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Good afternoon and welcome to Loan Depot's Second 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 one again. I would now like to turn the call over to Gerhard Erdely, Senior Vice President, Investor Relations. Please go ahead. Thank you. Good afternoon, everyone, and thank you for joining our second 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-GAP financial mesures, 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 Loan Depot's founder and chief executive officer, Anthony Shea, 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 DeGurian, and chief digital officer, Dominic 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. When I returned as full-time CEO one year ago, I set a clear transformation agenda to position Loan Depot for profitable market share growth in any macro environment. We have moved decisively to reshape the business and are starting to see signs of our progress. We are making more loans faster and at a lower cost. In the second quarter, revenue increased, operating leverage improved, and our net loss narrowed substantially even as interest rates rose meaningfully beginning in March. While we are in the early innings of our transformation, the pace of improvement accelerated as the quarter progressed, with June demonstrating the strongest results so far this year. A central driver of this momentum is the progress we made during the second quarter in executing our strategic expansion into home equity lending. This represents a significant expansion opportunity within a market supported to buy approximately $35 trillion of U.S. homeowner equity, which represents a potential market size more than double total mortgage debt outstanding. Importantly, these are the same homeowners we have long served through traditional refinance products. In a higher rate environment, however, home equity products can allow qualified borrowers to access liquidity while preserving an attractive first mortgage rate and may offer a more compelling value proposition than higher cost alternatives such as unsecured personal loans credit cards and certain small business financing products home equity lending is more stable less rate sensitive and less seasonal than refinance and purchase mortgage lending it is also stickier in that it meets an ongoing customer need loan balances are smaller but gain on sale and revenue are both typically higher and our cost to produce is significantly lower we are now seeing the result of this pivot during the quarter we increase unit volume by 25 percent from the first quarter reflecting the success of our launch into this product segment we believe that when rates fall and traditional refinance activity returns home equity will remain an attractive product for a large segment of the market particularly those customers with ultra low pandemic era interest rates that are unlikely to be in the money for traditional refinance home equity lending broadens our addressable market and complements our traditional purchase and refinance business it addresses our customers liquidity needs and benefits from attractive unit economics the second quarter results demonstrate that this strategic shift is beginning to translate into measurable growth stronger margins and improved operating leverage during the year we continue to expand our core mortgage franchise by adding builder partners in our joint vendor channel and branch locations in our retail channel that growth drove a 33 increase in purchase market share in the second quarter and reinforces the durability of our diversified origination platform it's important to understand that we believe that we are the number one independent mortgage company financing new home construction for builders this is a critical competitive advantage our ability to pivot towards home equity will continue to grow purchase market share reflects the agility of our team and the adaptability of loan depot's origination model few originators have the multi-channel distribution customer relationship or operating expertise to make that transition at scale we believe we are uniquely positioned with our nationally recognized brand valuable servicing portfolio diversify channels including our growing wholesale channel proven ability to develop loan officers organically industry leading recapture capabilities and technology enable customer acquisition platform allowing us to redirect capacity towards a product that offers the greatest customer and shareholder value in a given rate environment. Together, these assets help generate customer leads at the top of the funnel and support a broad distribution network that includes retail and partner channels, as well as what we believe to be one of only two scaled direct lending platforms. Our ability to efficiently convert marketing investments at the top of the funnel into customer leads and new customer acquisition is an important market differentiator. The market is extremely fragmented, giving us a huge opportunity to apply or differentiate assets to profitably grow market share. Producing, managing, and directing leads to our loan officers has been a core competency since founding the company. With new technology powering lead conversion, we expect to create more customers while also driving down marketing costs. Powering our growth is our ability to organically develop loan officers. Over the past year, we increased our net loan officer count by 18%. 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 relationships in our retail channel. This quarter's results are evidence of the progress we have made over the past year as we strengthen our platform, rebuild our management team with leaders that have deep expertise across mortgage, technology, and marketing. Expanded our loan officer base, improved marketing performance, and invest in technology and AI-enabled capabilities designed to enhance productivity and the customer experience. To punctuate this progress over the past year, we have increased return on marketing by 70 percent. We increased marketing lead to funded loan conversion by 50%. We reduced marketing cost per funding by 34%, reduced total cost per funded loan by 12%, and increased funded loan units per loan officer by 18%. As we continue to scale the platform, we believe there are opportunities to realize additional operating leverage across our business in a range of market environments. Our technology-enabled multi-channel platform creates a unique opportunity to partner with additional financial service providers that can benefit from our scale distribution and sales culture few originators have the resources or expertise to make this transition at scale when refinance and purchase opportunities return we will be ready to move just as quickly to capture them this is what it means to be built to compete across market cycles while important work remains we believe we have the discipline and focus to increase operating leverage and cost containment necessary to continue progressing towards sustainable profitability over time with that i will now turn the call over today who will take us through our financial results in more detail. David? Thanks, Anthony, and good afternoon, everyone. The second quarter marked another meaningful step forward in our financial performance, demonstrating that we can grow volume while maintaining a focus on efficiency and profitability. We reported an adjusted net loss of $29 million in the second quarter compared to an adjusted net loss at $34 million inthe first quarter due primarily to higher adjusted revenue while limiting expense growth to primarily volume-related costs. During the second quarter, our loan origination volume was $8 billion for the quarter, an increase of 4% from the prior quarter's volume of $7.7 billion. This was within the guidance we issued last quarter of between $725 billion and $9.25 billion. The increase in closed loan volume was more notable given the mixed shift towards smaller, five-by-five home loan products, which carry a smaller loan balance compared to traditional firsts. On a unit basis, we increased volume 25% during the quarter, reflecting the success of the product in the investment in our loan officers. As Anthony stated, we increase both loan officers and their productivity since last year. Pull-through weighted rate lock volume was $6.6 billion, which represented a 20% decrease from the prior quarter's volume of $8.3 billion. As a reminder, pull-through weighted rate lock volume is down primarily due to the product mix shift to HELOC, which does not record a lock. Pull-through rated rate lock also came in within the guidance we issued last quarter of $5.75 billion to $7.75 million and contributed to adjusted total revenue of $308 million, which compared favorably to $299 million in the first quarter. Our pull-through rated gain on sale margin for the second quarter came in at 345 basis points within our guidance range of 330 to 360 basis points and up compared to 271 basis points in the prior quarter.Our higher gain on sales margin primarily reflected product mix shift. The higher rate environment suppressed demand for first trustee loans, but demand for higher margin 5x5 home loan HELOC products increased. Their contribution can be seen in the 60% increase in origination income for the prior quarter. Servicing fee income increased from $109 million in the first quarter to $112 million in the second quarter, primarily due to a larger portfolio size and higher interest credit on our escrow balances. We hedge our servicing portfolio, so we do not record the full impact of the changes in fair value and results of our operations. We believe the strategy helps protect against volatility in our earnings and liquidity. Our strategy for hedging the servicing portfolios is dynamic, and we adjust our hedge positions in reaction to changing industry environments. Maintaining a strong liquidity position remains a top priority for us, and as such, we took advantage of a strong market conditions to monetize approximately $10 billion of our servicing rights post-quarter end. We expect this trade to settle later in the year and will be reflected in the coming quarters. Our total expenses for the second quarter increased by $2 million or less than 1% from the prior quarter. The primary drivers of this increase were higher commissions and direct origination expenses reflecting the increase in origination volume. This is partially offset by the progress on operating leverage metrics that Anthony mentioned. Looking ahead to the third quarter, we expect pull-through weighted lock volume of between $5.25 billion and $7.25 million, and origination volume of $6.25 and $8.25. These ranges reflect an ongoing mix shift as our 5x5 home loan product continues to TO BE A POPULAR PRODUCT IN THE CURRENT RATE ENVIRONMENT. HELOC VOLUME IS NOT REFLECTED IN THE LOC VOLUNE, BUT IT IS REFLED IN THE CLOSED LOAN VOLUEMENT. IT IS ALSO WORTH NOTING THAT THE SHIFT TO HELOC PRODUCTION RESULTED IN HIGHER UNIT VOLUNT AND CONTRIBUTION MARGINS, ALBEIT AT SMALLER AVERAGE LOAN SIZES. WE EXPECT OUR THIRD QUARTER PULL THROUGH WEIGHTED GAIN ON SALE MARGIN TO BE BETWEEN 360 AND 390 BASIS POINTS. Our total expenses are expected to decrease somewhat in the third quarter, primarily due to the benefit of repurchasing our corporate debt at a discount partially offset by higher volume-related costs as we continue to drive growth in our HELOC product. As part of our ongoing cost management strategy, the company has begun actioning approximately $12 million of annualized productivity initiatives progressing through the remainder of the year. We ended the quarter with $229 million in cash, decreasing by $48 million from the first quarter. However, the previously mentioned MSR sale and other financing strategies in-flight should mitigate this decrease going forward. Additionally, we repurchased $16 million of senior notes at an average purchase price of 90% of PAR during the quarter and repurchase an additional $27 million of notes at a average purchase price of 86% of par post-quarter end through July 30th, 2026. Finally, we continue to evaluate opportunities to optimize our capital structure. Addressing the company's bond maturities remains a high priority for the management team, and we're evaluating a range of options with the help of our retained advisors. Anthony stated this earlier, but it bears repeating. Our goals are to continue investing and driving top line in market share growth. Reducing our cost and increasing operating leverage, and applying automation and technology across the origination and servicing businesses 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 1 to raise your hand. To withdraw your question, press star 1 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 Doug Harder with BTIG. Your line is now open. Please go ahead. Thank you, and good afternoon. On your guidance and as you think about the third quarter, you know, how should we think about the mix between HELOC and first mortgage and how that influences kind of the gain-on-sale range that you gave and volume range, you Know, and I guess included in that, like, How do you think about, on a like-for-like basis, the products, how the gain-on-sale margin is trending in the third quarter versus the second? Hi, Doug. Anthony Shea here. So I'm going to answer the question assuming rates are going to stay relatively in the same zip code. And of course, you know, as rates change, you're going to see a return in first mortgages more pronounced on the refinance side than on the resale or purchase side. But certainly, you know, all that is directed by what happens to interest rates. The home equity market, Doug has been a strategy since my return it has taken some time to retool marketing retool technology and the retool our point of sale system as well as retraining of our sales staff so over the course of the last six months this is starting to prove some traction And the momentum is finally here. We're feeling pretty good about it. The market is a new entrant for us. So we do expect the momentum to continue. We are starting to be very opportunistic by adding loan officers on the direct lending side. i think you might have seen we just announced a new opening of our miami center which will give greater coverage to the east coast and that particular time zone so understanding the competition in the home equity market is uniquely different doug than refinance as well as purchase market a traditional mortgage player it is much more difficult for a traditional mortgage company to attack the home equity market because you're relying on your loan officers to generate the production for you where in this case the company generates the leads at the top of the funnel utilizing our capacity and our ability to develop loan officers organically to fulfill the customer's demand so over q3 we expect home equity to continue but the your your question of you know what is the ratio there it really depends on the interest rate uh sort of movement because as rates do fall uh you're going to see the return of first mortgages but if it stays static i think you can i think you can safely assume that we will continue to to penetrate and grow our HELOC volume which ultimately will slant the margins upward. I appreciate that, Anthony. And then just a clarification on the MSR sale. I guess, what is the size? The presentation says $12 billion. I think you mentioned $10 billion. And is there any way you can frame kind of the total dollars that you expect to receive from that sale? So the sale was $10 billion. We'll double check what your reference was on the 12. We did do a $12 million cost savings program, which was announced. But the overall sale of the portfolio was $ 10 billion. So, yeah, slide six of your presentation has $12 billion. We'll fix that. Great. And any sense of the size, the amount of cash that you expect to receive from that? Hey, Doug. It's Jeff DeGurian. We'll just say that the trade executed well through our marks. And, you know, we continue to evaluate opportunities in the market, as we stated before on other calls. And we decided to execute here because it made sense given all the factors considered. Okay. Thank you. Your next question comes from the line of Mahir Bhatia with Bank of America. Your line is now open. Please go ahead. Please remember to unmute your device locally. Thank you. Hi, this is Caroline Latta. I'm on for me here. Thanks for taking my question. So, it looks like recapture declined sequentially about five points. Was that driven primarily by customer behavior, competitive intensity, or makeshift towards the home equity products? And what recapture level should we think about going forward? You know, there's really no particular cause, Caroline. You know, I would guess that it's due to the fact that interest rates went up Q2 over Q1. So anytime rates go up, you know, you'll have less attractiveness for consumers. I do expect that that amount of recapture will increase as we continue to develop our home equity offering. So I don't expect that to materially change over Q3. Okay, cool, thank you. And then maybe just on wholesale, since it was reintroduced earlier this year, is there any quantitative metrics you can give us about where wholesale stands today and whether that channel is tracking ahead of or behind where you contemplated when you reentered the market? Yeah, great question. Wholesale business is a complement for us, Caroline. It is never slated to be a major contributor of ours, but so far, I think it's been five or six months since we introduced it. We are tracking ahead of schedule, and so far the business is doing quite well, and we've had positive responses from the broker community. Okay, great. Thank you. Your next question comes from the line of Mikhail Goberman with Citizens JMP. key. Your line is now open. Please go ahead. Hey, good afternoon. Thanks for taking the question. Just wanted to get your general thoughts on the competitive landscape out there. We've seen some of the big banks report some pretty good numbers for origination sequentially. Just wondering if they're taking share at the margin and just your general thoughts on on the comparative landscape from a kind of big picture point of view. Thank you. So we haven't seen an increase in competitive pressure. Within the last 24 hours, we've had some news in the marketplace where a couple of competitors have exited the mortgage market or changed their strategy towards more of a B2B structure rather than consumer direct. um what we've seen over the last quarter is our ability to hold on to margins in both purchases and refinances and our purchase share as an example from q1 to q2 our purchase year went up 33 percent while our volume increased 44 percent on purchase business at the same time as we enter the home equity market from april to june as an example we have reduced our loss tremendously in april discounting fair value we entered the quarter at a 15 million dollar loss in aprril and in june we reduced that to 2 million so we can see clear progress on our market penetration because we're entering a completely new market segment which is the home equity market uh thanks for that and just um if i can squeeze one more in your your thoughts on technology and ai um endeavors um you know within the firm going forward any um any plans to sort of uh ramp things up and uh how would that lead to um further kind of operating leverage possibilities um yeah thank you yeah don marchetti's on on the line so don do you want to take that and maybe i can compliment your answer yes i'd love to yeah we we've we've been spending huge focus on on first the team that we're able to take full advantage of the team and execute against our strategies we're leveraging the fact that we already have a proprietary platform and control of our own destiny we have a diversified sales platform inside of that we'll very focus first and foremost on revenue generating top of funnel emphasis with contact transfer origination focus tools and we've seen a huge benefit there that's enabled obviously five by five and our ability to can add diversified products on top of that platform second focus has been clearly around operational efficiency measures and we're already receiving feedback around you know very very highly improved performance from the agencies as it relates as it relates to verification processes and some of the underlying tools and capabilities that we've been leaning into and lastly just leveraging you know automation through a combination of pools available in the market and doubling down on our proprietary platform to drive you know additional opportunities that allow us to scale very very effectively when interest rates decrease and like i said already seeing benefits of that in in the notes that anthony shared Great. Thank you all. Appreciate it. Yeah, I just want to add to what Dom is saying real quickly, and that is, you know, this organization is about deploying modern technology so that it gives us a competitive advantage. At AI right now, everyone has a Q acronym or a nickname to their system. And I think getting beyond all the cuteness of all the new entrants, I think you need to really understand how to develop this technology and utilize it so that it gives you a competitive advantage. We continue to study it, we continue to evaluate it, and we continue make the investments where it gives us an edge. AI will fundamentally change this industry, and We believe that given our assets and our strategy and our uniqueness of touching the customer at the top of the funnel, it's going to benefit us greatly. Thank you. There are no further questions at this time. I will now turn the call back to Anthony Shea for closing remarks. Thank you on behalf of Dave, Jeff, Dom, and the rest of our team. I want to thank you for joining us today. 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. I'm proud of the work that has been accomplished since my return to a full-time operating role. 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 mission and what we are working towards every day. This is how we 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. for now. This concludes today's call. Thank you for attending. 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