LoanDepot reports net loss as cyber-related settlement hit Q2 financial results

Dive Brief:

• LoanDepot reported a net loss of $65.9 million during the second quarter, as its financial results were weighed down by the continuing impacts of a January ransomware attack. 
• The California-based lending firm took about $37 million in non-operational charges, including a $27 million charge in connection with the attack, used mainly to settle a class action lawsuit. 
• LoanDepot said for the first half of 2024 it incurred more than $41 million in expenses related to the attack and thus far has received $15 million in insurance reimbursements, according to a 10-Q report filed Thursday with the Securities and Exchange Commission. The company does not yet have any specifics on timing or amounts of any future insurance reimbursements.

Dive Insight:

The loanDepot attack was one of several high-profile cyberattacks related to the mortgage servicing or lending industries starting in October 2023. 

The attacks had significant impacts on consumers around the country as many home buyers had to postpone their transactions, while other deals had to be completed manually. 

Mr. Cooper Group was hit by a cyberattack in October, which led to data theft impacting 14.7 million people. Fidelity National Financial suffered an attack in November, impacting about 1.3 million customers. 

First American Financial, a title insurance firm, was later hit by a cyberattack in December where hackers stole and encrypted data belonging to about 44,000 people. 

The attack against loanDepot impacted about 16.9 million people, the company said in the 10-Q filing. 

“We believe the settlement will remove significant uncertainty for our stakeholders going forward,” David Hayes, CFO of loanDepot, said in the earnings announcement. 

The lawsuit, filed in U.S. District Court for the Central District of California was filed on behalf of a New Jersey-based customer, who previously applied for a personal loan.

The breach impacted various personal data, including Social Security numbers, account numbers, names, addresses and other data, according to a February filing by the company with the Maine Attorney General. 

The company is negotiating the terms of the settlement deal, which is expected to be submitted for court approval during the third quarter. 

The net loss was up 32% compared with a net loss of $49.8 million in the year-ago quarter. The company reported total revenue of $265 million during the quarter, down just over 2% compared with total revenue of $271.8 million in Q2 last year.