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With scarce inventories continuing to crimp sales of existing homes in many markets, loanDepot is counting on a proven strategy to boost its purchase loan business: Forming joint ventures with homebuilders.
LoanDepot’s latest joint venture partner is Woodstock, Georgia-based Smith Douglas Homes, which targets price-conscious entry-level and empty-nest homebuyers in the Southeast and Southern U.S.
Dan Peña
“Smith Douglas Homes’ approach to the new construction market is perfectly aligned with loanDepot’s commitment to serving the needs of first-time homebuyers,” loanDepot executive Dan Peña said, in a statement Monday.
Once it’s up and running, the plan is for the new joint venture, Ridgeland Mortgage, to operate in Atlanta; Houston; Birmingham and Huntsville, Alabama; Charlotte and Raleigh, North Carolina; and Chattanooga and Nashville, Tennessee.
Greg Bennett
“Our partnership with loanDepot allows us to focus on what we do best — delivering incredible value to our customers with high quality homes at an affordable price point — while leveraging loanDepot’s mortgage lending expertise to provide a smooth and seamless home loan process,” Smith Douglas Homes CEO Greg Bennett said in a statement.
Smith Douglas Homes, which raised $173 million in a January initial public offering, built and sold 2,297 homes last year, and owned or had options to build on nearly 13,000 additional lots, the company said in its most recent annual report to investors.
The builder currently works with a stable of preferred lenders in the markets where it’s active. In Atlanta, for example, Smith Douglas Homes works with BankSouth Mortgage, NorthStar Mortgage Advisors and Movement Mortgage.
LoanDepot’s other joint ventures include NHC Mortgage (with National HomeCorp), LGI Mortgage Solutions (with LGI Homes), Henlopen Mortgage (with Schell Brothers), BRP Mortgage (with Brookfield Residential), MTH Mortgage (Meritage Homes), MSC Mortgage (with Michael Saunders & Company), TRI Pointe Connect (with Tri Pointe Homes) and Day 1 Mortgage (with Century 21 Redwood Realty).
In its most recent annual report to investors, loanDepot reported $21 million in net earnings from its joint ventures in 2023, up 22 percent from 2022 and nearly double the $11.9 million in profits its joint ventures generated in 2021.
New homes taking more market share
Source: Fannie Mae housing forecast, October 2024.
With elevated mortgage rates making many homeowners reluctant to put their homes up for sale, Fannie Mae economists expect new home sales will grow 7 percent this year to 713,000. New homes are projected to make up 15 percent of 2024 home sales, up from 11 percent in 2022.
LoanDepot’s joint ventures with homebuilders “typically experience their highest level of activity during November and December as home builders focus on completing and selling homes prior to year-end,” the company said in its annual report.
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