"We're not here as a vulture fund," industry veteran says of his new charge
Given the challenges and travails of today’s housing market, loanDepot Inc. is taking a new tack in securing its market position by looking for strategic partnerships with other companies and eyeing potential acquisitions of other industry players.
To that end, the mortgage lender has created a new position helmed by industry veteran Dan Hanson (pictured) that pretty much spells out the strategy – executive director of enterprise partnerships and acquisitions. Mortgage Professional America reached out to Hanson for more details on what his new role entails.
“The mortgage industry, as you well know, is suffering through a very difficult environment,” Hanson said during a telephone interview. “Interest rates, inventory – there’s a litany of enemies that are poking at us. One of the things mortgage companies that are in for the long haul have to do is recognize there are other strategies to gain more volume and revenue.”
Consolidating through acquisition or partnership
One of those tactics is through acquiring other companies: “Obviously, acquisition speaks for itself,” Hanson said. “There are companies in this industry that are fairly thinly capitalized…that are going to see the future and thought rates were going to come down maybe at the end of the year and now maybe it’s not until the end of next year. A lot of them are saying ‘I’m going to have to shut the company down, or merge, or do something.’ “
That’s where Hanson would step in – not with a hard sell, he suggested, but more of a dialogue on how to salvage their companies. “We’re not here as a vulture fund,” he said. “I’ve been in the business for almost 40 years, and I know of lot of these owners who are fantastic people who’ve built companies over 20 years and now they’re in their 60s trying to figure out their exit strategy if they don’t know how to move the company forward. And now they’re saying, ‘all the equity I’ve built over these years is now draining out of the company coffers’.”
The virtues of a gentle approach
He explained his approach: “What I want to do, and what I’m really intent on doing, is being a resource for them to talk about what strategies they can have to keep their companies going into the future – with or without them. I’m not interested in circling companies like a buzzard and waiting for somebody to die because, generally by then, they’ve lost all their value, all their strength. I want to talk to people before that really happens and just look down the future six months from now – where do you see your company? Where do you want to be?”
Given his industry tenure – including working at companies being bought and sold motivated by market forces – Hanson suggested he has empathy in such scenarios: “Everybody’s terrified that a bigger company like loanDepot comes in and tears their culture apart. That’s not our way.”
There are a variety of permutations to salvaging a firm, he suggested: “Whether it’s a joint venture, whether it’s a strategic partnership together, maybe we service their loans for them. There are a lot of different ways we can help them to offset costs and still maintain their identity if they don’t want to become part of our company platform.”
The company itself has intimate knowledge of what’s it like in coming to terms with such a reckoning, as it’s not been immune to the market downturn. In reporting its second quarter results last year, loanDepot announced its exit from the wholesale business after a net loss of $223.8 million and a quarter-over-quarter freefall in revenue from $503.3 million to $308.6 million. In 2022 alone, the company slashed some 3,000 jobs amid lower origination volumes and profit margins.
“I started in 1984 in the mortgage business, and I’ve been around a few of these,” he said. “I was a principal at iMortgage when loanDepot acquired us in 2013. It’s difficult; it’s hard on everybody.”
He told MPA he’s already engaged in talks with a handful of companies, and he’s sending out more feelers largely via the Mortgage Bankers Association (MBA) with its robust membership ranks.
“My job is to let the MBA know that loanDepot is interested in helping organizations become successful through a very challenging time, whether through acquisition or strategic partnership.”
Whether or not companies are open to new incarnations in today’s volatility, Hanson suggested the market landscape is irrevocably altered to the point where tough decisions will have to be made. “We are looking at an inevitable consolidation in the mortgage space, period. It’s going to happen. When they go, how they go and who assumes the responsibility for those people – it’s going to be the stronger-scaled companies that have capital, and we’re one in that group. We have great capacity, we have good technology. We’re in this space. This is our space, and we’re not going anywhere.”
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