DBRS assigns B to loanDepot

DBRS said it assigned B issuer ratings to loanDepot, Inc. and its subsidiary loanDepot.com LLC. The trend is stable.

“The ratings reflect loanDepot’s franchise as one of the top nonbank mortgage loan originators and servicers in the U.S., with proper liquidity and acceptable capitalization. The ratings also consider the company’s earnings generation volatility given its concentrated and cyclical business model, as well as a primarily asset-based funding profile, and heightened exposure to operational and market risk,” the agency said in a press release.

The trend mirrors the position that loanDepot will execute on its strategic initiatives, including cost reduction and business restructuring as it copes with the challenging mortgage origination situation while keeping a sound balance sheet, DBRS noted.

“Nonetheless, a material weakening in the housing market accompanied by a sharp economic downturn constitute key downside risks to our expectations, the agency said.

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