loanDepot Reviews – Borrowing for the Web Age: Some Background
Despite their prominence in recent decades, non-bank mortgage and personal loan companies have at times been viewed as the last resort for borrowers with weaker credit — often to be preyed upon.
Companies like loanDepot are out to change that perception of the industry by offering much more transparency than their predecessors, as well as more competitive interest rates when compared to their bank competitors, based on our own loanDepot and loandepot.com reviews.
LoanDepot vs. loanDepot vs Loan Depot
The official name of the company is “loanDepot”. However, the firm is frequently referred to as “LoanDepot” and also as “Loan Depot.”
In this article, we’ll refer to the company by its official name – loanDepot.
New Generation of Non-Bank Lenders (loanDepot Reviews)
Driven by this new generation of non-bank lenders and by the recent shifts in the regulatory environment for consumer lending, the non-bank lending segment continues to gain favor.
A November 2015 loanDepot review in The Wall Street Journal written by Demos and Rudegeair noted that, “loanDepot…is among the largest of a group of nontraditional lenders that now account for more than four out of every 10 mortgage dollars borrowed.” According to the loanDepot.com website, the company is the second largest non-bank lender in the U.S.
loanDepot also notes on their website that “loanDepot, LLC was founded in 2010 on the principles of fair and ethical lending, with a customer-centric strategy to deliver mortgage and non-mortgage loans with great service and competitive rates.”
loanDepot currently operates in all 50 U.S. states via the web. In addition to the loanDepot parent company and the loanDepot.com website, the company also has “150+ retail branch locations under the imortgage and Mortgage Master brands.”
loanDepot’s marketing and internal press maintains that the company is focused on utilizing existing and emerging technologies to enhance efficiency and customer service. Our reviews on loanDepot will delve into the validity of those and other claims.
Image source: loanDepot
Is loanDepot Legit?
This is both an important question and one that is fairly easy to answer. Yes, loanDepot is a reputable company by a standard that can be reasonably measured.
There are several other reviews on loanDepot that suggest the same. To provide one example, the Better Business Bureau (BBB) in its loanDepot reviews rates the company as “A+” on the BBB’s rating scale. The loanDepot.com reviews from the BBB looked at key service metrics including volume of and responsiveness to customer complaints, length of time in business, law suits, and regulatory infractions.
The non-bank industry segment, led by major players including loanDepot, is gaining both respect and customers. According to a July 2015 Bloomberg article by Matt Scully, “Traditional lenders are fighting back after more than 75 startups built websites matching investors…with borrowers ranging from consumers to small businesses looking for loans to pay down existing debt or finance a big purchase.
Non-bank lending is growing so fast that Goldman Sachs Group Inc. said in a March report it eventually could rob banks of at least $11 billion in profits annually over the next several years.”
Frequent Questions: Is loanDepot a Scam?
During our loanDepot reviews, we noticed that a lot of consumers were asking the questions: “is loanDepot a scam?”
Based on our loanDepot reviews, our answer to the “is loanDepot a scam?” question is no, it is not.
Keep in mind, however, that even reputable businesses have their bad days. Always do your own homework when selecting a lender or any service provider.
Generally, reviews on loanDepot are fairly positive with regard to customer service and complaints. According to the BBB’s loanDepot.com reviews, the company received 299 customer complaints over a three-year period (specifically through the Better Business Bureau). All loanDepot complaints through the BBB were addressed/resolved in a timely manner according to the BBB’s loanDepot reviews.
Below is a snapshot of the complaints section from the Better Business Bureau’s loanDepot review:
Pros and Cons
In our loanDepot review, we identified four comparative strengths as well as four items to think about when considering using loanDepot.
- Modern technology platform – Our loanDepot reviews show that their web-based platform is easy to use and provides helpful information and guidance through the application process. Quotes are available with just some basic information (you don’t need to give any personal information). Modern back-end technology keeps applications and underwriting moving at speeds at or above industry norms.
- Forward-looking approach to the market – loanDepot is taking a modern approach to the non-bank lending segment in terms of transparency and its emphasis on web-based and other emerging technologies.
- Customer-service centric – This is certainly not a new concept; but it is nice to know that it is coming back into vogue.
- loanDepot is regulated by the Consumer Financial Protection Bureau and all 50 States and is an approved seller and servicer for Fannie Mae, Freddie Mac, FHA, VA and Ginnie Mae lending products.
- The best rates for customers with the best credit profile are still with the traditional financial institutions. The bank and the large mortgage companies will continue to dominate the higher-wealth segments, for the time being at least.
- Tech- and web-focused – While the loanDepot parent company does have a small sales-office operation of 150 + offices, this is not significant given their 50-state footprint on the web. For some consumers, working solely on the web without a local sales office may be off-putting.
- Our loanDepot review of marketing claims indicates that product and service doesn’t always live up to the hype. Service, however, is most often comparable with other good-quality lenders in the market.
- In October 2015, loanDepot filed an Initial Public Offering (IPO) but withdrew the following month due to adverse market conditions. Chairman and CEO, Anthony Hsieh said in a statement: “loanDepot has many options as a successful profit-generating company, and the pursuit of an IPO was one option to accelerate our plans for growth that were already in progress. Unlike other IPO candidates, we’re already moving forward with our plans because of our capital reserves and the investor confidence we’ve earned beyond the IPO market. And while an IPO continues to be an option, perhaps one day in the future, it’s not a necessity.” If the company decides to go public in the future major corporate changes can often cause service disruptions and customer issues for an extended period of time.
loanDepot Mortgage Reviews
Our loanDepot reviews included an assessment of the company’s home-purchase and home-refinance mortgage products. What we found was that the mortgage products available through loanDepot were competitive or comparable with banks for many customers.
Service and customer service quality is at or even above par with many major bank competitors. The loanDepot is headquartered in Foothill Ranch, CA, and boasts three operations and support centers in Scottsdale, AZ, Franklin, TN, and Plano, TX to help maintain speed, efficiency and deliver customer care.
In general, our loanDepot and loanDepot.com reviews indicated that the company has competitive interest rates and terms for many potential borrowers. Note that each borrower is going to be evaluated separately and approval results and terms are going to vary. That being said, our loanDepot reviews suggest that those in the “Fair” and “Good” credit score ranges will benefit more from loanDepot’s rates than will those in the “Excellent” credit range. Always compare prices and terms, though—and try to make apples-to-apples comparisons on pricing whenever possible.
As an example, we took a recent sample of pricing for a 30-year fixed-rate refinance mortgage at loanDepot.com and at Wells Fargo Bank. The quotes were taken on the same day and at the same time to ensure they were comparable.
We asked for a quote on a $100,000 loan, to refinance a home worth $200,000 and reported a FICO credit score of 740.
Here are the results:
- For the 740 credit score, the loan at Wells Fargo was quoted at an interest rate of 3.9% to 4.0%, depending on the geographic location of the loan. This compares to the loanDepot interest rate quote of 4.125% (not dependent on geographic location).
- Payments on the Wells Fargo loan quote for the 360-month term were $470 to $480 per month with no points. The comparable loanDepot loan had monthly payments of $485 per month, with negative points (which can potentially lower your loan closing costs but raises your annual percentage rate slightly).
Overall, these two loans are both potentially good options depending on your payment goals and personal preference. As credit scores trend lower, loanDepot loans may become more attractive compared to mortgages from large banks. Also, some borrowers will not qualify at a large bank like Wells Fargo, but may be able to qualify at loanDepot — albeit at a comparably higher interest rate than the ones shown above.
Here are some snapshots of the pricing terms from our loanDepot review of rates for the $100,000 refinance example above:
Image source: loanDepot
Other Loan Products
Similar to their mortgages, our loanDepot review indicated that rates for home equity loans are fairly-priced with the market, and for many borrowers may be a better alternative to the local bank (or the only option, depending on their credit profile).
In 2015, loanDepot also began providing personal, unsecured loans for debt consolidation and other purposes. Pricing is appropriate, but as with all unsecured debt, we encourage consumers to look first to other options, including secured debt like home equity loans, before utilizing personal loans and credit cards for long-term-debt.
All personal unsecured loans issued by loanDepot are originated by loanDepot and funded through Cross River Bank, an FDIC-insured commercial bank headquartered in New Jersey. Personal loan borrowers pay an origination fee of 1% to 5% of the loan amount, depending on the borrower’s credit and other factors. Interest rates can vary widely based on the borrower’s credit profile.
Conclusion – loanDepot Review | Pros, Cons, Complaints & Mortgage Review
In all, our loanDepot and loanDepot.com reviews suggest that there are new, good-quality alternatives to traditional banks in the consumer lending space. Both banks and non-banks have their own advantages. By leveraging technology in new ways and taking a more modern approach to financial services, however, players like loanDepot have the potential to drive growth in the non-bank lending segment and its consumer base over the coming decades.
The most important fact for consumers is that there are new options as well as greater transparency in the non-bank lending segment. This provides not only an additional source of financial resources for borrowers but also a level of confidence that the emerging businesses in the non-bank segment are following good business practices and treating customers fairly.
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