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| Statement |
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| As mentioned during our previous earnings call, this risk-off approach includes exploration of opportunities that may complement or supplement the services we offer today and contribute to increasing top line revenue and improving operating results |
| These accomplishments continue the theme of eliminating complexity and reducing costs from the company's corporate and operating verticals, thus permitting the company to explore complementary strategic ventures, adjacent revenue opportunities and attendant capital raise and corporate finance activities |
| The company remains in good standing with its warehouse lenders, whole loan takeout investors, vendors and subservicing counterparties |
| The broker channel will support an expanded suite of loan products and programs, offering enhanced flexibility with respect to credit, pricing, best-in-class technology and product development and maintenance We've partnered with established lenders to ensure our consumers continue to receive an optimized experience |
| The proactive initiatives that the company undertook in 2022 and early '23 have aligned the stakeholders of the company's capital stack and reduced its overall operating expense load |
| This pivot to a broker model will also allow the call center to continue to leverage the brand recognition associated with the CashCall Mortgage name in the direct-to-consumer space |
| In light of the challenging market ahead, the company remains steadfast in its commitment to managing risk within its core business |
| The shift to a broker model allows the company to originate a variety of products that serve its national consumer base at a reduced cost per loan due to significant expense abatement relative to specialized staffing, operations, technology and business promotion |
| The relocation was made possible by the company's ability to maintain a hybrid and remote workforce both during and following the COVID crisis, thereby minimizing physical office space needs |
| We do expect NonQM originations to continue to be the dominant product in the mortgage broker channel |
| Good afternoon, everyone |
| The company honored its pipeline and related obligations and commitments to its business to consumer and business-to-business partners as we have done historically |
| Thank you |
| The new lease terms -- the lease terms of our new building run through July 31, 2025, with a total expense of approximately $800,000 over the term of the lease as compared to $8.8 million that remained under the prior lease, a total savings of nearly $5 million |
| Statement |
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| As mentioned in our business update last week, the company's third-party origination channel, in line with industry cohorts, experienced significant volume and margin deterioration in 2022 |
| Our results as well as many of our peers' performance reflects the intense pressure on mortgage originations due to the dramatic collapse of the mortgage refinance market and the weakening mortgage purchase market, which has suffered from a lack of housing inventory and significant increase in mortgage interest rates resulting in affordability issues |
| From an expense management perspective, we continue to adjust our marketing spend to calibrate to a reduced loan officer head count as well as the deterioration of lead quality of borrowers looking to transact and the shrinking addressable market at these rate levels |
| Our originations and margins have suffered as a result, with originations declining to $21.5 million in the fourth quarter as compared to originations of $62 million in the third quarter of 2022 |
| Events of the recent week evidenced an accelerating deterioration of market conditions and operating environment |
| The residential mortgage market has been challenged by adverse macroeconomic conditions ushered in by rate and credit dislocation that commenced in the fourth quarter of 2021 |
| The financial results for the quarter and year reflect significant market pressure as a result of increasing interest rates, inflation, credit and liquidity risk |
| Our production volume in the fourth quarter, as with the third quarter, is reflective of the current challenges in the mortgage market, impacting mortgage lenders both on the credit and rate side of the business, resulting in a reduction in purchased loans due to a decrease in home purchase affordability and also in refinance volume due to the number of loans that had previously refinanced during the preceding historically low interest rate environment |
| Our risk-off posture in conjunction with the rate shock and increased fallout resulted in continued origination and pipeline reductions, which were the primary drivers of lower margins during the year |
| Non-transitory inflation and Fed tightening, coupled with widening credit spreads, has reduced the addressable market for our product offerings |
| During 2022, total originations decreased to $639 million with margins of 91 basis points as compared to $2.9 billion in 2021 with margins of 225 basis points |
| Despite competitor consolidation and closures, excess industry origination capacity remains as evidenced by participants pricing to decrease net margins in pursuit of market share |
| During the fourth quarter, our total originations decreased to $22 million as compared to $62 million in the third quarter |
| The company has no visibility as to when these dislocations will abate and return the industry to normalized volumes and margins |
| As we have discussed on previous calls this year, beginning in the first quarter, we were deliberate and decisively more conservative in our lending approach, adopting a risk-off defensive posture, sacrificing results for liquidity and stability, which we felt was the appropriate path heading into steep rate headwinds |
| These conditions have persisted into the first quarter of 2023 |
| NonQM originations decreased to $19 million as compared to $50 million for the third quarter |
| For the fourth quarter, the company reported a GAAP loss of $11.8 million as compared to a loss of $13 million for the third quarter and a gain of $3.6 million in the fourth quarter of 2021 |
| Our business promotion expense decreased to $261,000 in the fourth quarter, a 52% decrease from the prior quarter and an 88% or $2 million decrease from the fourth quarter of last year |
| Our fourth quarter adjusted loss was $11 million as compared to an adjusted loss of $12.6 million in the third quarter and a loss of $5 million in the fourth quarter of 2021 |
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