As filed with the Securities and Exchange Commission on October 8, 2015

No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

loanDepot, Inc.

(Exact name of registrant as specified in its charter)

Delaware

6162

38-3977115

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

26642 Towne Centre Drive

Foothill Ranch, California 92610

(888) 337-6888

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Peter A. L. Macdonald

Executive Vice President, General Counsel

26642 Towne Centre Drive

Foothill Ranch, California 92610

(888) 337-6888

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Joshua N. Korff

Michael Kim

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

(212) 446-4800

John J. Hentrich

David H. Sands

Sheppard, Mullin, Richter & Hampton LLP

12275 El Camino Real, Suite 200

San Diego, California 92130

(858) 720-8900

Michael Kaplan

Sarah K. Solum

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

(212) 450-4000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price⁽¹⁾⁽²⁾	Amount of Registration Fee
Class A Common Stock, $0.001 par value per share	$100,000,000	$10,070

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)	Includes additional shares of Class A common stock that the underwriters have the option to purchase.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell and does not seek an offer to buy these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale thereof is not permitted.

PRELIMINARY PROSPECTUS

Subject to Completion, dated October 8, 2015

Shares

LOGO

loanDepot, Inc.

Class A Common Stock

This is an initial public offering of shares of Class A common stock of loanDepot, Inc. We are offering shares of our Class A common stock. The selling stockholders identified in this prospectus are offering an additional shares of Class A common stock. We will not receive any of the proceeds from the sale of shares being sold by the selling stockholders. As described herein, we will use a portion of the net proceeds from our sale of our Class A common stock to purchase Holdco Units (as defined herein), together with an equal number of shares of our Class B common stock, from certain holders of Holdco Units named herein (the ‘‘Exchanging Members’’), including certain of our officers and directors.

Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price per share of the Class A common stock is expected to be between $ and $ . We intend to apply to list our Class A common stock on the New York Stock Exchange (the “NYSE”) under the symbol “LDI”.

We have two authorized classes of common stock: Class A and Class B. Holders of our Class A common stock and holders of our Class B common stock are each entitled to one vote per share of the applicable class of common stock and all such holders will vote together as a single class. However, holders of our Class B common stock do not have any right to receive dividends or distributions upon our liquidation or winding up. Each share of Class B common stock is, from time to time, exchangeable, when paired together with one Holdco Unit of loanDepot Holdings, LLC (“LD Holdings”), our direct subsidiary, for one share of Class A common stock, subject to customary adjustment for stock splits, stock dividends and reclassifications.

We will be a holding company and our principal asset will be our Holdco Units in LD Holdings. Immediately following this offering, the holders of our Class A common stock will collectively own 100% of the economic interests in loanDepot, Inc., which will own % of the economic interests in LD Holdings, and have % of the voting power of loanDepot, Inc. The holders of our Class B common stock will collectively have the remaining % of the voting power of loanDepot, Inc. and own % of the economic interests in LD Holdings. Upon completion of this offering, we will be a “controlled company” under the NYSE corporate governance standards.

We are an “emerging growth company,” as that term is defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements.

Investing in our Class A common stock involves risks. See “Risk Factors” beginning on page 23.

Neither the Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share		Total
Initial public offering price		$		$
Underwriting discounts and commissions⁽¹⁾		$		$
Proceeds, before expenses, to us⁽²⁾		$		$
Proceeds, before expenses, to the selling stockholders		$		$

(1)	See “Underwriting” for a full description of compensation payable to the underwriters in connection with this offering.

(2)

As described herein, we will use a portion of the net proceeds from our sale of Class A common stock to purchase Holdco Units and an equal number of shares of our Class B common stock from the Exchanging Members. The purchase price for each Holdco Unit surrendered for purchase by an Exchanging Member along with a share of Class B common stock will be equal to the price per share of our Class A common stock in this offering less underwriting discounts and commissions.

The underwriters have an option to purchase up to additional shares from us and the selling stockholders at the initial public offering price, less the underwriting discount. The underwriters can exercise this option at any time and from time to time within 30 days from the date of this prospectus.

If the underwriters exercise in full their option to purchase additional shares, we intend to use a portion of the net proceeds from our sale of such additional shares to purchase an additional aggregate of Holdco Units and shares of our Class B common stock from certain of the Exchanging Members, and the remaining shares will be sold by the selling stockholders upon exercise of such option. We will not retain any proceeds from the sale of shares of our Class A common stock by the selling stockholders. See ‘‘Use of Proceeds.’’

The underwriters expect to deliver the shares of Class A common stock against payment therefor in New York, New York on or about , 2015.

Joint Book-Running Managers


Morgan Stanley	Goldman, Sachs & Co.	Wells Fargo Securities	Barclays
UBS Investment Bank

Co-Manager

BMO Capital Markets

The date of this prospectus is , 2015

TABLE OF CONTENTS


	Page
PROSPECTUS SUMMARY		1
RISK FACTORS		23
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		66
ORGANIZATIONAL STRUCTURE		68
USE OF PROCEEDS		76
DIVIDEND POLICY		77
CAPITALIZATION		78
DILUTION		80
SELECTED FINANCIAL DATA		82
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION		84
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		90
BUSINESS		122


	Page
MANAGEMENT		150
EXECUTIVE COMPENSATION		156
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		167
PRINCIPAL AND SELLING STOCKHOLDERS		177
DESCRIPTION OF CAPITAL STOCK		180
SHARES ELIGIBLE FOR FUTURE SALE		186
U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS		188
UNDERWRITING		192
LEGAL MATTERS		199
EXPERTS		199
CHANGE IN AUDITOR		199
WHERE YOU CAN FIND MORE INFORMATION		200
INDEX TO FINANCIAL STATEMENTS		F-1

Through and including , 2015 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in the offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to any unsold allotment or subscription.

Neither we, the selling stockholders nor the underwriters have authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. Neither we, the selling stockholders nor the underwriters take any responsibility for, nor can we or they provide any assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date. Our business, prospects, financial condition and results of operations may have changed since that date.

MARKET, INDUSTRY AND OTHER DATA

This prospectus contains statistical data and estimates, including those relating to market size, competitive position and growth rates of the markets in which we participate, that we obtained from our own internal estimates and research, as well as from industry and general publications and research, surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified market and industry data from third-party sources. While we believe our internal company research is reliable and the definitions of our market and industry are appropriate, neither this research nor these definitions have been verified by any independent source.

TRADEMARKS, SERVICE MARKS AND TRADE NAMES

We own the trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. This prospectus may also contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this prospectus are listed without the TM, SM, © and ® symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors, if any, to these trademarks, service marks, trade names and copyrights.

BASIS OF PRESENTATION

In this prospectus, unless otherwise noted or indicated by the context, references to terms such as ‘‘originate,’’ “facilitate,” ‘‘fund,’’ ‘‘provide,’’ ‘‘extend’’ or ‘‘finance’’ are to the generation of all of our loans, regardless of form and whether originated directly by us or facilitated from a third party.

The following industry terms are used in this prospectus unless otherwise noted or indicated by the context:

“CFPB” refers to the Consumer Financial Protection Bureau;

“ECOA” refers to Equal Credit Opportunity Act;

“Fannie Mae” refers to the Federal National Mortgage Association;

“FDIC” refers to Federal Deposit Insurance Corporation;

“Federal Reserve Board” refers to the Board of Governors of the Federal Reserve System;

“FHA” refers to the Federal Housing Administration;

“FHFA” refers to the Federal Housing Finance Agency;

“Freddie Mac” refers to the Federal Home Loan Mortgage Corporation;

“Ginnie Mae” refers to the Government National Mortgage Association;

“GSEs” refers to Government Sponsored Enterprises, namely Fannie Mae and Freddie Mac;

“HAMP” refers to the Home Affordable Modification Program;

“HARP” refers to the Home Affordable Refinance Program;

“HOEPA” refers to the Home Ownership and Equity Protection Act of 1994;

“HUD” refers to the Department of Housing and Urban Development;

“IRLCs” refers to interest rate lock commitments;

“LHFS” refers to loans held for sale;

“LTV” refers to loan-to-value;

“MBS” refers to mortgage-backed securities;

“OIG” refers to the U.S. Department of Housing and Urban Development’s Office of the Inspector General;

“QRM” refers to a qualified residential mortgage;

“RESPA” refers to the Real Estate Settlement Procedures Act;

“TILA” refers to the Truth in Lending Act;

“UPB” refers to unpaid principal balance;

“VA” refers to the Department of Veterans Affairs; and

“Warehouse Lines” refer to the warehouse lines of credit that we use to finance most of our loan originations on a short-term basis.

Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

All references to years in this prospectus, unless otherwise noted or indicated by the context, refer to our fiscal years, which end on December 31.

iii

PROSPECTUS SUMMARY

This summary highlights material information about our business and the offering of our Class A common stock. This is a summary of material information contained elsewhere in this prospectus and is not complete and does not contain all of the information that you should consider before deciding to invest in our Class A common stock. For a more complete understanding of our business and the offering, you should read this entire prospectus, including the section entitled “Risk Factors,” as well as the consolidated financial statements and the related notes thereto, before making an investment decision.

In this prospectus, unless otherwise noted or indicated by the context, the terms “loanDepot,” the “Company,” “we,” “our,” and “us” refer (1) prior to the consummation of the Offering Transactions described under “Organizational Structure—Offering Transactions,” to loanDepot.com, LLC (“LDLLC”) and its consolidated subsidiaries, and (2) after the Offering Transactions described under “Organizational Structure—Offering Transactions,” to loanDepot, Inc., the issuer of the Class A common stock offered hereby, and its consolidated subsidiaries, including LDLLC. We refer to the members of LDLLC (excluding LD Investment Holdings, Inc. and the holders of LDLLC’s Class I common units) prior to the Offering Transactions, collectively as the “Continuing LLC Members.”

OUR MISSION

To become America’s Consumer Lending Platform by leveraging our technology to provide consumers with credit products best suited for their financial needs.

OUR COMPANY

loanDepot is a leading technology-enabled U.S. consumer lending platform. We launched our business in 2010 to provide credit solutions to consumers who were not satisfied with the service offered by banks and other traditional market participants. We are the nation’s second largest direct-to-consumer non-bank originator by annual funded loan amount and have facilitated over $50 billion in total funding since inception. We currently offer a broad suite of consumer credit products to our customers, ranging from home loans to unsecured personal loans. Our hybrid originate-to-sell and marketplace business model allows us to generate significant loan volume with less capital than traditional market participants. For the twelve months ended June 30, 2015, we originated $22.1 billion in loans, representing 125% year-over-year growth. Moreover, we have generated this substantial growth while maintaining profitability since 2012.

The consumer lending market in the United States is massive, with more than $11.8 trillion in household debt outstanding as of June 30, 2015. We believe that banks and other traditional market participants continue to be ineffective in adequately addressing consumer needs due to increasing capital requirements, regulatory constraints, legacy systems and antiquated processes. In addition, we expect our addressable market to expand, as consumer debt in our target markets was $1.6 trillion lower at June 30, 2015 than at December 31, 2008. This represents a compelling opportunity for us to disrupt the market and gain share by both displacing incumbent participants and addressing unmet demand.

Given this significant opportunity and our management team’s experience in providing home loan products, we identified home lending as our most effective entry into the broader U.S. consumer lending market because: (i) it has the largest addressable market with $8.6 trillion outstanding as of June 30, 2015; (ii) its complexity and licensing requirements present significant barriers to entry, which our management team has had significant experience and success in addressing; (iii) consumer dissatisfaction with banks and traditional lenders provides

an opportunity for significant disruption; and (iv) home loan products provide a foundation for direct customer relationships and powerful cross-selling opportunities for other loan products, thereby increasing customer lifetime value. Building on these direct customer relationships and the success of our existing home loan products, we continue to broaden our product suite, which now includes home equity and unsecured personal loans. By providing a robust suite of secured and unsecured loan products and leveraging technology to provide a better and more efficient customer experience, we strive to become America’s Consumer Lending Platform.

We have built our operations to be significantly automated, including the application process, product identification and selection, credit decisioning and scoring, loan funding, servicing, regulatory compliance and fraud detection. We further leverage our technology to address and comply with licensing and complex regulatory requirements. We believe that our platform and technology also provide an improved customer experience and enhances the lifetime value of our customer relationships through repeat and cross-sell opportunities. We believe our Net Promoter Score (“NPS”), an index that measures customer satisfaction and loyalty, of 59.5 for the six months ended June 30, 2015 and 63.5 for the year ended December 31, 2014 (for those channels we primarily operated in at the time) demonstrates our strong direct customer relationships and success in providing a better experience and compares favorably to the 2014 annual industry averages of approximately 16 for national banks and approximately 22 for regional banks.

Our multi-channel platform allows our customers to engage with us through their preferred channel, enabling a better customer experience, while matching consumers’ diverse borrowing needs with efficient and lower-cost sources of capital. This model offers three convenient options for consumers: (i) our direct retail channel comprising our online platform, loanDepot.com, and our proprietary customer contact centers; (ii) our distributed retail channel comprising nearly 1,000 members of our licensed loan officer sales force (our “sales force”) strategically located across the United States and our joint ventures; and (iii) our wholesale channel, LD Wholesale, comprising our nationwide network of independent home loan brokers. For the six months ended June 30, 2015, 89.6% of loans were originated through our retail channels and 10.4% were originated through our wholesale channel. Currently, home loans are originated through all of our distribution channels, personal loans are facilitated through both of our retail channels and home equity loans are originated through our direct retail channel. In the future, we expect that all of our consumer credit products will be available across all of our distribution channels. Our more than 1,500 employee sales force across both our direct and distributed retail channels provides a competitive advantage in our go-to-market strategy. We have invested heavily in both training our sales force and providing them with multiple state licenses to optimize workflow, which we believe creates a better consumer experience and differentiates our offerings in the marketplace.

Both our technology and multi-channel distribution platform are complemented by our scaled marketing effort. We currently invest significantly in both online and offline marketing strategies, which has resulted in loanDepot becoming a nationally recognized consumer brand. We believe our highly targeted marketing strategies are more effective than many of our competitors’ traditional marketing efforts. We currently generate over 300,000 customer leads each month and continue to grow our proprietary database, which currently exceeds 11 million consumer contacts. By effectively utilizing our lead-generation sources, proprietary lead management technology and automated product-decisioning capabilities, we are able to drive revenue while executing our customer acquisition strategy. Our extensive database and proprietary technology also proactively identify and facilitate opportunities to cross-sell and resell our products, which further reduces our average customer acquisition costs and thereby increases the lifetime value of our customer.

We have historically derived substantially all of our revenues from originating, selling and servicing home loans. However, in May 2015, we began facilitating personal loans, and, in large part due to the success of cross-selling opportunities, we have seen significant growth in units without a substantial increase in marketing expense. For the six months ended June 30, 2015, we funded over $14.3 billion in home loans and facilitated over $13.9 million in personal loans. Since the launch of our personal loan product through August 31, 2015, we have facilitated almost $90 million in personal loans. Based on our successful experience with personal loans, we believe a similar cross-selling opportunity exists with the origination of our home equity loan products, which we recently launched in September 2015.

We believe our broad suite of consumer loan products is a competitive advantage, and we expect that originating and facilitating multiple loan products will lead to:

•

improved customer experience and brand awareness;

•

savings for our customers;

•

greater customer conversion and retention;

•

enhanced data optimization, analytics and credit decisioning; and

•

lower average customer acquisition costs.

Our business has scaled rapidly and has been funded primarily by internally generated profits from operations. For the twelve months ended June 30, 2015, we originated $22.1 billion of loans, representing year-over-year growth of 125% relative to the twelve months ended June 30, 2014. Our growth has been supported by our balance-sheet light model, which utilizes diverse funding sources, our ability to provide what we believe is a superior customer experience and our strategic acquisitions. For the year ended December 31, 2014, we originated $13.2 billion of loans and recorded total net revenues of $544.5 million, Adjusted EBITDA of $50.2 million, Adjusted Net Income of $17.6 million (giving effect to net income as if we were taxed as a C-Corp) and net income of $21.7 million. For the six months ended June 30, 2015, we originated $14.3 billion of loans and recorded total net revenues of $489.6 million, Adjusted EBITDA of $101.1 million, Adjusted Net Income of $51.7 million (giving effect to net income as if we were taxed as a C-Corp) and net income of $69.2 million. See “—Summary Historical Consolidated Financial and Other Data” for a reconciliation of Adjusted EBITDA and Adjusted Net Income to net income.

INDUSTRY BACKGROUND & TRENDS

Massive Consumer Lending Market Poised for Growth as the U.S. Economy and Consumer Confidence Recover

The consumer lending market in the United States is massive with more than $11.8 trillion in household debt outstanding as of June 30, 2015. We believe this market is poised for growth as borrowings in our target markets (consumer debt excluding automotive and student loans) was $1.6 trillion lower at June 30, 2015 as compared to December 31, 2008, during the height of the 2008-2009 financial crisis (the “Financial Crisis”).

Consumer credit is an important driver of the U.S. economy. The loan products we currently provide target some of the largest components of U.S. consumer credit, including home loan debt ($8.1 trillion outstanding as of June 30, 2015), consumer credit excluding home, automotive and student loan debt ($1.0 trillion outstanding as of June 30, 2015) and home equity lines of credit ($0.5 trillion outstanding as of June 30, 2015), which collectively account for over 80% of the total consumer lending market. Following the Financial Crisis, U.S. households focused on stabilizing their financial positions by lowering their household debt, which has resulted in current household debt service ratios of 9.9%, the lowest level since 1980. Similarly, consumer confidence, which has historically served as a strong indicator of improving economic conditions and a precursor to increased desire to access credit, has improved steadily since 2009. This increased confidence along with higher employment levels and promising wage growth has led to increased consumer spending, which has recently driven increased demand for credit, particularly in the consumer credit products we provide.

equity loans, which we expect may offset, at least in part, any decline in rate and term refinancings in a rising interest rate environment. We also believe that rising interest rates will not have a material impact on market opportunities for personal loans because those are fixed rate products; however, if consumer debt in the aggregate began to decrease due to rising interest rates, we may see a reduction in personal loan volume because such loans are primarily used for consolidating debt.

Consumers Have Not Been Adequately Served

We believe the traditional banking and consumer lending system is burdened by high fixed costs and antiquated processes, in part due to extensive legacy infrastructure and labor-intensive processes. Post-Financial Crisis, this burden has been compounded by an increasingly complex regulatory environment. During the Financial Crisis, banks and other traditional market participants were forced to tighten credit and, in some cases, exit certain markets and lending products. As a result, despite continued strong demand for credit, many consumers have had fewer borrowing choices and declining access to credit product, creating an opportunity for non-bank lending platforms like us to fill the void left by traditional lenders.

The Home Loan Market is Undergoing a Substantial Transformation

The home loan market is the largest component of U.S. consumer borrowing and requires originators and servicers to have various licenses as well as substantial training and expertise. Following the Financial Crisis, the GSEs, government agencies (collectively with the GSEs, the “Agencies” and each, an “Agency”) and federal and state regulators have imposed substantial compliance and capital requirements on banks and other market participants which has raised origination costs and reduced economic returns. We believe that increasing regulation and stricter lending policies provide a compelling opportunity for a non-bank consumer lender of scale like us to take market share. Evidencing this, non-bank lenders have grown market share from 10% of the consumer lending market in 2009 to 42% in 2014. Additionally, as more consumers are becoming increasingly comfortable obtaining credit products through technology-driven platforms, there has been a significant increase in the share of the home loan market originated through the direct/indirect channels, including internet-based platforms.

Impact of Emerging Disruptive Business Models

Online marketplaces and other disruptive business models have emerged to connect buyers and sellers across many industries to increase consumer choice and improve customer satisfaction. Specifically in the financial sector, many of these platforms have focused on consumer lending. The majority of these platforms have sought to increase availability of unsecured personal loans to consumers via online marketplaces relative to alternatives such as credit cards, while still offering attractive yields to support investor return requirements. As a result, the consumer experience has improved, costs have been lowered and consumers have become increasingly comfortable using online platforms and technology to fulfill their financial needs.

Reemergence of Historically Important Lending Products

Since December 31, 2011, the home equity of U.S. consumers has increased by approximately $5.3 trillion as of March 31, 2015. Despite this, home equity lines of credit, which provide consumers with significant capacity to borrow against their home’s equity, generally at more attractive terms than those available with credit cards and unsecured loans, have declined 29% since December 31, 2008, to approximately $500 billion, as of June 30, 2015. As the market for home equity loans recovers, we believe consumers will utilize their increased home equity to more cost-efficiently meet their borrowing needs.

Additionally, in 2014, Agency home loans represented 96% of all home loans originated, well above the 2006 level of 44%. We believe that the current record level of U.S. government and Agency involvement in the home loan market will abate as private investors seek to invest in the improving housing market, allowing borrowers greater choice and access to non-Agency products.

While many new entrants have been able to grow quickly in the personal loan space due to the lower barriers to entry, originating home loans, home equity loans and other home loan products requires licensing, training and significant operational and regulatory expertise, which we believe these competitors generally lack.

OUR COMPETITIVE STRENGTHS

Full-Service Consumer Lending Platform of Scale with National Brand Awareness

We are currently the second largest direct-to-consumer non-bank originator, and we have underwritten and facilitated over $50 billion in total loan funding since our launch in 2010. The regulated nature and complexity of the home loan market create a significant barrier to entry, as competitors must have substantial scale and expertise in order to effectively compete. We have invested in our infrastructure, licensed personnel, national brand and technology platform as well as in direct customer relationships to position ourselves for future growth. Given our expertise in complex home loan products and our extensive consumer database, we believe that we are well positioned to continue our expansion into additional loan products. Together, we believe our brand, strong online and offline presence, full service capabilities and breadth of operations provide us significant advantages over competitors which we believe are unable to achieve the same benefits and cost advantages of scale.

Powerful, Efficient and Scalable Technology

Our proprietary technology systems, which were built de novo to address the post-Financial Crisis consumer lending environment, provide us substantial competitive advantages. Our technology significantly automates historically labor-intensive processes including the application process, credit decisioning and scoring, product identification and selection, loan funding, servicing, regulatory compliance and fraud detection, enabling us to be more efficient. Specifically, our technology allows us to instantly determine the optimal products to offer our potential customers, improving lead conversion and ultimately lowering average customer acquisition costs. Our systems continuously update our comprehensive database of financial and contact information for millions of consumers, which we monitor and analyze to identify attractive future lending opportunities.

Superior Customer Experience

We believe that our robust distribution and service model allows us to provide a superior customer experience throughout the lending life cycle. We employ a multi-channel model, consisting of our online platform, a sales force of more than 1,500 licensed employees located across the United States, strong relationships with affinity partners and our network of independent home loan brokers. We believe this model provides our customers with both optionality and convenience, as customers may pursue a loan through the channel of their choice. Further, our platform improves speed to close and increases funding certainty for our customers. We believe our customer-centric approach has been validated by our NPS score of 59.5 for the six months ended June 30, 2015. We expect that this continuous high level of service and resulting customer satisfaction positions us well to be successful in expanding our offering of loan products and services to our customer base.

Low-Cost Customer Acquisition Capabilities

Through our multi-channel origination platform, we drive acquisition costs lower through process automation and superior product decisioning technology. Our technology allows us to leverage our over

300,000 leads per month by providing customer-level intelligence to our platform prior to customer contact, which allows us to better understand a borrower’s financial profile and borrowing needs. Ultimately, we believe this drives superior lead conversion, a better customer service experience, improved retention and recapture rates and higher customer lifetime values. Moreover, as we continue to expand our product suite, we believe that we will be able to better leverage our database and cross-sell opportunities, and thereby further increase customer conversions and further reduce our average customer acquisition costs.

Proprietary Workflow Solution Supports Flexible Business Model

Our dynamic workflow solutions make our platform more flexible than those of many of our competitors. Utilizing both technology and our workforce, we optimize our capacity utilization and workflow capabilities to efficiently process significantly higher loan volume. Through our proprietary decisioning technology and expansive database, we are able to identify consumers that would benefit from a particular lending product. Our sales force proactively contacts these customers and highlights the attractiveness of these particular products. Whereas many loan officers are licensed in only one or two states, we have built a bespoke training program that licenses our sales force in several states for multiple credit products. This allows us to quickly reallocate resources to specific geographic areas based on demand, which is important particularly in the home loan market in which a licensed loan officer is required to handle each transaction. For the six months ended June 30, 2015, approximately 40% of our aggregate home loan origination was secured by properties concentrated in the states of California, Texas and Arizona. The properties securing the aggregate outstanding UPB of our home loan servicing rights portfolio have a similar geographic concentration.

Capital-Light Model, Driven by Stable and Diverse Funding Base

Our combination of an efficient, originate-to-sell business model in home loans and home equity loans and marketplace model with stable and diverse investors in personal loans allows us to generate significant loan volume with less capital than traditional market lenders. Currently, home loan products remain on our balance sheet for 17.3 days on average, and our personal loan products are funded directly by our issuing bank partner and then sold to investors, requiring no use of our balance sheet. We have developed a stable and diverse funding base and built an experienced capital markets team which has cultivated strong relationships with private investors, the GSEs, government agencies and more than 80 financial institutions globally.

Proven and Visionary Management Team

Our senior management team brings extensive experience from numerous high-growth, technology-enabled consumer lending companies as well as extensive capital markets and financing expertise throughout multiple credit environments over the past three decades. Our founder, Chairman and CEO, Anthony Hsieh, has nearly 30 years of consumer lending experience and previously founded two successful technology-enabled consumer lending companies, one of which was the first to underwrite a consumer loan online.

OUR STRATEGY FOR GROWTH

Increase Customer Penetration and Distribution in Existing Products and Markets

We initially focused on the $8.1 trillion U.S. home loan market and have entered the $1.0 trillion unsecured consumer lending market and $0.5 trillion home equity market where together we believe there is considerable opportunity for continued growth and further market penetration. We had an estimated 2.0% market share in the home loan origination market as of June 30, 2015, as compared to approximately 1.0% as of June 30, 2014. In addition, we launched our personal loan products in the second quarter of 2015, and through August 31, 2015, we have facilitated almost $90 million in personal loans. We believe that our technology platform and growing

proprietary database of more than 11 million consumers will allow us to further distribute our existing products to both new and existing customers. As banks have retreated, as evidenced by their decline in market share from 90% to 58% in the home loan market and 45% to 40% in the non-home loan consumer finance market from 2010 to 2014, we expect that consumer lending will continue to migrate towards technology-enabled, marketplace platforms and non-bank lenders such as ourselves. We also believe that origination volumes in the home loan and personal lending markets are below historical averages and that there will be a significant opportunity to increase volume through overall industry growth as the U.S. economy improves.

Introduce Additional Products to Our Platform

Our platform has been developed to allow us to expand into new product categories with minimal incremental cost, as evidenced by the recent launches of our personal loan and home equity products. We currently offer the bookends of consumer credit, ranging from home loans to unsecured personal loans. As we continue to expand our product suite, our consumer lending capabilities will provide a broad range of credit solutions that will serve much of a typical U.S. consumer’s borrowing needs. As we launch additional products, we will be able to leverage our proprietary database and technology, as well as our sales force to efficiently identify and engage with consumers that could benefit from our expanded product suite. As a result, we expect to continue to reduce our average customer acquisition costs as we scale, improve customer conversion rates and become increasingly efficient.

Investing in Our Brand

We utilize highly targeted and sophisticated marketing strategies, which include internet, broadcast and new media, strategic alliances and a national television campaign. During 2014, we invested over $93 million on marketing, representing 17% of our total net revenue. This investment has helped us attract customers and we expect to continue to invest in our brand. As customers continue to associate our brand with high quality service and a consumer-oriented approach, as evidenced by our NPS, we believe this will allow us to further increase market penetration and support our product expansion.

Further Expand Industry Partnerships

We have established relationships with key industry partners, including leading homebuilders, real estate brokerage firms and independent home loan brokers. Once we establish a relationship with a customer through an industry partnership, we have the ability to cross-sell additional and repeat products which enhances the lifetime value of that customer. We believe there is significant opportunity to deepen our existing relationships and develop additional partnerships in a capital-light manner.

Expand Our Distribution Capabilities

We currently have a nationwide distribution network and believe there are additional opportunities to strategically deepen our presence in key markets. We plan to leverage our diversified product offerings and scalable platform to attract industry talent. We have grown organically and effectively pursued and integrated strategic acquisition opportunities, as demonstrated by our launch of LDWholesale and our acquisitions of imortgage.com, Inc. (“imortgage”) and Mortgage Master, Inc. (“Mortgage Master”).

Grow Our Investment in Technology and Training

We plan to continue to invest significantly in our technology, which is designed to provide a best-in-class customer experience, reduce average customer acquisition costs and enhance profitability. This investment will also focus on improving our proprietary algorithms to increase our cutting edge product optimization and

decisioning, as well as further enhanced credit modeling. We also plan to continue to invest considerably in our people and training as we believe that the training system we have developed in-house is a key advantage that enhances our multi-channel business model.

OUR CURRENT PRODUCTS AND SERVICES

We offer a broad suite of consumer loan products, including what we consider to be the bookends of consumer finance, serving a wide range of borrowers through a variety of market environments. In addition to our nationwide presence in the U.S. residential home loan market, we also provide customers with other consumer loan products and services. We believe that expanding into new consumer products and services is a natural extension of our core brand that will be attractive to both existing and new customers. For more detail on each of our products and services described below, see “Business—Our Current Products and Services.”

Home Loans

We offer customers a range of home loan products, secured either by a first or second lien against a residential property. We expect our extensive home loan capabilities, combined with our consumer-direct distribution model, will further grow our presence in the home loan market and increase our current rate of growth in market share. We sell the home loans that we originate to secondary market investors, including a variety of institutional investors, generally within 15-20 days of origination. Our current product suite includes: (i) conventional agency loans, (ii) FHA & VA loans and (iii) conventional prime jumbo loans.

Home Equity Loans

In the third quarter of 2015, we expanded our product suite to include home equity loans. We originate certain home equity loans that are designed to provide homeowners access to efficient capital by accessing the home equity that borrowers have accumulated in their homes. Home equity products can take a number of forms including, but not limited to, home improvement loans designed to fund renovations to an existing property, closed end second lien loans that sit behind an existing first lien loan, or home equity lines of credit that allow borrowers to draw funds against their home equity on a revolving basis. We believe many home equity loan products offer borrowers attractive costs of funds relative to other loan products besides first lien home loans. We also believe that as the home loan market continues to recover, home equity loans will become an increasingly attractive financial product for our customers.

Personal Loans

In the second quarter of 2015, we expanded our product suite to include personal loans, which are offered through a bank partnership model. This personal loan product is designed to meet customers’ credit needs, regardless of whether they own a home. The personal loan product typically offers customers access to between $5,000 and $35,000 of unsecured credit, is fully amortizing, has a term of three to five years, includes no prepayment penalties and generally provides a lower interest rate than other unsecured borrowing alternatives such as credit cards. Currently, personal loans that are approved through our program are generally extended to borrowers who have a minimum FICO score of 660 or higher, satisfactory debt-to-income ratios and many other elements that contribute to our proprietary credit decisioning and scoring. We believe that these loans are simple, fair and responsible credit products that make it easier for many consumers to lower their monthly borrowing costs and meet their financial goals.

Loan Servicing

Prior to 2012, we sold substantially all the servicing rights associated with our home loan products. In 2012, we began retaining a portion of this servicing in order to complement our home loan business. While our net

income is predominantly attributable to gain on origination and sale of loans (87% of total net revenues for the six months ended June 30, 2015), by maintaining a relationship with our customers through the servicing function, we are able to preserve and improve repeat origination and cross-sell opportunities, thereby increasing the lifetime value of our customers. Home loan servicing includes the performance of a variety of loan administration and servicing functions, including the collection and remittance of loan payments, responding to customer inquiries, and accounting for principal and interest, among other responsibilities. Home loan servicing produces strong recurring, contractual fee-based revenue with minimal credit risk. We entered the personal loan servicing market in the second quarter of 2015 when we began to facilitate personal loans. Similar to our home loan servicing, we are able to enhance the lifetime value of the customer through the servicing relationship. Personal loan servicing is comprised of account maintenance, collection and processing of payments from borrowers and remittance of payments to investors. We engage third-parties as subservicers for both home loans and personal loans, which allows us to generate revenue in an operationally efficient manner while maintaining ongoing relationships with our customers. We are currently able to service loans in all 50 states.

RISK FACTORS

An investment in our Class A common stock involves a high degree of risk. Any of the factors set forth under “Risk Factors” may limit our ability to successfully execute our business strategy. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under “Risk Factors” in deciding whether to invest in our Class A common stock. Among these important risks are the following:

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We have experienced rapid growth which may be difficult to sustain and which may place significant demands on our resources;

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We may not be able to continue to grow our loan production volume;

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Our new loan products and enhancements may not achieve market acceptance;

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Our indebtedness and other financial obligations may limit our financial and operating activities and our ability to incur additional debt to fund future needs;

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Our home loan origination revenues are highly dependent on macroeconomic and U.S. residential real estate market conditions;

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We depend on the programs of GSEs and governmental agencies (such as Fannie Mae, Freddie Mac and Ginnie Mae), and discontinuation, or changes in the roles or practices of these entities, without comparable private sector substitutes, could materially and negatively affect us;

•

We are dependent on warehouse lines of credit and other sources of capital and liquidity to meet the financing requirements of our business, and our inability to access such capital and liquidity would materially and adversely affect our business;

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Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates;

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Our servicing rights are highly volatile assets with continually changing values which could affect our financial condition and results of operations;

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We operate in a highly regulated industry, and a material or continued failure to comply with applicable laws and regulations could subject us to lawsuits or governmental actions, which could materially and adversely affect us;

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Unlike our competitors that are depository institutions, we are subject to state licensing and operational requirements that result in substantial compliance costs and our business would be adversely affected if our licenses are impaired;

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We may be held responsible for the actions of the companies with which we do business, including the subservicers who service substantially all of our servicing rights;

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We face litigation and legal proceedings that could have a material adverse effect on us; and

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We will be a “controlled company” and, as a result, qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

We qualify as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). For as long as we remain an emerging growth company, we may take advantage of certain limited exemptions from various reporting requirements that are applicable to other public companies. These provisions include:

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a requirement to have only two years of audited financial statements and only two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations disclosure;

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an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”);

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an exemption from new or revised financial accounting standards until they would apply to private companies and from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation;

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reduced disclosure about the emerging growth company’s executive compensation arrangements; and

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no requirement to seek non-binding advisory votes on executive compensation or golden parachute arrangements.

The JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to “opt out” of this provision, and as a result, we plan to comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period is irrevocable.

We have elected to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result of these elections, the information that we provide in this prospectus may be different than the information you may receive from other public companies in which you hold equity interests. In addition, it is possible that some investors will find our common stock less attractive as a result of our elections, which may result in a less active trading market for our common stock and more volatility in our stock price.

We will remain an emerging growth company until the earliest of (i) the end of the fiscal year following the fifth anniversary of the completion of this offering, (ii) the first fiscal year after our annual gross revenues exceed $1.0 billion, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) the end of any fiscal year in which the market value of our Class A common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.

ORGANIZATIONAL STRUCTURE

Following the offering, loanDepot, Inc. will be a holding company and its sole material asset will be an equity interest in LD Holdings, which will be a holding company and have no material assets other than its equity

interests in LDLLC and LD Intermediate, LLC (“Intermediate LLC”). Intermediate LLC will also be a holding company with no material assets other than its equity interest in LDLLC. Through its ability to appoint the board of managers of LD Holdings and given LD Holdings will be the managing member of LDLLC, our operating subsidiary that conducts all of our operations directly, loanDepot, Inc. will indirectly operate and control all of the business and affairs and consolidate the financial results of LD Holdings and its subsidiaries, including LDLLC.

Prior to the offering, (i) the sixth amended and restated limited liability company agreement of LDLLC (the “6th LLC Agreement”) will be further amended and restated as the seventh amended and restated limited liability company agreement of LDLLC (“7th LLC Agreement”) to, among other things, modify its capital structure by replacing the different classes of interests (other than the Class I common units of LDLLC) with a single new class of units that we refer to as “LLC Units,” (ii) LD Investment Holdings, Inc. (“Parthenon Blocker”) and the Continuing LLC Members will contribute to LD Holdings, a newly formed Delaware limited liability company, all of their respective units in LDLLC in exchange for a single class of common units to be issued by LD Holdings (“Holdco Units”) on a one-for-one basis and (iii) the holders of Class I common units of LDLLC will simultaneously contribute all of their respective Class I common units of LDLLC for substantially identical Class I common units of LD Holdings. In connection with such exchange transactions, which will result in LDLLC becoming a wholly owned subsidiary of LD Holdings, each of Parthenon Blocker, the Continuing LLC Members and the holders of Class I common units of LD Holdings will enter into the limited liability company agreement of LD Holdings (the “Holdings LLC Agreement”). After completing these exchange transactions, LD Holdings will further amend and restate the 7th LLC Agreement to simplify the equity arrangements of LDLLC as a subsidiary company and create a single class of common units of LDLLC (as amended and restated, the “8th LLC Agreement”).

In connection with the exchange transactions set forth above, we will issue to the Continuing LLC Members a number of shares of loanDepot, Inc. Class B common stock equal to the number of Holdco Units held by such Continuing LLC Members. Our Class B common stock will entitle holders thereof to one vote per share and will vote as a single class with our Class A common stock. However, the Class B common stock will not have any economic rights. Pursuant to the terms of the exchange agreement to be entered into by the Continuing LLC Members, LD Holdings and loanDepot, Inc. in connection with this offering (the “Exchange Agreement”), the Continuing LLC Members will have the right to exchange their Holdco Units and Class B common stock for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. Any Holdco Units exchanged under the exchange provisions described above will thereafter be owned by loanDepot, Inc. Any shares of Class B common stock exchanged will be cancelled.

Following the exchange transactions set forth above, in order to facilitate certain HUD regulatory compliance matters for LDLLC, LD Holdings will form Intermediate LLC, a Delaware limited liability company. LD Holdings will then contribute 0.1% of its LLC Units to Intermediate LLC, making LDLLC jointly held by LD Holdings and Intermediate LLC.

Thereafter, Parthenon Blocker and loanDepot, Inc. will engage in a series of transactions that will result in Parthenon Blocker merging with and into loanDepot, Inc., with loanDepot, Inc. remaining as the surviving corporation. As a result of such transactions, affiliates of Parthenon Capital Partners (the “Parthenon Stockholders”) will exchange all of the equity interests of Parthenon Blocker in return for shares of loanDepot, Inc. Class A common stock.

The diagram below depicts our simplified organizational structure immediately following this offering after giving effect to the use of proceeds to us therefrom and assuming no exercise by the underwriters of their option to purchase additional shares of Class A common stock. See “Organizational Structure.”

LOGO

(1)

Class I common units will remain outstanding following the Reorganization Transactions and this offering as units of LD Holdings. Holders of such units will only be entitled to the fixed payment rights set forth in the Holdings LLC Agreement representing the deferred purchase price for an acquisition and are not otherwise entitled to any distributions or residual interest in LD Holdings. See “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement.”

OUR SPONSOR

An affiliate of Parthenon Capital Partners (along with its associated investment funds, “Parthenon Capital”) acquired its interest in us in December 2009. Parthenon Capital is a private equity investment firm with approximately $2 billion of capital under management. Parthenon Capital was founded in March 1998 and focuses on investing in select middle-market companies. The firm invests in a variety of industry sectors with

particular expertise in business and financial services, healthcare, distribution/logistics and technology-enabled services. The Parthenon Stockholders will participate as selling stockholders and receive the proceeds from the sale of their shares of Class A common stock in this offering. In addition, PCP, L.P., an affiliate of Parthenon Capital, may participate in the offering as an Exchanging Member and receive a portion of our proceeds from the offering used to purchase a number of its Holdco Units and shares of Class B common stock. See “Use of Proceeds” and “Principal and Selling Stockholders.”

CORPORATE INFORMATION

loanDepot, Inc. was incorporated on July 10, 2015 and has had no business transactions or activities and had no material assets or liabilities prior to the Reorganization Transactions and this offering. Our principal executive offices are located at 26642 Towne Centre Drive, Foothill Ranch, California 92610. Our telephone number is (888) 337-6888. The address of our main website is www.loandepot.com. The information contained on or accessible through our website does not constitute a part of this prospectus.

THE OFFERING

Issuer

loanDepot, Inc.

Class A common stock offered by us

shares of Class A common stock (or shares if the underwriters’ option is exercised in full).

Class A common stock offered by the selling stockholders

shares of Class A common stock (or shares if the underwriters’ option is exercised in full).

Underwriters’ option to purchase additional shares

We and the selling stockholders have granted the underwriters a 30-day option to purchase up to an additional shares of Class A common stock at the public offering price less underwriting discounts and commissions.

Common stock to be outstanding after giving effect to this offering and the use of proceeds to us therefrom

shares of Class A common stock (or shares if the underwriters’ option is exercised in full), including shares of Class A common stock (or shares if the underwriters’ option is exercised in full) to be sold in this offering and shares of Class A common stock (or shares if the underwriters’ option is exercised in full) to be held by the Parthenon Stockholders. If all outstanding Holdco Units and Class B common stock held by the Continuing LLC Members were exchanged for newly-issued shares of Class A common stock on a one-for-one basis, shares of Class A common stock (or shares if the underwriters’ option is exercised in full) would be outstanding.

shares of Class B common stock (or shares if the underwriters’ option is exercised in full), equal to one share per Holdco Unit (other than any Holdco Units owned by loanDepot, Inc.).

Voting

One vote per share; Class A and Class B common stock vote together as a single class.

Voting power held by holders of Class A common stock after giving effect to this offering and the use of proceeds to us therefrom

% (or 100% if all outstanding Holdco Units and Class B common stock held by the Continuing LLC Members were exchanged for newly-issued shares of Class A common stock on a one-for-one basis).

Voting power held by holders of Class B common stock after giving effect to this offering and the use of proceeds to us therefrom

% (or 0% if all outstanding Holdco Units and Class B common stock held by the Continuing LLC Members were exchanged for newly-issued shares of Class A common stock on a one-for-one basis).

Use of proceeds

We estimate that the net proceeds to us from the offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million (or approximately $ million if the underwriters exercise in full their option to purchase additional shares of Class A common stock), assuming an initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus. We will not receive any proceeds from the sale of shares by the selling stockholders.

We intend to use a portion of the net proceeds to us from the offering to purchase newly issued Holdco Units from LD Holdings, as described under “Organizational Structure—Offering Transactions.” We intend to use the remaining net proceeds to us from the offering to purchase an aggregate of Holdco Units, together with an equal number of shares of Class B common stock, held by the Exchanging Members, including certain of our officers, directors and PCP, L.P., as described under “Organizational Structure—Offering Transactions.” See ‘‘Principal and Selling Stockholders’’ for the number of Holdco Units, together with an equal number of shares of Class B common stock, to be surrendered for purchase by each of such persons, as well as information regarding the selling stockholders and other Exchanging Members participating in the offering. The per share purchase price for each Holdco Unit surrendered for purchase by an Exchanging Member along with a share of Class B common stock will be equal to the price per share of our Class A common stock in this offering, less underwriting discounts and commissions. If the underwriters exercise in full their option to purchase additional shares, we intend to use a portion of the net proceeds from our sale of such additional shares to purchase an additional aggregate of Holdco Units and shares of our Class B common stock from certain of the Exchanging Members, and the remaining shares will be sold by the selling stockholders upon exercise of such option. We will not retain any proceeds from the sale of shares of our Class A common stock by the selling stockholders.

The proceeds received by LD Holdings in connection with the sale of newly issued Holdco Units will be used by LD Holdings and LDLLC to pay $ to the holders of Class I common units of LD Holdings (which represents deferred purchase price for a prior acquisition, see “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement”), to repay in full the approximately $13.4 million aggregate principal amount outstanding of promissory notes issued as part of the consideration for the acquisition of Mortgage Master (the “Seller Notes”), to pay $ in other contingent consideration pursuant to the Mortgage Master acquisition, to repay $ of principal and accrued interest under our $80.0 million unsecured term loan facility (the “Unsecured Term Loan”) and for general corporate purposes, in such order to the extent we raise enough proceeds in this offering. See “Use of Proceeds.”

Dividend policy

We have no current plans to pay dividends on our Class A common stock. Any future determination to pay dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. See “Dividend Policy.”

Listing

We intend to apply to list our Class A common stock on the NYSE under the symbol “LDI”.

Exchange rights of the Continuing LLC Members

Prior to the offering, we will conduct the reorganization described in “Organizational Structure” which will provide, among other things, that each Continuing LLC Member will have the right to cause us and LD Holdings to exchange its Holdco Units and Class B common stock for shares of Class A common stock of loanDepot, Inc. on a one-for-one basis, subject to customary adjustment for stock splits, stock dividends and reclassifications. See “Certain Relationships and Related Party Transactions—Exchange Agreement.”

Tax receivable agreement

Our purchase of Holdco Units from the Exchanging Members using a portion of the net proceeds from this offering and any future exchanges of Holdco Units for our Class A common stock pursuant to the exchange rights described above and our potential purchase of Class I common units of LD Holdings pursuant to our election described under “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement” are expected to result in increases in loanDepot, Inc.’s allocable tax basis in the assets of LD Holdings. These increases in tax basis are expected to increase (for tax purposes) depreciation and amortization deductions allocable to loanDepot, Inc. and therefore reduce the amount of tax that loanDepot, Inc. otherwise would be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss) on future dispositions of certain assets to the extent tax basis is allocated to those assets. We will enter into a tax receivable agreement with a newly formed Delaware limited liability company (“TRA LLC”) owned by the Parthenon Stockholders and certain of the Continuing LLC Members, whereby loanDepot, Inc. will agree to pay to TRA LLC, for the benefit of such parties, 85% of the amount of cash tax savings, if any, in U.S. federal, state and local taxes that loanDepot, Inc. realizes or is deemed to realize as a result of these increases in tax basis, increases in basis from such payments and deemed interest deductions arising from such payments. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

Risk factors

Please read the section entitled “Risk Factors” for a discussion of some of the factors you should carefully consider before deciding to invest in our Class A common stock.

In this prospectus, unless otherwise indicated or the context otherwise requires, the number of shares of Class A common stock outstanding and the other information based thereon:

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assumes an initial offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus;

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assumes that the underwriters’ option to purchase additional shares of Class A common stock from us and the selling stockholders is not exercised;

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excludes shares of Class A common stock issuable upon the exchange of Holdco Units and an equal number of shares of Class B common stock that will be held by the Continuing LLC Members immediately following this offering and the use of proceeds to us therefrom; and

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excludes shares of Class A common stock reserved as of the date of this prospectus for future issuance under our 2015 Omnibus Incentive Plan (including any LTIP Units, which may be granted thereunder) (see “Executive Compensation—Employee Benefit Plans—2015 Omnibus Incentive Plan—Available Shares”).

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables set forth summary historical consolidated financial and other data of LDLLC at the dates and for the periods indicated. LDLLC will be considered our predecessor for accounting purposes, and its consolidated financial statements will be our historical consolidated financial statements following the offering. The statements of operating data for the years ended December 31, 2014 and 2013 and balance sheet data as of December 31, 2014 and 2013 are derived from the audited consolidated financial statements of LDLLC and related notes included elsewhere in this prospectus. The statement of operating data for the six months ended June 30, 2015 and the balance sheet data as of June 30, 2015 are derived from the audited consolidated financial statements of LDLLC and related notes included elsewhere in this prospectus. The statement of operating data for the six months ended June 30, 2014 and the balance sheet data as of June 30, 2014 are derived from the unaudited consolidated financial statements of LDLLC and related notes included elsewhere in this prospectus. The unaudited consolidated financial statements of LDLLC have been prepared on substantially the same basis as the audited consolidated financial statements of LDLLC and include all adjustments that we consider necessary for a fair presentation of LDLLC’s consolidated financial position and results of operations for all periods presented. The summary historical financial data of loanDepot, Inc. have not been presented because loanDepot, Inc. is a newly incorporated entity, has had no business transactions or activities and had no material assets or liabilities during the periods presented in this section.

The summary unaudited pro forma consolidated statements of operations data for the fiscal year ended December 31, 2014 and the six months ended June 30, 2015 present our consolidated results of operations after giving pro forma effect to (i) the Mortgage Master acquisition, as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Influencing Our Results of Operations—Acquisitions and Industry Partnerships—Acquisition of Mortgage Master,” (ii) the Reorganization Transactions and Offering Transactions, as described under “Organizational Structure,” (iii) the use of the estimated net proceeds to us from the offering, as described under “Use of Proceeds,” (iv) the effects of the tax receivable agreement, as described under “Certain Relationships and Related Party Transactions—Tax Receivable Agreement” and (v) a provision for corporate income taxes on the income attributable to loanDepot, Inc. at an effective rate of %, inclusive of all U.S. federal, state and local income taxes, as if such transactions occurred on January 1, 2014. The summary unaudited pro forma consolidated balance sheet data as of June 30, 2015 presents our consolidated financial position giving pro forma effect to (i) the Reorganization Transactions and Offering Transactions, as described under “Organizational Structure,” (ii) the use of the estimated net proceeds to us from the offering, as described under “Use of Proceeds” and (iii) the effects of the tax receivable agreement, as described under “Certain Relationships and Related Party Transactions—Tax Receivable Agreement,” as if such transactions occurred on June 30, 2015. The pro forma adjustments are based on available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma basis, the impact of these transactions on the historical financial information of LDLLC. The summary unaudited pro forma consolidated financial information is included for informational purposes only and does not purport to reflect the results of operations or financial position of loanDepot, Inc. that would have occurred had we been in existence or operated as a public company or otherwise during the periods presented. The unaudited pro forma consolidated financial information should not be relied upon as being indicative of our results of operations or financial position had the described transactions occurred on the dates assumed. The unaudited pro forma consolidated financial information also does not project our results of operations or financial position for any future period or date.

The following summary historical consolidated financial and other data are qualified in their entirety by reference to, and should be read in conjunction with, our audited consolidated financial statements and related notes, our unaudited condensed consolidated financial statements and related notes, imortgage’s audited consolidated financial statements and related notes, Mortgage Master’s audited consolidated financial statements and related notes and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Selected Financial Data,” “Unaudited Pro Forma Consolidated Financial Information”

and other financial information included in this prospectus. Historical results included below and elsewhere in this prospectus are not necessarily indicative of our future performance and the results for any interim period are not necessarily indicative of the operating results to be expected for the full fiscal year.


	Historical Consolidated LDLLC												Pro Forma loanDepot, Inc.
	Six Months Ended June 30,						Year Ended December 31,						Six Months Ended June 30, 2015	Year Ended December 31, 2014
	2015			2014			2014			2013			Six Months Ended June 30, 2015	Year Ended December 31, 2014
				(Unaudited)									(Unaudited)	(Unaudited)
	(Dollars in thousands, except share and per share amounts)
Statement of Operation Data:
Revenues:
Interest income	$	30,815		$	14,462		$	34,416		$	18,902		$	$
Interest expense		(20,651	)		(8,132	)		(19,966	)		(12,692	)

Net interest income		10,164			6,330			14,450			6,209
Gain on origination and sale of loans, net		425,438			193,849			435,462			246,478
Origination income, net		41,649			34,635			75,064			51,995
Servicing income		20,195			12,652			28,517			12,914
Servicing (losses) gains		(19,284	)		(10,368	)		(26,522	)		10,667
Other income		11,471			7,122			17,504			10,232

Total net revenues	$	489,633		$	244,220		$	544,475		$	338,496		$	$

Expenses:
Personnel expense	$	273,182		$	130,210		$	293,552		$	153,179
Marketing and advertising expense		54,369			43,024			93,906			51,265
Direct origination expense		28,594			20,503			43,893			22,907
General and administrative expense		33,618			18,127			44,070			17,769
Occupancy expense		11,118			7,065			15,083			5,716
Depreciation and amortization		8,593			5,207			11,692			5,778
Subservicing expense		5,651			4,919			11,157			6,884
Other interest expense		5,124			4,400			8,930			1,967

Total expenses	$	420,249		$	233,454		$	522,282		$	265,465		$	$

Income before income taxes	$	69,384		$	10,766		$	22,193		$	73,031
Provision for income taxes		216			598			509			773

Net income	$	69,168		$	10,168		$	21,684		$	72,258		$	$

Net income attributable to non-controlling interest

Net income attributable to loanDepot, Inc.	$			$			$			$			$	$

Per Share Data:
Weighted average shares outstanding:
Basic
Diluted
Net income available to Class A Common Stock Per Share:
Basic

Diluted

Balance Sheet Data (end of period):
Cash and cash equivalents	$	53,350		$	24,225		$	28,637		$	40,885
Loans held for sale, at fair value		1,504,603			883,585			1,004,195			741,509
Servicing rights, at fair value		194,093			108,361			138,837			93,823
Total assets		2,076,376			1,186,927			1,370,356			1,023,337
Total liabilities		1,786,222			1,011,694			1,181,162			860,028
Total liabilities, redeemable units and unitholders’ equity		2,076,376			1,186,927			1,370,356			1,023,337

Cash Flow Data:
Net cash used in operating activities	$	(559,772	)	$	(162,923	)	$	(314,555	)	$	(217,083	)
Net cash provided by (used in) investing activities		69,729			20,797			44,215			(34,026	)
Net cash provided by financing activities		514,756			125,466			258,091			264,349


	Historical Consolidated LDLLC
	Six Months Ended June 30,						Year Ended December 31,
	2015			2014			2014			2013
	(Dollars in thousands)
Other Financial Data (Unaudited):
Fundings by Product⁽¹⁾:
Home loans	$	14,317,688		$	5,368,825		$	13,160,987		$	8,374,121
Personal loans		13,918			—			—			—

Total fundings	$	14,331,606		$	5,368,825		$	13,160,987		$	8,374,121

Number of Customers Serviced by Product⁽¹⁾⁽²⁾:
Home loans		75,761			50,069			64,373			37,069
Personal loans		840			—			—			—

Total Number of Customers Serviced		76,601			50,069			64,373			37,069

Adjusted EBITDA⁽³⁾	$	101,108		$	23,480		$	50,201		$	84,666
Adjusted EBITDA Margin⁽³⁾		21	%		10	%		9	%		25	%
Adjusted Net Income⁽³⁾	$	51,678		$	8,272		$	17,626		$	45,426
Adjusted Net Income Margin⁽³⁾		11	%		3	%		3	%		13	%

(1)	Does not reflect our home equity loan product, which was recently launched in September 2015.

(2)	Measured by number of home loan and personal loan units serviced.

(3)

We present Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin as supplemental measures of performance. Adjusted EBITDA is defined as net income plus (i) other interest expense, (ii) provision for income taxes and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain non-cash and other items that we do not consider indicative of our ongoing operating performance. Adjusted EBITDA Margin is defined as, for any period, the Adjusted EBITDA for that period divided by the total net revenues for that period. Adjusted Net Income is defined as net income plus (i) estimated tax provision, (ii) equity-based compensation expense, (iii) acquisition related expenses, (iv) litigation reserve, (v) new product and channel development costs and (vi) certain non-cash and other items that we do not consider indicative of our ongoing operations. Adjusted Net Income Margin is defined as, for any period, the Adjusted Net Income for that period divided by the total net revenues for that period. We describe these adjustments reconciling net income to Adjusted EBITDA and Adjusted Net Income in the table below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation.

The following table provides reconciliations of net income to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin for the periods presented:


	Six Months Ended June 30,						Year Ended December 31,
	2015			2014			2014			2013
	(Dollars in thousands)
Adjusted EBITDA:
Net income	$	69,168		$	10,168		$	21,684		$	72,258
Other interest expense		5,124			4,400			8,930			1,967
Provision for income taxes		216			598			509			773
Depreciation and amortization		8,593			5,207			11,692			5,778

EBITDA	$	83,101		$	20,373		$	42,815		$	80,775
Equity-based compensation expense		11,888			2,643			5,263			1,612
Acquisition related expense^(a)		1,310			15			510			1,807
Litigation reserve^(b)		2,858			—			—			—
New product and channel development costs^(c)		1,175			313			1,032			—
Other expense^(d)		775			136			581			472

Adjusted EBITDA	$	101,108		$	23,480		$	50,201		$	84,666

Adjusted EBITDA Margin:
Adjusted EBITDA	$	101,108		$	23,480		$	50,201		$	84,666
Total net revenues		489,633			244,220			544,475			338,496
Adjusted EBITDA Margin		21	%		10	%		9	%		25	%


	Six Months Ended June 30,						Year Ended December 31,
	2015			2014			2014			2013
	(Dollars in thousands)
Adjusted Net Income:
Income before income taxes	$	69,384		$	10,766		$	22,193		$	73,031
Estimated tax provision^(e)		(28,447	)		(4,414	)		(9,099	)		(29,943	)

After tax net income^(e)		40,937			6,352			13,094			43,088
Equity-based compensation expense^(e)		7,014			1,560			3,105			951
Acquisition related expense^(a)^(e)		773			9			301			1,066
Litigation reserve^(b)^(e)		1,686			—			—			—
New product and channel development costs^(c)^(e)		693			184			609			—
Other expense^(d)^(e)		458			80			343			278
Amortization of intangible assets^(e)		117			87			174			43

Adjusted Net Income^(e)	$	51,678		$	8,272		$	17,626		$	45,426

Adjusted Net Income Margin:
Adjusted Net Income	$	51,678		$	8,272		$	17,626		$	45,426
Total net revenues		489,633			244,220			544,475			338,496
Adjusted Net Income Margin		11	%		3	%		3	%		13	%

(a)

Represents acquisition costs, including changes in the estimated fair value of future payments or contingent consideration that may be required to be made to former shareholders of certain acquired entities.

(b)

Represents management’s estimate of the future settlement cost of litigation.

(c)

Represents expenses related to pre-launch development of new products and product distribution channels.

(d)

Represents certain non-cash and other items that we do not consider indicative of our ongoing operating performance, including debt transaction fee, early stage advisory expenses in connection with this offering and management fees and expenses of our sponsor, which will no longer be payable after the consummation of this offering.

(e)

loanDepot, Inc. was incorporated on July 10, 2015 and did not conduct any business transactions or activities and had no material assets or liabilities prior to the Reorganization Transactions and this offering. loanDepot, Inc. is a C-Corp under the Internal Revenue Code of 1986, as amended (the “Code”), and will be subject to income taxes. Estimated tax provision, adjustments and Adjusted Net Income were computed as if we were subject to federal income tax as a subchapter C corporation for the periods presented using a federal tax rate of 35.0% and an estimated effective state tax rate of 6.0%, net of the federal tax benefit.

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin are supplemental measures of our performance that are not required by, or presented in accordance with, United States generally accepted accounting principles (“GAAP”). They are also not a measurement of our financial performance under GAAP and should not be considered as an alternative to operating profit, net income or any other performance measures derived in accordance with GAAP nor as an alternative to cash flows from operating activities as a measure of our liquidity. We believe that EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin provide meaningful information to assist investors in understanding our financial results and assessing our prospects for future performance. Management believes EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin are important indicators of our operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and provide a baseline for analyzing trends in our underlying business from period to period. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin reflect an additional way of viewing an aspect of our operations that, when viewed with our GAAP results and the reconciliation contained above to our net income, provides a more complete understanding of our business.

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•

they do not reflect costs or cash outlays for capital expenditures or contractual commitments;

•

they do not reflect changes in, or cash requirements for, our working capital needs;

•

they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

•

they do not reflect period-to-period changes in taxes, income tax expense or the cash necessary to pay income taxes;

•

they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and they do not reflect cash requirements for such replacements;

•

non-cash compensation may be a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;

•

they do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and

•

other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Our presentation of EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

RISK FACTORS

An investment in our Class A common stock involves risk. You should carefully consider the following risks as well as the other information included in this prospectus, including “Selected Financial Data,” “Unaudited Pro Forma Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes contained elsewhere in this prospectus, before investing in our Class A common stock. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. However, the selected risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations. In such a case, the trading price of the Class A common stock could decline and you may lose all or part of your investment in our company.

Risks Related to Our Business

We have experienced rapid growth, which may be difficult to sustain and which may place significant demands on our operational, administrative and financial resources.

Our annual loan production and servicing portfolio (each, measured in UPB) have grown (i) from approximately $8.4 billion and $8.3 billion, respectively, as of and for the year ended December 31, 2013 to $13.2 billion and $13.6 billion, respectively, as of and for the year ended December 31, 2014 and (ii) from approximately $5.4 billion and $10.7 billion, respectively, as of and for the six months ended June 30, 2014 to $14.3 billion and $16.6 billion, respectively, as of and for the six months ended June 30, 2015. Our rapid growth has caused, and if it continues will continue to cause, significant demands on our operational, legal, and accounting infrastructure, and will result in increased expenses. In addition, we are required to continuously develop our systems and infrastructure in response to the increasing sophistication of the lending markets and legal, accounting and regulatory developments relating to all of our existing and projected business activities. Our future growth will depend, among other things, on our ability to maintain an operating platform and management system sufficient to address our growth and will require us to incur significant additional expenses and to commit additional senior management and operational resources. As a result, we face significant challenges in:

•

securing funding to maintain our operations and future growth;

•

maintaining and improving our retention and recapture rates;

•

maintaining and scaling adequate financial, business and risk controls;

•

implementing new or updated information and financial systems and procedures;

•

training, managing and appropriately sizing our work force and other components of our business on a timely and cost-effective basis;

•

navigating complex and evolving regulatory and competitive environments;

•

increasing the number of borrowers utilizing our products and services;

•

increasing the volume of loans originated and facilitated through us;

•

entering into new markets and introducing new loan products;

•

continuing to revise our proprietary credit decisioning and scoring models;

•

continuing to develop, maintain and scale our platform;

•

effectively using limited personnel and technology resources;

•

effectively maintaining and scaling our financial and risk management controls and procedures;

•

maintaining the security of our platform and the confidentiality of the information (including personally identifiable information) provided and utilized across our platform; and

•

attracting, integrating and retaining an appropriate number of qualified employees.

We may not be able to manage our expanding operations effectively and we may not be able to continue to grow, and any failure to do so could adversely affect our ability to generate revenue and control our expenses.

We may not be able to continue to grow our loan production volume, which could negatively affect our business, financial condition and results of operations.

Our loan originations, particularly our refinance home loan volume, are dependent on interest rates and are expected to decline if interest rates increase. Our loan origination activities are also subject to overall market factors that can impact our ability to grow our loan production volume. For example, increased competition from new and existing market participants, slow growth in the level of new home purchase activity or reductions in the overall level of refinancing activity can impact our ability to continue to grow our loan origination volume, and we may be forced to accept lower margins in order to continue to compete and keep our volume of activity consistent with past or projected levels.

Our home loan originations also depend on the referral-driven nature of the home loan industry. The origination of purchase money home loans is greatly influenced by traditional market participants in the home buying process such as real estate agents and builders. As a result, our ability to maintain existing, and secure new, relationships with such traditional market participants will influence our ability to grow our purchase money home loan volume and, thus, our distributed retail originations business. Recent regulatory developments have also imposed limits on our ability to enter into marketing services agreements with referral sources, which could adversely impact us. See “Business—Supervision and Regulation—Federal, State and Local Regulation—Real Estate Settlement Procedures Act.” In addition, we will need to convert leads regarding prospective borrowers into funded loans and that depends on the pricing that we will be able to offer relative to the pricing of our competitors and our ability to process, underwrite and close loans on a timely basis. Institutions that compete with us in this regard may have significantly greater access to capital or resources than we do, which may give them the benefit of a lower cost of operations.

If new loan products and enhancements do not achieve sufficient market acceptance, our financial results and competitive position will be harmed.

Until recently, we have derived substantially all of our revenue from originating, selling and servicing traditional home loans. Efforts to expand into new consumer credit products, such as personal loans and home equity loans, may not succeed and may reduce expected revenue growth. Furthermore, we incur expenses and expend resources upfront to develop, acquire and market new loan products and platform enhancements to incorporate additional features, improve functionality or otherwise make our loan products more desirable to consumers. In particular, we recently launched new loan initiatives, through which we commenced facilitation of personal loans in May 2015 and origination of home equity loans in September 2015. For more information regarding our home loan and personal loan production operations, see “Business—Our Current Products and Services” and “—Our Distribution Channels.” New loan products must achieve high levels of market acceptance in order for us to recoup our investment in developing and bringing them to market. If we are unable to grow our loan production volumes or if our margins become compressed, then our business, financial condition and results of operations could be adversely affected.

Recently launched and future loan products could fail to attain sufficient market acceptance for many reasons, including:

•

our failure to predict market demand accurately or to supply loan products that meet market demand in a timely fashion;

•

negative publicity about our loan products’ performance or effectiveness or our customer experience;

•

our ability to obtain financing sources to support such loans;

•

regulatory hurdles;

•

delays in releasing to the market new loan products; and

•

the introduction or anticipated introduction of competing products by our competitors.

If our new and recently launched loan products do not achieve adequate acceptance in the market, our competitive position, revenue and operating results could be harmed. The adverse effect on our financial results may be particularly acute because of the significant development, marketing, sales and other expenses we will have incurred in connection with the new loan products or enhancements before such products or enhancements generate sufficient revenue.

We rely on warehouse lines of credit and other sources of capital and liquidity to meet the financing requirements of our business.

Our ability to finance our operations and repay maturing obligations rests on our ability to borrow money and secure investors to purchase loans we originate or facilitate. We are generally required to renew our Warehouse Lines each year, which exposes us to refinancing, interest rate, and counterparty risks. As of June 30, 2015, we had eight Warehouse Lines which provide an aggregate available home loan lending facility of $2.2 billion, and all of our Warehouse Lines allow drawings to fund loans at closing of the consumer’s home loan. We rely on two such Warehouse Line providers to provide 48% of our aggregate available home lending facility. If any Warehouse Line provider ceased doing business with us, our business, operations, and results of operations would materially suffer. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Warehouse Lines.” Our ability to extend or renew existing Warehouse Lines and obtain new Warehouse Lines is affected by a variety of factors including:

•

limitations imposed on us under our Warehouse Lines and other debt agreements contain restrictive covenants and borrowing conditions, which limit our ability to raise additional debt and require that we maintain certain financial results, including minimum tangible net worth, minimum liquidity, minimum pre-tax net income, minimum debt service coverage ratio, and maximum total liabilities to tangible net worth ratio as well as require us to maintain committed warehouse facilities with third party lenders;

•

changes in financial covenants mandated by Warehouse Line lenders, which we may not be able to achieve;

•

any decrease in liquidity in the credit markets;

•

potential valuation changes to our home loans, servicing rights or other collateral;

•

prevailing interest rates;

•

the strength of the Warehouse Line lenders from whom we borrow, and the regulatory environment in which they operate, including proposed capital strengthening requirements;

•

Warehouse Line lenders seeking to reduce their exposure to residential loans due to other reasons, including a change in such lender’s strategic plan or lines of business; and

•

accounting changes that may impact calculations of covenants in our Warehouse Lines and other debt agreements which result in our ability to continue to satisfy such covenants.

Warehouse Lines may not be available to us with counterparties on acceptable terms or at all. While we believe that our current ability to access Warehouse Lines for our home loan products has been enhanced due to our operating history, experience and performance under the Warehouse Line facilities, it is possible that this advantage will dissipate as new home loan products are developed and introduced, as the cost and terms of credit

with respect to those new home loan products may prove to be less favorable than the terms we have for our current home loan products, or the terms that our competitors may have on their new home loan products.

Our access to and our ability to renew our existing Warehouse Lines could suffer in the event of: (i) the deterioration in the performance of the home loans underlying the Warehouse Lines; (ii) our failure to maintain sufficient levels of eligible assets or credit enhancements; (iii) our inability to access the secondary market for home loans; or (iv) termination of our role as servicer of the underlying home loan assets in the event that (a) we default in the performance of our servicing obligations or (b) we declare bankruptcy or become insolvent.

Furthermore, we have obtained one Warehouse Line and anticipate obtaining one or more additional Warehouse Lines to support our home equity loan business which was launched in September 2015. Initially, we are likely to be reliant upon a single Warehouse Line lender to provide the entire facility for our home equity loan business. In the event we are unable to obtain sufficient Warehouse Line facilities to support our home equity loan business, the growth of such business will materially suffer. We will be unable to effectively operate and grow our home equity loan business without access to Warehouse Line facilities or other sources of capital to fund home equity loans that we originate.

An event of default, an adverse action by a regulatory authority or a general deterioration in the economy that constricts the availability of credit, similar to the market conditions in 2007 through 2010, may increase our cost of funds and make it difficult or impossible for us to renew existing Warehouse Lines or obtain new Warehouse Lines, any of which would have a material adverse effect on our business, results of operations, and the trading price of our common stock, and would result in substantial diversion of our management’s attention. Additionally, a significant new acquisition may require us to raise additional capital to facilitate such a transaction, which may not be available on acceptable terms or at all.

Our existing credit facilities, including Warehouse Lines, also impose financial and non-financial covenants and restrictions on us that limit the amount of indebtedness that we may incur, impact our liquidity through minimum cash reserve requirements, and impact our flexibility to determine our operating policies and investment strategies. If we default on one of our obligations under a Warehouse Line or breach our representations and warranties contained therein, the lender may be able to terminate the transaction, accelerate any amounts outstanding, require us to prematurely repurchase the loans, and cease entering into any other repurchase transactions with us. Because our Warehouse Lines typically contain cross-default provisions, a default that occurs under any one agreement could allow the lenders under our other agreements to also declare a default. Additional Warehouse Lines, bank credit facilities or other debt facilities that we may enter into in the future may contain additional covenants and restrictions. If we fail to meet or satisfy any of these covenants, we would be in default under these agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral and enforce their interests against existing collateral. Any losses that we incur on our Warehouse Lines could materially adversely affect our financial condition and results of operations.

We rely on other sources of capital and liquidity in addition to Warehouse Lines and cash provided by operations. We are party to a $30 million secured revolving line of credit (the “Original Secured Credit Facility”) and a $50 million secured revolving line of credit under one of our Warehouse Lines (the “New Secured Credit Facility” and together with the Original Secured Credit Facility, the “Secured Credit Facilities”) both of which we use to fund retaining servicing rights and for other working capital and general corporate purposes. We also have entered into our $80 million Unsecured Term Loan which we used to fund the acquisition of imortgage, retain servicing rights and for working capital and general corporate purposes. Additionally, we have raised $32.5 million in equity capital from related parties. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Obligations” and “Certain Relationships and Related Party Transactions—Class P and P-2 Subscription Agreements” for more information about these and other financing arrangements. If we are unable to access such other sources of capital and liquidity, our business, financial condition and results of operations may be negatively impacted.

We will need to increase the aggregate dollar amount of investment in personal loans funded through our issuing bank, and secure additional funding sources, to meet anticipated demand for 2016.

Investors willing to purchase personal loans from our issuing bank, Cross River Bank, are of vital importance for the day-to-day operations of our personal loan facilitation business launched in May 2015 as we do not fund these loans ourselves. Two investors currently account for the aggregate investment in personal loans originated and funded by Cross River Bank. If these investors cease investing in personal loans over a short period of time, our business could be temporarily interrupted as new investors complete the administrative and diligence updating processes necessary to enable their investments. Any such event could have a material and adverse effect on our business, financial condition and results of operations.

If we are unable to continue sourcing investors willing to purchase personal loans from Cross River Bank, or any other issuing bank we may collaborate with in the future, our personal loan facilitation business would be substantially reduced or we may need to cease our involvement with such personal loans. Our issuing bank has no responsibility to locate such investors. Investors may decide to discontinue purchasing personal loans that we facilitate from our issuing bank for a variety of reasons, including increased regulatory requirements, adverse regulatory or judicial determinations which may prevent investors from enforcing the personal loans according to their terms, or other business or market conditions which make personal loan portfolios less attractive than other investment opportunities these investors may have. We have expended considerable time and effort to launch our personal loan facilitation business. If current investors cease purchasing personal loans from Cross River Bank (or any future issuing bank), or if we fail to attract additional investors to purchase personal loans from Cross River Bank (or any future issuing bank), we would suffer substantial losses and diversion of management attention.

The departure or change in the responsibilities of Anthony Hsieh, our Chief Executive Officer, and certain other changes in our ownership or in our board of directors may cause one or more events of default under our Warehouse Lines and other financing arrangements.

Certain changes in the management of LDLLC (such as Anthony Hsieh no longer being employed by our company or involved in our day to day activities), the board of directors of LDLLC and/or the ownership of LDLLC (such as (i) Parthenon Blocker or Anthony Hsieh and their affiliates holding below a specified percentage of equity interests or (ii) a percentage change in the outstanding equity interests of LDLLC as low as a 10%) may cause an event of default under one or more of our Warehouse Lines and other financing arrangements, which may in turn cause events of default under many (potentially all) of our other Warehouse Lines and financing arrangements due to standard cross-default provisions. Uncured events of default under our Warehouse Lines and other financing arrangements would cause a material adverse effect on our business, financial condition and results of operations.

Additionally, as highlighted by the recent Delaware Chancery Court decision Pontiac General Employees Retirement Fund v. Healthways, we may receive stockholder demands or face stockholder litigation regarding the existence of “proxy put” provisions in our financing arrangements, meaning any provision that allows a lender to accelerate and demand full payment of outstanding indebtedness upon a substantial change in the composition of the board of directors, any of which could distract management and otherwise negatively impact our business.

Our indebtedness and other financial obligations may limit our financial and operating activities and our ability to incur additional debt to fund future needs.

As of June 30, 2015, on a pro forma as adjusted basis to give effect to this offering and the use of proceeds to us therefrom, we had $ billion of outstanding indebtedness, of which $1.4 billion was secured, short-term indebtedness under our Warehouse Lines, $48.8 million was secured indebtedness under the Secured Credit Facilities and $ million was unsecured indebtedness under our Unsecured Term Loan. We are also obligated to pay $ to the holders of Class I common units following this offering, as described further under “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement.” For more information

regarding our financing arrangements, see “—Warehouse Lines” and “—Debt Obligations” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” In addition, we are able to incur additional indebtedness in the future, subject to the limitations contained in the agreements governing our indebtedness.

Our existing indebtedness and any future indebtedness we incur could:

•

require us to dedicate a substantial portion of cash flow from operations to the payment of principal and interest on indebtedness, including indebtedness we may incur in the future, thereby reducing the funds available for other purposes;

•

limit our ability to obtain short-term credit, including renewing or replacing Warehouse Lines;

•

increase our vulnerability to fluctuations in market interest rates, to the extent that the spread we earn between the interest we receive on our loans held for sale (“LHFS”) and the interest we pay under our indebtedness is reduced;

•

place us at a competitive disadvantage to competitors with relatively less debt in economic downturns, adverse industry conditions or catastrophic external events; or

•

reduce our flexibility in planning for, or responding to, changing business, industry and economic conditions.

In addition, our indebtedness could limit our ability to obtain additional financing on acceptable terms, or at all, to fund our day-to-day loan origination operations, future acquisitions, working capital, capital expenditures, debt service requirements, general corporate and other purposes, any of which would have a material adverse effect on our business and financial condition. Our liquidity needs could vary significantly and may be affected by general economic conditions, industry trends, performance and many other factors not within our control. Further, our Warehouse Lines are short-term debt that must to be renewed by our lenders on a regular basis, typically once a year.

Obligations under our indebtedness could have other important consequences. For example, our failure to comply with the restrictive covenants in the agreements governing our indebtedness that limit our ability to incur liens, to incur debt and to sell assets, among other things, could result in an event of default that, if not cured or waived, could harm our business or prospects and could result in our bankruptcy. In addition, if we defaulted on our obligations under any of our secured debt, our secured lenders could proceed against the collateral granted to them to secure that indebtedness. Furthermore, if we default on our obligations under one debt agreement, it may trigger defaults under our other debt agreements which include cross-default provisions.

The success and growth of our business will depend upon our ability to adapt to and implement technological changes.

All of our loan distribution channels are dependent upon and are becoming increasingly dependent upon technological advancement, such as our ability to process applications over the internet, accept electronic signatures, provide process status updates instantly and other conveniences expected by borrowers and counterparties. We must ensure that our technology facilitates a borrower experience that equals or exceeds the borrower experience provided by our competitors. Maintaining and improving this technology will require significant capital expenditures. As these requirements increase in the future, we will have to fully develop these technological capabilities to remain competitive and any failure to do so could adversely affect our business, financial condition and results of operations.

If 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 decrease.

We believe that developing and maintaining awareness of our brands in a cost-effective manner is critical to attracting new and retaining existing consumers. Successful promotion of our brands will depend largely on the

effectiveness of our marketing efforts and the experience of our consumers. Our efforts to build our brands have involved significant expense, and our future marketing efforts will require us to maintain or incur significant additional expense. These brand promotion activities may not result in increased revenue and, even if they do, any increases may not offset the expenses incurred. If we fail to successfully promote and maintain our brands or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brands, we may lose our existing consumers to our competitors or be unable to attract new consumers.

Additionally, reputational risk, or the risk to our business, results of operation and financial condition from negative public opinion, is inherent in our business. Negative public opinion can result from actual or alleged conduct by our employees or representatives in any number of activities, including lending and debt collection practices, marketing and promotion practices, corporate governance and actions taken by government regulators and community organizations in response to those activities. Negative public opinion can also result from media coverage, whether accurate or not. Negative public opinion can adversely affect our ability to attract and retain borrowers and employees and can expose us to litigation and regulatory action.

We may grow by making acquisitions, and we may not be able to identify or consummate acquisitions or otherwise manage our growth effectively.

Part of our growth strategy has included acquisitions, including the imortgage and Mortgage Master acquisitions described elsewhere in this prospectus, and we may acquire additional companies or businesses. We may not be successful in identifying origination platforms or businesses, or other businesses that meet our acquisition criteria in the future. In addition, even after a potential acquisition target has been identified, we may not be successful in completing or integrating the acquisition. We face significant competition for attractive acquisition opportunities from other well-capitalized companies, many of which have greater financial resources and a greater access to debt and equity capital to secure and complete acquisitions than we do. As a result of such competition, we may be unable to acquire certain assets or businesses that we deem attractive or the purchase price may be significantly elevated or other terms may be substantially more onerous. Any delay or failure on our part to identify, negotiate, finance on favorable terms, consummate and integrate such acquisitions could impede our growth.

There can be no assurance that we will be able to manage our expanding operations effectively or that we will be able to continue to grow, and any failure to do so could adversely affect our ability to generate revenue and control our expenses. Furthermore, we may be responsible for any legacy liabilities of businesses we acquire. The existence or amount of these liabilities may not be known at the time of acquisition and may have a material adverse effect on our consolidated financial position, results of operations or cash flow.

Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates.

Our profitability is directly affected by the level of, and changes in, interest rates. The market value of a closed loan held for sale and interest rate lock commitments (“IRLCs”) generally decline as interest rates rise, and fixed-rate loans are more sensitive to changes in market interest rates than adjustable-rate loans. When we promise a client an interest rate for a loan before an investor has promised to buy the loan from us at a stated price, a gain or loss on the sale of the loan may result from changes in interest rates during the period between the date the interest rate is fixed and the date we receive a commitment to buy the loan at an agreed upon price.

Changes in interest rates could also lead to increased prepayment rates, which could materially and adversely affect the value of our servicing rights and could have a material adverse effect on our financial position, results of operations or cash flows. Historically, the value of servicing rights has increased when interest rates rise as higher interest rates lead to decreased prepayment rates, and have decreased when interest rates decline as lower interest rates lead to increased prepayment rates (for example, as consumers refinance their home loans to take advantage of lower interest rates). The value of our servicing rights is affected by a home loan

refinance since the servicing income stops on the old loan when a consumer refinances into a new loan. As a result, substantial volatility in interest rates materially affects our consolidated financial position, results of operations and cash flows.

We employ various economic hedging strategies to mitigate the interest rate and fall-out risk that is inherent in many of our assets, including our commitments to fund loans and our home loans held for sale. These derivative instruments involve elements of interest rate and credit risk. Interest rate risk represents a component of market risk and represents the possibility that changes in interest rates will cause unfavorable changes in net income and in the value of our interest-rate-sensitive assets. Rising mortgage rates result in falling prices for those interest-rate-sensitive assets, which negatively affect their value.

Our derivative instruments, which currently consist of home loan forwards and options on U.S. Treasury futures, are accounted for as free-standing derivatives and are included on our consolidated balance sheet at fair market value. Our operating results may suffer because the losses on the derivatives we enter into may not be offset by a change in the fair value of the related hedged transaction. We use options on U.S. Treasury futures in hedging the interest rate risk exposure in volatile markets. Utilization of options on U.S. Treasury futures involve some degree of basis risk. Basis risk is defined as the risk that the hedge instrument’s price does not move in parallel with the increase or decrease in the market price of the hedged financial instrument. We calculate an expected hedge ratio to attempt to mitigate a portion of this risk. We also use mortgage forwards in hedging our interest rate risk exposure on our fixed rate and other adjustable rate commitments. Utilization of home loan forwards also involves some degree of basis risk. We calculate an expected hedge ratio to attempt to mitigate a portion of this risk. The success of our interest rate risk management strategy is largely dependent on our ability to predict the earnings sensitivity of loan production activities in various interest rate environments. Our hedging strategies also rely on assumptions and projections regarding our assets and general market factors.

Our hedging activities in the future may include entering into interest rate swaps, caps and floors, options to purchase these items, and/or purchasing or selling U.S. Treasury securities. Our hedging decisions in the future will be determined in light of the facts and circumstances existing at the time and may differ from our current hedging strategy. Moreover, our hedging strategies may not be effective in mitigating the risks related to changes in interest rates and could affect our profitability and financial condition. Poorly designed strategies or improperly executed transactions could actually increase our risk and losses. Further, the significant and atypical volatility in the current interest rate marketplace can negatively impact our hedging effectiveness. Finally, derivatives may expose us to counterparty risk, which is defined as the possibility that a loss may occur from the failure of another party to perform in accordance with the terms of the contract, which exceeds the value of existing collateral, if any.

The geographic concentration of our loan originations may adversely affect our retail lending business, which would adversely affect our financial condition and results of operations.

For the year ended December 31, 2014 and the six months ended June 30, 2015, respectively, approximately 53% and 40% of our aggregate home loan origination was secured by properties concentrated in the states of California, Texas and Arizona. The properties securing the aggregate outstanding UPB of our home loan servicing rights portfolio have a similar geographic concentration. During the Financial Crisis, the states of California and Arizona experienced severe declines in property values and a disproportionately high rate of delinquencies and foreclosures relative to other states. To the extent that the states of California and Arizona continue to experience weaker economic conditions or greater rates of decline in real estate values than the United States generally, the concentration of loans that we service in those states may decrease the value of our servicing rights and adversely affect our retail lending business. The impact of property value declines may increase in magnitude and it may continue for a long period of time. Additionally, if states in which we have greater concentrations of business were to change their licensing or other regulatory requirements to make our business cost-prohibitive, we may be required to stop doing business in those states or may be subject to a higher cost of doing business in those states, which could materially adversely affect our business, financial condition and results of operations.

We may be required to indemnify the purchasers of loans that we originate, or repurchase those loans, if those loans fail to meet certain criteria or characteristics or under other circumstances.

Our contracts with purchasers of home loans that we originate, including the GSEs and other financial institutions that purchase home loans for investor or private label securitization, contain provisions that require us to indemnify the purchaser of the home loans or to repurchase the home loans under certain circumstances. We also pool FHA-insured and VA-guaranteed home loans, which back securities guaranteed by Ginnie Mae. While our contracts vary, they generally contain provisions that require us to indemnify these parties, or repurchase these home loans, if:

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our representations and warranties concerning home loan quality and home loan characteristics are inaccurate or are otherwise breached and not remedied within any applicable cure period (usually 90 days or less) after we receive notice of the breach;

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we fail to secure adequate mortgage insurance within a certain period after closing of the applicable home loan;

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a mortgage insurance provider denies coverage; or

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the home loans fail to comply with underwriting or regulatory requirements.

We believe that, as a result of the current market environment, many purchasers of home loans are particularly aware of the conditions under which home loan originators or sellers must indemnify them against losses related to purchased home loans, or repurchase those home loans, and would benefit from enforcing any repurchase remedies they may have.

Repurchased loans typically can only be resold at a steep discount to their repurchase price, if at all. They are also typically sold at a significant discount to the UPB. To recognize these potential indemnification and repurchase losses, we have recorded reserves of $10.3 million and $14.0 million as of December 31, 2014 and June 30, 2015, respectively. Our liability for repurchase losses is assessed quarterly. Although not all home loans repurchased are in arrears or default, as a practical matter most have been. Factors that we consider in evaluating our reserve for such losses include default expectations, expected investor repurchase demands (influenced by, among other things, current and expected home loan file requests and home loan insurance rescission notices) and appeals success rates (where the investor rescinds the demand based on a cure of the defect or acknowledges that the home loan satisfies the investor’s applicable representations and warranties), reimbursement by third party originators and projected loss severity. Also, although we re-evaluate our reserves for repurchase losses each quarter, evaluations of that sort necessarily are estimates and there remains a risk that the reserves will not be adequate.

Additionally, if home values decrease, our realized home loan losses from home loan indemnifications and repurchases may increase. As such, our indemnification and repurchase costs may increase beyond our current expectations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Reserve for Loan Loss Obligations.” If we are required to indemnify the GSEs or other purchasers against loan losses, or repurchase loans, that result in losses that exceed our reserve, this could materially adversely affect our business, financial condition and results of operations.

Additionally, we may not be able to recover amounts from some third parties, such as brokers through our wholesale channel, from whom we may seek indemnification or against whom we may assert a loan repurchase demand in connection with a breach of a representation or warranty due to financial difficulties or otherwise. As a result, we are exposed to counterparty risk in the event of non-performance by counterparties to our various contracts, including, without limitation, as a result of the rejection of an agreement or transaction in bankruptcy proceedings, which could result in substantial losses for which we may not have insurance coverage.

If we are unable to maintain our relationship with the issuing bank of our personal loan products, our business will suffer.

We rely on an issuing bank to originate all personal loans and to comply with various federal, state and other laws. Our current issuing bank is Cross River Bank, a federally-insured New Jersey state-chartered bank, which handles a variety of consumer and commercial financing programs.

Our current agreement with Cross River Bank has an initial term ending in May 2018, with the possibility of two, successive two-year renewal terms, unless either party notifies the other of its intent to terminate the agreement at least 150 days prior to the end of the term. Cross River Bank could decide that working with us is not in its interest, could make working with it cost prohibitive or could decide to enter into exclusive or more favorable relationships with our competitors. Further, federal or state regulators could require Cross River Bank to terminate its relationship with us. In addition, Cross River Bank may not perform as expected under our agreements including potentially being unable to accommodate our projected growth in personal loan volume. We could in the future have disagreements or disputes with Cross River Bank, which could negatively impact or threaten our relationship.

The current agreement with Cross River Bank is non-exclusive, but if we establish a program to facilitate personal loans that is substantially similar to and/or competes with the Cross River Bank personal loan program, then we are required to pay a specified fee to Cross River Bank.

Cross River Bank is subject to oversight by the FDIC, the Consumer Financial Protection Bureau (“CFPB”) and the New Jersey Department of Banking and Insurance and must comply with complex rules and regulations, licensing and examination requirements, including requirements to maintain a certain amount of regulatory capital relative to its outstanding loans. We are a service provider to Cross River Bank, and as such, we are subject to audit by Cross River Bank in accordance with FDIC and CFPB guidance related to management of third-party vendors. We may also be subject to the examination and enforcement authority of the FDIC as a bank service company covered by the Bank Service Company Act and by the CFPB as a service provider to a covered institution. If Cross River Bank were to suspend, limit or cease its operations or if our relationship with Cross River Bank were to otherwise terminate, we would need to implement a substantially similar arrangement with another issuing bank, obtain additional state licenses, alter the terms at which personal loans are offered or curtail our operations. If we need to enter into alternative arrangements with a different issuing bank to replace our existing arrangements with Cross River Bank, we may not be able to negotiate a comparable alternative arrangement in a timely fashion, on commercial reasonable terms, or at all. Transitioning loan originations to a new issuing bank is untested and may result in delays in the issuance of loans or, if our platform becomes inoperable, may result in our inability to facilitate loans through our platform which would cause irreparable harm to our brand and reputation and would result in a material adverse effect on our results of operations. If we were unable to enter in an alternative arrangement with a different issuing bank, we would need to obtain additional state licenses in order to enable us to originate personal loans, as well to identify and comply with additional regulatory obligations under other state and federal laws, which would be costly and time-consuming. If we are unsuccessful in maintaining our relationships with Cross River Bank or other issuing banks, our ability to facilitate personal loan products could be materially impaired and our operating results would suffer.

If the credit decisioning and scoring models we use contain errors or are otherwise ineffective, our reputation and relationships with borrowers and investors could be harmed and our market share could decline.

Our ability to attract borrowers and investors to, and build trust in, our consumer loan products is significantly dependent on our ability to effectively evaluate a borrower’s credit profile and likelihood of default. To conduct this evaluation, we use credit decisioning and scoring models that assign each loan a grade and a corresponding interest rate. Our credit decisioning and scoring models are based on algorithms that evaluate a number of factors, including behavioral data, transactional data and employment information, which may not

effectively predict future loan losses. We have only recently launched our personal loan and home equity products and our algorithms may prove inaccurate. If we are unable to effectively segment borrowers into relative risk profiles, we may be unable to offer attractive interests rates for borrowers and returns for investors in the loans. We refine these algorithms based on new data and changing macro and economic conditions. If any of these credit decisioning and scoring models contain programming or other errors, are ineffective or the data provided by borrowers or third parties is incorrect or stale, or if we are unable to obtain the data from borrowers or third parties, our loan pricing and approval process could be negatively affected, resulting in mispriced or misclassified loans or incorrect approvals or denials of loans. If any of these errors were to occur in the future, investors may try to rescind their affected investments or decide not to invest in loans or borrowers may seek to revise the terms of their loans or reduce the use of our loans.

If the personal loans we facilitate experience an increase in defaults, the return on investment for investors in those loans would be adversely affected and investors may not find investing in the personal loans we facilitate desirable.

Investors in the personal loans we facilitate have a variety of attractive investment options. An investor may become dissatisfied with us if a loan underlying its investment is not repaid and it does not receive full payment. As a result, our reputation may suffer and we may lose investor confidence, which could adversely affect investor participation as investors may seek more desirable investment options. Loss of investors would cause irreparable harm to our personal loan facilitation business.

If personal loan default rates are in excess of the expected default rates, we may be unable to collect our entire servicing fee.

Personal loans funded by our issuing bank (Cross River Bank) are not secured by any collateral, not guaranteed or insured by any third party and not backed by any governmental authority in any way. Our subservicer is therefore limited in its ability to collect on the loans if a borrower is unwilling or unable to repay. A borrower’s ability to repay can be negatively impacted by increases in their payment obligations to other lenders under home, credit card and other loans, including student loans and home equity lines of credit, loss of job or other sources of income, adverse health conditions, or other reasons. Changes in a borrower’s ability to repay personal loans facilitated by us could also result from increases in base lending rates or structured increases in payment obligations and could reduce the ability of our borrowers to meet their payment obligations to other lenders and to us. If a borrower defaults on a personal loan, our subservicer outsources subsequent servicing efforts to third-party collection agencies, which may be unsuccessful in their efforts to collect the amount of the personal loan. Because our servicing fees depend on the collectability of the personal loans, if we experience an unexpected significant increase in the number of borrowers who fail to repay their personal loans or an increase in the principal amount of the personal loans that are not repaid, we will be unable to collect our entire servicing fee for such personal loans and our revenue would be adversely affected.

Our 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.

The value of our servicing rights is based on the cash flows projected to result from the servicing of the related loans and continually fluctuates due to a number of factors. Our servicing portfolio is subject to “run off,” meaning that loans serviced by us (or our subservicer) may be prepaid prior to maturity, refinanced with a loan not serviced by us or liquidated through foreclosure, deed-in-lieu of foreclosure or other liquidation process or repaid through standard amortization of principal. As a result, our ability to maintain the size of our servicing portfolio depends on our ability to originate additional mortgages. In determining the value for our servicing rights and subservicing agreement, management makes certain assumptions, many of which are beyond our control, including, among other things:

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the speed of prepayment and repayment within the underlying pools of loans;

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projected and actual rates of delinquencies, defaults and liquidations;

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future interest rates and other market conditions;

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our cost to service the loans;

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ancillary fee income; and

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amounts of future servicing advances.

We use external, third-party valuations that utilize market participant data to value our servicing rights for purposes of financial reporting. We also benchmark these valuations to internal financial models. These models are complex and use asset-specific collateral data and market inputs for interest and discount rates. In addition, the modeling requirements of servicing rights are complex because of the high number of variables that drive cash flows associated with servicing rights. Even if the general accuracy of our valuation models is validated, valuations are highly dependent upon the reasonableness of the assumptions and the results of the models utilized in such valuations.

If loan delinquencies or prepayment speeds are higher than anticipated or other factors perform worse than modeled, the recorded value of our servicing rights would decrease, which would adversely affect our financial condition and results of operations.

We have made, and expect to continue to make, significant investments in personnel and our technology platform to allow us to retain additional servicing rights. In particular, we invest significant resources in recruiting, training, technology and systems. We may not realize the expected benefits of these investments to the extent we are unable to increase the pool of home loans serviced, we are delayed in obtaining the right to service such home loans or the servicing rights that we retain or the subservicing agreements we enter into are not appropriately valued. Any of the foregoing could adversely affect our financial condition and results of operations.

Substantially all of our loan servicing operations are conducted pursuant to subservicing contracts with subservicers, and any termination by our subservicers of these contracts, or a material change in the terms thereof that is adverse to us, would adversely affect our business, financial condition, liquidity and results of operations.

Substantially all of our loan servicing operations are currently conducted pursuant to a subservicing contract with Cenlar (for home loans) and a subservicing contract with First Associates (for personal loans), each an unaffiliated third party loan servicing provider. We are responsible for ensuring each subservicer’s compliance with the applicable servicing criteria and applicable law, and we are required to have procedures in place to provide reasonable assurance that its activities comply in all material respects with applicable servicing criteria and applicable law. In the event that a subservicer’s activities do not comply with the servicing criteria or applicable law for a home loan, it could negatively impact our agreements with the GSEs, Agencies or other investors. In addition, because our subservicers maintain the primary contact with the borrower of a serviced loan throughout the life of the loan, we have less ability to become involved with any potential loss mitigation. Therefore, we may not have control over a rise in delinquencies and/or claims among non-performing loans, both of which could have a material adverse effect on our business, financial condition, liquidity and results of operations.

Further, our subservicers may, under certain circumstances, terminate their subservicing contracts with or without cause, with little notice and in some instances with no compensation to us. Upon any such termination, it would be difficult to replace a large volume of subservicing on comparable terms in a short period of time, or perhaps at all.

In addition, for home loans, the approval of the GSEs or other investors that own the home loans underlying our servicing rights would be required to transfer our servicing rights portfolio from our subservicer to another

subservicer. Such approval would be in the applicable investor’s discretion, and there is no assurance that such approval could be obtained if and when necessary. If we were to have our subservicing contract terminated by our subservicer, or if there was a change in the terms under which our subservicer performs subservicing that was materially adverse to us, it would adversely affect our business, financial condition and results of operations.

In order to be able to maintain or grow our servicing business, our servicing rights must be replaced as the loans that we service are repaid or refinanced, and if our loan business loses market share, our servicing business would also be impacted.

Our servicing portfolio is subject to “run-off,” meaning that loans serviced by us may be repaid at maturity, prepaid prior to maturity, refinanced with a loan not serviced by us or liquidated through foreclosure, deed-in-lieu of foreclosure or other liquidation process or repaid through standard amortization of principal. As a result, our ability to maintain the size of our servicing portfolio depends on our ability to originate loans with respect to which we retain the servicing rights.

If our loan business loses market share, or if the volume of loan originations otherwise decreases or if the loans underlying our servicing portfolio are repaid or refinanced at a faster pace, we may not be able to maintain or grow the size of our servicing portfolio, which could have a material adverse effect on our business, financial condition and results of operations.

We 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, business, financial condition and results of operations.

For home loans, during any period in which a borrower is not making payments, we are required under most of our servicing agreements in respect of our servicing rights to advance our own funds to meet contractual principal and interest remittance requirements for investors, pay property taxes and insurance premiums, legal expenses and other protective advances. We also advance funds under these agreements to maintain, repair and market real estate properties on behalf of investors. As home values change, we may have to reconsider certain of the assumptions underlying our decisions to make advances. In addition, if a home loan serviced by us is in default or becomes delinquent, the repayment to us of the advance may be delayed until the home loan is repaid or refinanced, foreclosure or a liquidation occurs. If we receive requests for advances in excess of amounts that we are able to fund at that time, we may not be able to fund these advance requests, which could materially and adversely affect our home loan servicing activities and our status as an approved servicer by Fannie Mae and Freddie Mac. A delay in our ability to collect an advance may adversely affect our liquidity, and our inability to be reimbursed for an advance could adversely affect our business, financial condition and results of operations.

Our counterparties may terminate our servicing rights, which could adversely affect our business, financial condition and results of operations.

The owners of the home loans for which we have retained servicing rights, may, under certain circumstances, terminate our right to service the home loans. As is standard in the industry, under the terms of our master servicing agreements with the GSEs in respect of the servicing rights for home loans that we retain, the GSEs have the right to terminate us as servicer of the home loans we service on their behalf at any time (and, in certain instances, without the payment of any termination fee) and also have the right to cause us to sell the servicing rights to a third party. In addition, failure to comply with servicing standards could result in termination of our agreements with the GSEs with little or no notice and without any compensation. Currently, a subservicer performs the servicing activities on the home loans underlying our servicing rights portfolio. However, we are responsible to the GSEs that own the underlying loans for such activities. Consequently, in the event of a default by our subservicer, the GSE could terminate our servicing rights or require that our servicing rights be transferred to another subservicer.

The owners of the personal loans for which we have servicing rights may also under certain circumstances, generally related to our insolvency or a material breach, terminate our right to service the personal loans.

If we were to have our servicing rights terminated on a material portion of our servicing portfolio, the value of our servicing rights could be reduced or, potentially, eliminated entirely and our business, financial condition and results of operations could be adversely affected.

Our servicing rights portfolio has a limited performance history, which makes our future results of operations more difficult to predict.

With respect to home loans, the likelihood of delinquencies and defaults, and the associated risks to our business, including higher costs to service such home loans and a greater risk that we may incur losses due to repurchase or indemnification demands, changes as home loans season, or increase in age. Newly originated home loans typically exhibit low delinquency and default rates as the changes in economic conditions, individual financial circumstances and other factors that drive borrower delinquency often do not appear for months or years. Most of the home loans underlying our servicing rights portfolio were originated in recent years. As a result, we expect the delinquency rate and defaults of the loans underlying the servicing rights portfolio to increase in future periods as the portfolio seasons, but we cannot predict the magnitude of this impact on our results of operations. In addition, because most of the home loans in our portfolios are recently originated, it may be difficult to compare our business to our home loan originator competitors and others that have weathered the economic difficulties in our industry over the last several years. Such competitors may have better ability to model delinquency and default risk based on their longer operating histories and may have a better ability than we do in establishing appropriate loss reserves on their financial statements. Any inadequacy of our loss reserves established for delinquencies and defaults may result in future financial restatements or other adverse events.

We began servicing personal loans in May 2015 and do not yet have an operational track record.

We may incur increased costs and related losses if a borrower challenges the validity of a foreclosure action on a home loan or if a court overturns a foreclosure, which could adversely affect our business, financial condition, liquidity and results of operations.

We may incur costs if we are required to, or if we elect to, execute or re-file documents or take other action in our capacity as a servicer in connection with pending or completed foreclosures on home loans. We may incur litigation costs if the validity of a foreclosure action is challenged by a borrower. If a court overturns a foreclosure because of errors or deficiencies in the foreclosure process, we may have liability to a title insurer or the purchaser of the property sold in foreclosure. These costs and liabilities may not be legally or otherwise reimbursable to us, particularly to the extent they relate to securitized home loans. In addition, if certain documents required for a foreclosure action are missing or defective, we could be obligated to cure the defect or repurchase the home loan. A significant increase in litigation costs could adversely affect our liquidity, and our inability to be reimbursed for an advance could adversely affect our business, financial condition and results of operations. We may also incur the aforementioned costs and liabilities to the extent that they may be incurred by our subservicer under certain circumstances.

We rely on joint ventures with industry partners through which we originate home loans. If any of these joint ventures are terminated, our revenues could decline.

As of June 30, 2015, we were party to joint ventures with four industry partners (three home builders and one real estate broker). For the year ended December 31, 2014, revenue from loans originated through these joint ventures totaling $6.5 million represented approximately 1.2% of our total revenues; and for the six months ended June 30, 2015, revenue from loans originated through these joint ventures totaling $3.4 million represented approximately 0.7% of our total revenues. The termination of any of these joint ventures (including as a result of

one of our partners exiting the industry), or a decline in the activity of the building industry generally, could cause revenue from loans originated through these joint ventures to decline, which would negatively impact our business.

Challenges to the MERS System could materially and adversely affect our business, results of operations and financial condition.

MERSCORP, Inc. is a privately held company that maintains an electronic registry, referred to as the MERS System, which tracks servicing rights and ownership of home loans in the United States. Mortgage Electronic Registration Systems, Inc. (“MERS”), a wholly owned subsidiary of MERSCORP, Inc., can serve as a nominee for the owner of a home loan and in that role initiate foreclosures or become the mortgagee of record for the loan in local land records. We and/or our subservicer have in the past and may continue to use MERS as a nominee. The MERS System is widely used by participants in the mortgage finance industry.

Several legal challenges in the courts and by governmental authorities have been made disputing MERS’s legal standing to initiate foreclosures or act as nominee for lenders in mortgages and deeds of trust recorded in local land records. These challenges have focused public attention on MERS and on how home loans are recorded in local land records. Although most legal decisions have accepted MERS as mortgagee, these challenges could result in delays and additional costs in commencing, prosecuting and completing foreclosure proceedings, conducting foreclosure sales of mortgaged properties and submitting proofs of claim in borrower bankruptcy cases.

We depend on the accuracy and completeness of information about borrowers and any misrepresented information could adversely affect our business, financial condition and results of operations.

In deciding whether to extend credit or to enter into other transactions with borrowers, we rely on information furnished to us by or on behalf of borrowers, including credit, identification, employment and other relevant information. Some of the information regarding borrowers provided to us is also used in our proprietary credit decisioning and scoring models, which we use to determine whether to lend to borrowers and the risk profiles of such borrowers. Such risk profiles are subsequently utilized by Warehouse Line counterparties who lend us capital to fund home loans and by our issuing bank partner to fund personal loans. We also may rely on representations of borrowers as to the accuracy and completeness of that information.

While we have a practice of seeking to independently verify some of the borrower information that we use in deciding whether to extend credit or to agree to a loan modification, including employment, assets, income and credit score, not all borrower information is independently verified, and if any of the information that is independently verified (or any other information considered in the loan review process) is misrepresented and such misrepresentation is not detected prior to loan funding, the value of the loan may be significantly lower than expected. Additionally, there is a risk that, following the date of the credit report that we obtain and review, a borrower may have become delinquent in the payment of an outstanding obligation, defaulted on a pre-existing debt obligation, taken on additional debt, lost his or her job or other sources of income; or sustained other adverse financial events. Whether a misrepresentation is made by the loan applicant, another third party or one of our employees, we generally bear the risk of loss associated with the misrepresentation. We may not detect all misrepresented information in our home loan originations or from service providers we engage to assist in the loan approval process. Any such misrepresented information could adversely affect our business, financial condition and results of operations.

We are also subject to the risk of fraudulent activity associated with the origination of loans. The level of our fraud charge-offs and results of operations could be materially adversely affected if fraudulent activity were to significantly increase. High profile fraudulent activity or significant increases in fraudulent activity could lead to regulatory intervention, negatively impact our operating results, brand and reputation and lead us to take steps to reduce fraud risk, which could increase our costs.

Our financial statements are based in part on assumptions and estimates made by our management, including those used in determining the fair values of a substantial portion of our assets. If the assumptions or estimates are subsequently proven incorrect or inaccurate, there could be a material adverse effect on our business, financial position, results of operations or cash flows.

Accounting rules for home loan sales and securitizations, valuations of financial instruments and servicing rights, and other aspects of our operations are highly complex and involve significant judgment and assumptions. For example, we utilize certain assumptions and estimates in preparing our financial statements, including when determining the fair values of certain assets and liabilities and reserves related to home loan representations and warranty claims and to litigation claims and assessments. These complexities and significant assumptions could lead to a delay in the preparation of financial information and also increase the risk of errors and restatements, as well as the cost of compliance. Changes in accounting interpretations or assumptions could impact our financial statements and our ability to timely prepare our financial statements. If the assumptions or estimates underlying our financial statements are incorrect, we may experience significant losses as the ultimate realization of value may be materially different than the amounts reflected in our consolidated statement of financial position as of any particular date, and there could be a material adverse effect on our business, financial position, results of operations or cash flows.

A substantial portion of our assets are recorded at fair value based upon significant estimates and assumptions with changes in fair value included in our consolidated results of operations. As of December 31, 2014 and June 30, 2015, respectively, 87.3% and 86.0% of our total assets were measured at fair value on a recurring basis, including $191.7 million and $281.5 million of assets representing our servicing rights and derivative assets which are valued using significant unobservable inputs and management’s judgment of the assumptions market participants would use in pricing the asset. The determination of the fair value of our assets involves numerous estimates and assumptions made by our management. Such estimates and assumptions include, without limitation, estimates of future cash flows associated with our servicing rights and derivative assets based upon assumptions involving, among other things, discount rates, prepayment speeds, cost of servicing of the underlying serviced home loans, pull-through rates and direct origination expenses. The use of different estimates or assumptions in connection with the valuation of these assets could produce materially different fair values, or our fair value estimates may not be realized in an actual sale or settlement, either of which could have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Reserves are established for home loan representations and warranty claims when it is probable that a loss has been incurred and the amount of such loss can be reasonably estimated. In light of the inherent uncertainties involved in loan repurchase claims related to representations and warranties, it is not always possible to determine a reasonable estimate of the amount of a probable loss, and we may estimate a range of possible loss for consideration in our estimates. The estimates are based upon currently available information and involve significant judgment taking into account the varying stages and inherent uncertainties of such repurchase and indemnification requests. Accordingly, our estimates may change from time to time and such changes may be material to our consolidated results of operations, and the ultimate settlement of such matters may have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Reserves are established for pending or threatened litigation, claims or assessments when it is probable that a loss has been incurred and the amount of such loss can be reasonably estimated. In light of the inherent uncertainties involved in litigation and other legal proceedings, it is not always possible to determine a reasonable estimate of the amount of a probable loss, and we may estimate a range of possible loss for consideration in its estimates. The estimates are based upon currently available information and involve significant judgment taking into account the varying stages and inherent uncertainties of such matters. Accordingly, our estimates may change from time to time and such changes may be material to our consolidated results of operations, and the ultimate settlement of such matters may have a material adverse effect on our consolidated financial position, results of operations or cash flows.

For additional information on the key areas for which assumptions and estimates are used in preparing our financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.”

Our 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 business.

We have significant vendors that, among other things, provide us with financial, technology and other services to support our loan servicing and originations activities. In April 2012, the CFPB issued guidance stating that institutions under its supervision may be held responsible for the actions of the companies with which they contract. Accordingly, we could be adversely impacted to the extent our vendors are unfamiliar with legal requirements applicable to the particular products or services being offered or fail to take efforts to implement such requirements effectively. In addition, if our current vendors were to stop providing services to us on acceptable terms, including as a result of one or more vendor bankruptcies due to poor economic conditions, we may be unable to procure alternatives from other vendors in a timely and efficient manner and on acceptable terms, or at all. Further, we may incur significant costs to resolve any such disruptions in service and this could adversely affect our business, financial condition and results of operations.

Some services important to our business are outsourced to third-party vendors. For example, substantially all of our home loan servicing operations are currently conducted by Cenlar. It would be difficult and disruptive for us to replace some of our third-party vendors, particularly Cenlar, in a timely manner if they were unwilling or unable to provide us with these services in the future (as a result of their financial or business conditions or otherwise), and our business and operations likely would be materially adversely affected. Our principal agreement with Cenlar automatically renewed for another three-year term in 2015 and will automatically renew itself for successive three-year terms until terminated by us or Cenlar. In our personal loan business, we rely upon Cross River Bank for loan origination and funding and First Associates for collection of monthly payments and other subservicing. Our principal agreement with Cross River Bank expires under its existing terms (assuming automatic renewals) in 2022, and our agreement with First Associates expires under its existing terms in 2017 but automatically renews for incremental one-year terms unless terminated by us or First Associates. In addition, if a third-party provider fails to provide the services we require, fails to meet contractual requirements, such as compliance with applicable laws and regulations, or suffers a cyber-attack or other security breach, our business could suffer economic and reputational harm that could have a material adverse effect on our business and results of operations. See “—Risks Related to Our Business—Substantially all of our loan servicing operations are conducted pursuant to subservicing contract with subservicers, and any termination by our subservicers of these contracts, or a material change in the terms thereof that is adverse to us, would adversely affect our business, financial condition, liquidity and results of operations.”

The loss of the services of our senior management could adversely affect our business.

The experience of our senior management, including Anthony Hsieh, our Chief Executive Officer, is a valuable asset to us. Our management team has significant experience in the residential home loan production and servicing industry and the investment management industry. Furthermore, certain of our Warehouse Lines specify that a substantial change in the management responsibilities of Mr. Hsieh constitutes an event of default. We do not maintain key life insurance policies relating to our senior management. See “—Risks Related to Our Business—The departure or change in the responsibilities of Anthony Hsieh, our Chief Executive Officer, and certain other changes in our ownership or in our board of directors may cause one or more events of default under our Warehouse Lines and other financing arrangements.”

Our business could suffer if we fail to attract and retain a highly skilled workforce.

Our future success will depend on our ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of our organization, in particular skilled managers, loan officers and underwriters. Trained

and experienced personnel are in high demand and may be in short supply in some areas. Many of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. We may not be able to attract, develop and maintain an adequate skilled workforce necessary to operate our business and labor expenses may increase as a result of a shortage in the supply of qualified personnel. If we are unable to attract and retain such personnel, we may not be able to take advantage of acquisitions and other growth opportunities that may be presented to us and this could materially affect our business, financial condition and results of operations.

Technology failures, including failure of internal security measures, could damage our business operations and increase our costs, which could adversely affect our business, financial condition and results of operations.

The financial services industry as a whole is characterized by rapidly changing technologies and system disruptions and failures caused by fire, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters and other similar events may interrupt or delay our ability to provide services to our customers. Security breaches, acts of vandalism and developments in computer capabilities could result in a compromise or breach of the technology that we use to protect our customers’ personal information and transaction data. Despite our efforts to ensure the integrity of our systems, it is possible that we may not be able to anticipate or implement effective preventive measures against all security breaches, especially because the methods of attack change frequently or are not recognized until launched, and because security attacks can originate from a wide variety of sources, including third parties such as persons involved with organized crime or associated with external service providers. Those parties may also attempt to fraudulently induce employees, customers or other users of our systems to disclose sensitive information in order to gain access to our data or that of our borrowers. These risks may increase in the future as we continue to increase our reliance on the internet and use of web-based product offerings.

A successful penetration or circumvention of the security of our systems or a defect in the integrity of our systems or cyber security could cause serious negative consequences for our business, including significant disruption of our operations, misappropriation of our confidential information or that of our borrowers or damage to our computers or operating systems and to those of our borrowers and counterparties.

In the ordinary course of our business, we receive and store certain non-public personal information concerning borrowers. Additionally, we enter into third party relationships to assist with various aspects of our business, some of which require the exchange of confidential borrower information. If a third party were to compromise or breach our security measures or those of the vendors, through electronic, physical or other means, and misappropriate such information, it could cause interruptions in our operations and expose us to significant liabilities, reporting obligations, remediation costs and damage to our reputation.

Any of the foregoing events could result in violations of applicable privacy and other laws, financial loss to us or to our borrowers, loss of confidence in our security measures, customer dissatisfaction, significant litigation exposure and harm to our reputation, and diversion of management attention, all of which could adversely affect our business, financial condition and results of operations.

We face litigation and legal proceedings that could have a material adverse effect on our revenues, financial condition, cash flows and results of operations.

We are routinely and currently involved in legal proceedings concerning matters that arise in the ordinary course of our business. See “Business—Legal Proceedings.” These legal proceedings range from actions involving a single plaintiff to class action lawsuits with potentially tens of thousands of class members. These actions and proceedings are generally based on alleged violations of consumer protection, employment, contract and other laws. Additionally, along with others in our industry, we are subject to repurchase claims and may

continue to receive claims in the future. Our business in general exposes us to both formal and informal periodic inquiries, from various state and federal agencies as part of those agencies’ oversight of the origination and sale of home loans and servicing activities. See “—Risks Related to Our Regulatory Environment” below. An adverse result in governmental investigations or examinations or private lawsuits, including purported class action lawsuits, may adversely affect our financial results. In addition, a number of participants in our industry have been the subject of purported class action lawsuits and regulatory actions by state regulators, and other industry participants have been the subject of actions by state Attorneys General. Litigation and other proceedings may require that we pay settlement costs, legal fees, damages, penalties or other charges, any or all of which could adversely affect our financial results. In particular, legal proceedings brought under state consumer protection statutes may result in a separate fine for each violation of the statute, which, particularly in the case of class action lawsuits, could result in damages substantially in excess of the amounts we earned from the underlying activities and that could have a material adverse effect on our liquidity, financial position and results of operations.

We may be unable to sufficiently protect our proprietary rights and we may encounter disputes from time to time relating to our use of the intellectual property of third parties.

We rely on a combination of copyrights, trademarks, service marks, trade secrets, domain names and agreements with employees and third parties to protect our proprietary rights. We have trademark and service mark registrations and pending applications for additional registrations in the United States and select foreign jurisdictions. We also own the domain name rights for our institutions, as well as other words and phrases important to our business. Nonetheless, as new challenges arise in protecting these proprietary rights online, we cannot assure you that these measures will be adequate to protect our proprietary rights, that we have secured, or will be able to secure, appropriate protections for all of our proprietary rights or that third parties will not infringe upon or violate our proprietary rights. Despite our efforts to protect these rights, unauthorized third parties may attempt to duplicate or copy the proprietary aspects of our technology, curricula, and online resource material, among others. Our management’s attention may be diverted by these attempts, and we may need to expend funds in litigation to protect our proprietary rights against any infringement or violation.

We may also encounter disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in these disputes. Third parties may raise claims against us alleging an infringement or violation of their intellectual property. Some third-party intellectual property rights may be extremely broad, and it may not be possible for us to conduct our operations in such a way as to avoid all alleged violations of such intellectual property rights. Any such intellectual property claim could subject us to costly litigation and impose a significant strain on our financial resources and management personnel regardless of whether such claim has merit. Our insurance may not cover potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant, or our institutions may be required to alter the content of their classes to be non-infringing.

Terrorist attacks and other acts of violence or war may affect the real estate industry generally and our business, financial condition and results of operations.

The terrorist attacks on September 11, 2001 disrupted the U.S. financial markets, including the real estate capital markets, and negatively impacted the U.S. economy in general. Any future terrorist attacks, the anticipation of any such attacks, the consequences of any military or other response by the United States and its allies, and other armed conflicts could cause consumer confidence and spending to decrease or result in increased volatility in the United States and worldwide financial markets and economy. The economic impact of these events could also adversely affect the credit quality of some of our loans and investments and the properties underlying our interests.

We may suffer losses as a result of the adverse impact of any future attacks and these losses may adversely impact our performance. A prolonged economic slowdown, recession or declining real estate values could impair

the performance of our investments and harm our financial condition and results of operations, increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. We cannot predict the severity of the effect that potential future armed conflicts and terrorist attacks would have on us. Losses resulting from these types of events may not be fully insurable.

Risks Related to the Home Loan and Personal Loan Industries

Our home loan origination revenues are highly dependent on macroeconomic and U.S. residential real estate market conditions.

Our results of operations are materially affected by conditions in the home loan and real estate markets, the financial markets and the economy generally. During the Financial Crisis for example, a decline in home prices led to an increase in delinquencies and defaults, which led to further home price declines and losses for creditors. This depressed home loan origination activity and general access to credit. Post-Financial Crisis, the disruption in the capital markets and secondary mortgage markets has also reduced liquidity and investor demand for mortgage loans and MBS, while yield requirements for these products have increased. Continuing concerns about declines in the real estate market, as well as inflation, energy costs, geopolitical issues and the availability and cost of credit, have contributed to increased volatility and diminished expectations for the economy and markets going forward. Although the U.S. and global economies have shown improvement, the recovery remains modest and uncertain. If present U.S. and global economic uncertainties persist, loan origination activity may remain muted. Should any of these situations occur, our loan originations and revenue would decline and our business would be negatively impacted.

Our earnings may decrease because of changes in prevailing interest rates.

We generate a sizeable portion of our revenues from loans we make to clients that are used to refinance existing home loans. Generally, the refinance market experiences significant fluctuations. As interest rates rise, refinancing volumes generally decrease as fewer consumers are incentivized to refinance their mortgages. This could adversely affect our revenues or require us to increase marketing expenditures in an attempt to maintain refinancing related origination volumes. Higher interest rates may also reduce demand for purchase home loans as home ownership becomes more expensive and could also reduce demand for our home equity and personal loans. Decreases in interest rates can also potentially adversely affect our business as the stream of servicing fees and correspondingly, the value of servicing rights, decreases as interest rates decrease.

For more information regarding how changes in interest rates may negatively affect our financial condition and results of operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Influencing Our Results of Operations” and “—Quantitative and Qualitative Disclosures About Market Risk.”

The 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 business, financial condition and results of operations.

We operate in highly competitive industries that could become even more competitive as a result of economic, legislative, regulatory and technological changes. With respect to our home loan, home equity loan and personal loan businesses, we face competition in such areas as loan product offerings, rates, fees and customer service. With respect to servicing, we face competition in areas such as fees, compliance capabilities and performance in reducing delinquencies.

Competition in originating loans comes from large commercial banks and savings institutions and other independent loan originators and servicers. Many of these institutions have significantly greater resources and access to capital than we do, which gives them the benefit of a lower cost of funds. Commercial banks and

savings institutions may also have significantly greater access to potential customers given their deposit-taking and other banking functions. Also, some of these competitors are less reliant than we are on the sale of home loans into the secondary markets to maintain their liquidity and may be able to participate in government programs that we are unable to participate in because we are not a state or federally chartered depository institution, all of which may place us at a competitive disadvantage. The advantages of our largest competitors include, but are not limited to, their ability to hold new loan originations in an investment portfolio and their access to lower rate bank deposits as a source of liquidity.

Additionally, more restrictive loan underwriting standards have resulted in a more homogenous product offering, which has increased competition across the home loan industry for loan originations. Furthermore, our existing and potential competitors may decide to modify their business models to compete more directly with our loan origination and servicing models. Since the withdrawal of a number of large participants from these markets following the Financial Crisis, there have been relatively few large nonbank participants.

In addition, technological advances and heightened e-commerce activities have increased consumers’ accessibility to products and services. This has intensified competition among banks and nonbanks in offering home loans. We may be unable to compete successfully in our industries and this could adversely affect our business, financial condition and results of operations.

Increases in delinquencies and defaults may adversely affect our business, financial condition and results of operations.

The level of home prices and home price appreciation affects performance in the home loan industry. For example, falling home prices between 2007 and 2011 across the United States resulted in higher LTV ratios, lower recoveries in foreclosure and an increase in loss severities above those that would have been realized had property values remained the same or continued to increase. Though housing values have stabilized and risen in many markets, many borrowers do not yet have sufficient equity in their homes to permit them to refinance their existing loans, which prevents them from financing into more affordable loans. There is also a risk that the current recovery in housing prices reverses and the U.S. experiences another decline in housing prices further reducing borrower equity and incentive to repay. Additionally, adverse macroeconomic conditions may further reduce borrowers’ ability to pay. Further, if rates rise borrowers with adjustable rate home loans may face higher monthly payments as the interest rates on those home loans adjust upward from their initial fixed rates or low introductory rates. All of these factors could potentially contribute to an increase in home loan delinquencies and correspondingly, defaults and foreclosures.

Increased home loan delinquencies, defaults and foreclosures may result in lower revenue for loans that we service for the Agencies, such as Fannie Mae or Freddie Mac, because we only collect servicing fees from the Agencies for performing loans. Additionally, while increased delinquencies generate higher ancillary fees, including late fees, these fees are not likely to be recoverable in the event that the related loan is liquidated. Also, increased home loan defaults may ultimately reduce the number of home loans that we service.

Increased home loan delinquencies, defaults and foreclosures will also result in a higher cost to service those loans due to the increased time and effort required to collect payments from delinquent borrowers and to liquidate properties or otherwise resolve loan defaults if payment collection is unsuccessful, and only a portion of these increased costs are recoverable under our servicing agreements. Any loan level advances made on defaulted loans within the allowable levels provided by investors and insurers are recoverable either from the borrower in a reinstatement or the investors/insurers in a liquidation. Increased home loan delinquencies, defaults and foreclosures may also result in an increase in our interest expense and affect our liquidity if we are required to borrow to fund an increase in our advancing obligations. Any additional cost to service these loans, including interest expense on loan level advances, are generally not recoverable and are considered a cost of doing business.

In addition, we are subject to risks of borrower defaults and bankruptcies in cases where we might be required to repurchase loans sold with recourse or under representations and warranties. In these cases, a borrower filing for bankruptcy during foreclosure could have the effect of staying the foreclosure and thereby delaying the foreclosure process, which may potentially result in a reduction or discharge of a borrower’s home loan debt. Even if we are successful in directing a foreclosure on a home loan that has been repurchased, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover our cost basis in the loan, resulting in a loss to us. Furthermore, any costs or delays involved in the foreclosure of the home loan or a liquidation of the underlying property will further reduce the net proceeds and, thus, increase the loss. If these risks materialize, they could have a material adverse effect on our business, financial condition and results of operations.

In the event we originate home loans that we are unable to sell, we will bear the risk of loss of principal on such home loans. An increase in delinquency rates could therefore adversely affect our business, financial condition and results of operations.

Similarly, an increase in defaults or delinquencies may impact the performance of our personal loan business. If delinquencies or defaults on personal loans increase, it has the potential to decrease investor interest in the asset class and make the sale of personal loans to investors more difficult, potentially reducing fee income relating to the origination of personal loans.

Our underwriting guidelines may not be able to accurately predict the likelihood of defaults on some of the home loans in our portfolio.

We originate and sell Agency-eligible residential home loans, which meet the underwriting guidelines defined by the Agencies. In addition, our underwriting policies include additional requirements designed to predict a borrower’s ability to repay. In spite of these standards, our underwriting guidelines may not always correlate with home loan defaults. For example, FICO scores, which we obtain on all loans, purport only to be a measurement of the relative degree of risk a borrower represents to a lender (i.e., that a borrower with a higher score is statistically expected to be less likely to default in payment than a borrower with a lower score). Underwriting guidelines cannot predict two of the most common reasons for a default on a home loan: loss of employment and serious medical illness. Any increase in default rates could have a material adverse effect on our business, financial condition, liquidity and results of operations.

Adverse developments in the secondary home loan market, including the MBS market, could have a material adverse effect on our business, financial position, results of operations and cash flows.

We historically have relied on selling or securitizing our home loans into the secondary market in order to generate liquidity to fund maturities of our indebtedness, the origination and warehousing of home loans, the retention of servicing rights and for general working capital purposes. We bear the risk of being unable to sell or securitize our home loans at advantageous times and prices or in a timely manner. Demand in the secondary market and our ability to complete the sale or securitization of our home loans depends on a number of factors, many of which are beyond our control, including general economic conditions, general conditions in the banking system, the willingness of lenders to provide funding for home loans, the willingness of investors to purchase home loans and MBS and changes in regulatory requirements. If it is not possible or economical for us to complete the sale or securitization of certain of our LHFS, we may lack liquidity under our Warehouse Lines to continue to fund such home loans and our revenues and margins on new loan originations would be materially and negatively impacted, which would materially and negatively impact our consolidated net revenue and net income and also have a material adverse effect on our overall business and our consolidated financial position. The severity of the impact would be most significant to the extent we were unable to sell conforming home loans to the GSEs or securitize such loans pursuant to Agency-sponsored programs.

During 2014 and the six months ended June 30, 2015 approximately 56% and 59%, respectively, of the loans that we originated were delivered to Fannie Mae or Freddie Mac to be pooled into agency MBS and 36%

and 29%, respectively, of our loans were originated to FHA guidelines and pooled into Ginnie Mae MBS. Disruptions in the general MBS market have occurred in the past. Any significant disruption or period of illiquidity in the general MBS market would directly affect our liquidity because no existing alternative secondary market would likely be able to accommodate on a timely basis the volume of loans that we typically sell in any given period. Accordingly, if the MBS market experiences a period of illiquidity, we might be prevented from selling the loans that we produce into the secondary market in a timely manner or at favorable prices, which could materially adversely affect our business, financial condition and results of operations.

Risks Related to Our Regulatory Environment

We 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, results of operations and ability to compete.

We are required to comply with a wide array of federal, state and local laws and regulations that regulate, among other things, the manner in which we conduct our loan origination and servicing activities, the terms of our loans and the fees that we may charge. See “Business—Supervision and Regulation.” A material or continued failure to comply with any of these laws or regulations could subject us to lawsuits or governmental actions and/or damage our reputation, which could materially adversely affect our business, financial condition and results of operations.

Additionally, federal, state and local governments and regulatory agencies have recently proposed or enacted numerous new laws, regulations and rules related to home loans and personal loans. Federal and state regulators are also enforcing existing laws, regulations and rules more aggressively and enhancing their supervisory expectations regarding the management of legal and regulatory compliance risks. Consumer finance regulation is constantly changing, and new laws or regulations, or new interpretations of existing laws or regulations, could have a materially adverse impact on our ability to operate as we currently intend.

These regulatory changes and uncertainties make our business planning more difficult and could result in changes to our business model and potentially adversely impact our result of operations. New laws or regulations also require us to incur significant expenses to ensure compliance. Accordingly, uncertainty persists regarding the competitive impact of new laws or regulations. As compared to our competitors, we could be subject to more stringent state or local regulations, or could incur marginally greater compliance costs as a result of regulatory changes. In addition, our failure to comply (or to ensure that our agents and third party service providers comply) with these laws or regulations may result in costly litigation or enforcement actions, the penalties for which could include but are not limited to: revocation of required licenses; fines and other monetary penalties; civil and criminal liability; substantially reduced payments by borrowers; modification of the original terms of loans, permanent forgiveness of debt, or inability to directly or indirectly collect all or a part of the principal of or interest on loans; delays in the foreclosure process and increased servicing advances; and increased repurchase and indemnification claims.

Proposals to change the statutes affecting financial services companies are frequently introduced in Congress and state legislatures and, if enacted, may affect our operating environment in substantial and unpredictable ways. In addition, numerous federal and state regulators have the authority to pass or change regulations that could affect our operating environment in substantial and unpredictable ways. We cannot determine whether any such legislative or regulatory proposals will be enacted and, if enacted, the ultimate impact that any such potential legislation or implementing regulations, or any such potential regulatory actions by federal or state regulators, would have upon our financial condition or results of operations.

With respect to state regulation, although we seek to comply with applicable state loan, loan broker, home loan originator, servicing, debt collection and similar statutes in all U.S. jurisdictions, and with licensing or other

requirements that we believe may be applicable to us, if we are found to not have complied with applicable laws, we could lose one or more of our licenses or authorizations or face other sanctions or penalties or be required to obtain a license in such jurisdiction, which may have an adverse effect on our ability to continue to originate home loans and to facilitate personal loans, perform our servicing obligations or make our loan platform available to borrowers in particular states, which may adversely impact our business.

We depend on the programs of the GSEs and 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.

We sell home loans to various entities, including Fannie Mae and Freddie Mac, which include the home loans in GSE-guaranteed securitizations. In addition, we pool FHA insured and VA guaranteed home loans, which back securities guaranteed by Ginnie Mae. During the year ended December 31, 2014 and the six months ended June 30, 2015, respectively, 56% and 59% of our home loan originations were sold to Fannie Mae and Freddie Mac and 36% and 29% of our home loan originations were FHA insured or VA guaranteed loans. We derive material financial benefits from our relationships with the Agencies, as our ability to originate and sell home loans under their programs reduces our credit exposure and home loans inventory financing costs. In addition, we receive compensation for servicing loans on behalf of Fannie Mae, Freddie Mac and Ginnie Mae.

The future of the GSEs and the role of the Agencies in the U.S. mortgage markets are uncertain. In 2008, Fannie Mae and Freddie Mac experienced catastrophic credit losses and were placed in the conservatorship of the FHFA. The FHA also was severely impacted by credit losses following the downturn in the U.S. housing market. The Obama Administration proposed in 2011 a plan to responsibly reduce the role of the GSEs in the mortgage market and, ultimately, wind down both institutions, which would be replaced by a new, yet-undefined housing finance model. In addition, proposals have been introduced by members of Congress recently to reform the role of the GSEs in the U.S. housing sector. It is not yet possible to determine whether or when any such proposals, or any additional federal legislative proposals, may be enacted, what form any final legislation or policies might take and how any such proposals, legislation or policies may impact our business, operations and financial condition.

The roles of the GSEs (including as insurers or guarantors of MBS) could be eliminated, or significantly reduced as a consequence of proposed reforms to the housing market. Additional reforms, some of which could be implemented through changes to the GSEs’ guidelines, might include: (i) further reductions in conforming loan limits; (ii) further tightening of underwriting standards and down payment requirements; (iii) increases in insurance premiums or guarantee fees; or (iv) changes to other servicer charges or compensation. In January 2011, the FHFA directed Fannie Mae and Freddie Mac to develop a joint initiative to consider alternatives for future mortgage servicing structures and compensation. Under this proposal, the GSEs are considering potential structures in which the minimum service fee would be reduced or eliminated altogether. This would provide home loan servicers with the ability to either sell all or a portion of the retained servicing fee for cash up front, or retain an excess servicing fee. While the proposal provides additional flexibility in managing liquidity and capital requirements, it is unclear how the various options might impact MBS pricing and the related pricing of excess servicing fees. The proposal may also have implications for the valuation of our existing servicing assets. The GSEs are also considering different pricing options for non-performing loans to better align servicer incentives with MBS investors and provide the loan guarantor the ability to transfer non-performing servicing. The FHFA has indicated that any change in the servicing compensation structure would be prospective and the changes, if implemented, could have a significant impact on the entire home loan industry and on the results of operations and cash flows of our home loan business.

The extent and timing of any reform regarding the GSEs, FHA and/or the home mortgage market are uncertain, which makes our business planning more difficult. Discontinuation, or significant changes in the roles or practices, of the Agencies, including changes to their guidelines and other proposed reforms, could require us to revise our business models, which could ultimately negatively impact our results of operations. Significant uncertainty also persists regarding the competitive impact of proposals to eliminate the GSEs in favor of private sector models.

Changes in GSE or Ginnie Mae selling and/or servicing guidelines or guarantees could adversely affect our business, financial condition and results of operations.

The Agencies require us to follow specific guidelines, which may be changed at any time. The Agencies have the ability to provide monetary incentives for loan servicers that perform well and to assess penalties for those that do not, including compensatory penalties against loan servicers in connection with the failure to meet specified timelines relating to delinquent loans and foreclosure proceedings and other breaches of servicing obligations. We generally cannot negotiate the terms of these guidelines or predict the penalties that the Agencies might impose for a failure to comply with those guidelines. Any failure by us to conform to these guidelines would materially adversely affect us.

We are required to follow specific guidelines that impact the way that we originate and service Agency loans, including guidelines with respect to:

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credit standards for home loans;

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our staffing levels and other origination and servicing practices;

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the fees that we may charge to consumers or pass-through to the Agencies;

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our modification standards and procedures;

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the amount of non-reimbursable advances; and

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internal controls such as data security, compliance, quality control and internal audit.

Our selling and servicing obligations under our contracts with the Agencies may be amended, restated, supplemented or otherwise modified by the Agencies from time to time without our specific consent. A significant modification to our selling and/or servicing obligations under our Agency contracts could adversely affect our business, financial condition and results of operations.

In particular, the FHFA has directed the GSEs to align their guidelines for servicing delinquent home loans that they own or that back securities which they guarantee, which can result in monetary incentives for servicers that perform well and penalties for those that do not. In addition, the FHFA has directed Fannie Mae to assess compensatory penalties against servicers in connection with the failure to meet specified timelines relating to delinquent loans and foreclosure proceedings and other breaches of servicing obligations. A significant change in these guidelines that has the effect of decreasing the fees we charge or requires us to expend additional resources in providing home loan services could decrease our revenues or increase our costs, which would adversely affect our business, financial condition and results of operations.

In addition, changes in the nature or extent of the guarantees provided by the GSEs or the insurance provided by the FHA could also have broad adverse market implications. The fees that we are required to pay to the GSEs for these guarantees have increased significantly over time and any future increases in these fees would adversely affect our business, financial condition and results of operations.

We are subject to regulatory investigations and inquiries and may incur fines, penalties and increased costs that could negatively impact our future liquidity, financial position and results of operations or damage our reputation.

Federal and state agencies have broad enforcement powers over us and others in the loan origination and servicing industry, including powers to investigate our lending and servicing practices and broad discretion to deem particular practices unfair, deceptive, abusive or otherwise not in accordance with the law. See “Business—Supervision and Regulation.” The continued focus of regulators on the practices of the loan origination and servicing industry have resulted and could continue to result in new enforcement actions that could directly or indirectly affect the manner in which we conduct our business and increase the costs of defending and settling any such matters, which could impact our reputation and/or results of operations.

In addition, the laws and regulations applicable to us are subject to administrative or judicial interpretation, but some of these laws and regulations have been enacted only recently and may not yet have been interpreted or may be interpreted infrequently. As a result of infrequent or sparse interpretations, ambiguities in these laws and regulations may leave uncertainty with respect to permitted or restricted conduct under them. Any ambiguity under a law to which we are subject may lead to regulatory investigations, governmental enforcement actions or private causes of action, such as class action lawsuits, with respect to our compliance with applicable laws and regulations. Provisions that by their terms, or as interpreted, apply to lenders or servicers of loans may be construed in a manner that favors our borrowers and customers over loan originators and servicers. Furthermore, provisions of our loan agreements could be construed as unenforceable by a court.

The OIG recently completed two compliance audits of our operations in order to determine: (i) whether we originated FHA loans containing down payment assistance (“DPA”) in accordance with HUD FHA regulations; and (ii) whether we originated FHA loans containing Golden State Finance Authority DPA in accordance with HUD FHA regulations.

In connection with each audit, the OIG found that the FHA loans we originated did not always meet HUD requirements, alleging that the DPA used for certain loans constituted ineligible gifts and secondary financing funds which improperly resulted in a premium interest rate for the borrower. Specifically, the OIG contends that funds provided by State Housing Finance Agencies (“HFAs”) cannot properly be considered DPA funds. Accordingly, the OIG (i) recommended that HUD’s Associate General Counsel for Program Enforcement determine legal sufficiency and, if legally sufficient, pursue civil and administrative remedies, civil monetary penalties or both against us and our principals or both and (ii) recommended that HUD’s Deputy Assistance Secretary for Single Family Housing require us to cease originating FHA loans with the allegedly ineligible assistance; indemnify HUD for all FHA loans identified by the OIG as ineligible and any other loans that likely contain ineligible assistance (which could result in an indemnification obligation exceeding $100,000,000); reimburse amounts (less than $100,000 in the aggregate) to borrowers for fees that the OIG alleges were not customary or reasonable or were not representative of their intended purpose; collaborate with loan servicers to reduce interest rates for borrowers that the OIG asserts received DPA and were charged a premium interest rate; reimburse borrowers for overpaid interest payments as a result of any premium interest rate; and update our internal checklists to include specific HUD requirements on gifts, secondary financing, premium rates, and allowable fees. For more information, see “Business—Supervision and Regulation—Supervision and Enforcement.” Based on public statements that HUD has made in similar contexts, the outcome of the compliance audits is uncertain, and any actions taken against us by HUD based on the OIG’s recommendations could harm our reputation and otherwise negatively impact our business.

The CFPB continues to be more active in its monitoring of the home loan and personal loan origination and servicing sectors. New rules and regulations, such as the TILA-RESPA Integrated Disclosure rules, and/or more stringent enforcement of existing rules and regulations by the CFPB, including with respect to vendor management, could result in increased compliance costs, enforcement actions, fines, penalties and the inherent reputational risk that results from such actions.

The CFPB is charged, in part, with enforcing certain federal laws involving consumer financial products and services and is empowered with examination, enforcement and rulemaking authority. The CFPB has taken an active role in lending markets. For example, the CFPB sends examiners to banks and other financial institutions that service and/or originate home loans to determine compliance with applicable federal consumer financial laws and to assess whether consumers’ interests are protected.

Among other things, the CFPB issued final rules that took effect on January 10, 2014 amending Regulation X, which implements RESPA, and Regulation Z, which implements TILA. These final rules implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) regarding home loan servicing, including periodic billing statements, certain notices and acknowledgements, prompt crediting of borrowers’ accounts for payments received, additional notice, availability and loss mitigation options for delinquent borrowers, prompt investigation of complaints by borrowers, prompt responses to inquiries by borrowers and required additional steps to be taken before

purchasing insurance to protect the lender’s interest in the property. On November 20, 2014 the CFPB issued proposed amendments to these rules and expects the amendments to take effect in 2016 or early 2017. The CFPB has also provided for stricter rules governing marketing services arrangements which could impact our businesses practices. See “Business—Supervision and Regulation.”

The CFPB also has enforcement authority with respect to the conduct of third-party service providers of financial institutions. The CFPB has made it clear that it expects non-bank entities to maintain an effective process for managing risks associated with third-party vendor relationships, including compliance-related risks. In connection with this vendor risk management process, we are expected to perform due diligence reviews of potential vendors, review vendors’ policies and procedures and internal training materials to confirm compliance-related focus, include enforceable consequences in contracts with vendors regarding failure to comply with consumer protection requirements, and take prompt action, including terminating the relationship, in the event that vendors fail to meet our expectations. The CFPB is also applying greater scrutiny to compensation payments to third-party providers for marketing services and may issue guidance that narrows the range of acceptable payments to third-party providers as part of marketing services agreements, lead generation agreements and other third-party marketer relationships. We generate a significant amount of our business through marketing service agreements, lead generation agreements and other third-party marketer relationships. Consequently, if the CFPB were to alter the forms of acceptable payment under these arrangements, it could have a materially adverse impact on our business.

Additionally, in November 2013, the CFPB finalized its TILA-RESPA Integrated Disclosure (“TRID”) rule, which is intended to improve the way consumers receive information about home loans both when they apply and when they are getting ready to close. The TRID rule (also known as the Know Before You Owe Mortgage Disclosure Rule) became effective on October 3, 2015 and represents a comprehensive overhaul of not only the existing home loan disclosure rules, but the entire home loan origination process, and requires industry wide changes to the way in which home loan brokers, lenders, settlement agents and service providers must work with each other. The rule has required, and will continue to require, substantial expense and effort in order to implement.

We have relied on several third party vendors, in addition to our internal resources, to implement all of the home loan disclosure changes required by TRID. Failure of our vendors to properly integrate the various information technology systems required for us to effectively implement the TRID rule could result in additional expense and diversion of management attention in order to ensure we have appropriately implemented the TRID rule. In addition, any such failure of these information technology systems to be effectively integrated could result in our failure to have implemented the TRID rule prior to the CFPB mandated deadline, which may subject us to serious adverse consequences.

The TRID rule and other regulations promulgated under the Dodd-Frank Act or by the CFPB and actions by the CFPB could materially and adversely affect the manner in which we conduct our business, result in heightened federal regulation and oversight of our business activities, and in increased costs and potential litigation associated with our business activities. Our failure to comply with the laws, rules or regulations to which we are subject, whether actual or alleged, would expose us to fines, penalties or potential litigation liabilities, including costs, settlements and judgments, any of which could have a material adverse effect on our business, financial position, results of operations or cash flows and our ability to make distributions to our stockholders.

The federal government is increasingly seeking significant monetary damages and penalties against home loan lenders and servicers under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) and the False Claims Act (“FCA”) for making false statements and seeking reimbursement for ineligible costs and expenses.

The federal government has initiated a number of actions against home loan lenders and servicers alleging violations of FIRREA and the FCA. Some of the actions against lenders allege that the lenders sold defective loans to Fannie Mae and Freddie Mac, while representing that the loans complied with the GSE’s underwriting guidelines. The federal government has also brought actions against lenders asserting that they submitted claims for FHA-insured loans that the lender falsely certified to HUD met FHA underwriting requirements that resulted in FHA paying out millions of dollars in insurance claims to cover the defaulted loans. HUD’s Office of Inspector General has commenced an audit of our operations and has advised us of instances of non-compliance with applicable rules. See “Business—Supervision and Regulation—Supervision and Enforcement” and the risk factor captioned “We are subject to regulatory investigations and inquiries and may incur fines, penalties and increased costs that could negatively impact our future liquidity, financial position and results of operations or damage our reputation.” Other allegations involve the HAMP, which is a federal program established to help eligible homeowners impacted by financial hardship by offering them loan modifications on their home loans. HAMP requires participating home loan servicers to file annual certifications that they have been truthful and accurate in their HAMP-related activities, including reports they submitted to the government in which they acknowledged that providing false or fraudulent information may violate the FCA. Actions have also been filed against certain banks alleging they improperly denied borrowers access to HAMP services, and submitted fraudulent certifications and accepted financial incentives for HAMP participation. Because these actions carry the possibility for treble damages, many have resulted in settlements totaling in the hundreds of millions of dollars, as well as required lenders and servicers to make significant changes in their practices.

Federal and state legislative and agency initiatives in MBS, servicing eligibility standards and securitization may adversely affect our financial condition and results of operations.

There are federal and state legislative and agency initiatives related to MBS that could, once fully implemented, adversely affect our business. For instance, the risk retention requirement under the Dodd-Frank Act requires securitizers to retain a minimum beneficial interest in MBS they sell through a securitization, absent certain QRM exemptions. The rule also permits securitizers to share a portion of the risk retention requirement with certain originators. Once implemented, the risk retention requirement may result in higher costs of certain origination operations and impose on us additional compliance requirements to meet servicing and origination criteria for QRMs. The risk retention requirements become effective, for MBS, in December 2015. Additionally, the amendments to Regulation AB relating to the registration statement required to be filed by issuers of asset-backed securities (“ABS”) adopted by the SEC pursuant to the Dodd-Frank Act increases compliance costs for ABS issuers, which in turn increases our cost of funding and operations. Lastly, certain proposed federal legislation would permit borrowers in bankruptcy to restructure home loans secured by primary residences. Bankruptcy courts could, if this legislation is enacted, reduce the principal balance of a home loan that is secured by a lien on real property, reduce the home loan interest rate, extend the term to maturity or otherwise modify the terms of a bankrupt borrower’s home loan. Any of the foregoing could materially affect our financial condition and results of operations.

Discontinuation of, and changes to, government home loan modification and refinance programs could adversely affect our future revenues and business.

The federal government has introduced a number of programs intended to assist homeowners in modifying or refinancing their existing home loans or taking other steps to avoid foreclosure. Most of these programs provide incentives to lenders and servicers. Under the Making Home Affordable Plan, an official program of the U.S. Departments of the Treasury and HUD, which includes HAMP and HARP, a participating servicer may be entitled to receive financial incentives in connection with any modification plans that it enters into with eligible borrowers and subsequent success fees to the extent that a borrower remains current in any agreed upon loan

modification. The existing HARP facilitates refinancing, which boosts our refinance revenues, but may negatively impact the valuation of our home loan servicing rights to the extent it increases home loan prepayment speeds. It may also result in our servicing portfolio becoming increasingly subject to run-off if we are not successful in recapturing our existing loans that are refinanced. The FHA also has a negative equity refinance program that facilitates refinancing of loans to borrower with little or negative equity in their homes.

Although for the year ended December 31, 2014 and the six months ended June 30, 2015, only 8.7% and 3.5%, respectively, of our originations volume was attributable to these programs, changes to the terms or requirements of these programs and their currently scheduled expiration at the end of 2016 for HAMP and HARP and at the end of 2016 for FHA’s negative equity refinance program could adversely affect our future revenues and business as we are likely to face increased competition by other market participants who have derived a greater portion of their revenues from these programs.

Because we are not a federally chartered depository institution, we generally do not benefit from federal preemption of state home loan banking, loan servicing or debt collection licensing and regulatory requirements. We must comply with state licensing requirements and varying compliance requirements in all the states in which we operate and the District of Columbia, and we are sensitive to regulatory changes that may increase our costs through stricter licensing laws, disclosure laws or increased fees or that may impose conditions to licensing that we or our personnel are unable to meet. Further, our reliance on warehouse lines of credit for purposes of funding loans contains certain risks, as the recent home loan crisis resulted in warehouse lenders refusing to honor lines of credit for non-banks without a deposit base.

In most states in which we operate, a regulatory agency or agencies regulate and enforce laws relating to loan servicers, brokers and originators. These rules and regulations, which vary from state to state, generally provide for, but are not limited to: licensing as a loan servicer, loan originator or broker (including individual-level licensure for employees engaging in loan origination activities), loan modification processor/underwriter or third-party debt default specialist (or a combination thereof); requirements as to the form and content of contracts and other documentation; licensing of our employees and independent contractors with whom we contract; and employee hiring background checks. They also set forth restrictions on origination, brokering and collection practices, restrictions related to fees and charges, and disclosure and record-keeping requirements. They establish a variety of borrowers’ rights in the event of violations of such rules. Future state legislation and changes in existing regulation may significantly increase our compliance costs or reduce the amount of ancillary fees, including late fees that we may charge to borrowers. This could make our business cost-prohibitive in the affected state or states and could materially affect our business.

In addition, we are subject to periodic examinations by state and other regulators in the jurisdictions in which we conduct business, which can result in increases in our administrative costs and refunds to borrowers of certain fees earned by us, and we may be required to pay substantial penalties imposed by those regulators due to compliance errors, or we may lose our license or our ability to do business in the jurisdiction otherwise may be impaired. Fines and penalties incurred in one jurisdiction may cause investigations or other actions by regulators in other jurisdictions.

We may not be able to maintain all currently requisite licenses and permits. In addition, the states that currently do not provide extensive regulation of our business may later choose to do so, and if such states so act, we may not be able to obtain or maintain all requisite licenses and permits, which could require us to modify or limit our activities in the relevant state(s). The failure to satisfy those and other regulatory requirements could result in a default under our Warehouse Lines, other financial arrangements and/or servicing agreements and thereby have a material adverse effect on our business, financial condition and results of operations.

We may be subject to liability for potential violations of predatory lending laws, which could adversely impact our results of operations, financial condition and business.

Various U.S. federal, state and local laws have been enacted that are designed to discourage predatory lending practices. The HOEPA amended TILA to prohibit inclusion of certain provisions in “high cost home loans” that have interest rates or origination costs in excess of prescribed levels, and require that borrowers receiving such loans be given certain disclosures, in addition to the standard TILA home loan disclosures, prior to origination. It also provides that an assignee of such a “high cost home loan” is subject to all claims and any defense which the borrower could assert against the original creditor, which has severely constrained the secondary market for such loans. Some states have enacted, or may enact, similar laws or regulations, which in some cases impose restrictions and requirements greater than those in HOEPA. In addition, under the anti-predatory lending laws of some states, the origination of certain home loans, including loans that are not classified as “high-cost” loans under applicable law, must satisfy a net tangible benefit test with respect to the related borrower. Such tests may be highly subjective and open to interpretation. As a result, a court may determine that a residential home loan, for example, does not meet the test even if the related originator reasonably believed that the test was satisfied. If any of our home loans are found to have been originated in violation of predatory or abusive lending laws, we could incur losses, which could adversely impact our results of operations, financial condition and business. If any of our home loans are found to exceed high-cost thresholds under HOEPA or equivalent state laws, we may be unable to sell them on the secondary market and/or be required to repurchase them from our investors.

The conduct of the brokers through whom we originate our wholesale home loans could subject us to fines or other penalties.

The brokers through whom we originate wholesale home loans have parallel and separate legal obligations to which they are subject. While these laws may not explicitly hold the originating lenders responsible for the legal violations of such brokers, U.S. federal and state agencies increasingly have sought to impose such liability. The U.S. Department of Justice (“DOJ”), through its use of a disparate impact theory under the ECOA and the Fair Housing Act, is actively holding home loan lenders responsible for the pricing practices of brokers, alleging that the lender is directly responsible for the total fees and charges paid by the borrower even if the lender neither dictated what the broker could charge nor kept the money for its own account. In addition, under the new TRID rule, we may be held responsible for improper disclosures made to consumers by brokers. We may be subject to claims for fines or other penalties based upon the conduct of the independent home loan brokers with which we do business.

If the personal loan products we facilitate are found to violate state usury laws or other state consumer protection laws, we may have to make restitution, pay fines and/or alter our business model, with resulting harm to our financial condition and operations.

The personal loans we make available are originated by Cross River Bank and sold by Cross River Bank shortly after origination to third-party investors. Because Cross River Bank is an FDIC-insured bank chartered by the State of New Jersey, we believe that the interest rates on these loans are governed nationwide by Section 27 of the Federal Deposit Insurance Act (“Section 27”), without regard to more restrictive laws that might otherwise apply. Section 27 provides that an FDIC-insured state bank may charge interest at the rates allowed by the laws of the state where it is located. New Jersey allows its state banks to charge interest at a rate of 30% per annum on loans to individuals and 50% per annum on loans to corporations, limited liability companies and limited liability partnerships.

The applicability of Section 27 to the personal loans originated through our platform can be challenged on two potential bases: First, it could be argued that, notwithstanding Cross River Bank’s funding of the loans and its formal status as the lender, as a matter of substance either loanDepot or the nonbank assignee and not Cross River Bank should be treated as the “true lender,” with the result that state usury laws and not Section 27 would

apply. Second, it could be argued that, even if Cross River Bank is the “true lender,” Section 27 ceases to apply once Cross River Bank sells the loan to a nonbank assignee, again with the result that state usury laws would apply.

The “true lender” argument has been litigated in a number of courts, most commonly (but not always) in cases involving short-term “payday loans” offered at triple-digit annual percentage rates, where the nonbank partner of the bank nominally making the loan provides turnkey marketing, billing, collection and accounting services in connection with the loans and also acquires the predominant if not entire economic interest in the loans. While our program involves neither payday loans nor the sales of loans to us, there nevertheless remains a risk that a court in one or more jurisdictions could conclude that the loans are unlawful because Cross River Bank is not the “true lender.”

In May 2015, the United States Court of Appeals for the Second Circuit issued a decision in Madden v. Midland Funding, holding that a nonbank loan purchaser cannot rely on federal law to continue charging the interest the bank lender can charge under federal law. As a result of Madden, Cross River Bank limits the maximum interest rates charged on personal loans to borrowers in the Second Circuit (i.e., New York, Connecticut and Vermont). It is unclear at this stage: (i) whether the Madden decision will be adopted by courts outside the Second Circuit; (ii) whether, notwithstanding Madden, nonbank loan purchasers can continue to charge the interest Cross River Bank can charge as a matter of state common law; or (iii) what long-term effects this ruling will have on the personal loans we facilitate, especially outside the Second Circuit. To date, $ in UPB of personal loans that we have facilitated would have exceeded the maximum interest rates permitted under state law if Madden was applied nationally. We have not facilitated any personal loans in excess of the maximum interest rates permitted under state law in states located in the Second Circuit.

If a state attorney general or other authority (or a borrower suing on a class basis once our arbitration agreements no longer protect us against class actions) were to successfully challenge our program with Cross River Bank on the basis of either or both of the foregoing arguments, we could be compelled in the state in question to pay restitution and/or usury penalties as to existing loans (and any new loans originated at rates that are not permitted under the laws of the states in question), subject to applicable statutes of limitation. We could also be required to lower the maximum rates and fees charged on personal loans offered through the platform, obtain additional licenses and/or make other changes to our mode of operation. These changes could reduce our profits and operating efficiency with respect to personal loans.

Additional state consumer protection laws would be applicable to the loans facilitated through our personal loan program if we were re-characterized as a lender, and the loans could be voidable or unenforceable. In addition, we could be subject to claims by borrowers, as well as enforcement actions by regulators. Even if we were not required to cease doing business with residents of certain states or to change our business practices to comply with applicable laws and regulations, we could be required to register or obtain licenses or regulatory approvals that could impose a substantial cost on us.

Regulatory agencies and consumer advocacy groups are becoming more aggressive in asserting claims that the practices of lenders and loan servicers result in a disparate impact on protected classes.

Antidiscrimination statutes, such as the Fair Housing Act and the ECOA, prohibit creditors from discriminating against loan applicants and borrowers based on certain characteristics, such as race, religion and national origin. Various federal regulatory agencies and departments, including the DOJ and CFPB, take the position that these laws apply not only to intentional discrimination, but also to neutral practices that have a disparate impact on a group that shares a characteristic that a creditor may not consider in making credit decisions protected classes (i.e., creditor or servicing practices that have a disproportionate negative affect on a protected class of individuals).

These regulatory agencies, as well as consumer advocacy groups and plaintiffs’ attorneys, are focusing greater attention on “disparate impact” claims. The U.S. Supreme Court recently confirmed that the “disparate

impact” theory applies to cases brought under the Fair Housing Act, while emphasizing that a causal relationship must be shown between a specific policy of the defendant and a discriminatory result that is not justified by a legitimate objective of the defendant. Although it is still unclear whether the theory applies under ECOA, regulatory agencies and private plaintiffs can be expected to continue to apply it to both the Fair Housing Act and ECOA in the context of home loan lending and servicing. To extent that the “disparate impact” theory continues to apply, we may be faced with significant administrative burdens in attempting to comply and potential liability for failures to comply.

Furthermore, many industry observers believe that the “ability to pay” rule issued by the CFPB, discussed above, will have the unintended consequence of having a disparate impact on protected classes. Specifically, it is possible that lenders that make only qualified mortgages may be exposed to discrimination claims under a disparate impact theory.

In addition to reputational harm, violations of the ECOA and the Fair Housing Act can result in actual damages, punitive damages, injunctive or equitable relief, attorneys’ fees and civil money penalties.

The Dodd-Frank Act prevents us from using arbitration agreements to protect against class actions on residential real estate loans and will likely result in the next few years in the adoption of a CFPB rule that will prevent us from using arbitration agreements to protect against class actions on other loans.

At present, where permitted by applicable law, companies providing consumer products and services, including consumer loans, frequently require their customers to agree to arbitrate any disputes on an individual basis rather than pursuing lawsuits, including class actions. Such agreements are binding in accordance with their terms as a matter of federal law, even where state law provides otherwise. Thus, arbitration agreements can serve as a vehicle for eliminating class action exposure.

Under the Dodd-Frank Act, arbitration agreements are not permitted for residential real estate loans. Accordingly, in the event of a purported violation of applicable law with respect to our real estate lending activities, we could be subject to class action liability.

While Cross River Bank’s personal loan agreements currently include arbitration agreements, the Dodd-Frank Act explicitly authorizes the CFPB to adopt a rule prohibiting the use of arbitration agreements in consumer financial services contracts. We expect the CFPB to adopt such a rule in the next few years. Any such rule, assuming it survives judicial challenge, would apply prospectively to contracts entered into at least 181 days after the rule becomes final; it would not apply to existing arbitration agreements or agreements entered into within 180 days after the rule becomes final. Accordingly, in the next few years, we expect to encounter a renewed risk of class action lawsuits attacking the personal loan program. This will significantly increase legal risks associated with this program.

In recent years, federal regulators and the DOJ have increased their focus on enforcing the Servicemembers Civil Relief Act (“SCRA”) against loan owners and servicers. Similarly, state legislatures have taken steps to strengthen their own state-specific versions of the SCRA.

The DOJ and federal regulators have entered into significant settlements with a number of loan servicers alleging violations of the SCRA. Some of the settlements have alleged that the servicers did not correctly apply the SCRA’s 6% interest rate cap, while other settlements have alleged that servicers did not comply with the SCRA’s foreclosure and default judgment protections when seeking to foreclose upon a home loan note or collect payment of a debt. Recent settlements indicate that the DOJ and federal regulators broadly interpret the scope of the substantive protections under the SCRA and are moving aggressively both to identify instances in which loan servicers have not complied with the SCRA. Alleged SCRA non-compliance was a focal point of the National Mortgage Settlement by the DOJ as well as the Independent Foreclosure Review jointly supervised by the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve, and several additional SCRA-related settlements continue to make this a significant area of scrutiny for both regulatory examinations and public enforcement actions.

In addition, most state legislatures have their own versions of the SCRA. In most instances these laws extend some or all of the substantive benefits of the federal SCRA to members of the state National Guard who are in state service, but certain states also provide greater substantive protections to National Guard members or individuals who are in federal military service. Recent years have seen states revise their laws to increase the potential benefits to individuals, and these changes pose additional compliance burdens on creditors as they seek to comply with both the federal and relevant state versions of the SCRA.

Privacy and information security are an increasing focus of regulators at the federal and state levels.

Privacy requirements under the Gramm-Leach-Bliley Act (“GLBA”) and Fair Credit Reporting Act (“FCRA”) are within the regulatory and enforcement authority of the CFPB and are a standard part of CFPB examinations. Information security requirements under GLBA and FCRA are, for non-depository mortgage lenders, generally under the regulatory and enforcement authority of the Federal Trade Commission (“FTC”). The FTC has taken several actions against financial institutions and other companies for failure to adequately safeguard personal information. State entities may also initiate actions for alleged violations of privacy or security requirements under state law. Failure to comply with applicable privacy requirements may have a material adverse effect on our business, financial condition and results of operations.

A cyber-attack, information or security breach, or a technology failure of ours or of a third party could adversely affect our ability to conduct our business, manage our exposure to risk or expand our businesses, result in the disclosure or misuse of confidential or proprietary information, increase our costs to maintain and update our operational and security systems and infrastructure, and adversely impact our results of operations, as well as cause reputational harm.

We are dependent on the security and efficacy of our infrastructure, computer and data management systems, as well as those of third parties with whom we interact. Cyber security risks have significantly increased in recent years. We devote significant resources to maintain and regularly update our systems and processes that are designed to protect the security of our computer systems, software, networks and other technology assets against attempts by unauthorized parties to obtain access to confidential information, destroy data, disrupt or degrade service, sabotage systems or cause other damage. From time to time we, our vendors (including service providers located offshore who conduct support services for us) and other companies that store or process confidential borrower personal and transactional data are targeted by unauthorized parties using malicious code and viruses or otherwise attempting to breach the security of our or our vendors’ systems and data. We employ extensive layered security at all levels within our organization to help us detect malicious activity, both from within the organization and from external sources. Although we have established, and continue to establish on an ongoing basis, defenses to identify and mitigate cyber-attacks, loss, unauthorized access to, or misuse of confidential or personal information could disrupt our operations, damage our reputation, and expose us to claims from customers, financial institutions, regulators, employees and other persons, any of which could have an adverse effect on our business, financial condition and results of operations.

Risks Related to Our Organizational Structure

We 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.

We will be a holding company and will have no material assets other than our equity interest in LD Holdings, which will be a holding company and will have no material assets other than its equity interests in LDLLC and Intermediate LLC. Intermediate LLC will also be a holding company with no material assets other than its equity interest in LDLLC. We have no independent means of generating revenue. We intend to cause LDLLC to make distributions to LD Holdings and Intermediate LLC and to cause Intermediate LLC to make distributions to LD Holdings, and LD Holdings to make distributions to its unitholders in an amount sufficient to cover all applicable taxes payable by them determined according to assumed rates, payments owing under the tax

receivable agreement, and dividends, if any, declared by us. To the extent that we need funds, and LDLLC or LD Holdings are restricted from making such distributions under applicable law or regulation, or are otherwise unable to provide such funds, it could materially and adversely affect our liquidity and financial condition.

After completion of this offering and the use of proceeds to us therefrom, the Parthenon Stockholders and Anthony Hsieh collectively as a group will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a “controlled company” within the meaning of the NYSE corporate governance standards. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a ‘‘controlled company’’ and may elect not to comply with certain corporate governance requirements, including:

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the requirement that a majority of the board of directors consists of independent directors;

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the requirement that our director nominees be selected, or recommended for our board of directors’ selection by a nominating and governance committee comprised solely of independent directors with a written charter addressing the nomination process;

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the requirement that the compensation of our executive officers be determined, or recommended to our board of directors for determination, by a compensation committee comprised solely of independent directors; and

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the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.

Following this offering, we intend to use these exemptions. As a result, we may not have a majority of independent directors, our governance and nominating committee and compensation committee may not consist entirely of independent directors and such committees will not be subject to annual performance evaluations. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements.

In addition, in 2012, the SEC passed final rules implementing provisions of the Dodd-Frank Act pertaining to compensation committee independence and the role and disclosure of compensation consultants and other advisers to the compensation committee. The SEC’s rules direct each of the national securities exchanges to develop listing standards requiring, among other things, that:

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compensation committees be composed of fully independent directors, as determined pursuant to new independence requirements;

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compensation committees be explicitly charged with hiring and overseeing compensation consultants, legal counsel and other committee advisors; and

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compensation committees be required to consider, when engaging compensation consultants, legal counsel or other advisors, certain independence factors, including factors that examine the relationship between the consultant or advisor’s employer and us.

As a “controlled company,” we will not be subject to these compensation committee independence requirements.

The Parthenon Stockholders and the Continuing LLC Members control us and their interests may conflict with yours in the future.

Immediately following the offering and the application of net proceeds to us from the offering, the Parthenon Stockholders and the Continuing LLC Members will own approximately % of the combined voting

power of our Class A and Class B common stock (or % if the underwriters’ option is exercised in full). Accordingly, the Parthenon Stockholders and the Continuing LLC Members, if voting in the same manner, will be able to control the election and removal of our directors and thereby determine our corporate and management policies, including potential mergers or acquisitions, payment of dividends, assets sales, amendment of our certificate of incorporation or bylaws and other significant corporate transactions for so long as the Parthenon Stockholders and the Continuing LLC Members retain significant ownership of us. This concentration of ownership may delay or deter possible changes in control of our company, which may reduce the value of an investment in our common stock. So long as the Parthenon Stockholders and the Continuing LLC Members continue to own a significant amount of our combined voting power, even if such amount is less than 50%, they will continue to be able to strongly influence or effectively control our decisions.

In addition, immediately following the offering and the application of net proceeds to us from the offering, the Continuing LLC Members will own % of the Holdco Units (or % if the underwriters’ option is exercised in full). Because they hold their ownership interest in our business through LD Holdings, rather than us, these existing unitholders may have conflicting interests with holders of our Class A common stock. For example, the Continuing LLC Members may have different tax positions from us which could influence their decisions regarding whether and when to dispose of assets, and whether and when to incur new or refinance existing indebtedness, especially in light of the existence of the tax receivable agreement. In addition, the structuring of future transactions may take into consideration these existing unitholders’ tax considerations even where no similar benefit would accrue to us. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

Certain of our stockholders have the right to engage or invest in the same or similar businesses as us.

In the ordinary course of its business activities, Parthenon Capital and its affiliates may engage in activities where its interests conflict with our interests or those of our stockholders. Our amended and restated certificate of incorporation will provide that Parthenon Capital or any of its officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries will have no duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us or any of our subsidiaries, even if the opportunity is one that we might reasonably have pursued or had the ability or desire to pursue if granted the opportunity to do so. No such person will be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person, acting in good faith, pursues or acquires any such business opportunity, directs any such business opportunity to another person or fails to present any such business opportunity, or information regarding any such business opportunity, to us unless, in the case of any such person who is our director or officer, any such business opportunity is expressly offered to such director or officer solely in his or her capacity as our director or officer. See “Description of Capital Stock—Corporate Opportunity.”

We will be required to pay certain Continuing LLC Members for certain tax benefits we may claim arising in connection with our purchase of Holdco Units and future exchanges of Holdco Units under the Exchange Agreement and the potential purchase of Class I common units of LD Holdings, which payments could be substantial.

The Continuing LLC Members may from time to time cause LD Holdings to exchange an equal number of Holdco Units and Class B common stock for Class A common stock of loanDepot, Inc. on a one-for-one basis (as described in more detail in “Certain Relationships and Related Party Transactions—Exchange Agreement”). In addition, we intend to purchase Holdco Units from the Exchanging Members and we may purchase Class I common units of LD Holdings pursuant to our election described under “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement.” As a result of these transactions we will become entitled to certain tax basis adjustments reflecting the difference between the price we pay to acquire Holdco Units or Class I common units of LD Holdings and the proportionate share of LD Holdings’ tax basis allocable to such units at the time of the exchange. As a result, the amount of tax that we would otherwise be required to pay in the future may be reduced by the increase (for tax purposes) in depreciation and amortization deductions attributable to our

interests in LD Holdings, although the U.S. Internal Revenue Service (“IRS”) may challenge all or part of that tax basis adjustment, and a court could sustain such a challenge.

We will enter into a tax receivable agreement with TRA LLC that will provide for the payment by us to TRA LLC for the benefit of the Parthenon Stockholders and certain of the Continuing LLC Members of 85% of the amount of cash savings, if any, in U.S. federal, state and local tax that we realize or are deemed to realize as a result of (i) the tax basis adjustments referred to above, (ii) any incremental tax basis adjustments attributable to payments made pursuant to the tax receivable agreement and (iii) any deemed interest deductions arising from payments made by us pursuant to the tax receivable agreement. While the actual amount of the adjusted tax basis, as well as the amount and timing of any payments under this agreement will vary depending upon a number of factors, including the basis of our proportionate share of LD Holdings’ assets on the dates of exchanges, the timing of exchanges, the price of shares of our Class A common stock at the time of each exchange, the extent to which such exchanges are taxable, whether we elect to purchase Class I common units of LD Holdings (and if so, the timing of such a purchase and the price of such units), the deductions and other adjustments to taxable income to which LD Holdings is entitled, and the amount and timing of our income, we expect that during the anticipated term of the tax receivable agreement, the payments that we may make to TRA LLC for the benefit of the Parthenon Stockholders and certain of the Continuing LLC Members could be substantial. Payments under the tax receivable agreement may give rise to additional tax benefits and therefore to additional potential payments under the tax receivable agreement. In addition, the tax receivable agreement will provide for interest accrued from the due date (without extensions) of the corresponding tax return for the taxable year with respect to which the payment obligation arises to the date of payment under the agreement. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the tax receivable agreement, we expect that the tax savings associated with the purchase of Holdco Units from the Exchanging Members in connection with this offering and future exchanges of Holdco Units and Class B common stock as described above would aggregate to approximately $ over years from the date of this offering based on offering price of $ per share of our Class A common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and assuming all future exchanges would occur one year after this offering. Under such scenario we would be required to pay to TRA LLC for the benefit of the Parthenon Stockholders and certain of the Continuing LLC Members approximately 85% of such amount, or $ , over the year period from the date of this offering.

Further, upon consummation of the offering and after giving effect to the use of proceeds to us therefrom, loanDepot, Inc. will have acquired a significant equity interest in LD Holdings from Parthenon Blocker after a series of transactions that will result in Parthenon Blocker merging with and into loanDepot, Inc., with loanDepot, Inc. remaining as the surviving corporation. See “Organizational Structure—Reorganization Transactions at LDLLC.” The Company will not realize any of the cash savings in U.S. federal, state and local tax described above in relation to any Class A common stock received by the Parthenon Stockholders in the Reorganization Transactions. The Parthenon Stockholders, however, partially own TRA LLC which will be entitled to receive payments under the tax receivable agreement in respect of the cash tax savings, if any, that we realize or are deemed to realize as a result of future exchanges of Holdco Units and Class B common stock for Class A common stock of loanDepot, Inc.

There may be a material negative effect on our liquidity if, as a result of timing discrepancies or otherwise, (i) the payments under the tax receivable agreement exceed the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement, and/or (ii) distributions to us by LDLLC and LD Holdings are not sufficient to permit us to make payments under the tax receivable agreement after it has paid its taxes and other obligations. For example, were the IRS to challenge a tax basis adjustment, or other deductions or adjustments to taxable income of LDLLC, neither TRA LLC nor its owners (the Parthenon Stockholders and certain of the Continuing LLC Members) will reimburse us for any payments that may previously have been made under the tax receivable agreement, except that excess payments made to TRA LLC for the benefit of the Parthenon Stockholders and certain of the Continuing LLC Members will be netted against payments otherwise to be made, if any, after our determination of such excess. As a result, in certain circumstances we could make payments to TRA LLC for the benefit of the Parthenon Stockholders and certain of the Continuing LLC

Members under the tax receivable agreement in excess of our ultimate cash tax savings. In addition, the payments under the tax receivable agreement are not conditioned upon any recipient’s continued ownership of interests in us or LD Holdings. TRA LLC will receive payments under the tax receivable agreement until such time that it validly assigns or otherwise transfers its rights to receive such payments.

In 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.

The tax receivable agreement will provide that (i) in the event that we materially breach any of our material obligations under the agreement, whether as a result of failure to make any payment, failure to honor any other material obligation required thereunder or by operation of law as a result of the rejection of the agreements in a bankruptcy or otherwise, (ii) if, at any time, we elect an early termination of the agreement, or (iii) upon certain changes of control of the Company our (or our successor’s) obligations under the agreements (with respect to all Holdco Units and all Class I common units of LD Holdings, whether or not such units have been exchanged or acquired before or after such transaction) would accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax benefits calculated based on certain assumptions. These assumptions include the assumptions that (i) we (or our successor) will have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits subject to the tax receivable agreement, (ii) we (or our successor) will utilize any loss carryovers generated by the increased tax deductions and tax basis and other benefits in the earliest possible tax year, and (iii) LD Holdings and its subsidiaries will sell certain nonamortizable assets (and realize certain related tax benefits) no later than a specified date. As a result of the foregoing, if we materially breach a material obligation under the agreement, if we elect to terminate the agreement early, or if we undergo a change of control we would be required to make an immediate lump sum payment equal to the present value of the anticipated future tax savings, which payment may be made significantly in advance of the actual realization of such future tax savings. In these situations, our obligations under the tax receivable agreement could have a substantial negative impact on our liquidity. There can be no assurance that we will be able to fund or finance our obligations under the tax receivable agreement. Additionally, the obligation to make a lump sum payment on a change of control may deter potential acquirors, which could negatively affect our shareholders’ potential returns. If we were to elect to terminate the tax receivable agreement immediately after this offering and the use of proceeds to us therefrom, based on the offering price of $ per share of our Class A common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and a discount rate equal to five percent per annum, compounded annually, we estimate that we would be required to pay $ in the aggregate under the tax receivable agreement.

In 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.

The holders of Holdco Units, including loanDepot, Inc., will incur U.S. federal, state and local income taxes on their proportionate share of any taxable income of LD Holdings. Net profits and net losses of LD Holdings will generally be allocated to the holders of Holdco Units (including loanDepot, Inc.) pro rata in accordance with their respective share of the net profits and net losses of LD Holdings. The Holdings LLC Agreement will provide for cash distributions, which we refer to as “tax distributions,” based on certain assumptions, to the holders of Holdco Units (including loanDepot, Inc.) pro rata based on their Holdco Units. Generally, these tax distributions to holders of Holdco Units will be an amount equal to our estimate of the taxable income of LD Holdings, net of taxable losses, allocable per Holdco Unit multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual resident in California (taking into account the non-deductibility of certain expenses). Because tax distributions will be determined based on the holder of Holdco Units who is allocated the largest amount of taxable income on a per unit basis, LD Holdings may be required to make tax distributions that, in the aggregate, may exceed the amount of taxes that LD Holdings would have paid if it were taxed on its net income at the assumed rate.

Funds used by LD Holdings to satisfy its tax distribution obligations will not be available for reinvestment in our business. Moreover, the tax distributions that LD Holdings will be required to make may be substantial, and may exceed (as a percentage of LD Holdings’ income) the overall effective tax rate applicable to a similarly situated corporate taxpayer.

Certain provisions of our amended and restated certificate of incorporation and our amended and restated bylaws could hinder, delay or prevent a change in control of us, which could adversely affect the price of our Class A common stock.

Certain provisions of our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions:

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authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock;

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prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our stockholders;

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provide that the board of directors is expressly authorized to make, alter or repeal our amended and restated bylaws;

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establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings;

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establish a classified board of directors, as a result of which our board of directors will be divided into three classes, with each class serving for staggered three-year terms, which prevents stockholders from electing an entirely new board of directors at an annual meeting;

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limit the ability of stockholders to remove directors if Parthenon Capital ceases to own more than % of our voting common stock;

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prohibit stockholders from calling special meetings of stockholders if Parthenon Capital ceases to own more than % of our voting common stock; and

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require the approval of holders of at least 75% of the outstanding shares of our voting common stock to amend the amended and restated bylaws and certain provisions of the amended and restated certificate of incorporation if Parthenon Capital ceases to own more than % of our voting common stock.

In addition, these provisions may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt that is opposed by our management or our board of directors. Stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is favorable to stockholders. These anti-takeover provisions could substantially impede the ability of stockholders to benefit from a change in control or change our management and board of directors and, as a result, may adversely affect the market price of our Class A common stock and your ability to realize any potential change of control premium. See “Description of Capital Stock—Anti-Takeover Effects of Certain Provisions of Delaware Law and Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws.”

Risks Related to this Offering and Our Class A Common Stock

An active trading market for our Class A common stock may never develop or be sustained, which may cause shares of our Class A common stock to trade at a discount from the initial public offering price and make it difficult to sell the shares of Class A common stock you purchase.

Prior to this offering, there has not been a public trading market for shares of our Class A common stock. It is possible that an active trading market for our Class A common stock will not develop or continue, or, if developed, that any market will be sustained that would make it difficult for you to sell your shares of Class A common stock at an attractive price or at all. The initial public offering price per share of our Class A common stock will be determined by agreement among us, the selling stockholders and the underwriters, and may not be indicative of the price at which shares of our Class A common stock will trade in the public market after this offering. The market price of our Class A common stock may decline below the initial public offering price and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all.

The market price of our Class A common stock may be volatile, which could cause the value of your investment to decline.

Even if a trading market develops, the market price of our Class A common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our Class A common stock may fluctuate and cause significant price variations to occur. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of shares of our Class A common stock in spite of our operating performance. In addition, our results of operations could be below the expectations of public market analysts and investors due to a number of potential factors, including variations in our quarterly or annual results of operations, additions or departures of key management personnel, changes in our earnings estimates (if provided) or failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, adverse market reaction to any indebtedness we may incur or securities we may issue in the future, changes in market valuations of similar companies or speculation in the press or the investment community with respect to us or our industry, adverse announcements by us or others and developments affecting us, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnership, joint ventures or capital commitments, actions by institutional stockholders, increases in market interest rates that may lead investors in our shares to demand a higher yield, and in response the market price of shares of our Class A common stock could decreases significantly. You may be unable to resell your shares of Class A common stock at or above the initial public offering price, or at all.

These broad market and industry factors may decrease the market price of our Class A common stock, regardless of our actual operating performance. The stock market in general has from time to time experienced extreme price and volume fluctuations, including in recent months. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.

We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, and our management will be required to devote substantial time to new compliance matters, which could lower profits or make it more difficult to run our business.

As a public company, we expect to incur significant legal, accounting, reporting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors. We also have incurred and will incur costs associated with compliance with the Sarbanes-Oxley Act and rules and regulations of the SEC, and various other costs of a public company. The expenses incurred by public companies generally for reporting and corporate

governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. Our management will need to devote a substantial amount of time to ensure that we comply with all of these requirements. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Class A common stock, fines, sanctions and other regulatory action and potentially civil litigation.

Failure to comply with the requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price.

As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company.

If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our operating results. In addition, we will be required pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the first fiscal year beginning after the effective date of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in an internal control over financial reporting. In addition, our independent registered public accounting firm will be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) commencing the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an “emerging growth company” as defined in the JOBS Act if we take advantage of the exemptions contained in the JOBS Act, as we currently intend. See “—Risks Related to Our Organizational Structure—We are an “emerging growth company” as defined in the Securities Act of 1933, as amended, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.” Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 or our independent registered public accounting firm may not issue an unqualified opinion. If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report, investors could lose confidence in our reported financial information, which could cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC.

We are an “emerging growth company” as defined in the Securities Act of 1933, as amended, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Class A common stock less attractive to investors.

We are an “emerging growth company” as defined in the Securities Act of 1933, as amended (the “Securities Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, among other things, not being required to comply with the auditor attestation requirements of Section 404(b), reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a non-binding

stockholder advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information that they may deem important.

An emerging growth company can utilize the extended transition period provided in the Securities Act for complying with new or revised accounting standards. However, we are choosing to “opt out” of such extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not emerging growth companies. Our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

We could be an emerging growth company for up to five years following the date of this prospectus, although circumstances could cause us to lose that status earlier, including if our total annual gross revenues exceed $1.0 billion, if we issue more than $1.0 billion in non-convertible debt during any three-year period or if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time. We cannot predict if investors will find our Class A common stock less attractive because we may rely on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading market for our Class A common stock, our stock price may be more volatile and the price of our Class A common stock may decline.

Investors in this offering will experience immediate and substantial dilution.

The initial public offering price of our Class A common stock will be substantially higher than the pro forma as adjusted net tangible book value per share of our Class A common stock immediately after this offering. As a result, you will pay a price per share of Class A common stock that substantially exceeds the per share book value of our tangible assets after subtracting our liabilities. In addition, you will pay more for your shares of Class A common stock than the amounts paid by our existing owners. Assuming an offering price of $ per share of Class A common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, you will incur immediate and substantial dilution in an amount of $ per share of Class A common stock. See “Dilution.”

You may be diluted by the future issuance of additional Class A common stock in connection with our incentive plans, acquisitions or otherwise.

After the offering and the use of proceeds to us therefrom, we will have an aggregate of shares of Class A common stock authorized but unissued, including shares of Class A common stock issuable upon exchange of Holdco Units and Class B common stock that will be held by the Continuing LLC Members. Our amended and restated certificate of incorporation authorizes us to issue these shares of Class A common stock and options, rights, warrants and appreciation rights relating to Class A common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise. We have reserved shares for issuance under our 2015 Omnibus Incentive Plan (including any LTIP Units, which may be granted thereunder), which amount is subject to adjustment in certain events. See “Executive Compensation—Employee Benefit Plans—2015 Omnibus Incentive Plan.” Any Class A common stock that we issue, including under our 2015 Omnibus Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the investors who purchase Class A common stock in the offering.

Because we have no current plans to pay cash dividends on our Class A common stock, you may not receive any return on investment unless you sell your Class A common stock for a price greater than that which you paid for it.

We have no current plans to pay cash dividends on our Class A common stock. The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors. Our board of directors

may take into account general and economic conditions, our financial condition and operating results, our available cash, current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, implications on the payment of dividends by us to our stockholders or by our subsidiary to us and such other factors as the board may deem relevant. In addition, the terms of our existing financing arrangements restrict or limit our ability to pay cash dividends. Accordingly, we may not pay any dividends on our Class A common stock in the foreseeable future. See “Dividend Policy.”

Future offerings of debt or equity securities by us may adversely affect the market price of our Class A common stock.

In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our Class A common stock or offering debt or other equity securities, including commercial paper, medium-term notes, senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. Future acquisitions could require substantial additional capital in excess of cash from operations. We would expect to obtain the capital required for acquisitions through a combination of additional issuances of equity, corporate indebtedness and/or cash from operations.

Issuing additional shares of our Class A common stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing stockholders or reduce the market price of our Class A common stock or both. Upon liquidation, holders of such debt securities and preferred shares, if issued, and lenders with respect to other borrowings would receive a distribution of our available assets prior to the holders of our Class A common stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred shares, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our Class A common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings.

Future sales, or the perception of future sales, of shares of our Class A common stock by existing stockholders could cause the market price of our Class A common stock to decline.

The sale of substantial amounts of shares of our Class A common stock in the public market, or the perception that such sales could occur, including sales by the Parthenon Stockholders and the Continuing LLC Members, could harm the prevailing market price of shares of our Class A common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price we deem appropriate. Upon completion of this offering after giving effect to the use of proceeds to us therefrom, we will have outstanding a total of shares of Class A common stock. Of the outstanding shares, the shares of Class A common stock sold in this offering by us and the selling stockholders, or shares if the underwriters exercise their option to purchase additional shares in full, will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, except that any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act, may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale.” In addition, subject to certain limitations and exceptions, pursuant to certain provisions of the Exchange Agreement, the Continuing LLC Members may exchange an equal number of Holdco Units and Class B common stock for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. Upon consummation of the offering and after giving effect to the use of proceeds to us therefrom, the Continuing LLC Members will beneficially own Holdco Units, or Holdco Units if the underwriters exercise their option to purchase additional shares in full, all of which will be exchangeable for shares of our Class A common stock beginning 181 days after the date of this prospectus (subject to the terms of the Exchange Agreement).

Our amended and restated certificate of incorporation authorizes us to issue additional shares of Class A common stock and options, rights, warrants and appreciation rights relating to Class A common stock for the

consideration and on the terms and conditions established by our board of directors in its sole discretion. In accordance with the Delaware General Corporation Law (“DGCL”) and the provisions of our certificate of incorporation, we may also issue preferred stock that has designations, preferences, rights, powers and duties that are different from, and may be senior to, those applicable to shares of Class A common stock. Similarly, the Holdings LLC Agreement permits LD Holdings to issue an unlimited number of additional limited liability company interests of LD Holdings with designations, preferences, rights, powers and duties that are different from, and may be senior to, those applicable to the Holdco Units, and which may be exchangeable for shares of our Class A common stock.

Each of our directors and officers, and substantially all of our stockholders, including all of the selling stockholders, have entered into lock-up agreements with the underwriters that restrict their ability to sell or transfer their shares of Class A common stock. The lock-up agreements pertaining to this offering will expire 180 days from the date of this prospectus. , however, may, in its sole discretion, permit our officers, directors and other current stockholders who are subject to the contractual lock-up to sell shares prior to the expiration of the lock-up agreements. See “Underwriting” for a description of these lock-up agreements.

After the lock-up agreements expire, up to an additional shares of Class A common stock will be eligible for sale in the public market, approximately of which are held by our executive officers, directors and their affiliated entities, and will be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements.

We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our Class A common stock or securities convertible or exchangeable for shares of our Class A common stock issued pursuant to our 2015 Omnibus Incentive Plan. See “Executive Compensation—Employee Benefit Plans—2015 Omnibus Incentive Plan—Available Shares.” Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. We expect that the initial registration statement on Form S-8 will cover shares of our Class A common stock.

As restrictions on resale end, the market price of our shares of Class A common stock could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings or our shares of Class A common stock or other securities.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of our company, the trading price of our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these statements by the use of words such as “outlook,” “potential,” “continue,” “may,” “seek,” “approximately,” “predict,” “believe,” “expect,” “plan,” “intend,” “estimate” or “anticipate” and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as “will,” “should,” “would” and “could.” These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” as well as in this prospectus generally, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. These risks and uncertainties include, but are not limited to, those risks described under the section entitled “Risk Factors” set forth herein. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this prospectus will in fact occur. You should not place undue reliance on these forward-looking statements. If one or more of these risks or uncertainties materialize or our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We qualify all of the forward-looking statements in this prospectus by the cautionary statements and risks set forth in the section entitled “Risk Factors” and elsewhere in this prospectus. Forward-looking statements in this prospectus include, but are not limited to, statements regarding:

•

our reliance on Warehouse Lines and other sources of capital and liquidity to meet the financial requirements of our business;

•

difficulties inherent in growing our personal and home equity loan businesses;

•

our level of indebtedness;

•

our recent rapid growth;

•

the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate;

•

lawsuits or governmental actions if we do not comply with the laws and regulations applicable to our businesses;

•

the creation of the CFPB, its recently issued and future rules and the enforcement thereof by the CFPB;

•

changes in existing U.S. government-sponsored entities, their current roles or their guarantees or guidelines;

•

the licensing and operational requirements of states and other jurisdictions applicable to our businesses, to which our bank competitors are not subject;

•

changes in macroeconomic and U.S. residential real estate market conditions;

•

difficulties inherent in growing loan production volume;

•

changes in prevailing interest rates;

•

increases in loan delinquencies and defaults; and

•

any required additional capital and liquidity to support business growth that may not be available on acceptable terms, if at all.

The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act do not protect any forward-looking statements that we make in connection with this offering.

You should read this prospectus and the documents that we reference in this prospectus and the documents we have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

ORGANIZATIONAL STRUCTURE

loanDepot, Inc. was formed as a Delaware corporation on July 10, 2015. LD Holdings was formed as a Delaware limited liability company on , 2015. Following the Reorganization Transactions and the Offering Transactions described below, we will be a holding company and our sole material asset will be an equity interest in LD Holdings, which will be a holding company and have no material assets other than its equity interest in LDLLC and Intermediate LLC. Intermediate LLC will also be a holding company with no material assets other than its equity interest in LDLLC. loanDepot, Inc. has not engaged in any other business or other activities except in connection with the Reorganization Transactions and the Offering Transactions described below. Following the offering, through our ability to appoint the board of managers of LD Holdings and given LD Holdings will be the managing member of LDLLC, our operating subsidiary that conducts all of our operations directly, we will indirectly operate and control all of the business and affairs and consolidate the financial results of LD Holdings and its subsidiaries, including LDLLC. The ownership interest of the members of LD Holdings (other than loanDepot, Inc.) will be reflected as a non-controlling interest in our consolidated financial statements.

The diagram below depicts our simplified organizational structure immediately following the Reorganization Transactions and the offering after giving effect to the use of proceeds to us therefrom and assuming no exercise by the underwriters of their option to purchase additional shares of Class A common stock. As discussed in greater detail below, prior to the completion of this offering, (i) the 6th LLC Agreement of LDLLC will be further amended and restated as the 7th LLC Agreement to, among other things, modify its capital structure by replacing the different classes of interests (other than the Class I common units of LDLLC) that had been held by Parthenon Blocker and the Continuing LLC Members with a single new class of LLC Units, (ii) Parthenon Blocker and the Continuing LLC Members will contribute to the newly formed LD Holdings all of their respective LLC Units in exchange for Holdco Units of LD Holdings on a one-for-one-basis and (iii) the holders of Class I common units of LDLLC will simultaneously contribute all of their respective Class I common units of LDLLC for substantially identical Class I common units of LD Holdings. In connection with such exchange transactions, which will result in LDLLC becoming a wholly owned subsidiary of LD Holdings, each of Parthenon Blocker, the Continuing LLC Members and the holders of Class I common units of LD Holdings will enter into the Holdings LLC Agreement. After completing these exchange transactions, LD Holdings will further amend and restate the 7th LLC Agreement as the 8th LLC Agreement to simplify the equity arrangements of LDLLC as a subsidiary company and create a single class of common units of LDLLC.

In connection with the exchange transactions set forth above, we will issue to the Continuing LLC Members a number of shares of loanDepot, Inc. Class B common stock equal to the number of Holdco Units held by such Continuing LLC Members. Our Class B common stock will entitle holders to one vote per share and will vote as a single class with our Class A common stock. However, the Class B common stock will not have any economic rights. The Exchange Agreement will also provide that each of the Continuing LLC Members will have the right to exchange an equal number of their Holdco Units and Class B common stock for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. Any Holdco Units exchanged under the exchange provisions described above will thereafter be owned by loanDepot, Inc. Any shares of Class B common stock exchanged will be cancelled.

Thereafter, Parthenon Blocker and loanDepot, Inc. will engage in a series of transactions that will result in Parthenon Blocker merging with and into loanDepot, Inc., with loanDepot, Inc. remaining as the surviving corporation. As a result of such transactions, the Parthenon Stockholders will exchange all of the equity interests of Parthenon Blocker in return for shares of loanDepot, Inc. Class A common stock.

In connection with the offering, loanDepot, Inc. will acquire a number of Holdco Units from LD Holdings and the Exchanging Members that is equal to the number of shares of Class A common stock that are issued and outstanding (including shares sold in this offering) and the Continuing LLC Members will own the remaining outstanding Holdco Units. The Class I common units of LD Holdings will only be entitled to the fixed payment rights set forth in the Holdings LLC Agreement and are not otherwise entitled to any distributions or residual interest in LD Holdings. See “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement.” LD Holdings will own the equity interests of LDLLC and Intermediate LLC. loanDepot, Inc., through its significant equity interest in LD Holdings, will benefit from the income of LDLLC and its consolidated subsidiaries to the extent of any distributions made in respect of our holdings of Holdco Units. Any such distributions will be distributed to all holders of Holdco Units, including the Continuing LLC Members, pro rata based on their holdings of Holdco Units.

LOGO

(1)

Class I common units will remain outstanding following the Reorganization Transactions and this offering as units of LD Holdings. Holders of such units will only be entitled to the fixed payment rights set forth in the Holdings LLC Agreement and are not otherwise entitled to any distributions or residual interest in LD Holdings. See “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement.”

Reorganization Transactions at LDLLC

Immediately prior to the offering, LDLLC and its direct and indirect equity holders will effect certain transactions, which we collectively refer to as the “Reorganization Transactions.” Currently, LDLLC’s capital structure consists of different classes of membership interests, each of which has different capital accounts and amounts of aggregate distributions above which its holders share in future distributions. The entry into the 7th LLC Agreement, as part of the Reorganization Transactions, will result in the conversion of the current multiple-class structure (other than the Class I common units of LDLLC) into a single new class of LLC Units in LDLLC. The Class I common units of LDLLC will remain outstanding following the entry into the 7th LLC Agreement. The conversion ratios of all of the different classes of units of LDLLC (other than the Class I common units of LDLLC) into a single class will be based on the proceeds that each unit would receive in a hypothetical liquidation (pursuant to the distribution provisions set forth in the 6th LLC Agreement) of 100% of LDLLC based on the initial public offering price of the Class A common stock. The number of LLC Units issued upon conversion per class of outstanding units will be determined pursuant to the distribution provisions set forth in the 6th LLC Agreement. Immediately after such conversion is effected, each holder of LLC Units will exchange such LLC Units on a one-for-one basis for Holdco Units. Simultaneously, the holders of LDLLC’s Class I common units will also contribute all of their respective Class I common units of LDLLC to LD Holdings for substantially identical Class I common units of LD Holdings. In connection with such exchange transactions, which will result in LDLLC becoming a wholly owned subsidiary of LD Holdings, each of Parthenon Blocker, the Continuing LLC Members and the holders of Class I common units of LD Holdings will enter into the Holdings LLC Agreement. After completing these exchange transactions, LD Holdings will further amend and restate the 7th LLC Agreement as the 8th LLC Agreement to simplify the equity arrangements of LDLLC as a subsidiary company and create a single class of common units of LDLLC.

In connection with the exchange transactions set forth above, we will issue to the Continuing LLC Members a number of shares of loanDepot, Inc. Class B common stock equal to the number of Holdco Units held by such Continuing LLC Members. Our Class B common stock will entitle holders to one vote per share and will vote as a single class with our Class A common stock. However, the Class B common stock will not have any economic rights. The Exchange Agreement will also provide that each of the Continuing LLC Members will have the right to exchange an equal number of their Holdco Units and Class B common stock for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. Any Holdco Units exchanged under the exchange provisions described above will thereafter be owned by loanDepot, Inc. Any shares of Class B common stock exchanged will be cancelled.

Thereafter, (i) Parthenon Blocker and loanDepot, Inc. will engage in a series of transactions that will result in Parthenon Blocker merging with and into loanDepot, Inc., with loanDepot, Inc. remaining as the surviving corporation, (ii) the Parthenon Stockholders will contribute to loanDepot, Inc. an existing call option providing the option to purchase, from Parthenon Blocker (and loanDepot, Inc. after the merger described in clause (i) above), its equity interest in LDLLC, and (iii) loanDepot, Inc. will enter into the tax receivable agreement with TRA LLC for the benefit of (a) the Parthenon Stockholders in exchange for promissory notes previously issued by Parthenon Blocker to the Parthenon Stockholders as a dividend distribution in an aggregate amount of approximately $20.8 million, which will be cancelled after such exchange, and (b) certain of the Continuing LLC Members. As a result of the transactions described in clause (i) above, the Parthenon Stockholders will receive shares of our Class A common stock. loanDepot, Inc. will own one Holdco Unit for each share of Class A Common Stock so issued to the Parthenon Stockholders.

The following table summarizes the number of membership interests by class outstanding prior to the Reorganization Transactions, the conversion ratio for each class, and the number of Holdco Units and Class I common units of LD Holdings that will be outstanding after the Reorganization Transactions and this offering, assuming (i) that no direct or indirect existing investors in LDLLC (other than the Parthenon Stockholders) receives shares of our Class A common stock in lieu of any or all Holdco Units and shares of Class B common stock that would otherwise be issued to them or for their benefit in the Reorganization Transactions and (ii) the sale of shares of Class A common stock in this offering, including by the selling stockholders, at a price per share to the public of $ , which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after giving effect to the use of proceeds to us from the offering to purchase newly issued Holdco Units from LD Holdings and to purchase Holdco Units and shares of Class B common stock from the Exchanging Members:

Members of LDLLC

Number of applicable
units before the
Reorganization
Transactions as of
, 2015

Conversion Ratio in
the Reorganization
Transactions

Number of Holdco
Units outstanding
after the
Reorganization
Transactions and
the Offering

Holders of Class A Common Units

Holders of Class B Common Units

Holders of Class P Common Units

Holders of Class P-2 Common Units

Holders of Class W Common Units

⁽¹⁾

⁽²⁾

Holders of Class X Common Units

⁽¹⁾

⁽³⁾

Holders of Class Y Common Units

⁽¹⁾

⁽⁴⁾

Holders of Class Z-1 Common Units

⁽¹⁾

⁽⁵⁾

Holders of Class Z-2 Common Units

⁽¹⁾

⁽⁶⁾

Holders of Class Z-3 Common Units

⁽¹⁾

⁽⁷⁾

Holders of Class Z-4 Common Units

⁽¹⁾

⁽⁸⁾

Holders of Class I Common Units

⁽⁹⁾

N/A

—

Holders of Class J Common Units

—

N/A

—

Holders of Class K Common Units

—

N/A

—

Ownership by loanDepot, Inc.

—

N/A

⁽¹⁰⁾

Total

⁽¹¹⁾

(1)	The numbers shown include both vested and unvested common units. The Reorganization Transactions will not affect applicable vesting timelines.

(2)	With respect to these Holdco Units, will be vested and are unvested as of the completion of this offering.

(3)	With respect to these Holdco Units, will be vested and are unvested as of the completion of this offering.

(4)	With respect to these Holdco Units, will be vested and are unvested as of the completion of this offering.

(5)	With respect to these Holdco Units, will be vested and are unvested as of the completion of this offering.

(6)	With respect to these Holdco Units, will be vested and are unvested as of the completion of this offering.

(7)	With respect to these Holdco Units, will be vested and are unvested as of the completion of this offering.

(8)	With respect to these Holdco Units, will be vested and are unvested as of the completion of this offering.

(9)	Class I common units will remain outstanding following the Reorganization Transactions and this offering as units of LD Holdings. For more information, see “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement.”

(10)

Includes Holdco Units following a series of transactions that will result in Parthenon Blocker merging with and into loanDepot, Inc., with loanDepot, Inc. remaining as the surviving corporation, Holdco Units purchased from LD Holdings with a portion of the net proceeds to us from this offering and Holdco Units purchased from the Exchanging Members with the remaining net proceeds to us from this offering.

(11)

Includes Holdco Units owned by loanDepot, Inc. and Holdco Units owned by the Continuing LLC Members. A $1.00 increase or decrease in the assumed initial offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease the number of Holdco Units outstanding after the Reorganization Transactions, the offering and the use of proceeds to us therefrom by Holdco Units, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

Incorporation of loanDepot, Inc.

loanDepot, Inc. was incorporated as a Delaware corporation on July 10, 2015. loanDepot, Inc. has not engaged in any business or other activities except in connection with its formation. The amended and restated certificate of incorporation of loanDepot, Inc. at the time of the offering will authorize two classes of common stock, Class A common stock and Class B common stock and one or more series of preferred stock, each having the terms described in “Description of Capital Stock.”

Prior to completion of the offering, a number of shares of Class B common stock equal to the number of outstanding Holdco Units owned by the Continuing LLC Members will be issued to the Continuing LLC Members in order to provide them with voting rights in loanDepot, Inc. Each Continuing LLC Member will receive a number of shares of Class B common stock equal to the number of Holdco Units held by such Continuing LLC Member. See “Description of Capital Stock—Common Stock—Class B Common Stock.” Holders of our Class A and Class B common stock each have one vote per share of Class A and Class B common stock, respectively, and vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law.

Formation of LD Holdings

LD Holdings was formed as a Delaware limited liability company on , 2015. The Holdings LLC Agreement designates loanDepot, Inc. as the member of LD Holdings which is entitled to appoint the board of managers of LD Holdings and provides for Holdco Units and Class I common units of LD Holdings. Following the offering, the board of managers of LD Holdings will have the right to determine the timing and amount of any distributions (other than tax distributions as described in “—Holding Company Structure”) to be made to holders of the Holdco Units from LD Holdings, subject to the distribution preference with respect to the Class I common units. Profits and losses of LD Holdings will be allocated, and all distributions with respect to Holdco Units (which, other than tax distributions, LD Holdings will generally only be permitted to pay after all distributions to the Class I common units have been made) will be made, pro rata to the holders of the Holdco Units. See “Certain Relationships and Related Party Transactions— Limited Liability Company Agreement of LD Holdings.”

Formation of Intermediate LLC

Intermediate LLC was formed as a Delaware limited liability company on , 2015 in order to facilitate certain HUD regulatory compliance matters for LDLLC. Prior to completion of the offering, LD Holdings will contribute 0.1% of its LLC Units to Intermediate LLC, making LDLLC jointly held by LD Holdings and Intermediate LLC.

Offering Transactions

At the time of the offering, we intend to use a portion of the net proceeds to us from the offering to purchase a number of newly issued Holdco Units from LD Holdings and to use the remaining net proceeds to us from the offering to purchase Holdco Units and an equal number of shares of Class B common stock from the Exchanging Members, including certain of our officers, directors and PCP, L.P. The number of such Holdco Units acquired from LD Holdings and the Exchanging Members will be equal to the number of shares of Class A common stock issued in this offering. See “Use of Proceeds.” Any Holdco Units purchased by us from the Exchanging Members will thereafter be owned by loanDepot, Inc. The corresponding equal number of shares of Class B common stock purchased from the Exchanging Members will be cancelled. Following the offering, each of the Continuing LLC Members may from time to time beginning 181 days after the date of this prospectus (subject to the terms of the Exchange Agreement) exchange an equal number of their Holdco Units and Class B common stock for shares of our Class A common stock on a one-for-one basis, subject to customary adjustments for stock splits, stock dividends and reclassifications. See “Certain Relationships and Related Party Transactions—Exchange Agreement.” Any Holdco Units exchanged under the exchange provisions described above will thereafter be owned by loanDepot, Inc. Any Class B shares exchanged will be cancelled. Our purchase of Holdco Units from the Exchanging Members in connection with this offering and any exchanges of Holdco Units for shares of Class A common stock are expected to result, with respect to loanDepot, Inc., in increases in the tax basis of the assets of LD Holdings that otherwise would not have been available. These increases in tax basis may reduce the amount of tax that loanDepot, Inc. would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets.

We will enter into a tax receivable agreement with TRA LLC that will provide for the payment from time to time by loanDepot, Inc. to TRA LLC for the benefit of the Parthenon Stockholders and certain of the Continuing LLC Members of 85% of the amount of the benefits, if any, that loanDepot, Inc. realizes or under certain circumstances (such as following a change of control) is deemed to realize as a result of (i) the increases in tax basis referred to above and increases in tax basis as a result of any purchase by us of Class I common units of LD Holdings, (ii) any incremental tax basis adjustments attributable to payments made pursuant to the tax receivable agreement and (iii) any deemed interest deductions arising from payments made by us pursuant to the tax receivable agreement. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

We refer to the foregoing transactions as the “Offering Transactions.”

As a result of the transactions described above, and assuming the sale of shares of Class A common stock in this offering at a price per share to the public of $ , which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after giving effect to the use of proceeds to us from the offering as described above:

•

the investors in the offering will collectively own shares of our Class A common stock (or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock) and the Parthenon Stockholders will collectively own shares of Class A common stock;

•

loanDepot, Inc. will hold Holdco Units (or Holdco Units if the underwriters exercise in full their option to purchase additional shares of Class A common stock), representing % of the total economic interest of LD Holdings (or % of the total economic interest of LD Holdings if the underwriters exercise in full their option to purchase additional shares of Class A common stock);

•

the Continuing LLC Members will collectively hold Holdco Units, representing % of the total economic interest of LD Holdings (or Holdco Units, representing % if the underwriters exercise in full their option to purchase additional shares of Class A common stock), which can be exchanged together with an equal number of Class B common stock for newly issued Class A common stock pursuant to the Exchange Agreement;

•

the investors in the offering will collectively have % of the voting power in loanDepot, Inc. (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock);

•

the Parthenon Stockholders that will receive shares of Class A common stock in the Reorganization Transactions and the Continuing LLC Members that will hold Holdco Units and Class B common stock that may be exchanged for newly issued Class A common stock pursuant to the Exchange Agreement, will collectively have % of the voting power in loanDepot, Inc. (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock); and

•

the holders of LDLLC’s Class I common units will hold Class I common units of LD Holdings and will only be entitled to the fixed payment rights set forth in the Holdings LLC Agreement and are not entitled to any distributions or residual interest in LD Holdings. See “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement.”

Our post-offering organizational structure will allow the Continuing LLC Members to retain their equity ownership in LD Holdings, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of Holdco Units. Investors in the offering and the Parthenon Stockholders will, by contrast, hold their equity ownership in loanDepot, Inc., a Delaware corporation that is a domestic corporation for U.S. federal income tax purposes, in the form of shares of Class A common stock.

The Continuing LLC Members will also hold shares of Class B common stock of loanDepot, Inc. The shares of Class B common stock have only voting and no economic rights. A share of Class B common stock cannot be transferred except in connection with a transfer of a Holdco Unit. Further, a Holdco Unit cannot be exchanged with loanDepot, Inc. for a share of our Class A common stock without the corresponding share of our Class B common stock being delivered together at the time of exchange for cancellation by us. Accordingly, as the Continuing LLC Members subsequently exchange Holdco Units for shares of Class A common stock of loanDepot, Inc. pursuant to the Exchange Agreement, the voting power afforded to the Continuing LLC Members by their shares of Class B common stock is automatically and correspondingly reduced.

Holding Company Structure

loanDepot, Inc. will be a holding company, and its sole material asset will be an equity interest in LD Holdings, which will hold all of the equity interests in LDLLC and Intermediate LLC. loanDepot, Inc. will indirectly control all of the business and affairs of LD Holdings and its subsidiaries, including LDLLC, through its ability to appoint the board of managers of LD Holdings and given LD Holdings will be the managing member of LDLLC.

loanDepot, Inc. will consolidate the financial results of LD Holdings and its subsidiaries, including LDLLC, and the ownership interest of the Continuing LLC Members and holders of Class I common units will be reflected as a non-controlling interest in loanDepot, Inc.’s consolidated financial statements.

Pursuant to the Holdings LLC Agreement, the board of managers of LD Holdings has the right to determine when distributions (other than tax distributions) will be made to the members of LD Holdings and the amount of any such distributions, and loanDepot, Inc. will have the right to appoint such board of managers under the Holdings LLC Agreement. If loanDepot, Inc. authorizes a distribution, such distribution will be made to the holders of Holdco Units, including loanDepot, Inc., pro rata based on their holdings of Holdco Units.

The holders of Holdco Units, including loanDepot, Inc., will generally have to include for purposes of calculating their U.S. federal, state and local income taxes their share of any taxable income of LD Holdings. Taxable income of LD Holdings generally will be allocated to the holders of Holdco Units (including loanDepot, Inc.) pro rata in accordance with their respective share of the net profits and net losses of LD Holdings. LD Holdings will be obligated, subject to available cash and applicable law and contractual restrictions (including pursuant to our debt instruments), to make cash distributions, which we refer to as “tax distributions,” based on

certain assumptions, to its members (including loanDepot, Inc.) pro rata based on their Holdco Units. Generally, these tax distributions to holders of Holdco Units will be an amount equal to our estimate of the taxable income of LD Holdings, net of taxable losses, allocable per Holdco Unit multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual resident in California (taking into account the non-deductibility of certain expenses). Because tax distributions will be determined based on the holder of Holdco Units who is allocated the largest amount of taxable income on a per unit basis, LD Holdings may be required to make tax distributions that, in the aggregate, may exceed the amount of taxes that LD Holdings would have paid if it were taxed on its net income at the assumed rate. See “Certain Relationships and Related Party Transactions— Limited Liability Company Agreement of LD Holdings.”

USE OF PROCEEDS

We estimate that the net proceeds to us from the offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million (or $ million if the underwriters exercise in full their option to purchase additional shares of Class A Common Stock) based upon an assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses and other related transaction costs payable by us. We will not receive any proceeds from the sale of shares of our Class A common stock by the selling stockholders.

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

We intend to use a portion of the net proceeds to us from the offering to purchase newly issued Holdco Units from LD Holdings, as described under “Organizational Structure—Offering Transactions.” We intend to use the remaining net proceeds to us from the offering to purchase an aggregate of Holdco Units, together with an equal number of shares of Class B common stock, held by the Exchanging Members, including certain of our officers, directors and PCP, L.P., as described under “Organizational Structure—Offering Transactions.” See “Principal and Selling Stockholders” for the number of Holdco Units, together with an equal number of shares of Class B common stock, to be surrendered for purchase by each of such persons, as well as information regarding the selling stockholders and other Exchanging Members participating in the offering. The per share purchase price for each Holdco Unit surrendered for purchase by an Exchanging Member along with a share of Class B common stock will be equal to the price per share of our Class A common stock in this offering, less underwriting discounts and commissions. If the underwriters exercise in full their option to purchase additional shares, we intend to use a portion of the net proceeds from our sale of such additional shares to purchase an additional aggregate of Holdco Units and shares of our Class B common stock from certain of the Exchanging Members, and the remaining shares will be sold by the selling stockholders upon exercise of such option. We will not retain any proceeds from the sale of shares of our Class A common stock by the selling stockholders.

The proceeds received by LD Holdings in connection with the sale of newly issued Holdco Units will be used by LD Holdings and LDLLC to pay $ to the holders of Class I common units of LD Holdings (which represents deferred purchase price for a prior acquisition, see “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement”), to repay in full the approximately $13.4 million aggregate principal amount outstanding of Seller Notes, to pay $ in other contingent consideration pursuant to the Mortgage Master acquisition, to repay $ of principal and accrued interest under our $80.0 million Unsecured Term Loan and for general corporate purposes, in such order to the extent we raise enough proceeds in this offering. For the interest rates and maturities of our Unsecured Term Loan and Seller Notes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt Obligations.”

DIVIDEND POLICY

We currently intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual, legal, tax and regulatory restrictions, general business conditions and other factors that our board of directors may deem relevant. We are a holding company and will have no material assets other than our ownership of Holdco Units in LD Holdings. Our ability to pay cash dividends will depend on our receipt of distributions from our current or future operating subsidiaries, including LDLLC, and such distributions may be restricted as a result of regulatory restrictions or contractual agreements, including agreements governing their indebtedness. See “Risk Factors—Risks Related to Our Organizational Structure—We 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.” In addition, our ability to pay cash dividends may be restricted by the terms of our debt financing arrangements, and any future debt financing arrangement will likely contain terms restricting or limiting the amount of dividends that may be declared or paid on our common stock.

Following this offering, we will receive a portion of any distributions made by LDLLC. Under the 8th LLC Agreement, loanDepot, Inc., through its ability to appoint the board of managers of LD Holdings and given LD Holdings will be the managing member of LDLLC, has the right to determine when distributions (other than tax distributions) will be made by LDLLC to LD Holdings and the amount of any such distributions. Under the Holdings LLC Agreement, the board of managers of LD Holdings has the right to determine when distributions (other than tax distributions) will be made to unitholders of LD Holdings and the amount of any such distributions. Any such distributions will be distributed to all holders of Holdco Units, including us, pro rata based on their holdings of Holdco Units. The cash received from such distributions will first be used by us to satisfy any tax liability and then to make required payments to the holders of Class I common units and any payments required under the tax receivable agreement to TRA LLC for the benefit of the Parthenon Stockholders and certain of the Continuing LDLLC Members. Other than tax-related distributions, LDLLC has not made any distributions to its existing owners during 2013, 2014 or to date during 2015. Tax-related distributions aggregated $13.0 million in 2013 and $1.1 million in 2014.

CAPITALIZATION

The following table sets forth our cash and capitalization as of June 30, 2015 on:

•

a historical basis for LDLLC; and

•

a pro forma basis for loanDepot, Inc., giving effect to the transactions described under “Unaudited Pro Forma Consolidated Financial Information,” including the application of the proceeds to us from this offering as described in “Use of Proceeds” based upon an assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses and other related transaction costs payable by us.

You should read this table together with the information contained in this prospectus, including “Use of Proceeds,” “Unaudited Pro Forma Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and related notes included elsewhere in this prospectus.


	As of June 30, 2015
	Actual LDLLC		Pro Forma loanDepot, Inc.⁽¹⁾
			(unaudited)
	(Dollars in thousands)
Cash and cash equivalents	$	53,350	$

Debt⁽²⁾:
Warehouse Lines	$	1,410,794
Secured Credit Facilities		48,754
Unsecured Term Loan		80,000
Seller Notes		13,407

Total debt	$	1,552,955	$


Redeemable units	$	91,675

Capital (equity):
Unitholders’ equity		—
Class A Common Stock, par value $0.001 per share, shares authorized on a pro forma basis; shares issued and outstanding on a pro forma basis		—
Class B Common Stock, par value $0.001 per share, shares authorized on a pro forma basis; shares issued and outstanding on a pro forma basis		—
Preferred Stock, par value $0.001 per share, shares authorized on a pro forma basis; no shares issued and outstanding on a pro forma basis		—
Additional paid-in capital		11,259
Retained earnings		187,220

Total unitholders’ equity/loanDepot, Inc. stockholders’ equity		198,479

Non-controlling interest		—

Total capital (equity)		198,479

Total capitalization	$	1,843,109	$

(1)

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease the additional paid-in capital and total unitholders’ equity/loanDepot, Inc. stockholders’ equity by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

(2)

Does not include approximately (i) $14.4 million in obligations under capital leases as of June 30, 2015, as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Capital Lease Transactions,” (ii) $ payable to the holders of Class I common units following this offering, as described further under “Certain Relationships and Related Party Transactions—imortgage Settlement Agreement,” and (iii) $28.1 million in contingent consideration as of June 30, 2015 associated with the acquisition of Mortgage Master in January 2015.

DILUTION

If you invest in the initial public offering of our Class A common stock, your interest will be diluted to the extent of the excess of the initial public offering price per share of our Class A Common Stock over the pro forma net tangible book value per share of our Class A common stock after this offering. Dilution results from the fact that the per share offering price of the Class A common stock is substantially in excess of the net tangible book value per share attributable to the existing equity holders.

Our pro forma net tangible book value at June 30, 2015 was approximately $ million. Pro forma net tangible book value represents the amount of total tangible assets less total liabilities of LDLLC, after giving effect to the Reorganization Transactions, and pro forma net tangible book value per share represents pro forma net tangible book value divided by the number of shares of Class A common stock outstanding, after giving effect to the Reorganization Transactions and assuming that all of the Continuing LLC Members exchanged their vested Holdco Units and Class B common stock for newly issued shares of our Class A common stock on a one-for-one basis.

After giving effect to the sale by us of shares of our Class A common stock at the initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus in the offering, after deducting the underwriting discounts, estimated offering expenses and other related transaction costs payable by us, and the use of the estimated net proceeds to us as described under “Use of Proceeds,” our pro forma net tangible book value at June 30, 2015, excluding pre-reorganization noncontrolling interest that is not convertible into shares of Class A common stock, was $ million or $ per share of Class A common stock, assuming that all of the Continuing LLC Members exchanged their Holdco Units and Class B common stock for newly issued shares of our Class A common stock on a one-for-one basis.

Assuming the number of shares offered by us as set forth on the cover page of this prospectus remains the same, after deducting the underwriting discounts, estimated offering expenses and other related transaction costs payable by us, and the use of the estimated net proceeds to us as described under “Use of Proceeds,” a $1.00 increase or decrease in the assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease our pro forma net tangible book value at June 30, 2015, excluding pre-reorganization noncontrolling interest that is not convertible into shares of Class A common stock, by $ million, or $ per share of Class A common stock, assuming that all of the Continuing LLC Members exchanged their Holdco Units and Class B common stock for newly issued shares of our Class A common stock on a one-for-one basis.

The following table illustrates the immediate dilution of $ per share to new stockholders purchasing Class A common stock in this offering, assuming the underwriters do not exercise their option to purchase additional shares.


Assumed initial public offering price per share		$
Pro forma net tangible book value per share as of June 30, 2015
Increase per share attributable to this offering
Pro forma net tangible book value per share, as adjusted to give effect to this offering
Dilution in pro forma net tangible book value per share per share to new investors		$

The following table summarizes, on the same pro forma basis at June 30, 2015, the total number of shares of Class A common stock purchased from us, the total cash consideration paid to us and the average price per share paid by the Parthenon Stockholders, the Continuing LLC Members and by new investors purchasing shares in the offering, assuming that all of the Continuing LLC Members exchanged their Holdco Units and Class B common stock for shares of our Class A common stock on a one-for-one basis.


	Shares of Class A Common Stock Purchased/Granted				Total Consideration				Average Price Per Share
	Number	Percentage			Amount	Percentage			Average Price Per Share
	(Dollars in thousands, except per share amounts)
New investors in this offering				%	$			%	$
Investors prior to this offering				%	$			%	$

Total			100	%	$		100	%	$

If the underwriters’ option to purchase additional shares is exercised in full, the pro forma net tangible book value per share at June 30, 2015 would have been approximately $ per share and the dilution in pro forma net tangible book value per share to new investors would be $ per share, in each case assuming that all of the Continuing LLC Members exchanged their Holdco Units and Class B common stock for shares of our Class A common stock on a one-for-one basis. Furthermore, the percentage of our shares held by existing equity owners would decrease to approximately % and the percentage of our shares held by new investors would increase to approximately %, in each case assuming that all of the Continuing LLC Members exchanged their Holdco Units and Class B common stock for shares of our Class A common stock on a one-for-one basis.

A $1.00 increase or decrease in the assumed initial offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase or decrease total consideration paid by investors in this offering, total consideration paid by all stockholders and average price per share paid by all stockholders by $ million, $ million and $ per share, respectively, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and offering expenses payable by us.

SELECTED FINANCIAL DATA

The following table shows selected historical financial data of our accounting predecessor, LDLLC and its predecessors, for the periods and as of the dates presented.

The selected consolidated financial data as of December 31, 2014 and 2013 and for the years then ended were derived from the audited consolidated financial statements of our predecessor included elsewhere in this prospectus. The selected consolidated financial data as of and for the six months ended June 30, 2015 were derived from the audited consolidated financial statements of our predecessor included elsewhere in this prospectus. The selected consolidated financial data as of and for the six months ended June 30, 2014 were derived from the unaudited consolidated financial statements of our predecessor included elsewhere in this prospectus. The unaudited consolidated financial statements have been prepared on a consistent basis with the audited consolidated financial statements of LDLLC. In the opinion of management, such unaudited consolidated financial data reflects all adjustments (consisting of normal and recurring accruals) considered necessary to present our financial position for the periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. In addition, our historical results are not necessarily indicative of the results expected for any future periods.

The selected historical consolidated financial data of loanDepot, Inc. have not been presented because loanDepot, Inc. is a newly incorporated entity, has had no business transactions or activities to date and had no assets or liabilities during the periods presented in this section.

You should read the following financial information together with the information under “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.


	Six Months Ended June 30,						Year Ended December 31,
	2015			2014			2014			2013
				(Unaudited)
	(Dollars in thousands, except share and per share amounts)
Statement of Operation Data:
Revenues:
Interest income	$	30,815		$	14,462		$	34,416		$	18,902
Interest expense		(20,651	)		(8,132	)		(19,966	)		(12,692	)

Net interest income		10,164			6,330			14,450			6,209
Gain on origination and sale of loans, net		425,438			193,849			435,462			246,478
Origination income, net		41,649			34,635			75,064			51,995
Servicing income		20,195			12,652			28,517			12,914
Servicing (losses) gains		(19,284	)		(10,368	)		(26,522	)		10,667
Other income		11,471			7,122			17,504			10,232

Total net revenues	$	489,633		$	244,220		$	544,475		$	338,496


	Six Months Ended June 30,				Year Ended December 31,
	2015		2014		2014		2013
			(Unaudited)
	(Dollars in thousands, except share and per share amounts)
Expenses:
Personnel expense	$	273,182	$	130,210	$	293,552	$	153,179
Marketing and advertising expense		54,369		43,024		93,906		51,265
Direct origination expense		28,594		20,503		43,893		22,907
General and administrative expense		33,618		18,127		44,070		17,769
Occupancy expense		11,118		7,065		15,083		5,716
Depreciation and amortization		8,593		5,207		11,692		5,778
Subservicing expense		5,651		4,919		11,157		6,884
Other interest expense		5,124		4,400		8,930		1,967

Total expenses		420,249		233,454		522,282		265,465

Income before income taxes		69,384		10,766		22,193		73,031
Provision for income taxes		216		598		509		773

Net income	$	69,168	$	10,168	$	21,684	$	72,258

Net income attributable to non-controlling interest

Net income attributable to loanDepot, Inc.	$		$		$		$

Per Share Data:
Weighted average shares outstanding:
Basic
Diluted
Net income available to Class A common stock per share:
Basic
Diluted


	As of June 30,						As of December 31,
	2015			2014			2014			2013
				(unaudited)
	(Dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	53,350		$	24,225		$	28,637		$	40,885
Loans held for sale, at fair value		1,504,603			883,585			1,004,195			741,509
Servicing rights, at fair value		194,093			108,361			138,837			93,823
Total assets		2,076,376			1,186,927			1,370,356			1,023,337
Total liabilities		1,786,222			1,011,694			1,181,162			860,028
Total liabilities, redeemable units and unitholders’ equity		2,076,376			1,186,927			1,370,356			1,023,337

Cash Flow Data:
Net cash used in operating activities	$	(559,772	)	$	(162,923	)	$	(314,555	)	$	(217,083	)
Net cash provided by (used in) investing activities		69,729			20,797			44,215			(34,026	)
Net cash provided by financing activities		514,756			125,466			258,091			264,349

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The unaudited pro forma consolidated statements of operations for the year ended December 31, 2014 and for the six months ended June 30, 2015 present our consolidated results of operations giving pro forma effect to the following transactions, in each case as if such transactions occurred on January 1, 2014:

•

the Mortgage Master acquisition, as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Factors Influencing Our Results of Operations—Acquisitions and Industry Partnerships—Acquisition of Mortgage Master”;

•

the Reorganization Transactions and Offering Transactions, as described under “Organizational Structure”;

•

the use of the estimated net proceeds to us from this offering, as described under “Use of Proceeds”;

•

the effects of the tax receivable agreement, as described under “Certain Relationships and Related Party Transactions—Tax Receivable Agreement”; and

•

a provision for corporate income taxes on the income attributable to loanDepot, Inc. at an effective rate of %, inclusive of all U.S. federal, state and local income taxes.

The unaudited pro forma consolidated balance sheet is based on our historical audited balance sheet as of June 30, 2015 and includes pro forma adjustments to give effect to the Reorganization Transactions and Offering Transactions, as described under “Organizational Structure,” the use of the estimated net proceeds to us from this offering, as described under “Use of Proceeds,” and the related effects of the tax receivable agreement, as described under “Certain Relationships and Related Party Transactions—Tax Receivable Agreement” as if they had occurred on June 30, 2015. The unaudited pro forma consolidated statements of operations are based on: (i) our audited consolidated financial statements as of and for the year ended December 31, 2014; (ii) our audited condensed consolidated financial statements as of and for the six months ended June 30, 2015; and (iii) the audited consolidated financial statements of Mortgage Master as of and for the year ended December 31, 2014.

The unaudited pro forma consolidated financial statements have been prepared on the basis that we will be taxed as a corporation under the Code and accordingly will become a tax-paying entity subject to U.S. federal and state income taxes, and should be read in conjunction with “Organizational Structure,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included elsewhere in this prospectus.

The pro forma data presented reflect events directly attributable to the described transactions and certain assumptions that we believe are reasonable. The pro forma data are not necessarily indicative of financial results that would have been attained had the described transactions occurred on the dates indicated below or which could be achieved in the future because they necessarily exclude various operating expenses, such as incremental general and administrative expense associated with being a public company. The adjustments are based on currently available information and certain estimates and assumptions. Therefore, the actual adjustments may differ from the pro forma adjustments. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma consolidated financial statements.

The unaudited pro forma consolidated financial statements and related notes are presented for illustrative purposes only. If this offering and other transactions contemplated herein had occurred in the past, our operating results might have been materially different from those presented in the unaudited pro forma financial statements. The unaudited pro forma consolidated financial statements should not be relied upon as an indication of operating results that the Company would have achieved if this offering and other transactions contemplated herein had taken place on the specified date. In addition, future results may vary significantly from the results reflected in the unaudited pro forma consolidated statements of operations and should not be relied on as an indication of the future results we will have after the completion of this offering and the other transactions contemplated by these unaudited pro forma consolidated financial statements.

LOANDEPOT, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

JUNE 30, 2015

(unaudited)


	LDLLC Historical		Pro Forma Adjustments⁽¹⁾	loanDepot, Inc. Pro Forma
	(Dollars in millions)
ASSETS
Cash and cash equivalents⁽²⁾	$	53.4	$	$
Restricted cash		3.2
Accounts receivable, net		39.4
Loans held for sale, at fair value		1,504.6
Derivative assets, at fair value		87.4
Servicing rights, at fair value		194.1
Property and equipment, net		50.1
Prepaid expense and other assets		15.0
Loans eligible for repurchase		71.6
Investments in joint ventures		16.7
Goodwill		35.4
Intangible assets, net		5.4

Total assets	$	2,076.4	$	$

LIABILITIES, REDEEMABLE UNITS AND UNITHOLDERS’ EQUITY
Warehouse lines of credit	$	1,410.8	$	$
Accrued expenses and other liabilities		130.6
Contingent consideration		28.1
Derivative liabilities, at fair value		2.0
Member distributions payable		—
Liability for loans eligible for repurchase		71.6
Capital lease obligations		14.4
Debt obligations		128.8

Total liabilities	$	1,786.2	$	$

Redeemable units
Class I units	$	27.3
Class A units		26.9
Class B units		5.0
Class P units		12.5
Class P-2 units		20.0
Class Z-I units		—

Total redeemable units		91.7
Unitholders’ equity
Class Z-2 units		—
Class Z-3 units		—
Class Z-4 units		—
Class Y units		—
Class W units		—
Class X units		—
Preferred stock, par value $0.001 per share, shares authorized on a pro forma basis; shares issued and outstanding on a pro forma basis		—
Class A common stock, par value $0.001 per share, shares authorized on a pro forma basis; shares issued and outstanding on a pro forma basis		—
Class B common stock, par value $0.001 per share, shares authorized on a pro forma basis; shares issued and outstanding on a pro forma basis		—
Additional paid-in capital		11.3
Retained earnings		187.2

Total unitholders’ equity/loanDepot, Inc. stockholders’ equity⁽³⁾	$	198.5

Non-controlling interest⁽⁴⁾	$	—

Total equity		198.5

TOTAL LIABILITIES, REDEEMABLE UNITS AND UNITHOLDERS’ EQUITY	$	2,076.4	$	$

(1)	As described in “Organizational Structure,” loanDepot, Inc. will have the ability to appoint the board of managers of LD Holdings. loanDepot, Inc. will initially have % of the economic interest in LD Holdings, but will have 100% of the voting

power and control the management of LD Holdings. As a result, loanDepot, Inc. will consolidate the financial results of LD Holdings and will record non-controlling interest on the loanDepot, Inc. consolidated balance sheet. Immediately following the Reorganization Transactions and Offering Transactions, the non-controlling interest, based on the assumptions to the pro forma financial information, will be $ million. Pro forma non-controlling interest, including non-controlling interest at LD Holdings, represents % of the pro forma equity of LD Holdings of $ million.

(2)	Reflects the net effect on cash and cash equivalents of the receipt of offering proceeds to us of $ million described in “Use of Proceeds” net of estimated expenses.

(3)	Represents an adjustment to stockholders’ equity reflecting the following:

(a)

par value for Class A common stock and Class B common stock to be outstanding following the offering and the use of net proceeds to us therefrom;

(b)

an increase of $ million of additional paid-in capital as a result of estimated net proceeds to us from the offering; and

(c)

the elimination of LDLLC members’ equity of $ million upon consolidation.

(4)	The increase in non-controlling interest reflects an increase from the reclassification of members’ equity of $ million to non-controlling interest upon consolidation.

LOANDEPOT, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2015

(unaudited)


	LDLLC Historical			Pro Forma Adjustments⁽¹⁾	loanDepot, Inc. Pro Forma
	(Dollars in millions, except share and per share amounts)
Revenues:
Interest income	$	30.8		$	$
Interest expense		(20.7	)

Net interest income		10.2
Gain on origination and sale of loans, net		425.4
Origination income, net		41.6
Servicing income		20.2
Servicing (losses) gains		(19.3	)
Other income		11.5

Total net revenues	$	489.6		$	$

Expenses:
Personnel expense		273.2
Marketing and advertising expense		54.4
Direct origination expense		28.6
General and administrative expense		33.6
Occupancy expense		11.1
Depreciation and amortization		8.6
Sub-servicing expenses		5.7
Other interest expense		5.1

Total expenses	$	420.2		$	$

Income before income taxes		69.4
Provision for income taxes⁽²⁾		0.2

Net income	$	69.2		$	$
Less: Net income attributable to non-controlling interest⁽³⁾

Net income attributable to stockholders

Net income per common share:
Basic
Diluted⁽⁴⁾
Weighted average common shares outstanding:
Basic
Diluted⁽⁴⁾

LOANDEPOT, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2014

(unaudited)


	LDLLC Historical			Mortgage Master Acquisition			LDLLC Pro Forma			Pro Forma Adjustments ⁽¹⁾	loanDepot, Inc Pro Forma
	(Dollars in millions, except share and per share amounts)
Revenues:
Interest income	$	34.4		$	8.4		$	42.5		$	$
Interest expense		(20.0	)		(4.7	)		(24.7	)

Net interest income		14.4			3.7			17.8
Gain on origination and sale of loans, net		435.5			80.2			450.3
Origination income, net		75.1			6.2			151.3
Servicing income		28.5			—			28.5
Servicing (losses) gains		(26.5	)		—			(26.5	)
Other income		17.5			0.1			17.9

Total net revenues	$	544.5		$	94.2		$	639.3		$	$

Expenses:
Personnel expense	$	293.5		$	70.5		$	364.0
Marketing and advertising expense		93.9			1.8			95.7
Direct origination expense		43.9			9.9			53.8
General and administrative expense		44.1			7.9			56.6
Occupancy expense		15.1			4.3			19.4
Depreciation and amortization		11.7			1.9			13.6
Sub-servicing expenses		11.2			—			11.2
Other interest expense		8.9			—			8.9

Total expenses		522.3			96.3			623.2
Income before income taxes		22.2			(6.1	)		16.1
Provision for income taxes⁽²⁾		0.5			0.3			0.8

Net income	$	21.7		$	(6.4	)	$	15.3		$	$

Less: Net income attributable to non-controlling interest⁽³⁾

Net income attributable to stockholders	$			$			$			$	$

Net income per common share:
Basic
Diluted⁽⁴⁾
Weighted average common shares outstanding:
Basic
Diluted⁽⁴⁾

(1)

As described in “Organizational Structure,” loanDepot, Inc. will have the ability to appoint the board of managers of LD Holdings. loanDepot, Inc. will initially own % of the economic interest in LD Holdings, but will have 100% of the voting power and control the management of LD Holdings. The Continuing LLC Members will own the remaining % of the economic interest in LD Holdings, which will be accounted for as a non-controlling interest in the future consolidated financial results of loanDepot, Inc. Immediately following the offering and the use of proceeds to us therefrom, the non-controlling interest will be %. Net income attributable to the non-controlling interest will represent % of income

before income taxes. These amounts have been determined based on the assumption that the underwriters’ option to purchase additional shares is not exercised. If the underwriters’ option to purchase additional shares is exercised the ownership percentage held by the non-controlling interest would decrease to %.

(2)

Following the Reorganization Transactions and the Offering Transactions, loanDepot, Inc. will be subject to U.S. federal income taxes, in addition to state and local taxes, with respect to its allocable share of any net taxable income of LD Holdings, which will result in higher income taxes than during our history as a limited liability company. As a result, the pro forma statements of operations reflect an adjustment to our provision for corporate income taxes to reflect an effective rate of %, which includes a provision for U.S. federal income taxes and uses our estimate of the weighted average statutory rates apportioned to each state and local jurisdiction.

(3)

The shares of Class B common stock of loanDepot, Inc. do not share in loanDepot, Inc. earnings and are therefore not allocated any net income attributable to the controlling and non-controlling interests. As a result, the shares of Class B common stock are not considered participating securities and are therefore not included in the weighted average shares outstanding for purposes of computing net income available per share.

(4)

For purposes of applying the as-if converted method for calculating diluted earnings per share, we assumed that all Holdco Units and Class B common stock are exchanged for Class A common stock. Such exchange is affected by the allocation of income or loss associated with the exchange of Holdco Units and Class B common stock for Class A common stock and accordingly the effect of such exchange has been included for calculating diluted pro forma net income (loss) available to Class A common stock per share. Giving effect to (i) the exchange of all Holdco Units and Class B common stock for shares of Class A common stock and (ii) the vesting of all unvested Holdco Unit stock based compensation awards, diluted pro forma net income (loss) per share available to Class A common stock would be computed as follows:


	Six Months Ended June 30, 2015	Year Ended December 31, 2014
Pro forma income before income taxes	$	$
Adjusted pro forma income taxes^(a)
Adjusted pro forma net income
Net income (loss) attributable to existing noncontrolling interest
Adjusted pro forma net income to loanDepot, Inc. stockholders^(b)
Weighted average shares of Class A common stock outstanding (assuming the exchange of all Holdco Units for shares of Class A common stock)^(c)	$	$
Pro forma diluted net income available to Class A common stock per share

(a)

Represents the implied provision for income taxes assuming the exchange of all Holdco Units of LD Holdings for shares of Class A common stock of loanDepot, Inc using the same method applied in calculating pro forma tax provision.

(b)

Assumes elimination of non-controlling interest due to the assumed exchange of all Holdco Units and Class B common stock for shares of Class A common stock of loanDepot, Inc. as of the beginning of the period.

(c)

The unvested units are converted to Holdco Units based on the treasury stock method and an as-if converted method is used to give effect to the exchange provisions of the Exchange Agreement for the diluted weighted average share calculation.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes included elsewhere in this prospectus. The results of operations described below are not necessarily indicative of the results to be expected for any future periods. This discussion includes forward-looking information that involves risks and assumptions which could cause actual results to differ materially from management’s expectations. See “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

Overview

We are a leading technology-enabled U.S. consumer lending platform. We launched our business in 2010 to provide credit solutions to consumers who were not satisfied with the service offered by banks and other traditional market participants. We are the nation’s second largest direct-to-consumer non-bank originator by annual funded loan amount and have facilitated over $50 billion in total funding since inception. We currently offer a broad suite of consumer credit products to our customers, ranging from home loans to unsecured personal loans. Our hybrid originate-to-sell and marketplace business model allows us to generate significant loan volume with less capital than traditional market participants. For the twelve months ended June 30, 2015, we originated $22.1 billion in loans, representing 125% year-over-year growth relative to the twelve months ended June 30, 2014. Moreover, we have generated this substantial growth while maintaining profitability since 2012.

Key Factors Influencing Our Results of Operations

Market and Economic Environment

The $11.9 trillion consumer lending market is an important driver of the U.S. economy. The loan products we currently provide target some of the largest components of U.S. consumer credit, including home loan debt ($8.1 trillion outstanding as of June 30, 2015), consumer credit excluding home, automotive and student loan debt ($1.0 trillion outstanding as of June 30, 2015) and home equity lines of credit ($0.5 trillion outstanding as of June 30, 2015), which collectively account for over 80% of the total consumer lending market. Following the Financial Crisis, U.S. households focused on stabilizing their financial position by lowering household debt, which has resulted in current household debt service ratios of 9.9%, the lowest level since 1980. Similarly, consumer confidence, which has historically served as a strong indicator of improving economic conditions and a precursor to increased desire to access credit, has improved steadily since 2009. This increased confidence along with higher employment levels and promising wage growth has led to increased consumer spending, which has recently driven increased demand for credit, particularly in the consumer credit products we provide.

The consumer lending market and the associated loan origination volumes for home loans and personal loans are influenced by interest rates and economic conditions. While borrower demand for consumer credit has typically remained strong in most economic environments, general market conditions, including the interest rate environment, unemployment rates, home price appreciation and consumer confidence may affect borrower willingness to seek financing and investor desire and ability to invest in loans. For example, a significant interest rate increase or rise in unemployment could cause potential borrowers to defer seeking financing as they wait for interest rates to stabilize or the general economic environment to improve. Additionally, if the economy weakens and actual or expected default rates increase, loan investors may postpone or reduce their investments in loan products.

The volume of home loan originations associated with home purchases is generally less affected by interest rate fluctuations and more sensitive to broader economic factors as well as the overall strength of the economy and home affordability. Purchase home loan origination volume can be subject to seasonal trends as home sales typically rise during the spring and summer seasons and decline in the fall and winter seasons. This is somewhat

offset by purchase loan originations sourced from our joint ventures which experience their highest level of activity during November and December as home builders focus on completing and selling homes prior to year end. Seasonality has less of an impact on refinance volumes, which are primarily driven by fluctuations in home loan interest rates.

Fluctuations in Interest Rates

Our home loan refinance volumes (and to a lesser degree, our purchase volumes), balance sheet and results of operations are influenced by changes in interest rates and how we effectively manage the related interest rate risk. As interest rates decline, home loan refinance volumes tend to increase, while an increasing interest rate environment may cause a decrease in refinance volumes and purchase volumes. In addition, the majority of our assets are subject to interest rate risk, including LHFS, which consist of home loans held on our balance sheet for a short period of time after origination until we are able to sell them, IRLCs, servicing rights and mandatory trades, forward sales contracts and put options that we enter into to manage interest rate risk created by IRLCs and uncommitted LHFS. We refer to such mandatory trades, forward sales contracts and put options collectively as “Hedging Instruments.” As interest rates increase, our LHFS and IRLCs generally decrease in value while our Hedging Instruments utilized to hedge against interest rate risk typically increase in value. However, rising interest rates cause our expected home loan servicing revenues to increase due to a decline in home loan prepayments which extends the average life of our servicing portfolio and increases the value of our servicing rights. Conversely, as interest rates decline, our LHFS and IRLCs generally increase in value while our Hedging Instruments decrease in value. However, in a declining interest rate environment, borrowers tend to refinance their home loans, which increases prepayment speed and causes our expected home loan servicing revenues to decrease, which reduces the average life of our servicing portfolio and decreases the value of our servicing rights. The changes in fair value of our servicing rights are recorded as unrealized gains and losses in gain on origination and sale of loans, net, and servicing gains (losses) in our consolidated statements of operations.

When interest rates rise, rate and term refinancings become less attractive to consumers after a historically long period of low interest rates. However, rising interest rates are also indicative of overall economic growth and inflation that should create more opportunities with respect to cash-out refinancings. In addition, inflation reflecting increases in asset prices and stronger economic growth (leading to higher consumer confidence) typically should generate more purchase-focused transactions requiring loans and greater opportunities for home equity loans, which we expect may offset, at least in part, any decline in rate and term refinancings in a rising interest rate environment. We also believe that rising interest rates will not have a material impact on market opportunities for personal loans because those are fixed rate products; however, if consumer debt in the aggregate began to decrease due to rising interest rates, we may see a reduction in personal loan volume because such loans are primarily used for consolidating debt.

Product Innovation and Brand Expansion

We have made and intend to continue to make investments to develop and offer new loan products for borrowers and investors. Our platform has been engineered to allow us to expand into new product categories as evidenced by the recent launches of our personal loan products in the second quarter of 2015 and home equity products in the third quarter of 2015. Our revenue growth to date has been a function of, and our future success will depend in part on, successfully meeting borrower and investor demand with new and innovative loan products and expanding our market share in our current products. As we continue to launch new products, we expect to be able to leverage our proprietary database and technology, as well as our sales force to efficiently identify consumers that could benefit from our expanded product suite. As a result, we expect to continue to reduce our average customer acquisition costs as we scale, increase customer conversion rates and become increasingly more efficient.

We intend to continue to dedicate significant resources to our marketing and brand advertising efforts and strategic relationships. We utilize highly targeted and sophisticated marketing strategies, which include internet,

broadcast and new media, strategic alliances and a national television campaign to build brand awareness. Our operating results and ability to sustain and grow loan volume will depend, in part, on our ability to continue to make effective investments in marketing and product development.

Acquisitions and Industry Partnerships

Although we have experienced rapid organic growth, we have completed and will continue to pursue selective strategic growth opportunities, which is demonstrated by our acquisitions of imortgage and Mortgage Master described below. In addition to direct borrower relationships, our sales force in the distributed retail channel originates loans through their relationships with local home builders, real estate agents and other local contacts. Furthermore, we have established joint ventures with several industry partners, including with two of the ten largest national home builders and other affinity partners and independent mortgage brokers. A local, cost-effective sales presence allows us to generate incremental origination opportunities and develop a personal relationship with customers, which leads to expanded volumes and profitability.

Acquisition of imortgage

On October 1, 2013, we completed the acquisition of substantially all of the assets of imortgage headquartered in Scottsdale, Arizona, for $53.7 million, consisting of $20.3 million in cash and $33.4 million in equity. The acquisition of imortgage provided us with a distributed retail presence to complement our direct retail channel. At the time of the acquisition, imortgage had 1,022 employees and a licensed salesforce of 369 located in six states, primarily in California and Arizona. The results of imortgage have been included in our results of operations since October 1, 2013.

Acquisition of Mortgage Master

On January 2, 2015, we completed the acquisition of Mortgage Master, headquartered in Walpole, Massachusetts, for $38.2 million, consisting of an estimated $26.9 million in contingent earn-out consideration and $11.3 million in promissory notes. The Seller Notes were amended on June 2, 2015 to, among other things, increase the amount of the notes by $4.3 million to a total outstanding principal amount of approximately $15.5 million. We repaid $2.1 million in Seller Notes as of June 30, 2015. Through our acquisition of Mortgage Master, we significantly expanded our distributed retail channel into the Northeast, Tri-State and mid-Atlantic regions. At the time of the acquisition, Mortgage Master had 629 employees and a licensed sales force of 290 located in 14 states. The results of Mortgage Master have been included in our results of operations since January 2, 2015.

Key Performance Metrics

We manage and assess the performance of our business by evaluating a variety of metrics. Selected key performance metrics are discussed below.

Fundings by Product

Fundings by product are a measure of how successful we are at growing sales of our home loan and personal loan products and a metric used by management in an attempt to isolate how effectively we are growing home and personal loans. We believe that fundings by product are an indicator of our market penetration in home and personal loans and that this provides useful information because it allows investors to better assess the underlying growth rate of our core products.

Number of Customers Serviced by Product

Number of customers serviced by product represents the number of home loan and personal loan units serviced in our servicing portfolio. We believe that our net customer additions are an indicator of the growth of home loans and personal loans and our servicing income, but may be offset by sales, from time to time, of servicing rights.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin

We present Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin, which management believes are important indicators of our operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and provide a baseline for analyzing trends in our underlying business from period to period. Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin are not a measurement of our financial performance under GAAP and should not be considered as an alternative to operating profit or any other performance measures derived in accordance with GAAP nor as an alternative to cash flows from operating activities as a measure of our liquidity.

For a presentation of our selected key performance metrics for the six months ended June 30, 2015 and 2014 and the years ended December 31, 2014 and 2013, including a discussion thereof, see “Prospectus Summary—Summary Historical Consolidated Financial and Other Data.”

Description of Components of Results of Operations

Revenues

Net Interest Income. Net interest income reflects interest earned on LHFS offset by interest expense on amounts borrowed under Warehouse Lines to finance such loans until sold. For more information regarding our Warehouse Lines, see “—Liquidity and Capital Resources—Warehouse Lines” below.

Gain on Origination and Sale of Loans, Net. Gain on origination and sale of loans, net, includes cash and non-cash elements and is comprised of the following components:

•

gain or loss realized upon the sale of loans to investors;

•

the value of servicing rights associated with loans sold to investors on a servicing-retained or servicing-released basis in the current period;

•

discount points collected, rebates paid to borrowers and lender paid costs for the origination of loans (including broker fee compensation paid to independent wholesale brokers and brokerage fees paid to our joint ventures for referred loans);

•

changes in the fair value of IRLCs that we enter into with loan applicants to originate loans;

•

changes in the fair value of LHFS;

•

changes in the fair value of Hedging Instruments;

•

realized gains and losses on Hedging Instruments; and

•

provisions for estimated loan loss obligations that we record for sold loans.

When we sell loans to investors, we record a gain or loss which is ultimately determined by the proceeds received from the sale of loans compared to their respective carrying values. The gain or loss that we realize on the sale of loans provided through our lending activities is primarily determined by the terms of originated loans, current market interest rates, the effect of any hedging and other risk management activities that we undertake, the sales price of the loan and the value of any servicing rights generated by the transaction. We carry our LHFS at fair value. Fair value is estimated based on quoted market prices, where available, prices for other traded loans

with similar characteristics, and purchase commitments and bid information received from market participants. Changes in fair value are reported as a component of gain on origination and sale of loans, net, within our consolidated statements of operations.

While our contracts vary, we provide representations and warranties to purchasers and insurers of the home loans sold that typically are in place for the life of the loan. In the event of a breach of these representations and warranties, we may be required to repurchase a home loan or indemnify the purchaser or insurer for losses, and any subsequent loss on the home loan may be borne by us. The representations and warranties require adherence to applicable origination and underwriting guidelines, including but not limited to the validity of the lien securing the loan, property eligibility, borrower credit, income and asset requirements and compliance with applicable federal, state and local law. We record a liability for our estimate of losses that we may experience as a result of our breach of representations and warranties provided to the purchasers or insurers of the loans that we have sold.

We provide IRLCs in order to provide our customers with certainty of the rate for their loan. We recognize in revenue the estimated fair value of IRLCs upon their issuance. The estimated fair value of IRLCs is based on our estimated gain on origination and sale of a loan, net of estimated direct origination costs, funded under the commitment, including servicing rights value, adjusted for the probability that the loan will fund. The IRLC is subject to changes in fair value as the loan approaches funding, as market interest rates for similar loans change and as our assessment of the probability of the funding of loans at similar points in the origination process changes. We recognize IRLCs on the balance sheet under derivative assets and liabilities, at fair value, on the commitment date with changes in fair value reported as a component of gain on origination and sale of loans, net.

The primary factor influencing the probability that the loan will fund within the terms of the IRLC is the change, if any, in interest rates subsequent to the commitment date. In general, the probability of funding increases if current interest rates rise and decreases if current interest rates fall. This is due primarily to the relative attractiveness of current interest rates compared to the applicant’s committed rate. The probability that a loan will fund within the terms of the IRLC is also influenced by the channel source of the application, aging of the application and the purpose of the loan (purchase or refinance).

We manage interest rate risk created by IRLCs and LHFS by entering into Hedging Instruments, which are accounted for as derivative financial instruments. We account for our derivative financial instruments as free-standing derivatives. We do not designate our Hedging Instruments under hedge accounting. We recognize all of our Hedging Instruments on the balance sheet at fair value with changes in the fair value reported as a component of gain on origination and sale of loans, net, within our consolidated statements of operations.

We typically originate home loans and then sell them in the secondary market while retaining servicing, and thus generate net interest income and gain on origination and sale of loans, net, on such loans, in addition to origination income, servicing income and servicing (losses) gains. We do not originate personal loans, but rather these loans are originated by our bank partner and then sold to investors. As a result, we do not generate net interest income or gain on origination and sale of personal loans, net, and instead generate platform licensing fee income and servicing income, net.

Origination Income, Net. Origination income, net, reflects the fees that we earn, net of lender credits we pay, from originating loans. Origination income includes loan origination fees, processing fees, underwriting fees and other fees collected from the borrower at the time of funding, as well as the platform licensing fee income received from our issuing bank partner in connection with our personal loan products. Lender credits typically include rebates or concessions to borrowers for certain loan origination costs.

Servicing Income. Servicing income reflects contractual servicing fees and ancillary and other fees (including late charges) related to the servicing of loans, including master servicing fees related to the servicing of home and personal loans.

Servicing (Losses) Gains. Servicing (losses) gains reflects both (i) changes in the fair value of servicing rights and (ii) gain or loss on sale of servicing rights. Changes in the fair value of servicing rights are influenced by borrower prepayment expectations and actual borrower prepayments (including through a home loan refinancing) relating to the underlying loans that are, in turn, primarily influenced by interest rate levels and expectations.

Other Income. Other income reflects our pro rata share of the net earnings from joint ventures, fee income from escrow services performed by LD Escrow, Inc., a consolidated subsidiary which provides escrow services to our customers in conjunction with their real estate transactions, and other items.

Expenses

Personnel Expense. Personnel expense reflects employee compensation related to salaries, commissions, incentive compensation, benefits and other employee costs.

Marketing and Advertising Expense. Marketing and advertising expense primarily reflects online advertising costs, including fees paid to search engines, television, print and radio, distribution partners, master service agreements with brokers and desk rental agreements with realtors. We expense and do not capitalize any of our marketing spend.

Direct Origination Expense. Direct origination expense reflects the unreimbursed portion of direct out-of-pocket expenses that we incur in the loan origination process, including underwriting, appraisal, credit report, loan document and other expenses paid to non-affiliates.

General and Administrative Expense. General and administrative expense reflects professional fees, data processing expense, communications expense, interest expense incurred on capital leases and other operating expenses.

Occupancy Expense. Occupancy expense reflects our lease costs, utilities, maintenance and security expenses related to the operation of our facilities.

Depreciation and Amortization. Depreciation and amortization reflects depreciation and amortization of property and equipment, amortization of assets under capital leases and amortization of intangible assets.

Subservicing Expense. Subservicing expense reflects the amounts that we pay to our subservicers to service our home and personal loan servicing portfolios.

Other Interest Expense. Other interest expense comprises costs for corporate debt obligations, including our Unsecured Term Loan and our Secured Credit Facilities. For more information regarding the debt obligations, see “—Liquidity and Capital Resources” below.

Results of Operations

The following table sets forth our consolidated financial statement data for the periods indicated:


	Six Months Ended June 30,									Year Ended December 31,
	2015			2014			% Change			2014			2013			% Change
	(Dollars in thousands)
REVENUES:
Interest income	$	30,815		$	14,462			113	%	$	34,416		$	18,902			82	%
Interest expense		(20,651	)		(8,132	)		154			(19,966	)		(12,692	)		57

Net interest income		10,164			6,330			61			14,450			6,209			133
Gain on origination and sale of loans, net		425,438			193,849			119			435,462			246,478			77
Origination income, net		41,649			34,635			20			75,064			51,995			44
Servicing income		20,195			12,652			60			28,517			12,914			121
Servicing (losses) gains		(19,284	)		(10,368	)		86			(26,522	)		10,667			(349	)
Other income		11,471			7,122			61			17,504			10,232			71

Total net revenues	$	489,633		$	244,220			100		$	544,475		$	338,496			61

EXPENSES:
Personnel expense	$	273,182		$	130,210			110		$	293,552		$	153,179			92
Marketing and advertising expense		54,369			43,024			26			93,906			51,265			83
Direct origination expense		28,594			20,503			39			43,893			22,907			92
General and administrative expense		33,618			18,127			85			44,070			17,769			148
Occupancy expense		11,118			7,065			57			15,083			5,716			164
Depreciation and amortization		8,593			5,207			65			11,692			5,778			102
Subservicing expenses		5,651			4,919			15			11,157			6,884			62
Other interest expense		5,124			4,400			16			8,930			1,967			354

Total expenses	$	420,249		$	233,454			80		$	522,282		$	265,465			97

Income before income taxes	$	69,384		$	10,766			544		$	22,193		$	73,031			(70	)
Provision for income taxes		216			598			(64	)		509			773			(34	)

Net income	$	69,168		$	10,168			580	%	$	21,684		$	72,258			(70	)%

Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

Net income was $69.2 million for the six months ended June 30, 2015, as compared to $10.2 million for the six months ended June 30, 2014, representing an increase of $59.0 million or 580%. Total fundings by product were $14.3 billion for the six months ended June 30, 2015, as compared to $5.4 billion for the six months ended June 30, 2014, representing an increase of $8.9 billion or 167%. Of the total fundings by product for the six months ended June 30, 2015, $3.6 billion, or 25%, was attributable to our acquisition of Mortgage Master in January 2015. We generated additional revenue and net income growth related to increased IRLCs and home loan originations as a result of the Mortgage Master acquisition. Our operating results were positively influenced by an attractive home loan origination market during the six months ended June 30, 2015 during which interest rates declined in the first quarter of 2015, resulting in an increase in IRLCs and home loan origination volumes. Additionally, our marketing activities proved to be effective during the current period as we were able to generate additional IRLC and home loan origination volumes at a reduced marketing cost per loan. The acquisition of Mortgage Master, the continued growth of imortgage and the additional marketing spend enabled us to increase our market share in the six months ended June 30, 2015 to 2.0%, as compared to 1.0% in the six months ended June 30, 2014. We made investments in personnel and infrastructure during 2014, which enabled us to increase home loan origination volume and grow revenues at an increased rate, relative to the increase in expenses for the six months ended June 30, 2015, as compared to the six months ended June 30, 2014. Our profitability improved during the period due to efficiencies gained from our benefits of scale.

Revenues

Net Interest Income. Net interest income was $10.2 million for the six months ended June 30, 2015, as compared to $6.3 million for the six months ended June 30, 2014, representing an increase of $3.8 million or 61%. The increase between periods was primarily the result of increased net interest earned on a higher average balance of LHFS funded by Warehouse Lines.

Gain on Origination and Sale of Loans, Net. Gain on origination and sale of loans, net, was $425.4 million for the six months ended June 30, 2015, as compared to $193.8 million for the six months ended June 30, 2014, representing an increase of $231.6 million or 119%. The increase is primarily attributable to the increase in loan originations during the period, the acquisition of Mortgage Master and continued growth of imortgage and across all our existing channels. The components of gain on origination and sale of loans, net, are as follows:

•

$358.5 million in net premiums realized upon the sale of loans to investors for the six months ended June 30, 2015, as compared to $186.5 million for the six months ended June 30, 2014, representing an increase of $172.0 million or 92%;

•

$148.0 million in retained servicing rights from loans sold to investors on a servicing-retained basis for the six months ended June 30, 2015, as compared to $51.2 million for the six months ended June 30, 2014, representing an increase of $96.8 million or 189%, which was driven by both (i) the increase in volume of loans sold on a servicing-retained basis to $12.1 billion during the six months ended June 30, 2015, as compared to $4.7 billion for the six months ended June 30, 2014 and (ii) an increase in estimated servicing multiples from 3.7x as of June 30, 2014 to 4.2x as of June 30, 2015;

•

$4.7 million of provision for loan loss obligations recorded for loans sold during the six months ended June 30, 2015, as compared to $0.7 million for the six months ended June 30, 2014, representing an increase of $4.0 million or 571%. The increase was due to $13.8 billion of loans sold during the six months ended June 30, 2015, as compared to $5.2 billion during the six months ended June 30, 2014;

•

$10.8 million of realized and unrealized gains from Hedging Instruments for the six months ended June 30, 2015, as compared to $57.6 million of realized and unrealized losses for the six months ended June 30, 2014. The increase is primarily due to the overall change in interest rate environment;

•

$23.1 million of unrealized gains from IRLCs for the six months ended June 30, 2015, as compared to $30.5 million for the six months ended June 30, 2014, representing a decrease of $7.3 million or 24%. The decrease is primarily due to the overall change in interest rate environment;

•

$5.2 million of mark-to-market losses on LHFS for the six months ended June 30, 2015, as compared to $20.1 million of mark-to-market gains for the six months ended June 30, 2014. The decrease is primarily attributable to an increasing interest rate environment for the six months ended June 30, 2015, as compared to a decreasing rate environment during the six months ended June 30, 2014; and

•

$105.1 million of rebates paid to borrowers and lender paid costs, net of discount points collected from borrowers for the origination of loans for the six months ended June 30, 2015, as compared to $36.1 million for the six months ended June 30, 2014, representing an increase of $69.0 million or 191%.

Origination Income, Net. Origination income, net, was $41.6 million for the six months ended June 30, 2015, as compared to $34.6 million for the six months ended June 30, 2014, representing an increase of $7.0 million or 20%. The increase in origination income, net, between periods was primarily the result of an increase in loan origination and other loan fees attributable to the growth in loan origination volumes.

Servicing Income. Servicing income was $20.2 million for the six months ended June 30, 2015, as compared to $12.7 million for the six months ended June 30, 2014, representing an increase of $7.5 million or 60%. The increase in servicing income between periods was the result of an increase of $4.4 billion in the average UPB of

our servicing portfolio, which increase resulted from an increase in servicing-retained loan sales. Our average servicing portfolio increased to $14.0 billion for the six months ended June 30, 2015, as compared to $9.6 billion for the six months ended June 30, 2014.

Servicing (Losses) Gains. Servicing losses were $19.3 million for the six months ended June 30, 2015, as compared to servicing losses of $10.4 million for the six months ended June 30, 2014, representing an increase of $8.9 million or 86%. The increase in servicing losses was the result of:

•

$15.6 million in unrealized mark-to-market losses on servicing rights for the six months ended June 30, 2015, as compared to losses of $10.8 million for the six months ended June 30, 2014, primarily due to an increase in principal amortization and prepayments experienced in our servicing portfolio during the six months ended June 30, 2015; and

•

$3.7 million in realized losses on sales of servicing rights associated with the sale of $7.4 billion in UPB during the six months ended June 30, 2015, as compared to a $0.5 million gain associated with the sale of $2.0 billion in UPB during the six months ended June 30, 2014.

Other Income. Other income was $11.5 million for the six months ended June 30, 2015, as compared to $7.1 million for the six months ended June 30, 2014, representing an increase of $4.3 million or 61%. The increase between periods was primarily the result of an increase in escrow income of $7.8 million for the six months ended June 30, 2015, driven by overall increased loan activity, as compared to $4.0 million for the six months ended June 30, 2014.

Expenses

Personnel Expense. Personnel expense was $273.2 million for the six months ended June 30, 2015, as compared to $130.2 million for the six months ended June 30, 2014, representing an increase of $143.0 million or 110%. The increase between periods was primarily the result of an increase in commissions, salaries and benefits expense as a result of the increase in headcount associated with the growth of our lending operation, including the acquisition of Mortgage Master in January 2015. As of June 30, 2015, we had 4,126 full-time equivalent employees (“FTE”), as compared to 2,698 FTE as of June 30, 2014, representing a 52% year-over-year increase.

Marketing and Advertising Expense. Marketing and advertising expense was $54.4 million for the six months ended June 30, 2015, as compared to $43.0 million for the six months ended June 30, 2014, representing an increase of $11.3 million or 26%. The increase between periods was primarily the result of additional acquired leads, direct mail campaigns, national television advertising, internet marketing and marketing service agreements associated with generating additional lead sources and growing our brand awareness.

Direct Origination Expense. Direct origination expense was $28.6 million for the six months ended June 30, 2015, as compared to $20.5 million for the six months ended June 30, 2014, representing an increase of $8.1 million or 39%. The increase between periods was primarily the result of increased underwriting, credit reports, loan document and other loan origination costs associated with increased loan origination volumes during the period.

General and Administrative Expense. General and administrative expense was $33.6 million for the six months ended June 30, 2015, as compared to $18.1 million for the six months ended June 30, 2014, representing an increase of $15.5 million or 85%. The increase between periods was primarily the result of an increase in data and communication expense and professional services expense associated with increases in personnel and sales offices, including the acquisition of Mortgage Master in January 2015, partially offset by an increase in capitalized internally developed software costs associated with the expansion of our proprietary technology.

Occupancy Expense. Occupancy expense was $11.1 million for the six months ended June 30, 2015, as compared to $7.1 million for the six months ended June 30, 2014, representing an increase of $4.1 million or 57%. The increase between periods was the result of increased facilities cost related to our acquisition of Mortgage Master in January 2015 and an increase in the number and lease rates of imortgage sales offices.

Depreciation and Amortization. Depreciation and amortization was $8.6 million for the six months ended June 30, 2015, as compared to $5.2 million for the six months ended June 30, 2014, representing an increase of $3.4 million or 65%. The increase between periods was the result of increased property and equipment associated with the growth of our lending business, including property and equipment related to the acquisition of Mortgage Master in January 2015.

Subservicing Expense. Subservicing expense was $5.7 million for the six months ended June 30, 2015, as compared to $4.9 million for the six months ended June 30, 2014, representing an increase of $0.7 million or 15%. The increase between periods was the result of the increased balance of our servicing portfolio.

Other Interest Expense. Other interest expense was $5.1 million for the six months ended June 30, 2015, as compared to $4.4 million for the six months ended June 30, 2014, representing an increase of $0.7 million or 16%. The increase between periods was the result of interest expense on our $80.0 million Unsecured Term Loan and an increase in the Secured Credit Facilities used to finance servicing rights.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Net income was $21.7 million for 2014, as compared to $72.3 million for 2013, representing a decrease of $50.6 million or 70%. Total fundings by product were $13.2 billion for 2014, as compared to $8.4 billion for 2013, representing an increase of $4.8 billion or 57%. The acquisition of imortgage in October 2013 and the launch of our wholesale loan channel in May 2014 enabled us to grow our home loan origination volumes and increase revenues year-over-year despite the contraction in the home loan origination market due to higher interest rates (which affected our acquired entities before we bought them). In an effort to increase market share, we significantly increased our marketing efforts. The acquisition of imortgage and the additional marketing spend enabled us to increase our market share in 2014 to 1.2%, as compared to 0.5% in 2013. Additionally, during 2014 we enhanced our management team and made additional investments in personnel and infrastructure to support future growth of our business, including the launch of our personal loan product. Our profitability declined as a result of the increased expenses associated with marketing and organizational growth.

Revenues

Net Interest Income. Net interest income was $14.5 million for 2014, as compared to $6.2 million for 2013, representing an increase of $8.2 million or 133%. The increase between periods was primarily the result of increased net interest earned on a higher average balance of LHFS funded by Warehouse Lines.

Gain on Origination and Sale of Loans, Net. Gain on origination and sale of loans, net, was $435.5 million for 2014, as compared to $246.5 million for 2013, representing an increase of $189.0 million or 77%. The increase is primarily attributable to the increase in loan originations during the period and continued growth through the acquisition of imortgage and across all our existing channels. The components of gain on origination and sale of loans, net, are as follows:

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$455.3 million in net premiums realized upon the sale of loans to investors for 2014, as compared to $196.3 million for 2013, representing an increase of $259.1 million or 132%;

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$132.8 million in retained servicing rights from loans sold to investors on a servicing-retained basis in 2014, as compared to $60.2 million in 2013, representing an increase of $72.6 million or 121%. The increase was driven by the increase in volume of loans sold on a servicing-retained basis to $11.8 billion during 2014, as compared to $6.2 billion for 2013 and an increase in estimated servicing multiples;

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$2.6 million of provision for loan loss obligations recorded for loans sold in 2014, as compared to $3.1 million in 2013, representing a decrease of $0.6 million or 18%, which decrease was primarily the result of changes in management estimates;

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$91.4 million of realized and unrealized losses from Hedging Instruments in 2014, as compared to $39.8 million of realized and unrealized gains in 2013, representing a decrease of $131.2 million. The decrease is primarily due to the overall change in interest rate environment;

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$18.9 million of unrealized gains from IRLCs in 2014, as compared to $3.1 million in 2013, representing an increase of $15.8 million or 510%. The increase is primarily attributable to an increase in loan pipeline commitments totaling $23.8 billion in UPB for 2014 as compared to $14.2 billion for 2013;

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$23.5 million of mark-to-market gains on LHFS in 2014, as compared to $4.5 million of mark-to-market losses in 2013. The increase is primarily attributable to an increase in LHFS to $1.0 billion as of December 31, 2014, as compared to $741.5 million as of December 31, 2013; and

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$101.2 million of discount points collected, net of rebates paid to borrowers and lender paid costs, for the origination of loans for 2014, as compared to $45.3 million for 2013, representing an increase of $55.9 million or 123%.

Origination Income, Net. Origination income, net, was $75.1 million for 2014, as compared to $52.0 million for 2013, representing an increase of $23.1 million or 44%. The increase between periods was primarily the result of an increase in loan origination and other loan fees attributable to the 57% growth in loan origination volumes for 2014.

Servicing Income. Servicing income was $28.5 million for 2014, as compared to $12.9 million for 2013, representing an increase of $15.6 million or 121%. The increase in servicing income between periods was the result of an increase of $5.4 billion in the average UPB of our servicing portfolio, from an average of $5.2 billion for 2013 to $10.6 billion for 2014.

Servicing (Losses) Gains. Servicing losses were $26.5 million for 2014, as compared to servicing gains of $10.7 million for 2013, representing a decrease of $37.2 million. The decrease in servicing gains was the result of:

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$30.2 million in unrealized mark-to-market losses on our servicing rights in 2014, as compared to unrealized gains of $10.7 million in 2013, primarily due to a decrease in interest rates on a higher balance of servicing rights as of December 31, 2014; and

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$3.7 million in realized gains on sales of servicing rights associated with the sale of $5.3 billion in UPB during 2014, as compared to no servicing rights sales during 2013.

Other Income. Other income was $17.5 million for 2014, as compared to $10.2 million for 2013, representing an increase of $7.3 million or 71%. The increase between periods was primarily the result of increases in income from our investments in joint ventures associated with the acquisition of imortgage in 2013 and increases in escrow fee income. Income from joint ventures increased $4.9 million to $6.8 million for 2014, as compared to $1.9 million for 2013. Additionally, escrow fee income increased $1.8 million to $9.6 million for 2014, as compared to $7.7 million for 2013.

Expenses

Personnel Expense. Personnel expense was $293.6 million for 2014, as compared to $153.2 million for 2013, representing an increase of $140.4 million or 92%. The increase between periods was primarily the result of an increase in commissions and salaries and benefits expense as a result of the increase in headcount

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associated with the growth of our lending operation including the acquisition of imortgage in October 2013. As of December 31, 2014, we had 3,114 FTE, as compared to 2,326 FTE as of December 31, 2013, representing a 31% year-over-year increase.

Marketing and Advertising Expense. Marketing and advertising expense was $93.9 million for 2014, as compared to $51.3 million for 2013, representing an increase of $42.6 million or 83%. The increase between periods was primarily the result of additional acquired leads, internet marketing and marketing service agreements associated with our efforts to capture additional market share.

Direct Origination Expense. Direct origination expense was $43.9 million for 2014, as compared to $22.9 million for 2013, representing an increase of $21.0 million or 92%. The increase between periods was primarily the result of increased underwriting, credit reports, appraisals, loan document and other loan origination costs associated with increased loan origination volumes during the period.

General and Administrative Expense. General and administrative expense was $44.1 million for 2014, as compared to $17.8 million for 2013, representing an increase of $26.3 million or 148%. The increase between periods was primarily the result of an increase in data and communications expense and professional services expense associated with investments in personnel and infrastructure, as well as increased costs associated with the operations of imortgage commencing in October 2013. Partially offsetting the increase in costs was an increase in capitalized internally developed software costs associated with the expansion of our proprietary technology.

Occupancy Expense. Occupancy expense was $15.1 million for 2014, as compared to $5.7 million for 2013, representing an increase of $9.4 million or 164%. The increase between periods was primarily the result of increased facilities cost related to our distributed retail channel (primarily as a result of our acquisition of imortgage in October 2013) and the growth of our direct retail and wholesale channels.

Depreciation and Amortization. Depreciation and amortization was $11.7 million for 2014, as compared to $5.8 million for 2013, representing an increase of $5.9 million or 102%. The increase between periods was primarily the result of increased property and equipment associated with the growth of our lending business, including property and equipment related to the acquisition of imortgage in October 2013.

Subservicing Expense. Subservicing expenses were $11.2 million for 2014, as compared to $6.9 million for 2013, representing an increase of $4.3 million or 62%. The increase between periods was primarily the result of the significant growth in the balance of our servicing portfolio which increased to $13.6 billion as of December 31, 2014, as compared to $8.3 billion as of December 31, 2013.

Other Interest Expense. Other interest expense was $8.9 million for 2014, as compared to $2.0 million for 2013, representing an increase of $7.0 million or 354%. The increase between periods was primarily the result of higher outstanding debt balances associated with our Unsecured Term Loan we entered into during October 2013 and the Original Secured Credit Facility we entered into during October 2014.

Description of Certain Components of Consolidated Balance Sheets

Loans Held for Sale, at Fair Value. Loans held for sale, at fair value, are primarily fixed and variable rate, 15- to 30-year term first-lien loans that are secured by residential property. All loans are reflected at fair value. During the six months ended June 30, 2015, our home loans were on our balance sheet for 17.3 days on average before final sale. Our personal loans are funded directly by our issuing bank partner, which thereafter sells the loans directly to investors, and are not recorded on our balance sheet.

Derivative Assets and Liabilities, at Fair Value. Derivative assets and liabilities, at fair value, represent the fair value of IRLCs and Hedging Instruments, which may be positive or negative. We do not use derivative financial instruments for purposes other than in support of our risk management activities.

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Servicing Rights, at Fair Value. Servicing rights, at fair value, represent the value of a contract that obligates us to service home loans on behalf of the purchaser of the loan in exchange for servicing fees and the right to collect certain ancillary income from the borrower. We recognize servicing rights at our estimate of the fair value of the contract to service the loans.

Warehouse Lines of Credit. Warehouse lines of credit represent debt that is used to fund, and is secured by, home loans. Warehouse Lines are repaid using proceeds from the sale of loans. Warehouse Lines carry base interest rates and may include annual facility fees, commitment fees and non-usage fees.

Loans Eligible for Repurchase/Liability for Loans Eligible for Repurchase. For certain loans guaranteed by Ginnie Mae, we (as the servicer) have the unilateral right to repurchase any individual loan in a Ginnie Mae securitization pool if that loan meets defined criteria, including being delinquent greater than 90 days. Once we have the unilateral right to repurchase the delinquent loan, we have effectively gained control over the loan and must re-recognize the loan on our consolidated balance sheet and establish a corresponding liability regardless of our intent to repurchase the loan.

Financial Condition

The following table sets forth our consolidated balance sheet data as of the dates indicated:


	June 30, 2015		December 31,
	June 30, 2015		2014		2013
	(Dollars in thousands)
ASSETS
Cash and cash equivalents	$	53,350	$	28,637	$	40,885
Restricted cash		3,227		9,099		17,662
Accounts receivable, net		39,420		18,759		12,750
Loans held for sale, at fair value		1,504,603		1,004,195		741,509
Derivative assets, at fair value		87,443		52,851		44,572
Servicing rights, at fair value		194,093		138,837		93,823
Property and equipment, net		50,056		36,286		26,995
Prepaid expenses and other assets		15,035		10,362		6,736
Loans eligible for repurchase		71,608		39,840		5,311
Investments in joint ventures		16,687		16,791		18,064
Goodwill		35,422		10,883		10,883
Intangible assets, net		5,432		3,818		4,148

Total assets	$	2,076,376	$	1,370,356	$	1,023,337

LIABILITIES, REDEEMABLE UNITS AND UNITHOLDERS’ EQUITY
Warehouse lines of credit	$	1,410,794	$	938,617	$	697,756
Accrued expenses and other liabilities		130,558		80,945		63,569
Contingent consideration		28,100		—		—
Derivative liabilities, at fair value		2,020		7,590		199
Member distributions payable		—		—		7,089
Liability for loans eligible for repurchase		71,608		39,840		5,311
Capital lease obligations		14,388		11,171		6,104
Debt obligations		128,754		103,000		80,000

Total liabilities		1,786,222		1,181,162		860,028
Total redeemable units		91,675		69,225		64,024
Total unitholders’ equity		198,479		119,968		99,285

Total liabilities, redeemable units and unitholders’ equity	$	2,076,376	$	1,370,356	$	1,023,337

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June 30, 2015 Compared to December 31, 2014

Assets

Cash and Cash Equivalents. Cash and cash equivalents were $53.4 million as of June 30, 2015, as compared to $28.6 million as of December 31, 2014, representing an increase of $24.7 million or 86%. The increase between periods was primarily the result of net income generated in the first six months of 2015, proceeds from the sales of servicing rights, proceeds from financing of servicing rights and proceeds from capital contributions from related parties (see “Certain Relationships and Related Party Transactions—Class P and P-2 Subscription Agreements”).

Restricted Cash. Restricted cash was $3.2 million as of June 30, 2015, as compared to $9.1 million as of December 31, 2014, representing a decrease of $5.9 million or 65%. The decrease between periods was primarily the result of a reduction in cash collateral posted for our Unsecured Term Loan.

Accounts Receivable, Net. Accounts receivable, net, was $39.4 million as of June 30, 2015, as compared to $18.8 million as of December 31, 2014, representing an increase of $20.7 million or 110%. The increase between periods was primarily the result of increased holdback receivables from loan sales and sales of servicing rights and an increase in realized pair-off gains receivable from our Hedging Instruments.

Loans Held for Sale, at Fair Value. Loans held for sale, at fair value, were $1.5 billion as of June 30, 2015, as compared to $1.0 billion as of December 31, 2014, representing an increase of $500.4 million or 50%. The increase between periods was primarily the result of increased loan originations driven by our acquisition of Mortgage Master in January 2015 and the growth of our wholesale channel. For the six months ended June 30, 2015, we originated and sold $14.3 billion and $13.8 billion, respectively, in loans.

Derivative Assets, at Fair Value. Derivative assets, at fair value, were $87.4 million as of June 30, 2015, as compared to $52.9 million as of December 31, 2014, representing an increase of $34.6 million or 65%. The increase between periods was primarily the result of increased IRLCs and Hedging Instruments entered into as a result of increased loan commitments associated with the growth in our lending operation and acquisition of Mortgage Master in January 2015. During the six months ended June 30, 2015, we recorded record IRLC volume with over $23.9 billion in IRLCs for an average of over 15,000 units per month.

Servicing Rights, at Fair Value. Servicing rights, at fair value, were $194.1 million as of June 30, 2015, as compared to $138.8 million as of December 31, 2014, representing an increase of $55.3 million or 40%. The increase between periods was primarily the result of $148.0 million in capitalized servicing rights from the sale of loans on a servicing retained basis and a $2.1 million increase in estimated fair value due to changes in assumptions, partially offset by a $73.5 million reduction in servicing rights from the sale of $7.4 billion in UPB of servicing rights, $17.6 million in principal amortization and prepayments and $3.7 million in realized losses on servicing rights sales during the six months ended June 30, 2015.

Property and Equipment, Net. Property and equipment, net, was $50.1 million as of June 30, 2015, as compared to $36.3 million as of December 31, 2014, representing an increase of $13.8 million or 38%. The increase between periods was primarily the result of the capitalization of internally developed software cost associated with the expansion of our proprietary technology, capital expenditures associated with the growth of our company and additional property and equipment related to our acquisition of Mortgage Master in January 2015.

Prepaid Expenses and Other Assets. Prepaid expenses and other assets were $15.0 million as of June 30, 2015, as compared to $10.4 million as of December 31, 2014, representing an increase of $4.7 million or 45%. The increase between periods was primarily the result of increases in prepaid marketing and other expenses associated with the growth of our servicing portfolio, security deposits and other assets related to our acquisition of Mortgage Master in January 2015.

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Loans Eligible for Repurchase. Loans eligible for repurchase were $71.6 million as of June 30, 2015, as compared to $39.8 million as of December 31, 2014, representing an increase of $31.8 million or 80%. The increase between periods is due to an increase in loans 90 or more days past due and represent loans that we have the unilateral right to repurchase from Ginnie Mae guaranteed securitizations as part of our contractual arrangements as the servicer of the loans.

Investments in Joint Ventures. Investments in joint ventures were $16.7 million as of June 30, 2015, as compared to $16.8 million as of December 31, 2014, representing a decrease of $0.1 million or 1%. The decrease between periods was primarily the result of a loss incurred on one of our joint ventures during the six months ended June 30, 2015.

Goodwill. Goodwill was $35.4 million as of June 30, 2015, as compared to $10.9 million as of December 31, 2014, representing an increase of $24.5 million or 225%. The increase between periods was the result of our acquisition of Mortgage Master in January 2015. We recorded $24.5 million of goodwill representing the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired.

Intangible Assets, Net. Intangible assets, net, were $5.4 million as of June 30, 2015, as compared to $3.8 million as of December 31, 2014, representing an increase of $1.6 million or 42%. The increase between periods was the result of our acquisition of Mortgage Master in January 2015, net of amortization for the six months ended June 30, 2015. As part of the acquisition, we acquired $1.8 million of intangible assets related to trademarks, trade names and non-compete agreements. We recorded $0.2 million in amortization expense during the six months ended June 30, 2015 associated with intangible assets acquired in the imortgage and Mortgage Master acquisitions.

Liabilities, Redeemable Units and Unitholders’ Equity

Warehouse Lines of Credit. Warehouse lines of credit were $1.4 billion as of June 30, 2015, as compared to $938.6 million as of December 31, 2014, representing an increase of $472.2 million or 50%. The increase between periods was primarily the result of increased loan originations across all of our channels with the distributed retail channel benefitting from our acquisition of Mortgage Master in January 2015. For the six months ended June 30, 2015, we originated and sold $14.3 billion and $13.8 billion, respectively, in loans. We increased our borrowing capacity under our Warehouse Lines to $2.2 billion during the six months ended June 30, 2015 with existing lenders.

Accrued Expenses and Other Liabilities. Accrued expenses and other liabilities were $130.6 million as of June 30, 2015, as compared to $80.9 million as of December 31, 2014, representing an increase of $49.6 million or 61%. The increase between periods was primarily the result of increases in accrued expenses and other liabilities related to the growth of our business and our acquisition of Mortgage Master in January 2015. As part of the acquisition, we entered into $15.5 million in Seller Notes payable to Mortgage Master as part of purchase consideration. We made $2.1 million in principal payments which reduced the outstanding principal balance of Seller Notes to $13.4 million at June 30, 2015. Accrued loan origination costs and loan loss obligations increased $13.3 million and $3.6 million, respectively, due to growth in loan originations and loan sales during the period. Additionally, we accrued $2.9 million in litigation related liabilities during the six months ended June 30, 2015.

Contingent Consideration. Contingent consideration was $28.1 million as of June 30, 2015, as compared to $0 as of December 31, 2014. The increase between periods was primarily the result of our acquisition of Mortgage Master in January 2015. On the acquisition date, we recorded $26.9 million in contingent consideration. At June 30, 2015, we recorded a $1.2 million increase to the estimated fair value of the contingent consideration liability primarily due to an improvement in Mortgage Masters’ pre-tax earnings since the acquisition.

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Derivative Liabilities, at Fair Value. Derivative liabilities, at fair value, were $2.0 million as of June 30, 2015, as compared to $7.6 million as of December 31, 2014, representing a decrease of $5.6 million or 73%.

Liability for Loans Eligible for Repurchase. Liability for loans eligible for repurchase was $71.6 million as of June 30, 2015, as compared to $39.8 million as of December 31, 2014. The increase between periods is due to an increase in loans 90 or more days past due and represent loans that we have the unilateral right to repurchase from Ginnie Mae guaranteed securitizations as part of our contractual arrangements as the servicer of the loans.

Capital Lease Obligations. Capital lease obligations were $14.4 million as of June 30, 2015, as compared to $11.2 million as of December 31, 2014, representing an increase of $3.2 million or 29%. The increase between periods was primarily the result of additional equipment financing to facilitate the growth of our business.

Debt Obligations. Debt obligations were $128.8 million as of June 30, 2015, as compared to $103.0 million as of December 31, 2014, representing an increase of $25.8 million or 25%. The increase between periods was primarily the result of a $26.1 million advance on servicing rights associated with a Warehouse Line that provides financing for both home loans and servicing rights. The Warehouse Line contains a $50.0 million sub-limit for the financing of servicing rights. The increase in debt obligations was partially offset by a $0.4 million reduction in our Original Secured Credit Facility due to principal reductions. At June 30, 2015, the balance of our Original Secured Credit Facility was $22.6 million, as compared to $23.0 million at December 31, 2014.

Redeemable Units and Unitholders’ Equity. Total redeemable units and unitholders’ equity were $91.7 million and $198.5 million as of June 30, 2015, as compared to $69.2 million and $120.0 million as of December 31, 2014, representing increases of $22.5 million or 32%, and $78.5 million or 65%. The increases between periods were primarily the result of $69.2 million of net income generated in the first six months of 2015, $20.0 million in capital contributions received from related parties in a private placement issuance and $11.9 million in equity compensation. See “Certain Relationships and Related Party Transactions—Class P and P-2 Subscription Agreements.”

December 31, 2014 Compared to December 31, 2013

Assets

Cash and Cash Equivalents. Cash and cash equivalents were $28.6 million as of December 31, 2014, as compared to $40.9 million as of December 31, 2013, representing a decrease of $12.2 million or 30%. The decrease between periods was primarily the result of cash used for haircuts to fund the increased balances of LHFS funded on our Warehouse Lines. Additionally, we sold more loans on a servicing-retained basis resulting in an increase in our use of cash to fund investment in servicing rights. Partially offsetting the decreases were increases in cash from net income generated in 2014 and shares issued through equity compensation plans.

Restricted Cash. Restricted cash was $9.1 million as of December 31, 2014, as compared to $17.7 million as of December 31, 2013, representing a decrease of $8.6 million or 48%. The decrease between periods was primarily the result of the release of funds held in the reserve account for the Unsecured Term Loan. Restricted cash was subsequently released to support the full draw on the Unsecured Term Loan as additional servicing rights collateral was pledged in the first quarter of 2014.

Accounts Receivable, Net. Accounts receivable, net, was $18.8 million as of December 31, 2014, as compared to $12.8 million as of December 31, 2013, representing an increase of $6.0 million or 47%. The increase between periods was primarily the result of increased holdback receivables from loan sales and sales of servicing rights. Partially offsetting the increase was a decrease in pair-off gains receivable from our Hedging Instruments.

Loans Held for Sale, at Fair Value. Loans held for sale, at fair value, were $1.0 billion as of December 31, 2014, as compared to $741.5 million as of December 31, 2013, representing an increase of $262.7 million or

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35%. The increase between periods was primarily the result of increased loan originations driven by our acquisition of imortgage in October 2013 and the growth of our wholesale channel. For the year ended December 31, 2014, we originated and sold $13.2 billion and $12.9 billion, respectively, in loans.

Derivative Assets, at Fair Value. Derivative assets, at fair value, were $52.9 million as of December 31, 2014, as compared to $44.6 million as of December 31, 2013, representing an increase of $8.3 million or 19%. The increase between periods was primarily the result of increased IRLCs and Hedging Instruments entered into as a result of increased loan commitments associated with the growth in our lending operation and acquisition of imortgage in October 2013 as well as the growth of our wholesale channel. As of December 31, 2014, we had $2.3 billion in IRLCs outstanding with borrowers as compared to $1.4 billion as of December 31, 2013.

Servicing Rights, at Fair Value. Servicing rights, at fair value, were $138.8 million as of December 31, 2014, as compared to $93.8 million as of December 31, 2013, representing an increase of $45.0 million or 48%. The increase between periods was primarily the result of $133.1 million in servicing rights additions from servicing-retained loan sales, partially offset by a decrease of $62.1 million in servicing rights related to the sale of $5.3 billion in outstanding UPB of our loan servicing portfolio and a decrease of $26.0 million in servicing rights from unrealized mark-to-market losses related to a decline in interest rates during 2014.

Property and Equipment, Net. Property and equipment, net, was $36.3 million as of December 31, 2014, as compared to $27.0 million as of December 31, 2013, representing an increase of $9.3 million or 34%. The increase between periods was primarily the result of additional property and equipment related to our acquisition of imortgage in October 2013 and the growth of our lending operation.

Prepaid Expenses and Other Assets. Prepaid expenses and other assets were $10.4 million as of December 31, 2014, as compared to $6.7 million as of December 31, 2013, representing an increase of $3.6 million or 54%. The increase between periods was primarily the result of an increase of $1.7 million in servicing advances, associated with the growth in our servicing portfolio, to $2.4 million as of December 31, 2014, as compared to $0.7 million as of December 31, 2013 and other prepaid marketing costs related to the growth of our lending operation.

Loans Eligible for Repurchase. Loans eligible for repurchase were $39.8 million as of December 31, 2014, as compared to $5.3 million as of December 31, 2013. The increase between periods is due to an increase in loans 90 or more days past due and represent loans that we have the unilateral right to repurchase from Ginnie Mae guaranteed securitizations as part of our contractual arrangements as the servicer of the loans.

Investments in Joint Ventures. Investments in joint ventures were $16.8 million as of December 31, 2014, as compared to $18.1 million as of December 31, 2013, representing a decrease of $1.3 million or 7%. The decrease between periods was primarily the result of a loss incurred on one of our joint ventures during the year ended December 31, 2014, partially offset by income from an investment in a new joint venture during 2014.

Goodwill. Goodwill was $10.9 million as of December 31, 2014, as compared to $10.9 million as of December 31, 2013. As a result of our acquisition of imortgage in October 2013, we recorded $10.9 million of goodwill representing the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired.

Intangible Assets, Net. Intangible assets, net, were $3.8 million as of December 31, 2014, as compared to $4.1 million as of December 31, 2013, representing a decrease of $0.3 million or 8%. The decrease between periods was the result of the amortization of intangible assets related to our acquisition of imortgage in October 2013. As part of the acquisition, intangible assets consisted primarily of trademarks and a non-compete agreement. Intangible assets with definite lives are amortized over their estimated lives.

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Liabilities, Redeemable Units and Unitholders’ Equity

Warehouse Lines of Credit. Warehouse lines of credit were $938.6 million as of December 31, 2014, as compared to $697.8 million as of December 31, 2013, representing an increase of $240.9 million or 35%. The increase between periods was primarily the result of increased loan originations across all of our channels with the distributed retail channel that was launched by our acquisition of imortgage in October 2013. For the year ended December 31, 2014, we originated and sold $13.2 billion and $12.9 billion, respectively, in loans. We increased our borrowing capacity during 2014 by entering into one new Warehouse Line agreement providing $125.0 million in additional borrowing capacity.

Accrued Expenses and Other Liabilities. Accrued expenses and other liabilities were $80.9 million as of December 31, 2014, as compared to $63.6 million as of December 31, 2013, representing an increase of $17.4 million or 27%. The increase between periods was primarily the result of increases in accrued expenses and other liabilities related to our acquisition of imortgage in October 2013. Additionally, the increase is due to increased accrued operating expenses and escrow liabilities associated with the growth in our lending operations and servicing portfolio.

Derivative Liabilities, at Fair Value. Derivative liabilities, at fair value, were $7.6 million as of December 31, 2014, as compared to $0.2 million as of December 31, 2013, representing an increase of $7.4 million. The increase in Hedging Instruments between periods was primarily the result of increased IRLCs and LHFS associated with the growth in our lending operation and acquisition of imortgage in October 2013.

Liability for Loans Eligible for Repurchase. Liability for loans eligible for repurchase was $39.8 million as of December 31, 2014, as compared to $5.3 million as of December 31, 2013. The increase between periods is due to an increase in loans 90 or more days past due and represent loans that we have the unilateral right to repurchase from Ginnie Mae guaranteed securitizations as part of our contractual arrangements as the servicer of the loans.

Capital Lease Obligations. Capital lease obligations were $11.2 million as of December 31, 2014, as compared to $6.1 million as of December 31, 2013, representing an increase of $5.1 million or 83%. The increase between periods was primarily the result of an increase in capital leases associated with capital expenditures for the growth of our lending operations.

Debt Obligations. Debt obligations were $103.0 million as of December 31, 2014, as compared to $80.0 million as of December 31, 2013, representing an increase of $23.0 million or 29%. The increase between periods was the result of entering into our Original Secured Credit Facility in October 2014. As of December 31, 2014, our Original Secured Credit Facility balance was $23.0 million.

Redeemable Units and Unitholders’ Equity. Total redeemable units and unitholders’ equity were $69.2 million and $120.0 million as of December 31, 2014, as compared to $64.0 million and $99.3 million as of December 31, 2013, representing increases of $5.2 million or 8%, and $20.7 million or 21%. The increases between periods were primarily the result of $21.7 million of net income generated in 2014 and $5.3 million in shares issued through equity compensation plans, partially offset by $1.1 million in capital distributions.

Liquidity and Capital Resources

Liquidity

Our liquidity reflects our ability to meet our current obligations (including our operating expenses and, when applicable, the retirement of our debt and margin calls relating to our Hedging Instruments, Warehouse Lines and Secured Credit Facilities), fund new originations and purchases and make investments as we identify them. We forecast the need to have adequate liquid funds available to operate and grow our business. As of June 30, 2015, unrestricted cash and cash equivalents were $53.3 million and committed and uncommitted available capacity under our Warehouse Lines was $753.1 million.

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Sources and Uses of Cash

Our primary sources of liquidity have been as follows: (i) funds obtained from our Warehouse Lines; (ii) proceeds from other financing arrangements described under “—Debt Obligations” below; (iii) proceeds received from the sale and securitization of loans; (iv) proceeds from the sale of servicing rights; (v) loan fees from the origination of loans; (vi) servicing fees; (vii) interest payments from LHFS; and (viii) proceeds from private placement issuances.

Our primary uses of funds for liquidity have included the following: (i) funding new loans; (ii) funding loan origination costs; (iii) payment of Warehouse Line haircuts required at loan origination; (iv) payment of interest expense on Warehouse Lines; (v) payment of interest expense under other financing arrangements described under “—Debt Obligations” below; (vi) payment of operating expenses; (vii) repayment of Warehouse Lines; (viii) repayment of other financing arrangements described under “—Debt Obligations” below; (ix) funding of servicing advances; (x) margin calls on Warehouse Lines or Hedging Instruments; (xi) payment of distributions and other amounts due to the holders of Class I common units; (xii) repurchases of loans under representation and warranty breaches; and (xiii) costs relating to subservicing.

We rely on the secondary mortgage market as a source of long-term capital to support our home lending operations. Substantially all of the home loans that we originate are sold in the secondary mortgage market to Fannie Mae or Freddie Mac or, in the case of mortgage-backed securities guaranteed by Ginnie Mae, are home loans insured or guaranteed by the FHA or VA. We also sell loans to many private investors.

At this time, we believe that there are no material market trends that would affect our access to long-term or short-term borrowings sufficient to maintain our current operations, or that would likely cause us to cease to be in compliance with applicable covenants for our indebtedness or that would inhibit our ability to fund our loan operations and capital commitments for the next twelve months. However, should those trends change, we believe we could retain less or sell additional servicing rights, scale back growth or take other actions to mitigate any significant increase in demands on our liquidity.

We do not originate personal loans, but rather these loans are originated by our issuing bank partner and then sold by such partner to third party investors. Accordingly, we do not utilize our capital resources for our personal loans. However, our ability to grow the personal loan business will depend upon the availability of third-party investors to purchase such loans when funded. Our issuing bank currently has commitments from two third-party investors for these purposes. Further investor commitments will be necessary in order for us to continue to facilitate personal loans once the existing commitments are satisfied or expire.

Cash Flows

The following table summarizes the net cash provided by (used in) operating activities, investing activities and financing activities for the periods indicated:


	Six Months Ended June 30,						Year Ended December 31,
	2015			2014			2014			2013
	(Dollars in thousands)
Statement of Operation Data:
Net cash used in operating activities	$	(559,772	)	$	(162,923	)	$	(314,555	)	$	(217,083	)
Net cash provided by (used in) investing activities		69,729			20,797			44,215			(34,026	)
Net cash provided by financing activities		514,756			125,466			258,091			264,349

Operating Activities

During the six months ended June 30, 2015, net cash used in operating activities was $559.8 million, compared to $162.9 million during the six months ended June 30, 2014. The increase in cash used in operating

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activities during the six months ended June 30, 2015 was primarily driven by a net $662.4 million use of cash due to loan originations in excess of loan sales during the period as we grew our loans held for sale to $1.5 billion at June 30, 2015 as compared to $1.0 billion at December 31, 2014. The increase in cash used was partially offset by $69.2 million in net income, $15.6 million in fair value changes in servi

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loanDepot, Inc. S-1