the builder business is predictable and stable, and we are experiencing steady growth. The retail business, in-market business is when we grow by hiring in-market loan officers in each of the local markets that we serve. That business is primarily resale and purchase business. Our direct lending business is where lots of opportunities are available today. We did retrace in the last few years in our market share on the direct lending side. And there are tremendous opportunities for us to rebuild our marketing funnel, our lead management systems, our CRM, our leads scoring system and all of the functionalities that make direct lending functional. Dom and Sean, as they started over the last 6 months or so, have been asked to completely rebuild our lead funnel engine utilizing AI. So there's lots of opportunities for us to continue to push down marketing cost, which is cost per customer acquisition. And we're seeing early wins as our volume and market share on our direct lending channel is starting to improve. There's still lots of work to do, but we're very, very bullish about our ability to penetrate additional market share through our direct lending channel.

Got it. All that color is very helpful. And then if I could just squeeze in one more here just on your -- just to get a sense of your 2026 non-volume-related OpEx and profitability expectations. I know you haven't guided for the year, but can you just give us a sense on how you're thinking about the non-volume expense growth in 2026 and how we should think about operating leverage for the business in the next year?

Yes. Sure, Taylor, it's David. Yes, I think, generally speaking, as volume grows, you will see the scalable nature of our business given we do have a fixed cost that we get to amortize that incremental revenue over. I think from a year-over-year basis on sort of that non-volume-related growth, you'll see some modest investment into some technology initiatives and innovation initiatives that will help drive the growth for the overall profile of the company. So that's predominantly where you'll see that in. The rest of the expense growth will be volume related in the context of loan officer additions and related operations staff to support that volume.

And I just want to add, Taylor, by saying that as we scale and penetrate profitable market share, which is something that is not foreign to this organization since our inception in 2010, I want to remind everyone that we did grow 38% year-over-year for the first 11 years through profitable market share gains. As we scale up, most of the cost, there will be variable cost as we add on additional personnel for funding of loans at the same time as we achieve AI efficiencies. But most of the fixed cost is pretty much already baked into the year.

Your next question is from Eric Hagen with BTIG.

Some housekeeping here. The pickup in amortization expense to $52 million in the quarter, is that a good run rate to reflect the expense going forward? Or could we actually see it maybe come back down because rates have moved back the other way even just this quarter?

I would say, Eric, there was a pickup in the quarter related to the higher refinance volumes that came in. That was obviously offset by our kind of best-in-class leading recapture rate, but I think they could moderate a little bit into the first quarter, but it really depends on rates on a go-forward basis and where that will go.

Okay. All right. That's helpful. We're actually pretty intrigued by the level of cash-out refis in the period. Is there some overlap in the borrowers that you originated there where you also own the first lien in your MSR portfolio? And is that just the pickup in cash out refi volume in the period, would you say that's a function of your lead generation or something else? And how does the margin for cash out refis compared to the other products you guys are originating?

Eric, it's Anthony. So we see customers shift over to cash out refinances rather than taking out a HELOC or a closed-end second anytime the 10-year yield or mortgage rates drop. So the good news there is we have the optionality to offer to that customer. And the volume on both sides are actually fairly similar because the CES margin has higher basis points, but lower loan amount. So we are seeing both products shift as mortgage rates do drop or climb back up.

Your next question is from Mikhail Goberman with Citizens JMP.

Just curious if you could maybe delve into a little bit of the thought process of the announcement the other day of getting back into the wholesale lending channel and what kind of volumes if you're targeting in that space over what kind of time frame? And what kind of margins do you expect to see in that space?

So I can talk about the strategies there. So getting back into wholesale, which is a business that we were in previously, is going to allow us to achieve greater scale. It's a third-party origination, as you know. So we do not control the customer experience, but we are and we will be able to utilize the volume to help us create additional operating efficiency. And as we anticipate a volume growth and most likely a refinance volume return, we expect margins to expand, which will make wholesale model much, much more attractive. So we think this is the ideal timing for us to get back into the wholesale model.

All right. Great. And if I could just squeeze in one more. Is there a level of recapture that you guys are targeting? I appreciate the 71% figure for this last quarter. Is there a level you guys targeting going forward?

I think we're always going to be around that level. I think with technology changing and with AI being a better predictor of any customer that potentially could be in the market for an additional refinance, I think that number could go up. But I believe that we are pretty much at the top of the house as far as our recapture percentages.

[Operator Instructions] There are no further questions at this time. I will now turn the call back to Anthony Hsieh for closing remarks. Please go ahead.

Well, thank you, everybody. On behalf of Dave, Jeff, Dom and the rest of our team, I want to thank you for joining us today. The pieces are in place. We are executing a bold strategy to compete at the highest levels by returning to our core strength. Our strategy rests on 4 objectives: one, investing in the business through growth, operational efficiency and infrastructure; two, becoming a best-in-class mortgage banker or in other words, find another loan, close it faster, produce it cheaper and maintain superior loan quality. Three, growing profitable market share by hiring and training sales professionals in each of our channels, we plan to grow our origination capacity to capture profitable market share growth across refinance, resale and new home loans. And finally, four, returning to profitability by investing in our origination and new customer acquisition capabilities, growing our servicing portfolio, improving our recapture rates, growing our brand and marketing and increasing our operating leverage. We believe we can return to consistent profitability. This is how we will win. Executing these objectives positions us to create sustainable value for our shareholders while accelerating growth in a competitive landscape. So thanks again, everyone, and I appreciate your support. Bye for now.

This concludes today's call. Thank you for attending. You may now disconnect.