loanDepot (LDI) risk factors, FY2025 10-K

Risks Related to our Business and Strategy

1. 01We may not achieve some or all of the expected benefits of our strategic plan and our initiatives may adversely affect our business43% rewritten
2. 02If new products, services, enhancements or expansions do not achieve sufficient acceptance or do not result in anticipated efficiencies and revenues, our financial results and competitive position could be harmed49% rewritten
3. 03If we fail to promote and maintain our brands in a cost-effective manner, or if we experience negative publicity, we may lose market share and our revenue may decrease54% rewritten
4. 04We may grow by making acquisitions, and we may not be able to identify or consummate acquisitions or otherwise manage our future growth effectively
5. 05We may not be able to retain loans from customers who refinance

Risks Related to our Operations

1. 06Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates45% rewritten
2. 07exchange of margin with our hedging counterparties could under certain market conditions, adversely affect our short-term liquidity positionNew
3. 08We rely on internal models to manage risk and to make business decisions. Our business could be adversely affected if those models fail to produce reliable and/or valid results
4. 09The geographic concentration of our loan originations may adversely affect our lending business
5. 10We may be required to indemnify the purchasers of loans that we originate (including securitization trusts), or repurchase those loans, if those loans fail to meet certain criteria or characteristics or under other circumstances59% rewritten
6. 11Many purchasers of mortgage loans are particularly aware of the conditions under which mortgage loan originators or sellers must indemnify them against losses related to purchased mortgage loans, or repurchase those mortgage loans, and the benefits of enforcing repurchase remedies they may haveNew
7. 12If the value of the collateral underlying certain of our loan funding facilities decreases, we could be required to satisfy a margin call, and an unanticipated margin call could have a material adverse effect on our liquidity
8. 13Our servicing rights are highly volatile assets with continually changing values, and these changes in value, or inaccuracies in our estimates of their value, could adversely affect our financial condition and results of operations
9. 14The performance of our prior subservicer to effectively service our portfolio of MSRs, mortgage loans and other loan products, could materially and adversely affect us22% rewritten
10. 15In-house servicing of loans increases operational and compliance costs as we become directly responsible for complying with investor and regulatory requirements36% rewritten
11. 16We are required to make servicing advances that can be subject to delays in recovery or, to a lesser extent, may not be recoverable in certain circumstances, which could adversely affect our liquidity and business51% rewritten
12. 17Our counterparties may terminate our servicing rights, which could adversely affect our business
13. 18Our servicing rights portfolio may experience increased delinquencies and defaults as it ages, which may adversely affect our business and financial condition21% rewritten
14. 19We rely on joint ventures with industry partners through which we originate mortgage loans. If any of these joint ventures are terminated, our revenues could decline
15. 20Challenges to the MERS System could materially and adversely affect our business
16. 21We depend on the accuracy and completeness of information about borrowers and any misrepresented information could adversely affect our business54% rewritten
17. 22Our underwriting guidelines may not be able to accurately predict the likelihood of defaults on some of the mortgage loans in our portfolio
18. 23Our vendor relationships subject us to a variety of risks and the failure of third parties to provide various services that are important to our operations could have a material adverse effect on our business24% rewritten
19. 24Our risk management policies and procedures may not be effective
20. 25The loss of the services of our senior management could adversely affect our business
21. 26Our business could suffer if we fail to attract and retain a highly skilled workforce47% rewritten
22. 27We face litigation and legal proceedings that could have a material adverse effect on us
23. 28Severe weather, wildfires, natural disasters, health crises, terrorist attacks and other catastrophic events may adversely affect our business

Risks Related to Our Information Technology, Information Security and Intellectual Property

1. 29The success and growth of our business will depend upon our ability to adapt to and implement technological changes and operate effective and reliable systems
2. 30We use artificial intelligence in our business, and challenges with properly managing its use could result in harm to our brand, reputation, business or customers, and adversely affect our results of operations65% rewritten
3. 31Cyberattacks, information or security breaches and technology disruptions or failures, including failure of internal operational or security systems or infrastructure, or other cybersecurity incidents of ours or of our third-party vendors, have and may damage our business operations and increase our costs
4. 32examinations focusing on cybersecurity incidents, including the recent Cybersecurity Incident, can result in fines, penalties, increased costs, loss of licenses, and restrictions on, or other adverse changes to, the manner in which we conduct our business
5. 33We may be unable to sufficiently obtain, maintain, protect and enforce our intellectual property and proprietary rights and we may encounter disputes from time to time relating to our use of the intellectual property of third parties

Risks Related to the Mortgage Industry

1. 34Our mortgage loan origination revenues are highly dependent on macroeconomic and U.S. residential real estate market conditions34% rewritten
2. 35Our earnings have decreased and may continue to be adversely affected because of elevated interest rates and other market factors25% rewritten
3. 36The industries in which we operate are highly competitive, and are likely to become more competitive, and our inability to compete successfully or decreased margins resulting from increased competition could adversely affect our business54% rewritten
4. 37Increases in mortgage loan delinquencies and defaults may adversely affect our business
5. 38Adverse developments in the secondary mortgage loan market, including the MBS market, could have a material adverse effect on our business, financial position, results of operations and cash flows

Risks Related to Our Regulatory Environment

1. 39We operate in a highly regulated industry that is undergoing regulatory transformation which has created inherent uncertainty. Changing federal, state and local laws, as well as changing regulatory enforcement policies and priorities, may negatively impact the management of our business
2. 40We depend on the programs of the Agencies. Discontinuation, or changes in the roles or practices, of these entities, without comparable private sector substitutes, could materially and negatively affect our results of operations and ability to compete
3. 41Changes in or failure to satisfy Agency or Ginnie Mae guidelines or requirements could adversely affect our businessNew
4. 42We are subject to regulatory investigations and inquiries and may incur fines, penalties and increased costs and that could damage our reputation
5. 43The CFPB monitors the loan origination and servicing sectors, and its rules and activities increase our regulatory compliance burden and associated costs58% rewritten
6. 44Unlike our competitors that are depository institutions, we are subject to state licensing and operational requirements that result in substantial compliance costs75% rewritten
7. 45charted depository institutions, and as illustrated in the mortgage loan crisis which resulted in warehouse lines lenders refusing to honor lines of credit for nonbanks without a deposit baseNew
8. 46We may be subject to liability for potential violations of predatory lending laws, which could adversely impact our results of operations, financial condition and business
9. 47Failure to comply with fair lending laws and regulations could lead to a wide variety of costs and penalties
10. 48The DOJ and federal and state regulator enforcement of the Servicemembers Civil Relief Act (“SCRA”) and similar state laws may result in significant compliance costs and risk
11. 49Privacy and information security are an increasing focus of regulators at the federal and state levels
12. 50We are subject to laws, regulations, and guidelines regarding our use of telemarketing; failure to comply with these laws, rules, and guidelines, including the Telephone Consumer Protection Act (“TCPA”) and the Telemarketing Sales Rule (“TSR”), could increase our operating costs and adversely impact our business51% rewritten

Risks Related to Our Indebtedness

1. 51We rely on warehouse lines of credit and other sources of capital and liquidity to meet the financing requirements of our business28% rewritten
2. 52Our indebtedness and other financial obligations may limit our financial and operating activities and our ability to incur additional debt to fund future needs

Risks Related to Our Organizational Structure

1. 53We are a holding company with no operations of our own and, as such, we depend on our subsidiaries for cash to fund all of our operations and expenses, including future dividend payments, if any
2. 54The Continuing LLC Members including Mr. Hsieh and his affiliates (the “Hsieh Stockholders”) hold their ownership interests in our business through LD Holdings and their interests may conflict with yours in the future54% rewritten
3. 55Certain of our stockholders will have the right to engage or invest in the same or similar businesses as us
4. 56In certain circumstances, including certain changes of control of the Company, payments by us under the tax receivable agreement may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement
5. 57In certain circumstances, LD Holdings will be required to make distributions to us and the other holders of Holdco Units and the distributions that LD Holdings will be required to make may be substantial

Risks Related to Ownership of Our Class A Common Stock and Public Company Status

1. 58The market price of our Class A Common Stock may be volatile, which could cause the value of your investment to decline
2. 59A material weakness of internal controls over financial reporting could have a material adverse effect on our business and stock price
3. 60Future offerings of debt or equity securities by us may adversely affect the market price of our Class A Common Stock
4. 61Future sales, or the perception of future sales, of shares of our Class A Common Stock by existing stockholders or other dilution of our equity could cause the market price of our Class A Common Stock to decline48% rewritten
5. 62We cannot assure that we will pay any dividends on our Class A Common Stock
6. 63An active, liquid trading market for our Class A Common Stock may not be sustained
7. 64If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us or our business, the price of our Class A Common Stock and trading volume could decline
8. 65The provision of our amended and restated certificate of incorporation requiring exclusive forum in certain courts in the State of Delaware or the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers
9. 66Certain provisions of our amended and restated certificate of incorporation and our amended and restated bylaws could hinder, delay or prevent an unsolicited acquisition proposal or potential change of control that the Company’s stockholders might consider favorable